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Democratic governors have bold ideas to transform health care: Harvard researchers

Democratic governors have bold ideas to transform health care: Harvard researchers

A new analysis published in the American Journal of Public Health finds competing visions for health reform among newly elected governors, including significant enthusiasm among Democrats for new public coverage

FOR IMMEDIATE RELEASE: January 16, 2019 at 4:00 p.m. EST

Contacts: Micah Johnson, Harvard Medical School, micah_johnson@hms.harvard.edu; Sanjay Kishore, Harvard Medical School, sanjay_kishore@hms.harvard.edu; Clare Fauke, PNHP communications specialist, 312-782-6006, clare@pnhp.org

Republican and Democratic governors have strikingly different visions for the future of health care, according to a new analysis appearing in today’s American Journal of Public Health. While Republican leaders favor maintaining or shrinking public health insurance programs, Democratic leaders are advancing several new proposals to expand public coverage, including “public option” and single-payer health reforms.

Researchers analyzed the health care platforms of the 72 Republican and Democratic nominees running for governor in the 2018 election, examining position statements posted on campaign websites. They identified four major health care reform proposals advanced by gubernatorial candidates: introducing work requirements for Medicaid, expanding Medicaid in states that have not yet done so, creating a public insurance option, and transitioning to a state-based single-payer system.

Five Republican nominees proposed adding work requirements for their state’s Medicaid program, of whom one was elected (in Ohio). In the 22 states that had previously expanded Medicaid, no candidate from either party proposed rolling back coverage.

Six Democratic nominees proposed creating a new public insurance option to compete alongside private plans, of whom five were elected. Importantly, a public option was proposed by newly elected governors in Illinois, Colorado, New Mexico, and Maine who will be working with Democratic state legislatures, bolstering the political viability of reform. Seven Democratic nominees proposed single-payer health care plans, of whom three were elected. These newly elected governors—in California, Colorado, and New Mexico—will all be working with Democratic-controlled state legislatures.

All Democratic nominees included health care platforms on their campaign websites, but only half of Republican nominees did so. Their omission did not appear to have electoral consequences: 13 of the 18 Republicans offering no health care platform won their elections.

According to Micah Johnson, an author of  the AJPH article and M.D. candidate at Harvard Medical School, “With a divided government in Washington, states have an opening to provide leadership on health reform in the next two years. State efforts to expand public coverage could serve as a model for future national reform, much as the Massachusetts health reform plan in 2006 provided the blueprint for the Affordable Care Act.”

Sanjay Kishore, an author of the article and M.D. candidate at Harvard Medical School, said, “At a time when many voters consider health care their top priority, it’s remarkable that ten candidates for governor led with a platform of single-payer or a public option, reforms never achieved anywhere in the U.S. This may signal a desire for more progressive health policy.”

“Laboratories of Democracy: Health Care Reform Platforms in the 2018 Governor Elections.” Micah Johnson and Sanjay Kishore. American Journal of Public Health, Jan. 16, 2019. DOI: 10.2105/AJPH.2018.304890

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and educational organization of more than 22,000 doctors who support a single-payer national health program. PNHP had no role in funding or otherwise supporting the study above.

There is bipartisan agreement that our health care system has major problems

Seven in 10 Maintain Negative View of U.S. Healthcare System

By Justin McCarthy
Gallup, January 14, 2019

Seventy percent of Americans describe the current U.S. healthcare system as being “in a state of crisis” or having “major problems.” This is consistent with the 65% to 73% range for this figure in all but one poll since Gallup first asked the question in 1994.

Although the percentage of Americans saying U.S. healthcare has major problems or is in crisis has been fairly flat over the past two decades, Democrats’ and Republicans’ views have changed within that time frame.

From 2001 to 2009, Democrats and Democratic-leaning independents were considerably more likely than Republicans and Republican-leaning independents to say healthcare had major problems or was in crisis. Democrats’ negative assessments then decreased in the rest of President Barack Obama’s first term, after passage of the Affordable Care Act (ACA) in 2010, at the same time that Republicans’ concerns mounted. By 2012, the lines crossed, so that during most of Obama’s second term, Republicans were significantly more likely than Democrats to perceive significant or critical problems in the healthcare system.

Now, with Republican President Donald Trump in office, partisan views have flipped again, with Democrats more likely to be concerned.

The difference between the two major parties on this measure was just five percentage points in 2017, Trump’s first year, when 76% of Democrats and 71% of Republicans said healthcare had major problems or was in crisis. This expanded to a 28-point gap in 2018, when 84% of Democrats and 56% of Republicans expressed these views — the largest partisan gap on this measure in Gallup’s trend since 2001.

The 2018 poll was conducted on the heels of last year’s midterm elections, in which Democratic candidates highlighted key problems with the healthcare system — especially coverage.

https://news.gallup.com…

Comment:

By Don McCanne, M.D.

Consistently since 1994 (except 9/11/2001) about seven-tenths of the nation has believed that the U.S. health care system is in a state of crisis or has major problems. That view persists today.

The intensity of this view has varied with the politics. During the administration of George W. Bush, the Democrats thought the system was worse than did the Republicans. Following the passage of the Affordable Care Act under Barack Obama, the Republicans thought the system was worse. At the time of the midterm elections last year, the opinions flipped again when the Democrats had campaigned on the need to fix our system with Medicare for All whereas the Republicans abandoned their attack on Obamacare and called only for guaranteed issue – not excluding people from insurance because of preexisting conditions.

Although political polarization is certainly a reality, we should temper our views on this particular difference. It should be noted that the graph is truncated – the bottom 30 percent is not included. It looks like the two sides switched positions two times, but, in fact, except for 2001, at all times the majority of both parties believed that health care was in a state of crisis or had major problems.

The point is that a majority of all Americans, regardless of party affiliation, believes that we have very serious problems with our health care system. The main difference is that the Republicans have failed to come up with any effective solutions and thus currently consider the crisis less pressing, whereas the Democrats are now more concerned, in spite of Obamacare, and thus many support a proven solution: Single Payer Medicare for All. It would fix the problems, and everyone, regardless of political affiliation, needs to understand that.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Medicare for all: The time is coming

By Susanne King, M.D.
The Berkshire Eagle (Pittsfield, Mass.), Jan. 15, 2019

The majority of Americans and their doctors have long supported a national health program, an expanded and improved Medicare for All, that covers everyone, and is cost-effective, efficient and practical. This single payer program would cover every American for all medically necessary services, including mental health, rehabilitation and dental care, without co-payments or deductibles. Under such a program, patients would be able to keep their doctors and other health care providers: the delivery of health care would remain the same. Only the administration of the health care funds would change: from multiple insurance companies to the federal government, which becomes the “single payer” for all health care. This administrative change would free up billions of dollars currently spent for the bloated bureaucracy and profits of these private insurance companies.

The Affordable Care Act was forged under the promise “If you like your health plan, you get to keep it,” but that promise no longer looks so great. More than half the people under 65 get their health insurance through an employer. In these employee-based plans, premiums rose sharply in 2017, with family premiums of $20,000 or more in some states. The amount workers have to contribute to those premiums has continued to rise, along with increasing annual deductibles. These payments by workers are eating into their take-home pay, with an average worker paying over 11 percent of their income for this out-of-pocket spending in 2017.

How would a Medicare for All program be cost-efficient, effective, and practical?

Cost-efficient: cutting administrative costs would generate $400 billion in administrative savings annually. Effective: even after full implementation of the Affordable Care Act, tens of millions of Americans remain uninsured, or only partially insured, so a national health program that covers everyone would be effective. Practical: everyone would have a card to present at the doctor’s office or hospital, allowing for treatment without a co-payment or deductible.

Some think a single payer program may too costly for our country. However, a recent economic analysis of a Medicare for All program by the Political Economy Research Institute at UMass addresses this concern. It found that such reform would provide universal and comprehensive coverage without increasing overall health expenditures. This is in line with Congressional Budget Office estimates, and also with a study by the Mercatus Institute (funded by the Koch brothers), which concluded that a single payer program would realize significant savings..

The idea of a national health program is gaining more traction in the legislature. Last week Nancy Pelosi said through her spokesman that she supports holding hearings in the House on Medicare for All. Our state representative, Richard Neal, chairman of the Ways and Means committee, said last month that Medicare for All deserves “a conversation.” And there is a class of new members of Congress who are vocal in their support. All this enthusiasm marks a major step forward for supporters of single payer.

There is a bill in the House, H.R.676, “The Expanded and Improved Medicare for All Act,” which has a growing number of sponsors, because it is cost-efficient, effective and practical. You can support single payer health care by contacting Rep. Neal, who wants to protect Medicare. Ask him to go further, and sponsor this legislation for Medicare for All.

https://www.berkshireeagle.com…

It’s Still The Prices, Stupid

Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt

By Gerard F. Anderson, Peter Hussey, and Varduhi Petrosyan
Health Affairs, January 2019

Abstract

A 2003 article titled “It’s the Prices, Stupid,” and coauthored by the three of us and the recently deceased Uwe Reinhardt found that the sizable differences in health spending between the US and other countries were explained mainly by health care prices. As a tribute to him, we used Organization for Economic Cooperation and Development (OECD) Health Statistics to update these analyses and review critiques of the original article. The conclusion that prices are the primary reason why the US spends more on health care than any other country remains valid, despite health policy reforms and health systems restructuring that have occurred in the US and other industrialized countries since the 2003 article’s publication. On key measures of health care resources per capita (hospital beds, physicians, and nurses), the US still provides significantly fewer resources compared to the OECD median country. Since the US is not consuming greater resources than other countries, the most logical factor is the higher prices paid in the US. Because the differential between what the public and private sectors pay for medical services has grown significantly in the past fifteen years, US policy makers should focus on prices in the private sector.

From the introduction

Much has happened in the US and other OECD countries in health policy and health care delivery in the intervening fifteen years. Since 2003 there has been much greater attention given to the cost of treating people with chronic conditions, a greater emphasis on value-based care, more people entering managed care programs, the passage of the Affordable Care Act, the introduction of electronic medical records, consolidation of hospitals and insurers, and many other changes designed to lower the level of spending in the US. As a result, it is important to assess whether the general conclusion that prices are responsible for most of the difference in health spending remains valid and what, if anything, has changed.

Health spending

US per capita health spending was $9,892 in 2016. The US spending level was 25 percent higher than that of Switzerland ($7,919), the country with the next-highest expenditure per capita; 108 percent higher than that of neighboring Canada ($4,753) and 145 percent higher than the OECD median of $4,033. The US spent 17.2 percent of its GDP on health care in 2016, and the OECD median was 8.9 percent.

Public versus private spending

The US financed 50.9 percent of its health care from private sources in 2016, compared to the OECD median of 25.0 percent. It is noteworthy that the differential between the prices paid by public and private insurers in the US has increased drastically since the 2003 article was written. In 2000 the price differential between what public and private insurers paid was approximately 10 percent. The Medicare Payment Advisory Commission recently estimated that private insurers pay prices that are 50 percent higher than what Medicare pays. Increased attention needs to be paid to the prices paid in the private sector.

Spending on pharmaceuticals

In 2015 per capita spending on pharmaceuticals varied from $171 in Poland to $1,011 in the US, with most of the OECD countries spending $400–$600. Recent studies found that prices for brand-name pharmaceuticals were responsible for most of the difference in pharmaceutical spending, with the US providing a considerable portion of the profits to the pharmaceutical industry.

Supply of physicians

In 2015 the US had 19 percent fewer practicing physicians per 1,000 population than the median OECD country (2.6 versus 3.2). The median OECD country had 12.1 medical school graduates in 2015 per 100,000 population, while the US had only 7.5. The US also had the lowest percentage of generalist physicians among the twenty-eight countries with data available, according to the OECD definition: 11.9 percent. The OECD median was 27.9 percent.

Supply of nurses

The US nurse-to-population ratio declined from 2000 to 2015, when it was 7.9 per 1,000 population—20 percent below the OECD median (9.9 per 1,000).

Hospitals

The US had 26 percent fewer inpatient acute care hospital beds per 1,000 population (2.5) than the median OECD country (3.4) in 2015.

Medical technology

The US was second (after Japan) in MRI units per million population and third (after Japan and Australia) in CT scanners per million population in 2015.

Explanations for differences

There is a growing literature on administrative costs. A Commonwealth Fund comparison of health insurance administrative costs showed that the US spent $737 per capita on administration, compared to $94 per capita in the median OECD country. The next-highest-spending country after the US (Switzerland) had administrative costs of only $280. In 2017 Steffie Woolhandler and David Himmelstein estimated that the US would save about $617 billion (about 20 percent of its total health spending) if it moved to a single-payer system. A study comparing administrative costs of physicians in Canada and the US found that US physicians spend considerably more on administrative services than Canadian physicians do.

Health spending versus health care provision

The 2003 article discussed how the buy and sell sides of the marketplace operate. The subsequent literature has validated the arguments made in the 2003 article. First, many OECD countries continue to use their monopsony power to control prices, while the US continues to have geographic areas with providers able to obtain “rents” from having monopolies in their community. Second, the current literature continues to show that the US buy side continues to be highly fragmented by international standards.

A series of recent articles has examined the relationship between the market power of providers in a community and health outcomes and found association with higher prices but very little correlation with health outcomes. These studies show that insurance companies are strengthening their market power through consolidation, while hospitals and physicians’ practices merge into giant conglomerates, strengthening their sell-side market power and driving up the prices.

In the US the evidence suggests that consolidation of insurers does not necessarily lead to lower premiums, copayments, or deductibles, but it shifts profits from providers to insurers, thereby transferring revenues from providers to insurers and not to society.

It’s still the prices, stupid

In 2000 the US had fewer physicians per 1,000 population, physician visits per capita, and acute care beds per capita, as well as fewer hospital admissions per 1,000 population and acute care days per capita, compared to the median OECD country. The US was still not devoting more real resources to health care than most other OECD countries in 2015 or 2016. At that time, the US had 26 percent fewer hospital beds per capita, 20 percent fewer practicing nurses, and 19 percent fewer practicing physicians per capita, compared to the OECD median country. Because the US is still not devoting more real resources to medical care than the typical OECD country, we believe that the conclusion that “it’s the prices, stupid,” remains valid. What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

The really important finding of this update of the classic study, “It’s the Prices, Stupid,” is that the conclusion has not changed: Health care spending in the United States is the highest largely because our prices are the highest.

There are a couple of quotes in this update that warrant special attention:

“In the US the evidence suggests that consolidation of insurers does not necessarily lead to lower premiums, copayments, or deductibles, but it shifts profits from providers to insurers, thereby transferring revenues from providers to insurers and not to society.”

Got that? The consolidation of the private insurers has not resulted in benefits to health care consumers nor to society at large. It has shifted profits from providers to insurers. It makes you wonder why the American Medical Association and the American Hospital Association continue to support a financing system heavily dependent on private insurers when those insurers are draining the providers of their profits, which then must be compensated for by yet higher prices.

“What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations.”

Got that one too? The private insurers have been more successful in enabling the increase in health care prices than has the public sector. Success here of course means more profit from higher prices, but not success in controlling excess health care spending to benefit society.

The authors conclude that lowering prices will need to start with private insurers and self-insured corporations, but the past three-quarters of a century has provided more than ample evidence that private insurers and self-insured corporations have been incompetent or derelict in their efforts to control prices; both have been far more concerned with tending to maximizing their own profits.

Single payer advocates understand that reducing prices does not mean cutting physician and hospital payments to unacceptably low levels, but rather it means reducing prices by increasing efficiency of the financing system by eliminating profound administrative excesses, negotiating fair rates, eliminating diversion of funds to passive investors, and use of global budgets similar to financing of other publicly-funded facilities like fire departments.

There are two models that have been proven to be effective: a national health service (socialized medicine) or a single payer social insurance program like an improved Medicare that covers everyone (Single Payer Medicare for All). For the United States, the latter would be less disruptive, not to mention that it already has a following within the nation in a large part because of the popularity of our traditional Medicare program.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Single-payer coverage would reduce waste in health care

By Jay Brock, M.D.
Fredericksburg (Virginia) Star, Letters, Jan. 14, 2019

Single-payer coverage would reduce waste in U.S. health care

A recent editorial cartoon in The Free Lance– Star about health care spending brings up an interesting point: How much money we waste on our current vastly expensive and woefully inefficient multiple payer system.

Of the approximately $3.5 trillion we spend on “health care” each year, the American health insurance system wastes more than half a trillion of that in excessive administrative, profit and marketing costs, including some of the highest prices for medications in the world.

If we had a single-payer system, where there are no more insurance companies, no more co-pays, and no more deductibles, we would be able to spend that half-trillion-plus on actual health care for patients.

The United States is the only industrialized country in the world without universal health care coverage. Single payer/national improved Medicare for All will fix this, and end all this waste.

Isn’t it about time we caught up with the rest of the advanced nations of the world, where everyone is covered by a health insurance system (such as single-payer) that is designed for the benefit of the patient, not the insurance industry?

https://www.fredericksburg.com…

Medicare for All Explained Podcast: Episode 4

Interview with Dr. Phil Verhoef

January 14, 2019

Dr. Verhoef argues for global budgets as the best way to fund hospitals and other facilities in a single-payer system. He says it is especially important to separate capital expenditures from money dedicated to patient care. Hosted by Joseph Sparks. Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Medicare for All deserves support

By G. Richard Dundas, M.D.
Bennigton (Vt.) Banner, Letters, Jan. 13, 2019

To the Editor:

Over half of Americans delay or don’t get health care because they can’t afford it. That’s because we are the only wealthy nation which does not have universal health care. Thirty million of us are uninsured and many more are underinsured. Even though insured, high deductibles, coinsurance, and copayments keep Americans from accessing care. The cost of care is prohibitive for many of us, and it is nearly twice that of other industrialized nations. The outcomes of patient care (such as infant or maternal mortality) are worse in the U.S. than in most industrialized nations. Our life expectancy is going down instead of up. What can we do? Universal single payer health care could make us a healthier nation at much less cost.

There is a growing movement to switch to a new type of health care financing called “Improved Medicare for All.” For a number of years, there has been a bill in the U.S Congress (HR 676) which outlines how this switch could be accomplished. It now has many more sponsors than ever before (including our Representative Peter Welch), and our new Speaker of the House has promised to hold hearings. It would create a publicly financed, privately delivered health care system that builds on the existing Medicare program. It would improve and expand Medicare to cover all U.S. residents. It would replace our fragmented patchwork of inefficient insurance companies whose primary goal is to make a profit. It is estimated that it will save 500 billion per year by controlling administrative and drug costs and eliminating high executive salaries and huge corporate profits. HR 676 will save money, add extra services such as coverage for dental care, and virtually eliminate out of pocket costs.

Our current system of health care is a failure, so who in their right mind would oppose a new plan? Polls show that the people are for such a plan; however the insurance companies, drug companies, and equipment manufacturers will be in opposition. Their lobbyists have great influence over our politicians and most of our legislators have received campaign contributions from them. There is now hope that the will of the people may prevail. Pramila Jayapal (Democrat from Washington) is now the lead sponsor of HR 676, but there is rumor that the bill is being changed to a Medicare-Buy-In option. This is not the same as the original HR 676 as a buy-in preserves the inefficient, costly insurance companies that have plagued us for years. You should write to her (319 Cannon House Office Building, Washington DC, 20515) and also to Congressman Peter Welch (128 Lakeside Ave, Suite 235, Burlington, VT, 05401) and ask that they support HR 676 as it is now written.

https://www.benningtonbanner.com…

Insurance companies are supposed to be heartless. That’s why we need single-payer.

By Robert Vinetz, M.D.
Los Angeles Times, Letters, Jan. 13, 2019

To the editor:

Michael Kinsley is arguably correct when he writes regarding the denial of coverage for people with preexisting conditions: “The insurance companies are not behaving like heartless monsters. They are behaving like insurance companies.”

Well, they may or may not be monsters, but insurance companies are indeed “heartless.” They are inanimate creations. Their primary goal is to maximize profits, even if they have to be “heartless” and hurt people in doing so.

Do we really want a healthcare system financed and controlled by the heartless motive of corporate profits? Or, do we want one driven by the maxim “people before profits” and the heartening values of the Hippocratic Oath?

As a physician, I’ve made my choice: I support a single-payer, “Medicare for all” system.

https://www.latimes.com…

Portsmouth doctor and single-payer health care advocate predicts 2019 ‘the golden year’

By Paul Steinhauser
Foster’s Daily Democrat (Portsmouth, N.H.), Jan. 12, 2019

Dr. Tom Clairmont is a man on a mission.

Clairmont, a primary care physician in Portsmouth, is a longtime vocal advocate for the single-payer Medicare for all health care plan.

“My job is the try and educate the public,” Clairmont highlighted. “I’ve done letters to the editor. I’ve given talks to the Rotary Club. I’m doing a presentation on Monday night at the Portsmouth Public Library.”

Support for single-payer – a proposed single public system financed by taxes that covers the costs of health care for all of the country’s residents – has risen in public opinion polls in recent years. As of the end of 2018, some 125 Democrats in Congress had pledged their support for the plan.

Single-payer was a key part of Sen. Bernie Sanders’ platform during his 2016 bid for the Democratic presidential nomination, and was a leading issue for many candidates running in last year’s midterm elections, where Democrats won back control of the U.S. House of Representatives.

Now, with the start of the 2020 White House campaign and the spotlight shining on New Hampshire’s first-in-the-nation presidential primary, Clairmont predicted that “2019 is the golden year.”

“This is the year of opportunity for us to really get our message out,” he said. “Sanders started this, lit a spark. A lot of the campaigns throughout the country (in 2018) were elected on Medicare for all.”

Clairmont’s a longtime member of Physicians for a National Health Program, a non-profit research and educational organization of some 22,000 doctors, medical students and health care professionals that for three decades has pushed for a national health insurance system.

“We have been fighting this fight, trying to get people to understand it’s in their interest and it’s beneficial for you to have this program,” he said.

He explained that Sanders’ Senate bill and a longtime House bill for single-payer are based on the original Physicians for a National Health Program proposal.

Opponents of Medicare for all – and there are many – argue that single-payer does not translate into better health care. Instead, they say access to health care would diminish under a single-payer system, and the overall quality of care would decline.

Opponents also claim that single-payer systems cause shortages of general physicians and specialists and reduce access to medical technology. They add that the system would be too expensive.

“Every research paper I can show you that’s come up has shown that single-payer saves money,” Clairmont responded.

He argued that moving to a single-payer system would provide $600 billion per year in savings, adding “the total cost is going to go down. We estimate that 95 percent of people will save money under a single-payer program.”

Pointing to critics, he said “another thing they say is ‘your taxes are going to go up.’”

“Yes, they are. But you have to add your taxes plus your premiums plus your out-of-pocket (costs), plus your co-pays and deductibles and all that,” he added as he claimed that those costs would go down.

As a doctor who sees patients every day, Clairmont said moving to single-payer “would get me away from all these insurance companies interfering with the practice of medicine. I’m sick of getting permissions to perform a test, permissions to send somebody to a certain doctor I like, permissions for almost anything today.”

“My favorite quote is ‘You don’t want a government bureaucrat between you and your doctor.’ Nothing could be further from the truth,” he argued. “You don’t want an insurance company bureaucrat between you and your doctor because those are the people who are interfering with care continually.”

A single-payer system is – of course – a threat to the insurance industry. Claimont said that “our program eliminates those people. We don’t have insurance companies in our program. They are gone.”

Medicare for All: A discussion of House Bill HR676 and what it means to you, Monday, Jan. 14, 6:30 to 8 p.m., Levenson Community Room, Portsmouth Public Library. Sponsored by Physicians for a National Health Program.

https://www.fosters.com…

Public retirees being shifted to private insurance exchanges

As Retiree Health-Care Costs Soar, Public Employers Turn to Private Insurers

By Liz Farmer
Governing, January 9, 2019

The cost of retiree health care is spiraling out of control. In just two years, according to a recent S&P Global Ratings report, unfunded retiree health-care liabilities across the 50 states increased by $100 billion to now just under $700 billion.

The problem is becoming so alarming that Dearborn, Mich., recently borrowed money to help fill the gap, a move deemed risky by financial analysts. A more acceptable approach taking hold, thanks in part to the Affordable Care Act (ACA), is scrapping government-sponsored health plans and instead paying for retirees to purchase a plan on a private health insurance exchange. The change is expected to save some cities hundreds of millions of dollars and make their annual retiree health-care costs more predictable.

Retiree health care, also known as other post-employment benefits (OPEB), is one of the fastest-growing line items in government budgets. That’s because retirees are living longer and medical costs are rising faster than the rate of inflation.

In recent years, some governments have tried to manage costs by simply cutting health-care benefits — something they legally can’t do with pensions. In 2014, Memphis, Tenn., eliminated its 70 percent subsidy for retiree health insurance, and instead, plugged those savings into its vastly underfunded pension system. But unions fought the cuts, suing and pressuring the city to reinstate health care for retirees. With the subsidy gone, agencies were having problems with recruitment and retention, particularly police and fire departments where officers tend to retire well before the Medicare-eligible age of 65.

When Mayor Jim Strickland took office in 2016, he immediately tasked the city’s new chief human resources officer, Alexandra Smith, to fix the problem. That’s when the idea of turning to a health insurance exchange first emerged.

Private exchanges are different than the public, ACA exchanges. The idea is the same in that they pool risk and allow users to shop for their own health plans. But private exchanges are run by insurance and benefits companies. They have been around for much longer, generally catering to the 65 and older crowd looking for a health plan to supplement their Medicare coverage.

In recent years, governments, such as Cobb County, Ga., and the state of Ohio, have turned to these private exchanges for their Medicare-eligible retirees as a way to cut down on costs. But thanks to the ACA, private exchanges can expand their market to include users who are not yet eligible for Medicare. That’s opening up new options for governments that are paying for health care for younger retirees.

For Memphis, joining an exchange gave the city a chance to control their health-care costs because the insurer — rather than the city — is on the hook for big claims.

Shifting that responsibility, says Smith, dropped the city’s OPEB liability by $300 million to total $415 million. Costs going forward will also be more predictable, around $19 million per year. “The volatility we would have had by having retirees on our group insurance plan would have been much higher,” she says. “Now we’re able to better predict what our annual payments are.”

It also gave the city something to offer its younger retirees. While Memphis didn’t reinstate its 70 percent subsidy, it offers $5,000 annually for individuals and $10,000 for public safety retirees in the form of a health reimbursement account for those who aren’t eligible yet for Medicare. The money helps cover a significant portion of the premiums for retirees who buy a plan on the exchange.

Meanwhile, the idea is gaining traction. Ohio’s police and fire pension has already made the jump, and the state’s public employee pension plan is considering a similar move.

http://www.governing.com…

Comment:

By Don McCanne, M.D.

Public employers, in order to help control the costs of their retiree health benefit programs, are dropping the retirees from their own government-sponsored health plans and instead giving retirees a health reimbursement account (HRA) that can be used to purchase health plans through a private insurance exchange. The plan in Memphis provides an example as to how that can work out for the employers and for the retirees.

Instead of paying a 70 percent premium subsidy towards the government-sponsored health plan, Memphis is paying into the HRAs an amount that reduces their post-employment benefit obligation by $300 million, a savings for Memphis of 42 percent! That’s great for their city budget, but what does that do for the retirees?

To begin with, private insurers generally have significantly greater administrative costs, higher executive compensation schedules, plus a need to divert funds to investors (or build capital margins for nonprofits), plus there are the additional administrative costs of the private exchanges. If the retirees have 42 percent fewer funds for their retiree coverage and the coverage is now more expensive than the previous government-sponsored plan, then what gives? It would require some combination of much higher insurance premiums (likely greater than the funds in their HRAs), much greater deductibles and other cost sharing, and a reduction in the health benefits covered by the private plans. All of these can place a significant financial burden on individuals now trying to get by on their modest pensions. They might have to deplete their assets, if they have any, and health care access may be impaired because of these financial barriers. This can’t be good.

We have to end our dependence on an overpriced, inefficient, inequitable, fragmented health care financing system dominated by private insurers. We can do that by enacting and implementing a Single Payer Medicare for All program. Although support is increasing, inertia remains a problem, and we may have to start taking to the streets to get it to happen.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Small-business owner supports improved Medicare for All

By Pamella S. Gronemeyer
Illinois Business Journal (Edwardsville), Jan. 2019

I am a physician and an employer, as well as a purchaser and a recipient of my own health care. I strongly support improved Medicare for All, a/k/a/ a single payer health care, because it is the most economically affordable, equitable and patriotic health care for this country. Most other industrialized nations have long ago realized that the health of their nation is no better than the health of their sickest individuals.

As a recent Medicare enrollee, I know that Medicare works. I have conventional Medicare with a supplemental plan and a prescription drug plan. I chose my supplemental plan with a company that treats providers with respect and pays fairly. As a Medicare enrollee, I have my choice of physicians and health-care facilities. I know that the bills will be paid. The downside, however, is that the Medicare supplemental plans and drug plans are not cheap. Many seniors cannot afford these outlays. That is why we need to improve Medicare when we expand it to the entire population. Medicare for All would incorporate dental and vision services as well. The issue of long-term care coverage is still being discussed.

For many years, I have known, as a provider, that Medicare pays a clean claim in 30 days. The Medicare rates are published every year online and are observed. Patients and providers are not pitted against each other in the payment process. Insurance companies often confuse both the health-care provider and patient by telling them conflicting information. Many insurance claims are unpaid beyond 60 days, and it is difficult to run a small business without consistent cash flow. Most insurance companies base their provider rates on a multiple of at least one times Medicare. However, unfairly, some change the rates without notification.

As a small-business owner, I provide health insurance to my employees and their dependents with as low a deductible as possible. I pay the premiums and they pay their deductibles and copays. I do this because I know that my employees are vital to the success of my business and I care about their health and the health of their families. For many years, my premiums rose more than 10 percent a year. While this increase stabilized under the ACA, the premiums rose again 8.2 percent this year. As my employees age (I have good employee retention) their rates go up based on their age. The fact that more and more money is needed to pay health-care premiums limits my ability to give raises. My employees use their health care wisely. The thought that health care for all would create abuse of the system is ridiculous. If we had Medicare for All, I could use the time and energy that it now takes me each October to review available plans, select a plan that is affordable and re-enroll to do my real job of providing pathology and cytology services.

Medicare for All could be paid for by an employer payroll tax that would replace the premiums that my business currently pays to the health insurance company. The employee may pay a small tax that would replace their co pays and deductibles. Would Medicare for All be more expensive than what people are currently paying? Credible economists and healthcare experts say uniformly “NO.” The additional taxes that a person would pay annually are far less than the average person is now paying in premiums to insurance companies. Also, the savings created by a system that spends money for health care and not administrative costs is indisputable. Medicare operates on an overhead of 2 percent to 3 percent; the overhead of private insurance companies is around 20 percent. In addition, the costs of workman’s compensation and retirees’ health benefits would disappear. Malpractice premiums would go down since settlements would no longer include payments for future medical care, because an improved Medicare for All would cover virtually everything.

The entrepreneurial character of Americans is well known. Starting a business would be easier with the knowledge that health-care costs would not discourage people from the process. People would no longer be restricted from creating a business or changing jobs because they are worried about their health care. Medicare for All is a win-win proposition for businesses and for the nation.

Dr. Pamella Gronemeyer is an anatomic and clinical pathologist. She is the director and owner of SEMC Pathology in Highland.

https://www.ibjonline.com…

Health industry insider now tows line for Medicare for All

By Dennis Grubaugh
Illinois Business Journal (Edwardsville), Jan. 2019

The epiphany for Wendell Potter came in 2007 when he saw the reality of health care in America, the difference between the haves and the have-nots.

After spending almost 20 years in health-care public relations and being paid to tout the industry line, he had become disheartened over the state of managed care. Insurance executives were promising the moon to patients but were far more concerned with investors and the effects of potential reforms. Insurance was becoming unaffordable. Millions were going without coverage.

He was aware of the growing crisis but saw it personally when, while visiting his home in Tennessee, he read about an event offering free health care at county fairgrounds in nearby Virginia. He decided to go see for himself the state of the industry.

“What I saw was something I never expected to see in this country,” he said. “People were lined up by the hundreds waiting to get care, some under tents, but a lot of those lines were leading up to barns and animal stalls. It looked like a refugee camp.”

Potter added: “I didn’t know anything like that existed, but I found out there were events like that all over the country.”

Very quickly, Potter went from insurance advocate to insurance reformer. Today, he is the one of the country’s foremost proponents of the Medicare for All movement, the idea of having a single payer — the government — pay for all people’s health care.

Potter spoke recently at Southern Illinois University Edwardsville where he appeared at the invitation of the Missouri Chapter of Physicians for a National Health Program and others.

Potter rose to prominence in 2009 when he testified in Congress during the first Obamacare debate, about the damage caused by the misinformation campaigns he says he helped create while vice president of communications for Cigna.

“I realized I had played some kind of a role in perpetuating the myth of the health-care system,” he said. “I knew as soon as my testimony was over that I would be known by my insurance industry colleagues as Public Enemy No. 1.”

It was quite a change for a man who was raised to believe in the free market.

“One of my first jobs in the industry came during the early Clinton years, when Bill and Hillary Clinton were trying to enact health-care reform. My industry didn’t like it so we teamed up with the drug companies, the big hospital companies and the medical device companies to develop a campaign to make sure it never happened. And, it never happened (until Obamacare).”

He referred to the early effort as a “FUD campaign” — sewing fear, uncertainty and doubt to make sure people were made afraid of any kind of health-care reform.

He said he worked for a system that had an offense and a defense. The offense encouraged people to believe that the U.S. had the best health-care system in the world. The defense was to respond to criticism from patients and doctors when particular cases got too loud.

“More often than not the company would reverse gears and approve whatever was being denied, just to make the story go away,” he said.

Those stories led to the backlash against managed care and led Potter to question what he was doing for a living.

He handled financial communications for Cigna corporate and got to understand how the company made money. Regularly, he fielded calls from the Wall Street Journal and others.

“Press releases and talking points were handed off to lawmakers, who we had contributed to and were friendly to us,” he said.

The manipulation wasn’t unique to Cigna, where he worked 15 years, or to Humana, another insurance company where he worked more than four years, he said. Every large insurance company was lobbying for footing.

As a former journalist for Scripps-Howard papers in Tennessee and elsewhere before his health career, he brings a certain credibility to the table in discussing the situation. He has now written three books on the industry’s shortfalls. He is also founder of the independent investigative journalism group, Tarbell.org.

Now, he talks about what has happened to Obamacare and where reforms need to go next, which he believes is a single-payer system that is likely to take years to approve.

“(Obamacare) has done some good,” Potter said. “More people are insured who were not before but the problem is the number of unemployed Americans is beginning to creep back up again and a lot of people are now underinsured. Their plans have such high deductibles they can’t afford to pay them and the cost keeps going up.”

The parts that people like about Obamacare — younger people being protected on their parents’ policies until they are 26 and coverage for people with pre-existing conditions — have thwarted attempts in Congress to overturn the law. However, a federal judge in Texas last month ruled that Obamacare is unconstitutional because of the mandate that people buy insurance. That makes it more likely that the validity of the Affordable Care Act will again go before the U.S. Supreme Court, which originally approved the law in 2010.

The Democrat surge resulting from the midterm elections will also mean more support for keeping a national health-care law in place. A Medicare for All caucus, comprised of 70 Democrats, was in place when the new Congress was seated early this month.

Insurance companies have doled out millions of dollars to members of both parties to protect their interests, and Potter believes that further reforms are not a question of if but when.

“A lot of the people who opposed Obamacare early on were not opposed to the reforms per se but the fact that they didn’t think it went far enough,” he said. “In my view, when it passed, it was the end of the beginning of reform. It moved us in the right direction, but it kept a lot of the infrastructure of a broken system in place.”

He’s not sure further reforms will come during the Trump administration but does think talks will continue.

“Where we need to be is a system that disciplines costs, brings us all into coverage, and includes outcomes,” he said.

Health-care premiums have risen from about $6,000 a year for families in 1999 to almost $20,000 today. Meanwhile, employers have been shifting more and more of the cost of the premiums from themselves to their workers.

Many people who do have insurance can barely afford the deductibles, which prevents them from getting care.

“Our employer-based system is unraveling,” he said. “Now, business owners are beginning to get on board and realize they can’t keep providing health care.”

Potter is president of the Business Initiative for Health Policy, a public education and advocacy effort focused on advancing the business and economic rationale for adopting a Medicare for All system in the United States, which is the only developed nation in the world without guaranteed universal health care.

The U.S. health-care system was dead last of developed countries before Obamacare was enacted, but is still that way today because of the law’s weaknesses, he said.

https://www.ibjonline.com…