The Cost Curve Is Bending, but Not for All of Us

By Don McCanne, M.D.
Physicians for a National Health Program, March 21, 2013

Under President Barack Obama, the nation once again undertook the effort to reform health care so that everyone would have access to essential health care services. But this time it was different. The costs of health care had become unbearable to individuals, to employers, and to the government. It became an imperative to bend the cost curve of health care – to slow the growth in health care costs to a sustainable level.

Although the effort resulted in the enactment of the Patient Protection and Affordable Care Act (Obamacare), the effort falls far short. Not only will 30 million people remain uninsured, underinsurance in the form of low actuarial value health plans will become the new standard. Although the legislation included many features designed to control health care costs, most are only tweaks and unfortunately will have very little impact when considering the enormity of the problem.

https://www.pnhp.org…

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Comment:

By Don McCanne, M.D.

It seems ridiculous that we need a reminder that the whole health care reform movement began because health care costs were too high, but apparently we do.

Even the name of the Patient Protection and Affordable Care Act was shortened to the Affordable Care Act. Well, health care costs have continued to increase at rates in excess of inflation. Although there was some slowing, partially related to the Great Recession, affordability didn’t happen.

Current reform proposals are based on the worst possible method of controlling health care spending: shift costs directly to patients, many of whom cannot afford to pay for the health care that they need. Erecting financial barriers to necessary care might slow spending increases, but it does so by creating physical suffering and financial hardship. We need a different, more humane approach to address the problem of affordability.

Today’s article was written over four years ago, but the message is even more timely now. Every authority recognizes that we need to bend the cost curve, but it seems that too many are ignoring the “Patient Protection” part of the promise of reform. Today’s article explains how we can bend the cost curve through a system that actually improves the efficiency of our health care system so that all of us can receive the care that we need.

It is likely that the transition to a single payer system would not reduce our spending much initially. A large portion of the savings from administrative efficiencies and other beneficial features of a single payer system (see article at link above) would be used to expand coverage to everyone and to eliminate the scourge of under-insurance. The real promise is the slowing of cost escalation in the future (see the curves of U.S. and Canadian costs in the same article).

If we had enacted single payer when we first began to talk about it a couple decades ago, spending now would be much, much lower than it is. Additional delay will only further compound the affordability problem. While the subject of reform is hot, and now that the nation better understands the concept of Medicare for All, it is time to strike. Don’t let this moment cool off.

Share this article with others who care and might be motivated to do something about it. Remember, the hope of affordability rests with the future – a future under Medicare for All.

Nevada Is Considering a Revolutionary Health-Care Experiment

By Ed Kilgore
New York, June 6, 2017

There’s a new idea percolating up in Nevada: letting anyone without health insurance buy into the state’s Medicaid program. This would include people who qualify for Obamacare tax credits, which could be used to pay for the buy-in; in effect, that would make Medicaid a public option — a phrase you might remember from Obamacare deliberations, when it was a Medicare buy-in — for individual insurance purchasers. Because of Medicaid’s low reimbursement rates for doctors and other health-care providers (significantly lower than Medicare), it should provide an economical alternative to private insurance, though at the cost of narrower provider options (a significant number of physicians do not accept Medicaid patients). Medicaid also has a broad range of benefits, with no co-pays or deductibles.

A bill to create this new Medicaid buy-in has cleared the legislature, and is awaiting action by Republican governor Brian Sandoval. It is unclear what he will do, though it is noteworthy that he has long been a staunch supporter of the expanded Medicaid program the Affordable Care Act created. Since the legislation leaves a lot of crucial details — e.g., the pricing of the buy-in and the possibility of cost-sharing measures like co-pays or deductibles — to future state regulation, Sandoval may be in a position to shape the proposal to his own liking. Nevada would also need to secure a waiver from the federal Department of Health and Human Services to implement the buy-in; initial indications are that the feds might not have a problem with it so long as it has no impact on federal Medicaid spending in Nevada.

In theory you might expect private insurers to fight a Medicaid buy-in tooth and nail, just as they successfully fought a public option, and also a Medicare buy-in (for people over 55), in the original Affordable Care Act debate. But the vast majority of current Nevada Medicaid beneficiaries are in managed-care plans operated under contract by private insurers, who might view a buy-in as simply a way to get a large number of new customers who might otherwise be uninsured.

It’s also worth noting that during the ACA debate both the Medicare buy-in idea and the more general concept of a public option were quite popular, especially among progressives. So it might also have some bipartisan support.

“Yale University’s Jacob Hacker argues that while this option might work in a single state, trying to use Medicaid as the model for a national public option would mean people in different states would get significantly different coverage.” (Vox, June 6)

http://nymag.com…

Nevada A.B. 374 – Requires the Department of Health and Human Services, if authorized by federal law, to establish a health care plan within Medicaid for purchase by persons who are not otherwise eligible for Medicaid:

https://www.leg.state.nv.us…

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Comment:

By Don McCanne, M.D.

Many single payer supporters who have become impatient waiting for enactment of a single payer Medicare for all program are supporting the introduction of a public option – a Medicare-like plan that individuals not otherwise eligible for other programs could purchase. The Nevada legislature has moved forward with this concept by passing A.B. 374 which would allow a buy-in – not for Medicare but for the state Medicaid program instead.

This in no way should be considered to be a satisfactory substitute for a single payer system. All of the profound administrative excesses and inequities of our multi-payer system would remain in place. Funds authorized for this program would be only $89,000 for each of the first two years – for administrative expenses only – so premiums would have to cover all medical costs of the program (although the state would ask for waivers to allow the use of federal premium tax credits and cost sharing reductions that would be available to those who would otherwise qualify under the Affordable Care Act). Since many individuals would not be able to afford the premiums, a large number of Nevadans would remain uninsured.

Though this program does fall far short of what is needed, nevertheless any program that reduces physical suffering and financial hardship as an interim measure while we are working on our goal of health care justice for all should be supported. The primary caveat is that we cannot let it reduce in the least our efforts to enact a national single payer program – an improved Medicare for all.

(I contacted Gov. Brian Sandoval’s office and, as of 11:00 AM PDT today, June 8, S.B. 374 was still sitting on his desk without a signature.)

High-deductible Health Plans and Financial Barriers to Medical Care: Early Release of Estimates From the National Health Interview Survey, 2016

By Robin A. Cohen, Ph.D., and Emily P. Zammitti, M.P.H.
National Center for Health Statistics, June 2017

This report provides recent estimates from the National Health Interview Survey (NHIS) for the percentage of privately insured adults aged 18–64 who experienced financial barriers to care in the past 12 months by source (employment-based or directly purchased) and type (traditional or HDHP) of private coverage. Because income is also associated with financial barriers to care, income distribution by source and type of private coverage is also shown. All estimates in this report are based on preliminary data.

Highlights

* The percentage of adults aged 18–64 with employment-based coverage enrolled in a high- deductible health plan (HDHP) increased, from 26.3% in 2011 to 39.3% in 2016.

* In 2016, among privately insured adults aged 18–64 with employment-based coverage, those enrolled in an HDHP were more likely to experience the two financial barriers to care analyzed in this report than those enrolled in a traditional plan.

* In 2016, among privately insured adults aged 18–64 with directly purchased coverage, the percentage of those who had experienced financial barriers to health care did not differ by type of coverage (HDHP or traditional).

* In 2016, among privately insured adults aged 18–64 with employment-based coverage, income distributions were similar between those with an HDHP and those with a traditional plan.

* In 2016, among privately insured adults aged 18–64 with directly purchased coverage, those enrolled in an HDHP had higher household incomes than those enrolled in a traditional plan.

Figure 3. Percentage of privately insured adults aged 18–64 in families having problems paying medical bills in the past 12 months, by source and type of private coverage: United States, 2016

     Employment based
     9.0% – Traditional coverage
     15.4% – High deductible health plan

     Directly purchased
     15.9% – Traditional coverage
     16.1% – High deductible health plan

Figure 4. Percentage of privately insured adults aged 18–64 who did not get or delayed medical care due to cost in the past 12 months, by source and type of private coverage: United States, 2016

     Employment based
     4.1% – Traditional coverage
     8.5% – High deductible health plan

     Directly purchased
     11.8% – Traditional coverage
     13.3% – High deductible health plan

From the Summary

Among privately insured adults aged 18–64 with employment-based coverage, those enrolled in an HDHP were more likely than those enrolled in a traditional plan to forgo or delay medical care and to be in a family having problems paying medical bills. However, among privately insured adults aged 18–64 with directly purchased coverage, the pattern of results was different. In 2016, there was no significant difference in financial barriers to health care according to type of plan (traditional or HDHP) in the direct purchase market.

https://www.cdc.gov…

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Comment:

By Don McCanne, M.D.

Without getting bogged down in numbers (and there are many more in the full report), what can we glean from the facts here?

A significant percentage of privately insured families have problems paying medical bills or do not get medical care due to cost, regardless of whether their coverage was through a traditional plan or through a high deductible health plan, and regardless of whether their insurance was employment based or purchased directly in the individual insurance market. Private insurance is not providing adequate protection for too many individuals and their families.

Employment based coverage is shifting from traditional plans to high deductible health plans. Those in high deductible employment based plans are having more difficulties paying medical bills or obtaining care than are those still enrolled in traditional health plans. This shift to high deductible health plans has had an adverse financial impact on employees and their families.

For those who purchase their health care coverage directly in the individual market rather than obtaining it through their employment, those who select a high deductible health plan have higher incomes than do those who select a traditional plan. This is consistent with the well established observation that high deductible health plans are appealing to the healthy and wealthy, especially when linked to health savings accounts.

The authors of this report note that, for those purchasing their coverage directly in the market, there was no difference in encountering financial barriers to care for those selecting a high deductible plan versus those selecting a traditional plan. Though those with lower incomes who selected traditional plans fared as well as those with higher incomes who selected high deductible plans, that is not saying much. It would be more informative to state that those who selected traditional plans in the individual market fared as poorly as those selecting high deductible plans in that market. This is in contradistinction to employer based plans. In sum, traditional plans offered by employers provide better protection that do their high deductible plans, but traditional plans in the private market provided protection that was as lousy as the high deductible plans in the private market.

This is not meant to be an endorsement of employer sponsored traditional plans since too many people still face problems with medical bills and financial barriers with these plans. But this is a condemnation of the direction in which we are headed – greater use of high deductible health plans which are creating even greater personal financial hardships.

The more important message here is that the very best of private plans available – the employer sponsored traditional plans – though better than high deductible plans, are still not good enough. A well designed single payer program – an improved Medicare for All – would remove these financial barriers so that all of us can receive the care we need regardless of our individual incomes or wealth.

The United States Leads Other Nations In Differences By Income In Perceptions Of Health And Health Care

By Joachim O. Hero, Alan M. Zaslavsky and Robert J. Blendon
Health Affairs, June 2017

Abstract

We examined income gaps in the period 2011–13 in self-assessments of personal health and health care across thirty-two middle- and high-income countries. While high-income respondents were generally more positive about their health and health care in most countries, the gap between them and low-income respondents was much bigger in some than in others. The United States has among the largest income-related differences in each of the measures we studied, which assessed both respondents’ past experiences and their confidence about accessing needed health care in the future. Relatively low levels of moral discomfort over income-based health care disparities despite broad awareness of unmet need indicate more public tolerance for health care inequalities in the United States than elsewhere. Nonetheless, over half of Americans felt that income-based health care inequalities are unfair, and these respondents were significantly more likely than their compatriots to support major health system reform — differences that reflect the country’s political divisions. Given the many provisions in the Affordable Care Act that seek to reduce disparities, any replacement would also require attention to disparities or risk taking a step backward in an area where the United States is in sore need of improvement.

From the Study Results

Views Related To Unmet Need And Fairness In Health Care

Perceptions of unmet health care need and income-based fairness norms varied widely across countries. Perceived unmet health care need in the United States was widespread, with 67 percent of respondents responding that “many” people in the country do not have access to the health care they need. This is over 10 percentage points higher than the level in any other country, and over twice the median country rate of 31 percent. Nonetheless, Americans exhibited less moral concern about income-based differences in the quality of health care that people have access to, compared to respondents in the majority of the other countries in our sample. The proportion of respondents who believed that it is unfair that people with higher incomes can afford better health care than people with lower incomes was 54 percent in the United States, compared to the median country rate of 68 percent.

From the Discussion

The wide disparities in health care in the United States are natural consequences of features of its health care system. High out-of-pocket spending combined with fragmented and incomplete insurance coverage that is poorly targeted to meet economic need exacerbate sociodemographic drivers of disparity. These features expose Americans to catastrophic costs, which disproportionately affect low-income and disadvantaged groups. In spite of high poverty rates, the United States spends a smaller proportion of gross domestic product on social safety nets, compared to other high-income nations, and the constellation of services that can help improve health and access to health care is both less comprehensive and less generous.

Health care disparities are one of several interconnected aspects of US society that drive disparities in health. Poor living conditions and nutrition, unhealthy and stressful work environments, large income inequalities, and other factors have been linked to poor health in the United States, and all of them disproportionally affect low-income populations. In this way, wide disparities in health care are related to broader values systems in the United States that must also be addressed if gaps in health status are to be eliminated.

A current in recent research has addressed the role of norms of fairness in Americans’ attitudes about health care and the part those norms play in the divergence between health care policy in the United States and that of other nations. This research has found widespread concern among Americans about income-related health care disparities. The comparative evidence we presented above, while limited, stands in partial contrast to this work. We found that ethical concerns about the fairness of income-based health care disparities were less common in the United States than in most of the other countries in our sample, and that this norm of fairness reflects varied degrees of support for major health system reform. This is the case even though views that unmet need exists are more prevalent in the United States than in any other country in our sample. In all of the other high-income countries that had similarly low or lower concern about income-based health care inequalities than the United States — such as Australia, Finland, Great Britain, and Taiwan — most respondents believed that basic health care needs are being met.

http://content.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

Ouch! Of 32 middle- and high-income countries studied, more Americans recognize that many people in the country do not have access to the health care they need, but Americans exhibit less moral concern about income-based differences in the quality of health care that people have access to, compared to respondents in the majority of the other countries studied.

The authors state, “We found that ethical concerns about the fairness of income-based health care disparities were less common in the United States than in most of the other countries in our sample, and that this norm of fairness reflects varied degrees of support for major health system reform. This is the case even though views that unmet need exists are more prevalent in the United States than in any other country in our sample.”

This suggests that our greatest barrier to enacting single payer reform is that too many Americans do not have ethical concerns about the lack of fairness of our income-based health care disparities. Yet we do not hear expressions of unfairness with our Medicare program. Do you suppose that, if we had an improved Medicare that covered everyone, most Americans might take pride in the fairness our our health care system? Let’s try it and see. It seems to work in other countries.

A Tax Cut Might Be Nice. But Remember the Deficit.

By N. Gregory Mankiw
The New York Times, June 2, 2017

In the debate about federal tax policy, one question looms large: Should we have a tax cut that increases the budget deficit?

President Trump says he wants “a massive tax cut … maybe the biggest tax cut we’ve ever had.” But the Senate majority leader, Mitch McConnell, who is clearly worried about the growing national debt, says tax reform “will have to be revenue-neutral.” The stage is set for another Republican showdown.

The Reagan and Bush tax cuts combined the logic of supply-side economics and of Keynesian stimulus. Supply-siders argue that lower marginal tax rates give people more incentive to work and invest. Keynesians argue that leaving more money in people’s pockets, rather than in government coffers, increases spending and that greater demand for goods and services expands employment. When the government enacts deficit-financed tax cuts, the two channels can work simultaneously.

Yet Mr. Trump faces a vastly different set of circumstances. The economy has not experienced a recent recession.

The main macroeconomic problem the nation faces is slow productivity growth, which in turn leads to slow growth in average incomes. Increased budget deficits would only make this problem worse. They would cause the Fed to raise interest rates even faster than otherwise. Higher interest rates would discourage capital investments, further depressing productivity.

In short, Mr. Trump finds himself not in the position of Ronald Reagan in 1981 or George W. Bush in 2001 but rather of Ronald Reagan in 1986. He should follow the Reagan of the later period and aim for revenue neutrality. He should broaden the tax base, lower rates and reform the tax code to promote saving, investment and growth.

A key question is how revenue neutrality is to be judged. Traditional analyses of the effects of tax proposals rely on what is known as static scoring, a method based on the simple but dubious assumption that changes in the tax code do not alter the path of national income. An alternative approach, called dynamic scoring, accounts for the possibility that lower tax rates will promote growth.

Dynamic scoring is potentially more accurate, but it is also more easily abused by those who want to promote their policies with an unhealthy dose of wishful thinking. Tax cuts rarely pay for themselves.

When judging revenue neutrality, policy makers will need to rely on a credible, impartial arbiter, like the Congressional Budget Office. In this era of alternative facts, it would be far too easy to pass irresponsible tax cuts and hand the bill to future generations.

NYT Reader Comment:

By Don McCanne, M.D.

Why do we limit ourselves to Econ 101 type of considerations, such as Mankiw’s Principles of Economics? The greatest economic problem we have faced in recent decades is the transfer of income and wealth to the top, leaving the rest of us struggling to achieve the American Dream.

Piketty, Saez, Zucman and others have provided us with the data that can lead to only one conclusion. We do not need to reduce taxes on income and eliminate the “death tax” to further benefit the wealthy. We need to increase taxes on high incomes, capital gains, financial transactions and on large estates.

The tax revenues could then be used for social programs such as health, education, better retirement benefits through Social Security, and to improve our infrastructure, thus benefiting all of us. And while we’re at it, let’s cut back on spending on our killing machines that are doing so much harm to people of other nations.

Perhaps the Econ 101 professors need to place a greater emphasis on normative economics.

https://www.nytimes.com…

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Normative economics

Normative economics (as opposed to positive economics) is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be. – Paul A. Samuelson and William D. Nordhaus (2004). Economics, 18th ed.

https://en.wikipedia.org…

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Must or Should?

Greg Mankiw’s Blog, December 9, 2007

One of the things we teach in introductory economics is the distinction between positive and normative statements. It is useful when reading (or writing) op-eds to keep the distinction in mind.

For example, in today’s NY Times, Cornell economics professor Robert Frank writes:

“Top earners have captured the big share of all income and wealth gains during the last three decades. They’re where the money is. If we’re to pay for public services they and others want, they must carry a disproportionate share of the tax burden.”

The first two sentences are correct statements of fact. The third sentence appears to draw a positive inference from them. Interpreted as such, the sentence is just wrong. Is there any reason to think it is impossible for the government to raise adequate revenue with a proportional tax? Not that I know of, and the article gives no indication of why Frank might think otherwise.

Maybe Frank meant to write “should” rather than “must.” In that case, the sentence would have conveyed a personal political opinion, rather than suggesting (incorrectly) a conclusion of economic science. It would have been more clearly labeled as a normative statement.

http://gregmankiw.blogspot.com…

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Essays in Positive Economics

By Milton Friedman
University of Chicago Press (1953)

Confusion between positive and normative economics is to some extent inevitable. The subject matter of economics is regarded by almost everyone as vitally important to himself and within the range of his own experience and competence; it is the source of continuous and extensive controversy and the occasion for frequent legislation. Self-proclaimed “experts” speak with many voices and can hardly all be regarded as disinterested; in any event, on questions that matter so much, “expert” opinion could hardly be accepted solely on faith even if the “experts” were nearly unanimous and clearly disinterested. The conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained. Laymen and experts alike are inevitably tempted to shape positive conclusions to fit strongly held normative preconceptions and to reject positive conclusions if their normative implications – or what are said to be their normative implications – are unpalatable.

Positive economics is in principle independent of any particular ethical position or normative judgments. As Keynes says, it deals with “what is,” not with “what ought to be.”

Normative economics and the art of economics, on the other hand, cannot be independent of positive economics. Any policy conclusion necessarily rests on a prediction about the consequences of doing one thing rather than another, a prediction that must be based – implicitly or explicitly – on positive economics. There is not, of course, a one-to-one relation between policy conclusions and the conclusions of positive economics; if there were, there would be no separate normative science. Two individuals may agree on the consequences of a particular piece of legislation. One may regard them as desirable on balance and so favor the legislation; the other, as undesirable and so oppose the legislation.

https://campus.fsu.edu…

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California’s New Single-Payer Proposal Embraces Some Costly Old Ways

By Kaiser Health News
U.S. News & World Report, June 1, 2017

For years, U.S. officials have sought to move Medicare away from paying doctors and hospitals for each task they perform, a costly approach that rewards the quantity of care over quality. State Medicaid programs and private insurers are pursuing similar changes.

Yet the $400 billion single-payer proposal that’s advancing in the California legislature (SB 562) would restore fee-for-service to its once-dominant perch in California.

“Single-payer has its pros and cons, but if it’s built on the foundation of fee-for-service it will be a disaster,” said Stephen Shortell, dean emeritus of the School of Public Health at the University of California-Berkeley. “It would be a huge step backwards in delivering health care.”

Paul Ginsburg, a health economist and professor at the University of Southern California, agreed and said the legislation reads like something out of the 1960s in terms of how it wants to reimburse providers.

“There’s broad consensus we ought to go from volume to value. This bill ignores all the signs pointing to progress and advocates a system that failed,” he said.

https://www.usnews.com…

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Comment:

By Don McCanne, M.D.

Right now Congress is stumbling along in its efforts to reform health care while getting ready to move on to legislating tax cuts – all in the name of increasing freedom of our markets by reducing the role of government.

Perhaps not understanding it, the politicians are practicing what they would believe to be positive economics – that their policy recommendations define the “what must be.” Yet, in reality, they are supporting normative economics – that their policy recommendations define “what ought to be” from their own policy perspective.

Getting bogged down in the positive economics of markets versus the government leads to narrow, stilted thinking. What “must be” masks what “ought to be.”

In taxes, those with money “must” be allowed to feed their funds into the free market to enhance the economy to benefit all of us (or, actually, to benefit those with funds to invest). Thus the government ”must” not be allowed to confiscate those funds through the tax system.

In our arena – health care – consumer preferences “must” play out in the marketplace in order to enhance the services and products offered by the health care delivery system. The role of government in allocating tax funds “must” be diminished to take the shackles off of the marketplace. So economists would say that positive economics always applies – what must be must be – whereas normative economics is always secondary – merely an expression of what some believe ought to be.

Noted health policy experts Paul Ginsburg and Stephen Shortell provide us with an example in telling us that fee-for-service will be a disaster for single payer (Shortell) and that it has been a system that has failed (Ginsburg). These views are presented as if they were positive economics (must be true) whereas they actually represent normative views in that there are other policies inherent in a well designed single payer system that achieve, in a much more patient-friendly manner, the same goals of containing spending. Ginsburg and Shortell are expressing the view that moving from volume to value “must” include elimination of fee-for-service, when, in reality, they are saying it “ought to.”

What really ought to occur is that the system should be designed to place the patient first, as would be the case in a single payer system – a normative approach that does not violate bona fide positive economics (even though the policy and political communities might reclassify these to meet their own ideological preferences).

For the other issue – taxes – we need to apply normative economics as well, as I explain in the Reader Comments in response to Greg Mankiw’s New York Times article (above). The community at large ought to be placed first.

Long-Term Care in America: Views on Who Should Bear the Responsibility and Costs of Care

The Associated Press-NORC Center for Public Affairs Research, May 2017

Results from the 2017 Long-Term Care trends poll find that two-thirds of Americans age 40 and older feel the country is not prepared for the rapid growth of the older adult population. The Associated Press-NORC Center for Public Affairs Research survey also finds that at the local level, less than half of older Americans say their community is doing a good job of meeting older adults’ needs for nursing homes, assisted living facilities, and home health care aides to provide long-term care. Additionally, a majority of older adults say they would like the federal government to devote a lot or a great deal of effort this year to helping people with the costs of ongoing living assistance.

To help policymakers, health care systems, and families address this issue, research conducted by The AP-NORC Center examines awareness of older Americans’ understanding of the long-term care system, their perceptions and misperceptions regarding the likelihood of needing long-term care services and the cost of those services, and their attitudes and behaviors regarding planning for long-term care.

Overall, about a quarter of adults age 40 and older are able to correctly estimate the national average monthly cost of living in a nursing home, living in an assisted living facility, and hiring a part-time home health care aide.

While already underestimating the costs of most care, only 15 percent of Americans age 40 and older are very or extremely confident that they will have the financial resources to pay for long-term care.

Overall, older Americans have not done much planning for their future or current needs for ongoing assistance. Two-thirds (67 percent) say they have done only a little or no planning at all for their own needs. About a quarter (23 percent) say they have done a moderate amount of planning, and just 1 in 10 say they have done a great deal or quite a bit of planning.

Americans are confused about how they might pay for any needed care. The source that most Americans age 40 and older expect to rely heavily on to pay for ongoing living assistance is Medicare, which 57 percent say they will rely on quite a bit or completely. However, Medicare does not cover many expenses associated with long-term care, including most care in nursing homes, assisted living facilities, or from home health care aides.

Today, 70 percent of older Americans support a government-administered long-term care insurance program, similar to Medicare, a significant jump from the 53 percent who said the same last year.

Though support for a government-administered program for long-term care insurance similar to Medicare is lowest among Republicans, it still receives majority support. Eighty-three percent of Democrats favor such a program compared to 69 percent of independents and 54 percent of Republicans.

http://www.longtermcarepoll.org…

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Comment:

By Don McCanne, M.D.

Americans fear the prospects of long-term care, especially how they would pay for it should it become necessary. This survey reveals that a majority of Democrats, independents and Republicans – 70 percent overall – support a program similar to Medicare as the payment source for long term care.

The nation is ill-prepared for anticipated future needs for long-term care. Currently the most important program to cover these costs is Medicaid, but that requires the indignity of becoming destitute in order to qualify for the program.

Americans are very supportive of our Medicare program and a clear majority supports such a program for covering long-term care. The solution seems obvious; include long-term care under the Medicare program.

Single payer supporters understand that an improved Medicare for all would automatically do this. We should no longer demand destitution for those of modest means as a ticket to long term care.

Variation in Emergency Department vs Internal Medicine Excess Charges in the United States

By Tim Xu, MD, MPP; Angela Park; Ge Bai, PhD, CPA; et al
JAMA Internal Medicine, May 30, 2017

From the Introduction

Patients presenting to different emergency departments (ED) can face widely varying charges for similar care. Hospitals use chargemasters (list of services and their charges) to compile each patient’s bill, but the actual payment depends on the patient’s insurance type and network status. In-network patients and their insurers usually pay discounted amounts, whereas uninsured and out-of-network patients may be liable for the full hospital charges. In 2012, the 50 hospitals in the United States with the highest markups charged patients at least 9.2 times what the Medicare program would pay for care.

In this study, we used physician payment data from the Centers for Medicare & Medicaid Services to study the variation in markups on ED professional services and in relation to markups in internal medicine. We also examined the association between the level of markup and the characteristics of the hospitals and their patient populations.

From the Results

Nationwide, services provided by emergency medicine physicians to Medicare Part B fee-for-service beneficiaries totaled $4 billion in charges and $898 million in Medicare-allowable amounts, representing an overall markup ratio of 4.4 (340% excess charges). By contrast, the overall markup ratio for all services provided by internal medicine physicians was 2.1 (110% excess charges). Markup ratios for common ED services varied widely by procedure code and hospital.

By hospital, the aggregated markup ratio for all ED services ranged from 1.0 to 12.6; the aggregated markup ratio for all internal medicine services ranged from 1.0 to 14.1. Greater ED markup ratios by hospital were associated with for-profit status, greater uninsured population, African American and Hispanic patient populations, and location in the southeastern United States. These associations between markups and hospital characteristics were not present for internal medicine services.

From the Discussion

In this national study of hospital pricing practices in 2013, we found wide variation in excess charges for ED services relative to what Medicare would have paid. Moreover, ED services were generally priced higher than those in the internal medicine department for the same services within a given hospital. Emergency departments with the greatest markups were more likely to be for-profit and serve larger uninsured populations. These findings reinforce the recent interest among states in protecting patients from excess medical charges.

In addition to uninsured patients, insured but out-of-network patients can become subject to chargemaster prices. In the course of negotiations between insurers and physicians over payment rates, patients of physicians who remain out of network may receive a balance bill for the difference between the chargemaster price and the amount paid by the insurer. Out-of-network care can also result from hospitals outsourcing ED and other physician services to private contractors who are not part of the hospital’s insurer network.

Conclusions

Using national Medicare payment data, our study demonstrates the wide variation in the prices EDs charge patients for medical services, which can vary between 1.0 and 12.6 times the Medicare-allowable amount by hospital. Moreover, we found that hospitals typically charge patients more for similar services when performed by an ED physician compared with an internal medicine physician. In this context, the ongoing trends of uninsurance, hospital consolidation, and narrowing insurance networks since implementation of the Affordable Care Act are poised to increase the potential for patient financial harm in the years to come. Now, more than ever, protecting uninsured and out-of-network patients from highly variable hospital pricing should be a policy priority.

http://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

We have long recognized the injustices of emergency department patients being charged higher rates if they are uninsured or if the physicians providing the care are not in the networks of the patients’ insurance plans. This study adds to our understanding by quantifying the extra costs faced by the patients. These charges typically are 4 times  Medicare-allowable rates for the emergency physician and as much as 12 times for the hospital.

These unjust excessive charges would not exist in a well designed single payer system – an improved Medicare for all. Patients would benefit by the elimination of cost sharing, and the professionals and institutions would be paid based on legitimate costs and fair margins. Everyone would benefit except insurers and providers who currently gouge.

Economic Analysis of the Healthy California Single-Payer Health Care Proposal (SB-562)

By Robert Pollin, James Heintz, Peter Arno, and Jeannette Wicks-Lim
Political Economy Research Institute (PERI), University of Massachusetts – Amherst, May 2017

The State of California is considering a bill to create a statewide single-payer health care system. This study provides an economic analysis of the proposed measure, The Healthy California Act (SB-562). The study includes four major sections: 1) Cost Estimate of Universal Health Care Coverage in California; 2) Cost Saving Potential under Healthy California; 3) Financing Healthy California; and 4) Impact on Individual California Families and Businesses.

The primary goal of Healthy California is to provide high-quality health care to all California residents, including those who are presently either uninsured or underinsured. The study finds that the providing full universal coverage would increase overall system costs by about 10 percent, but that the single payer system could produce savings of about 18 percent. The study thus finds that the proposed single-payer system could provide decent health care for all California residents while still reducing net overall costs by about 8 percent relative to the existing system.

We propose two new taxes to generate the revenue required to offset the loss of private insurance spending: a gross receipts tax of 2.3 percent and a sales tax of 2.3 percent, along with exemptions and tax credits for small business owners and low-income families to promote tax-burden equity.

Within this proposed tax framework, Healthy California can achieve both lower costs and greater equity in the provision of health care in California for both families and businesses of all sizes. Thus, net health care spending for middle-income families will fall by between 2.6 – 9.1 percent of income.

Small firms that have been providing private health care coverage for their workers will experience a 22 percent decline in their health-care costs as a share of payroll. The small firms that have not provided coverage will still make zero payments for health care under Healthy California through their gross receipts tax exemption. Medium-sized firms will see their health care costs fall by between 6.8 and 13.4 percent as a share of payroll relative to the existing system. Firms with up to 500 employees will experience a 5.7 percent fall, and the largest firms, with over 500 employees, will experience a 0.6 percent fall as a share of payroll relative to the existing system.

In sum, the establishment of the Healthy California single-payer system will generate financial benefits for both families and businesses throughout the California economy. For families at most income levels and for businesses of most sizes, these financial benefits will be substantial. These benefits are in addition to those that the residents of California will achieve through having universal access to decent health care.

http://www.healthycaliforniaact.org…

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Comment:

By Don McCanne, M.D.

This meticulous economic study of the the Healthy California single-payer health care proposal (SB-562) reveals that it would provide health care for all Californians while reducing net costs for almost all households and businesses. This study is much more credible than the staff committee report released last week, primarily because of the detail in this study and the application of well established health policy science to the analysis.

A multitude of articles based on the cursory staff study have been published stating that total costs and a hypothetical high payroll tax would be outrageous and totally unaffordable. This study lays those claims to rest and should be used to refute the rhetoric of the opponents of single payer reform in California.

In fact, California cannot afford to pass up this opportunity to bring health care to everyone while finally controlling our spending on it.

If you wish to see how a single payer system really could provide health care for everyone while reducing costs for businesses and households alike, you should download the full analysis and study it (link above).