PNHP

Medicare for all really is ‘the only answer’

Medicare for all really is ‘the only answer’

By the Editorial Board
The Capital Times (Madison, Wis.), March 16, 2016

Dr. Quentin Young, one of the greatest economic and social justice campaigners of the modern era, has died at age 92. Young served as a personal physician for the Rev. Martin Luther King Jr. and organized the Medical Committee for Human Rights, which provided medical support for activists during the 1964 Freedom Summer in Mississippi. He helped to shape and advance the call for an understanding of health care not as a commodity but as a human right.

Young was a friend and ally of this newspaper, a source of insight and inspiration for many years, and an ally in our campaigning for universal health care, which dates back to the days when Capital Times founder William T. Evjue was cheering on the efforts of Franklin Delano Roosevelt and Harry Truman to establish a national health care program. Over the years, we celebrated Young’s work and joined him and his dear friends, the late Madison area physicians Gene and Linda Farley, in championing efforts to establish a single-payer “Medicare for all” health care system in the United States.

More than three decades ago, as he was working to forge the Physicians for a National Health Program movement, Young warned of “the corporate takeover of medicine.” As PNHP notes, “he sounded the alarm about the growing encroachment of corporate conglomerates on U.S. health care, noting that giant investor-owned firms were rapidly subordinating the best interests of patients and the medical profession to the maximization of corporate profit.”

To counter the crisis, PNHP said in its statement on the doctor’s death, Young became “the nation’s most eloquent and high-profile spokesperson for single-payer national health insurance, or improved Medicare for all.” He worked closely with an old ally from civil rights movement days, Congressman John Conyers Jr., D-Mich., on behalf of H.R. 676, “The Expanded and Improved Medicare for All Act,” the single-payer health care proposal backed by dozens of House and Senate members. Young gave credit to the efforts of President Obama — a friend and a patient of the physician’s Chicago clinic — to develop and implement the Affordable Care Act. But while he could identify positive elements of the ACA, Young argued it was an inadequate reform that left too many Americans with no coverage or insufficient coverage and that failed to control costs because it maintained an arrangement where “the insurance companies are still going to make their profits.”

Young, who served as PNHP’s national coordinator for more than two decades, remained an outspoken advocate for single-payer to the end. Making his case for “single-payer national health insurance, government-run, based on the tax system,” Young said in a 2004 interview posted on the organization’s website that “universal health care is no longer the best answer; it’s the only answer. There was a time when there were alternatives that might have worked, but that day is passed. We’ve had too much of a transfer of power from patients and physicians, for that matter, to giant corporate interests that are dedicated to the goal of maximizing profits, which accounts for much of the distress in the American health system.”

During the course of the 2016 presidential race, proposals for single-payer reform have taken hits from the campaigns of Hillary Clinton and a number of the Republicans who are seeking the presidency. Clinton has argued that the plan for single-payer offered by Vermont Sen. Bernie Sanders, her opponent for the Democratic presidential nomination, is “an idea that will never, ever come to pass.”

In the Democratic debate on March 10 in Miami, the former secretary of state complained about “Senator Sanders wanting to throw us into a contentious debate over single-payer.” Sanders, who has hailed Young as “a national hero,” replied: “I think if the rest of the world can do it, we can. And by the way, not only are we being ripped off by the drug companies, we are spending far, far more per capita on health care than any other major country on earth. You may not think the American people are prepared to stand up to the insurance companies or the drug companies. I think they are.”

That was the view that Young advanced in his last years, including in his brilliant 2013 autobiography, “Everybody In, Nobody Out: Memoirs of a Rebel Without a Pause.” The doctor wrote: “I’ve never wavered in my belief in humanity’s ability — and our collective responsibility — to bring about a more just and equitable social order. I’ve always believed in humanity’s potential to create a more caring society.”

The Capital Times has embraced that faith since its founding in 1917, but there is no question that our faith was enhanced and extended by our association with Young. We will honor his memory by continuing to be absolute and unequivocal in our championship of the essential understanding that health care must never be undermined by profiteering. It must always be understood as a human right that should be guaranteed for all.

http://host.madison.com/ct/opinion/editorial/editorial-medicare-for-all-really-is-the-only-answer/article_03994471-dd67-5668-8869-e79ea1a45048.html

Kenneth Arrow says single payer is better than any other system

“There Is Regulatory Capture, But It Is By No Means Complete”

Interview of Kenneth J. Arrow
Pro-Market: the blog of the Stigler Center at the University of Chicago Booth School of Business, March 15, 2016

Kenneth J. Arrow, one of the most influential economists of the 20th century, reflects on the benefits of a single payer health care system, the role of government and regulatory capture.

Kenneth J. Arrow requires very little introduction. Very few people, if any, can say they have influenced the development of economic theory in the 20th century as deeply as Arrow, who revolutionized the field of economics with groundbreaking contributions to general equilibrium theory, welfare theory, social choice theory and risk. In 1972, at the age of 51, Arrow won the Nobel Prize in Economics (sharing the prize with John R. Hicks). Arrow was the youngest economist ever to win the prize, a title he still holds to this day.

Born in New York in 1921, the son of Romanian-Jewish immigrants, Arrow’s life and work were profoundly influenced by the experience of growing up during the Great Depression. Over the years, his published papers on a wide variety of subjects, from innovation and monopolies to racial discrimination, information and climate change. In 1963, he published his classic paper on health care, Uncertainty and the Welfare Economics of Health Care, which was the first to show that existing competitive market models cannot be applied to the health care industry. The article effectively created the field of health economics, and is still frequently cited in debates regarding the role of non-market forces and institutions (like government) in the health system.

Q: looking back on your seminal 1963 paper about healthcare industry – it seems that the American health care system has only gotten worse since. Some people claim that it is the worst among developed nations in terms of cost, waste and wrong incentives to physicians, hospitals and research, and influence of special interest groups – producing very high rents, and little value.

Certainly in terms of inefficiency, I don’t think it has improved at all. The system is about as inefficient, and it was pretty inefficient then too. If we look at measurements like cost per capita, compared to comparable countries like Canada or the UK, it got worse. The rather reasonable attempts to improve the delivery, that is to extend health care to more people, have led to a bigger system, and therefore more complexity and more chance for exploitation. We talk about a price system, but that is not what we have. What we have is a system in which one buyer will pay ten times what other buyers will pay for similar medical devices, or services. So the idea of a price system as the source of efficiency fails at the most elementary level.

These things are never simple. You do want incentives for pharmaceutical companies to generate new drugs. Developing drugs is a pretty expensive proposition, and the failure rate is pretty high, so we have to create incentives for companies to innovate. The problem with what’s happening now is that to some extent, because the American market is not uncontrolled and other markets are, we are subsidizing new drugs to other countries.

Q: Is there a way to mitigate this problem?

This is not a problem that’s just confined to the pharmaceutical industry, but I think it’s most intense there. The question of intellectual property goes back several hundred years. Since the 17th century, the basic deal is that in return for the innovation, you give [innovators] monopoly power. That’s the way you pay for the upfront costs and provide incentive. This of course gives rise to monopolies, which is an inevitable conflict. Even Hayek was disturbed about whether intellectual property is really property in the same sense that a house is property.

The truth is it’s very easy to rail against it, but it’s not easy to find a substitute. People have proposed substitutes from time to time, like paying the innovator the social value of the innovation, and insist on free competition after that. But since no one knows how to evaluate the social value, it’s not a very practical answer.

There is no easy way out of this conflict, though a better-regulated system could help. A better bargaining position will improve matters, but you have to be a little careful, because you don’t want to hurt innovation. What you have under the present situation is a great incentive for health providers, hospitals and HMO, to get bigger, because that improves their bargaining position vis-à-vis the insurance companies.

A single payer will have control that will allow it to prevent things like differential pricing from happening. If the government was allowed to use its bargaining power, it would dominate. There will be monopolies, but they would be facing a single payer. A monopoly usually has power because it is the only one facing a large market of diverse individuals.

I’m afraid you’re talking to someone who’s an “on the one hand, on the other hand” type of person, which makes me a poor advocate.

Q: It does sound like you are strongly in favor a single-payer system, though.  Last year you signed, along with 266 other economists, a declaration that called on policymakers around the world to work toward universal health coverage.

I wouldn’t say I’m strongly in favor of a single payer system. I can find objections to it. But I still think it’s better than any other system. However, the idea of permitting private practice must not be ruled out. Similar to the UK, there can be a single payer system which everybody can go to, and private medical practices for those who want. In the UK, private medicine is about 20 percent of the total, so there is this escape valve for those who want it, but also a single payer system that anybody can join.

Q: Perhaps the way to fix the American health care system is simply to adopt the UK model?

I would say the Canadian model, rather than the UK model. But it’s so politically out of the question I don’t even think about it.

Q: So you’re saying that one answer to the influence of special interest groups in the health care system is to have the government intervene in a major way, whether it is through a single payer system or something more akin to the UK model?

That’s right. Of course, George Stigler would say that there could be regulatory capture, but so far it doesn’t seem to have happened really.

Q: Doesn’t the rather-muted regulatory response to phenomena like pharmaceutical price hikes and “evergreening” – making minor tweaks to existing formulations in order to artificially extend patents – suggest at least a possibility of a capture?

There’s no question that every time you have interaction between government and private interests, especially concentrated ones, they’re always going to have power. In this case, I think there’s no alternative.

Medicare particularly has succeeded in imposing price regulations of a pretty detailed nature without too much trouble. Recent regulations regarding readmission rates for Medicare have gone through a surprising lack of opposition. We know that other countries have also succeeded in doing this without too many scandals, even countries that are not thought of as models of good government.

Q: In that 1963 paper you wrote that “the laissez-faire solution for medicine is  intolerable.” 50 years later, do you still believe that to be true?

We don’t have a laissez-faire system. The intervention of the federal government, as measured by expenditures, is growing. It is not a private system at all. Roughly 50 percent of health costs are paid for by the government, and state governments are spending more and more on health. It’s crowding out education. State budget-support for education, especially higher education, is crowded out by two things: health and prisons. Nobody is prepared for the idea of a laissez-faire system, and we never really had one.

https://promarket.org/there-is-regulatory-capture-but-it-is-by-no-means-complete/

Arrow, Kenneth J., “Uncertainty and the Welfare Economics of Medical Care, The American Economic Review, December 1963:
https://www.aeaweb.org/aer/top20/53.5.941-973.pdf

Nobody understands markets and health care better than Nobel laureate Kenneth Arrow who wrote the classic treatise on the topic over half a century ago. Based on his work, it is clear that the government must be involved if we are to improve efficiency in the system as we attempt to expand it to include everyone. So what does Kenneth Arrow think about single payer as a model for health care?

Although he understands that there are some deficiencies in the single payer model, he states, “it’s better than any other system.” He does say that he believes that private practice should be permitted as an option, like they have in the United Kingdom. But when asked if the United States should adopt the UK system, he says, “I would say the Canadian model, rather than the UK model.” That’s interesting in that Canada does not permit health care to be paid for privately if it is covered by their single payer Medicare program (although that continues to be challenged by the Canadian privatizers).

Kenneth Arrow is not an ideologue. He is a gifted, two-handed economist (i.e., looks at the options). He has stated that single payer is better than any other system, and we should listen to him.

Hillary Clinton on high insurance premiums

CNN TV One Democratic Presidential Town Hall

CNN, March 13, 2016

QUESTION (from Teresa O’Donnell, an office coordinator from Powell, Ohio): I have voted for Obama, and then my health insurance skyrocketed from $409 a month to $1,090 a month for a family of four. I know Obama told us that we would be paying a little more, but doubling – over doubling my health insurance cost has not been a little more. It has been difficult to come up with that kind of payment every month. I would like to vote Democratic, but it’s cost me a lot of money, and I’m just wondering if Democrats really realize how difficult it’s been on working class Americans to finance Obama care.

(APPLAUSE)

HILLARY CLINTON:  Wow, Thank you for asking me that, because. May I ask you, before you were buying your family health insurance in the individual family market? Were you getting it through the employer? How were you insured before?

QUESTION:  I was purchasing it privately, because we both had bouts of unemployment.

CLINTON:  So you were going to a broker and buying a health insurance policy.

QUESTION:  Yes.

CLINTON:  And in effect, it nearly tripled after you went on to the exchange and bought a policy under the Affordable Care Act, is that right?

QUESTION:  We could not do that.  It was much more expensive than just purchasing private insurance from the insurance company.

CLINTON:  So you are still buying private insurance directly?

QUESTION:  Yes.

CLINTON:  OK.  Well, first of all, let me say I want very much to get the costs down, and that is going to be my mission, because I do think that for many, many people, but there are exceptions like what you are telling me, having the Affordable Care Act has reduced costs, has created a real guarantee of insurance, because if you’d had a pre-existing condition under the old system, you wouldn’t have gotten affordable insurance.

So it has done a lot of really good things, but, it has become increasingly clear that we are going to have to get the costs down.  And what I would like to see happen for you and your family is that if we can get the co-pays down, the deductibles down, get the prescription drug costs under control, that you would find an affordable plan on your exchange.

And one thing that I would like you to do, and I’m not saying it’s going to make a difference, but I would like you to just go shopping on that exchange.  As I understand it, Ohio has the federal exchange, is that right, Joyce?  Because they did not set up a state exchange.

So you have the federal exchange.  And to go on and keep looking to see what the prices are, because we have to get more competition back into the insurance market.  One thing that I want to work on with my friends from Congress who are here is we’ve got to get more non-profits that are capable of selling insurance back into the insurance market.

You know, Blue Cross and Blue Shield used to be non-profits.  And then they transferred themselves into for-profit companies.  And there was some effort made under the Affordable Care Act to get some competition from non-profit institutions, some of them worked and a lot of them didn’t.

I want to know what we can do, because if you could get a range of insurers, some of who were not-for-profit companies, that would lower costs.

So there is a number of things I am looking at.  And what I want to assure you and your family of is I will do everything I can as president, working with members of Congress where necessary, to try to get the costs down.

But I do want you to keep shopping, because what you are telling me is much higher than what I hear from other families, and so I want to be sure that if there is a better option out there for you, you’re going to be able to take advantage of it. 

And then I’ll work as hard as I can to get the costs down for everybody, and that includes prescription drug costs, which are skyrocketing and increasing costs for everything else.

(APPLAUSE)

http://cnnpressroom.blogs.cnn.com/2016/03/13/full-rush-transcript-hillary-clinton-partcnn-tv-one-democratic-presidential-town-hall/

***

Comment:

By Don McCanne, M.D.

Hillary Clinton says that one of her proposals is to bring health care costs down. This town hall exchange is significant because it reveals the depth, or lack thereof, as to how she might accomplish this.

She says that she would lower co-pays and deductibles. But the question was about high premiums, and the market is using higher deductibles and other cost sharing to lower premiums. Lowering deductibles will cause higher premiums, not lower.

She says that we need more non-profit insurers like Blue Cross and Blue Shield used to be. But if you compare premiums in California for for-profit Anthem Blue Cross and non-profit Blue Shield, they are the same. The non-profit insurers share the same inefficiencies and administrative excesses as the for-profits.

She says that she wants more competition in the exchanges so that less expensive plans will be available for diligent shoppers, but, again, lower premiums are possible only by reducing coverage – higher deductibles, less accessible narrower networks, etc.

Private plans competing in the marketplace is what we already had before the Affordable Care Act was passed. We merely continued the same system. Adding exchanges did very little except to enable the administration of subsidies and credits for lower-income individuals. For those not eligible for government subsidies and credits, nothing was done to control the very high costs of health care and the insurance products that pay for that care.

Unfortunately, Hillary’s proposal is more of the same. Perpetuate the fiction of lower prices through competition while manipulating the insurance products to have either lower premiums or poorer coverage. In fact, included in ACA is the excise tax (Cadillac tax) which is designed to prevent the marketing of full benefit plans. Making health care less affordable through greater out-of-pocket cost exposure is the exact opposite of where Clinton says she wants to take us. The problem is that the current financing infrastructure will not allow us to go there.

If we want affordable care for everyone, we need a single payer improved Medicare-for-all which will control costs and make the financing more equitable.

Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidates for public office.

Why business should favor a single-payer plan

By Tom DeLoe, Ph.D.
Gettysburg (Pa.) Times, March 10, 2016

If I were in business, I would favor a single-payer health plan. Instead of paying private insurance companies monthly premiums for health care coverage, each individual and business would pay the government through modest taxes. The government would negotiate health care services and costs for all of its citizens and pay providers directly for their services. Your business would no longer be responsible for the health care of your employees. Your business would pay a 10 percent payroll tax on your payroll directly to the government, and the health care of your employees would be provided by participating doctors and hospitals. So let’s look at what a single-payer system could do for you, your business, and your bottom line.

As a business leader, you want to control your business environment as much as possible. This means controlling costs, building a good product or service, and beating the competition. There are at least four principles that you must strive to achieve in order to survive in a competitive business environment. They are efficiency, transparency, predictability, and the building of core functions. Let’s look at each of these principles, and how they relate to your business and our present health care system.

Efficiency means getting the best value or result with the least cost in terms of time and money. If you are not efficient, you risk reducing your profits or worse facing bankruptcy. So how efficient are you now in controlling your health care costs? Let me give you a scenario and see if this rings a bell. You keep spending more on health care yearly and getting less coverage. The prices go up but the value of the coverage erodes year after year. So what do you do? You can shift some of the costs to your employees. You can try to negotiate harder with the insurance companies, but that is difficult given the resources of the insurance industry. You can also reduce the health benefits for your employees. You may have tried all or some of these strategies, but the bottom line is you are continuing to lose value while paying more. This is not the business definition of efficiency.

Transparency means clarity and openness. As a business, you want to know exactly what you are buying and at what cost. Also, if you are bidding for products or services, you want to know is the playing field equal for everyone? If your environment is transparent, you can effectively plan and implement your business model in a strategic manner. So how transparent are health care costs? The short answer is there is no transparency. No one knows how health care costs are determined. Hospital and pharmaceutical costs are all opaque. So how do you negotiate your health care premiums under these conditions? If you are like most businesses, you pay and hope you get appropriate services. This is not the transparency you are looking for.

Predictability means that you have some indications of what your business environment looks like. Ideally, you want a stable environment where prices do not fluctuate wildly. Without stability and predictability, you may risk losing business to competitors. Also, stability and predictability help you plan and implement your business model efficiently and effectively. So how predictable and stable are health care costs? They are in fact chaotic and swing upward every year. Providers move in and out of plans yearly. Also, services and drug coverages change constantly. As a business person, you try to keep up with the changes, but it is difficult because health care is so complex. How can your business plan effectively when there it is so much unpredictability? This is a constant challenge.

Core functions are the critical functions of your business. They are the products or services that you provide. Whether your core function is construction, software design, sales, or marketing, they are the bedrock of your business. They are where you want to concentrate your efforts to build your skills and expertise. The better you perform your core functions, the better you are able to compete. So is providing health care coverage a core function? No, it is not. However, because health care is so expensive and so complex, you must expend time and energy on it. Some examples of time spent may be: reviewing multiple health plans yearly; assessing how the Affordable Care Act affects you and your employees; and determining whether the business should self-insure or drop health care all together? These activities are not core functions. Spending excessive time on issues like these may not bring more value to your business. They certainly impede the concentration on your core functions, and that does not help the bottom line.

 So you are paying a lot of money and spending excessive time on health care. Coverage and services are reduced each year, but you continue to pay more. Health care is eating into profits inexorably. You are trying your best, but you simply cannot control the beast. Your employees are complaining about dwindling coverage and no one is happy. How can you compete effectively in this kind of environment? Let’s look at the single-payer health care system and how it might contribute to the four business principles and thus your bottom line.

Single payer is an efficient system because everyone pays into it, and the government in turn negotiates health care services for everyone. Everyone – patient or provider – is part of the system. Because it is one system, overhead costs are low (just like with Medicare, a time-tested, government-run health care program that seems to work pretty well for today’s seniors). While single-payer systems have different iterations, you as a business may not be involved in the complex process of providing health care at all. Your business would pay the 10 percent tax on your payroll directly to the government. The government handles the rest.

A major issue for you as a business leader is: will a single-payer health system cost more than what you are presently paying? A lot of experts, such as Steffie Woolander and David Himmelstein, say no. Writing in February 5, 2016, in the Philadelphia Inquirer, they noted that when you add up all of the premiums and taxes paid to fund our health care system, the single-payer system will not cost more. In fact, the taxes to pay for it will be fully offset by the savings incurred from eliminating private insurance premiums. Remember also, the costs of workman’s compensation and retirees’ health care costs would also be eliminated under the single-payer system. That’s because all individuals are provided for health care through their own modest (3 percent of income) tax. The result is most businesses would pay less than what they are paying now.

We know that health care costs are not fully transparent, but the single-payer system offers the best opportunity to achieve greater openness. Because everyone is in one system, the government would be in a strong position to negotiate with the large health care industries like the pharmaceutical industry. As an example, the Veterans Administration negotiates drugs prices for veterans. As a result, our veterans pay some of the cheapest drug prices. Also, under the single-payer system, administrative overhead would be low (probably ranging from 1 to 6 percent). Insurance companies average 20-35 percent. The power to negotiate prices and lower administrative overhead similarly have kept Medicare premiums for seniors relatively steady for several years.

Because the government would take the lead in acting as the single payer for health care services, you could then concentrate on your business core functions. You would not need to expend time learning the intricacies of the health care insurance industry. Health care services would be negotiated and paid for through the government. This would give you time to concentrate on your business model and your bottom line.

Richard Master, CEO of MSC Industries, a leading supplier of wall and poster frames located in Easton, Pennsylvania, became a recent convert to the single-payer system. Speaking in 2015 at a Chicago conference of Physicians for a National Health Program, he stated, “My company pays $1.5 million a year to provide access to health care for our workers and their dependents.” When he found out that approximately 33 percent of every health care premium dollar was being spent on administrative costs, he was “shocked.” He then reached out to a couple of award winning film makers to produce “Fix It, Healthcare at a Tipping Point.” This film makes the corporate case for scrapping the current multi-payer system and converting to single payer.

Representative Pamela DeLissio (D-Montgomery/Philadelphia) has recently introduced House Bill (HB) 1688, labeled the Pennsylvania Health Care Plan. The proposed legislation sets out a blueprint to lower health care costs through a single payer-system. It does this while retaining the freedom and flexibility to choose your health care providers. For more information on single payer health plans in Pennsylvania, go to: www.Healthcare4allPa.org.

Single payer is certainly not nirvana. There will still be problems within our health care system. However, single payer represents an efficient, transparent, and cost-effective way to achieve health care. It would also provide a level playing field for business to compete in a global economy. That would be good for business and for us as citizens, and that is the bottom line.

Tom DeLoe, Ph.D., is a member of the Democracy for America Healthcare Task Force.

http://www.gettysburgtimes.com/opinion/staff_columns/article_98e786a8-fcb7-513d-9a1c-2899162204f2.html

Hillary Clinton on high insurance premiums

CNN TV One Democratic Presidential Town Hall

CNN, March 13, 2016

QUESTION (from Teresa O’Donnell, an office coordinator from Powell, Ohio): I have voted for Obama, and then my health insurance skyrocketed from $409 a month to $1,090 a month for a family of four. I know Obama told us that we would be paying a little more, but doubling – over doubling my health insurance cost has not been a little more. It has been difficult to come up with that kind of payment every month. I would like to vote Democratic, but it’s cost me a lot of money, and I’m just wondering if Democrats really realize how difficult it’s been on working class Americans to finance Obama care.

(APPLAUSE)

HILLARY CLINTON:  Wow, Thank you for asking me that, because. May I ask you, before you were buying your family health insurance in the individual family market? Were you getting it through the employer? How were you insured before?

QUESTION:  I was purchasing it privately, because we both had bouts of unemployment.

CLINTON:  So you were going to a broker and buying a health insurance policy.

QUESTION:  Yes.

CLINTON:  And in effect, it nearly tripled after you went on to the exchange and bought a policy under the Affordable Care Act, is that right?

QUESTION:  We could not do that.  It was much more expensive than just purchasing private insurance from the insurance company.

CLINTON:  So you are still buying private insurance directly?

QUESTION:  Yes.

CLINTON:  OK.  Well, first of all, let me say I want very much to get the costs down, and that is going to be my mission, because I do think that for many, many people, but there are exceptions like what you are telling me, having the Affordable Care Act has reduced costs, has created a real guarantee of insurance, because if you’d had a pre-existing condition under the old system, you wouldn’t have gotten affordable insurance.

So it has done a lot of really good things, but, it has become increasingly clear that we are going to have to get the costs down.  And what I would like to see happen for you and your family is that if we can get the co-pays down, the deductibles down, get the prescription drug costs under control, that you would find an affordable plan on your exchange.

And one thing that I would like you to do, and I’m not saying it’s going to make a difference, but I would like you to just go shopping on that exchange.  As I understand it, Ohio has the federal exchange, is that right, Joyce?  Because they did not set up a state exchange.

So you have the federal exchange.  And to go on and keep looking to see what the prices are, because we have to get more competition back into the insurance market.  One thing that I want to work on with my friends from Congress who are here is we’ve got to get more non-profits that are capable of selling insurance back into the insurance market.

You know, Blue Cross and Blue Shield used to be non-profits.  And then they transferred themselves into for-profit companies.  And there was some effort made under the Affordable Care Act to get some competition from non-profit institutions, some of them worked and a lot of them didn’t.

I want to know what we can do, because if you could get a range of insurers, some of who were not-for-profit companies, that would lower costs.

So there is a number of things I am looking at.  And what I want to assure you and your family of is I will do everything I can as president, working with members of Congress where necessary, to try to get the costs down.

But I do want you to keep shopping, because what you are telling me is much higher than what I hear from other families, and so I want to be sure that if there is a better option out there for you, you’re going to be able to take advantage of it.

And then I’ll work as hard as I can to get the costs down for everybody, and that includes prescription drug costs, which are skyrocketing and increasing costs for everything else.

(APPLAUSE)

http://cnnpressroom.blogs.cnn.com/2016/03/13/full-rush-transcript-hillary-clinton-partcnn-tv-one-democratic-presidential-town-hall/

Hillary Clinton says that one of her proposals is to bring health care costs down. This town hall exchange is significant because it reveals the depth, or lack thereof, as to how she might accomplish this.

She says that she would lower co-pays and deductibles. But the question was about high premiums, and the market is using higher deductibles and other cost sharing to lower premiums. Lowering deductibles will cause higher premiums, not lower.

She says that we need more non-profit insurers like Blue Cross and Blue Shield used to be. But if you compare premiums in California for for-profit Anthem Blue Cross and non-profit Blue Shield, they are the same. The non-profit insurers share the same inefficiencies and administrative excesses as the for-profits.

She says that she wants more competition in the exchanges so that less expensive plans will be available for diligent shoppers, but, again, lower premiums are possible only by reducing coverage – higher deductibles, less accessible narrower networks, etc.

Private plans competing in the marketplace is what we already had before the Affordable Care Act was passed. We merely continued the same system. Adding exchanges did very little except to enable the administration of subsidies and credits for lower-income individuals. For those not eligible for government subsidies and credits, nothing was done to control the very high costs of health care and the insurance products that pay for that care.

Unfortunately, Hillary’s proposal is more of the same. Perpetuate the fiction of lower prices through competition while manipulating the insurance products to have either lower premiums or poorer coverage. In fact, included in ACA is the excise tax (Cadillac tax) which is designed to prevent the marketing of full benefit plans. Making health care less affordable through greater out-of-pocket cost exposure is the exact opposite of where Clinton says she wants to take us. The problem is that the current financing infrastructure will not allow us to go there.

If we want affordable care for everyone, we need a single payer improved Medicare-for-all which will control costs and make the financing more equitable.

Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidates for public office.

Burden of reporting quality measures

US Physician Practices Spend More Than $15.4 Billion Annually To Report Quality Measures

By Lawrence P. Casalino, David Gans, Rachel Weber, Meagan Cea, Amber Tuchovsky, Tara F. Bishop, Yesenia Miranda, Brittany A. Frankel, Kristina B. Ziehler, Meghan M. Wong and Todd B. Evensong
Health Affairs, March 2016

Abstract

Each year US physician practices in four common specialties spend, on average, 785 hours per physician and more than $15.4 billion dealing with the reporting of quality measures. While much is to be gained from quality measurement, the current system is unnecessarily costly, and greater effort is needed to standardize measures and make them easier to report.

**

The number of quality measures directed at US health care providers by external entities such as Medicare, Medicaid, and private health insurance plans has increased rapidly during the past decade. These measures, such as rates of mammography screening for women or of testing for cholesterol or hemoglobin A1c levels for diabetes, are used to provide publicly reported information for patients and as a basis for financial “pay-for-performance” incentives to physicians. At least 159 measures of outpatient physician care are now publicly available. The movement toward accountable care organizations, the federal Sustainable Growth Rate “fix” legislation, and the private-sector Catalyst for Payment Reform coalition will further emphasize measurement of physician performance.

Anecdotally, dealing with these measures imposes a considerable burden on physician practices in terms of understanding the measures, providing performance data, and understanding performance reports from payers, but the extent of that burden has not been quantified. We present results from a national survey of practices representing three common physician specialty and multispecialty practices.

From the Study Results

On average, physicians and staff spent a total of 15.1 hours per physician per week dealing with quality measures, with the average physician spending 2.6 hours per week and other staff spending 12.5 hours.

By far the most time — 12.5 hours of physician and staff time per physician per week — was spent on “entering information into the medical record ONLY for the purpose of reporting for quality measures from external entities.”

The time spent by physicians and staff translates to an average cost to a practice of $40,069 per physician per year.

From the Discussion

There is much to gain from quality measurement, but the current system is far from being efficient and contributes to negative physician attitudes toward quality measures. Improving the system rapidly will be difficult. Obstacles include the fragmented US health care system, lack of interoperability across EHRs, lack of EHR functionalities to facilitate retrieval of data for quality measures, the cost of change to external entities and to providers, and opposition from vested interests. Increasing efforts to reduce the number of measures and to standardize their use across external entities are being made by the National Quality Forum, the Institute of Medicine, and America’s Health Insurance Plans, as well as by federal agencies such as the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality. Our data suggest that US health care leaders should make these efforts a priority.

http://content.healthaffairs.org/content/35/3/401.abstract

***

Comment:

By Don McCanne, M.D.

Quality measures in health care have proven to be burdensome, consuming excess resources in both time and money. This study quantifies those costs.

Not only do these quality games waste resources, they have become a significant contributor to physician burnout.

Wouldn’t it be far better to devote these extra resources to improving access to actual health care for the uninsured and underinsured who are now being all too often left out? It would be automatic under a single payer Medicare for all program.

Burden of reporting quality measures

US Physician Practices Spend More Than $15.4 Billion Annually To Report Quality Measures

By Lawrence P. Casalino, David Gans, Rachel Weber, Meagan Cea, Amber Tuchovsky, Tara F. Bishop, Yesenia Miranda, Brittany A. Frankel, Kristina B. Ziehler, Meghan M. Wong and Todd B. Evensong
Health Affairs, March 2016

Abstract

Each year US physician practices in four common specialties spend, on average, 785 hours per physician and more than $15.4 billion dealing with the reporting of quality measures. While much is to be gained from quality measurement, the current system is unnecessarily costly, and greater effort is needed to standardize measures and make them easier to report.

**

The number of quality measures directed at US health care providers by external entities such as Medicare, Medicaid, and private health insurance plans has increased rapidly during the past decade. These measures, such as rates of mammography screening for women or of testing for cholesterol or hemoglobin A1c levels for diabetes, are used to provide publicly reported information for patients and as a basis for financial “pay-for-performance” incentives to physicians. At least 159 measures of outpatient physician care are now publicly available. The movement toward accountable care organizations, the federal Sustainable Growth Rate “fix” legislation, and the private-sector Catalyst for Payment Reform coalition will further emphasize measurement of physician performance.

Anecdotally, dealing with these measures imposes a considerable burden on physician practices in terms of understanding the measures, providing performance data, and understanding performance reports from payers, but the extent of that burden has not been quantified. We present results from a national survey of practices representing three common physician specialty and multispecialty practices.

From the Study Results

On average, physicians and staff spent a total of 15.1 hours per physician per week dealing with quality measures, with the average physician spending 2.6 hours per week and other staff spending 12.5 hours.

By far the most time — 12.5 hours of physician and staff time per physician per week — was spent on “entering information into the medical record ONLY for the purpose of reporting for quality measures from external entities.”

The time spent by physicians and staff translates to an average cost to a practice of $40,069 per physician per year.

From the Discussion

There is much to gain from quality measurement, but the current system is far from being efficient and contributes to negative physician attitudes toward quality measures. Improving the system rapidly will be difficult. Obstacles include the fragmented US health care system, lack of interoperability across EHRs, lack of EHR functionalities to facilitate retrieval of data for quality measures, the cost of change to external entities and to providers, and opposition from vested interests. Increasing efforts to reduce the number of measures and to standardize their use across external entities are being made by the National Quality Forum, the Institute of Medicine, and America’s Health Insurance Plans, as well as by federal agencies such as the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality. Our data suggest that US health care leaders should make these efforts a priority.

http://content.healthaffairs.org/content/35/3/401.abstract

Quality measures in health care have proven to be burdensome, consuming excess resources in both time and money. This study quantifies those costs.Not only do these quality games waste resources, they have become a significant contributor to physician burnout.

Wouldn’t it be far better to devote these extra resources to improving access to actual health care for the uninsured and underinsured who are now being all too often left out? It would be automatic under a single payer Medicare for all program.

What is Meant by ‘Single-Payer’ in the Current Discussion of Health Care Reforms During the Primaries?

By Vicente Navarro, M.D.
CounterPunch, March 10, 2016

Single-payer means that most of the funds used to pay for medical care are public, that is, they are paid with taxes. The government, through a public authority, is the most important payer for medical care services and uses this power to influence the organization of health care. The overwhelming majority of developed countries have one form or another of a single-payer system. The US is the only country that does not have a single-payer system. This is one reason why medical care is so expensive (the US spends $9,698 per capita in medical care, much more than any other country; Sweden spends $5,000, Germany $4,720, Canada $4,430, France $4,120, the UK $3,240, and Japan $3,240); inefficient (by far, the US has the highest percentage of unnecessary medical procedures, including surgery, in the developed world); and extremely unpopular (nearly 40% of the US population believes the country’s medical care should be reformed completely, vs. only 12% of Canadians and British). US medical care is also extremely cruel and insensitive. Almost 40% of people with terminal conditions, which means they are dying, worry about how they or their families are going to pay for their care.

Why is the US in this situation?

The usual answer is that the majority of funding is private: 48% of funding is public and the majority, or 52%, is private. These percentages, however, are misleading. David Himmelstein and Steffie Woolhandler, founders of Physicians for a National Health Program, have shown that taking into account the subsidies the government pays to health insurance companies through tax exemptions for their premiums, the overwhelming funding of health services is public.

Why, if health funding is public, do we still have the situation I described?

This situation exists because the majority of medical care is managed by insurance companies whose primary objective is to make money for their managers and stockholders. The health insurance industry makes huge amounts of money, and health insurance company CEOS are among the best paid individuals in this country. Steve Hemsley, CEO of United, makes an annual compensation of $66 million, or $254,328 a day. And he is no exception. There is an enormous amount of administration costs to cover the expenses of administrators. Since 1990, the number of administrators (i.e., those involved in paper shuffling) has increased almost 60 times faster than the number of medical professionals.

The other sector of the US medical system that also makes a huge amount of money is the pharmaceutical industry, one of the most profitable businesses in the US, with profit rates five times higher than the profit rate of the median Fortune 500. One reason the industry is so profitable is that it basically sets the prices of drugs it sells to the government. By law, the government has to accept the price defined by the pharmaceutical industry. This scandalous situation happens nowhere else in the Western world.

But the explanation usually provided by the media is that people like the system as it is.

That is not true. The US has the largest percentage of citizens profoundly unhappy with their country’s medical care system. Almost 35% of people indicate that the medical care system should be reformed completely. Canada only has 12% of people who feel that way. Since 2009, the majority of people (54%) have preferred to have a national medical care system that is publicly funded. Even a higher percentage, 77%, believe the government should provide quality medical coverage to all adults.

Could the reason that medical care is so expensive in the US be due to the fact that it is used more frequently in the US than in other countries?

No. The facts show otherwise. The US has one of the lowest rates of physician visits per capita (4 per year), lower than Denmark (4.5), the UK (5), France (6.4), Australia (7.3), Canada (7.7), and Japan (12.6), to name a few.

What about having more health professionals? Could this be the reason for higher expenditures?

No. As a matter of fact, the number of health professionals, like nurses, is smaller in the US than in other countries with a comparative level of economic development. In the US, there are 11.1 nurses per 1,000 individuals. Ireland has 12.4, Germany 12.8, Australia 12.8, Denmark 17.6, and Norway 19.9, among others.

Could it be that the US population uses hospitals more frequently than citizens in other countries?

Again, no. Hospitalized days per person in the US are one of the lowest among countries of comparable economic development, at 0.6 days per year, less than the UK (0.7 days), Australia (0.8 days), France (0.9 days), and Switzerland (0.9 days).

Could it be because we have a higher percentage of elderly people, who in general utilize health services more than other age groups?

Again this argument does not have any validity, because the percentage of people who are 65 years and older is lower than the percentage in similar countries. In the US, this group constitutes 14.5% of the population, while in Canada it is 15.6%, the UK 17.6%, France 17.7%, Sweden 19.3%, Germany 20.8%, Italy 21.4%, and Japan 26.0%. In all these countries, the utilization of medical services is much larger, and the percentage of elderly is also much larger. At the same time, medical care expenditures are much lower, while providing more extensive health benefits coverage than in the US.

What should be done?

The solution is fairly easy to see. We can see in other countries what should be done in the US. Look, for example, to Canada. The great advantage of Canada is that our neighboring country used to have the same system of funding as the US, including the same insurance companies. But it decided to change, establishing a national medical care program that could be funded publicly, using the power of being the single-payer for services to influence the organization of health services, including doctors’ offices and hospitals, which continued to be, for the most part, in the private sector. The system eliminated the insurance companies as intermediaries and was able to provide more comprehensive coverage at lower costs than in the US.

How did they do it?

Fairly simple. Employers and employees stopped paying premiums to insurance companies and, instead, paid directly to the public authority, which paid the providers. Rather than paying premiums to insurance companies, they paid taxes to the public authority, which is the entity directly negotiating with providers.

But what about candidates in the primaries who say that with single-payer, people will pay higher taxes?

Yes, this will indeed be the case. But what those who criticize single-payer do not say is that while people will pay higher taxes, these taxes will be a great deal lower than the premiums for which the taxes will be substituting. In other words, the American population will be paying considerably less and will gain considerably more. That is the reality that they do not mention.

Where will the money be coming from? Where will the savings originate?

Savings will originate from many sources. One will be the reduction of outrageous overhead costs of the insurance companies that go to pay for large CEO salaries, marketing, large administrative staffs, and large infrastructure. The US spends $829 per capita in insurance overhead alone. Canada’s overhead for administrating its medical care system is only $160 per capita. Imagine the amount of savings if we were to have a single-payer system like Canada. Another source of savings is the considerable decline in the prices in pharmaceuticals. The list of potential savings is enormous.

Why can we not have a similar program?

Because the 1% of the corporate class, or what is being called the billionaire class, has enormous power, unparalleled in any other country. In the US, it is not only the funding of medicine that is privatized, but also the electoral process. Most of the money used by candidates for public office comes from the business class, including the insurance companies. This is the root of the problem, because the billionaire class does not want to have a national health program, and they control the executive and legislative branches of the federal government.

And why do they not want a national health system?

The health insurance-based system allows the class of employers to control the workers and employees who work for them. Remember that when workers are fired, they lose not only their salary but also the medical care coverage of their family. This is one reason the US has the lowest number of working days lost due to strikes. The current dependency of health care coverage on employment is very useful to the class of employers in imposing labor discipline. The employer class has influence in the US Congress.

Another group within the billionaire class that benefits from and fights to maintain the current system is, of course, the insurance companies, who make a lot of money from the medical care system. The class alliance between industrial capital and financial capital has been critical for the maintenance of the current system.

What could be done?

The working population of this country, which has different and frequently opposed interests to the billionaire class, has to mobilize to be able to change the political system and forbid the country’s billionaire class from buying its political class. This mobilization, through the development of socialist, class-based parties, must take place to be able to reach a national health program. The experience of Canada is particularly relevant. It was a socialist party that initiated the single-payer in the province of Saskatchewan. As in the majority of countries that have single-payer, the socialist parties were the ones that introduced policies that influenced single-payer systems.

Is this possible in the US?

It is difficult, but not impossible. The primary problem is private funding of the electoral process, which corrupts democracy to the bone. Another problem is the lack of proportional representation that imposes a bi-party system: the Republican and Democratic Parties. The Republican Party today is a very conservative party, to put it mildly. The Democratic Party was rooted in the New Deal Transition, but has distanced itself from that tradition and has been moving more to the right. Neither of them are left-wing parties. Actually, very few people seem to know that the Democratic Party belongs, as an observer, to the International Association of Liberal Parties. These parties have been funded in each country by their “employer class” (“liberal” in Europe has a very different meaning than in the US; “liberal” in Europe is someone like President Reagan, the opposite of what it means in the US, where “liberal” is like Reverend Jesse Jackson Senior, whose policies are more similar to European social democracy). This fact shows you the nature of the challenge. The supposedly left party in the US is to the right of the Conservative Parties in many European countries. There is not a major socialist party in the US, and we pay a cost for it. This is not a partisan observation. It is a scientific one. The evidence for this is overwhelming.

Most of the facts presented in this Q&A are from the Physicians for a National Health Program resources.

Vicente Navarro, M.D., is professor of Public and Social Policy in The John Hopkins University USA and the Pompeu Fabra University Catalonia, Spain. He is also the director of the JHU-UPF Public Policy Center in Barcelona, Spain. Professor Navarro has been adviser to many national organizations and international organizations, including the WHO and the UN. He was a member of the White House Health Care Task Force in 1993 and senior adviser to Jesse Jackson’s Campaign in the Democratic Primaries in 1984 and 1985.

http://www.counterpunch.org/2016/03/10/what-is-meant-by-single-payer-in-the-current-discussion-of-health-care-reforms-during-the-primaries/

PNHP note: Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

‘Cadillac tax’ hits middle class hardest

The “Cadillac Tax” on Health Benefits in the United States Will Hit the Middle Class Hardest

Refuting the Myth That Health Benefit Tax Subsidies Are Regressive

By Steffie Woolhandler, David U. Himmelstein
International Journal of Health Services, Online March 9, 2016

Abstract

U.S. employment-based health benefits are exempt from income and payroll taxes, an exemption that provided tax subsidies of $326.2 billion in 2015. Both liberal and conservative economists have denounced these subsidies as “regressive” and lauded a provision of the Affordable Care Act — the Cadillac Tax — that would curtail them. The claim that the subsidies are regressive rests on estimates showing that the affluent receive the largest subsidies in absolute dollars. But this claim ignores the standard definition of regressivity, which is based on the share of income paid by the wealthy versus the poor, rather than on dollar amounts. In this study, we calculate the value of tax subsidies in 2009 as a share of income for each income quintile and for the wealthiest Americans. In absolute dollars, tax subsidies were highest for families between the 80th and 95th percentiles of family income and lowest for the poorest 20%. However, as shares of income, subsidies were largest for the middle and fourth income quintiles and smallest for the wealthiest 0.5% of Americans. We conclude that the tax subsidy to employment-based insurance is neither markedly regressive, nor progressive. The Cadillac Tax will disproportionately harm families with (2009) incomes between $38,550 and $100,000, while sparing the wealthy.

http://joh.sagepub.com/content/early/2016/03/08/0020731416637163.abstract

PNHP press release:
https://www.pnhp.org/news/2016/march/‘cadillac-tax’-on-health-benefits-will-hit-middle-class-hardest-study

***

Comment:

By Don McCanne, M.D.

The “Cadillac tax” is an excise tax on premiums of more expensive employer-sponsored health plans. It was included in the Affordable Care Act partly as a revenue source to help pay for ACA, partly to offset the tax subsidies for employer-sponsored insurance that were more generous for higher income individuals, and partly to reduce the incentive to purchase more insurance than necessary under the theory that making patients more sensitive to health care costs will prevent spending on supposedly excessive health care services (certainly a contentious point).

Because of the high costs of health care, we do need funding mechanisms that result in a transfer to those less able to pay. The Cadillac tax is a problem because, instead of disproportionately assessing the very wealthy, it impacts primarily working families. Not only is the tax unfair, the health plans will likely have their benefits reduced in an effort to escape the taxes.

In a PNHP press release (link above), Steffie Woolhandler, one of the co-authors of the report, stated, “Taxpayers should be paying directly for health care through Medicare-for-All, not indirectly through tax subsidies to private insurance. However, removing the tax subsidies – as Obamacare will do – without setting Medicare-for-All in place is a step backwards. It’s shameful that economists have provided cover for this tax that will hit middle-class families and largely spare the wealthy.”

The Cadillac tax is just one more example of the flawed policy patches required simply because the architects of reform decided to build on our current dysfunctional, fragmented financing system instead of replacing it with a more efficient, effective and equitable single payer Medicare-for-all program. That doesn’t mean that we have to live with our highly flawed system. We can still change it.

‘Cadillac tax’ on health benefits will hit middle class hardest: study

Affordable Care Act’s provision to tax employment-based health benefits will disproportionately harm families with incomes between $38,550 and $100,000, while sparing the wealthy

FOR IMMEDIATE RELEASE, March 11, 2016
Contact: Mark Almberg, PNHP communications director, 312-782-6006, mark@pnhp.org

Although both liberal and conservative economists have denounced the longstanding exemption of employment-based health benefits from taxes as tantamount to a “regressive” tax subsidy that unfairly favors the rich, and have lauded a provision of Affordable Care Act that will impose a hefty tax on costlier (“Cadillac”) benefit packages, those who stand to be hit hardest by the new provision are middle-income families.

That’s the chief finding of a new study by Drs. Steffie Woolhandler and David U. Himmelstein, professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School. Their article was published this week in the International Journal of Health Services.

“Taxpayers should be paying directly for health care through Medicare-for-All, not indirectly through tax subsidies to private insurance,” said Woolhandler. “However, removing the tax subsidies – as Obamacare will do – without setting Medicare-for-All in place is a step backwards. It’s shameful that economists have provided cover for this tax that will hit middle-class families and largely spare the wealthy.”

“Most Americans are covered by employment-based health insurance,” Woolhandler and Himmelstein write in their study. “Both employers’ and employees’ payments for such coverage are exempt from income and payroll taxes, an exemption that provided a tax subsidy of $326.2 billion in 2015.

“For years, economists and health policy analysts have criticized these subsidies on two grounds, claiming they (1) encourage over-insurance, resulting in the frivolous use of unneeded care, and (2) that the subsidies are regressive, that is, disproportionately benefiting the rich.”

These claims, they say, lay behind the so-called Cadillac tax provision of the ACA, which would impose a 40 percent, nondeductible excise tax on employment-based plans that exceed $10,200 for individuals or $27,500 for family coverage in 2018 (now set to take effect in 2020).

Because the upper limit on the cost of such plans “will be indexed to overall inflation rather than to health care inflation (which is almost always faster), over time more and more employee groups will be hit by the tax, or by a cut in benefits to avoid it.”

The authors note that the new tax provision has been sharply criticized by labor groups and some businesses.

To calculate the impact of the Cadillac tax on various segments of the U.S. population, the authors drew upon a key 2009 study by economist Jonathan Gruber, who helped design the tax, and data from the U.S. Census Bureau, the Robert Wood Johnson Foundation and the World Top Incomes Database. They break out the bulk of their findings by family income quintiles, with an accompanying table and chart.

As to the claim that new levy will make the tax subsidy less “regressive,” the authors flatly deny it. They say that while it’s true that the wealthiest segment of the U.S. population, e.g. the richest fifth, is currently receiving the largest subsidies in terms of absolute dollars (hence the claim that the subsidies are regressive), if one uses the standard definition of regressivity – based on share of income – it’s clear that middle-income Americans stand to sustain the greatest financial harm.

“The tax subsidy is a big help for people with (2009) family incomes of $38,550 to $100,000, but not for those with lower or higher incomes,” they write. As a result, the new tax on benefits “will hit the middle class hardest and spare the wealthy.”

They add that eliminating the subsidies (and “over-insurance”), as the Cadillac tax aims to do, “has ripple effects that will disproportionately harm lower-income workers.”

“Employers seeking to avoid the tax will probably increase copayments and deductibles. Even if most of the employers’ premium savings were eventually passed on to workers as higher wages, the higher out-of-pocket costs would discourage most low-income families from seeking care – exacerbating inequalities in health and health care.”

The authors also criticize other inequities that are built in to the Cadillac tax provision, and note “the glaring unfairness of levying the Cadillac tax based on the cost of benefits, rather than their richness.”

In addition to their academic posts, Woolhandler and Himmelstein are co-founders of Physicians for a National Health Program, which advocates for single-payer national health insurance. PNHP had no role in funding or otherwise supporting their study.

“The ‘Cadillac Tax’ on Health Benefits in the United States Will Hit the Middle Class Hardest: Refuting the Myth that Health Benefit Tax Subsidies Are Regressive,” by Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D. International Journal of Health Services, OnlineFirst ahead of print, first published on March 9, 2016, as doi:10.1177/0020731416637163.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 20,000 doctors who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

‘Cadillac tax’ hits middle class hardest

The “Cadillac Tax” on Health Benefits in the United States Will Hit the Middle Class Hardest

Refuting the Myth That Health Benefit Tax Subsidies Are Regressive

By Steffie Woolhandler, David U. Himmelstein
International Journal of Health Services, Online March 9, 2016

Abstract

U.S. employment-based health benefits are exempt from income and payroll taxes, an exemption that provided tax subsidies of $326.2 billion in 2015. Both liberal and conservative economists have denounced these subsidies as “regressive” and lauded a provision of the Affordable Care Act — the Cadillac Tax — that would curtail them. The claim that the subsidies are regressive rests on estimates showing that the affluent receive the largest subsidies in absolute dollars. But this claim ignores the standard definition of regressivity, which is based on the share of income paid by the wealthy versus the poor, rather than on dollar amounts. In this study, we calculate the value of tax subsidies in 2009 as a share of income for each income quintile and for the wealthiest Americans. In absolute dollars, tax subsidies were highest for families between the 80th and 95th percentiles of family income and lowest for the poorest 20%. However, as shares of income, subsidies were largest for the middle and fourth income quintiles and smallest for the wealthiest 0.5% of Americans. We conclude that the tax subsidy to employment-based insurance is neither markedly regressive, nor progressive. The Cadillac Tax will disproportionately harm families with (2009) incomes between $38,550 and $100,000, while sparing the wealthy.

http://joh.sagepub.com/content/early/2016/03/08/0020731416637163.abstract

PNHP press release:
https://pnhp.org/news/2016/march/‘cadillac-tax’-on-health-benefits-will-hit-middle-class-hardest-study

The “Cadillac tax” is an excise tax on premiums of more expensive employer-sponsored health plans. It was included in the Affordable Care Act partly as a revenue source to help pay for ACA, partly to offset the tax subsidies for employer-sponsored insurance that were more generous for higher income individuals, and partly to reduce the incentive to purchase more insurance than necessary under the theory that making patients more sensitive to health care costs will prevent spending on supposedly excessive health care services (certainly a contentious point).

Because of the high costs of health care, we do need funding mechanisms that result in a transfer to those less able to pay. The Cadillac tax is a problem because, instead of disproportionately assessing the very wealthy, it impacts primarily working families. Not only is the tax unfair, the health plans will likely have their benefits reduced in an effort to escape the taxes.

In a PNHP press release (link above), Steffie Woolhandler, one of the co-authors of the report, stated, “Taxpayers should be paying directly for health care through Medicare-for-All, not indirectly through tax subsidies to private insurance. However, removing the tax subsidies – as Obamacare will do – without setting Medicare-for-All in place is a step backwards. It’s shameful that economists have provided cover for this tax that will hit middle-class families and largely spare the wealthy.”

The Cadillac tax is just one more example of the flawed policy patches required simply because the architects of reform decided to build on our current dysfunctional, fragmented financing system instead of replacing it with a more efficient, effective and equitable single payer Medicare-for-all program. That doesn’t mean that we have to live with our highly flawed system. We can still change it.

Single payer in the Democratic debate

Transcript of the Democratic Presidential Debate in Miami

The New York Times, March 10, 2016

Excerpt:

HILLARY CLINTON: But let me say this. Senator Sanders has talked about free college for everybody. He’s talked about universal, single payer health care for everybody. And yet, when you ask questions, as many of us have and more importantly, independent experts, it’s very hard to get answers.

And a lot of the answers say that this is going to be much more expensive than anything Senator Sanders is admitting to. This is going to increase the federal government dramatically. And, you know, my dad used to say, if it sounds too good to be true, it probably is.

BERNIE SANDERS: All right. Let me respond to this.

(APPLAUSE)

CLINTON: And we deserve answers about how these programs will actually work and how they would be paid for.

SANDERS: I want you all to think. What Secretary Clinton is saying is that the United States should continue to be the only major country on earth that doesn’t guarantee health care to all of our people.

(APPLAUSE)

SANDERS: I think if the rest of the world can do it, we can. And by the way, not only are we being ripped off by the drug companies, we are spending far, far more per capita on health care than any other major country on earth.

You may not think the American people are prepared to stand up to the insurance companies or the drug companies. I think they are. And I think we can pass…

RAMOS: Thank you senator. (CROSSTALK)

(APPLAUSE)

CLINTON: This is a very important point in this debate, because I do believe in universal coverage. Remember, I fought for it 25 years ago. I believe in it. And I know that thanks the Affordable Care Act, we are now 90 percent of universal coverage. I will build on the Affordable Care Act. I will take it further. I will reduce the cost.

But I just respectfully disagree. Between the Republicans trying to repeal the first chance we’ve ever had to get to universal health care, and Senator Sanders wanting to throw us into a contentious debate over single-payer, I think the smart approach is build on and protect the Affordable Care Act. Make it work. Reduce the cost.

(APPLAUSE)

SANDERS: I’m on the committee, I know a little bit about this, I’m on the committee, Health, Education, Labor Committee that helped write the Affordable Care Act. And it has done a number of good things. But when Secretary Clinton says, well, 90 percent of the people have insurance, yes, not really.

Many of you may have insurance, but you have outrageously high deductibles and co-payments. One out of five Americans cannot afford the prescription drugs their doctors prescribe. Elderly people are cutting their pills in half.

I do believe that we should do what every other major country on earth does, and I think when the American people stand up and fight back, yes, we can have it, a Medicare for all health care system.

(APPLAUSE)

http://www.nytimes.com/2016/03/10/us/politics/transcript-democratic-presidential-debate.html

***

Hillary Clinton’s health care proposals:
https://www.hillaryclinton.com/issues/health-care/

Bernie Sanders’ health care proposals:
https://berniesanders.com/issues/medicare-for-all/

Donald Trump’s health care proposals:
https://www.donaldjtrump.com/positions/healthcare-reform

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Comment:

By Don McCanne, M.D.

Although today’s message does not seem appropriate for this forum since it is political and our agenda is on policy, actually it is apropos since it represents a disagreement over single payer policy, even though framed as a political debate.

Of the three candidates for the presidential nomination who have mentioned single payer, Donald Trump has recently clarified his stance by releasing a health reform proposal that made no mention of single payer. So the debate over single payer is really between the two remaining Democratic candidates – Hillary Clinton and Bernie Sanders.

In this election season, single payer is a political issue. Bernie Sanders is the first leading presidential candidate to support a bona fide single payer Medicare for all. Hillary Clinton continues to support private health plans in a multi-payer system, originally as her managed competition model 25 years ago, and now as incremental expansion of the Affordable Care Act. She opposes single payer since it would eliminate the private insurers.

The politics have been somewhat bizarre. The Republicans have not had to take a high profile position against single payer since many in the progressive community have done their work for them. Although often presented as policy arguments, the substance of the opposing arguments by these progressives has been political. We can only speculate that their reasons have more to do with their support of a particular political candidate than they do with their position on single payer. In fact, the leading analysis being used to oppose single payer was written by an academic who has authored other single payer proposals. Fortunately, many others in the progressive community have stood up to insist that single payer be accurately portrayed.

Instead of trying to wade through the proxy arguments of these outside experts, it would be better to listen to the words of the two candidates themselves. What did they have to say in last night’s debate?

Sanders reiterated his views on a truly universal Medicare for all, whereas Clinton reiterated her views on rejecting single payer and building on the Affordable Care Act which she mentions has us at 90 percent coverage. These are policy issues.

When you look at their respective plans (links above), you can see that, from a policy perspective, Sanders’ proposal automatically covers everyone, whereas Clinton’s proposals barely nudge us in that direction but cannot come close to universal coverage. In addition, Sanders points out that the current private insurance products frequently do not meet the needs of those insured because of the exposure to high out-of-pocket costs. Again, regardless of the politics, these are fundamental policy issues that often determine whether or not people will receive the health care that they need.

We’ll continue to speak out on policy and leave it to others to get the politics right.

Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidates for public office.