PNHP

Unauthorized immigrants prolong the life of Medicare Trust Fund: JGIM study

Unauthorized immigrants prolong the life of Medicare Trust Fund: JGIM study

Harvard and CUNY researchers find unauthorized immigrants generated surplus contributions of $35.1 billion from 2000-2011, prolonging the Trust Fund’s solvency

FOR IMMEDIATE RELEASE, June 23, 2015
Contact: Mark Almberg, (312) 782-6006, mark@pnhp.org

Unauthorized immigrants pay billions more into Medicare’s Hospital Insurance Trust Fund each year than they withdraw in health benefits, according to research from Harvard Medical School, the Institute for Community Health and the City University of New York School of Public Health at Hunter College. The study appeared last Thursday as an “online first” article in the Journal of General Internal Medicine.

In 2011 alone, unauthorized immigrants paid in $3.5 billion more than they utilized in care.  Unauthorized immigrants generated an average surplus of $316 per capita to the Trust Fund, while other Americans generated a deficit of $106 per capita. The authors conclude that reducing unauthorized immigration would worsen Medicare’s financial health.

Payroll taxes are the major revenue source for the Trust Fund, which mostly pays hospital bills. Unauthorized immigrants often pay these taxes, usually under a borrowed or invalid Social Security number. Unauthorized immigrants are mostly working age, have high rates of labor force participation, and hence contribute substantial payroll taxes. Medicare outlays for unauthorized immigrants are low because they are ineligible for Medicare benefits.

The study authors examined Medicare Trust Fund contributions and expenditures for each year from 2000 through 2011. They analyzed data from the Census Bureau’s Current Population Survey to calculate tax contributions, and used the Medical Expenditure Panel Survey to determine medical expenses paid by Medicare.

The study found that immigrants contributed a surplus of between $2.2 billion and $3.8 billion per year, or a total of $35.1 billion from 2000-2011. Had unauthorized immigrants neither contributed to nor withdrawn from the Trust Fund during those 11 years, it would become insolvent in 2029 – one year earlier than currently predicted.

“For years I have seen my unauthorized immigrant patients be blamed for driving up health care costs,” said lead author Dr. Leah Zallman, a faculty member at Harvard Medical School, researcher at the Institute for Community Health and primary care physician at Cambridge Health Alliance. “Yet few acknowledge their contributions. Our study demonstrates that in one large sector of the U.S. health care economy, unauthorized immigrants actually subsidize the care of other Americans.”

Senior author Dr. Steffie Woolhandler, professor of public health at City University of New York and lecturer in medicine at Harvard, said: “The numbers contradict the myth that unauthorized immigrants are a drain on the health system. Reducing immigration would worsen Medicare’s financial woes.”

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“Unauthorized Immigrants Prolong the Life of Medicare’s Trust Fund,” by Leah Zallman, M.D., M.P.H., Fernando A. Wilson, Ph.D., James P. Stimpson, Ph.D., Adriana Bearse, M.S., Lisa Arsenault, Ph.D., Blessing Dube, M.P.H., David U. Himmelstein, M.D., Steffie Woolhandler, M.D., M.P.H. Journal of General Internal Medicine, June 18, 2015.

A PDF of the article is available to media professionals upon request from Mark Almberg at mark@pnhp.org.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 19,000 doctors who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

Medicare at 50: Strengths to Build On

By John Geyman, M.D.
The Huffington Post, June 22, 2015

Traditional, or Original, Medicare turns 50 on July 30, having had many challenges and achievements from the days of its passage to today. It is time to celebrate its many successes, note some of its current challenges and threats to its future, and briefly discuss how it gives us a strong foundation upon which to build still-needed health care reform.

When it was enacted in 1965, about one-half of seniors in the U.S. lacked health insurance, and many could not afford necessary health care. When it was passed with strong bipartisan support (313-116 in the House, and 70-24 in the Senate), 20 million Americans age 65 and older gained health insurance.1

From the start, Medicare was a political football raising strong arguments for and against any kind of universal health insurance, quite similar to those we hear today, including from the American Medical Association, hospitals, and the health insurance industry. But a “corporate compromise” was struck in 1965 whereby private insurers were relieved of their worse health risks, hospitals could expect assured payments for their costs of serving a previously disadvantaged population, and physicians gained a permissive “usual, customary, and reasonable” reimbursement policy.2 Claims processing and bill auditing were contracted out by the government to private fiscal intermediaries, especially Blue Cross and Blue Shield plans.3

From the beginning, Medicare has provided a broad set of benefits, defined by law, protecting all seniors, many of whom could not afford health insurance in the private market. Part A provides hospital insurance, while Part B provides supplementary medical insurance for 80 percent of physician services (initially with a $50 deductible and 20 percent coinsurance), X-ray and laboratory tests, and some home health and outpatient and mental health services. Some additional benefits were added in later years to this basic program, including coverage for the disabled and patients with end-stage renal disease in 1972 and partial coverage for prescription drugs in 2003 (Part D). Medicare’s benefits have always been considered an earned right, not an entitlement, since all beneficiaries pay into the program through mandatory contributions from individuals and/or employers.4

Today, Medicare is a very large program, covering more than 55 million Americans, including all seniors and 9 million people with permanent disabilities under age 65. It accounted for 14 percent of the federal budget in 2014 and about 20 percent of total personal health expenditures in 2013.5 Since the 1990s, we have seen an increasing trend toward privatized Medicare plans (Part C), starting with Medicare + Choice HMOs in the 1990s and their sequel, Medicare Advantage (MA) since 2003. These plans have been promoted by conservative policymakers and think tanks with a goal to replace Medicare as an “entitlement program” with private market plans, health savings accounts and vouchers. Almost one-third of seniors are now enrolled in MA plans.

The Many Strengths of Traditional Medicare over 50 Years

Traditional Medicare has performed much better over the years than any of these private plans, which operate with the goal of profits more than service. Table 1 summarizes the major differences between traditional Medicare and privatized plans.6

Source: Adapted from Geyman, JP. Shredding the Social Contract: The Privatization of Medicare. Monroe, ME. Common Courage Press, 2006, p. 206.

These comparisons are supported by many studies over the years. As just four examples:

A literature review by the Kaiser Family Foundation of 40 studies since 2000 found that beneficiaries rated access and quality of care better in traditional Medicare than in Medicare Advantage, especially by those who were sick.7

An analysis by the Urban Institute over three decades found that private Medicare plans cost the government more than fee-for-service traditional Medicare, which contained costs better than private plans over those years.8

Traditional Medicare operates with an administrative overhead of 2 percent, compared to overhead of Medicare Advantage about seven times higher.9

The Centers for Medicare and Medicaid Services (CMS) took 35 enforcement actions against Medicare Advantage plans and Medicare Part D plans in 2014, particularly for inappropriate denials of care and requiring unnecessary preauthorization of services and medications that resulted in more cost shifting to beneficiaries.10

Some Major Challenges Facing Medicare Today

As in 1965, Medicare remains a lightning rod for intense political debates over its future. Despite its proven track record for efficiency, reliability, and responsible service over these last 50 years and widespread public support, Republicans are united in their attempts to dismember it, convert it to a voucher program, and shift patients to the private marketplace, all under the guise of reining in federal spending and austerity. Some Democrats are amenable to raising the eligibility age for Medicare and increasing cost sharing. These ideas are a complete disconnect with the needs of our aging society in a time of increasing inequality of incomes. More than 25 million seniors and people with disabilities live on annual incomes of $23,500 or less, many of whom cannot afford premiums and cost-sharing in either traditional or privatized Medicare. And as our population ages, pensions that in the past assured defined benefits are shifting to defined benefit pensions, without such assurances.11 There are still many gaps in coverage, even within traditional Medicare, including for long-term care and dental care.

Future funding for Medicare is seriously threatened and murky at best. The Obama administration has told us that the Affordable Care Act (ACA) will be financed in part by $716 billion in Medicare cuts over 10 years, with the unbelievable claim that these cuts will not result in reduction of services. The recently passed H. R. 2, the “doc fix” bill, has provisions in it that will require new deductibles in first-dollar supplemental Medigap plans (held by 40 percent of Medicare beneficiaries) and expand means-testing for Medicare Part D, both of which will increase costs for seniors and further undermine traditional Medicare.

Just as the future of Medicare is unclear, so is that of our entire health care system. The U. S. Supreme Court is expected to rule in coming days on the legality of subsidies under the ACA. A negative ruling will be a serious blow to the ACA and call into question where we should go next. Republicans in Congress will push for repeal or defunding parts of the ACA. As the debate heats up, the leading alternatives will likely be: (1) continuation of the ACA as it unravels, (2) some GOP “plan” based on patients having “more skin in the game” that further threatens access and affordability of care; (3) revival of the “public option” idea, hardly an effective fix as merely adding one more payer to our dysfunctional multi-payer financing system; and (4) long-overdue consideration of single-payer national health insurance that would cover all Americans in a large risk pool with more benefits, less cost, more reliability and equity in a sustainable way, as described in my recent book, How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans.11

Traditional Medicare has proven its superiority over any private, market-based alternatives for the last 50 years. It is time to build on this social insurance model as the health care debate continues.

References:

  1. Rosenblatt, B. House passes massive expansion of health care coverage. Washington, DC. National Academy of Social Insurance, April 10, 2015.
  2. Geyman, JP. Shredding the Social Contract: The Privatization of Medicare. Monroe, ME. Common Courage Press, 2006, pp. 49-51.
  3. Oberlander, J. The Political Life of Medicare. Chicago. The University of Chicago Press, 2003, p. 33.
  4. Study Panel on Medicare’s Larger Social Role, Final Report. Washington, DC. National Academy of Social Insurance, 1999, pp. 31-35.
  5. Cubanski, J. A primer on Medicare: Key facts about the Medicare program and the people it covers. Kaiser Family Foundation, March 20, 2015.
  6. Ibid # 2, p. 206.
  7. Gold, J, Casillas, G. What do we know about health care access and quality in the Medicare Advantage versus the traditional Medicare program? Kaiser Family Foundation, November 6, 2014.
  8. Boccuti, C, Moon, M. Comparing Medicare and private insurers: growth rates in spending over three decades. Health Affairs (Millwood) 22 (2): 230, 2003.
  9. Himmelstein, D, Woolhandler, S. The post-launch problem: the Affordable Care Act’s persistently high administrative costs. Health Affairs Blog, May 27, 2015.
  10. Herman, B. Medicare is doing more to police Advantage and Part D lapses, but does it matter? Modern Healthcare, December 4, 2014.
  11. Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015.

http://www.huffingtonpost.com/john-geyman/medicare-at-50-strengths_b_7637296.html

Robert Reich supports Medicare for all, but…

Making the Economy Work for the Many and Not the Few

#11: Medicare Isn’t the Problem; It’s the Solution

By Robert Reich
HuffPost Politics, June 22, 2015

Again and again the upcoming election you’ll hear conservatives claim that Medicare — the health insurance program for America’s seniors — is running out of money and must be pared back.

Baloney. Medicare isn’t the problem. In fact, Medicare is more efficient than private health insurance.The real problem is that the costs of health care are expected to rise steeply.

Medicare could be the solution — the logical next step after the Affordable Care Act toward a single-payer system.

Please see the accompanying video — #11 in our series on ideas to make the economy work for the many rather than for the few. And please share.

Some background: Medicare faces financial problems in future years because of two underlying trends that will affect all health care in coming years, regardless of what happens to Medicare:

The first is that healthcare costs are rising overall — not as fast as they were rising before the Affordable Care Act went into effect, but still rising too quickly.

The second is that the giant post­war baby boom is heading toward retirement and older age. Which means more elderly people will need more health care, adding to the rising costs.

So how should we deal with these two costly trends? By making Medicare available to all Americans, not just the elderly.

Remember, Medicare is more efficient than private health insurers ­­ whose administrative costs and advertising and marketing expenses are eating up billions of dollars each year.

If more Americans were allowed to join Medicare, it could become more efficient by using its growing bargaining power to get lower drug prices, lower hospital bills, and healthier people.

Allowing all Americans to join Medicare is the best way to control future healthcare costs while also meeting the needs of the baby boomer and other Americans.

Everyone should be able to sign up for Medicare on the healthcare exchanges set up under the Affordable Care Act. This would begin to move America away from its reliance on expensive private health insurance, and toward Medicare for all – a single­ payer system.

Medicare isn’t a problem. It’s part of the solution.

http://www.huffingtonpost.com/robert-reich/medicare-solution-for-making-economy-work_b_7635620.html

Video: https://www.facebook.com/moveon/videos/vb.7292655492/10152825520900493/

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Public Plan Option in a Market of Private Plans

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.
Physicians for a National Health Program, March 26, 2009

The “public plan option” won’t work to fix the health care system for two reasons.

1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer — not enough to make reform affordable.

2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan — which started as the single payer for seniors and has now become a funding mechanism for HMOs — and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.

https://www.pnhp.org/news/2009/march/himmelstein_and_wool.php

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Comment:

By Don McCanne, MD

In his enthusiastic endorsement of single payer Medicare for all, Robert Reich also renews the call for the “public option” of allowing people to purchase Medicare through the exchanges established by the Affordable Care Act. During the health care reform process, the public option had wide support, but was first weakened considerably and then eventually rejected by Congress in a power play by Sen. Joseph Lieberman.

In spite of the modest benefits of the Affordable Care Act, nothing has changed that would alter the concerns about the public option expressed by David Himmelstein and Steffie Woolhandler and others of us at PNHP.

At the time the public option was being considered, I wrote the following: “The option to purchase a public plan within a market of private health insurance plans would merely provide one more player in our inefficient, dysfunctional, fragmented, multi-payer system of financing health care, that is if the public option even survives the political process. It would leave in place the deficiencies that have resulted in very high costs with the poorest health care value of all nations (i.e., overpriced mediocrity in health care).”

Even if Medicare were offered for purchase in the exchanges, the premiums would not be competitive with the low-actuarial-value silver and bronze plans with their very high deductibles, especially since the Medicare risk pool includes higher cost elderly and disabled individuals. If Medicare were revised to make it competitive, benefits would have to be reduced when what we need instead is an improved Medicare with expanded benefits.

One possibility would be to provide subsidies for those electing the Medicare option, but either the beneficiaries’ share would still be too great, certainly making the plan non-competitive, or the public subsidies would have to be greater than those for the private low-actuarial-value insurance plans – an approach that would be vigorously opposed by the all-powerful private insurers.

Besides, it is unlikely that Congress would support higher subsidies for a public option Medicare when their agenda has been the opposite – providing higher subsidies for the private Medicare Advantage plans, sending us in the direction of a privatized Medicare.

Although Robert Reich proposes a public option version of Medicare as a way to begin moving us toward a single payer Medicare for all, it is difficult to perceive how the transition would take place. Offering an option to purchase Medicare is a very small step that leaves everything else in place. As Medicare Advantage demonstrates, one-third of beneficiaries have moved in the opposite direction – from traditional Medicare to private insurance options. That would continue as long as Congress continues to advance policies that cater to the insurers more than they do to the public.

Reich seems to be recommending a two step path to reform – one step offering the Medicare option and a second step of converting to single payer Medicare for all. Quentin Young has compared that to taking two steps to cross a chasm. That first step can lead to a serious misadventure, but it should not be a surprise.

Affordable Care Act? Not really

By The Editorial Board
Lake Placid (N.Y.) News, June 18, 2015

Health insurance is going to cost a lot more for many Americans.

President Barack Obama is not the first person to claim he could provide more people with health insurance while keeping costs for care under control, but it took Obama’s “hope and change” mantra to get a national health care plan on the books.

Change certainly is occurring. Millions of Americans have been affected adversely by Obamacare. Some have found the president was not being honest when he pledged that if they liked their health insurance, they could keep it. Some are losing excellent insurance provided through employers. Many learned that even with massive government subsidies, the only insurance they could afford leaves them with massive out-of-pocket obligations. And many are being fined hundreds of dollars a year for failing to obtain government-approved coverage.

The latest news, though, is that now many insurance companies say they must increase rates for health care policies. Increases in double digits will be common, just like in the days before the Affordable Care Act, commonly called Obamacare. Some large insurers propose rate hikes of 20-25 percent or more. Both government policies and those paid for by individuals will be affected.

Insurers have cited unexpectedly high expenses for Obamacare policies as a primary reason for the increases. That’s probably true. We suspect there’s another reason as well: These companies’ beneficiaries are getting richer by exploiting the public.

It’s true that the Affordable Care Act has done some good. Scrapping it would hurt many people who could not afford insurance without it, such as younger people who can now remain under their parents’ plans until they are 26 years old. Also, insurance companies are no longer allowed to reject people just because they have pre-existing conditions.

But in view of the news from insurers, how many Americans are being priced out of the market because of Obamacare?

We agree with conservative politicians like our congresswoman, Elise Stefanik, that Obamacare is a mess, but Republicans like her have proposed no real alternative. Many of them tend to heed the beck and call of big-business health industries over the needs of Americans.

We, however, have a clear and obvious solution. We’ve been talking about it for years. This nation should have single-payer health insurance – Medicare for all – but so far there’s been little political will to consider it.

Why do we in this country lay health insurance on the backs of employers? That makes no sense. It squelches hiring and makes things much less fair and more complicated than they have to be. Imagine how hiring would increase if every employer in the nation no longer had to worry about the cost of health insurance for every employee. Imagine how property taxes would decrease if health insurance (and, for counties, Medicaid) costs were no longer on the books of our school districts and municipalities.

We don’t believe it would cost much more than we’re paying now, because it would reduce the terrible inefficiency of the United States’ current system. According to the World Health Organization Global Health Expenditure database, in 2013 (the latest year stats are available, and with Obamacare in place) the U.S. spent $9,146 per person on health care, which is more than every other nation except Norway and Sweden, which have luxurious national health coverage. Canada spent $5,718.

There could be victims of such a move – the health insurance companies – but we’re willing to risk that. They’d land on their feet.

Only one presidential candidate is pushing this: Bernie Sanders of Vermont. We’re not close to ready to endorse anyone yet, but on this issue, we hope he gets some traction.

The Democratic Party alternative, the Affordable Care Act, is proving to be unaffordable.

http://www.lakeplacidnews.com/page/content.detail/id/523575/Affordable-Care-Act–Not-really.html

CBO: Repeal of ACA would raise economic output (per dynamic scoring)

Budgetary and Economic Effects of Repealing the Affordable Care Act

CBO, June 2015

In this report, the Congressional Budget Office and the staff of the Joint Committee on Taxation (JCT) analyze the main budgetary and economic consequences that would arise from repealing that law.

What Would Be the Major Effects of Repealing the ACA?

CBO and JCT estimate that repealing the ACA would have several major effects, relative to the projections under current law:

  • Including the budgetary effects of macroeconomic feedback, repealing the ACA would increase federal budget deficits by $137 billion over the 2016–2025 period. That estimate takes into account the proposal’s impact on federal revenues and direct (or mandatory) spending, incorporating the net effects of two components:
    • Excluding the effects of macroeconomic feedback — as has been done for previous estimates related to the ACA (and most other CBO cost estimates) — CBO and JCT estimate that federal deficits would increase by $353 billion over the 2016–2025 period if the ACA was repealed.
    • Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period. Alone, those effects would reduce federal deficits by $216 billion over the 2016–2025 period, CBO and JCT estimate, mostly because of increased federal revenues.
  • For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially in either direction from the central estimates presented in this report. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period — or could increase deficits by a substantially larger margin than the agencies have estimated. However, CBO and JCT’s best estimate is that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.
  • Repealing the ACA would cause federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included. That would occur because the net savings attributable to a repeal of the law’s insurance coverage provisions would grow more slowly than would the estimated costs of repealing the ACA’s other provisions — in particular, those provisions that reduce updates to Medicare’s payments. The estimated effects on deficits of repealing the ACA are so large in the decade after 2025 as to make it unlikely that a repeal would reduce deficits during that period, even after considering the great uncertainties involved.
  • Repealing the ACA also would affect the number of people with health insurance and their sources of coverage. CBO and JCT estimate that the number of nonelderly people who are uninsured would increase by about 19 million in 2016; by 22 million or 23 million in 2017, 2018, and 2019; and by about 24 million in all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA. In most of those years, the number of people with employment-based coverage would increase by about 8 million, and the number with coverage purchased individually or obtained through Medicaid would decrease by between 30 million and 32 million.
    • About 14 million fewer people would be enrolled in Medicaid.
    • About 18 million fewer people would have nongroup coverage. That reduction is the net effect of a projected decline of about 22 million in nongroup coverage purchased through exchanges (which would no longer serve as a conduit for federal subsidies and might not exist at all) and a projected increase of about 4 million enrollees in nongroup coverage purchased directly from insurers.
    • About 8 million more people, on net, would have employment-based coverage—roughly mirroring the agencies’ estimate of the extent to which the ACA will reduce employment-based coverage in future years.
    • About 24 million more nonelderly U.S. residents would be uninsured.

The Macroeconomic Feedback Effects of a Repeal and Their Impact on the Federal Budget

CBO and JCT also have analyzed the effects that repealing the ACA would have on the U.S. economy and estimated the budgetary impact — or feedback effects — of those macroeconomic changes. CBO and JCT estimate that the net effect on the economy’s output would be negligible in 2016 but would grow after that. According to the agencies’ estimates, from 2021 through 2025, a repeal would increase GDP by about 0.7 percent, on average — mostly by repealing provisions that, under current law, are expected to reduce the supply of labor.

Labor Supply

CBO and JCT estimate that repealing the ACA would increase the supply of labor and thus increase aggregate compensation (wages, salaries, and fringe benefits) by an amount between 0.8 percent and 0.9 percent over the 2021–2025 period. Those effects would be the result of repealing various provisions of the ACA that are estimated to reduce the amount of labor that people choose to supply. In particular, the subsidies and tax credits for health insurance that the ACA provides to some people are phased out as their income rises — creating an implicit tax on additional earnings — and those subsidies, along with expanded eligibility for Medicaid, generally make it easier for some people to work less or to stop working without losing health insurance coverage. For other people, the act directly imposes higher taxes on labor income, thus discouraging work. Repealing the ACA would reverse those effects. In percentage terms, the increase in total hours worked is estimated to be larger than the increase in aggregate compensation because the largest increases in labor supply would occur among the lower-wage workers whose incentives would be most strongly affected. Specifically, repealing the ACA would increase the aggregate number of hours worked by about 1.5 percent over the 2021–2025 period, CBO and JCT estimate.

How Would a Repeal Affect the Budget and the Economy Beyond 2025?

CBO and JCT expect that the trend projected for the latter part of the coming decade would probably continue after 2025, whether or not the effects of macroeconomic feedback are incorporated into the analysis. To generate rough estimates for the decade beyond 2025, CBO and JCT extrapolated the budgetary effects that a repeal of the ACA would have in the years before 2025. According to that analysis, and excluding the budgetary effects of macroeconomic feedback, a repeal would increase annual deficits over the 2026–2035 period by amounts that lie within a broad range around one percent of GDP. Although the macroeconomic feedback stemming from a repeal would continue to reduce deficits after 2025, the effects would shrink over time because the increase in government borrowing resulting from the larger budget deficits would reduce private investment and thus would partially offset the other positive effects that a repeal would have on economic growth. Consequently, taking that feedback into account would not substantially alter the increases estimated for federal deficits that would occur over that period. A repeal of the ACA would probably increase deficits in subsequent decades as well, whether or not the effects of macroeconomic feedback are included.

http://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50252-Effects_of_ACA_Repeal.pdf

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Mixed Effects Are Seen on an Affordable Care Act Repeal

By Robert Pear
The New York Times, June 19, 2015

The nonpartisan Congressional Budget Office said Friday that repealing the Affordable Care Act would significantly increase federal budget deficits and the number of people who are uninsured.

But, it said, repealing the law would also raise economic output because it would create incentives for some people to work more.

The estimates came in the first major study issued by the new director of the budget office, Keith Hall. It was also the first report to use new methods of fiscal analysis, according to instructions from the Republican majority in both houses of Congress.

Repealing the law would increase federal budget deficits by $137 billion in the decade from 2016 to 2025, Mr. Hall said in the report. In addition, he said, the number of uninsured people, estimated at 35 million under current law, would increase by 24 million if the law was repealed.

Senator Michael B. Enzi, Republican of Wyoming and the chairman of the Senate Budget Committee, said the report showed that “repealing the president’s health care law will increase economic growth.” But Representative Nancy Pelosi of California, the House minority leader, said it showed that “repeal will explode the deficit.”

The report analyzes the economic effects of the health care law and the ways in which those effects may, in turn, influence federal spending and revenues — a technique known as dynamic scoring. Democrats fear that Republicans will use that approach to help justify tax cuts. But at least in the report on Friday, Mr. Hall was cautious in using the new technique and carefully documented the economic assumptions that led to his conclusions.

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Dynamic Scoring in Congress Is Defensible but Slippery

By N. Gregory Mankiw
The New York Times, February 28, 2015

… congressional leaders appointed Mr. Hall, a veteran of the Bush administration, to be the new head of the budget office.

Until now, conventional budget analysis has used a process called static scoring, which assumes that the path of gross domestic product remains the same when the government changes taxes or spending. This procedure has the virtues of simplicity and transparency.

We don’t yet know how Mr. Hall’s leadership will differ from Mr. Elmendorf’s but we do know that he will face a big challenge. House Republicans have recently changed the rules: The Congressional Budget Office and Joint Committee on Taxation are now required to use “dynamic scoring” when evaluating major changes in tax and spending policy. This is the can of worms that awaits Mr. Hall as he takes on his new job.

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Obamacare and Labor Supply

By Paul Krugman
The New York Times, June 20, 2015

I was critical of CBO yesterday — probably excessively — for giving what seemed like undue cover for deficit scolds in its long-run budget projection. So credit where credit is due: the new report on the consequences of repealing the ACA is definitely not what the Congressional majority wants to hear. Despite including “dynamic scoring”, the report finds, unambiguously, that Obamacare reduces the deficit and repealing it would enlarge the deficit.

Is there anything in the report that provides fodder for the opponents? I see that the Times report says that there are “mixed effects”, because CBO says that GDP would be higher if the ACA were repealed. And maybe the usual suspects will try to spin it that way.

But the truth is that this report is much, much closer to what supporters of reform have said than it is to the scare stories of the critics — no death spirals, no job-killing, major gains in coverage at relatively low cost.

And there’s another important point: while the ACA may lead to somewhat lower GDP because it reduces labor supply, this does not imply a one-for-one loss in welfare. Suppose that a family’s second earner, now assured of being able to get health insurance, chooses as a result to work shorter hours and spend more time taking care of the children. GDP goes down — but there is a compensating non-monetary gain.

In fact, in a perfectly competitive economy the gain would fully offset the fall in GDP: if workers are paid their marginal product, the fall in GDP from the ACA is equal to the lost wages, but workers choosing to work less clearly prefer to have the extra time to the extra wages. Or to put it a bit differently, other things equal it’s a good thing if workers, freed from the fear that they won’t be able to get health insurance, respond by voluntarily working less.

OK, the story is made more complicated by taxes, which place a wedge between wages paid and income received; so there probably is a net cost to a fall in labor supply. But this effect is fully captured by the loss in revenue, which CBO doesn’t think would be large.

So overall this isn’t at all a “mixed” report — it’s a very big win for Obamacare supporters.

http://krugman.blogs.nytimes.com/2015/06/20/obamacare-and-labor-supply/

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Comment:

By Don McCanne, MD

This report from the Congressional Budget Office (CBO) is important because it describes the consequences of repealing the Affordable Care Act (ACA) – a goal of many conservatives in Congress. But there also is an important sub-story here – the advent of the use of “dynamic scoring” by the CBO and its potential implications.

One of the more severe deficiencies of ACA is that when it is fully implemented about 29 million people will still be uninsured. This CBO analysis indicates that repeal of ACA will increase the numbers of uninsured by another 24 million – bringing the total to over 50 million. If no other lesson is drawn from this report, it is that  we should not move backwards with efforts to reject what progress has been made, but that instead we should move forward with real reform that would cover everyone (in case you need any hints, that would be single payer).

From the perspective of the federal budget, this report also shows that repeal of ACA would cause significant increases in the deficit which presumably would require either increased revenues (taxes) which the conservatives reject, or decreases in spending which would be intolerable when considering that our discretionary federal budget is already spartan. If we moved forward with more effective reform – single payer – the provisions of that reform would include equitable financing, and thus the budgetary damage done by the displacement of ACA would become a moot point.

But what about dynamic scoring, and what is it? It seems to have more to do with politics and less with economic science. When the CBO analyzes the potential impact of proposed legislation on the federal budget, they look at not only the direct impact of the legislative requirements, but they also look at the macroeconomic impact – the changes in the economy at large that can result from the legislation. They can do this with static scoring – assuming that the gross domestic product remains the same when government changes taxes or spending – or they can use dynamic scoring – evaluating how fiscal policy influences the course of the economy.

The Republicans who now control Congress have changed the rules for the non-partisan CBO and now require dynamic scoring, and this is the first CBO report in which this tool has been applied. Does it represent economic science or political posturing?

They determined that repeal of ACA would increase the supply of labor, and this increase would result in a 0.7 percent increase in the gross domestic product (GDP) – an example of dynamic scoring. Why should the supply of labor be increased? They say that loss of insurance would drive greater employment rates amongst the unemployed and underemployed. With a continued sluggish economy, limited employment opportunities, and the permanent exiting of millions from the job market, do they really believe that health insurance status is a significant driver when everyone already wants income and job security? Do they really believe that people are not working because having insurance makes “it easier for some people to work less or to stop working,” as the CBO report states? Do they really believe that employers are not hiring now because there is a robust job market, whereas they would start hiring if the job market contracted? Does anyone of any integrity really propose that we do the experiment of repealing ACA and then follow the change in the GDP to see if it increases, while ignoring declines in insurance coverage and increases in the federal deficit?

Another concept implicit in this report is that the reduction in government expenditures for health care brought about by repealing ACA would somehow improve the economy. Yet health care is one of the most important sectors of our economy, and its strength likely prevented the Great Recession from becoming a full-on depression. Sidestepping the issue of precisely how GDP is or should be defined, wouldn’t the stimulus to the health care industry provided by ACA (confirmed by Wall Street reports) have a much greater impact on the economy than would this reduction in labor supply caused by more people being insured?

Considering the numbers who would become uninsured and considering the increase in the national debt that would occur with ACA repeal, it sounds like repeal would be a cruel and fiscally irresponsible act. Yet the conservatives are celebrating the fact that the CBO has allegedly implied in this report that repeal of ACA would be good for the economy. As Senate Budget Committee Chairman Mike Enzi said, “repealing the president’s health care law will increase economic growth” (Robert Pear, New York Times, June 19), and Senate majority leader Mitch McConnell said, in a tweet, “The CBO says an Obamacare repeal actually boosts the American economy” (Kate Gibson, CBS Moneywatch, June 19).

The CBO has always been the source of highly credible, non-partisan reports on important matters before Congress. Dynamic scoring could be used to increase the accuracy of CBO analyses, but it would have to be very carefully applied to avoid analyses driven by political ideology. Through the appointment of a conservative economist with an order to institute dynamic scoring, the Republicans may be impairing the credibility of the CBO. Imagine how they might use dynamic scoring to try to discredit single payer.

(In fairness to CBO Director Keith Hall, economist Paul Krugman does remind us, “the ACA may lead to somewhat lower GDP because it reduces labor supply.” Also respected New York Times reporter Robert Pear concludes, “Mr. Hall was cautious in using the new technique and carefully documented the economic assumptions that led to his conclusions.” So a generous application of this economic principle allows CBO to include in its summary the statement, “Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period.” But this isolated statement does allow, as Krugman indicates, fodder for the usual suspects to try to put a positive spin on repeal – exemplified by the statements of McConnell and Enzi. Nevertheless, I still contend that the loss of health insurance would not cause a major incremental increase in the labor supply for a population that already craves employment security. “Hey, I got insurance; forget about food and rent.”)

[Corrected text posted June 23, 2015.]

Part D drug benefit did not save money for Medicare

Did Medicare Part D Affect National Trends in Health Outcomes or Hospitalizations?: A Time-Series Analysis

By Becky A. Briesacher, PhD; Jeanne M. Madden, PhD; Fang Zhang, PhD; Hassan Fouayzi, MS; Dennis Ross-Degnan, ScD; Jerry H. Gurwitz, MD; and Stephen B. Soumerai, ScD
Annals of Internal Medicine, June 16, 2015

Background: Medicare Part D increased economic access to medications, but its effect on population-level health outcomes and use of other medical services remains unclear.

Objective: To examine changes in health outcomes and medical services in the Medicare population after implementation of Part D.

Results: Five years after Part D implementation, no clinically or statistically significant reductions in the prevalence of fair or poor health status or limitations in ADLs or instrumental ADLs, relative to historical trends, were detected. Compared with trends before Part D, no changes in emergency department visits, hospital admissions or days, inpatient costs, or mortality after Part D were seen. Confirmatory analyses were consistent.

Conclusion: Five years after implementation, and contrary to previous reports, no evidence was found of Part D’s effect on a range of population-level health indicators among Medicare enrollees. Further, there was no clear evidence of gains in medical care efficiencies.

http://annals.org/article.aspx?articleid=2322799

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Researchers find prescription drug benefit did not save money for Medicare

By Joe O’Connell
news@Northeastern, June 16, 2015

For years, the Medicare pre­scrip­tion drug ben­efit Part D has been cred­ited with pos­i­tively impacting national trends in health out­comes and med­ical ser­vices. But a recent study led by North­eastern asso­ciate pro­fessor Becky Briesacher chal­lenges that assump­tion.

“We are con­cluding that Medicare Part D did not save the (Medicare) pro­gram any money overall,” said Briesacher, a health ser­vices researcher in the School of Phar­macy with nationally-​​recognized exper­tise in drug policy and med­ica­tion use in older adults. “You have to be real­istic about the fact that giving people access to med­ica­tion is impor­tant, but it’s not going to sub­stan­tially save money in other parts of the health care system or keep a sig­nif­i­cant number of people out of the hospital.”

http://www.northeastern.edu/news/2015/06/researchers-find-prescription-drug-benefit-did-not-save-money-for-medicare/

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Comment:

By Don McCanne, MD

Although it was important to include a drug benefit in the Medicare program there was concern that the conservatives designing the program wanted to allow the market to work its magic. The program was to be administered by private pharmacy benefit managers (PBMs) rather than the government. In fact, the government was even prohibited from negotiating drug prices with the manufacturers. Further, it was thought that the benefits of improving access to drugs would make patients healthier thus reducing future costs for Medicare.

This study shows that the magic did not work in that the drug benefit did not save money for Medicare, and it did not measurably change the health status of Medicare beneficiaries. Specifically there were no changes in emergency room visits, hospitalizations, and inpatient costs, nor was there any change in mortality.

It would not be surprising to see conservatives propose that the Part D program be terminated since it supposedly isn’t doing any good. But there are innumerable studies that have shown that some medications do provide at least a modest benefit, though those benefits were not detected by this study.

At any rate, it is clear that PBMs are not as effective price negotiators as is our government, as demonstrated by the greater value in drug purchasing that we have through the VA and the Medicaid program. Also, the PBMs waste considerable funds in excess administrative activities, not to mention the added middleman profits that they divert to themselves.

Under an improved Medicare for all we would have a more efficient and less costly publicly-administered program that would ensure that the government was paying fair prices for our drugs. It is not that way now.

Our unethical health reform violates the principle of equipoise

Randomize evaluations to improve health care delivery

By Amy Finkelstein, Sarah Taubman (MIT)
Science, February 13, 2015

The medical profession has long recognized the importance of randomized evaluations; such designs are commonly used to evaluate the safety and efficacy of medical innovations such as drugs and devices. Unfortunately, innovations in how health care is delivered (e.g., health insurance structures, interventions to encourage the use of appropriate care, and care coordination approaches) are rarely evaluated using randomization. We consider barriers to conducting randomized trials in this setting and suggest ways for overcoming them. Randomized evaluations of fundamental issues in health care policy and delivery should be — and can be — closer to the norm than the exception.

http://www.sciencemag.org/content/347/6223/720.summary

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Health care reform unethical by research standards

Science, June 19, 2015

A. Finkelstein and S. Taubman report on the underuse of randomized controlled trials for U.S. health care reform (“Randomize evaluations to improve health care delivery” Policy Forum, 13 February). This reliance on suboptimal research compromises information needed for policy. However, a second problem about health reform decision-making is more serious, constituting a major ethical breach. 

The principles of research with humans require that deviations from the standard of care are allowable only if there is real uncertainty regarding which intervention is better. This is called the “principle of equipoise”; only when we don’t know which strategy yields the best results is it acceptable to compare them (1).

Yet for health care reform writ large — i.e., the basic payment system — there is no equipoise. Research from dozens of developed countries demonstrates convincingly that single-payer financing reduces costs, assures access, and improves outcomes.

To ignore this compelling evidence risks lives in the United States as we experiment with partial fixes to the multi-payer system. This experimentation would be rejected by any responsible university institutional review board as violating the principle of equipoise and causing unacceptable patient harm.

James G. Kahn (UCSF)
Paul Hofmann (Moraga CA)

1. Freedman B. Equipoise and the Ethics of Clinical Research. N Engl J Med 1987; 317:141-145

http://www.sciencemag.org/content/348/6241/1325.2.full

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Equipoise and the Ethics of Clinical Research

By Benjamin Freedman, Ph.D.
New England Journal of Medicine, July 16, 1987

The ethics of clinical research requires equipoise — a state of genuine uncertainty on the part of the clinical investigator regarding the comparative therapeutic merits of each arm in a trial. Should the investigator discover that one treatment is of superior therapeutic merit, he or she is ethically obliged to offer that treatment. The current understanding of this requirement, which entails that the investigator have no “treatment preference” throughout the course of the trial, presents nearly insuperable obstacles to the ethical commencement or completion of a controlled trial and may also contribute to the termination of trials because of the failure to enroll enough patients.

I suggest an alternative concept of equipoise, which would be based on present or imminent controversy in the clinical community over the preferred treatment. According to this concept of “clinical equipoise,” the requirement is satisfied if there is genuine uncertainty within the expert medical community — not necessarily on the part of the individual investigator — about the preferred treatment.

http://www.nejm.org/doi/full/10.1056/NEJM198707163170304#t=abstract

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Comment:

By Don McCanne, MD

Here’s a shocker. Enactment and implementation of the Affordable Care Act has been and continues to be unethical, under the “principle of equipoise.” How could that be?

Amy Finkelstein and Sarah Taubman, of MIT, call for an increased use of “randomized evaluations of fundamental issues in health care policy,” likening policy research to medical research. On the surface this seems quite reasonable, but James Kahn and Paul Hofmann reveal the potential dire implications of such a proposal when policies are studied that, at best, would fall short of already well established beneficial policy principles. 

Medical research requires the adherence to the principle of equipoise – the principle that it is unethical to expose a patient to an experimental treatment when there exists a better treatment that would always be recommended regardless of the outcome of the study. Only when there is agreement that the more effective and safer treatment is not known is it ethical to proceed with a randomized trial.

How would this apply to health policy research? In randomized trials proposed health policies could be compared with existing or other proposed health policies to determine which policies produce more favorable outcomes. This would require that the existing comprehension of the policies would be clearly inadequate to reliably predict the outcomes. Keep in mind that a health system’s policies can impact individual health as much or even more than the actual health care received. If the outcomes are predictable, it would be unethical to proceed with the study.

The problem with the proposal by Finkelstein and Taubman is that health policy science is quite advanced, and we have a rich body of knowledge of the potential impacts of various health policies. These researchers suggest that randomized evaluations should be closer to the norm when, in fact, it would be quite rare that two or more policy options would be so poorly understood that it would require a randomized trial to determine which would produce better outcomes. 

To understand the enormous impact of this, let’s compare the most basic policies perpetuated and enacted by the Affordable Care Act with fundamental policies inherent in a well designed single payer system – policies that are well understood through our experiences and the experiences of many other nations.

The Affordable Care Act

  • Tens of millions will be left uninsured
  • Tens of millions will be underinsured
  • Financial barriers to care that result from being uninsured or underinsured clearly impair access to beneficial health care services and thus often result in poor health outcomes and even death

Single Payer National Health Program

  • Everyone would be insured
  • Underinsurance is eliminated by removing financial barriers, especially high deductibles and coinsurance
  • Removal of financial barriers improves access to health care with a consequent improvement in health outcomes and with a lower mortality rate

Further, our current system wastes hundreds of billions of dollars on administrative excesses – much of which could be recovered under a single-payer system and be redirected into health care delivery.

We cannot do a randomized trial comparing single payer with the Affordable Care Act since a single payer system cannot exist commingled with a fragmented, multi-payer system, but we would not want to do that study anyway since we already understand the policy science behind these systems. Such a study would clearly violate the principle of equipoise.

To continue with our current grand national experiment in health care reform is clearly unethical because of the financial hardships, physical suffering and premature deaths that are perpetuated and would be prevented if we switched to a single payer national health program.

It would be unethical to repeal the Affordable Care Act and do nothing else since some provisions of the Act are beneficial. But since we can enact and implement a single payer national health program, we are engaging in unethical behavior by failing to do so.

Our national policymakers need to understand how profoundly unethical their behavior is by their continued violation of the principle of equipoise. People are suffering and dying as a result.

The latest legal challenge to Canada’s healthcare system

A primer on the legal dispute between Dr. Brian Day and British Columbia – and how it may affect Canada’s healthcare system

By Karen S. Palmer, M.P.H., M.S.
EvidenceNetwork.ca, June, 18, 2015

In British Columbia, as in the rest of Canada, the health care system, “Medicare,” provides public funding for all medically necessary hospital and physician services.

The Canada Health Act (federal legislation enacted in 1984) strongly discourages private payment, such as extra billing and user charges, for hospital and physician services covered under Medicare. If provinces (except Quebec) allow private payment for such services, the federal government is mandated to withhold an equivalent amount from federal cash transfers. With rare exceptions, this financial penalty for failing to comply with the legislation has been effective in restricting extra billing and other user fees.

The CHA is silent on care delivery, taking no position on whether health care should be delivered in private, not-for-profit or private, for-profit facilities.

When are doctors legally permitted to charge patients?

Under BC legislation, physicians enrolled in (and thus being paid by) the BC Medical Services Plan (MSP) must work entirely within the publicly-funded system when providing medically necessary care, whether that care is provided in hospitals or privately-owned facilities. As long as physicians are enrolled in MSP, they are prohibited from charging BC residents any fee for, or in relation to, the delivery of medically necessary hospital and physician services.

Physicians are, however, permitted to completely un-enroll from MSP. Non-enrolled physicians in BC may charge patients whatever amounts they want for providing medically necessary services, so long as those services are not provided in a “hospital” or a “community care facility” (as defined by the Hospital Act).

Patients are permitted to pay a non-enrolled physician out-of-pocket, but not with private “duplicative” insurance (such insurance — covering the same patients and services as the public insurance — does not currently exist in BC). Very few BC physicians are non-enrolled in MSP.

What’s the court case about?

Dr. Brian Day, the President and CEO of two private for-profit investor-owned facilities (Cambie Surgery Centre and their partner, Specialist Referral Clinic, neither of which is designated as a “hospital”) is challenging the prohibition on private billing by enrolled physicians.

Dr. Day alleges that the limits on charging patients privately, enshrined in the Canada Health Act (CHA, and its equivalent provincial legislation in BC), infringe patients’ rights to life, liberty and security of the person under Section 7 of the Canadian Charter of Rights and Freedoms.

The essence of Dr. Day’s claim is that, because the publicly-funded system compels some patients to wait for the delivery of some medically necessary services (in particular, elective surgery), patients should have the right to obtain such services more quickly by paying privately, either out-of-pocket or through private insurance.

Dr. Day supports a system of “dual practice” in which physicians can be paid from both public and private purses, including through private health insurance covering medically necessary hospital and physician care.

Beyond this, Dr. Day also argues that even physicians still enrolled in MSP should be allowed to “extra bill” patients — through out-of-pocket payment and private insurance — who do not wish to wait their turn for publicly-funded care. His rationale is that since BC physicians not enrolled in MSP are already permitted to collect out-of-pocket payments for care delivered outside of hospitals or community care facilities, then private duplicative insurance should also be for sale to BC patients who do not wish to wait for publicly-funded care, even when they are treated by physicians still enrolled in MSP.

Why is the province of BC opposing Day’s position?

The Attorney General (AG) of BC will argue against these changes to Medicare, based on evidence affirming that allowing a parallel private payment system, and physician dual practice, in an otherwise publicly-funded health care system, negatively affects these systems.

The AG will argue that there is no causal connection between BC’s limits on private payment and the alleged deprivation of life, liberty or security of the person.

Instead of care being delivered on the basis of need, as is the case now, overturning the limitations on private payment would result in care being provided first to those who can afford to pay. This means that if the law impeding extra-billing is over-turned, then all physicians would be able to charge patients whatever fees they wished, on top of what physicians are already paid by the government.

The AG will argue that care should be delivered on the basis of need, not ability to pay. If the same physicians are delivering both publicly-funded and privately-funded care, evidence from other countries shows that patients who can afford to pay out-of-pocket or through private insurance are likely to get care faster, regardless of their need. When physicians preferentially treat private pay patients, the probable result of a parallel public-private pay system is increased wait times for those unable to pay.

The AG will also bring evidence to show that allowing a multi-payer health care system will lure physicians from the public-pay sector to the private-pay sector, potentially reducing the availability, quality and timeliness of care in the publicly-funded system.  It will also argue that a multi-payer health care system that includes private health insurance will drive up costs, forcing public funders to pay higher prices to “compete” with private insurers.

The trial is expected to commence in the British Columbia Supreme Court in November 2015.

For more information, see also: 

Backgrounder: Court challenges to one-tier medicare: http://umanitoba.ca/outreach/evidencenetwork/archives/20743#sthash.dFgcG8Vf.dpuf

Four things you should know about the pending Charter challenge against medicare http://umanitoba.ca/outreach/evidencenetwork/archives/23871#sthash.jThrpDPI.dpuf

Backgrounder: Surgical wait times for publicly funded health services in Canada http://umanitoba.ca/outreach/evidencenetwork/archives/22134#sthash.jYRsswZc.dpuf

Commentary: BC doctors’ election represents crossroads for the future of medicine in Canada http://umanitoba.ca/outreach/evidencenetwork/archives/25681#sthash.5HbXKw2P.dpuf

This article was prepared for EvidenceNetwork.ca by Karen Palmer, M.P.H., M.S., adjunct professor in the Faculty of Health Sciences at Simon Fraser University, where she taught comparative health care policy until 2013. She is currently an independent health policy analyst and health services researcher.

http://umanitoba.ca/outreach/evidencenetwork/archives/25738

From Exchange to Egalité

However the Supreme Court rules, Obamacare isn’t enough. We need a more fundamentally egalitarian health care system

By A.W. Gaffney, M.D.
Jacobin magazine, June 18, 2015

Though admittedly not its most emblematic feature, one rather remarkable aspect of the French Revolution was its ambitious orientation towards the provision of social welfare, including medical care. Following a period of great deprivation, the French revolutionaries “endeavored to set up a national system of social assistance, inclusive of health care,” as the great historian of medicine George Rosen wrote; they furthermore “called attention to the need for assistance, inclusive of medical care, in neglected areas and for neglected groups in the population.”

Alas, as Rosen and others have noted, they also violently undercut the inadequate but at least functional system of church-based charitable care — before their own sweeping projects ever came close to fruition. Good intentions were insufficient, and it was the poor and ill who suffered the consequences.

With both Bastille Day and a decision in King v. Burwell — the case now before the Supreme Court that may threaten the viability of the Affordable Care Act (ACA) — soon to be upon us, this episode seems reasonably relevant. The Affordable Care Act isn’t — and is never going to be — adequate for delivering health care justice. At the same time, the sudden withdrawal of private health insurance from millions of Americans would be a human travesty that no sensible left should countenance, much less celebrate.

Yet such an acknowledgement must not mean turning a blind eye to the deep structural inadequacies of our health care system, which will persevere — whatever the decision of the Supreme Court — until more fundamental change is won.

A Vulnerable System

There are many roads to what is called, often problematically, “universal health care.” Some nations — for instance, Canada — have systems of national health insurance in which a governmental “payer” insures everyone (though the provision of care may remain predominantly private). Other nations have “national health services” — e.g., Britain — where the provision of care is a direct public service.

The health care reforms embodied in the ACA are neither of these: the law instead contains a number of intricate, interlocking provisions designed to lower the number of uninsured while preserving the role of private insurers (and also accommodating, not infrequently, the for-profit provision of care).

Understanding the complicated interdependency of the ACA’s insurance reforms is crucial to appreciating its fundamental vulnerability to legal challenges. This interdependency is frequently conceived as a precarious “three-legged stool”: a well-aimed kick delivered to any single leg, it is argued, would topple the law in its entirety.

The first “leg” is the ACA’s provision preventing insurance companies from discriminating against those with “pre-existing” conditions (for instance, through the imposition of punishingly high premiums). This particularly popular provision most easily accords with a sense of common decency.

The second leg of the stool is the “individual mandate,” a concept with its genesis, as is frequently noted, in the conservative Heritage Foundation. The mandate requires that the uninsured buy private health insurance or pay a penalty, so as to prevent “free riders” from taking advantage of the protections afforded by the first leg (for example, by postponing the purchase of insurance until one is in the throes of a terrible illness). In 2012, this leg came close to being severed in the Supreme Court case National Federation of Independent Business v. Sebelius, but emerged with its constitutionality intact by a single vote.

And third, given that it would be rather cruel to mandate the purchase of health insurance for people who cannot physically afford it, the law provides income-adjusted subsidies for those who buy plans on the ACA’s “exchanges.” It is this leg that is now under threat in King v. Burwell.

The legal basis for the suit revolves around what seems to be sloppy wording in one provision of the law. Sarah Kliff of Vox traces the origins of the case back to a 2010 presentation at a conference hosted by the conservative American Enterprise Institute and “aimed at finding new ways to challenge the healthcare law.”

The presentation, Kliff writes, pointed out one eyebrow-raising finding: a single provision of the ACA referred to subsidies being available to those who purchased insurance in exchanges “established by the state.” However, most states — thirty-four at present — have elected not to set up their own exchanges, and to instead rely on the federal government’s exchange (which the law permits).

If the Court finds that residents of those thirty-four states are not eligible for federal subsidies, it could deliver a potentially fatal blow to Obamacare: those who purchased plans in these states would quickly lose the subsidies that made buying health insurance affordable.

However, many legal scholars, interpreting the provision more contextually, are highly suspicious of the merits of this case. For instance, though the law professor Timothy Jost, writing in theNew England Journal of Medicine, acknowledges that the provision is “awkwardly worded,” he opines that nonetheless:

The purpose of the statute is clear, however, and there is no evidence, other than the four words on which these cases turn, that Congress meant to deny millions of Americans health insurance simply because their states elected not to operate exchanges.

Though that may be true, the health care access of these millions now very much hinges on the Supreme Court’s interpretation of the clause.

As things stand, individuals and families earning up to 400% of the federal poverty level are eligible for premium subsidies; in the thirty-four states using the federal exchange, about 6.4 million people (or 87% of those buying insurance on the exchange) would be at risk of losing these subsidies.

According to the Kaiser Family Foundation, the loss of these subsidies would translate into an average premium increase for these individuals and families of 287% (ranging from a 132% increase in Arizona to a whopping 650% increase in Mississippi).

Furthermore, those who were sick would try harder and sacrifice more to stay in the exchanges than those who were well, which would further destabilize the actuarial basis for the marketplace. According to modeling by the RAND Corporation, this would result in an overall decline in enrollment in the individual market by 9.6 million.

And Congress isn’t likely to deliver to Obama the simple “one sentence” fix needed to resolve this snafu, while a variety of substantial political and legal barriers would preclude or at least hinder an effective, expeditious remedy at the state level.

Though there may be some debate about the precise effects of uninsurance on mortality, the consequences of such an abrupt change should not be underestimated. Simply put, pulling the rug — or the hospital bed — out from under millions of people cannot be accomplished without substantial bloodshed. By one estimate, some 9,800 “additional deaths” a year may result from such a surge in the ranks of the uninsured.

Towards a Better World

And yet, a careful look at the very health insurance plans now under threat in King v. Burwell (the “non-group” plans purchased through the ACA exchanges) demonstrates why the heath care reform law, and the US health care system as a whole, will remain grossly unjust regardless of the Supreme Court’s ruling.

First, the combination of the individual mandate, the expansion of Medicaid, and the subsidy-supported health insurance plans (assuming a positive outcome in King) will still leave some 27 million people in America uninsured.

Second, the exchange plans themselves reflect a type of health insurance entirely at odds with a more expansively defined “universal health care,” in which health care access is not only universal, but also equitable, and where covered services are free at the point of care. Many of those who receive subsidies to purchase plans on the exchanges, for instance, still have serious financial exposure to medical bills.

Average deductibles — i.e. money paid out of pocket before insurance kicks in — for the standard “silver” family plans in 2015 are estimated to be $6,010. Out-of-pocket costs for copayments and deductibles — after premium payments — can be as high as $13,200 for a family making as little as 250% of the federal poverty level (or $60,625 for a family of four). Such out-of-pocket health care costs satisfy the dogmatists of “consumer-driven medicine” while further squeezing the working class.

Third, equality of access is not assured. Insurers gain negotiating power with providers by issuing plans that limit access to particular hospitals and physician groups. For instance, Anthem Blue Cross and Blue Shield in New Hampshire excluded ten out of the twenty-six hospitals in the state from its plans. These so-called “narrow networks” have caused understandabledissatisfaction, as individuals and families are unable to be seen by the physicians or in the facilities of their choosing; they then can get stuck with astronomical bills when, whether by choice, necessity, or accident, they are seen “out-of-network.”

Given such limitations, is it inconsistent to denounce an outcome in King that strips many of health care access? Certainly not: our friends, family members, partners, and patients currently rely on such plans. This is the awkward position that the Left always straddles when flawed social welfare programs come under attack.

Yet the vision of a more just health care system must not, in the process, be lost. In particular, it is an emphasis on the revolutionary notion of égalité that is absent from the health care discourse. A health care system based on the principle of equality would not feature the overlapping, interconnected disparities endemic to the American health care system: persistent uninsurance, “metallic tiers” of coverage, uneven and inequitable “networks,” non-financial barriers to care for the poor, and continued financial hurdles for those who aren’t wealthy. (Such divisions can be exploited by populists on the Right, and may explain — in part — the persistent divisiveness of the law among Americans.)

The meaning of equality has changed. Today, as the French historian Pierre Rosanvallon put it in his recent book The Society of Equals, equality is used as “a sort of negative incantation — ‘reduce inequalities’ — without a corresponding positive image of a better world.” This is even more true in health care. Moving forward must mean going beyond a discussion of increasing “health care access,” and working towards a vision of health care equality founded upon a single-payer national health program.

A.W. Gaffney is a physician whose work has appeared in Salon, Dissent, and In These Times. He blogs at theprogressivephysician.org.

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https://www.jacobinmag.com/2015/06/aca-obama-universal-healthcare/

How deficient is California’s Medicaid program?

Improved Monitoring of Medi-Cal Managed Care Health Plans Is Necessary to Better Ensure Access to Care

California State Auditor, California Department of Health Care Services, Report 2014-134, June 2015

Cover letter of report:

June 16, 2015

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the California Department of Health Care Services’ (Health Care Services) oversight of California Medical Assistance Program (Medi-Cal) managed care health plans (health plans).

This report concludes that Health Care Services did not verify that the provider network data it received from health plans were accurate. Therefore, it cannot ensure that the health plans it contracts with had adequate networks of providers to serve Medi-Cal beneficiaries. Health Care Services’ contracts with health plans to provide medical services to Medi-Cal beneficiaries generally require the plans, among other things, to maintain a network of primary care providers that are located within either 30 minutes or 10 miles from a member’s residence. To determine whether the health plan has an adequate provider network to meet these standards, Health Care Services receives provider network data from each of the health plans. However, for the health plans we reviewed, Health Care Services did not verify the accuracy of these data before certifying the health plans’ network adequacy during the Healthy Families Program transition to Medi-Cal and did not verify data for another health plan at the time the health plan entered the Medi-Cal program. Similarly, it does not verify the accuracy of the data it receives from health plans and that it provides to the California Department of Managed Health Care (Managed Health Care), with which it has an agreement to conduct quarterly network adequacy reviews. Furthermore, it has not ensured that Managed Health Care performed all quarterly reviews of health plans’ provider networks required pursuant to the agreement.

In addition, flaws in Health Care Services’ process for reviewing provider directories have resulted in it approving provider directories with inaccurate information. Specifically, our review of provider directories for three health plans — Anthem Blue Cross, Health Net and Partnership HealthPlan — found many errors in directories, including incorrect telephone numbers and addresses, or information about whether they were accepting new patients. However, Health Care Services’ review of these same directories had not identified these inaccuracies before it approved the directories for publication. Furthermore, we noted that thousands of calls from Medi-Cal beneficiaries seeking assistance through Health Care Services’ Medi-Cal Managed Care Office of the Ombudsman have gone unanswered. Specifically, each month between February 2014 and January 2015 an average of 12,500 calls went unanswered. Finally, Health Care Services has not performed all statutorily required annual medical audits of Medi-Cal managed care health plans to determine whether the health plans meet their beneficiaries’ needs.

Respectfully submitted,

ELAINE M. HOWLE, CPA

State Auditor

Full report: https://www.auditor.ca.gov/pdfs/reports/2014-134.pdf

Summary of report: https://www.auditor.ca.gov/reports/summary/2014-134

Fact sheet: https://www.auditor.ca.gov/pdfs/factsheets/2014-134.pdf

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Comment:

By Don McCanne, MD

Medicaid patients throughout the nation are being transferred into Medicaid managed care plans, allegedly to provide more coordinated care at a lower cost. There has been some justifiable concern that these plans may not be delivering on their promises. This auditor’s report of California’s Medi-Cal managed care plans provides some limited insight into the performance of these plans.

Medi-Cal is California’s Medicaid program for low-income individuals and families. Three-fourths of the 12 million Medi-Cal patients are already enrolled in the Medi-Cal managed care plans (state population 39 million). Astonishingly nearly half of all children in California are enrolled in Medi-Cal managed care, especially since those previously enrolled in CHIP were transferred to Medi-Cal. It is a massive program.

The auditor did not look at the adequacy or the quality of the health care services that are being delivered. Rather she looked at the plans’ reports submitted to the Department of Health Care Services on the adequacy and accessibility of their networks, the accuracy of the provider directories, and the effectiveness of the Medi-Cal Managed Care Office of the Ombudsman – basically just whether or not the infrastructure was adequate to provide the promised services.

The auditor found that the reports from the plans were inadequate and the oversight provided by the California Department of Health Care Services and the Department of Managed Health Care was also inadequate. It was not possible to determine the degree of the failures, but enough information was gathered to know that the system fell far short of the requirements. Some perspective of the extent of this problem is demonstrated by the fact that each month about 12,500 calls to the Office of the Ombudsman went unanswered. The Medi-Cal system wasn’t working for the patients, and the calls for help overwhelmed the telephone system.

Some have suggested that the funding was inadequate. Medicaid has been chronically underfunded, and Medi-Cal is near the bottom of all states in its level of funding. Also governments chronically underfund their own agencies. In a health care system that is infamous for its administrative excesses, under the Affordable Care Act we have expanded the need for yet more administrative services for both the health plans and for the government bureaucracies that provide oversight (not to mention the providers), yet our federal and state legislators do not authorize adequate funds to carry out their requirements.

Although the auditor attributed most of the blame to failures of the California Department of Health Care Services, the real blame lies with those who devised these expensive and inefficient programs and then failed to fund them adequately. The agencies cannot do their job if they are unable to hire the personnel that they need.

Although this report raises serious concerns about the infrastructure, much more important is whether or not the actual health care services are adequate in both quantity and quality. Though this report does not address that, there is reason to be concerned. Are the health plans really delivering more integrated care at a lower cost? Is the funding enough for the dedicated health care professionals to deliver on this promise? Unlikely, based on preliminary information. It is unfortunate that we will have to wait longer until the severity of the deficiencies is exposed.

If nothing else, it does appear that, through Medicaid, we have institutionalized a lower tier of a two-tiered health care system. The Affordable Care Act perpetuates a mediocre system for middle-income individuals and families and a substandard system for those with low incomes. Most other wealthy nations have a single higher health care quality standard for all of their people, delivered at a much lower cost. What is our resistance to learning from them?

Thinking health

By Kathleen Duncan
Houston Chronicle, Letters, June 12, 2015

Regarding “A matter of health” (Page B8, Thursday), thank you for the editorial which warned us of the dire and consequential human suffering that would befall many Americans (our family, friends, and neighbors) should the Supreme Court rule against federal subsidies for non-state health exchanges. Thank you for taking a firm, clear stand on the side of people’s well-being over abstract ideology.

Our country needs a national health program; insurance companies do not need to profit off of our suffering.

Kathleen Duncan resides in LaPorte.

http://www.chron.com/opinion/letters/article/Monday-letters-Jerusalem-Stephen-Klineberg-6324504.php

Will King v. Burwell have a long-term impact?

Obamacare’s final test: if it survives the Supreme Court, it’s here to stay

By Sarah Kliff
Vox, June 15, 2015

In the next two weeks, the Supreme Court will rule in King v. Burwell, a challenge that threatens to dismantle Obamacare by ending financial subsidies for 6.4 million Americans.

If the challengers win, it would throw the health-care law into chaos. But if the White House prevails, something equally momentous will have occurred: President Obama’s signature legislative accomplishment will actually, really, definitely be here to stay.

“If we win this, I think that’s major, and I’d call it a monumental step,” says Ron Pollack, executive director of the pro-Obamacare advocacy group Families USA. “It means that the ACA is a permanent part of the American health-care system.”

http://www.vox.com/2015/6/15/8779143/obamacare-repeal-dead-supreme-court

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Will Inefficient Financial Healthcare Reform Kill the ACA?

By Jacqueline DiChiara
RevCycleIntelligence, June 15, 2015

Is the Affordable Care Act (ACA) hurling the healthcare industry further into the red? The answer is a definite yes, according to a recent RevCycleIntelligence.com article about key findings from a pair of Harvard Medical School professors’ Health Affairs blog study.

The bureaucracy will gobble up a quarter of federal spending; the ACA will add almost $274 billion in new administrative costs heading into 2022, well beyond what would have been expected had the ACA not been passed, maintain David U. Himmelstein, MD and Steffie Woolhandler, MD.

“Previous work we’ve done suggests that a third of the total healthcare dollar goes to paperwork and bureaucracy,” Himmelstein states. Such numbers are likely mere underestimates that require updating, he confirms.

“Most other nations are much more efficient in the way that they finance and administer healthcare,” Himmelstein confirms. “There is no reason, other than political difficulty, that we can’t shed massive bureaucratic costs.”

Himmelstein predicts the ACA will soon lose dominance within the healthcare industry, moving forward. “Instead of fighting about whether to go back to an old system, repealing the ACA,” he says, “the debate will turn to how we move from here to something different, hopefully better.”

“Costs are likely to resume an upward growth pattern and more and more people are going to find themselves grossly underinsured. All of those problems are going to be part of the debate very soon,” he says. “We are moving to a handful of giant organizations controlling the health delivery system, largely focusing on their own interests and giving lip service to wanting to serve patients, but really acting like corporate masters of the healthcare system and shaping it to do what they want rather than what patients need,” he maintains.

The simple solution is to implement national health insurance, Himmelstein maintains. “Is it appropriate that some private organization have the decision making power over the healthcare of the vast majority in that region?” he asks. “Privatization is much less efficient,” Himmelstein states. “We’ll again be coming to a debate about national health insurance.”

http://revcycleintelligence.com/news/will-inefficient-financial-healthcare-reform-kill-the-aca

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Comment:

By Don McCanne, MD

Everywhere you turn these days there is rampant speculation on what the impact will be of the soon-to-be-released Supreme Court decision on King v. Burwell – the case on whether or not subsidies can be provided to enrollees in federal ACA insurance exchanges. In the long run, the outcome doesn’t matter.

As David Himmelstein (co-founder of PNHP) explains in the RevCycleIntelligence article above, “Costs are likely to resume an upward growth pattern and more and more people are going to find themselves grossly underinsured,” and “Instead of fighting about whether to go back to an old system, repealing the ACA, the debate will turn to how we move from here to something different, hopefully better.” Regardless of the King v. Burwell outcome, “We’ll again be coming to a debate about national health insurance.”

It’s absolutely inevitable.