Two Theologies Have Blocked Medicare-For-All

By Theodore Marmor and Kip Sullivan
Health Affairs Blog, December 11, 2014

In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.

Two Myths that Undercut Medicare-for-All: Managed Care and Competition

In the paper we presented at the Yale conference (Yale Law School, November 6 & 7) , we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.

The managed care movement helped marginalize support for Medicare’s expansion primarily through its influence on the proponents of national health insurance. It did so by persuading many potential proponents of Medicare expansion to pursue a different reform strategy.  Insurance companies practicing managed care, the rhetoric claimed, were more efficient than Medicare.  Managed care kept Medicare-for-all off the congressional agenda primarily by inducing potential proponents of Medicare expansion to support managed care rather the expansion of the traditional Medicare program.

The rise of the pro-competition movement constituted another significant impediment to Medicare expansion. It did so by strengthening the belief that market competition among private health insurance firms could be invigorated, largely by eliminating tax subsidies for insurance and shifting more costs onto patients, and that vigorous competition would make the health care sector much more efficient than Medicare could ever be. But because this movement appealed primarily to conservatives who did not support universal coverage in the first place, its impact on the debate about Medicare’s expansion, although powerful, was less direct.

To sum up, the pro-competition movement contributed to keeping the expansion of Medicare off the national agenda by keeping national health insurance off the national agenda throughout most of Medicare’s 50 years. And the managed care movement contributed by persuading liberals to endorse managed care proposals, not the expansion of Medicare, during those infrequent periods when universal coverage was at the top of the national agenda.

Why have the Managed Care and Competition Movements been Politically Successful?

The answer, in our view, is two-fold. First, both movements acquired immense economic power compared with supporters of Medicare expansion. Second, both movements clothed their diagnoses of and solutions to the health care crisis in rhetoric that induces listeners to overlook unproven assumptions that underlie those diagnoses and solutions. This permitted both movements to present their solutions in idealized, oversimplified forms, and to compare their idealized forms to real-world Medicare. Over the years both movements have developed cultures which resist acknowledging the discrepancy between their assumptions and the evidence.

In the first few months of 1970, Paul Ellwood and representatives of the Nixon administration agreed to promote an unproven diagnosis of the health care crisis and an unproven solution. The unproven diagnosis was overuse of the health care system induced by the fee-for-service method of paying doctors. The unproven solution was a new form of insurance company they called the “health maintenance organization” (HMO).

Ellwood and Nixon administration officials made the deliberate decision to refrain from describing how HMOs were supposed to achieve the powers attributed to them. As assistant HEW secretary Lewis Butler put it, “Let’s specify what we want it to do…. Let’s describe the thing by what we want it to do, not how it’s formed.”

This convention – describing an entity that will supposedly alleviate the health care crisis according to what “we want it to do” – was quickly adopted by Democrats. The convention encouraged, and to some degree forced, HMO advocates to explain their support for the concept in highly abstract terms. It also encouraged the use of opinion and wishful thinking as substitutes for evidence and scientific discourse.

The tendency to adopt abstract concepts defined only by the aspirations of their proponents, to give these abstract concepts labels designed to influence rather than illuminate, and to ignore or downplay evidence contradicting claims made for these concepts has persisted within the managed care movement ever since. These habits of thought can be seen in the movement’s support for other managed care proposals, including “pay-for-performance” and “accountable care organizations.”

The pro-competition movement has exhibited similar traits – a tendency not to examine fundamental assumptions and to gloss over evidence contradicting them. Like the managed care movement, the pro-competition movement rests its diagnosis on the unproven assumption that financial incentives are the single greatest cause of health care inflation. Unlike the managed care movement, which sees physician incentives as paramount, the pro-competition movement claims patient financial incentives are the fundamental cause of high medical costs. Like the managed care movement, the pro-competition movement bases its solution on unproven assumptions, the most important of which is that patients can shop for medical care just as they do for food and other commodities.

The willingness of the two movements to compare real-world Medicare with their idealized proposals has contributed significantly to their ability to keep the expansion of Medicare off the table. It has also contributed significantly to their inability to address the problems that bedevil the American health care system – a chronically unacceptable rate of uninsured, barriers to care even for the insured, and rising costs.

http://healthaffairs.org/blog/2014/12/11/two-theologies-have-blocked-medicare-for-all/

Comment:

By Don McCanne, MD

The dream of expanding Medicare to cover all of us has failed to materialize in a large part because of the nation’s obsession with marketplace concepts of health care financing. On the supply side, health care providers are responding to financial incentives that maximize their revenue. On the demand side, patient-consumers are responding to financial incentives that minimize their out-of-pocket spending. In both instances, health care access is compromised – in managed care by erecting structural barriers to care (“managing” the care), and in competition by erecting financial barriers to care (buying competitively-priced plans with lower premiums that have higher deductibles and other cost sharing).

Where did this obsession come from? Gilens and Page have shown that the very wealthy and large business interests have control over major legislation. These interests benefit from marketplace approaches to health care through investments in for-profit insurance companies and in health care delivery organizations, including for-profit hospitals. In contrast, their tax burden in publicly-financed health programs is greater when taxes are progressive. Also many other important government programs are financed through progressive taxes, so the moneyed interests benefit by privatizing government functions to the maximum extent possible.

These interests, along with ideologues, have made a meme of the concept that private markets are always more efficient than massive government bureaucracies, when the evidence is almost always to the contrary. Unfortunately, much of the media have accepted this meme as a given. Since everyone “knows,” based on a lifetime of exposure to these memes, that the private sector can always do it better, they are quite willing to support private solutions to problems such as the financing of health care.

Whenever proposals such as expanding Medicare come up, the insurance industry pulls the puppet strings in Congress, and the public is reminded how well UnitedHealth and the other for-profit insurers are doing in creating private products that have lower out-of-pocket costs than Medicare (not mentioning that they are doing that with one-third of the overpayments they receive while keeping the other two thirds for profits and to pay for the excessive administrative services that they are selling us – a bad deal for taxpayers).

So those who support the intrusive managed care organizations and who support shifting more costs directly to patients under the false banner of marketplace competition (see Kenneth Arrow) have been effective in suppressing any serious consideration of improving Medicare and expanding it to cover everyone. As long as the public continues to buy their meme, there is little likelihood of change.

We need to continue to inform the public on the legitimate findings of health policy science (national health programs that include everyone while providing higher quality at a lower cost), but that is a daunting task considering how difficult it is to communicate complex policies to a population blunted by unfounded memes.

Why I Oppose Payment Reform

By Alan Weil, Editor-in-Chief, Health Affairs
Health Affairs Blog, December 12, 2014

I had my epiphany shortly after I announced my departure from the National Academy for State Health Policy (NASHP) about nine months ago. In an effort to help find my successor, I contacted some executive search firms. One firm quoted what they referred to as the “market price.” When I pressed them to tell me how much effort this price represented, they declined to do so. Ultimately, I recommended that NASHP contract with a search firm that charged by the hour.

It was then that I realized that, given the choice between capitation (a fixed fee for the outcome I desired) and fee-for-service (an hourly rate with no accountability for the outcome), I, as a purchaser, chose fee-for-service. Only a hypocrite would go around talking about the importance of payment reform, while secretly conducting business the old way!

Having given the matter some further thought, I present my five reasons for opposing payment reform:

1. The premise of payment reform is flawed.

The major actors in today’s health care system have thrived in the old payment model, which rewards volume: filling beds, making referrals, conducting tests, and the like. We now say we want them to improve population health and clinical outcomes while holding down costs. Different competencies are required to achieve these different objectives. There is no reason to expect that the people and institutions that were successful under the old model are the best people and institutions to charge with carrying out the new model.

2. Payment reform is insufficiently disruptive.

As we capitate or bundle payments, these aggregated payments are generally given to the highest cost actor in the system: the hospital, health plan, or large medical practice that already has the most resources. We expect that, due to new incentives, they will share those resources with other, lower-cost professionals like dieticians, social workers, and community health workers, whose efforts may improve health outcomes. But this may be wishful thinking. Hospitals and health plans operate with inertia and under constraints that may prevent them from having what an observer might consider a rational response to the new incentives. Marginal changes in payment policy fail to disrupt the concentration of power held by expensive institutions, thereby limiting the likely effects.

3. There is no evidence to suggest that payment reform will achieve the goals we need it to achieve.

The Institute of Medicine tells us that 30 percent of health care spending is wasteful. Only nineteen of the original thirty-two Pioneer ACOs remain in the program, and only twelve are producing enough savings to be shared. Only 58 of the more than 200 participants in the Medicare Shared Savings Program are saving more than 2 percent. For all the effort we are putting into payment reform, at this point, we don’t have an evidence base that shows what we are doing will achieve the end result we desire.

4. The original rationale offered for payment reform doesn’t match the current objectives.

The current iteration of payment models began with integrated health systems, like Geisinger and Intermountain, complaining that they were financially penalized when they delivered high quality care. They had a point. Efforts to, for example, improve birth outcomes, yielded financial losses due to reduced revenue from Neonatal Intensive Care Units. Today’s narrative is that we need payment reform to leverage a system that is resistant to change to fundamentally alter the model of care. The original rationale required only that incentives be directionally correct — keep your savings when you invest in better quality. The more ambitious goal of payment reform opens up tremendous risks such as providers gaming quality metrics and avoiding complex patients. The payment reform movement has been hijacked to suggest it can accomplish things its founders never imagined.

5. Payment reform poses a risk for the growing understanding of the importance of patient-centered care.

Imagine the following scenario: three people come to the doctor with knee pain. Each person has their own goal for the outcome of their treatment: one wants to manage pain during her daily activities, one wants to play tennis again, and one wants be completely pain free. Now try and imagine a “value formula” for providers to achieve these three patient-centered outcomes. Even if you could come up with one, operationalizing it would be nearly impossible. And what provider would be willing to accept financial risk for achieving such varied patient goals? When we implement payment for “value” we oversimplify to make the methods administrable, but lose all nuance of patient preference.

Despite all of these reservations, I do not actually oppose payment reform. We all know current payment methods system are seriously flawed and that we can do better. But this list serves as a reminder that payment policy, like grass, is always greener on the other side.

http://healthaffairs.org/blog/2014/12/12/why-i-oppose-payment-reform/

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Comment:

By Don McCanne, MD

The health policy literature is saturated with expressions of the concept that we are no longer going to pay for health care based on the volume of care delivered, but rather we are going to start paying for quality instead. Traditional fee-for-service medicine encourages greater use of resources simply because that increases revenues. Innovations in payment reform are being proposed that supposedly will change fee-for-service to a system rewarding quality. Alan Weil, Editor-in-Chief of Health Affairs, provides us with insight on what those innovations might do.

Some of the proposals include accountable care organizations, pay for performance, bundling of payments, Medicare shared savings, capitation, and increased transparency combined with placing the upfront financial responsibility on patients so that they are forced to be better-informed shoppers. Each of these has its own problems and some could actually cause worse outcomes than our traditional fee-for-service system.

Perhaps the most important point that Weil makes is that those who have thrived on the volume-driven model are the same individuals we are asking to improve clinical outcomes while holding down costs. As he states, “There is no reason to expect that the people and institutions that were successful under the old model are the best people and institutions to charge with carrying out the new model.”

In the video at the following link, after presenting the five reasons for opposing payment reform, Weil suggests five elements that should be embraced when considering payment reform. I found them to be disappointing. For instance, he suggests that we should allow the leaders to lead and then follow them as we implement the payment reforms under a multi-payer system. He makes no attempt to distinguish these leaders from the MBAs who are already maximizing their business models while basically ignoring patient service concepts.

Perhaps more important is what is missing from Weil’s comments. He says absolutely nothing about concepts of social insurance, particularly the single payer model. Yet single payer would be far more effective in improving health care value than would any of the payment reforms under consideration today.

http://nyshealthfoundation.org/news-events/events/nyshealth-conference-payment-reform-expanding-the-playing-field

The Search For A National Child Health Coverage Policy

By Sara Rosenbaum and Genevieve M. Kenney
Health Affairs, December 2014

Abstract

Thirty-eight percent of US children depend on publicly financed health insurance, reflecting both its expansion and the steady erosion of employment-based coverage. Continued funding for the Children’s Health Insurance Program (CHIP) is an immediate priority. But broader reforms aimed at improving the quality of coverage for all insured children, with a special emphasis on children living in low-income families, are also essential. This means addressing the “family glitch,” which bars premium subsidies for children whose parents have access to affordable self-only employer-sponsored benefits. It also means addressing the quality of health plans sold in the individual and small-group markets—whether or not purchased through the state and federal exchanges—that are governed by the “essential health benefit” standard of the Affordable Care Act (ACA). In this article we examine trends in coverage and the role of Medicaid and CHIP. We also consider how the ACA has shaped child health financing, and we discuss critical issues in the broader insurance market and the need to ensure plan quality, including the scope of coverage, use of a pediatric medical necessity standard that emphasizes growth and development, the structure of pediatric provider networks, and attention to the quality of pediatric health care.

http://content.healthaffairs.org/content/33/12/2125.abstract

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The ACA’s Pediatric Essential Health Benefit Has Resulted In A State-By-State Patchwork Of Coverage With Exclusions

By Aimee M. Grace, Kathleen G. Noonan, Tina L. Cheng, Dorothy Miller, Brittany Verga, David Rubin and Sara Rosenbaum
Health Affairs, December 2014

Abstract

The Affordable Care Act (ACA) establishes essential health benefits as the coverage standard for health plans sold in the individual and small-group markets for all fifty states and the District of Columbia, including the health insurance Marketplaces. “Pediatric services” is one of the required classes of coverage under the ACA. However, other than oral health and vision care, neither the act nor the regulations for implementing it define what these services should be. We investigated how state benchmark plans—the base plan chosen in each state as the standard or benchmark of coverage in that state under ACA rules—address pediatric coverage in plans governed by the essential health benefits standard. Our review of summaries of all the state benchmark plans found that no state specified a distinct pediatric services benefit class. Furthermore, although benchmark plans explicitly included multiple pediatric conditions, many plans also specifically excluded services for children with special health care needs. The Department of Health and Human Services has made a commitment in the essential health benefits regulations to review its approach for the 2016 plan year. Thus, our findings have implications for future regulations regarding the essential health benefits standard for pediatric services.

http://content.healthaffairs.org/content/33/12/2136.abstract

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The Scheduled Squeeze On Children’s Programs: Tracking The Implications Of Projected Federal Spending Patterns

By C. Eugene Steuerle and Julia B. Isaacs
Health Affairs, December 2014

Abstract

Federal programs for children are under increasing budgetary pressure. According to current federal law or any budget alternative being offered by the president or congressional leaders, spending on children would decline as a share of the budget and of the national economy. This article summarizes past, current, and projected budgets for children’s programs. It traces significant historical expansions of means-tested programs, such as the Supplemental Nutrition Assistance Program; depicts fairly significant declines in more universal supports, such as the income tax exemption for dependents; and shows the future squeeze on children’s programs brought about by automatic growth in health, retirement, and tax subsidy programs, along with the failure of revenues to keep pace with the overall growth in spending. Federal programs for health care have been a mixed blessing for children: Medicaid has grown to be the largest federal support for children, but overall federal health care costs eat away at the share of the budgetary pie left for anything else.

http://content.healthaffairs.org/content/33/12/2214.abstract

Comment:

By Don McCanne, MD

During the health care reform process there seemed to be an attitude that we were already doing well in ensuring that the health care needs of children were being met. Employer-sponsored family coverage took care of middle- and upper-income children, Medicaid and SCHIP covered lower-income children, and community health centers and other safety-net institutions took care of children who were not covered by the other programs. The Affordable Care Act expanded assurances of coverage by providing income-based subsidies for plans offered through the exchanges. So what is the problem?

Having multiple sources of coverage with different eligibilities that change with continual changes in life circumstances – income levels, employment status of family income source, changes in geographical location, variations in community resources, citizenship status, etc. – results in instability of coverage for everyone, certainly including children. These articles from the current Health Affairs summarize some of these variations in the public and private programs, variations in benefits covered, and variations in financing of the programs. The current situation might be summed up as lacking “a national child health coverage policy” (Rosenbaum and Kenney).

Although many factors contribute to the deficiencies in child health coverage, one of the more important is that we continue to try to build upon a fragmented combination of public and private programs, an approach that only perpetuates many of these deficiencies. An example is the “family glitch” in which children do not have access to exchange subsidies if the employed parent receives solo coverage through their work. Efforts to patch the various flaws only increase the complexity and administrative burden of our dysfunctional system, and yet patches on a fundamentally flawed infrastructure can never provide the stability that we need.

So what can we do? We can build a new health care financing infrastructure that serves well the needs of not only our children, but all of us. That would be a single payer national health program – an improved Medicare for all – but not just a Medicare that serves only the elderly and persons with disabilities, rather, like Canada, a Medicare that serves all of us. Our children deserve it, and so do we.

Access to Care: Provider Availability in Medicaid Managed Care

Department of Health and Human Services, Office of Inspector General, December 2014

Examining access to care takes on heightened importance as enrollment grows in Medicaid managed care programs. Under the Patient Protection and Affordable Care Act, States can opt to expand Medicaid eligibility, and even States that have not expanded eligibility have seen increases in enrollment. Most States provide some of their Medicaid services—if not all of them—through managed care. The Office of Inspector General received a congressional request to evaluate the adequacy of access to care for enrollees in managed care.

We found that slightly more than half of providers could not offer appointments to enrollees. Notably, 35 percent could not be found at the location listed by the plan, and another 8 percent were at the location but said that they were not participating in the plan. An additional 8 percent were not accepting new patients. Among the providers who offered appointments, the median wait time was 2 weeks. However, over a quarter had wait times of more than 1 month, and 10 percent had wait times longer than 2 months. Finally, primary care providers were less likely to offer an appointment than specialists; however, specialists tended to have longer wait times.

Findings

• Half of providers could not offer appointments to enrollees
• Forty-three percent of providers were not participating in the plan at the listed location
• Another 8 percent of providers were not accepting new patients
• Among the providers who offered appointments, the median wait time was 2 weeks; however, over a quarter had wait times of more than 1 month
• A small number of providers required patients to submit medical records prior to scheduling an appointment or would not accept patients with certain medical conditions
• Primary care providers were less likely to offer an appointment than specialists; however, specialists tended to have longer wait times
• The median wait time for specialists was twice as long as that for primary care providers

Conclusion

Our findings demonstrate significant vulnerabilities in provider availability, which is a key indicator for access to care. These findings also raise serious questions about the abilities of plans, States, and CMS to ensure that access-to-care standards are met. Without adequate access, enrollees cannot receive the preventive care and treatment necessary to achieve positive health outcomes and improved quality of life.

Notably, 51 percent of providers were either not participating in the plan at the location listed or not accepting new patients enrolled in the plan. When providers listed as participating in a plan cannot offer appointments, it creates a significant obstacle for an enrollee seeking care. Moreover, it suggests that the actual size of provider networks may be considerably smaller than what is presented by Medicaid managed care plans.

Among the providers who offered appointments, the median wait time was 2 weeks. However, over a quarter had wait times of more than 1 month, and 10 percent had wait times longer than 2 months. Long wait times can have a significant impact on patient care. It also raises questions about whether these plans are complying with their States’ standards for access to care, as most States have access standards that require appointments be provided within 1 month or less. That so many providers could not offer appointments within a month raises concerns about enrollees’ ability to obtain timely access to care.

http://oig.hhs.gov/oei/reports/oei-02-13-00670.pdf

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Comment:

By Don McCanne, MD

One of the major features of the Affordable Care Act was to expand Medicaid to cover a greater number of low-income individuals. Although many states opted out of the expansion, nevertheless Medicaid enrollment increased in those states as well. Because of the expansion of state budgets required to cover the burgeoning Medicaid population, most states have moved most if not all of their Medicaid patients into Medicaid managed care plans.

Although states claim that this benefits patients by placing them in organizations that are designed to manage their health care, the real reason is that the states wanted to save money. The managed care plans agree to provide care at a cost lower than the costs of comparable care provided by community hospitals and physicians. Because of the increased enrollment, the total costs of Medicaid are increasing, but the payments per individual are not.

Medicaid, being a welfare program, was already chronically underfunded. Further limiting payments per patient can place a serious strain on resources that would pay for all of the promised care. This OIG study was done in the summer of 2013, before the surge in enrollment that began later that year. If half of providers could not offer appointments to patients at that time, what is happening now that the managed care organizations must accommodate the added demand?

Although there are already many anecdotal reports that the managed care organizations are not meeting their obligations under these state contracts, we will have to wait longer before we have a comprehensive objective evaluation of the extent of the deficiencies in health care services.

Isolating low-income individuals and placing them into an underfunded welfare program will certainly perpetuate disparities in care. Yet the deficiencies in health care services are even worse in those states that opted out of Medicaid expansion, and they are worse for the undocumented residents who are prohibited from participating in Medicaid or in the subsidized plans offered by the exchanges.

Under a single payer national health program – an improved Medicare for all – everyone would have access to a system that met the highest standards of care. The wealthy would still have their high standard of care, but with their special amenities paid for separately, such as private hospital suites, whereas low-income individuals could have the same high standard of care, but without the amenities. Because of the efficiencies of the single payer model, it would not cost the nation any more than we are now spending on health care.