Remarks by the Fist Lady to Lehman Brothers Health Corporation

The White House, Office of the Press Secretary, June 15, 1994
The William J. Clinton Presidential Library, Previously Restricted Documents

Question:  This next question… comes from Scott Engstrom (phonetic) of Franklin Templeton Funds. He asks, it seems clear that everyone on Capitol Hill is in favor of “health care reform” and that if the Administration wanted to compromise, some legislation could be passed very quickly. Is the danger of that approach from your perspective that that you may be giving up a mandate at a specific period in history in which you may be able to effectuate radical change? Is it now or never for massive health care reform?

Mrs. Hillary Clinton:  No, because what I think would happen if there is not health care reform this year, and if, for whatever reason, the Congress doesn’t pass health care reform, I believe, and I may be to totally off base on this, but I believe that by the year 2000 we will have a single payer system. I don’t think it’s — I don’t even think it’s a close call politically.

I think the momentum for a single payer system will sweep the country. And regardless of the referendum outcome in California, it will be such a huge popular issue in the sense of populist issue that even if it’s not successful the first time, it will eventually be. So for those who think that building on the existing public-private system with an employer mandate is radical, I think they are extremely short-sighted, but that is their choice.

There are many ways to compromise health care reform, and I don’t think that the President could have been clearer in every public statement he has made that he has one bottom line. It is universal coverage by a date certain. And he has basically told the Congress, you know, you’ve got different ways of getting there. Come to us, and let’s look at it. There are only three ways to get to universal coverage. You know, a lot of people stand up and applaud universal coverage, and they sit down, and you say, “Well, how are you going to get there?”, and they don’t want to confront that there are only three ways.

You either have a general tax — the single payer approach that replaces existing private investment — or you have an employer mandate, or you have an individual mandate. And there isn’t any other way to get to universal coverage. The market cannot deliver universal coverage in the foreseeable future, and any compromise that people try to suggest that would permit the market  to have a few years to try to deliver universal coverage without a mandate that would take effect to actually finish the job will guarantee a single payer heath care system.

http://www.clintonlibrary.gov/assets/storage/Research-Digital-Library/flotus/muscatine-flotus-press/Box-015/2011-0415-S-flotus-statements-and-speeches-4-26-94-10-21-94-binder-6-15-94-lehman-brothers-health-corp.pdf

More documents (search engine available): http://www.clintonlibrary.gov/previouslyrestricteddocs.html

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Comment:

By Don McCanne, MD

Happy New Year! 

(What else can I say?)

Sources of Geographic Variation in Health Care: Evidence from Patient Migration

By Amy Finkelstein, Matthew Gentzkow, and Heidi Williams
NBER Working Paper 20789, National Bureau of Economic Research, December 2014

Abstract

We study the drivers of geographic variation in US health care utilization, using an empirical strategy that exploits migration of Medicare patients to separate the role of demand and supply factors. Our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics. We find that 40-50 percent of geographic variation in utilization is attributable to patient demand, with the remainder due to place-specific supply factors. Demand variation does not appear to result from differences in past experiences, and is explained to a significant degree by differences in patient health.

From the Introduction

Health care utilization varies widely across the United States. Adjusting for regional differences in age, sex, and race, health care spending for the average Medicare enrollee in Miami, FL was $14,423 in 2010, but just $7,819 for the average enrollee in Minneapolis, MN. The average enrollee in McAllen, TX spent $13,648, compared to $8,714 in nearby and demographically similar El Paso, TX.

In this paper, we exploit patient migration to separate variation due to patient characteristics such as health or preferences from variation due to place-specific variables such as doctors’ incentives and beliefs, endowments of physical capital, and hospital market structure. As a shorthand, we refer to the former as “demand” factors and the latter as “supply” factors.

Like past decompositions, ours is not sufficient to draw strong conclusions about the efficiency of observed geographic variation. Though it may be tempting to see supply-driven heterogeneity as evidence of waste, such variation could reflect different allocations of physical or human capital, and so be consistent with efficiency. Conversely, demand-driven heterogeneity could reflect patient misinformation, and so contribute to inefficiency. We view our findings as both a first step toward a more welfare-relevant understanding and a clarification of an influential body of existing evidence.

Conclusion

We find robust evidence that 40 to 50 percent of geographic variation in the log of health care utilization is due to fixed characteristics of patients that they carry with them when they move. Our examination of mechanisms suggests that a large part of this demand-side heterogeneity may be due to patient health. The remaining 50 to 60 percent of variation is due to place-specific factors, possibly including doctor practice patterns and characteristics of health care organizations.

These results suggest that demand-side factors play a larger role in geographic variation than conventional wisdom might suggest. This does not translate immediately into conclusions about efficiency. The correlation of utilization with demand-side factors (and with patient health in particular) may reflect differences in the marginal impact of treatment or the marginal utility from a given impact, and so be consistent with efficiency. But it could also reflect differences in other demand drivers, such as patient information or beliefs. A more careful examination of the efficiency implications of the geographic variation is an important direction for further work.

Our findings have implications beyond our patient-place decomposition. The fact that habit formation seems limited implies that demand-side differences in utilization are unlikely to change quickly in response to policy, at least among the 65 and over population, a population that accounts for about a third of total annual health care spending. The fact that a large part of demand-side geographic variation reflects variation in patient health may also point to limits to the effectiveness of demand-side policies aimed at changing patient beliefs or preferences. At the same time, the sharp adjustment we observe around moves suggests policies that affect the supply-side can have immediate impacts.

While we have taken a first step toward understanding the origins of the patient component we measure, it remains for future work to better understand the mechanisms behind the place component. Particularly interesting questions concern the role of physicians’ training and practice patterns, and the role of health care organizations.

http://www.nber.org/papers/w20789

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Comment:

By Don McCanne, MD

Although this article is technically challenging to read and absorb, and the authors caution that more work is needed to understand better the implications of their initial results, nevertheless, this is a very important article because it improves our understanding of geographic variations in health care utilization as related to “patient characteristics such as health or preferences” (demand-side) and to “place-specific variables such as doctors’ incentives and beliefs, endowments of physical capital, and hospital market structure” (supply-side). Because of concerns over global health care spending, many important demand-side and supply-side policies are being put in place without an adequate regard of the policy science behind those decisions, both known and unknown.

On the demand side, it appears that the health of the patient is far more important in patient decisions on utilization than are patients’ beliefs, preferences and habits. This is as it should be. The health care system should be there to serve the health care needs of the patient. Yet the leading efforts to control demand-side over-utilization include measures that impair access, particularly financial barriers such as high deductibles and tiered layers of coinsurance, and provider barriers established through the use of narrow- and ultra-narrow networks. Policies that prevent patients from getting the care they need should be rejected. The claim that these policies control excess patient demand is based on the fiction that patients are demanding excessive care; they are not.

On the supply side, much has been written about excess capacity that results in excessive utilization, including the alleged excessive supply of high-tech specialized services. The authors of this study state that we need to learn more about the role of physicians’ training and practice patterns, and the role of health care organizations. Yet the leading efforts to control supply-side over-utilization include the use of accountable care organizations, in spite of the lack of evidence of their effectiveness, and the use of dubious pay-for-performance levers to guide physicians’ practice patterns. Many contend that about one-third of care provides marginal benefits that could be done away with, since the the overall negative impact would be small (but not zero). But it is very difficult to prospectively select the care that could be omitted. That is what the accountable care organizations are supposed to be doing, yet, to date, there has been very little reduction in spending under these programs, and often that reduction is erased by the performance rewards.

We already know of very effective policies that could control excesses on the supply side. Our prices are created on the supply side, and they are too high. They could be brought into line through public policies that would ensure adequate funding of services and products while reducing the waste of excessive pricing. The complexity of the supply-side administrative services wastes tremendous resources.  That waste could be dramatically reduced through an administratively simplified single payer financing infrastructure. Excess capacity that invites over-utilization could be reduced through central planning and budgeting of capital improvements – a step that would also address our even greater need to improve capacity in regions wherein services are inadequate.

So let’s get to the basics. Demand side? Remove barriers to care. Supply side? Begin by replacing our dysfunctional health care financing system with a single payer national health program. Once we have those in place, then we can sit around and have intellectual discussions about physicians’ training and practice patterns, and the role of health care organizations. But we can’t waste our time with decades of esoteric policy studies when we have important work to do right now.

Comparative Effectiveness of Generic and Brand-Name Statins on Patient Outcomes: A Cohort Study

By Joshua J. Gagne, PharmD, ScD; Niteesh K. Choudhry, MD, PhD; Aaron S. Kesselheim, MD, JD, MPH; Jennifer M. Polinski, ScD, MPH; David Hutchins, MBA, MHSA; Olga S. Matlin, PhD; Troyen A. Brennan, MD; Jerry Avorn, MD; and William H. Shrank, MD, MSHS
Annals of Internal Medicine, September 16, 2014

Background: Statins are effective in preventing cardiovascular events, but patients do not fully adhere to them.

Objective: To determine whether patients are more adherent to generic statins versus brand-name statins (lovastatin, pravastatin, or simvastatin) and whether greater adherence improves health outcomes.

Design: Observational, propensity score–matched, new-user cohort study.

Setting: Linked electronic data from medical and pharmacy claims.

Participants: Medicare beneficiaries aged 65 years or older with prescription drug coverage between 2006 and 2008.

Intervention: Initiation of a generic or brand-name statin.

Measurements: Adherence to statin therapy (measured as the pro- portion of days covered [PDC] up to 1 year) and a composite outcome comprising hospitalization for an acute coronary syndrome or stroke and all-cause mortality. Hazard ratios (HRs) and absolute rate differences were estimated.

Results: A total of 90 111 patients who initiated a statin during the study was identified; 83 731 (93%) initiated a generic drug, and 6380 (7%) initiated a brand-name drug. The mean age of patients was 75.6 years, and most (61%) were female. The average PDC was 77% for patients in the generic group and 71% for those in the brand-name group (P < 0.001). An 8% reduction in the rate of the clinical outcome was observed among patients in the generic group versus those in the brand-name group (HR, 0.92 [95% CI, 0.86 to 0.99]). The absolute difference was -1.53 events per 100 person-years (CI, -2.69 to -0.19 events per 100 person-years).

Limitation: Results may not be generalizable to other populations with different incomes or drug benefit structures.

Conclusion: Compared with those initiating brand-name statins, patients initiating generic statins were more likely to adhere and had a lower rate of a composite clinical outcome.

Primary Funding Source: Teva Pharmaceuticals.

From the Discussion:

In a head-to-head comparison, we found that patients initiating generic statins were more likely than those initiating brand-name statins to adhere to their prescribed treatment and had an 8% lower rate of a composite end point of cardiovascular events and death. Generic drug use has been widely recognized to reduce patient out-of-pocket costs and payer spending. Most persons in the United States are enrolled in prescription drug insurance programs with tiered benefits that require higher copayments for brand-name prescriptions than bioequivalent generic versions. Among patients in our study, the mean copayment for the index statin prescription was $10 for generic drug recipients and $48 for brand-name drug recipients. Our finding that adherence is greater with generic statins than with brand-name statins is therefore not surprising and is consistent with other studies that have shown a direct relation between higher copayments and lower adherence.

http://annals.org/article.aspx?articleid=1905128

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Comment:

By Philip Verhoef, MD

This study further dispels the notion that more skin in the game leads to better outcomes.

The researchers prospectively examined 90,111 patients who received a new prescription for statin therapy and divided them into receiving generic (83,731 patients) versus name-brand (6380 patients) for the 3 statins that were generic at that time. They used propensity scores to “match” patients since they weren’t able to properly randomize patients to generic versus name-brand. They then measured adherence and outcomes and found the following:

• 77% adherence in patients receiving generics versus 71% adherence in patients receiving name brand
• 8% reduction in the rate of pooled clinical outcomes (stroke, acute coronary syndrome or all cause mortality) for patients receiving generics
• They note that the out of pocket costs to fill the generic was 10 dollars and the branded was 48 dollars

They basically conclude that patients who have to pay more for their medications are less likely to be adherent, and that the difference in clinical outcomes occurred as a direct result of the increased cost, leading to poorer adherence and consequently more strokes/ACS/death.

There’s lots in here:

• Generics work
• Generics are cheaper
• Relatively small differences in adherence can lead to substantial clinical outcomes (ie, perhaps we should focus on improving adherence to prescribed therapies)

But I think that the biggest take-home is that if patients have to pay more for medications, they will not take them and then they will die. Ergo, shifting costs to patients leads to more death.

Philip Verhoef, MD, PhD is Clinical Instructor of Medicine at The University of Chicago Medicine, a member of the PNHP Advisory Board, and co-president for PNHP-Illinois.

Vermont ends single payer bid: Feds now left to confront the issue

By John E. McDonough
CommonWealth, December 23, 2014

Many American dislike the Affordable Care Act not because it goes too far but because it does not go far enough.  About 24 percent of Americans believe the ACA should be expanded, and by that, many mean a Medicare-for-All single payer financing scheme that takes insurance companies out of the equation.

Since the ACA is nothing like single payer, for four years now, the candle in the window for single payer advocates has stood in the governor’s office in the Vermont State House.  Gov. Peter Shumlin got elected in 2010 promising to bring a single payer health financing scheme to Vermont, and various people in his administration have been hard at work figuring how to make it happen.  Last Wednesday, though, Shumlin snuffed out the candle, admitting that he couldn’t make the numbers work.

So what is single payer’s future?  Like all good Democrats, I harken to the words of my late boss, Sen. Kennedy: “…the work goes on, the cause endures, the hope still lives, and the dream shall never die.”

Today, in the United States, we have three-plus mega-health insurance programs in Medicare, Medicaid, and the new ACA subsidy/exchange structure.  Medicare is actually two programs when you count Medicare Advantage.  Medicaid is nearing 70 million covered lives.  And as employer coverage continues its 25 year plummet, the ACA subsidized exchange world is going to grow in size and importance. 

It may take 5, 10, 15 years, or even longer – but at some point, some Republicans and Democrats will propose federal health insurance consolidation.  The illogic and wastefulness of running these enormous, siloed health insurance behemoths will become clear – that will be the backdoor start and momentum will grow.

The Vermont failure, I believe with regret, signals the end of serious efforts to achieve single payer at the state level.  It’s too big a lift, economically and politically.  Shumlin inadvertently blew out the candle.

At the federal level, I do expect it – but through the backdoor, not the front, and no time soon.

John McDonough is a professor at the Harvard School of Public Health and the author of Inside National Health Reform.

http://www.commonwealthmagazine.org/Voices/Perspective/Online-Perspectives-2014/Fall/028-Vermont-ends-single-payer-bid.aspx

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Comment:

By Don McCanne, MD

John McDonough is one of the nation’s most astute observers of health care reform. We can take solace in his prediction that the entire nation will eventually achieve single payer reform, while regretting that it will be a slow process.

For those who differ, prove him wrong.

Vermont’s Single Payer Washout

The Wall Street Journal, December 22, 2014

Last week, in a reversal that deserves more attention, Democratic Governor Peter Shumlin announced that Vermont would no longer create America’s first statewide single-payer health system.

Single payer is the polite term for socialized medicine and the ultimate goal of the political left.

At least the Governor deserves credit for admitting failure. His ideological comrades are rarely dissuaded by the prospect of economic damage, as ObamaCare proves. But Mr. Shumlin has succeeded in making Vermont a national model: By admitting that single payer will make health care both more expensive and less efficient, he has shown other states what not to do.

http://www.wsj.com/articles/vermonts-single-payer-washout-1419293404

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H.202, Bill as Passed by the House and Senate, 2011

“An act relating to a single-payer and unified health system”

changed to

“An act relating to a universal and unified health system”

(H.202 is a 213 page bill. The first 135 pages were deleted and the remaining pages are a rewrite of the entire bill.)

Sec.2(a)(6):

The director, in collaboration with the agency of human services, shall obtain waivers, exemptions, agreements, legislation, or a combination thereof to ensure that, to the extent possible under federal law, all federal payments provided within the state for health services are paid directly to Green Mountain Care. Green Mountain Care shall assume responsibility for the benefits and services previously paid for by the federal programs, including Medicaid, Medicare, and, after implementation, the Vermont health benefit exchange.

http://www.leg.state.vt.us/docs/2012/bills/Passed/H-202.pdf

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Comment:

By Don McCanne, MD

As was fully expected, the conservative and libertarian pundits are inundating the Internet and other media vehicles with celebratory commentaries on the theme that Vermont Gov. Peter Shumlin’s withdrawal of his single payer proposal is proof that single payer is more expensive and less efficient than other health care financing systems. The Wall Street Journal editorial excerpt above is selected as a leading example of these right-wing responses. The problem with these comments is that H.202, the Vermont reform legislation, IS NOT A SINGLE PAYER PROPOSAL.

Even many single payer supporters have it wrong. They claim that Gov. Shumlin gave up for political reasons, and, if he had persevered, he would have been successful in establishing the first state-level single payer system in the U.S. Again, the problem is that H.202, the Vermont reform legislation, IS NOT A SINGLE PAYER PROPOSAL.

Posted above is a link to H.202. During the legislative process, the bill was renamed, deleting “single-payer” from its title. If you check the document at the link, you will see that the original bill was red-lined out, and the bill was entirely rewritten. All references to “single-payer” were removed.

The crucial phrase in the except above regarding waivers and agreements is “to the extent possible under federal law.” It was known at the time the revisions were being made that Sec 1332 ACA waivers, Sec 1115 Medicaid waivers, the narrowly defined Medicare demonstration waivers, and the ERISA limitations on employer-sponsored plans were so limited that it would be impossible to establish a bona fide single payer system through unilateral state action alone, nor through a cooperative effort with the Obama administration. Comprehensive federal legislation would have been required, and that clearly was not forthcoming from this or the next Congress. Legislating a wish list does not equate with clearing all of the hurdles that only Congress can effectuate.

The reason that this message is being reemphasized again today is that there has not been a loud enough voice in unison emphatically rejecting the claim that Vermont’s experience is proof that single payer cannot work. Single payer never had a chance, considering the inertia in Congress. This was not a single payer failure. Do not remain silent when that claim is made. Single payer has been proven to work well in many other nations.

Medicaid Payments and Access to Care

By Sara Rosenbaum, J.D.
The New England Journal of Medicine, December 18, 2014

With more than 66 million beneficiaries, Medicaid is the United States’ largest insurer, and its impact on health insurance coverage, access to care, and the health of the poor has been substantial. But historically, Medicaid has faced a major challenge — a relatively low rate of physician participation. In its March 2011 report to Congress, the Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC, Congress’s Medicaid advisory panel) pointed out that the Medicaid population disproportionately resides in medically underserved communities with serious shortages of primary care providers and that the problem of isolation is confounded by low physician-participation rates.

Extensive research suggests that many factors contribute to low physician participation: complex program requirements, payment delays, and concerns about managing the care of patients with high levels of health and social risk. But research also shows that low fees play a key role and that substantial payment increases may be needed to alter physicians’ behavior. In a study conducted for the Kaiser Family Foundation, the Urban Institute estimated that in 2012, Medicaid physician fees averaged about 66% of Medicare payments and that the Medicaid–Medicare pay disparity was widening.

For good reason, primary care tends to be the first area of focus in any discussion of access in Medicaid. With a pronounced and growing shortage of primary care professionals — a shortage that’s estimated to reach 30,000 by 2015 — depressed Medicaid participation among available physicians is a major cause for concern. In the case of primary care, mitigation strategies exist. Safety-net providers such as community health centers play a vital role in reducing the access gap in the communities they serve.

Specialty care arguably presents the more serious Medicaid access problem, especially since there is no obvious mitigation strategy for it comparable to that offered by community health centers. The Commonwealth Fund reports that low payment rates are the principal cause of reduced specialist participation.

Among the hot-button issues that define the tense federal–state Medicaid relationship, no issue has historically been hotter than access to care, because of fierce state resistance to federal oversight of provider payment. This tension has led Congress to gradually strip most provider-payment provisions out of the Medicaid statute. But one basic legal principle remains: the so-called equal-access provision, which specifies that as a condition of federal funding, states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The Department of Health and Human Services (HHS), however, has never implemented this provision through regulations.

Under the Affordable Care Act, Congress funded a 2-year pay increase for Medicaid primary care services in order to boost primary care payment rates to Medicare levels. In its Kaiser study, the Urban Institute estimated that the pay bump would increase fees by 73%. But the increase, which took effect in 2013, expires at the end of 2014, with no renewal in sight. News reports suggest that nearly all states plan to roll back primary care payments to 2012 levels, despite anecdotal evidence reported by some states of increases in provider participation.

Faced with payment rates that in some cases may be dangerously low, beneficiaries and providers have turned to litigation. A fundamental question, however, is whether providers and beneficiaries can go to court when provider payments may be too low to ensure appropriate access to care. In 2012, in Douglas v. Independent Living Center of Southern California, which involved a challenge to deep rate cuts enacted by California’s legislature, the Supreme Court deflected this question. Now, however, the issue is back; this term, the Court will hear Armstrong v. Exceptional Child Center, Inc., which again raises the question of whether beneficiaries and providers can protest low Medicaid payments in court. Douglas involved a rate cut; Armstrong, in contrast, involves a state’s refusal to pay properly. The situation here is one of a state’s failure to pay a provider an HHS-approved rate, with no HHS effort to enforce its own requirements.

Observers do not expect another deflection; in his Douglas dissent, Chief Justice John Roberts made clear his objection to court involvement in Medicaid-access cases, arguing that HHS — not the courts — should be the sole enforcement authority.

The Armstrong situation may be more serious than that in Douglas. Douglas involved an ongoing and active federal review, however slow it may have been. In Armstrong, the federal government has chosen to play no affirmative role whatsoever. 

There is a deeper issue here, of course: getting the federal government to do what it is supposed to do. That means issuing the long-delayed access regulations, providing technical assistance to states, and maintaining active and ongoing oversight of state program management. Medicaid beneficiaries deserve no less.

http://www.nejm.org/doi/full/10.1056/NEJMp1412488

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Comment:

By Don McCanne, MD

Medicaid has traditionally underpaid physicians for their health care services. That has resulted in low participation rates, especially by specialists, which, in turn, threatens health care access for Medicaid patients. The Medicaid statute requires that states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Failure of our government to enforce this equal-access provision will now be heard by the Supreme Court.

The Affordable Care Act (ACA) greatly expanded eligibility for Medicaid, though the increase was not quite as large as anticipated because of the Supreme Court’s previous ruling allowing states to opt out of the expansion. Nevertheless, in an effort to ensure that enough physicians would participate at a level to assure adequate access for the new Medicaid enrollees, Congress included a temporary provision in ACA that would increase primary care payments to Medicare levels. Next week, that increase ends, and most states will revert to pre-ACA payment levels.

Most states are shifting their Medicaid patients into managed care organizations for the purpose of reducing their spending for this program. With the low payment rates, it is difficult to see how these organizations can afford to finance their patients’ care except by significantly reducing the frequency and intensity of services delivered. This is not a population that has been receiving an excess of health care services. Quite the contrary, they were already doing without services that they should have. These further reductions likely will be able to be measured by an increase in suffering and death.

Although Chief Justice Roberts has already indicated that he does not believe this is a matter for the courts, even if there is a ruling that the equal-access provision must be enforced, it is likely that only nominal adjustments will be made and that Medicaid will continue to be critically underfunded.

Instead of tweaking Medicaid, we need to enact an improved Medicare for all that would include implicitly an equal-access provision that applies to everyone.