By Carey Goldberg
WBUR’s CommonHealth blog, Sept. 10, 2014

Note to politicians: Backing “Medicare for all” is looking less and less like electoral poison. If, deep in your heart, you believe American health care would be better off with a Canadian-style, single-payer system, you might now consider coming out of the closet. (In Democratic primaries in blue states, at least.)

That’s my suggested takeaway from the striking Massachusetts Democratic primary showing of Dr. Donald Berwick, who rocketed from near-zero name recognition among general voters to 21 percent at the polls. Catch him saying forcefully in this video: “Let’s take the step in health care that the rest of the country hasn’t had the guts to take: single payer. Medicare for all.”

Now, Vermont not only has a mainstream politician who backed a single-payer system — Gov. Peter Shumlin — it’s actually translating the idea into practice as we speak. But let’s put it this way: This seems to be the first time that a candidate in a mainstream political party in a state that is not a verdant utopian duchy has run on a single-payer platform. And though he did not defeat the longtime familiar faces, he did surprisingly well.

Of course, we knew that Massachusetts voters tend to like the idea of single payer. As recently as 2010, 14 fairly middle-of-the-road districts voted in favor of a non-binding ballot measurecalling for “creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts.”

Analysts projected that the results meant a statewide majority in support of a single-payer system. The single-payer idea had polled well in non-binding ballot measures before, as well. But now we’ve seen that sentiment translated into support for a candidate.

Other politicians, including President Obama, have backed the general idea of a single-payer system, but they always add a “but,” said Dr. Steffie Woolhandler, who helped found Physicians for a National Health Program.

“And the ‘but’ usually has to do with the political situation,” she said. “But it’s actually important to say what’s the right thing to do and to really work toward the right solution, and that’s what Don [Berwick] has been willing to do, to say, ‘We need single payer and skip the ‘but,’ let’s just say we need single payer and that we need to start working toward it.’”

Will Dr. Berwick’s strong showing change the playing field for other candidates? Dr. Woolhandler says yes: “Politicians understand votes. Unfortunately, they also understand money. But they do understand votes, and I think other politicians will see that voters are behind the idea of single payer.”

I asked Dr. Berwick about the reaction to his single-payer position in his many campaign-season travels, and he said the biggest surprise was how positive the response had been from voters who would likely not call themselves progressives. They either already agreed with the idea, he said, or responded instantly after one sentence of explanation with, “That sounds right to me. Let me tell you my story.”

“I remember a carpenter in Hingham,” he said. “I don’t think he would have said he was a progressive — he was a somewhat older carpenter struggling to make ends meet, sitting on a sofa at a gathering, a meet-and-greet, and I started talking about this, and I guess — embarrassingly, to me — I was expecting some pushback. But he immediately said, ‘I’ve got to tell you a story.’ And he told me about his struggle to get health insurance.

“He very carefully went through the policy options, he had picked one that had a maximum deductible that was pretty stiff, and he was ready to swallow it. And he did, he signed up for that plan. And then, the problem was that he had three major illnesses the following year. And he discovered — to his dismay — that the deductible did not apply to the year, it applied to each separate episode. So this guy, who’s working with his hands and trying to just get through and have his family’s ends meet, suddenly found himself tens of thousands of dollars in debt, because of the complexity [of health insurance.] And he said, ‘Enough of this!’ He immediately understood and was fully on board, and that kind of experience has been pretty constant for me.”

Overall, Dr. Berwick said, “The response has been extremely positive beyond anything I would have anticipated.  When I took the position, I had no polling information. I did it because I was looking at the state budget and seeing the erosive impact of rising health care costs on everything else we need to do. The numbers were stunning to me. I got briefed by the Mass. Budget Policy Center and they said — as I remember the numbers and have been quoting them — Parks and Recreation were down 25 percent, local aid was down 40 percent, higher education was down 30 percent.

You really can’t find a line item on the state budget that hasn’t been down in real terms in the last decade. Except health care is up 59 percent. That was the number that stuck in my mind when they briefed me. And as I went around the state and began to see what we need to do for schools, for transportation, for affordable housing — the term I’ve used, and it’s a bold term but it’s confiscation. It’s with benign intent, but health care is essentially taking away opportunities from public investment.”

“And then you meet with businesses and you get the same story. Businesses talk about how the continuing increase in health care costs is cutting opportunities for them to grow and develop their businesses. And then when you talk to labor — I remember meeting with the painters’ union, and I asked the person who was hosting me to show me their paychecks, and the union wage scales over the past few years — you can see it right there in black letters — the take-home pay per hour has not been going up. What is going up is contributions to health care. So the logic was strong.

“And the reactions have been consonant with those data. People are very frustrated. They don’t understand their health insurance. They can’t read their policy. They know it’s not transparent. And they are suffering from vastly increased costs.”

No anti-Canada, anti-England backlash against what could be seen as an attempt to “nationalize” or “socialize” health care?

Not really, Dr. Berwick said. “Initially, you have to explain it, like, ‘What exactly do you mean? Medicare is a federal program.’ If you say it’s Medicare for all, that doesn’t quite do it. But as I explain it to people, you take all the funds, put them in a single pool, make that pool publicly accountable, constantly subject to scrutiny and redefinition, stop the paperwork, stop the complexity, that could save 10 percent of the total bill over the first couple of years.”

“People do have questions, like, ‘Is this a government takeover of health care?’ And you explain, ‘No, no, no. It’s the same delivery system, your doctors and hospitals, this is not nationalization or the state taking over care, but it is a single payment system. So I would say, the reaction to this has been stunningly positive. Could this be catalytic? I certainly hope so. I’d hate to see Vermont lap Massachusetts on being the first to show what a rational payment system looks like.”

Neither of the Massachusetts primary winners — Democrat Martha Coakley and Republican Charlie Baker — backs a single-payer system, so it’s actually pretty well guaranteed that Vermont is going to lap Massachusetts in the single-payer realm.

But perhaps the question is whether Vermont and Massachusetts will follow the pattern of gay marriage: The Vermont Supreme Court broke the ice in late 1999 with its decision on “civil unions,” but it was — arguably — the 2003 decision by the highest court of Massachusetts that set gay marriage on the road to the big-time.

Readers, what do you see happening next with single-payer politics? WBUR’s Martha Bebinger reports that Dr. Berwick did not say in his concession speech what he plans to do next. We’ll keep you posted on that.

http://commonhealth.wbur.org/2014/09/single-payer-don-berwick

By John Nichols
The Nation, Sept. 5, 2014

Don Berwick is making a vital point about the need for progressives to expand the discussion about healthcare reform.

Democratic and Republican strategists, and the candidates who let campaign consultants frame their range of opinion, are still engaging in picayune debates about the strengths and weaknesses of the Affordable Care Act.

But Berwick, who for seventeen months headed the Medicare and Medicaid programs under President Obama, isn’t getting lost in the political weeds. He’s blazing a trail in the direction of what ultimately must be done—pushing at the constraints of the conversation and offering an illustration of why it is so important for progressives to get specific about the need for a “Medicare for All” fix.

Mounting an admittedly uphill campaign for the Democratic nomination for governor of Massachusetts, Berwick says, “I want us to be the first state in the nation to adopt single-payer health care—Medicare for All. With that one change, we can improve care and reduce costs for families and businesses. We can free up resources that will add tens of thousands of jobs all over Massachusetts. Single-payer health care— let’s lead.”

Berwick does not raise this issue casually. A Harvard Medical School graduate who practiced medicine serving low-income families before founding the nonprofit Institute for Healthcare Improvement, advised the World Health Organization and was so well regarded for his advice and counsel on improving Britain’s healthcare system that he was knighted by Queen Elizabeth II.

But being one of the best thinkers and doers in the area of healthcare reform does not always bring rewards. During his tenure as administrator of the Centers for Medicare and Medicaid Services, Berwick was a key player in implementing some of the best components of the Affordable Care Act, including initiatives “ensuring that young people can stay on their parents’ health plans until the age of 26, kids with preexisting conditions can no longer be denied the care they need, and insurance companies are subjected to new levels of transparency.”

Yet, as Berwick’s campaign now notes, “The toxic politics of Washington cut short Don’s time there. Right-wing pundits attacked his commitment to equality and health care for all. Glenn Beck labeled him the ‘second most dangerous man in America.’ Senate Republicans vowed to filibuster his confirmation. In the face of the same Republicans who blocked Elizabeth Warren’s confirmation to head the Consumer Financial Protection Bureau, Don was forced to step aside after only seventeen months leading Medicaid and Medicare.”

The experience did not sour Berwick on the fight for healthcare reform.

But it did cause him to refocus his considerable energies.

The physician returned to his home state of Massachusetts and began preparing for a gubernatorial run in which he has argued that the states can and must lead on real healthcare reform.

To that end, he says, he wants to build on the leadership role Massachusetts has taken on reform to make Medicare for All a reality.

“I know from my first-hand experience in Washington guiding the early implementation of the Affordable Care Act that all eyes in the nation are on Massachusetts. Champions of real health care reform are crossing their fingers for us to succeed; opponents are hoping for us to fail. It is crucial that we lead, and show the rest of the nation that treating health care as a right, not a privilege, is sensible and successful public policy,” explains Berwick in a statement on his website.

“It is time to find a way to get to yes on a single payer system in Massachusetts. The complexity of our health care payment system adds costs, uncertainties, and hassles for everyone—patients, families, doctors, and employers. On day one, I will appoint a multi-stakeholder Single Payer Advisory Panel to investigate and report back within six months on how Massachusetts moves to a single payer health insurance system like Medicare for all.”

Massachusetts is not the only state where single-payer healthcare reform is being placed in the agenda. In Vermont, Governor Peter Shumlin and his legislative allies have made significant progress on the issue. And they are not alone.

Last month’s “Organizing for Healthcare Justice in the Age of Obamacare” strategy conference in Oakland, California, brought together Labor Campaign for Single Payer, Healthcare NOW! and the One Payer States group, as well as members of Physicians for a National Health Program and leading figures in National Nurses United, the California Nurses Association, the International Longshore and Warehouse Union and other labor groups. At the conference, much of the discussion was about state-based initiatives in Vermont, California, Minnesota, Oregon, Washington and other regions of the country.

In Massachusetts, Berwick says the work that has already been done in the state to extend access to health care creates an circumstance for developing a single-payer system. His arguments are strong in this regard. But it will take leadership to take the next step, which is why Berwick entered the gubernatorial race.

As next week’s primary approaches, he’s trailing two primary foes, Massachusetts Attorney General Martha Coakley and Massachusetts Treasurer Steven Grossman, both of whom have more resources and party connections. While his poll numbers have improved some as the September 9 primary approaches, Berwick is behind. Yet, if the measure of a campaign is the extent to which it shifts the discourse, Berwick’s run has already been a success: He’s at the table, as a candidate who is getting a serious hearing, participating in debates and in many senses framing the discourse.

After a June debate, an analysis for WBUR radio noted that Berwick “seems to be shifting the conversation, at least at this early stage, further to the left.”

In particular, explained the WBUR report, “Berwick seems to be adjusting the conversation… on the issue of a single-payer health care system.”

The other candidates are still more cautious on the issue. But Grossman is now saying that he wants to lead a “conversation” on single-payer—arguing, “You’ve got to build a consensus in our society around any dramatic societal change.” And while Coakley says “We’re not ready to go to single-payer yet,” she adds, “I don’t rule it out ever.”

But as the Massachusetts race steers toward a close, Boston Globe columnist Alan Wirzbicki writes: “This lackluster Democratic primary wouldn’t have been the same without [Berwick]. The only doctor in the race has added some needed fiber to the Democratic diet during this year’s gubernatorial campaign. His single-payer health proposal has forced his opponents to engage in a substantive discussion of health care costs…”

http://www.thenation.com/blog/181488/putting-medicare-all-agenda#

PNHP note: For the record, Physicians for a National Health Program is a nonpartisan educational and research organization that neither supports nor opposes any candidate for public office.

By Markus Mannheim
The Canberra Times (Australia), Sept. 9, 2014

United States hospitals spend a quarter of their budgets on administration, more than twice as much as some other countries, an international study has found.

Meanwhile, separate data suggests Australian public hospitals may be only marginally more efficient than American hospitals.

The latest issue of Health Affairs journal reported on the eight-nation study, which found “bureaucracy” – e.g. central administration, IT and marketing – took up 25.3 per cent of US hospital budgets in 2011.

By comparison, administrative costs were only about 12 per cent in Scotland and Canada, countries with simpler, publicly funded health systems.

Hospitals in nations with some elements of private funding, such as Germany and France, had intermediate administrative expenses, while those shifting to “market-oriented payment systems”, such as the Netherlands (19.8 per cent), faced costs closer to the US’s.

The study attributed the high costs of the mostly private US system to the complexity of billing, given the need to deal with a wide range of health insurers and payments.

However, it also said the “entrepreneurial imperative” to make a profit undermined efficiency, by encouraging hospitals to “divert personnel and dollars to marketing, to cherry-picking profitable patients and services (and avoiding unprofitable ones), and to expensive computer systems and consultants to game the payment system”.

Lead author Professor David Himmelstein, of Hunter College’s school of urban public health, said US hospitals wasted $US300 billion a year on insurance companies’ overheads “and the paperwork they inflict on doctors”.

Another author, Steffie Woolhandler, said the result of America’s market-oriented healthcare policies had created “the world’s costliest healthcare, and our life expectancy is years shorter than in most other wealthy nations”.

“It’s time to admit that, when it comes to caring for sick people, markets don’t work.”

Australian hospitals were not included in the international study.

However, Independent Hospital Pricing Authority data published this year shows overheads made up 22.7 per cent of the costs faced by Australian public hospitals in 2011-12.

A spokeswoman for the authority said this amount was “not the same as administrative costs as described in the study by Himmelstein et al, and direct comparison should not be made to the figures quoted in the study”.

The national commission of audit warned earlier this year that hospital expenses were “one of the fastest-growing areas of government spending“, with budgets expected to grow by 10.4 per cent a year over the next decade.

Markus Mannheim is public service editor at The Canberra Times.

http://www.canberratimes.com.au/national/health/market-forces-create-bloated-hospital-bureaucracies-international-study-20140909-10ee1w.html#ixzz3CpRdgB6E

By Helen Adamopoulos
Becker’s Hospital Review, Sept. 8, 2014

An analysis of eight countries with various types of healthcare systems has found the U.S. has the highest hospital administrative costs, according to a study published in Health Affairs.

Researchers analyzed data from Canada, England, Scotland, Wales, France, Germany, the Netherlands and the U.S. Administrative costs made up 25.3 percent of total hospital spending in the U.S., more than any of the other countries studied and more than twice the percentages for Canada and Scotland, which had the lowest administrative expenditures. Here are seven things to know about hospital administrative costs in the U.S. and why they’re significantly higher than other countries’ spending.

1. Differences in hospital administrative spending become more pronounced when examined as a percentage of gross domestic product or dollars per capita. In that form, administration costs ranged from 0.41 percent of GDP or $158 per capita in Canada to 1.43 percent of GDP or $667 per capita in the U.S., according to the study.

2. Within the U.S., for-profit hospitals also had greater administrative costs (27.2 percent of hospital spending) compared with their nonprofit (25 percent) and public (22.8 percent) counterparts. Furthermore, teaching hospitals (which are rarely for-profit) and rural hospitals also had below average administrative costs, at 23.6 percent and 24.7 percent of spending respectively.

3. U.S. hospital administrative costs aren’t just high; they’re also increasing. Administrative spending rose from 23.5 percent of total hospital spending in 2000 to 25.3 percent in 2011. By contrast, hospital administrative costs in Canada fell from 12.9 percent in 1999 to 12.4 percent in 2011.

4. Various factors and differences between the healthcare systems in the countries studied contribute to administrative cost disparities, according to the study. For instance, in nations where hospital administrators have few responsibilities aside from procuring and coordinating the facilities, supplies and personnel necessary to deliver quality care, administration only takes up about 12 percent of total hospital spending.

5. Hospital payment, billing and financing have a significant influence on administrative costs. In Canada, Scotland and Wales, hospitals receive global, lump-sum budgets, which means procuring operating funds doesn’t require much administrative work. By contrast, in countries where hospitals conduct per-patient (or diagnosis-related group-based) billing, hospitals need additional clerical and management workers, in addition to specialized IT systems, according to the study. Countries such as the U.S. and Netherlands must also negotiate payment rates with multiple payers with differing billing procedures and documentation requirements, driving up administrative spending.

6. Furthermore, the way hospitals get capital funding also impacts costs, according to the study. For example, hospitals in Scotland and Canada — with the lowest administrative costs — receive funding through a combination of direct government grants and separate global operating budgets. Despite more complicated per-patient billing, hospitals in France and Germany also have relatively low administrative costs because a large amount of their capital funding comes from direct government grants. Meanwhile, in countries like the U.S., surpluses from day-to-day operations account for most hospital capital funding. “In such healthcare systems, the need to accumulate capital funds for modernization and expansion stimulates administrators to undertake the additional work that is needed to identify and pursue profit opportunities,” the researchers write.

7. The researchers concluded that reforming the U.S. healthcare system to a single-payer model would result in significant administrative savings. Reducing U.S. administrative spending to the level of Canada or Scotland per capita in 2011 would have saved $158 billion or $156 billion, respectively.

http://www.beckershospitalreview.com/finance/why-u-s-hospital-administrative-costs-are-among-the-highest-in-the-world-7-things-to-know.html

By Alan Bavley
The Kansas City Star, Sept. 8, 2014

Eye-popping compensation packages of hospital executives — particularly those at safety-net and nonprofit hospitals — are regular fodder for exposes and editorials.

Consider the $1.2 million that tax records show was paid to former Truman Medical Centers CEO John Bluford in salary, bonuses, benefits and deferred compensation, or the nearly $1.5 million paid to St. Luke’s Health System CEO Melinda Estes, or the $2 million paid to Children’s Mercy Hospital CEO Randall O’Donnell. Those are typical of what leaders of major U.S. hospital organizations make.

But sensational figures like these may just be a symptom. The billion-dollar problem appears to be the bloated bureaucracies of American hospitals.

A study out today in the journal Health Affairs finds that 25.3 percent of hospital expenditures in the U.S. go toward administrative costs rather than to care of patients. That’s twice the percentage that hospitals in Canada devote to administration. And it’s more than at hospitals in any of the other countries — France, Germany, the Netherlands, the United Kingdom — examined by an international team of health economists and policy experts.

If U.S. hospitals could cut administrative spending to Canadian levels, they’d save more than $150 billion, the researchers estimated.

The reason hospitals elsewhere spend so much less on administration is that their countries have nationalized health care systems, the researchers said.

U.S. hospitals must deal with myriad insurance plans that pay different amounts and use different paperwork. Hospitals need an army of clerical personnel and managers, as well as specialized IT systems, to deal with that. In the other countries the researchers studied, hospitals are paid uniform rates or get lump-sum budgets to care for patients.

Hospitals in those countries also get government grants to cover modernization and expansion. U.S. hospitals fund such projects largely through revenues of their day-to-day operations. Efforts to boost those revenues, such as creating profitable services lines, lead to further expenses.

Simplifying health care to a single-payer system could trim administrative costs of U.S. hospitals, the researchers suggest. That would be something along the lines of a Medicare program that covers everybody.

And that’s unlikely to happen. Too many sectors of the health care industry are vested in the current system. And to many, the idea of a single payer raises the specter of socialism.

America’s alternative to socialized medicine turns out to be bureaucratized medicine.

http://www.kansascity.com/news/local/news-columns-blogs/local-columnists/article1879553.html#storylink=cpy

By Alvin Tran
WBUR CommonHealth blog, Sept. 8, 2014

When it comes to hospital administrative costs, a new Health Affairs study finds, our country is No. 1 and we’re way ahead of the curve — unfortunately.

In the study, researchers analyzed hospital accounting data to compare administrative costs across eight countries: Canada, England, France, Germany, the Netherlands, Scotland, the United States and Wales. They found that administrative costs accounted for more than 25 percent of total U.S. hospital expenditures — far ahead of the pack.

“We were surprised by just how big the differences have grown. The U.S. is in another league than every other country,” said Dr. David Himmelstein, the study’s lead author and a professor at the City University of New York’s School of Public Health.

Himmelstein and his colleagues also found that countries operating under a single-payer health system, such as Canada and Scotland, had the lowest administrative spending, and calculated that the U.S. could save $150 billion a year if it had a system like theirs.

Based on Medicare Costs Report data from 2011, hospital administrative spending in the U.S. amounted to $667 per capita — more than double what the Netherlands and England spend.

In the Netherlands, administrative costs consumed just 19.8 percent of hospital budgets — compared to 25.3 percent in the U.S. —  and in England, just 15.5 percent.

In a phone interview, Himmelstein said American hospital administrative costs have doubled over the last decade. “We anticipate that they’ll continue to go up because we’re continuing to pursue health policies that stimulate administration,” he added.

Uwe Reinhardt, a health economist and professor at Princeton University, sees high hospital administrative costs as a moral question. “You’re pulverizing all this money on something that does not make people better — doesn’t improve their health,” he said.

Reinhardt, who said he had once believed the new federal health law would lower administrative costs, now thinks Obamacare has become too challenging and complex, especially with the addition of navigators and health exchange administrators.

“I think the administration of the American health system has outpaced our ability to cope with it. Even the best IT people cannot cope with it anymore,” he said, adding that “Obamacare, if anything, adds to the administrative overhead.”

So, does having higher administrative costs result in better patient care in the U.S.?

According to the study’s authors, the answer is no. They cited previous research that found no significant relationship between higher administrative costs and better care in the U.S.

As for potential solutions, Himmelstein, who is a cofounder of Physicians for a National Health Program, says he is in favor of switching to a single-payer health-care system. He believes the new federal health law is steering the country in the wrong direction: “It moves us to more private insurance when expanding Medicare would have been much more efficient,” he says, adding that the law created another layer of insurance bureaucracy.

“The U.S., of course, has a very complex system where there are multiple payers paying different prices for different health care services,” says Dylan Roby, an assistant professor at the UCLA Fielding School of Public Health. “The findings probably are indicative of the fact that we have a very complex and fragmented system.”

Roby, however, says that he thinks switching to a single-payer system isn’t necessarily the only solution or even the best option.

“I think there might be some sort of solution between what we have now and single payer that is still somewhat market-driven and that may come out of the ACA, if there’s political support for it,” he said.

Alvin Tran is a doctor of science student at the Harvard School of Public Health. 

http://commonhealth.wbur.org/2014/09/us-highest-hospital-administrative-costs

They are one of many reasons that U.S. health care has the world’s highest overhead costs

By David Cay Johnston
Al Jazeera America, Sept. 8, 2014

American hospitals spend a huge and growing share of their revenue on overhead, a study published today in Health Affairs shows. Getting those costs down should be a national priority.

American hospitals on average spend 25.3 cents out of each dollar of revenue on overhead, with for-profit hospitals spending 27 percent and nonprofits a bit below the average.

By contrast, the Netherlands and England, which have the next highest overhead costs, spend 19.8 percent and 15.5 percent, respectively. Both are moving toward market-based financial models, so as with the U.S. overhead costs are likely to rise.

Compare Canada and Scotland, which have single-payer health care systems. Their hospital administrative costs are half those in America. 

The new study helps explain why for each $1 the 33 other countries with advanced economies spend per person on universal health care, the United States spends $2.64 — and yet more than one-fifth of Americans has no or poor health insurance.  A significant reason America’s health care system is so expensive and inefficient turns out to be those annoying co-pays. 

For the full article, visit http://america.aljazeera.com/opinions/2014/9/health-care-costscopaysoverhead.html.

David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law. He is the best-selling author of “Perfectly Legal,” “Free Lunch” and “The Fine Print” and editor of the new anthology “Divided: The Perils of Our Growing Inequality.”