By Harris Meyer
Health Affairs Blog, October 13, 2020

Last month’s Rand Corporation report on the prices paid for inpatient and outpatient services to more than 3,000 US hospitals in 49 states is the latest salvo in an escalating battle to reduce health care spending through transparent pricing and greater market competition.

But stakeholders, including employers, workers, and state and federal policy makers, have a daunting task ahead to squeeze down hospital and physician prices, by far the highest in the world, in the face of fierce resistance to price transparency from both providers and insurers.

“The actors charging these prices are doing everything they can to keep prices secret,” said James Gelfand, senior vice president for health policy at the ERISA Industry Committee, which represents large self-insured employers. “That crazy, outrageous pricing persists because of the lack of information.”

Despite industry opposition, the secret-pricing system has to change, particularly if policy makers insist on preserving a market-based health care system rather than shifting to a government-run model with regulated prices such as Medicare for All or public-option health plans. The continued failure of the market model to hold down costs gives ammunition to Joe Biden and the Democrats, if they win the November elections, to establish a price regulation system.

A Legislative Approach

Ultimately, Congress has to get involved to make transparency happen because more than 100 million non-elderly Americans are covered by health plans that can only be regulated by the federal government. Lawmakers should backstop the Trump administration’s court-endangered transparency rules by passing legislation requiring hospitals and health plans to publish their negotiated prices.

Legislation also should limit providers’ monopoly pricing power by capping hospitals’ and physicians’ out-of-network charges at a reasonable percentage of Medicare rates, perhaps 125 percent. That would weaken providers’ negotiating trump card of threatening to stay out of an insurer’s network.

Health Affairs Comment:

By Don McCanne, M.D.

The emphasis on price transparency stems from the belief that the health care consumer can control spending through price shopping. It’s as if we’ve forgotten Kenneth Arrow’s classic lesson on how markets do not work in health care. Price shopping is effective only for marginal services and can have very little impact on our total national health expenditures.

Our health care financing system should be designed to assist patients in obtaining the care that they need. Yet our insurance innovations erect financial barriers to care through high deductibles and other cost sharing and by preventing coverage of out-of-network providers. Even the Trump administration’s expansion of short term plans exposes patients with health care needs to higher costs because of a reduction in covered benefits. And health savings accounts are strictly a tax gimmick for higher income individuals and not a ticket to health care.

Having medical problems is a burden enough without the additional burden of assessing greater financial penalties for accessing health care (out-of-pocket cost sharing and payment for services not covered).

Other wealthy nations cover nearly everyone at an average per capita cost of about half of what we spend while we leave tens of millions with inadequate health coverage and tens of millions more with no coverage at all. We already have more consumer-directed health care than most other nations, and our very high spending is proof that it is a flawed concept.

Rather than relying on patient-consumer shopping we should rely on government administered pricing since that has been effective in many other nations. Through a single payer, improved Medicare for All that uses negotiated prices, bulk purchasing, global budgets for institutions such as hospitals, separate budgeting of capital improvements based on need, and a dramatic reduction in wasteful administrative services, we can control excess spending while ensuring adequate capacity in the system. Everyone is included in an equitably financed system that is affordable for each of us. Price transparency can’t do that, not even close.

Wasting time and more excessive administrative services on price transparency will only further delay the comprehensive reform that we desperately need.

https://www.healthaffairs.org…

Additional Comment:

By Don McCanne, M.D.

In advocating for using price transparency to enable price shopping in the marketplace, the author also recommends “capping hospitals’ and physicians’ out-of-network charges at a reasonable percentage of Medicare rates, perhaps 125 percent.” This is an obvious concession that Medicare has been far more effective in controlling prices than has the marketplace. Further, why should we limit government price controls to the current Medicare program plus health care spending outside of private insurer provider networks? Why shouldn’t we all receive the benefit of government administered pricing?

Price increases have been far greater under the private insurers than they have through Medicare. Some of that has been due to excessive administrative waste of the insurers themselves and from the costly administrative burden they place on the health care delivery system. Much of that administrative waste could be recovered by using single payer economic tools as listed in my comment posted to the Health Affairs article above.

For those who have Medicare, when you review your explanation of benefits, were you aware of the listed prices before you received the services, or were you aware of the amount of the allowed charges and the adjustments for which neither you nor the government would be responsible? Of course not. Price transparency plays no role in determining Medicare payments. Government administered pricing is far more effective than price transparency in the health care marketplace could ever be.

We do need to improve Medicare so that we can get pricing right. Payments need to be adequate to cover legitimate expenses of the health care delivery system plus provide a fair margin for those delivering health care (profit, salary, or whatever is appropriate for the financial structure under which the health care services are being provided). Yet judicious use of our public funds would also require that price gouging be prevented. Other countries do that well. We can too.

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By Robert King
Fierce Healthcare, October 13, 2020

Seema Verma, the head of the Centers for Medicare & Medicaid Services (CMS), said that some value-based care payment models did not generate enough savings and quality outcomes.

Her remarks Tuesday during HLTH’s virtual conference come a few weeks after other Trump administration officials reported mixed results for bundled payment models in producing savings. Verma did tout models that required providers to take on financial risk at a faster pace, potentially alluding to the direction CMS wants to steer value-based care models.

“I think the issue we have in value-based care is that many of our models unfortunately are not working the way we would like them to,” she said. “They are not producing the types of savings the taxpayers deserve.”

It has been a “very poor return in investment,” Verma added.

Verma also gave praise to CMS’ Pathways to Success model that overhauled the program managing accountable care organizations (ACOs).

Pathways required ACOs to take on financial risk at a shorter period than the Medicare Shared Savings Program created under the Obama administration. This meant that ACOs had to pay back Medicare if it did not meet certain savings targets.

“We are already seeing significant savings and increases in quality,” Verma said of Pathways, which started in 2019.

Verma said that CMS isn’t shying away from value-based care, but she hinted at what direction the next wave of payment models could entail.

“I think it is important for providers to have skin in the game,” she said. “Just having upside risk doesn’t really produce the type of savings and quality measures that we want to see.”

https://www.fiercehealthcare.com…

Comment:

By Don McCanne, M.D.

The policy community still seems to be fixated on the rhetoric of paying for value instead of volume, as they continue to support value-based models such as ACOs. CMS administrator Seema Verma now concedes that value-based models have provided a “very poor return in investment.”

Verma, who is driven more by ideology than by health policy that is designed to serve patients first, is not exactly giving up on value-based care, but rather she is focusing on a model design “for providers to have skin in the game.” She wants value-based models that are designed for providers “to take on financial risk at a faster pace.” Instead of emphasizing upside risk that rewards providers with Medicare dollars, she is now emphasizing downside risk that penalizes providers who then have to return money to Medicare.

Verma has long supported consumer-driven health care that requires patients to assume greater risk when accessing health care, but now she also wants to transfer even more risk from the government to the providers of health care. Forget patient care; it really is about the money.

Lack of affordability is one of the greatest problems in health care today. Making health care even less affordable by transferring more risk to the patient, such as with increased deductibles and not paying for out-of-network providers, is the opposite of the direction in which we should be headed. Government programs are noted for their parsimonious payment policies, often paying less than costs of care, and thus shifting more risk to the providers can threaten especially the safety-net system – again, the wrong direction on policy.

Many decades ago Nobel laureate Kenneth Arrow explained why markets do not work in health care, and yet the wish-they-would-work ideologues keep pushing their concepts on us. Our insistence on using markets in health care, such as our heavy reliance on private health plans, has resulted in the most expensive health care system yet one of the poorest performing when considering the tens of millions with inadequate insurance or no insurance at all. Our very high spending with poor performance is proof that, in health care, the markets are not bringing us high quality at low cost.

If we had a single payer Medicare for All system, we wouldn’t have to rely on the marketplace to manage costs since the government would use patient-friendly and provider-friendly administered pricing. Those who still contend that the government can’t do it right have to recognize that all other wealthy nations are providing health care for essentially everyone at an average per capita cost of half of what we spend.

More “skin in the game” punishes those who already are suffering the burden of having medical disorders. Our health care financing system should be designed to help relive those burdens, not cause more.

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By Joan Alker, Alexandra Corcoran
Georgetown University, Health Policy Institute, Center for Children and Families, October 8, 2020

Introduction

For many years, the United States was on a positive trajectory in reducing the number and rate of uninsured children; in 2016, the nation attained a historic low of 3.6 million uninsured children. This progress occurred as a result of expansions of public coverage—primarily Medicaid and the Children’s Health Insurance Program (CHIP)—and was accelerated by the implementation of the Affordable Care Act’s (ACA) major coverage expansions in 2014. As employer-sponsored insurance became increasingly unaffordable for dependents, public coverage ameliorated the impacts of private coverage losses for children. However, the number of uninsured children began to increase in 2017 as Medicaid enrollment began to decline and reached 4.4 million in 2019. This represents an increase of 726,000 children during this three-year period. The rate of uninsured children rose a full percentage point from 4.7 percent to 5.7 percent. Much of the gain in coverage that children made as a consequence of the ACA’s major coverage expansions has now been eliminated. Moreover, the most recent year of data (2018 to 2019) shows the biggest one-year loss in children’s coverage during this time period, with 320,000 more children becoming uninsured. These coverage losses occurred in a healthy economy with the lowest unemployment rate in decades prior to the economic shocks and job loss associated with the COVID-19 pandemic.

Key Findings

• After reaching a historic low of 4.7 percent in 2016, the child uninsured rate began to increase in 2017, and as of 2019 jumped back up to 5.7 percent. This increase of a full percentage point translates to approximately 726,000 more children without health insurance since the beginning of the Trump Administration when the number of uninsured children began to rise. Much of the gain in coverage that children made as a consequence of the Affordable Care Act’s major coverage expansions implemented in 2014 has now been eliminated.
• The number of uninsured children increased every year during the Trump Administration. The largest increase was observed between 2018 and 2019 when, despite a continued strong economy, the number of children without health insurance rose by 320,000. This increase in the number of uninsured children was the largest annual jump seen in more than a decade. Moreover, since this data was collected prior to the pandemic, the number of uninsured children is likely considerably higher in 2020, as families have lost their jobs and employer-sponsored insurance, though it is impossible to know yet by precisely how much.
• One-third of the total increase in the number of uninsured children from 2016 to 2019 live in Texas. The state saw by far the greatest coverage loss over the period with an estimated 243,000 more children living without health coverage. Florida has the next biggest loss, adding about 55,000 children to the uninsured count over the three-year period. As a consequence, 41 percent of children’s coverage losses during the Trump Administration occurred in Texas and Florida. Twenty-nine states experienced an adverse change for children from 2016 to 2019. The only state that bucked national trends and significantly reduced its number of uninsured children during this three-year time period was New York.
• These coverage losses were widespread across income, age, and race/ethnicity, but were largest among White and especially Latino children (who can be of any race).

https://ccf.georgetown.edu…

Full report:
https://ccf.georgetown.edu…

Comment:

By Don McCanne, M.D.

There is a special place for children in the hearts of Americans. For the last half century an extra effort has been made to provide health care coverage for children, especially through the Medicaid and CHIP programs, but also through private plans through the ACA exchanges and employer-sponsored plans that also cover dependents.

However, the reluctance to support a universal national health program inevitably left many children without coverage. American style of health care reform – incremental patches – did have some effect in reducing but not eliminating the number of children uninsured, but this has changed during the last three years – not coincidentally the years of the Trump administration. An additional 726,000 children are now without health insurance (totaling 4.4 million in 2019), and that does not include more recent losses in coverage due to job loss during the Covid pandemic, due to the threat of the public charge rule against immigrants who are here legally, and due to increased administrative barriers to enrollment in the public programs. Apparently not all Americans hold in esteem children who represent the future of our nation. But it really is disconcerting to see some of our public stewards struggle to take health care away from children.

Think again about a single payer system of improved Medicare for All… health care… for everyone… for life… health care that is affordable for each of us. Imagine an America where each year we wouldn’t find ourselves compelled to count up the number of children uninsured due to the failure of our politicians to ensure health care for everyone who needs it. Yes, the uninsured children… think of them and what that represents, and then extrapolate that to the rest of us.

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By The Editors
The New England Journal of Medicine, October 8, 2020

Covid-19 has created a crisis throughout the world. This crisis has produced a test of leadership. With no good options to combat a novel pathogen, countries were forced to make hard choices about how to respond. Here in the United States, our leaders have failed that test. They have taken a crisis and turned it into a tragedy.

The magnitude of this failure is astonishing. According to the Johns Hopkins Center for Systems Science and Engineering, the United States leads the world in Covid-19 cases and in deaths due to the disease, far exceeding the numbers in much larger countries, such as China. The death rate in this country is more than double that of Canada, exceeds that of Japan, a country with a vulnerable and elderly population, by a factor of almost 50, and even dwarfs the rates in lower-middle-income countries, such as Vietnam, by a factor of almost 2000. Covid-19 is an overwhelming challenge, and many factors contribute to its severity. But the one we can control is how we behave. And in the United States we have consistently behaved poorly.

We know that we could have done better. China, faced with the first outbreak, chose strict quarantine and isolation after an initial delay. These measures were severe but effective, essentially eliminating transmission at the point where the outbreak began and reducing the death rate to a reported 3 per million, as compared with more than 500 per million in the United States. Countries that had far more exchange with China, such as Singapore and South Korea, began intensive testing early, along with aggressive contact tracing and appropriate isolation, and have had relatively small outbreaks. And New Zealand has used these same measures, together with its geographic advantages, to come close to eliminating the disease, something that has allowed that country to limit the time of closure and to largely reopen society to a prepandemic level. In general, not only have many democracies done better than the United States, but they have also outperformed us by orders of magnitude.

Why has the United States handled this pandemic so badly? We have failed at almost every step. We had ample warning, but when the disease first arrived, we were incapable of testing effectively and couldn’t provide even the most basic personal protective equipment to health care workers and the general public. And we continue to be way behind the curve in testing. While the absolute numbers of tests have increased substantially, the more useful metric is the number of tests performed per infected person, a rate that puts us far down the international list, below such places as Kazakhstan, Zimbabwe, and Ethiopia, countries that cannot boast the biomedical infrastructure or the manufacturing capacity that we have. Moreover, a lack of emphasis on developing capacity has meant that U.S. test results are often long delayed, rendering the results useless for disease control.

Although we tend to focus on technology, most of the interventions that have large effects are not complicated. The United States instituted quarantine and isolation measures late and inconsistently, often without any effort to enforce them, after the disease had spread substantially in many communities. Our rules on social distancing have in many places been lackadaisical at best, with loosening of restrictions long before adequate disease control had been achieved. And in much of the country, people simply don’t wear masks, largely because our leaders have stated outright that masks are political tools rather than effective infection control measures. The government has appropriately invested heavily in vaccine development, but its rhetoric has politicized the development process and led to growing public distrust.

The United States came into this crisis with enormous advantages. Along with tremendous manufacturing capacity, we have a biomedical research system that is the envy of the world. We have enormous expertise in public health, health policy, and basic biology and have consistently been able to turn that expertise into new therapies and preventive measures. And much of that national expertise resides in government institutions. Yet our leaders have largely chosen to ignore and even denigrate experts.

The response of our nation’s leaders has been consistently inadequate. The federal government has largely abandoned disease control to the states. Governors have varied in their responses, not so much by party as by competence. But whatever their competence, governors do not have the tools that Washington controls. Instead of using those tools, the federal government has undermined them. The Centers for Disease Control and Prevention, which was the world’s leading disease response organization, has been eviscerated and has suffered dramatic testing and policy failures. The National Institutes of Health have played a key role in vaccine development but have been excluded from much crucial government decision making. And the Food and Drug Administration has been shamefully politicized, appearing to respond to pressure from the administration rather than scientific evidence. Our current leaders have undercut trust in science and in government, causing damage that will certainly outlast them. Instead of relying on expertise, the administration has turned to uninformed “opinion leaders” and charlatans who obscure the truth and facilitate the promulgation of outright lies.

Let’s be clear about the cost of not taking even simple measures. An outbreak that has disproportionately affected communities of color has exacerbated the tensions associated with inequality. Many of our children are missing school at critical times in their social and intellectual development. The hard work of health care professionals, who have put their lives on the line, has not been used wisely. Our current leadership takes pride in the economy, but while most of the world has opened up to some extent, the United States still suffers from disease rates that have prevented many businesses from reopening, with a resultant loss of hundreds of billions of dollars and millions of jobs. And more than 200,000 Americans have died. Some deaths from Covid-19 were unavoidable. But, although it is impossible to project the precise number of additional American lives lost because of weak and inappropriate government policies, it is at least in the tens of thousands in a pandemic that has already killed more Americans than any conflict since World War II.

Anyone else who recklessly squandered lives and money in this way would be suffering legal consequences. Our leaders have largely claimed immunity for their actions. But this election gives us the power to render judgment. Reasonable people will certainly disagree about the many political positions taken by candidates. But truth is neither liberal nor conservative. When it comes to the response to the largest public health crisis of our time, our current political leaders have demonstrated that they are dangerously incompetent. We should not abet them and enable the deaths of thousands more Americans by allowing them to keep their jobs.

https://www.nejm.org…

Comment:

By Don McCanne, M.D.

This great tragedy resulting in loss of life, physical suffering from illness, loss of employment, financial hardship from damage to our economy, and day in and day out angst for all of us could have and should have been partially or largely ameliorated had our government been competent and attentive. It was not. This was a massive political failure. The blame lies heavily with the president and his administration, but also with the legislators – especially those controlling the Senate – and their inadequate response, and ultimately much of the blame lies with the voters who elected and continue to support a political hierarchy that has failed us so miserably.

This incompetence is not new. For many decades we have tolerated an expensive health care system that has left tens of millions of us without any health care coverage, and tens of millions more with inadequate coverage that leaves them having to cope with financial barriers to care. We have allowed hundreds of billions of health care dollars to be redirected to extremely wasteful administrative excesses, benefiting passive investors at the cost of impaired patient access to care. This too is a political failure.

The policy science is straightforward. We know how to design a system that would provide essential health care services for absolutely everyone at a cost that each of us could afford – single payer, improved Medicare for All. The policy is easy, but we have to get the politics right. The Covid-19 pandemic and the political response to it should give us all of the lessons we need. Let’s apply them now.

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Encyclical Letter of the Holy Father, Francis

Chapter Five: A Better Kind of Politics

168. The marketplace, by itself, cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith. Whatever the challenge, this impoverished and repetitive school of thought always offers the same recipes. Neoliberalism simply reproduces itself by resorting to the magic theories of “spillover” or “trickle” – without using the name – as the only solution to societal problems. There is little appreciation of the fact that the alleged “spillover” does not resolve the inequality that gives rise to new forms of violence threatening the fabric of society. It is imperative to have a proactive economic policy directed at “promoting an economy that favours productive diversity and business creativity” and makes it possible for jobs to be created and not cut. Financial speculation fundamentally aimed at quick profit continues to wreak havoc. Indeed, “without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function. And today this trust has ceased to exist”. The story did not end the way it was meant to, and the dogmatic formulae of prevailing economic theory proved not to be infallible. The fragility of world systems in the face of the pandemic has demonstrated that not everything can be resolved by market freedom. It has also shown that, in addition to recovering a sound political life that is not subject to the dictates of finance, “we must put human dignity back at the centre and on that pillar build the alternative social structures we need”.

169. In some closed and monochrome economic approaches, for example, there seems to be no place for popular movements that unite the unemployed, temporary and informal workers and many others who do not easily find a place in existing structures. Yet those movements manage various forms of popular economy and of community production. What is needed is a model of social, political and economic participation “that can include popular movements and invigorate local, national and international governing structures with that torrent of moral energy that springs from including the excluded in the building of a common destiny”, while also ensuring that “these experiences of solidarity which grow up from below, from the subsoil of the planet – can come together, be more coordinated, keep on meeting one another”. This, however, must happen in a way that will not betray their distinctive way of acting as “sowers of change, promoters of a process involving millions of actions, great and small, creatively intertwined like words in a poem”. In that sense, such movements are “social poets” that, in their own way, work, propose, promote and liberate. They help make possible an integral human development that goes beyond “the idea of social policies being a policy for the poor, but never with the poor and never of the poor, much less part of a project that reunites peoples”. They may be troublesome, and certain “theorists” may find it hard to classify them, yet we must find the courage to acknowledge that, without them, “democracy atrophies, turns into a mere word, a formality; it loses its representative character and becomes disembodied, since it leaves out the people in their daily struggle for dignity, in the building of their future”.

Pope Francis’s Social Encyclical:
http://w2.vatican.va…

Short summary of Pope Francis’s Social Encyclical:
https://www.vaticannews.va…

Long summary of Pope Francis’s Social Encyclical:
https://www.vaticannews.va…

Comment:

By Don McCanne, M.D.

Once we have “a better kind of politics,” we should be able to have health care for all. Let’s work on that.

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