PNHP

Universal coverage expansions in wealthy nations finds Medicare for All likely less expensive than previous estimates: Harvard researchers

Clare Fauke

Universal coverage expansions in wealthy nations finds Medicare for All likely less expensive than previous estimates: Harvard researchers

Review of 13 national coverage expansions finds that universal coverage directed care to those who needed it, but without an overall increase in utilization, challenging claims that Medicare for All would cause a surge in health care utilization and costs

Contact:
Clare Fauke, Communications specialist, Physicians for a National Health Program, clare@pnhp.org, 312-782-6006
Dr. Adam Gaffney, Instructor in Medicine, Harvard Medical School; President, Physicians for a National Health Program; Division of Pulmonary and Critical Care Medicine, Cambridge Health Alliance; agaffney@cha.harvard.edu

The cost of Medicare-for-All reform — as recently projected in an economic analysis from Elizabeth Warren’s campaign — is contested by scholars and politicians. Some predict net savings, while others project that utilization of care would soar under single-payer, leading to runaway costs. However, a new study examining the implementation of universal coverage expansions in wealthy nations finds that projections of surging costs are likely in error, and that Medicare for All is more affordable than previously predicted.

The researchers examined all major coverage expansions in wealthy capitalist nations during the past 81 years. Their analysis encompassed 13 coverage expansions in 11 nations, beginning with New Zealand’s 1938 Social Security Act and extending through the 2010 Affordable Care Act in the U.S. They found that coverage expansions led only to small, or no, rise in system-wide utilization of care. However, in many cases, there were shifts in use — with increased use among those newly covered, balanced by slight decreases among the well-to-do.

The researchers examined changes in annual doctor visits and hospitalizations per capita.  In most nations, coverage expansions were associated with either small (<10%) or no rise in service use for the overall population after universal coverage. For instance, in the Canadian province of Quebec, individuals had on average five doctor visits per year both before and after single-payer was implemented in 1971, with increased use among lower-income individuals offset by very small reductions among the well-off. A similar pattern was seen after the implementation of Medicare in the U.S. in 1966, the ACA in 2014, and in several other nations. 

“Doctors stay busy,” noted study author Dr. Steffie Woolhandler, distinguished professor of public health at Hunter College and a lecturer at Harvard Medical School. “It makes sense that when coverage expands, doctors adjust their schedules to provide more care to those who are newly covered and in need, and slightly less low-value services to their well-off, healthy, and previously well-insured patients.”

Study author Dr. David Himmelstein, also a distinguished professor of public health at Hunter College and a lecturer at Harvard Medical School, noted that the finite number of hospital beds and nurses precludes a surge in hospitalizations after coverage expansions. “While coverage expansions usually lead to greater hospital use among the newly-covered, they generally produce small offsetting decreases among others. That probably reflects a small decline in elective and completely unnecessary hospital care for wealthy individuals, likely a benefit for both groups.” 

“The idea that Medicare-for-All will lead to runaway costs due to an unaffordable surge in health care use is belied by the experience of the 13 coverage expansions implemented over the past century,” summarized lead author Dr. Adam Gaffney, a pulmonary and critical care physician at Harvard Medical School and the Cambridge Health Alliance. “Our findings indicate covering everybody is not only the right thing to do, it’s something we can afford to do.”

“The effect of large-scale health coverage expansions in wealthy nations on society-wide healthcare utilization,” Adam Gaffney, M.D., M.P.H.; Steffie Woolhandler, M.D., M.P.H; David U. Himmelstein, M.D. Journal of General Internal Medicine, published online Nov. 20, 2019. DOI: doi.org/10.1007/s11606-019-05529-y

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 23,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

Doctors rally for Medicare for All, demand Rep. Dwight Evans co-sponsor single-payer legislation

More than 100 doctors marched to Thomas Paine Plaza to demand congressional action on America’s health care crisis

FOR IMMEDIATE RELEASE, November 1, 2019
Contact: Clare Fauke, PNHP communication specialist, 312-802-2302 (mobile), clare@pnhp.org

PHILADELPHIA —  Wearing their scrubs and white coats, more than 100 doctors, medical students and other health care advocates gathered in downtown Philadelphia to demand a single-payer, Medicare for All national health system. Specifically, they called on Congressman Dwight Evans (D-Penn.) to sign onto H.R. 1384, the Medicare for All Act of 2019. The bill currently has 118 co-sponsors, including a majority of House Democrats. 

Dr. Adam Gaffney, president of Physicians for a National Health Program (PNHP), said Rep. Evans co-sponsored H.R. 676, the previous House Medicare for All bill, but has refused to endorse single-payer legislation in the current session of Congress.

“At the same time that he lost interest in supporting single payer, Rep. Evans accepted campaign contributions from private health insurers such as Cigna, Blue Cross/Blue Shield, UnitedHealth Group, and Molina,” said Dr. Gaffney. “These companies are fighting tooth-and-nail against Medicare for All because this kind of reform renders them obsolete.” Dr. Gaffney added that Rep. Evans also accepted contributions from the Federation of American Hospitals and other groups representing for-profit providers, which also oppose Medicare for All. 

Melinda St. Louis of Public Citizen’s Medicare for All campaign said the City of Philadelphia passed a resolution in support of single-payer Medicare for All, demonstrating clearly that Rep. Evans’ constituents favor this type of reform. 

Dr. Walter Tsou, a Philadelphia physician and board adviser with PNHP, pointed to the recent closing of Hahnemann Hospital as an example of how the current health system values corporate profits over community needs. “To its investors, Hahnemann was more valuable for its downtown location than as a safety-net hospital,” said Dr. Tsou. “Only single-payer Medicare for All  — not incremental measures like a public option — will treat hospitals as public goods, not piggy banks for private equity firms.” Dr. Tsou added that H.R. 1384 would fund hospitals through global budgets, providing a lifeline to community hospitals in rural and other underserved areas. 

Many of the doctors are in Philadelphia this weekend for the annual meeting of Physicians for a National Health Program (PNHP), nonprofit research and educational organization of more than 23,000 doctors and health professionals who support Medicare for All. The theme of this year’s conference is “Single Payer is for Every Body.”

Doctors to rally for Medicare for All, demand Congressman Dwight Evans endorse single-payer legislation

More than 100 doctors will gather at Thomas Paine Plaza on Friday, Nov. 1 to demand congressional action on America’s health care crisis

WHAT: March and rally for Medicare for All

WHO: More than 100 doctors from Physicians for a National Health Program; Public Citizen; Philadelphia City Council Member Helen Gym 

WHEN: Friday, Nov. 1 from 4:30-5:30 p.m.

WHERE: Thomas Paine Plaza, 1401 John F Kennedy Blvd, Philadelphia, PA 19102 (near corner of Kennedy and Broad Street). 

Wearing their scrubs and white coats, more than 100 doctors, medical students, and other health care advocates will rally in Philadelphia to demand that Congress pass a single-payer, Medicare for All national health program. Specifically, the group will call on U.S. Rep. Dwight Evans (D- Penn.) to co-sponsor H.R. 1384, the Medicare for All Act of 2019 (The rally will also be livestreamed on PNHP’s Facebook Page).

Activists note that in his last term, Rep. Evans endorsed H.R. 676, the previous House Medicare for All bill, but has refused to endorse single-payer legislation in the current session of Congress. This past election cycle, Rep. Evans also accepted campaign contributions from private health insurers such as Cigna, Blue Cross/Blue Shield, UnitedHealth Group, and Molina, which would become obsolete under a Medicare for All system. He also accepted contributions from the Federation of American Hospitals and other groups representing for-profit providers, which actively oppose Medicare for All. 

Local health care advocates question whether Rep. Evans represents the needs and values of Philadelphia, which in 2018 passed a city resolution endorsing Medicare for All. 

Dr. Walter Tsou, a Philadelphia physician and board adviser with Physicians for a National Health Program (PNHP), says the recent closing of Hahnemann Hospital was a result of today’s profit-based health care system. “To its investors, Hahnemann appears to be more valuable for its location than as a safety-net hospital for the city’s most vulnerable residents,” said Dr. Tsou. “Entrepreneurs have taken over health care, leaving Americans to fend for ourselves. Only single-payer Medicare for All  — not incremental measures like a public option — will fix that.” 

Speakers include: 

  • Helen Gym: Philadelphia City Council member
  • Dr. Adam Gaffney: President of Physicians for a National Health Program
  • Marilyn Arwood: Chair of DSA Philadelphia and organizer for Health Care for All Pennsylvania
  • Melinda St. Louis: Public Citizen’s Medicare for All campaign director
  • Noah Levinson: Executive director of Health Care for All Pennsylvania
  • Dr. Susan Rogers: Board member of Physicians for a National Health Program
  • Jean Ross, R.N.: co-president, National Nurses United 

Many of the doctors are in Philadelphia this weekend for the annual meeting of Physicians for a National Health Program (PNHP), a nonprofit research and educational organization of more than 23,000 doctors and health professionals who support Medicare for All. The theme of this year’s conference is “Single Payer is for Every Body.”

Medical bankruptcy is an American scandal — no debate

Medical bankruptcy is an American scandal — and that’s not debatable

By Michael Hiltzik
Los Angeles Times, September 4, 2019

You’ve got to hand it to Sen. Bernie Sanders for his ability to keep hot-button issues in the forefront of the presidential race.

The latest example is his assertion, made at least twice in the last month, that medical bills drive 500,000 Americans into bankruptcy every year. The Washington Post’s fact-checker column examined the numbers and concluded that Sanders deserved “three Pinocchios” for the statement, which means the Post found it “mostly false” and that Sanders was, basically, lying.

The Post blundered, as the authors of the study on which Sanders based his claim point out. In the real world, Sanders’ assertion that “500,000 Americans will go bankrupt this year from medical bills” is “mostly true.” Medical bankruptcy is an American scandal, and possibly even more common than he or the study’s authors calculate.

“At this point everyone agrees that many thousands of Americans suffer medical bankruptcies each year, but there’s still scholarly debate over exactly how many,” Himmelstein and Woolhandler wrote in response to the Post fact-checking. “Economists and business school professors (including some funded by the health insurance industry) generally offer lower estimates, and medical and legal researchers find higher numbers.”

Unquestionably, the individual burden of medical costs in the U.S. can be unsupportable and, in the richest country in the world, should be unnecessary. Sanders and Warren are right to point the finger at a dysfunctional healthcare financing system. Those who say things aren’t that bad are wrong; it’s worse. Debating whether the number of Americans forced into bankruptcy by medical debt is 500,000 or some other figure is nitpicking, and woefully beside the point. What everyone knows is that the threat is bad enough, and it can strike at anyone.

www.latimes.com…

Sanders’s flawed statistic: 500,000 medical bankruptcies a year

By Salvador Rizzo
The Washington Post, August 28, 2019

This fact check has been updated with a rebuttal response

Sanders’s statements — “500,000 people go bankrupt every year because they cannot pay their outrageous medical bills” and “500,000 Americans will go bankrupt this year from medical bills” — are unambiguous. He’s saying medical debts caused those 500,000 bankruptcies. However, correlation is not causation, and the study he’s citing doesn’t establish causation for all 500,000 bankruptcy cases.

One of the authors sent us rough estimates showing that Sanders might be on target, but those numbers deserve scientific scrutiny before they can be taken as fact.

The omissions and twists are significant enough to merit Three Pinocchios for Sanders.

www.washingtonpost.com…

Medical Bankruptcy is Real, Even if the Washington Post Refuses to Believe it

By David U. Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H

The Washington Post has broken new ground, calling a presidential candidate a liar for citing a statistic from research published in the world’s leading public health journal. The Post’s Fact Checker column labeled Bernie Sanders a “three pinocchio” level liar for saying that 500,000 Americans are bankrupted by medical bills each year. Sanders’ statement relied on research that we and three colleagues published in the American Journal of Public Health (AJPH). Dozens of politicians and publications (including the Post itself!) have cited that study as a reliable source.

Our AJPH study was part of an ongoing research effort by the Consumer Bankruptcy Project (CBP). For decades, the CBP has been surveying debtors about the causes (including medical ones) and consequences of their bankruptcy. In our 2019 research, 37.0% of bankrupts “very much” agreed that medical bills were an important factor, while another 21.5% “somewhat agreed”. Many others cited lost wages due to illness, and overall, two-thirds cited illness-related bills, income loss or both. As we wrote in the AJPH, that’s “. . . equivalent to about 530 000 medical bankruptcies annually.” That figure is in line with estimates based on our earlier CBP studies (carried out with then-Harvard law professor Elizabeth Warren and sociologist Deborah Thorne), which were published in leading medical and policy journals.

But even the 530,000 figure is an underestimate of the number of people affected by medical bankruptcies. Most bankruptcies involve more than one person – an average of about 2.7 people, often including a spouse/partner and children. That means that the 750,000 bankruptcies last year involved more than 2 million people. And even if you use the most restrictive definition of medical bankruptcy – i.e. including only debtors who “very much” agreed that medical bills were a cause of their bankruptcy – Sanders’ 500,000 figure is, if anything, too low. The right number is more like three quarters of a million.

And our studies aren’t the only indicator that many American families suffer a crushing burden of medical bills. A Nobel Prize winner was forced to sell his medal to pay medical bills. More than 250 000 people sought to raise funds for medical bills through GoFundMe campaigns last year. According to the Consumer Financial Protection Bureau, medical bills account for more than half of all unpaid bills sent to collection agencies. And in a New York Times/Kaiser Foundation survey, more than one quarter of respondents said they or someone in their household had a problem paying medical bills, and of them, 11% said they’d declared bankruptcy due, at least in part to medical bills.

So why did the Fact Checker claim that Sanders told a whopper? That claim rests on an econometric study that found only a modest uptick in bankruptcy filings among persons hospitalized in California between 2003 and 2007. But that study appeared tailor made to undercount medical bankruptcies. As we and Elizabeth Warren noted in our response to it in the New England Journal of Medicine, it excluded most people who were frequently hospitalized (a group that’s at high risk of medical bankruptcy); it assumed that anyone not hospitalized could not suffer medical bankruptcy (even though people who aren’t hospitalized in the course of a year account for four-fifths of all out-of-pocket medical bills); that no one is bankrupted by bills for a child’s or partners’ care; and that potentially bankrupting illnesses never start before the moment of hospitalization – an assumption contradicted by the study’s own data.

Yet despite these flaws, the economists behind the study insisted (and the Post believed) that their math was a more reliable indicator of what caused financial ruin than the testimony (and court records that we’ve used as cross-check) from the thousands of debtors surveyed and interviewed by the CBP.

At this point everyone agrees that many thousands of Americans suffer medical bankruptcies each year, but there’s still scholarly debate over exactly how many; economists and business school professors (including some funded by the health insurance industry) generally offer lower estimates, and medical and legal researchers find higher numbers. We’d be happy to see the Post report the facts and nuances of that debate. But instead it’s chosen a side and labeled those on the other side – researchers, public figures who cite their research, and the debtors who shared their painful stories – “liars.”

David U. Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H. are both Distinguished Professors of Public Health, City University of New York at Hunter College and Lecturers in Medicine at Harvard Medical School, and the founders of Physicians for a National Health Program.

www.berniesanders.com… 

Comment:

By Don McCanne, M.D.

The United States is unique in supporting a health care financing system that results in financial hardship for millions of people due to medical bills. Many of those individuals end up in personal bankruptcy whether those bills were a contributor or a “cause” of the bankruptcy.

For many years now, the bankruptcy statistics have been debated, not based on whether medical bills cause financial hardship or contribute to bankruptcy – they clearly do and on a massive scale. Rather, the debate has been over the definition of “cause” when used to estimate the number of bankruptcies “caused” by medical bills. Those who wish to discredit the bankruptcy studies seem to disregard medical debt as “a” cause of bankruptcy and insist that only medical debt as “the” (presumably sole) cause of bankruptcy be counted in the statistics.

David Himmelstein and Steffie Woolhandler, in their response above, set the record straight. Medical debt in the United States is a horrendous problem that creates much hardship, and it is totally unnecessary.

All we need to do is to separate the health care financing system from the delivery of health care. We can finance the entire health care system with equitable taxes that are affordable for each of us without creating any personal financial hardship. Then when individuals need health care they can get it without the necessity of paying insurance premiums nor deductibles, copayments or coinsurance as a condition for accessing health care.

A Single Payer Medicare for All system would ensure health care for everyone without exposing them to financial hardship nor personal bankruptcy due to medical debt. The media and policy community should stick to the issues that actually impact our health care rather than distracting us with their pinocchio mischief.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

The fallacy of expanding ACA and adding a public option

Who Are the Remaining Uninsured, and Why Do They Lack Coverage?

By Munira Z. Gunja and Sara R. Collins
The Commonwealth Fund, August 28, 2019

In 2018, an estimated 30.4 million people were uninsured, up from a low of 28.6 million in 2016. Coverage gains have stalled in most states and have even eroded in some. In addition, more people have reported problems getting health care because of cost. To examine why so many people remain uninsured, we use data from the 2018 Commonwealth Fund Biennial Health Insurance Survey.

  • Uninsured Working-Age Adults Disproportionately Low-Income, Latino, and Under Age 35
  • Nearly Half of Uninsured Adults May Be Eligible for Marketplace Subsidies or Medicaid
  • One-Third of Uninsured Adults Who Did Not Visit Marketplace to Get Coverage Cited Affordability Concerns
  • One-Third of Adults Who Lost Coverage and Were Previously Covered Through the Individual Market Cited Affordability Concerns
  • Majority of Adults Who Had Lost Coverage and Were Previously Covered by Medicaid Said They Were No Longer Eligible
  • More Adults Had Difficulty Finding Affordable Coverage in the Individual Market in 2018 vs. 2016

Policy Recommendations:

  • Expand Medicaid without restrictions.
  • Lift the 400-percent-of-poverty cap on eligibility for marketplace tax credits.
  • State or federal reinsurance.
  • Reinstate outreach and navigator funding for the 2020 open-enrollment period.
  • Ban or place limits on short-term health plans and other insurance that doesn’t comply with the ACA.
  • Make premium contributions for individual market plans fully tax deductible.
  • Fix the so-called family coverage glitch.
  • Inform people about their options.
  • Reduce churn in Medicaid.
  • Extend the marketplace open-enrollment period.

www.commonwealthfund.org…

Comment:

By Don McCanne, M.D.

In spite of enactment and implementation of the Affordable Care Act, 30 million people remain uninsured and tens of millions remain underinsured. In spite of spending twice the average of other wealthy nations, access to health care and affordability of care remain a uniquely American problem.

The Commonwealth survey quantifies these problems, and then they propose incremental tweaks that would expand access and improve affordability, but they would do so at a cost of increasing our already excessive administrative complexity and increasing further our very high level of spending. Further, they would not eliminate the problems of access and affordability as many would still fall short of qualifying for public programs or of being able to pay for private programs.

Yet many recommend that we build on ACA and add a public option (Medicare buy-in) as another choice. The options listed by Commonwealth are those that would build on ACA, and yet we see that they are costly and increase administrative complexity while falling far short of the goals of universality, accessibility, and affordability. Adding the option of buying a public plan does not work for the great majority of those who would remain uninsured simply because the plan would not be affordable for them.

The single payer model of Medicare for All would recover hundreds of billions of dollars in administrative waste while automatically making health care affordable and accessible for absolutely everyone.

Enough with the deficient tweaks. Let’s go directly to a system that would work for all of us: Single Payer Medicare for All.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

The role of hospitals in high prices and administrative excesses

That Beloved Hospital? It’s Driving Up Health Care Costs.

By Elisabeth Rosenthal
The New York Times, September 1, 2019

As voters fume about the high cost of health care, politicians have been targeting two well-deserved villains: pharmaceutical companies, whose prices have risen more than inflation, and insurers, who pay their executives millions in salaries while raising premiums and deductibles.

But while the Democratic presidential candidates have devoted copious airtime to debating health care, many of the country’s leading health policy experts have wondered why they have given a total pass to arguably a primary culprit behind runaway medical inflation: America’s hospitals.

Data shows that hospitals are by far the biggest cost in our $3.5 trillion health care system, where spending is growing faster than gross domestic product, inflation and wage growth. Spending on hospitals represents 44 percent of personal expenses for the privately insured, according to Rand.

A report this year from researchers at Yale and other universities found that hospital prices increased a whopping 42 percent from 2007 to 2014 for inpatient care and 25 percent for outpatient care, compared with 18 percent and 6 percent for physicians.

So why have politicians on both the left and right let hospitals off scot-free? Because a web of ties binds politicians to the health care system.

Every senator, virtually every congressman and every mayor of every large city has a powerful hospital system in his or her district. And those hospitals are as politically untouchable as soybean growers in Iowa or oil producers in Texas.

As hospitals and hospital systems have consolidated, they have become the biggest employers in numerous cities and states. They have replaced manufacturing as the hometown industry in a number of rust-belt cities, including Cleveland and Pittsburgh.

Can Kamala Harris ignore the requests of Sutter Health, Kaiser Permanente, U.C.L.A. or any of the big health care systems in California? Can Elizabeth Warren ignore the needs of Partners HealthCare, Boston’s behemoth? (Bernie Sanders may be somewhat different on this front because Vermont doesn’t have any nationally ranked hospitals.)

Beyond that, hospitals are often beloved by constituents. It’s easy to get voters riled up about a drug maker in Silicon Valley or an insurer in Hartford. It’s much riskier to try to direct their venom at the place where their children were born; that employed their parents as nurses, doctors and orderlies; that sponsored local Little League teams; that was associated with their Catholic Church.

And, of course, there’s election money. Hospital trade groups, medical centers and their employees are major political donors, contributing to whichever party holds power — and often to the out-of-power party as well.

To defend their high prices, medical centers assert that they couldn’t afford to operate on Medicare payments, which are generally lower than what private insurers pay. But the argument isn’t convincing.

The cost of a hospital stay in the United States averaged $5,220 a day in 2015 — and could be as high as over $17,000, compared with $765 in Australia. In a Rand study published earlier this year, researchers calculated that hospitals treating patients with private health insurance were paid, overall, 2.4 times the Medicare rates in 2017, and nearly three times the rate for outpatient care. If the plans had paid according to Medicare’s formula, their spending would be reduced by over half.

Most economists think hospitals could do just fine with far less than they get today from private insurance.

While on paper many hospitals operate on the thinnest of margins, that is in part a choice, resulting from extravagance.

It would be unseemly for these nonprofit medical centers to make barrels of money. So when their operations generate huge surpluses — as many big medical centers do — they plow the money back into the system. They build another cancer clinic, increase C.E.O. pay, buy the newest scanner (whether it is needed or not) or install spas and Zen gardens.

If hospitals were paid less via regulation or genuine competition, they would look different, and they’d make different purchasing decisions about technology. But would that matter to medical results? Compared with their European counterparts, some American hospitals resemble seven-star hotels. And yet, on average, the United States doesn’t have better outcomes than other wealthy nations. By some measures — such as life expectancy and infant mortality — it scores worse than average.

As Uwe Reinhardt, the revered Princeton health economist who died in 2017, told me, “If you want to save money, you have to pay less.” That means taking on hospital pricing.

Elisabeth Rosenthal, a former New York Times correspondent, is the editor in chief of Kaiser Health News, the author of “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back” and a contributing opinion writer.

www.nytimes.com… 

Comment:

By Don McCanne, M.D.

Certainly the insurance and pharmaceutical industries are appropriate targets as we try to explain to the public how we can dramatically improve the financing of health care so that it becomes more accessible and truly affordable for each and everyone of us. In this article, Elisabeth Rosenthal explains why we should be looking at the hospital industry as well.

Two of the most important reasons for our high health care costs are administrative excesses and high prices. Hospitals are guilty of contributing to high costs on both counts, primarily because they not only tolerate but actually support our highly flawed method of health care financing, while actively opposing a method that would reduce administrative waste and price gouging.

It is the private insurance industry that has been a major player in tolerating and perpetuating high health care prices, and, of course, their role in increasing the administrative burden for hospitals and the rest of the health care delivery system is infamous. The hospital lobbyists are actively supporting the private insurance industry.

The single payer Medicare for All model of health care financing would change the way we fund hospitals. Instead of paying itemized fees or DRGs for each patient and the various services and products that they utilize, under single payer hospitals would be funded through global budgets, much like we fund the fire department. We would be paying the legitimate costs of operating the facility rather than payments based on driving up both prices and volume of services. Also expansion of system capacity and addition of capital improvements would be separately budgeted based on community need, thus avoiding excess capacity that embodies the Romer rule (if you have an empty bed, it will be filled), while still ensuring adequate capacity for the community.

Right now the opponents to Medicare for All are emphasizing that individuals would lose their choice of private health plans, when that financing model is responsible for much of the waste, deficiencies, and inequities in our system. Our drumbeat needs to be louder on the true sources of high costs and inequities – the perpetrators of the administrative waste and high prices. We will not adequately address those until we change the financing system to single payer through an improved version of Medicare that truly includes everyone.

Why are the hospitals in bed with the insurers instead of with us? Money. They are being paid generously for the services they offer. They seem to dismiss financial hardship and personal bankruptcy for too many of their patients as simply a cost of doing business, but those hardships stem from the fact that they are doing business with the wrong people – the private insurers. That doesn’t mean that they won’t accept funds from the public insurers, especially Medicare and Medicaid, but they don’t see that as a source of huge surpluses that they can plow back into their systems, sometimes surrounding themselves with extravagance.

Of course, there are also hospitals in communities with high rates of poverty and excess numbers of uninsured and underinsured, and many of these hospitals struggle. Single payer Medicare for All would play an important role as the great equalizer, a role that underfinanced Medicaid and charity cannot fulfill.

We can do far better, but the public has to understand how.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Medical bankruptcy is an American scandal — and that’s not debatable

By Michael Hiltzik
Los Angeles Times, September 4, 2019

You’ve got to hand it to Sen. Bernie Sanders for his ability to keep hot-button issues in the forefront of the presidential race.

The latest example is his assertion, made at least twice in the last month, that medical bills drive 500,000 Americans into bankruptcy every year. The Washington Post’s fact-checker column examined the numbers and concluded that Sanders deserved “three Pinocchios” for the statement, which means the Post found it “mostly false” and that Sanders was, basically, lying.

The Post blundered, as the authors of the study on which Sanders based his claim point out. In the real world, Sanders’ assertion that “500,000 Americans will go bankrupt this year from medical bills” is “mostly true.” Medical bankruptcy is an American scandal, and possibly even more common than he or the study’s authors calculate.

It’s also virtually unique to the U.S. among developed countries; when experts from Japan and Europe were asked by the PBS program “Frontline” about the prevalence of medical bankruptcy in their countries, some had trouble even comprehending the question.

What’s clear about the financial consequences of the American system of healthcare financing, which places much of the burden on households, is that they’re widespread and scandalous. One signpost is the rise of crowdfunding campaigns via platforms such as GoFundMe to raise money for families facing medical bills. In a civilized country, public appeals for help with medical bills shouldn’t exist. Yet GoFundMe reports that it hosts more than 250,000 medical campaigns per year, raising more than $650 million a year.

Even households seemingly well-covered by employer health plans can face financial trouble. A survey conducted jointly by the Kaiser Family Foundation and the Los Angeles Times found this year that among those consumers, “four in ten report that their family has had either problems paying medical bills or difficulty affording premiums or out-of-pocket medical costs, and about half say someone in their household skipped or postponed some type of medical care or prescription drugs in the past year because of the cost. Seventeen percent say they’ve had to make what they feel are difficult sacrifices in order to pay health care or insurance costs; for some, the sacrifices they report making are extreme.”

Still, pinpointing the number of medical bankruptcies in the United States is difficult, because the causes of bankruptcy typically are multiple. To an extent, the Post’s blunder rests in trying to shoehorn a nuanced phenomenon into its Pinocchio scale, which doesn’t much allow for shades of meaning. So let’s take a look at what the research tells us about the devastation that medical bills can bring to household finances.

First, let’s examine the research underlying Sanders’ figure. It comes from a series of studies dating back to 2005, chiefly by David U. Himmelstein and Steffie Woolhandler of Harvard and the City University of New York, with the participation at one point or another of Elizabeth Warren, previously a professor at Harvard and currently a U.S. senator and like Sanders a candidate for the Democratic nomination for president.

In their most recent paper, published in March, Himmelstein, Woolhandler and colleagues explained that they mined questionnaires sent to bankrupt debtors by the Consumer Bankruptcy Project and determined that 66.5% of the respondents “very much” or “somewhat” agreed that medical expenses or illness-related work loss contributed to their bankruptcies. That’s “equivalent to about 530 000 medical bankruptcies annually,” they wrote.

The researchers’ earlier papers triggered a scholarly debate that’s still ongoing over how to define “medical bankruptcy.” Is it enough, for example, that medical bills are a contributing factor, since in a typical bankruptcy there are many factors?

Whatever the definition, the numbers proposed by Himmelstein, Woolhandler and Warren have also come under attack. In a 2006 study funded by the health insurance industry, David Dranove and Michael L. Millenson of Northwestern University asserted that “medical bills are a contributing factor in just 17 percent of personal bankruptcies,” mostly affecting households already near poverty.

Dranove and Millenson scoffed at the argument by Himmelstein and Woolhandler that the solution to the problem is a national health insurance program. (Himmelstein and Woolhandler are co-founders of Physicians for a National Health Program, a leading advocate of single-payer universal health coverage.)

Last year, researchers from UC Santa Cruz, MIT and Northwestern took another crack at the data, examining the finances of patients who were admitted for treatment to California hospitals. They found “compelling evidence of the existence of medical bankruptcies but discovered that medical expenses cause many fewer bankruptcies than has been claimed” (by you-know-who). They estimated that “hospitalizations cause only 4% of personal bankruptcies among nonelderly U.S. adults.”

The dimensions of the debate should be evident by now. Himmelstein, Woolhandler and Warren have sturdily defended their methodology and findings.

Responding to Dranove and Millenson, they observed that narrowing the debts listed in bankruptcy filings to medical bills probably conceals the role of medical expenses in those cases. That’s because families may take intermediate steps to pay those bills before financially throwing in the towel. Responses by families themselves indicate that “medical debts that wound up as credit card balances, second mortgages, payday loans, collection lawsuits, and so on” are “some of the most important indicators of medical bankrupcies …. Medical debt often appears as ‘credit card debt’ or ‘mortgage’ in court records.”

As for the California data, Himmelstein, Woolhandler and Warren responded that the study was flawed in treating hospitalization as “the sole indicator of a medical problem that could lead to financial distress.” Families can be overwhelmed by nonhospitalization bills, including emergency care, physical therapy or prescriptions, not to mention the costs of treating chronic conditions that never result in a hospital stay but drain household accounts year in and year out. (The authors of the California study replied that relying on debtors’ own assessments “is not a credible way to estimate the causes of bankruptcy.”)

That’s where things stand right now. “At this point everyone agrees that many thousands of Americans suffer medical bankruptcies each year, but there’s still scholarly debate over exactly how many,” Himmelstein and Woolhandler wrote in response to the Post fact-checking. “Economists and business school professors (including some funded by the health insurance industry) generally offer lower estimates, and medical and legal researchers find higher numbers.”

Unquestionably, the individual burden of medical costs in the U.S. can be unsupportable and, in the richest country in the world, should be unnecessary. Sanders and Warren are right to point the finger at a dysfunctional healthcare financing system. Those who say things aren’t that bad are wrong; it’s worse. Debating whether the number of Americans forced into bankruptcy by medical debt is 500,000 or some other figure is nitpicking, and woefully beside the point. What everyone knows is that the threat is bad enough, and it can strike at anyone.

www.latimes.com…

Ady Barkan: ‘Eyes to the Wind’

Excerpt from "Eyes to the Wind," a new book by Ady Barkan

In nearly every congressional district, voters tell me that their top concern is health care. The high cost, the lack of access, the bureaucratic headaches – I hear these complaints in small towns, big cities, and suburbs from coast to coast. But these complaints, I realize, are symptomatic of a much more profound problem: our democracy is broken, and it seems that we have lost the ability to solve our collective challenges. Everywhere we go, we are meeting voters who have been disabused of the notion that our elected representatives are pursuing the public good, disabused of the quaint idea that our government is of the people, by the people, and for the people.

And yet, throughout our travels, this cynicism is being overcome by a different emotion. Hope. All around the country, we are meeting people who can see beyond this dark moment into the bright light of another world. For the first time in many decades, our national politics are being shaped not only by fear and hatred but also by our dreams for a better world. Each month, more organizers, activists, candidates, and elected officials are talking about reshaping American society in a radically humane way. This vision encompasses both negative and positive rights: freedom from unjust incarceration, racist policing, inhumane immigration enforcement, economic exploitation, sexual violence, and political disenfranchisement; and a set of public policies that gives up the freedom to thrive – debt-free education from pre-K through college, decent housing, the guarantee of a good job, clean energy, resilient and sustainable cities to call home, retirement security, and free and robust Medicare for all.

Focusing on the moment and immersing myself in the task at hand has been my salvation over the past two years. Peering into the future has been too dispiriting and too overwhelming. But there is so much to embrace in this very moment – so much work right here in front of us.

This is the message that I settled on somewhere between the cornfields of the Great Plains and the glistening waters of the Great Lakes: the notion that the cure to what ails American democracy is more American democracy; that our problems are created by people and that we can solve them only with people power; and that, as Rebecca Solnit teaches us, hope is not a lottery ticket that can deliver us out of despair, but a hammer for us to use in this national emergency – to break the glass, sound the alarm, and sprint into action.

What action? Voting is not nearly enough. This moment calls on us all to become organizers, to be heroes for our communities and future generations. To talk to our less political friends, neighbors, classmates, and coworkers and to enlist them in this experiment we call American democracy. This is our Congress, our country, and our future for the making.

https://www.simonandschuster.com…

Comment:

By Don McCanne, M.D.

Most avid single payer advocates know Ady Barkan, if for no more than his testimony presented earlier this year to the Rules Committee of the House of Representatives, on single payer Medicare for All. As a young activist attorney, already admired in the progressive community for his other work on social justice issues, he literally risked his life to provide that testimony, due to the advanced paralytic stages of his amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease). Delivering the message to America of the importance of health care justice for all was too important to him to not take that risk, and drove him to go ahead and appear in his fragile, vulnerable state.

What does a man do who feels that he has so much left undone to advance social justice in this nation when he is told that he has a disorder that will quickly sap him of all of his strength and result in his rapid demise? This is what his book, “Eyes to the Wind,” is about – “a memoir of love and death, hope and resistance.”

His frustration is certainly evident, how could it not be? But his drive to do all that he can, and more, serves as an invaluable lesson for us all. When we see him accomplishing what he has, it should motivate us even more to advance the cause of social justice, and, for PNHP and our single payer colleagues, more specifically the cause of health care justice through Single Payer Medicare for All.

As he tells us, “This moment calls on us all to become organizers, to be heroes for our communities and future generations. To talk to our less political friends, neighbors, classmates, and coworkers and to enlist them in this experiment we call American democracy. This is our Congress, our country, and our future for the making.”

His words will be with us forever as they influence our actions.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Medicare for All unlikely to cause surge in hospital use: Harvard study

Analysis finds no increase in hospitalizations after previous large coverage expansions; increased care for newly insured was counterbalanced by small decreases for the healthy and wealthy

As political leaders debate the merits of a future Medicare for All system in the U.S., some analysts predict that implementing universal coverage could cause a sharp, unaffordable increase in hospital use and costs, overwhelming the system.  But new research by a team at Harvard Medical School and The City University of New York at Hunter College, published today in the Annals of Internal Medicine, contradicts that assumption, finding that past insurance expansions did not result in a net increase in hospital use. Instead, researchers found a redistribution of care, with increases in hospital care among those newly insured that was offset by small decreases among healthier and wealthier Americans. 

The study examined changes in hospital use among those who gained coverage — as well as those whose coverage remained unchanged — after the implementation of Medicare and Medicaid in 1966 and the Affordable Care Act (ACA) in 2014. Each of those programs provided new coverage to about 10% of the U.S. population, about the same share expected to gain coverage under a Medicare for All program.  The researchers analyzed large national surveys from both the Medicare/Medicaid and ACA eras, and examined hospital use before and after the coverage expansions. Hospital admissions averaged 12.8 for every 100 persons in the three years before Medicare, and 12.7 per 100 in the four years after Medicare’s implementation. Similarly, the hospital admission rate was statistically unchanged in the wake of the ACA, averaging 9.4 admissions per 100 in the six years before the ACA coverage expansion and 9.0 per 100 in the two years’ afterward.  

While the study found no overall change in hospital use, the coverage expansions redistributed care. Medicare increased hospital admissions by 3.7 per 100 among the elderly, and by 0.7 per 100 among the poorest one-third of the population, i.e., the groups that gained new coverage. In contrast, hospitalizations fell slightly (about 0.5 per 100) for younger and wealthier individuals. After the ACA, admissions rose by 1.5 per 100 among sicker Americans, but fell by 0.6 per 100 among those in good health. The researchers also found a slight shift of hospital care toward the poor after the ACA.  

Dr. Steffie Woolhandler, a study author and distinguished professor of public health at CUNY’s Hunter College who is also on the faculty at Harvard Medical School commented: “The good news is that even big coverage expansions didn’t increase hospitalizations overall, indicating that universal coverage won’t cause a surge in care, and that Medicare for All is affordable. On the other hand, it implies that overturning the ACA would deprive millions of needed care without saving any money.”

The researchers hypothesized that the limited supply of hospital beds constrained the overall use of hospitals when coverage was expanded. They noted that many previous studies, such as the Rand and Oregon Health Insurance Experiments, only examined the effects of greater coverage for the newly insured, not changes among those whose coverage was unchanged, nor the societal effects of expanded coverage. 

“We’ve long known that when people get new or better coverage, they use more health care,” said senior author Dr. David Himmelstein, a distinguished professor of public health at CUNY’s Hunter College and lecturer in medicine at Harvard Medical School. “What we didn’t know is what happens to those who were already well-insured, and how this plays out society-wide given the limited number of hospital beds, doctors and nurses,” he stated.  “Our data shows that if you sensibly control hospital growth, you can cover everybody without breaking the bank.”

Lead author Dr. Adam Gaffney, instructor in medicine at Harvard Medical School and a pulmonary and critical care physician at Cambridge Health Alliance, suggested that the small reductions in hospitalizations among healthier and wealthier individuals are unlikely to be harmful. “We know that the well-insured often receive unnecessary hospitalizations,” said Dr. Gaffney. “While defibrillator implants and coronary artery stents can be lifesaving, thousands of patients each year get these and other procedures even when they offer no benefit,” he added, pointing to an Institute of Medicine study that found that nearly one-third of medical spending is wasted.  “The fact that coverage expansions shift hospital care to those who need it, and reduce care for groups currently getting excessive and possibly harmful interventions, means that universal coverage could help everyone,” he stated. 

“The Effects on Hospital Utilization of the 1966 and 2014 Health Insurance Coverage Expansions in the United States,” by Adam Gaffney, M.D.; Danny McCormick, M.D.; David H. Bor, M.D.; Anna Goldman, M.D.; Steffie Woolhandler, M.D., M.P.H.; and David U. Himmelstein, M.D. Annals of Internal Medicine, July 23, 2019.  DOI: 10.7326/M18-2806

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 23,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

Trump Administration’s proposed public charge immigration rules likely to harm millions of children: JAMA Pediatrics study

The study is the first to examine the impact of the proposed change on children with significant medical needs

Contact:
Leah Zallman, M.D., M.P.H.: (917) 520-8918, lzallman@icommunityhealth.org
Steffie Woolhandler, M.D., M.P.H.: (617) 312-2766, swoolhan@hunter.cuny.edu

A proposal by the Trump administration to deny legal permanent residency status to immigrants who legally use public benefits like food assistance and Medicaid may prevent health care and nutrition aid from reaching millions of children, according to a new study by researchers from Harvard Medical School and the City University of New York at Hunter College that was published online today in JAMA Pediatrics. Currently, enrollment in public food, housing, and health insurance programs are not counted against immigrants applying for permanent residency, also known as “green cards.”

The study is the first to examine the impact of a proposed change in the U.S. Department of Homeland Security’s ‘public charge’ rule on children with significant medical needs. Researchers found that between 0.8 million and 1.9 million such children currently enrolled in public health insurance and the Supplemental Nutrition Assistance Program (food stamps), may lose these benefits, endangering their health. Most of these children are citizens living in households with a non-citizen immigrant parent or other family member. 

Using data from the Medical Expenditure Panel Survey, the authors estimated the number of children who need medical care and who live in families that may disenroll from public benefits. They also estimated the number of children in need of medical care, e.g., kids with asthma, who may lose benefits due to the proposed rule change.

In 2015, 8.3 million children enrolled in Medicaid and the Children’s Health Insurance Program or who received Supplemental Nutrition Assistance Program benefits lived with adults who may disenroll their families from benefits due to fear or confusion caused by the proposed rule, even if the rule does not technically apply to them. Of these children, 5.5 million had medical needs, including 615,842 with asthma; 53,728 with epilepsy; 3,658 with cancer; and 583,700 with disabilities or functional limitations. The article concludes that this policy would threaten the health and wellbeing of millions of children, most of whom are U.S. citizens.

“Most children who lose Medicaid or CHIP due to this proposed rule will become uninsured, and are likely to skip needed care,” said lead author Dr. Leah Zallman, Director of Research at the Institute for Community Health at Cambridge Health Alliance/Harvard Medical School, where she is also an Assistant Professor of Medicine. “For many children, skipping care will lead to long-term medical problems, increased health care costs and school absenteeism. It also means that their parents — many of whom play vital roles as caregivers in nursing homes and home care — will be forced to skip work. The proposed public charge policy will threaten the health of millions of children and have negative repercussions for generations to come.”

The DHS proposal would affect both green card applications and applications for admission to the U. S. It would not apply to other immigrants, including: refugees; asylees; survivors of trafficking, domestic violence, or other serious crimes (T or U visa applicants/holders); VAWA self-petitioners; special immigrant juveniles; and certain people paroled into the U.S. Immigrants who already hold green cards are also exempt from public charge requirements when applying for U.S. citizenship.

The DHS proposal is one of several regulatory policy changes experts expect to dissuade lawfully-present immigrants and their families from using health and social services programs. Other Trump Administration regulatory proposals contributing to this “chilling effect” have been proposed by the U.S. Department of Housing and Urban Development, U.S. Department of Agriculture’s Food and Nutrition Service, U.S. Department of State (which processes visa applications abroad), the Social Security Administration, and a draft proposal by the U.S. Justice Department.

“Punishing children by denying them medical care and nourishment is a gross violation of medical ethics and common decency. But that’s what President Trump’s proposed immigration policy changes will do to millions of innocent children,” said Dr. Steffie Woolhandler, Distinguished Professor of Public Health at the City University of New York at Hunter College and Lecturer in Medicine at Harvard.

“Implications of changing public charge immigration rules on children who need medical care,” Leah Zallman, M.D., M.P.H., Karen Finnegan, P.h.D, David Himmelstein, M.D., Sharon Touw, M.P.H., Steffie Woolhandler, M.D., M.P.H., JAMA Pediatrics, July 2019.

Drs. Woolhandler and Himmelstein are co-founders of Physicians for a National Health Program (PNHP) which advocated single-payer health reform.  PNHP had no role in the funding or designing the research, which was partially funded by a grant to Dr. Zallman from the California Health Care Foundation.

Despite the Affordable Care Act, millions of Americans with cardiovascular diseases and cardiovascular risk factors still can’t get needed care

Harvard researchers found that nearly 10 million Americans with cardiovascular conditions gained coverage, but twice as many still lack insurance post-ACA

Contact: Danny McCormick, M.D., M.P.H., Harvard Medical School, 617-548-7213 or danny_mccormick@hms.harvard.edu
Clare Fauke, Physicians for a National Health Program, 312-782-6006 or clare@pnhp.org

Cardiovascular disease (CVD) is the leading cause of death for Americans, yet millions with CVD or cardiovascular risk factors (CVRF) still can’t access the care they need, even years after the implementation of the Affordable Care Act (ACA).

In a new study published today in the Journal of General Internal Medicine, researchers at Harvard Medical School found the ACA increased insurance coverage and improved access to medical care for Americans with CVD such as heart disease and stroke, and for those with CVD risk factors including smokers and those with diabetes and obesity. However, three years after the ACA took full effect, 20.6 million remained uninsured, and many were unable to get regular medical care due to cost. The study is the first to document the effect of the ACA on Americans with CVD and CVRF, a group with complex health care needs that face significant health consequences when they lack coverage.

Researchers analyzed nationally representative data on more than one million adults aged 18 to 64 with a range of cardiovascular conditions, comparing data from before ACA implementation (2012-13) to data after the ACA was in effect (2015-16). They estimated that nearly 7% of those with CVD or CVRF gained insurance coverage in the first three years after the ACA went into effect, and that the ACA slightly narrowed previous disparities in coverage for ethnic and racial minorities.

Insurance coverage increased most in states that expanded Medicaid, from 81% to 89%. In non-expansion states, coverage increased more modestly, from 76% to 81%. Post-ACA, the percentage of chronically ill people with insurance ranged from a high of 94% in Massachusetts to a low of 73% in Texas. In addition to increases in coverage, the study found that post-ACA, Americans with CVD were less likely to forgo a doctor visit due to cost, and were more likely to have a check-up in the last year, and to have a primary care physician.

Despite these gains, researchers discovered major gaps in coverage and access to care: Nearly one-quarter of low-income Americans with a CVD or CVRF — more than 20 million people — still lacked coverage, and approximately 13% of black and 29% of Hispanic adults in the U.S. with CVD/CVRF remain uninsured. Among Hispanic people with CVD/CVRF in non-Medicaid expansion states, 42% still lack insurance, 25% could not afford a doctor visit, 40% did not have a checkup in the last year, and 48% did not have a personal physician.

“Patients with existing cardiovascular conditions require regular medical care and daily medications to prevent another heart attack or stroke,” said lead author Ameen Barghi of Harvard Medical School. “The good news is that the medications for cardiovascular disease are very effective, and millions of Americans gained some coverage under the ACA. Unfortunately, despite these gains, millions of Americans with these conditions remain uncovered, and many of those will likely suffer serious complications and even death because they cannot get the care they need.”

“The data shows that insurance coverage increased more in states that opted to expand Medicaid, and also that coverage rates were already lowest in non-expansion states before the ACA, highlighting the importance of the Medicaid expansion for people with serious pre-existing medical conditions,” said Dr. Hugo Torres, a study author and also a physician at Massachusetts General Hospital and Instructor of Medicine at Harvard Medical School. “If more states expanded Medicaid, many more people with cardiovascular disease would be covered, particularly among people with low incomes, and in communities of color.”

Dr. Torres notes that these findings should be considered in light of the Trump administration’s intention to repeal and replace the ACA with a more “market-based” system.

“Repealing or weakening the ACA would strip coverage from millions of Americans with cardiovascular disease or cardiovascular risk factors, spelling disaster for many of them,” said the study’s senior author, Dr. Danny McCormick, a physician at Cambridge Health Alliance and Associate Professor at Harvard Medical School. “However, today’s piecemeal approaches to coverage, including the ACA, will not get all these patients covered. Only a comprehensive Medicare-for-All plan could provide both coverage and good access to care for everyone with a cardiovascular disease or risk factor. Polls show that such reform is popular with the American people, and increasingly on the agenda of many elected officials.”

###

“Coverage and Access for Americans With Cardiovascular Disease or Risk-Factors after the ACA: A Quasi-Experimental Study,” Ameen Barghi, B.A., M.P.P.; Hugo Torres, M.D., M.P.H.; Nancy Kressin, Ph.D.; and Danny McCormick, M.D., M.P.H. Journal of General Internal Medicine, published online first, June 27, 2019. DOI: 10.1007/s11606-019-05108-1

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 23,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

RAND: Private insurers pay hospitals excessive prices (but they left out why)

Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely

By Chapin White and Christopher Whaley
RAND, May 9, 2019

Large price discrepancies exist between what private health plans pay for hospital services and what Medicare pays. RAND Corporation researchers used data from three sources — self-insured employers, state-based all-payer claims databases, and health plans — to assess $13 billion in hospital spending in terms of hospital price levels, variation, and trends from 2015 through 2017 in 25 states. In this report, prices reflect the negotiated allowed amount paid per service, including amounts from both the health plan and the patient, with adjustments for the intensity of services provided. These negotiated prices are then compared with Medicare reimbursement rates for the same procedures and facilities to determine relative prices.

Key Findings

  • Relative prices, including all hospitals and states in the analysis, rose from 236 percent of Medicare rates in 2015 to 241 percent of Medicare rates in 2017
  • Relative prices for hospital outpatient services were 293 percent of Medicare rates on average, far higher than the average relative price for inpatient care (204 percent of Medicare rates)

Recommendations

  • Employers can exert pressure on their health plans and hospitals to shift from discounted charge contracts to contracts based on a multiple of Medicare or some other prospective case rates.
  • Employers can use networks and benefit designs to move patient volume away from high-priced, low-value hospitals and hospital systems.
  • Employers can encourage expanded price transparency by participating in existing state-based all-payer claims databases and promoting development of new ones.
  • Transparency by itself is likely insufficient to reduce hospital prices, and employers may need state or federal policy interventions to rebalance negotiating leverage between hospitals and employer health plans. Such interventions could include placing limits on payments for out-of-network hospital care or applying insurance benefit design innovations to target high prices paid to providers and allowing employers to buy into Medicare or another public option that pays providers prices based on Medicare rates.

RAND press release:
https://www.rand.org…

For links to full RAND report:
https://www.rand.org…

Many Hospitals Charge Double or Even Triple What Medicare Would Pay

By Reed Abelson
The New York Times, May 9, 2019

Across the nation, hospitals treating patients with private health insurance were paid overall 2.4 times the Medicare rates in 2017, according to the RAND analysis. The difference was largest for outpatient care, where private prices were almost triple what Medicare would have paid.

The RAND study underscores the widening chasm between what the federal government and the private sector pay the nation’s hospitals.

The disparity shows how competition has faltered in an opaque market where the costs of care are secret and hospital systems are increasingly consolidated, gaining outsize clout in price negotiations with employers, some experts say.

This yawning spread in hospital rates will likely fuel the debate over Medicare-for-all proposals that would give the federal government authority to decide what to pay hospitals and that have proved popular with many Democratic voters on the presidential campaign trail.

Some proponents of Medicare for all argue that employers and private insurers have failed to control costs. About one-third of all health care spending in the country goes to pay for hospital care. Many supporters point to the billions of dollars that could be saved annually if hospitals and doctors were paid at the much lower Medicare rates.

“The shadow of single payer hangs all over this,” said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, which helped fund the RAND research.

The RAND study shows “market forces are clearly not working,” said Richard Scheffler, a health economist at the University of California, Berkeley.

But soaring hospital costs have become a significant burden, and many businesses have off-loaded more of the expense onto their employees through higher premiums and deductibles. Families have struggled to cope with surprise medical bills and increasing out-of-pocket costs. The trend toward consolidation in the last several years has also spurred higher costs, as hospitals merged into bigger, more powerful systems that dominated their local markets, demanding ever-higher prices.

Unlike Medicare, which sets the price it will pay for a type of care, insurers often try to negotiate discounts with hospitals over charges, especially for outpatient services, said Chapin White, an adjunct senior policy researcher at RAND and one of the authors of the study.

The insurers don’t have a strong incentive to demand the lowest prices because many, working for employers that are self-insured, are “literally spending someone else’s money,” he said. Insurers are also frequently paid based on how much the employer spends; they take in more revenue when the employer spends more.

In contrast to private insurers, “Medicare has been much more zealous about keeping its payments down,” said Sherry Glied, dean of the Robert F. Wagner Graduate School of Public Service at New York University.

Policy experts say the hospitals have come to rely on higher payments from employers and insurers. “The whole system is symbiotic,” Ms. Glied said. If private insurers paid the hospitals less, they “would look different and have a different cost structure.”

Anthem says it is now developing new networks made up of significantly fewer hospitals and will steer people to places that deliver the best quality at lower prices, said Paul Marchetti, a senior vice president at Anthem. “That’s where we are headed as a company,” he said.

It will be up to the employers to prove that they can exert discipline on controlling health care costs, which (Robert J. Smith, executive director of the Colorado Business Group on Health) called an open question: “Can the U.S. market become more effective or more efficient or do we need a single payer?”

https://www.nytimes.com…

QOTD: Fixed MLR will drive health care costs higher

By Don McCanne, M.D.
April 20, 2010

Although this concept has been touched upon in previous qotd messages, it is important that we clearly understand that the newly enacted medical loss ratio (MLR) requirements provide insurers with an incentive to further drive up health care costs.

How could that be? The intent of placing minimum limits on the medical loss ratio (the percentage of premiums spent on actual health care) was to limit the maximum percentage of premium dollars spent on administrative costs and profits. When the administrative costs exceed the permissible limits, the insurers, it was suggested, would find administrative efficiencies in their own operations, thereby helping to control overall spending. But since administrative services are the product that they are selling us, why would they want to pare back their own business?

Rather than achieving compliance with the medical loss ratio by reducing their own product, doesn’t it make much more sense from a business perspective to increase the amount of medical services being paid for, thereby achieving compliance with the ratio without any reduction in their own product? Of course it does.

One way to do that is to reclassify as health care as much as possible of the administrative services that they provide. As the Senate report indicates, WellPoint has already reclassified more than half a billion dollars of administrative expenses as medical expenses. This has a double accounting advantage on the ratio since it both reduces the administrative component while increasing the health care component.

What should concern us even more is the potential impact on health care spending. The more health care that the insurers authorize, the greater the health care component of the medical loss ratio. If they can hold their administrative costs at about the same level, increasing the health care component of the ratio allows them to increase… guess what… profits!

There are two ways to increase health care spending. The insurers can approve more medical services, increasing both the frequency and intensity of services authorized. More scary is that they are also motivated to increase health care spending by simply paying higher prices!

For those who insist that all we need is incremental fixes to the legislation that passed (ACA), tell us how you’re going to fix this one. Private market forces will always place profits before all else. Change the rules, and they will always find another way.

Imagine instead a health care financing system with about 3 percent administrative costs, zero profits, and incentives to control excessive prices and limit the excessive growth in the frequency and intensity of non-beneficial, high-tech services and products. That’s what we would have if we enacted an improved Medicare system that covered everyone.

https://pnhp.org…

Comment:

By Don McCanne, M.D.

It has long been known that Medicare is very effective in controlling hospitals’ prices for both inpatient and outpatient services. Though it is also known that private health plans negotiate higher prices with the hospitals, because of the confidentiality of rate negotiations few realized that the differential compared to Medicare rates was this great. RAND shows us that, in 2017, private health plans paid 204 percent of Medicare rates for inpatient care and 293 percent of Medicare rates for hospital outpatient services.

That should be enough to make us question why we should leave the private health plans in charge of health care financing. But there is something much more nefarious under all of this. It is how insurers handle the medical loss ratio – the percentage of revenues that insurers spend on health care which is considered a loss by Wall Street standards. But it is really the other part of the ratio – the administrative costs – that the insurers divert from patient care. There is nothing new here. Read my Quote of the Day comment above from almost a decade ago. Really, read it.

Health plans keep a percentage of funds paid to hospitals for their own administrative costs and profits. Because the medical loss ratio is generally a fixed percentage, insurers can increase their profits by increasing the volume of health care services they authorize. But worse, they further increase their profits by authorizing higher prices paid to the hospitals, because they keep percentage of those prices. So why should anyone be surprised that the RAND study shows that the private health plans are paying hospitals egregiously high prices, when those high prices are contributing to the spectacular Wall Street performance of the private insurers?

This is criminal. When the politicians and health policy community are supposedly looking for ways to try to control our outrageous national health expenditures, the health insurance lobbyists are right under their noses promoting these devious schemes to take care of their own industry while placing ever greater financial burdens on the backs of hardworking American families.

Hospitals claim that Medicare payments are too low (and they are much lower than private insurer payments) so they fear that a Medicare for All program would not pay enough to meet their costs. But under a well designed single payer system, hospital financing would change. Hospitals would be placed on global budgets, much like our fire departments, and capital improvements would be separately budgeted based on local need, ensuring appropriate capacity. Our public stewards would have a mission to provide adequate funds to meet the health care needs of the community, while preventing gouging of our public funds.

It is obvious that a single payer Medicare for all system would fix this and many of the other problems that are contributing to high costs and poor performance in our health care system. Now that we have shown once again that the private insurers are crooks, it’s time to throw them out and enact and implement our own publicly-financed and publicly-administered, single payer, improved Medicare for All. (How many times do I have to write this?)

ADDENDUM to the Quote of Day on RAND study of hospital prices

By Don McCanne, M.D.

ADDENDUM to Quote of the Day, “RAND: Private insurers pay hospitals excessive prices (but they left out why)” May 10, 2019:

Although an excerpt from The New York Times article stated the well known fact that hospital consolidation has given them an “outsize clout in price negotiations with employers,” that, and the leverage from “must have” hospitals, was knowingly left out of my comment because the message was already too long. Discussing only the theory that insurers increase their own profits by deliberately negotiating higher hospital prices may have left the false impression that this latter point was the main driving force behind high hospital prices in private insurance contracts as opposed to hospital prices under Medicare.

In a personal communication, one of the nation’s leading health services researchers, Richard Kronick of the University of California at San Diego, made the following point:

“While it is true that if an insurer has a contract with an employer in which the administrative fee is expressed as a percent of medical spending, then, in the very short run, if hospital prices increase then the administrative fee increases.  But that insurer is likely to lose business to other insurers that keep prices down, and also will lose money on the portion of business that is insured (unless it is able to increase premiums, but in most markets there is at least some competitive pressure that at least partially restrains that behavior).  I don’t think it is correct to state that insurers make more money when the prices they pay hospitals increase.”

My supposition is not totally without support:

“Insurers are also frequently paid based on how much the employer spends; they take in more revenue when the employer spends more.” – The New York Times, May 9, 2019

“On the other hand, the target ratios (MLR) might give them (the insurers) added incentive to raise premiums. By doing so, they could keep overhead and profit fixed, even as those items decline as a percentage of the premium dollar.” The Washington Post, April 18, 2010

At PNHP we try to rigidly adhere to facts. Because of my failure to emphasize the importance of hospital consolidation and “must have” status in hospital price negotiation, I considered retracting this Quote of the Day. However I decided not to since this still supports our contention that including private insurers as intermediaries in health care financing is deleterious when compared to the much more efficient method of administered pricing through our public Medicare program, though we do recommend a change to the more precise and equitable methods of global operating budgets and separate budgeting of capital improvements for hospitals.

I thank Professor Kronick for his input in clarifying this issue.

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