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Fight To Lower Drug Prices Forces Some To Switch Medication

By Alison Kodjak
NPR, January 26, 2016

Steve Miller… The chief medical officer at Express Scripts, the largest pharmacy benefit manager in the U.S., has been essentially auctioning off his 80 million customers to the drug companies that will give him the best deal.

Express Scripts and its rivals including CVS/Caremark and OptumRX manage prescription drug coverage for insurers and employers. They’re trying to spark price wars among drugmakers by refusing to pay for some brand-name medications unless they get a big discount.

The result is that average costs for many drugs are falling. At the same time, consumers are being forced to change medications, sometimes to brands that don’t work as well for them.

This year, more than half of all people with insurance will have some medications excluded from coverage, says Ronny Gal, a drug industry analyst at investment firm Alliance Bernstein in New York.

“Drug companies have been pricing their drugs largely along the lines of, you know, whatever you can get away with and still have the patient get the drug,” he says. “This year exclusion will become a standard feature of the industry, which is actually quite a shocker for a lot of patients.”

Express Scripts pioneered the strategy two years ago, when it announced it would no longer pay for 48 brand-name drugs.

Express Scripts isn’t alone. Caremark, Optum and Prime Therapeutics also refuse to pay for some name-brand medications. Dr. David Lassen, the chief medical officer at Prime, which is the pharmacy benefit manager for several Blue Cross and Blue Shield plans, says the company offers an exclusion option to its health plan customers.

http://www.npr.org/sections/health-shots/2016/01/25/463809474/fight-to-lower-drug-prices-forces-some-to-switch-medication

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Comment:

By Don McCanne, M.D.

Drug prices are a problem, so much so that many people will not fill their prescriptions unless they have a drug plan that will cover most of the costs. The United States relies largely on market solutions through pharmacy benefit managers (PBMs), rather than through government administered pricing. Markets and the government function quite differently.

Drug companies have been pricing their products at the maximum that the market will bear, which results frequently in truly unreasonable prices. As the market intermediaries, PBMs are now boycotting products that they believe are overpriced. The obvious problem is that patients are then denied coverage for some medications that may be much more preferable than other options, including doing without.

In contrast, government programs such as Medicaid and the VA have been able to negotiate even better prices while making the drugs more accessible to patients on those programs.

It is time for us to quit pretending that there is some magic in the market when it is our public programs that function far better. If we had a national single payer program that included a drug benefit, the intrusive obstruction of the pharmacy benefit managers would go away.

New Report: CMS’ Changes to Medicare Advantage Undermine Care for Beneficiaries Managing Chronic Conditions

America’s Health Insurance Plans (AHIP), January 22, 2016

With 17 million seniors and individuals with disabilities depending on the Medicare Advantage program, a report from Avalere Health raises new concerns about CMS’ policies that undermine health plans’ efforts to care for beneficiaries managing multiple chronic conditions. After assessing the accuracy of CMS’ current risk adjustment model and the cost of care for chronic health conditions, the Avalere analysis found that the model under-predicts costs for individuals with multiple chronic conditions by $2.6 billion on an annual basis. These findings come just weeks before CMS releases its annual proposed payment notice and call letter for Medicare Advantage and Part D plans, which may include further changes to the program and seniors’ benefits.

In the spring of 2015, CMS finalized changes to the risk adjustment system, which directly targeted chronic disease prevention programs. This latest Avalere analysis demonstrates that these changes significantly limit health plans’ early intervention efforts and seniors’ benefits.

“Further cuts to Medicare Advantage and seniors’ benefits are fundamentally at odds with the goal of delivering better care and better value for beneficiaries,” AHIP President and CEO Marilyn Tavenner said. “Rather than relying on an antiquated fee-for-service approach as the model for care delivery, CMS should focus on strengthening Medicare Advantage and the innovative programs that improve seniors’ health.”

Last year, more than 340 members of Congress, lead by Sen. Chuck Schumer (D-NY), Sen. Mike Crapo (R-ID), Rep. Patrick Murphy (FL-18), and Rep. Brett Guthrie (KY-02), urged CMS to protect seniors’ coverage and provide stability to the program. Ahead of the upcoming February rate notice, more than 2 million seniors from AHIP’s Coalition for Medicare Choices have mobilized, urging Washington to defend the Medicare Advantage program from further payment cuts.

https://www.ahip.org/News/Press-Room/2016/New-Report–CMS–Changes-to-Medicare-Advantage-Undermine-Care-for-Beneficiaries-Managing-Chronic-Conditions.aspx

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Analysis of the Accuracy of the CMS-Hierarchical Condition Category Model

Avalere Health, January 2016

From the Executive Summary

Since 2000, the Centers for Medicare & Medicaid Services (CMS) has adjusted Medicare Advantage (MA) capitated payments for demographic characteristics and health status (also known as “risk adjustment”). In 2004 CMS adopted the Hierarchical Condition Category (HCC) risk adjustment model, which includes a series of patient diagnoses that impact healthcare spending. In 2014, CMS introduced a new version of the model that removed certain conditions, added others, and made additional modifications (hereafter referred to as the “2014 model”).

In this project, Avalere assessed the accuracy of the 2014 model for beneficiaries in the traditional Medicare program with certain common chronic conditions by using Medicare fee-for-service (FFS) claims data to compare predicted healthcare costs with actual healthcare costs.

In summary, we estimate that the 2014 model under-predicts costs for individuals with multiple chronic conditions by $2.6 billion on an annual basis (see Table 1). As a result, because the model is “zero sum”—that is, the values for each condition are relative to the average cost across all individuals—under-prediction for individuals with multiple chronic conditions is balanced by over-prediction of costs for individuals with no chronic conditions.

On October 28, 2015, CMS announced proposed changes to the MA risk adjustment model that the agency believes will improve its predictive power for low-income beneficiaries. Specifically, CMS intends to further refine the model by accounting for both dual eligible/low-income subsidy (LIS) eligible and disabled status.

(W)e intentionally used a different disease classification system from the HCC model groupings in order to independently assess how well the model predicts costs for specific chronic diseases.

Table 1. Predictive Accuracy for Beneficiaries with Multiple Chronic Conditions

  Total Estimated MA Over/Under- Prediction of Expenditures ($ millions)

    Multiple Chronic Conditions (All)  $ (2,613.7)
   
    Multiple Chronic Conditions (Dual/LIS-eligibles)  $ (401.8)

The purpose of risk adjustment is to anticipate systematic differences in costs for groups of individuals so that plans are reasonably compensated for the financial risks they bear. If plans are not accurately compensated for taking on the risk associated with a particular group, it creates a misalignment between payments and costs for higher cost beneficiaries, and under-compensates plans that enroll many chronically ill members. For any particular individual, the model may over- or under-predict actual costs, in some cases by a wide margin; every dollar of under-predicted cost is balanced by a dollar of over-predicted cost.

From the Detailed Findings

Analysis for Multiple Chronic Conditions

We reviewed how well the model predicts expenditures for individuals with multiple chronic conditions in order to determine how well payments to MA plans would be risk adjusted for the clinical severity of their patient populations under the 2014 model. As shown in Table 3, we find that the model under-predicts costs by approximately $2.6 billion for individuals with three or more chronic conditions. We also find that the model over-predicts disease burden for individuals without chronic conditions.

Table 3. Predictive Accuracy for Members with Chronic Conditions; All Members and Dual/LIS-Eligibles

  Total Estimated MA Over/Under- Predictions ($ millions)

    All Members

      Multiple (3+) Chronic Conditions  $ (2,613.7)

      Few (1-2) Chronic Conditions  $ 936.2

      No Chronic Conditions  $ 1,677.50

    Dual/LIS-Eligibles

      Multiple (3+) Chronic Conditions  $ (401.8)

      Few (1-2) Chronic Conditions  $ 599.8

      No Chronic Conditions  $ 582.9

From the Conclusion

We reviewed the accuracy of the new CMS-HCC model at predicting costs for individuals with multiple chronic conditions, and paid particular attention to how well the model predicts costs for high cost individuals. We find that the CMS-HCC model substantially under-predicts costs for individuals with multiple chronic conditions, under-predicts costs for several specific chronic conditions, and does not accurately predict costs for high cost individuals within each chronic condition.

These findings suggest the model may need improvements and modifications in order to appropriately pay for high cost members and individuals with multiple and certain single chronic conditions. In other words, the model may not be adequately compensating health plans for treating these individuals.

http://go.avalere.com/acton/attachment/12909/f-028f/1/-/-/-/-/012016_Avalere_HCC_WhitePaper_LP_Final.pdf

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Comment:

By Don McCanne, M.D.

For the past four years, the private insurance industry, led by their lobby organization – AHIP, has been successful in offsetting the reductions in overpayments that have been made to the private Medicare Advantage plans – reductions that are required by the Affordable Care Act. AHIP has now commissioned Avalere to produce a study that purportedly shows that they will need higher capitation payments than the CMS’s risk adjustment program would allow. The release of this study is the first step in their campaign to, once again, offset the decreases required by ACA.

A program to authorize private Medicare Advantage plans (originally Medicare + Choice plans) was authorized by Congress as a move to eventually completely privatize Medicare once the private plans were able to show that they could deliver higher quality at lower costs. Early on the concept was proven a fraud when the plans successfully marketed their plans selectively to healthy Medicare beneficiaries, while being compensated at levels equivalent to the costs of those in the traditional fee-for-service (FFS) Medicare program who had greater health problems.

In response, CMS developed a risk adjustment program that would pay more when the Medicare Advantage plans enrolled beneficiaries with greater health care needs, based on their diagnoses. The private plans then responded by upcoding the diagnoses of their enrollees, making them appear much sicker than they were. They even went to the point of sending out teams to make detective house calls so that they could add more diagnoses that were not being itemized by the providers.

In 2004, CMS adopted the Hierarchical Condition Category (CMS-HCC) risk adjustment model, which does adjust payments upward for those with greater needs, but it still fails to prevent about four-fifths of the excessive payments.

With pressure from AHIP, and with the support of Congress, CMS used various innovative methods to boost the payment rates for these private plans. This year, they seem to be headed towards a claim that they are being paid much less for high cost patients than the actual costs entailed.

Look at Table 1 in the Executive Summary (the only part that legislators read). Based on current CMS risk adjustment methods, they predict that the calculated costs for beneficiaries with multiple chronic conditions will fall short of actual costs by $2,614 million. They are now campaigning to have those costs added to their reimbursement rates for 2017.

But look at Table 3 which is found in “Detailed Findings” (which most will not read). It is the same as Table 1, but expanded to include the predicted calculations for those who have few or no chronic conditions. It shows that the CMS calculations predict $2,614 million in excess estimates of costs.

For the dual eligible/low-income subsidy group (Dual/LIS), Table 1 shows that the costs for those with multiple chronic conditions would be underestimated by $402 million. But for the Dual/LIS with few or no conditions, Table 3 shows that the predicted costs would be calculated to be $1,183 million over the actual costs. The report indicates that Dual/LIS patients have greater costs, so they plead to be compensated for this $402 million underestimate. They remain silent on the $1,183 overestimate for the healthier sector.

Also the estimates are based on patients in the traditional FFS Medicare program, a less healthy population than those in the Medicare Advantage plans. Since the Medicare Advantage plans continue to be successful in recruiting healthier patients, the overestimates by which they would be reimbursed would be even greater.

The politics are ugly. Marilyn Tavenner, as head of CMS, participated in the conspiracy to use devious innovations to overpay the Medicare Advantage plans. She is now president and CEO of AHIP and will use her cozy relationship with members of Congress to be sure that they put more pressure on CMS to once again jack up the rates for Medicare Advantage plans, in conflict with the intent of the ACA legislation.

This is a nefarious effort that is part of the conspiracy to completely privatize Medicare. As Marilyn Tavenner said in the AHIP news release, “Rather than relying on an antiquated fee-for-service approach as the model for care delivery, CMS should focus on strengthening Medicare Advantage and the innovative programs that improve seniors’ health.” This statement is not ambiguous. It is a blatant call for total privatization of Medicare.

The last thing we want is a privatized Medicare Advantage for all who can afford it.

Doctors group welcomes national debate on ‘Medicare for All’

Nonpartisan physicians group calls single-payer reform ‘the only effective remedy’ for nation’s continuing health care woes and urges focus on facts, not rhetoric

Physicians for a National Health Program, a nonprofit, nonpartisan organization of 20,000 doctors who support single-payer national health insurance, released the following statement today by its president, Dr. Robert Zarr, a Washington, D.C., pediatrician.

The national debate on single-payer health reform, or “Medicare for All,” that has emerged in the course of the presidential primaries is a welcome development. But unfortunately a number of misrepresentations about single-payer national health insurance – and the prospects for its attainment – have crept into the dialogue and are potentially misleading the public.

Most of these misrepresentations, or myths, have been decisively refuted by peer-reviewed research. They include the following:

Myth: A single-payer system would impose an unacceptable financial burden on U.S. households. Reality: Single payer is the only health reform that pays for itself. By replacing hundreds of insurers and thousands of different private health plans, each with their own marketing, enrollment, billing, utilization review, actuary and other departments, with a single, streamlined, tax-financed nonprofit program, more than $400 billion in health spending would be freed up to guarantee coverage to all of the 30 million people who are currently uninsured and to upgrade the coverage of everyone else, including the tens of millions who are underinsured. Co-pays and deductibles, which have been rapidly rising under the Affordable Care Act, would be eliminated. Further, the single-payer system’s bargaining clout would rein in rising costs for drugs and medical supplies. Lump-sum budgets for hospitals and capital planning would control costs even more.

A recent study shows 95 percent of U.S. households would come out financially ahead under an improved version of Medicare for all. The graduated, progressively structured tax burden would be based on ability to pay, and the heavy cost to average U.S. households of private insurance premiums, co-pays, deductibles, and many currently uncovered services would be eliminated. Patients could go to the doctor or hospital of their choice, and would no longer be restricted to proprietary networks. Multiple studies over a period of several decades, including by the General Accountability Office and the Congressional Budget Office, show that a single-payer system would provide universal coverage at a much lower cost, per capita, than we are spending now. International experience confirms it. Even our traditional Medicare program, which falls short of a true single-payer system, has much lower overhead than private insurance, and shows that publicly financed programs can deliver affordable, reliable care.

A single-payer system would also greatly diminish the administrative burden on our nation’s physicians and hospitals, freeing up physicians, in particular, to concentrate on doing what they know best: caring for patients.

Covering everyone for all medically necessary care is affordable; keeping the current private-insurance-based system intact is not.

Myth: The U.S. has a privately financed health care system. Reality: About 64 percent of U.S. health spending is currently financed by taxpayers. (Estimates that are lower than this exclude two large sources of taxpayer-funded care: health insurance for government employees and tax subsidies to employers and individuals for purchasing private health plans.) On a per capita basis, the amount of government-funded health care in the U.S. exceeds the health spending of nations with universal health systems, e.g. Canada. We are paying for a national health program, but not getting it.

Myth: A single-payer system would overturn the gains won under the Affordable Care Act and provide inferior coverage to what people have today. Reality: A single-payer system would go far beyond the modest improvements that the ACA made around the edges of our current private-insurance-based system and ensure truly universal care, affordability and health security. For example, H.R. 676, the Expanded and Improved Medicare for All Act, would guarantee coverage for all necessary medical care, including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care and correction, hearing services including hearing aids, chiropractic, durable medical equipment, palliative care, podiatric care, and long-term care. It would eliminate financial barriers to care like co-pays and deductibles and eliminate restrictive networks. It would end the steady erosion of job-based coverage under our current arrangements and disconnect insurance coverage from employment. H.R. 676 currently has 61 sponsors.

Myth: The American people don’t support single payer. Reality: Surveys have repeatedly shown that an improved Medicare for All is the remedy preferred by about two-thirds of the population. A recent Kaiser Family Foundation survey yielded similar results, showing 58 percent of Americans support Medicare for All. A solid majority of the medical profession favors such an approach, as well, as do more than 600 labor organizations, and many civic and faith-based groups.

Myth: The goal of establishing a single-payer system in the U.S. is unrealistic, or “politically infeasible.” Reality: It’s true that single-payer health reform faces formidable opposition, especially from the private insurance industry, Big Pharma, and other for-profit interests in health care, along with their allies in government. This prompts some people to conclude that single payer is out of reach and therefore not worth fighting for. While such moneyed opposition should not be underestimated, there is no reason why a well-informed and organized public, including the medical profession, cannot prevail over these vested interests. We should not sell the American people short. At earlier points in U.S. history, the abolition of slavery and the attainment of women’s suffrage were considered unrealistic, and yet the movements to achieve these goals were ultimately victorious and we now wonder how those injustices were allowed to stand for so long.

What is truly “unrealistic” is believing that we can provide universal and affordable health care, and control costs, in a system dominated by private insurers and Big Pharma.

We call upon our nation’s lawmakers and the political leaders of all political parties to heed public opinion and to do the right thing by acting swiftly to bring about the only equitable, financially responsible and humane cure for our health care ills: single-payer national health insurance, an expanded and improved Medicare for all.

Physicians for a National Health Program (www.pnhp.org) has been advocating for single-payer national health insurance for three decades. It neither supports nor opposes any candidates for public office.

https://www.pnhp.org/news/2016/january/doctors-group-welcomes-national-debate-on-‘medicare-for-all’

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Comment:

By Don McCanne, M.D.

The concept of a single payer national health program – Medicare for all – has become part of the political debate leading up to the presidential primaries. To no surprise, the rhetoric has been driven by politics which characteristically reduces important concepts to sometimes meaningless or deceptive sound bites. The media, including liberal pundits who should know better, have made the debate a battle of words rather than ideas. We at PNHP believe that facts should guide the national debate, and thus this release.

The Current and Projected Taxpayer Shares of US Health Costs

By David U. Himmelstein, MD, and Steffie Woolhandler, MD, MPH
American Journal of Public Health, Published online ahead of print January 21, 2016

Objectives:  We estimated taxpayers’ current and projected share of US health expenditures, including government payments for public employees’ health benefits as well as tax subsidies to private health spending.

Methods:  We tabulated official Centers for Medicare and Medicaid Services figures on direct government spending for health programs and public employees’ health benefits for 2013, and projected figures through 2024. We calculated the value of tax subsidies for private spending from official federal budget documents and figures for state and local tax collections.

Results:  Tax-funded health expenditures totaled $1.877 trillion in 2013 and are projected to increase to $3.642 trillion in 2024. Government’s share of overall health spending was 64.3% of national health expenditures in 2013 and will rise to 67.1% in 2024. Government health expenditures in the United States account for a larger share of gross domestic product (11.2% in 2013) than do total health expenditures in any other nation.

Conclusions:  Contrary to public perceptions and official Centers for Medicare and Medicaid Services estimates, government funds most health care in the United States. Appreciation of government’s predominant role in health funding might encourage more appropriate and equitable targeting of health expenditures.

From the Discussion

Americans pay the world’s highest health-related taxes. Yet many perceive that US health care financing system is predominantly private, in contrast to the universal tax-funded health care systems in nations such as Canada, France, or the United Kingdom. By 2024, government expenditures in the United States are expected to account for more than two thirds of national health spending. This is nearly the same proportion as in Canada, where official figures put government’s share at 70.7% (although this figure excludes modest tax subsidies for supplemental private coverage).

Public funds help the vast majority of Americans pay for care, but these funds flow through many different spigots. The funding streams for the poor, the elderly, veterans, family planning, and public sector workers are visible and hotly debated. Meanwhile, the hundreds of billions in tax subsidies that disproportionately benefit wealthier Americans have drawn far less public attention.

Although taxpayers fund the vast majority of health spending, overall priorities for this funding are rarely discussed. Appreciation of the magnitude of government funding might encourage more explicit, appropriate, and equitable targeting of these expenditures as components of a total health budget.

http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2015.302997

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Comment:

By Don McCanne, M.D.

We often hear that we cannot afford the taxes to pay for a single payer national health program – an improved Medicare for all. Yet we are already paying most of the taxes that would be required; it’s just that they are relatively obscure and thus not recognized by most taxpayers.

By 2024, government expenditures will pay for more than two-thirds of national health spending (up from 64.3% in 2013). “Government health expenditures in the United States account for a larger share of gross domestic product (11.2% in 2013) than do total health expenditures in any other nation,” according to this study. Our government health expenditures alone are more than both government and private health expenditures in any other nation. We are paying for a national health program, but we are not getting it.

Most people are aware of the insurance premiums and out of pocket expenses that they and their employers pay for health care, so they tend to think that most health care spending is private. They are aware of the payroll deduction for Medicare, but they do not tend to consciously connect other taxes, especially income taxes, with expenditures for Part B and Part D Medicare, Medicaid, CHIP, the VA system and other government health programs. Also, totally out of mind is the portion of personal and corporate income taxes that help pay for government health programs – taxes that are built into the pricing of consumer goods and services (not to mention that the cost of employee health benefit programs is also built into consumer prices). (This may be double counting for the tax tally, but higher health spending in the U.S. does pass on opaque employer plan health costs to the consumer.) And one of the largest silent taxes is the tax expenditure (tax subsidies) on the federal, state and local level that help pay for private, employer-sponsored health plans. Also, we are paying, through taxes, for most of the health benefits offered to federal, state and local government employees.

The roughly $300 billion we pay for tax expenditures for employer-sponsored health plans (will be over $500 billion by 2024) is a prime example of how dysfunctional our health care financing is. The subsidies are credited in direct proportion to income – the higher a person’s income, the greater the subsidy. That is really unfair to lower-income individuals and families who may be paying the same insurance premium, directly or indirectly through forgone wage increases, as the higher-income employees do, but at a greater dollar amount than those with higher incomes after the subsidy is applied, and at a much greater percentage of income. This is a highly regressive tax policy.

The point is, we are already spending our taxes on the health care system, and we can do it much more equitably through a well-designed single payer program. Not only would we increase transparency, we would also reduce inefficient spending by eliminating the private insurance industry, saving more in premiums than would be the increase in taxes. The next time someone says that we cannot afford the taxes for a single payer system – clue him or her in. Let everyone know that it is time to demand much greater value for the enormous amount of taxes that we are already paying for health care.

Historic Gains in Health Coverage for Hispanic Children in the Affordable Care Act’s First Year

By Sonya Schwartz, Alisa Chester, Steven Lopez, and Samantha Vargas Poppe
Georgetown University Health Policy Institute & National Council of La Raza, January 2016

Key Findings

1. Uninsurance rates for Hispanic children reached a historic low in the first year that the Affordable Care Act’s (ACA) coverage provisions took effect. The number of uninsured Hispanic children dropped by approximately 300,000 children, from about 2 million uninsured Hispanic children in 2013 to 1.7 million in 2014. The uninsurance rate for Hispanic children declined by nearly 2 percentage points from 11.5 to 9.7 percent in the same one-year time period.

2. Hispanic children were much more likely to have health coverage in states that have taken multiple steps to expand coverage for children and parents. In 2014, 20 states had uninsurance rates for Hispanic children that were significantly below the national average. Of these, 16 states covered children in Medicaid and the Children’s Health Insurance Program (CHIP) above 255 percent of the Federal Poverty Level (FPL, the median eligibility level for children), 18 states provided Medicaid and/or CHIP coverage to lawfully residing children in the five-year waiting period, and 17 states extended Medicaid to low-income parents and other adults.

3. Despite these gains, health coverage inequities for Hispanic children remained. Hispanic children accounted for a much greater share of the uninsured child population (39.5 percent) than the child population at large (24.4 percent) in 2014. These inequities existed even though the vast majority of uninsured Hispanic children were eligible for Medicaid and CHIP, but unenrolled.

http://ccf.georgetown.edu/wp-content/uploads/2016/01/CCF-NCLR-Uninsured-Hispanic-Kids-Report-Final-Jan-14-2016.pdf

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Comment:

By Don McCanne, M.D.

They say that the historic gains in health coverage for Hispanic children is one of the many accomplishments of the Affordable Care Act (ACA) that we can celebrate. From 2013 to 2014 the number uninsured Hispanic children declined from about 2 million to 1.7 million.

Of course, under a well-designed single payer system, that number would have dropped to zero, not only for Hispanic children, but for everyone. Yet, now that single payer has been thrust back into the political debate, the sides are lining up between those who say that we should try to build on ACA and those who say that we should move to single payer, improved Medicare for all.

Now be real. With ACA, we have reduced the number of uninsured Hispanic children by about 300,000. What kind of adjustments would we have to make in ACA to insure the other 1,700,000? With greater outreach to the eligible children, we might be able knock that number down a little bit more, but there is no mechanism under ACA, even if tweaked, that we could use to come anywhere near eliminating uninsurance.

The ongoing, highly publicized debate between two potential presidential candidates has produced a surge in interest in single payer, according to several polls. There is now a spate of opinion articles being written by progressives who have previously acknowledged the straightforward benefits of single payer. Ironically, many of these articles represent a retreat, taking the position that we have gained much with ACA and we should continue to build on it, that single payer is not politically feasible. Yet none of them have even hinted at the policies they would propose that would be truly effective in achieving the same goals as single payer, except maybe for the fantasy fix of the public option.

The public option would be only one more player in our dysfunctional, administratively complex, multi-payer system, and an expensive one at that. If it were a Medicare buy-in, would new enrollees be placed in the same risk pool as the elderly and people with long-term disabilities? That would require very high premiums because of the greater needs of these patients. Also Medicare covers only about one-half of health care costs and works only because almost everyone has some additional coverage such as Medigap, employer-based retiree coverage, Medicare Advantage, or Medicaid. So would people have to buy two plans – the Medicare buy-in plus some sort of Medigap plan? Too expensive and administratively wasteful. If the buy-in were a Medicare Advantage plan insurers would be reluctant to enter that market since it is subject to adverse selection and a death spiral because of the high premiums they would have to charge. Besides, Medicare Advantage plans are private plans and could hardly be categorized as a “public” option. Instead of using Medicare, could we start with a new government-run insurance plan? We would want to have reasonably comprehensive benefits, with a higher actuarial value to avoid excessive out-of-pocket costs, and we would want free choice of our health care professionals and institutions, all with no underwriting (subjecting it to adverse selection). Since the government would require that it be budget-neutral, the premiums of such a plan would be much higher than any plan currently on the market. Forget that. Okay, so let’s offer an affordable public option that has spartan benefits, low actuarial value (high deductibles, etc.), and limited choice of narrow networks. Wait a minute. Isn’t that where ACA is taking us? Do we really want the public option to be just another player on the ACA exchanges? How could that ever be considered an incremental step that would bring us closer to single payer?

Back to those 1,700,000 uninsured Hispanic children. Do we want all of them insured, along with everyone else? It will never happen under ACA since thousands of tweaks would not be enough to make it an effective financing system that would take care of everyone. The fundamental ACA infrastructure is irreparably flawed. We have to let these sheep in progressive clothes – the aforementioned opinion writers – know that they are flat-out wrong. Instead of whining about feasibility, we need to change the politics so that single payer becomes the only feasible choice.

Or shall we simply continue on the ACA path and adopt some more tweaks so that in the next decade or so we can get maybe another 300,000 Hispanic children insured? And the other 1,400,000 Hispanic children? Under single payer, we wouldn’t have to ask that.

(Note: While we are battling for single payer, we do need to continue tweaking ACA. California’s Health for All Kids law will allow about 170,000 of the state’s 497,000 uninsured children to quality for Medi-Cal, plus many others are already qualified but do not enroll. But we cannot allow ACA tweaking to in any way diminish our drive toward national single payer.)

Cost-Sharing Obligations, High-Deductible Health Plan Growth, and Shopping for Health Care

By Anna D. Sinaiko, PhD; Ateev Mehrotra, MD; Neeraj Sood, PhD
JAMA Internal Medicine, January 19, 2016

The rapid growth of high-deductible health plans (HDHP) has been driven in part owing to a belief that cost-sharing obligations (ie, having skin in the game) will encourage health insurance enrollees to shop for health care. The wide variation in costs across physicians and hospitals implies considerable opportunity for enrollees to save money by switching to lower-cost providers. High-deductible health plan enrollment is associated with lower health care spending. However, prior studies using health insurance claims data indicate these savings are primarily owing to decreased use of care and not because HDHP enrollees are switching to lower-cost providers. Limited prior work has assessed attitudes toward price shopping among HDHP enrollees and whether they were more likely to consider costs when seeking care.

From Methods

We surveyed a nationally representative sample of insured US adults between 18 and 64 years of age who used medical care in the last year and compared HDHP enrollees with people in traditional plans on rates of shopping for care. The definition of an HDHP was established as a health plan having an individual deductible greater than $1250 or a family deductible greater than $25006 or a health plan that included a health savings account.

From Results

During their last use of medical care, HDHP enrollees were no more likely than enrollees in traditional plans to consider going to another health care professional for their care (n = 120 [10.9%] vs n = 85 [10.0%]; P = .67), or to compare out-of-pocket cost differences across health care professionals (n = 42 [3.8%] vs n = 23 [2.7%]; P = .37).

From Discussion

Simply increasing a deductible, which gives enrollees skin in the game, appears insufficient to facilitate price shopping. Members of HDHP and traditional plans are equally likely to price shop for medical care, and they hold similar attitudes about health care prices and quality.

http://archinte.jamanetwork.com/article.aspx?articleid=2482348

Editor’s Note

High-Deductible Health Plans and Higher-Value Decisions

By Joseph S. Ross, MD, MHS

High-deductible health plans — insurance plans that have lower premiums but higher deductibles than traditional health plans — have been increasingly promoted as a means to incentivize higher-value health care decision making. However, we have little information on how individuals take accessibility, cost, and quality information into account when making health care decisions. Moreover, there remains uncertainty about whether individuals will obtain recommended health care services while at risk for greater out-of-pocket costs.

In this issue of JAMA Internal Medicine, Sinaiko and colleagues conduct an internet-based survey of enrollees in high-deductible health plans and traditional health plans to better understand how they think about health care decisions. Individuals enrolled in plans with different financial incentives actually share many of the same beliefs about health care pricing and how to obtain high-quality care. Both rarely consider obtaining care from a different health care professional and even less often compare costs among health care professionals. Despite the limitations of an internet-based sample and few questions to disentangle the nuance of decision making, an interpretation of this study could be that high-deductible health plans are rationally designed for individuals who do not yet have access to sufficient information to make higher-value decisions in today’s market, suggesting that these plans have not yet succeeded at making cost and quality information more available and more actionable for their enrollees. However, a more likely interpretation is that getting enrollees to make higher-value decisions remains a mirage. High-deductible health plans take advantage of an irrationally designed health care system. In fact, information about our health care system is asymmetric in that it is better understood by physicians and less so by patients, which means patients obtaining care are not truly informed decision makers.

It is true that high-deductible health plan enrollees have “skin in the game.” However, these enrollees are exposed to substantial out-of-pocket cost risk with little evidence that this risk exposure will incentivize higher-value health care decisions, meaning they are essentially playing the game blindfolded with one hand tied behind their back.

http://archinte.jamanetwork.com/article.aspx?articleid=2482346

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Comment:

By Don McCanne, M.D.

This study shows that individuals with high-deductible health plans (HDHP) are no more likely to select their care based on their out-of-pocket costs than do individuals enrolled in traditional health plans without high deductibles. As the editorial states, it is likely that “getting enrollees to make higher-value decisions remains a mirage.”

So high deductibles do not cause patients to be smart shoppers, but they do cause patients to decline beneficial health care services. They also create financial hardships for some patients. Thus high deductibles have a net negative impact. We should get rid of them. A single payer system is a much more efficient and patient-friendly method of controlling health care spending.

Transcript of the Democratic Presidential Debate

The New York Times, January 17, 2016

(The debate is sponsored by the Congressional Black Caucus Institute)

Brief excerpts

Hillary Clinton:  We finally have a path to universal health care. We have accomplished so much already. I do not to want see the Republicans repeal it, and I don’t to want see us start over again with a contentious debate. I want us to defend and build on the Affordable Care Act and improve it.

Bernie Sanders:  No one is tearing this up, we’re going to go forward. But with the secretary neglected to mention, not just the 29 million still have no health insurance, that even more are underinsured with huge copayments and deductibles. Tell me why we are spending almost three times more than the British, who guarantee health care to all of their people? Fifty percent more than the French, more than the Canadians. The vision from FDR and Harry Truman was health care for all people as a right in a cost-effective way.

Bernie Sanders:  What this is really about is not the rational way to go forward — it’s Medicare for all — it is whether we have the guts to stand up to the private insurance companies and all of their money, and the pharmaceutical industry. That’s what this debate should be about.

Hillary Clinton:  So, what I’m saying is really simple. This has been the fight of the Democratic Party for decades. We have the Affordable Care Act. Let’s make it work.

http://www.nytimes.com/2016/01/18/us/politics/transcript-of-the-democratic-presidential-debate.html

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Health Reform Realities

By Paul Krugman
The New York Times, January 18, 2016

Obamacare is … what engineers would call a kludge: a somewhat awkward, clumsy device with lots of moving parts. This makes it more expensive than it should be, and will probably always cause a significant number of people to fall through the cracks.

The question for progressives — a question that is now central to the Democratic primary — is whether these failings mean that they should re-litigate their own biggest political success in almost half a century, and try for something better.

My answer, as you might guess, is that they shouldn’t, that they should seek incremental change on health care (Bring back the public option!) and focus their main efforts on other issues — that is, that Bernie Sanders is wrong about this and Hillary Clinton is right.

… as the health policy expert Harold Pollack points out, is that a simple, straightforward single-payer system just isn’t going to happen.

http://www.nytimes.com/2016/01/18/opinion/health-reform-realities.html

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Here’s why creating single-payer health care in America is so hard

By Harold Pollack
Vox, January 16, 2016

The experience of peer industrial democracies suggests that a well-designed single-payer system would be more humane and markedly less expensive than what we have right now.

Passing a single-payer plan requires precisely the same interest-group bargaining and logrolling required to pass the ACA. The resulting policies will thus replicate some of the very same scars, defects, and kludge that bedevil the ACA.

Progressives should still push for basic reforms that improve our current system. I supported the public option in 2009. I still do. I hope it resurfaces in some form, particularly for older participants in the state marketplaces . It may open a pathway to a true single-payer. If it doesn’t — which I suspect it will not — it might still provide a valuable alternative and source of pricing discipline within our pathological health care market.

http://www.vox.com/2016/1/16/10779270/pollack-single-payer-in-america

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Bernie Sanders’s single-payer plan isn’t a plan at all

By Ezra Klein
Vox, January 17, 2016

Sanders calls his plan Medicare-for-All. But it actually has nothing to do with Medicare. He’s not simply expanding Medicare coverage to the broader population — he makes that clear when he says his plan means “no more copays, no more deductibles”; Medicare includes copays and deductibles. The list of what Sanders’s plan would cover far exceeds what Medicare offers, suggesting, more or less, that pretty much everything will be covered, under all circumstances.

Behind Sanders’s calculations, both for how much his plan will cost and how much Americans will benefit, lurk extremely optimistic promises about how much money single-payer will save. And those promises can only come true if the government starts saying no quite a lot — in ways that will make people very, very angry.

This is what Republicans fear liberals truly believe: that they can deliver expansive, unlimited benefits to the vast majority of Americans by stacking increasingly implausible, and economically harmful, taxes on the rich. Sanders is proving them right.

http://www.vox.com/2016/1/17/10784528/bernie-sanders-single-payer-health-care

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Why We Can’t Wait

By Martin Luther King, Jr.

“For years now, I have heard the word ‘Wait!’ It rings in the ear of every Negro with piercing familiarity. This ‘Wait’ has almost always meant ‘Never.’ We must come to see, with one of our distinguished jurists, that ‘justice too long delayed is justice denied.’”

http://thekinglegacy.org/books/why-we-cant-wait

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Comment:

By Don McCanne, M.D.

Martin Luther King, Jr. already said it, and that was half a century ago.

[PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. As a consequence, it neither supports nor opposes any candidate for public office.]

The single-payer debate we should be having

By Matthew Yglesias
Vox, January 15, 2016

Bernie Sanders’s argument in favor of single-payer health care is pretty simple.

“The United States is the only major nation in the industrialized world that does not guarantee health care as a right to its people,” Sanders said at a 2015 rally of the National Nurses Union, one of the leading advocacy groups in favor of moving to a Medicare-for-all approach. “Meanwhile, we spend far more per capita on health care with worse results than other countries. It is time that we bring about a fundamental transformation of the American health care system.”

Hillary Clinton’s campaign has sought to counter the appeal of this proposition with a questionable line of attack, arguing that the election of a Democratic president on a Medicare-for-all platform would somehow help Republicans unwind the existing Affordable Care Act and other aspects of insurance provision.

Alternately, she has (accurately) noted that a universal Medicare system would require higher taxes — only to be met with the counter that a universal Medicare system would involve less overall spending.

On this, too, Sanders is right. Medicare manages to finance patients’ health care at dramatically lower per-person rates — just as foreign countries do — so if Medicare covered everyone, total spending would decline even as some of it was shifted to the tax side of the ledger.

The real issue is something else entirely. Single-payer systems save money by squeezing health care providers — doctors, hospitals, and ultimately everyone who works for them — which would be very difficult to accomplish ex post facto. If the political consensus did exist for enacting large, across-the-board cuts in doctors’ fees and hospital charges, then there would be no need to shift to a single-payer system in order to accomplish the cuts. In the absence of such a consensus, the switch to single-payer actually wouldn’t save money, and the costs would become exorbitant.

Medicare works because it pays providers less

Why would a government-run system be more efficient?

Well, here’s the answer: Foreign single-payer systems pay doctors less. They also pay pharmaceutical companies less. They pay less for medical devices, too.

It turns out that Medicare uses this trick, too, offering doctors only about 80 percent of what private insurance plans pay them.

But to the average health care provider, the Medicare patient market is just too big to ditch. Doctors — and hospitals and everyone else — take what they get and are glad for it.

A single-payer structure is neither necessary nor sufficient

The thing about saving money by having a single health care payer squeeze providers on reimbursement rates is that adopting a single-payer structure is neither necessary nor sufficient to achieve the gains. In other words, if the American political system wanted to cut doctors’ payments, we could do that without moving to a single-payer system. Conversely, adopting a single-payer system does not on its own lead to low reimbursement rates — that’s a separate decision that the political system would have to make.

The truth is that there are two entirely separate questions: Who pays health insurance claims, and what prices does the government set? It’s true that shifting from a multi-payer to a single-payer system streamlines some elements of payment administration, but the overwhelming preponderance of the cost savings in a Medicare-for-all plan comes from the lower reimbursement rates.

To get single-payer, liberals have to be more honest with themselves

But if they ever want to get such a bill passed, liberals are going to have to start being more honest with themselves about what their vision entails — a sharp 20 percent cut in doctors’ pay rates, alongside comparable cuts for other kinds of health care providers.

Right now, Sanders and other single-payer proponents’ main strategy for dealing with this problem is to talk around it. Medicare is extremely popular, so “Medicare for all” is a popular slogan, and that’s what they talk about. But you can’t get major policy change enacted on this basis. At some point, to get the savings of their dreams liberals are going to need to win a straightforward argument over the merits of cutting doctors’ pay.

But in my experience, relatively few rank-and-file single-payer proponents are even aware that stingy reimbursements is how single-payer controls costs — in part because essentially none of the movement’s leaders ever say it publicly.

http://www.vox.com/2016/1/15/10775050/single-payer-debate

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Comment:

By Don McCanne, M.D.

Matthew Yglesias tells us that “the overwhelming preponderance of the cost savings in a Medicare-for-all plan comes from the lower reimbursement rates,” thus “adopting a single-payer structure is neither necessary nor sufficient to achieve the gains.” He then criticizes single-payer proponents for not stating this publicly. What Matt does not seem to understand about PNHP is that we are meticulous with our facts, so we would never state something that is so misleading as to be untrue.

A well-designed single payer system includes multiple features that contain health care spending. The most important is the administrative efficiency. Under the Affordable Care Act, the private insurance industry is allowed to keep 15 to 20 percent of the premiums for administrative services and profits. The administrative costs for Medicare are about two percent, and that includes costs of other government programs that support Medicare. Adopting an improved Medicare for all would eliminate much of the excess administrative waste of the private insurers.

On the provider side, our highly inefficient multi-payer system also places a tremendous administrative burden on physicians, hospitals and other providers. In fact, administrative work consumes about one-sixth of U.S. physicians’ time (while eroding their morale, precipitating burnout). U.S. physician practices spend nearly four times as much money interacting with health plans and payers as do their Canadian counterparts.

Administrative costs consume about 31 percent of total U.S. health care spending. That is about twice that of Canada – 16.7 percent. Much of that difference is due to the financing systems – single payer in Canada and a dysfunctional multi-payer system in the U.S. – and thus most of that portion would be recoverable if we switched to single payer.

Yglesias says that we would have to reduce physician payments by 20 percent to achieve the spending goals of a single payer system. But when Canada changed to single payer, not only were physicians’ incomes not harmed, they remain among the top earners in the country.

There are several other policies of a single payer system that control spending. Hospitals are placed on global budgets – a process that works well as demonstrated by public services such as our fire departments. Excess capacity in the delivery system drives up spending, but that can be controlled by regional planning and capital budgets. The prices of pharmaceuticals and medical supplies can be negotiated just as the VA Health system already does so quite successfully. A single payer system incentivizes primary care which has been shown to spend health dollars more efficiently.

The United States and Canada followed the same trajectory in health care inflation until they adopted the Canada Health Act, providing a single payer system in each province. Since then health care inflation has been less in Canada than in the U.S. Likewise, adopting single payer in the U.S. would truly bend the cost curve, putting us on a more sustainable trajectory. Merely cutting prices 20 percent would continue us on a parallel inflationary trajectory.

Of course, there are some other advantages of single payer, besides the cost savings, which would not be achieved merely by cutting prices 20 percent – like truly universal coverage, free choice of physicians and hospitals, removal of financial barriers to care, and better access through capital planning.

We know what we know, but we don’t know what we don’t know. Although Hillary Clinton finds it politically expedient to leave out crucial facts in her critique of single payer, I would assume that Matt Yglesias, as a journalist of high integrity (and for whom I have great respect), would welcome a more thorough understanding of PNHP’s single payer model. We hope he reads this. Then we can have that debate that we should be having.