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In defense of single-payer: How it would reduce administrative waste

By Adam Gaffney, M.D.
KevinMD blog, Aug. 4, 2015

Would a single-payer national health program, at the end of the day, truly be sleeker and slimmer than our bloated and fragmented semi-private system? Not according to Dr. Michel Accad, who takes on this important single-payer talking point in his post: “Will single-payer really reduce administrative waste?”

Given that savings from reduced expenditures on billing and overhead are a core argument that single-payer advocates (myself among them) employ to advance our cause, the piece caught my eye. To quote the proposal of the Physicians’ Working Group for Single-Payer Insurance (of note, I’m active in the organization Physicians for a National Health Program [PNHP], which was behind the proposal), published in JAMA in 2003:

“Our multiplicity of insurers forces US hospitals to spend more than twice as much as Canadian hospitals on billing and administration; forces US physicians to spend vast amounts on billing; and nourishes a panoply of business consultants, coding software vendors, and other satellite business.”

Had a new study been published demonstrating, contrary to all existing data, that private insurers somehow had lower administrative costs than Medicare? Had Canadian expenditures on health care administration somehow suddenly vaulted ahead of that of the United States? No, neither had come to pass (not surprisingly). In fact, Dr. Accad doesn’t really deal with any of the literature about the administrative efficiency of different types of health care systems. Instead, he employs a “Hayekian perspective” to make the argument that central economic planning is inherently inferior to an atomized free market where individual economic actors buy and sell, rationally relying on their intimate knowledge of local market circumstances. “Only in a decentralized system,” he argues, “of decision making, where price fluctuations can adjust to the reality of needs and provisions, are major gluts and shortages avoided.” (For instance, no one knows the business of bread making better than the bread maker.)

Now on the one hand, it’s a bit quixotic to invoke the political philosophy of a neoliberal economist to argue against what is essentially empirical point: that the United States spends more on health care administration than nations that have a single-payer system.

For it clearly does. One study found that the U.S. spent about three-times as much as Canada on health administration ($1,059 vs. $307 per capita, in 1999). More recently, anotherstudy found that the U.S. had the highest hospital administrative costs among eight high-income nations (an astronomical 1.43 percent of GDP spent annually on hospital administration in the U.S., as compared to 0.41 percent in Canada).

Closer to home, Medicare — a single-payer-like system for older Americans — has an administrative overhead around 2 percent, as compared to the 13.6 percent in overhead and profits of privatized Medicare Advantage, which is run by private insurers.

I could quote my favored political philosophers here to counter Accad’s quotes from Hayek, but it’s really all beside the point. As the Princeton health care economist Uwe E. Reinhardt wrote in the New York Times: “The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”

To be fair, Dr. Accad makes a good point ridiculing the extraordinarily complex and “byzantine scheme of codification” used by Medicare (and followed by private insurers) for billing purposes. “[A] CPT code 99204-21 (new patient visit, E/M coding level 4, prolonged service) associated with ICD-9 code 786.50 (chest pain, unspecified),” he notes, “hardly conveys any real knowledge and cannot possibly be a basis on which relevant decisions can be made or value established.”

No, it can’t, but that’s not what such codes are used for: They’re used to determine reimbursement. But they don’t have to be — and that’s where the administrative savings come in.

Under a single-payer system (as PNHP’s proposals describe), hospitals would receive a global lump sum budget to pay for all operating costs; there would be no need to monitor services used by individual patients, tabulate costs, or hire debt collectors. Indeed, hospital billing could largely be eliminated from the ledgers of hospital operating expenses.

Simplified fee schedules, capitation, or salaries — without bonuses or penalties for more or less health care use — would be used to reimburse providers in the outpatient sector. The name of the game would be “[s]implicity, simplicity, simplicity!” as one prominent New Englander put it in his important defense of a national single-payer system, Walden.

I share what I sense is Dr. Accad’s bitterness at onerous documentation obligations. But a universal system would make much of that documentation irrelevant, and, therefore, unnecessary. It would therefore be a win both for practitioners and for the public. (Though it would admittedly be a loss for many others, including those who profit from the system’s inefficiency, like the health insurance industry.)

“Reducing administrative waste” may not be the heady revolutionary slogan today’s millennial physician-activists are looking for, but it’s no less true for that — whatever the opinion of Hayek, Hegel, or Henry David Thoreau.

Adam Gaffney is a physician who blogs at the progressive physician, where a version of this article originally appeared.

http://www.kevinmd.com/blog/2015/08/in-defense-of-single-payer-how-it-would-reduce-administrative-waste.html

To fix what ails U.S. health care, expand Medicare — for all

By Chess Yellot, M.D.
Spirit of Jefferson (Charles Town, W.Va.), Aug. 5, 2015

Isn’t it time to have a serious conversation on the question: why aren’t we all covered by Medicare, regardless of age?

More than 50 people, young and old, from the Eastern Panhandle turned out to publicly celebrate Medicare’s 50th birthday. Medicare is a popular program. The local celebrators joined others throughout the country to show their gratitude and to spread the message: “Medicare: As American as Apple Pie – Protect, Improve, Expand!”

Let me start the conversation by describing my experiences at an area community health center where I practiced for 14 years, until my recent retirement. I saw many working people without insurance. Tragically, some died because they could not afford the specialists or procedures they needed. Others suffered needless pain, discomfort, and disability.

The Affordable Care Act, or Obamacare, enabled many of my West Virginia patients to obtain Medicaid. I saw a lot of new patients who had delayed care for years. They had gone months and years feeling fatigued, short of breath, depressed, in pain. Many times their problems would have cost the system much less if their conditions had been treated when symptoms began.

Now, some middle-class families can obtain health insurance under the Affordable Care Act, but many are finding the co-pays and high deductibles unaffordable. Out-of-pocket costs continue to be a barrier to getting care. Still other patients find that insurance companies limit their choice of physician. The preferred provider might not be in the insurance company’s network.

If we had improved and expanded Medicare for all, I would not have had patients who died and suffered needlessly. My patients would never have gone without needed care because they could not afford the deductibles and co-pays, or because the best specialist for them was out of network.

Let’s look at a solution: A bill in Congress, HR 676, “The Expanded and Improved Medicare for All Act.” Under the simple, 30-page bill, every person in the U.S. would receive prescription drugs, vision, dental, and hearing services, long-term care, and all other medically necessary care. There would be no co-payments, no deductibles, no premiums, and no insurance companies. Funding would come from current federal financing for health care, increasing personal income taxes on the top 5 percent, a modest tax on some unearned income, a modest payroll tax, and a small tax on stock and bond transactions.

The great thing is that for 95 percent of households, these taxes would be less than what they now pay for premiums and out-of-pocket medical expenses.

HR 676 also would mandate that drug prices be negotiated, resulting in huge savings. Currently, federal law prohibits Medicare from negotiating lower prices.

All practitioners providing medically necessary care would be in this one system, and their fees would be negotiated. This would again save money and everyone could choose their own provider. There would be no networks. As is the case now, most providers would be in private practice. We would have private providers and public financing.

A significant study indicates that because of the simplicity of the system described by HR 676, the health care funds currently diverted from our insurance premiums to company profits, high executive compensation, stockholder dividends, advertising, lobbying, and campaign donations would be spent on health care. Medicare’s overhead is around 2 percent. Compare this to private insurance overhead which runs 15 to 20 percent. Add in the amount hospitals and medical practices spend on billing, and this comes to a total of 30 percent. The savings made possible by a simple, single payment system would now go toward Medicare for all. And patients won’t be wasting time trying to figure out their medical bills!

No system is perfect. But if HR 676 became law, no one would suffer or die or go bankrupt due to lack of money to pay for the health care they need. HR 676 is affordable and the savings it provides would protect, improve and expand Medicare for all of us.

Dr. Chess Yellott writes from Shepherdstown.

http://www.spiritofjefferson.com/news/opinion/article_12adb3ca-3aff-11e5-8f79-4b271fb2140b.html

Ask our primary care clinicians how well reform is working

Primary Care Providers’ Views of Recent Trends in Health Care Delivery and Payment

By Jamie Ryan, Michelle M. Doty, Liz Hamel, Mira Norton, Melinda K. Abrams, Mollyann Brodie
The Commonwealth Fund and The Kaiser Family Foundation, August 5, 2015

In recent years, the U.S. primary care delivery system has experienced many changes in the way health care is organized, delivered, and financed. Some of these changes have been strengthened or accelerated by the Affordable Care Act (ACA). For instance, there has been an increased use of health information technology, a move toward team-based care and using nonphysician clinicians, an effort to better coordinate care through medical homes and accountable care organizations, and the introduction of financial incentives and quality metrics to determine how providers are paid.

Using data from the Commonwealth Fund/Kaiser Family Foundation 2015 National Survey of Primary Care Providers, this brief examines providers’ opinions about the changes in primary care payment and health care delivery. Between January 5 and March 30, 2015, a nationally representative sample of 1,624 primary care physicians and a separate sample of 525 midlevel clinicians (i.e., nurse practitioners and physician assistants) working in primary care practices were surveyed online and by mail.

CONCLUSION

New primary care payment and delivery models have emerged in recent years as part of efforts to improve patient outcomes and lower health care costs, with the Affordable Care Act accelerating many of these changes. It may be too early to reach a conclusion on the quality or cost effects of these primary care reforms, but assessing the perspective and experience of those on the front lines is critical to understanding the implementation of these reforms, including any challenges that could potentially undermine the process.

The survey results indicate that primary care providers’ views of many of these new models are more negative than positive. There are exceptions: health information technology gets mostly positive views and medical homes receive mixed opinions with a positive tilt. With regard to HIT, our study indicates that primary care providers generally accept the promise of HIT to improve quality of care even if previous research shows they dislike the process of transitioning from paper-based records. Our survey results also may reflect clinicians’ earlier exposure to certain models and tools National adoption of electronic health records received a boost from the Health Information Technology for Economic and Clinical Health (HITECH) Act of the federal stimulus package of 2009, while the four primary care specialty societies announced a joint statement regarding medical homes in February 2007, several years before passage of the Affordable Care Act.

Though many providers are unsure of the impact of ACOs on quality of care, those physicians who do have an opinion are more likely to say ACOs are having a negative rather than a positive impact on quality of care. ACO implementation is a somewhat more recent development, and primary care providers are not as involved in the day-to-day management of organizational change. Primary care clinicians’ views are also decidedly negative when it comes to financial penalties and the increased use of quality metrics in judging their performance. It may be some time before they can become comfortable with these new payment models.

More primary care providers may be participating in ACOs and relying on quality metrics for performance assessment in the near future. In early 2015, the Centers for Medicare and Medicaid Services announced that 85 percent of Medicare fee-for-service payments should be tied to quality or value by 2016. And, by the end of 2018, 50 percent of all Medicare payments should be tied to quality or value through specific alternative payment models, like ACOs and bundled payments. Dissatisfaction with new models may not be solely attributable to a difficult transformation process; larger culture change within the practice of medicine may be a necessary first step before delivery system reforms such as ACOs and medical homes are fully accepted on the ground.

As primary care transformation efforts mature and spread, it will remain important to judge their effects on patients in terms of access, quality, and costs of care. However, it is also important to assess their effect on primary care clinicians. Of concern, nearly half of primary care physicians say that recent trends in health care are causing them to consider retiring earlier than planned. Market trends in health care have been affecting physicians’ satisfaction for more than 20 years. It will be important to monitor providers’ satisfaction with delivery reform efforts.

http://www.commonwealthfund.org/publications/issue-briefs/2015/aug/primary-care-providers-views-delivery-payment?omnicid=EALERT846316&mid=don@mccanne.org

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Comment:

By Don McCanne, MD

The intent of health care reform, reinforced through the Affordable Care Act, was not only to improve the financing of health care by increasing the numbers insured and providing more government support through insurance subsidies and Medicaid, but it was also to improve the health care delivery system through structural changes that theoretically would improve quality while controlling costs.

Some of the structural reforms included increased use of health information technology (HIT), establishment of accountable care organizations (ACOs), reinforcing primary care through medical homes, use of alternative payment models with financial incentives, and quality metrics to determine how health care professionals are paid.

So far, evaluation of these efforts have provided us with mostly weak and inconclusive data, with initial results suggesting that the effectiveness in improving quality and controlling spending has been very unimpressive, with little positive impact.

Although the public and private bureaucracies are not providing us with enough impressive data to move forward aggressively with these programs, the physician and non-physician clinicians on the front lines can give us a better perspective of just what is happening. This report provides us with their insight.

A few conclusions:

The transition from paper to electronic records has been difficult, especially because of the amount of time required to interact with the HIT system, but clinicians believe that electronic records may improve quality through error reduction, though recent data has cast doubts on this as well.
Medical homes have increased administrative activities with mixed opinions as to their value, with “a positive tilt” in their views.
Many clinicians have not formed opinions on ACOs, but those who have are “more likely to say ACOs are having a negative rather than a positive impact on quality of care.”
Dissatisfaction with the new models do not seem to be limited to transition issues but challenge the very culture of the practice of medicine. Efforts to change the culture could further entrench dissatisfaction and have adverse consequences on the patient experience.
“Primary care clinicians’ views are also decidedly negative when it comes to financial penalties and the increased use of quality metrics in judging their performance.” With little evidence that these metrics improve quality, it seems that creating clinician animosity would be a reason to abandon this experiment.
Medicare’s requirement that payments be tied to quality or value through alternative payment models is an unwise policy decision of the CMS bureaucrats considering the lack of studies that support this move and the increased clinician animosity that will ensue.
“Of concern, nearly half of primary care physicians say that recent trends in health care are causing them to consider retiring earlier than planned.”

The Affordable Care Act and the various measures leading up to it did not adequately address the financing issues in that it left it place our expensive, dysfunctional, fragmented financing system and left far too many people uninsured and even more with under-insurance. Nevertheless, the legislators and bureaucrats have demonstrated even greater incompetence in putting into effect these changes supposedly designed to improve the health care delivery system, when the evidence does not support these particular transformational changes.

These screwball ideas simply thought up by non-clinician policy academics are wasting valuable resources while having negligible or negative impact on health care delivery. What is worse is that they have diverted us from proceeding with reform that would have a very positive impact on health care for all of us.

The greatest driver of quality is to have a system that delivers the right care to the right people at the right time. This is exactly what a single payer national health program is designed to do. Let’s do that instead of wasting our time and resources with measures that do not do much more than to alienate our clinicians.

Health care should be a birthright

By the Editorial Board
The Delaware County Daily Times (Secane, Pa.), Aug. 4, 2015

As the nation marks the 50th anniversary of Medicare the discussion of expanding the program and offering universal health care is resurfacing.

It’s not a new debate. Fifty years before Medicare’s enactment, progressives had fought unsuccessfully for universal, government-provided health insurance, wrote Nancy Altman, founding co-director of Social Security Works, for the Huffington Post.

In 1912, President Theodore Roosevelt’s Progressive Party platform advocated universal, government-sponsored, health insurance, but he was defeated in his re-election bid. In 1917, the California legislature approved universal health insurance, and the governor supported it, but it was defeated in a ballot resolution after a massive, well-financed business and physician-fueled campaign against it. President Franklin Roosevelt considered including national health insurance in his 1935 Social Security legislation, but decided against it out of fear that it would bring down the entire legislative package. President Harry Truman made universal health insurance a top priority, but got nowhere.

So progressives settled on first creating Medicare for seniors, with the goal of expanding coverage to other groups incrementally and ultimately offering universal coverage.

“Universal, government-sponsored insurance is the most effective and efficient way to cover everyone,” Altman wrote. “Insurance is least expensive when it covers the most people; the large size of government-sponsored health insurance provides economies of scale and the greatest ability to negotiate over prices and control costs. Moreover, unlike private health insurance, a government plan has no marketing costs and no high CEO salaries. It can provide health care less expensively and more efficiently for everyone.”

Compared to Medicare’s administrative costs of just 1.4 percent, the administrative costs of private health insurance by very small firms or purchased by individuals can run as high as 30 percent, Altman notes. Even for large companies the administrative costs run around 7 percent.

Unfortunately, politicking and heavy lobbying by the insurance industry over the years waylaid those efforts to expand Medicare. But there are still some pushing for real health care reform – not the Affordable Care Act version that still involves profit-motivated companies and isn’t quite so affordable for everyone.

Addressing a rally outside the Capitol to mark the 50th anniversary of Medicare last week, presidential contender and U.S. Sen. Bernie Sanders, I-Vt., said he will introduce legislation to provide Medicare-for-all health insurance.

He said providing health insurance for all Americans would result in better care, improved access and lower costs by eliminating the middle-man role played by insurance companies that now rake in billions of dollars in profits. Sanders’ bill would set federal guidelines and strong minimum standards for states to administer single-payer health care programs.

“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. “Meanwhile, we spend far more per capita on health care with worse results than other countries.”

As Sanders noted, thousands of people die each year in the U.S. because they delay seeking care they cannot afford. Health care eats up one-fifth of our economy, but the U.S. ranks 27th among major, developed nations on life expectancy and 31st on infant mortality.

Sanders said his proposal also would rein in skyrocketing prices for prescription drugs. Americans pay pharmaceutical companies nearly twice for the exact same drugs manufactured by the exact same companies in other countries.

“This is unacceptable,” Sanders said. “Until we put patients over profits, our system will not work for ordinary Americans.”

In contrast to Sanders, GOP contenders are calling for the phasing out of Medicare.

As Altman wrote, “This upcoming presidential election could be a powerful defining moment. If each Party’s platform reflects these views, the American people will have a clear choice. … If we follow the lead of those visionary architects fifty years ago, those who come after us will inherit a nation where affordable, first class health insurance – Medicare for All – is a birthright.”

http://www.delcotimes.com/opinion/20150804/editorial-health-care-should-be-a-birthright

Celebrate Medicare’s 50th birthday with your support

By Patricia Downs Berger, M.D.
Wicked Local Brookline (Mass.), Aug. 4, 2015

July 30 was the 50th anniversary of Medicare being signed into law by President Johnson. Fifty years of a national health program guaranteeing health coverage for all seniors is a cause for celebration! Medicare has saved millions of lives, provided quality medical care for our parents and older relatives, and significantly reduced the financial burden on younger family members caring for their parents. Medicare has provided dignity and peace of mind to our seniors, who no longer worry that they will be unable to pay for needed medical care.

Alas, this wonderful program is being threatened, and we need first of all to protect it, then improve it, and finally, we need to expand our incredible Medicare to cover everyone.

We have heard the cry, “Hands off my Medicare,” and there is a reason. There are forces trying to destroy it. Republican candidates for president and the Republican congressional leadership are saying they want to change Medicare from guaranteed medical coverage to a voucher program, leaving seniors to search for an appropriate private health insurance plan and pay for it with the voucher money allotted to them. With health costs rising, it is clear that vouchers will not keep up with the cost of private insurance, a disastrous outcome for seniors.

A second threat to Medicare is the effort by privatization groups to increase the number of seniors choosing Medicare Advantage plans. These plans are run by private health insurers and get special subsidies from the federal government to cover more benefits than standard Medicare so that no supplemental insurance is needed. Because of the added benefits in the Medicare Advantage plans, more and more seniors are signing up for them, even though they limit the network of eligible physicians. Unless the benefits in standard Medicare are improved, in 10 years, there may be more people in the private Medicare Advantage plans than in standard Medicare. In order to protect Medicare from privatization, we need to improve it so it can effectively compete with Medicare Advantage plans.

The most important improvement to Medicare would be to give it the power to negotiation with the drug companies for lower prices on medications the same way the Veterans Administration and Medicaid are able to. Medicare drug prices are 78 percent higher, on average, than prices for the same drugs for Medicaid, and 80 percent higher than for the VA. Most of the developed countries across the world have government-run health care systems that negotiate drug prices that are about half of Medicare’s. This negotiating power is especially important, since the trend is for drug companies to raise drug prices, in some instances to astronomical levels.

Another necessary improvement to Medicare is to cover the services that fall into the “gap” in standard Medicare plans so that “Medi-Gap” insurance would not be needed, and they could compete effectively with Medicare Advantage plans.

Finally, we need to expand an improved Medicare to cover everyone. Our present system under the Affordable Care Act is a market-based system where all the stakeholders in the system — hospitals, doctors, pharmaceutical companies, health insurers and medical device manufacturers — are looking for their opportunity to make a big profit. It is a profit-driven system, but lacks the power to control costs that are determined by the major stakeholders.

And who pays the bills? We, the patients, are the ones footing the bills! Patients only obtain medical care if they can pay the premiums and the out-of-pocket costs that include deductibles, co-pays and co-insurance. A new trend in our market-based system called “consumer-driven” health care is shifting responsibility for paying health care costs from insurers and employers to patients, making even “covered” visits to the doctor more difficult for patients to afford.

The rising cost of health care for the average patients perfectly exemplifies the simple truth that market-based economic policies do not work in health care. Medical care is not a commodity that can be bought and sold. When we are sick, we cannot spend time looking for the best quality doctor for the lowest price; we need a physician who knows us and is someone we trust. We need a health care system that puts the patient first and is not based on whether you have the money to pay. That is why we need an equitable system where everyone pays according to their means through fair taxation. The money that is raised goes to a government entity, like expanded Medicare for All, that will guarantee health coverage to everyone from cradle to grave.

We should celebrate Medicare’s 50th birthday by joining millions of Americans who will protect Medicare from privatization, improve its coverage, and finally expand it to cover everyone. Everybody in, nobody out!

Dr. Patricia Downs Berger is co-chair of Mass-Care, the organization leading the campaign for single-payer health care for Massachusetts. She lives on Heath Street.

http://brookline.wickedlocal.com/article/20150804/OPINION/150808858

Medicare for all means equality for all

By William D. Clark, M.D.
Portland (Maine) Press Herald, Letters, Aug. 4, 2015

Medicare became law on July 30, 1965. Medicare runs economically. It’s equitable – we pay when working, not when sick!

Only months later, in March 1966, Dr. Martin Luther King Jr. clairvoyantly said, “Of all the forms of inequality, injustice in health care is the most shocking and inhuman.”

Fast forward 45 years, to 2010. Politicians promised that the Affordable Care Act would make health care universally accessible. But instead it delivered a tangle of rules and procedures. And health care spending is about $3 trillion, more than 17 percent of gross domestic product.

Profits are healthy in our capitalist system. But millions of people are worried sick and unhealthy – roughly one-third of that $3 trillion goes to profits and so-called overhead, not to health care.

Insurers and drug and device makers spend hundreds of millions on lobbying, blocking attempts to provide universal coverage that other developed nations enjoy. This waste of premium and tax dollars is unconscionable.

Unfortunately, current political discussion is dominated by hyperbolic summary statements, simplistic at best and often outright lies, instead of facts. Preservation of a profit-driven system overshadows provision of health care.

As Trudy Lieberman wrote in Harper’s magazine in June, the only solution is to attack the profit seekers’ stranglehold on the machinery of health care – “a bold move that has so far frightened away almost all contenders.”

So, what would Medicare for All provide? Simply stated: Everybody in, nobody out! Comprehensive coverage from your first breath to your last! And an economical and equitable system, based on 50 years’ experience.

Former Labor Secretary Robert Reich recently affirmed that providing Medicare for everyone would address inequality and injustice.

A united citizenry can become a contender. Join the Maine Nurses Association, the Southern Maine Workers Center, Maine AllCare, U.S. Rep. Chellie Pingree, D-1st District, and many others seeking Medicare for everyone.

Dr. William D. Clark resides in Woolwich.

Letter to the editor: Medicare for all means equality for all

Happy Birthday, Medicare

By Oliver Fein, M.D.
PNHP N.Y. Metro, July 30, 2015

The following are the prepared remarks of the speech that Dr. Oliver Fein delivered at the New York City celebration of the 50th anniversary of Medicare and Medicaid at the Professional Staff Congress CUNY in Manhattan on July 30.

We are gathered here today to celebrate the 50th Birthday of Medicare and Medicaid. At birth, Medicare was a fantastic program. The baby was really beautiful. Why?

Because every citizen who had a job contributed;
Because everyone who contributed had access to the same benefits;
Because access to benefits did not depend on how much you contributed or how much you earned;
Because enrollment occurred once in a lifetime, when you turned 65;
Because every hospital and more than 90 percent of doctors participated – it had as broad network of providers;
Because it was efficient: 97-98 percent of all dollars contributed to Medicare went to pay providers of health care – nurses, doctors, physician assistants, social workers, hospitals.

But the baby had some blemishes:

Health care was not free at the point of delivery: there were deductibles and co-payments;
Some benefits were not covered: preventive care, dental care, eye glasses and hearing aids, long-term care and prescription drugs;
Contributions were not progressive – they were the same percentage on all incomes;
People under 65 years of age were not covered.

Many of us assumed that when the baby grew up, all of these weaknesses would be overcome.

There would be no co-pays and no deductibles – health care would be free at the point of delivery.
When benefits were expanded to include medications, Medicare would be able to negotiate directly with pharmaceutical companies to lower prices on prescription drugs;
When the Medicare tax was increased, it would become more progressive like the income tax;
Medicare would be expanded to cover all residents of the United States.

But as Medicare has grown from 16 million enrollees in its first year to 55 million today, in its 50th year, it has become infected by potential deadly parasite, namely private, for-profit health insurance companies, which extracted over $34 billion in overpayments in 2012 alone. The private insurance companies accomplish this by attracting Medicare enrollees who are less sick and therefore less expensive, leaving those who are sicker and more expensive in the original program. If this continues, the original program will become the repository of the sickest, most expensive patients – resulting in an insurance death spiral, killing the original Medicare as we know it. We must work to phase out Medicare Advantage plans and work for an improved, Medicare-for-All – with no co-pays and deductibles, automatic enrollment of all residents of the United States, in a single-payer national health insurance program.

So what is to be done?

First, each of us should call our representatives in Congress in the House and the Senate with three demands to protect the Medicare program:

Do NOT raise the age of Medicare eligibility above 65 years, if anything lower it;
Allow Medicare to negotiate directly with the pharmaceutical industry for drug prices;
If any money is to be saved from Medicare, it must come from the overpayments to Medicare Advantage plans.

Second, each of us should write our member of Congress proposing they sign-on to an improved, expanded Medicare-for-All bill such as H.R. 676 (the Conyers bill) or S.B. 1782 (the Sanders bill). Thank them if they have signed on.

Third, each of us should try to meet with our New York State senator and assemblyperson and ask them to sign on to the New York Health Act (A5062 or S3525), a statewide single-payer bill for New York State.

Fourth, invite a friend or neighbor to join you for some apple pie and tell them what an improved, expanded Medicare-for-All would look like and invite them to join a single-payer advocacy group, such as Healthcare-NOW, the Campaign for the New York Health Act, union action committees, the New York State Nurses Association and Physicians for a National Health Program.

Happy Birthday Medicare! We pledge to protect, improve and expand you to everyone who lives in America.

Dr. Oliver Fein is the chair of the New York Metro chapter of Physicians for a National Health Program.

A better health plan

By Roger LaBonte
The Commercial Appeal (Memphis, Tenn.), Letters, Aug. 2, 2015

Thank you for the July 30 guest column by Dr. Arthur J. Sutherland III, “Grow Medicare to save lives, money.” I agree completely with Sutherland’s opinion and conclusions. We need a comprehensive health care plan for all Americans.

The current Patient Protection and Affordable Care Act (PPACA) should be renamed the Partial Patient Protection and Affordable Insurance Act (PPPAIA), since, while it provides some protection for a few groups and affordable insurance for many, but not affordable care for the nation. The act leaves many with no protection and completely inadequate insurance coverage. It is not likely to drive down the cost of medical care, nor the amount of GDP we spend on health care in this country. In addition, many more Americans are likely to be driven into bankruptcy due to health care costs. Dr. Sutherland is right; we have the talent and the resources to do better.

Dr. Roger LaBonte resides in Memphis.

http://www.commercialappeal.com/opinion/letters-to-the-editor/letter-a-better-health-plan

Anderson and Herring on all-payer rate setting

The All-Payer Rate Setting Model for Pricing Medical Services and Drugs

By Gerard Anderson, PhD, and Bradley Herring, PhD
AMA Journal of Ethics, August 2015

In theory, the price set by a competitive market-oriented health care system should result in efficient (and presumably ethical) rates for hospitals, physicians, drugs, and other health care services. In practice, however, price efficiency does not generally occur for many health services. Because of health insurance, most patients are less sensitive to prices than they would be if they paid the full price. In addition, in some geographic areas, health systems with significant market power can negotiate very high prices, while in other areas, one or two dominant private health insurers have great power to set relatively low prices. As a result, prices paid by individuals for the same service can vary by a factor of 10 at some hospitals. Moreover, a side effect of all these negotiations is that the private insurers and health systems spend millions of dollars negotiating and carrying out unique deals with each other—dollars that could be better spent delivering care.

At the same time, the public Medicare and Medicaid programs in the US have set payment rates using a totally different approach from that of the private insurers. The Medicare program has used a diagnosis-based prospective payment system for hospitals since 1984 and the Resource-Based Relative Value Scale (RBRVS) payment system for physicians since 1992. Both attempt to estimate the underlying costs of providing a given service, resulting in a distinct amount for each of about 750 different hospital services and 16,000 different physician services. There is, however, wide variation in payment rates among state Medicaid programs; the average Medicaid payment rates are comparable to Medicare for hospitals but about one-third lower than Medicare for physicians.

Consequences of Price Inefficiency in Health Care

The result of the wide variations in payment rates and methods among private and public insurers can lead to access problems. When the payment rate of one insurer is much lower than that of other insurers, patients have access to a restricted number of participating hospitals and clinicians. And when the premium rates of some insurers are much higher than those of other insurers, people have difficulty paying for health insurance. Moreover, as noted above, the complexity of numerous insurer payment methods means that health systems have to negotiate payment rates with various insurers and hire many people to keep track of these different payment methods, leading to higher administrative costs embedded in these prices. The end result is that prices in the US are typically much higher than they are for similar services in other industrialized countries, or, as one of us wrote years ago, “It’s the prices, stupid.” In addition, when the payment methods differ from one insurer to another, hospitals and clinicians are given mixed messages about exactly what services to provide and whether to emphasize quality, price, or satisfaction.

Are there alternatives?

Alternate Model: The Common Payment Method

One option is for all insurers—public and private—to use the same method for paying hospitals, but not necessarily the same rates. This would reduce the administrative costs associated with each insurer’s developing and maintaining its own payment methodology and each health system’s learning each new methodology. A common payment system (but not necessarily the same payment rates) could be adopted voluntarily or imposed through legislation.

The US has developed a variant of this approach already: the RBRVS payment system for physicians used by Medicare since 1992. Subsequently, nearly all private insurers have chosen to adopt Medicare’s relative value units as the starting point for negotiating payment rates to physicians. Although most private insurers pay higher rates than Medicare does and some pay less, nearly all insurers use relative value units as the basis for starting the negotiation.

Alternate Model: All-Payer Rate Setting

A significant step beyond the common payment method approach is “all-payer rate setting.” In this approach, there is both a uniform payment method and a single rate that all private and public insurers pay for a service. In some variants, all hospitals and physicians are paid the same rate, while in other variants each hospital and clinician has a unique rate. An international example of all-payer rate setting is the German system. In Germany, all insurers sit on one side of the proverbial table and representatives for the hospitals and physicians sit on the other side. Their objective is to negotiate a single payment rate for each service that all health insurers and all health systems will accept. The rates are binding on all insurers and all hospitals and clinicians. There are no special deals for a dominant organization in a local market.

The US attempted a number of state-specific all-payer rate setting programs beginning in the 1970s. One program that has remained operational is Maryland’s, which was fully implemented in 1977. Until 2014, the state used prospective diagnosis-based payments for each admission, a method similar to the Medicare hospital payment system. The Maryland program was able to reduce significantly the rate of increase in spending per hospital admission below the national rate of increase in the US. However, because the admission rate increased, the program was less successful in controlling overall hospital spending. This necessitated a revision to the payment system. Since 2014, Maryland has used a prospective annual global budget that requires each hospital to monitor both the number of admissions and the cost per admission.

The Maryland program has a number of features that differentiate it from other all-payer rate setting programs. Whereas the payment rates in Germany result from a negotiation between payers and hospitals and physicians, the payment rates in Maryland are established singlehandedly by a quasigovernmental agency called the Health Services Cost Review Commission (HSCRC). Moreover, all payers in Maryland—large private insurers, small private insurers, the Medicare program, and the Medicaid program—essentially pay a given hospital the same rate for the same service. Unlike the Germany system, however, each hospital negotiates its own rates.

The Maryland program has a Medicare waiver that allows it to set Medicare payment rates. Much of the attention paid to the HSCRC’s all-payer hospital rate revolves around this waiver and what Maryland must do to maintain it.

Conclusion

These models have numerous advantages and have worked relatively well in Maryland and in other countries. However, all-payer rate setting could be difficult to sell elsewhere in the US, inasmuch as many insurers, hospitals, and clinicians believe they live in Lake Wobegon and receive above-average rates that give them a competitive advantage. This makes them less willing to accept a regulated system that would eliminate this competitive advantage, which means that the US will continue to pay higher prices than other countries and will restrict access to health care for some Americans.

http://journalofethics.ama-assn.org/2015/08/pfor1-1508.html

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Comment:

By Don McCanne, MD

Because of the political resistance to single payer, some have suggested that we adopt an all-payer system instead, especially since we already have an example of such a system in Maryland, and it has even introduced a form of global budgeting for hospitals – a policy feature of the single payer model. Would this be an incremental step towards single payer?

All-payer leaves in place the multitude of payers, both public and private. It would perpetuate administrative complexity and would have very little impact on the inequities of our system. Although the prices public and private insurers pay would be more highly regulated, the complex system of collecting premiums for private plans, and taxes for public programs would remain in place.

The major advantage is that all-payer depends more heavily on government or quasi-government control, with experience confirming the principle that the government can do health care financing better. The major disadvantage is that all-payer likely would be considered an endpoint rather than an incremental step, with little appetite for moving forward with the disruptive changes that implementation of single payer would require. That would be unfortunate since those systems in other nations that more closely resemble all-payer tend to be more expensive than the OECD averages for per capita health spending.

In this article, Anderson and Herring make the point that all-payer could be a hard sell since many insurers, hospitals and clinicians believe they are receiving above average “Lake Wobegone” rates compared to what they would receive in an all-payer system. As the authors state, “This makes them less willing to accept a regulated system that would eliminate this competitive advantage, which means that the US will continue to pay higher prices than other countries and will restrict access to health care for some Americans.”

So we’re back to the political feasibility issue. As we’ve stated many times before, instead of modifying policy to match the politics, we should advocate for optimal policy and work on changing the politics. Instead of accepting all-payer as a compromise, let’s go for single payer.

What do those concerned about ethics in medicine think about single payer?

AMA Journal of Ethics, August 2015

“In a single-payer system, a single public or quasi-public agency organizes health care financing, but the delivery of care remains largely in private hands. Would you like to see a single-payer health care system in the US?”

“Yes.” 93% (14)

“No.” 0% (0)

“Don’t know.” 7% (1)

http://journalofethics.ama-assn.org/site/poll.html

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Comment:

By Don McCanne, MD

This online poll by the AMA Journal of Ethics only just opened for voting, garnering 15 votes so far. Also the sampling method – voluntary participation of visitors to the website – is not a scientifically valid polling method. Nevertheless, it is very encouraging to see that persons attracted to a web publication on ethics in medicine strongly support single payer.

Solution for spiraling health care costs

By Floyd E. McDowell Sr., M.D.
Delaware State News, Letters, July 31, 2015

There is one research-proven program and cost-effective solution to this very important huge health care increase challenge that is having a devastating effect on the budgets of all citizens, our state and municipalities and private businesses. It is to enact and implement our state coalition’s single-payer, nongovernment-run Delaware Health Security Act.

If this act had been operational in 2015, it would have saved a minimum of $3 billion of the approximately $8.4 billion we’ll spend this year on health care in our state. It would only take 90 percent of these savings to have thoroughly covered every Delaware citizen and Delaware employees and family members who live outside our state.

This comprehensive coverage for all health care needs would be met simply by using one’s Delaware Health Security Card.

Fifty-five research studies are readily available that support these savings. Two are statewide research studies on single-payer health care reform in our state. Every Delaware citizen should access the Health Care page of our Coalition’s nonprofit, nonpartisan DEinformedvoter.org website to see the long list of specific programs and cost-effective benefits this act will provide every current and future Delaware citizen without the need for any other insurance, deductibles, co-payments or out-of-pocket funds.

Our state’s citizens now pay for 90 percent of all health care costs, by 70 percent from various taxes and 20 percent from out-of-pocket expenses. A state legislator as a key sponsor of this act asked our State Office of Budget and Management to check the act’s cost and savings figures, and this office reported they were correct.

Every one of the other 30 developed nations provide comprehensive health care coverage to all of their citizens at one-half the cost of our system controlled by the totally unnecessary profit-making broker health insurance industry. Twenty-six of these nations use a pure single-payer system. In our state and nation, we have four very cost-effective single-payer health care systems.

These are as follows: Medicare, Medicaid, the VA system and Tri-Care, which serves our military personnel and retirees. All four of these single-payer systems have an administrative/overhead cost of less than 2 percent, compared to approximately 40 percent of our funds wasted on these costs by our corporate-owned system.

Health care fraud is another minimum loss of 10 percent of funds. In a single-payer system, health care fraud is easily detected and prevented.

Polls at state and national levels inform us approximately 70 percent of citizens polled want a single-payer health care system. Our state act is a Medicare-for-All single-payer system. There is no government interference with choosing all health care providers or with providers practicing their professions.

Yet, only 30 percent of our state legislators have co-sponsored our single-payer act, and our governor and Delaware Health Care Commission have totally ignored it — proof positive as to whom they represent in our state-level elected and appointed offices.

Sen. Bernie Sanders, Democratic candidate for president, is a strong, credible supporter of a needed single-payer system that will provide every current and future citizen comprehensive health care coverage using the funds we now provide for health care.

Dr. Floyd E. McDowell Sr. is chair of the Delaware Health Security Coalition. He can be reached at 832-2799 or via email at flydmcdwll@verizon.net. He resides in Bear.

LETTER TO THE EDITOR: Solution for spiraling health care costs

Medicare just turned 50, and we should all look so good

By the Editorial Board
The Star-Ledger (Newark, N.J.), Aug. 2, 2015

Happy anniversary, Medicare. Like that Italian actress starring in the new James Bond movie, you’re looking good at 50.

It’s hard to believe that before this program went into effect, Ronald Reagan said that if it weren’t stopped, “one of these days, you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.”

Yet America did not end, and we did not all become slaves. Instead, what we have is a triumph for the notion of active government. Before Medicare, about half of Americans over age 65 had no health insurance. Now, fifty years later, almost all of them do.

The program has simultaneously reduced deaths, hospital stays and costs, according to a new study from the Journal of the American Medical Association — a health care hat trick that a top researcher at Yale called “jaw-dropping.”

Is this a perfect program? No. It could be improved. But Medicare has undeniably made us a more civilized nation, where old people don’t die in pain without needed care. It’s even become a model for private insurers, helping the whole health care system find better ways of providing treatment.

So there’s a much larger lesson in this 50th anniversary, in how to solve major problems in our country: That even with higher taxes, a government program can be an advance of the collective welfare. Of course Medicare will need adjustments to stay in good financial health. But its spending per beneficiary has consistently grown more slowly than private insurance premiums, and its administrative costs are substantially lower.

The Affordable Care Act’s cost controls have also improved Medicare’s financial outlook. What would really torpedo the program’s finances is a repeal of Obamacare, as Republicans have called for, time and time again.

Instead, we should be expanding this success story far beyond the elderly. “Medicare for all,” the same concept as Canada’s single payer system, would be a more sensible answer than Obamacare, and is probably where we are headed in the end.

After all, under the Affordable Care Act, tens of millions of people will remain under-insured, and the U.S. still spends far more per capita on health care than any other nation. That’s why Medicare should be expanded to cover all Americans, as Sen. Bernie Sanders has called for.

Having a single payer system would dramatically reduce costs by eliminating overhead and insurance company profits. And why should access to quality healthcare depend on who your boss is?

A single payer system was scrapped from the Obamacare policy debates because it was viewed as a political impossibility. Yet just over 50 percent of Americans say they still support the idea, including one-quarter of Republicans, according to a new poll.

Some Republican leaders, like Colin Powell, were early supporters of the concept. Others, like Sen. Marco Rubio, argue a single payer system “would completely eviscerate the quality of our health care.”

But if Medicare at 50 is any evidence, it’s likely to do the exact opposite.

http://www.nj.com/opinion/index.ssf/2015/08/medicare_just_turned_50_and_we_should_all_look_so.html

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Primary Care Providers’ Views of Recent Trends in Health Care Delivery and Payment

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The All-Payer Rate Setting Model for Pricing Medical Services and Drugs

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