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A Simpler, Better Solution

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A Simpler, Better Solution

By David Himmelstein and Steffie Woolhandler
The New York Times, Room for Debate, May 29, 2013

Gordon Schiff, an expert on medical quality, frequently admonishes: “Avoid workarounds.” It’s better to fix system defects than to force doctors and nurses to squander time and creativity (and to court disaster) by sidestepping problems like broken equipment, missing charts or computer bugs.

The Affordable Care Act is a giant workaround. Overwhelming evidence says that public insurers like Medicare (with overhead costs of 2 percent) are more efficient than private ones (overhead of private Medicare Advantage plans is 14 percent). And multiple insurers means multiple contracts, with varying coverage, billing procedures, documentation requirements, etc. – all of which force doctors and hospitals to waste billions more. The obvious fix is to cut out the insurance middlemen and cover everyone under a single public program paid for by taxes – with equal coverage for all. But the insurance lobby blocked that, so instead the Affordable Care Act took the Rube Goldberg route.

If your income is below $31,321 for a family of four (133 percent of the poverty line), you will get Medicaid (unless you live in a red state that declined the federal assistance, like Texas or Alabama). And “Medicaid” nowadays means a privately run Medicaid H.M.O. But make one dollar more (or if Junior moves out, leaving a family of three) and Medicaid disappears; now you’re shopping for subsidized private insurance in the state-run exchange. That’s not a rare occurrence: 28 million adults cross the 133 percent line annually.

In the exchange, “bronze” plans look cheapest – at first glance. But if your income is under 250 percent of poverty there are special discounts for copayments, but only in “silver” plans.

Move from 400 percent of poverty to 401 percent, and individual premiums rise $2,303. Can’t quit smoking? Add $3,365.

Stop paying your premium? You’ll stay enrolled for three months, but your insurer only has to pay your medical bills for one month.

The health care law’s consumer protections apply to everyone, except the 58.5 percent of private sector workers whose employers self-insure.

Employers who do not offer coverage must pay a fine, unless you work less than 30 hours a week, averaged over three months, or maybe 12 months.

Small employers can get help with premiums, unless they buy coverage through a Taft-Hartley Fund.

Got it? We don’t either. And there’s much more arcane detail that can mean life or death for thousands, penury or plenty for millions.

Government already pays two-thirds of total health costs, but much of that money takes a detour through a maze of private insurers. This manufactured complexity sows confusion and adds huge expense – the cost of a workaround.

David Himmelstein and Steffie Woolhandler are professors at the City University School of Public Health at Hunter College and visiting professors at Harvard Medical School. They are co-founders of Physicians for a National Health Program.

http://www.nytimes.com/roomfordebate/2013/05/29/is-obamacare-too-complicated-to-succeed/a-single-payer-system-would-be-better-than-obamacare

Immigrants help Medicare stay solvent

By Noam N. Levey
Los Angeles Times, May 29, 2013

WASHINGTON — Immigrants in the United States both legally and illegally are helping sustain Medicare, contributing about $14 billion more a year to the federal health program for the elderly than they use in medical services, a new study indicates.

The surplus generated by immigrants contrasts sharply with deficits caused by native-born Americans, as medical care for elderly beneficiaries depletes Medicare’s reserves more quickly than working-age U.S. natives can refill them.

The report — published Wednesday in the journal Health Affairs as Congress debates immigration overhaul legislation — does not calculate the full impact of immigrants in the country illegally on all government healthcare programs.

But the authors estimate that these immigrants are helping to support the Medicare program because many pay taxes, while they are ineligible to receive benefits.

“Our study should raise skepticism about the widespread assumption that immigrants drain public healthcare resources,” said Dr. Leah Zallman, an internist and Harvard Medical School instructor who is lead author of the report.

Most legal immigrants, like U.S. citizens, become eligible for Medicare benefits at 65 if they have worked at least 40 quarters in this country. That means many immigrants who today sustain the program will someday draw benefits. But the authors note that, as long as immigration continues, immigrants should not be drain on the program.

“Policies that reduce immigration would almost certainly weaken Medicare’s financial health, while an increasing flow of immigrants might bolster its sustainability,” the study concludes.

Medicare, which covers about 50 million retired and disabled Americans, is funded partly through payroll taxes that employers and employees pay into a trust fund.

But that fund is slowly being drained as a wave of Baby Boomers retires and healthcare costs continue to rise, if more slowly than in past years. Medicare’s main trust fund is projected to run in the red in 2024.

The new report suggests this deficit is being driven entirely by native-born Americans because the number of retirees is increasing more rapidly than the working-age population.

Today, less than 60% of the U.S.-born population is 18 to 64. By contrast, nearly 80% of foreign-born residents are in their prime working years.

The United States is home to an estimated 40 million foreign-born residents, among whom about 11 million have entered the country illegally or overstayed their visas.

Every year, about 1 million immigrants become legal permanent residents, according to the Department of Homeland Security. Nearly 95% of these new immigrants are under age 65.

By looking at census data, researchers were able to estimate that people born abroad likely paid about $33 billion in payroll taxes to the Medicare trust fund in 2009. The researchers then used Medicare data to estimate that immigrants were responsible for about $19 billion of the program’s medical expenses that year.

Similar surpluses were identified in the previous seven years, leading researchers to calculate that immigrants contributed $115 billion more to Medicare than they consumed in medical services between 2002 and 2009.

U.S.-born people, by contrast, were responsible for a nearly $31-billion Medicare deficit over the same period.

Zallman said the data did not allow researchers to determine how much of the Medicare surplus was generated by immigrants who are in the country illegally, though previous research by the Social Security Administration has estimated that these immigrants contribute billions of dollars to the nation’s retirement programs.

Immigrants in the country illegally often use fake Social Security numbers to work. They and their employers in turn pay Social Security and Medicare payroll taxes, though these immigrants are banned from receiving Medicare benefits.

The new healthcare law also bars immigrants in the country illegally from receiving other health benefits, including insurance subsidies that will be available to millions of low- and moderate-income Americans next year.

Children and pregnant women in the country illegally do qualify for government healthcare assistance through the Medicaid program in some states.

Unlike Medicare, Medicaid is funded almost entirely by general tax revenues collected by state and federal governments.

http://www.latimes.com/news/politics/la-pn-immigrants-medicare-stay-solvent-20130529,0,3048046.story

See additional coverage of the Health Affairs study at The New York Times, Reuters, The Wall Street Journal, The Washington Post, Kaiser Health News, Modern Healthcare, MedPage Today, Bloomberg News, NBC Latino, The Hill, Becker’s Hospital Review, National Journal, and CBS News, among other media outlets.

Immigrants subsidize Medicare recipients, study says

By Kelly Kennedy
USA Today, May 29, 2013

WASHINGTON — Immigrants contributed about $115 billion more from their paychecks to the Medicare Trust Fund than they took out over a seven-year period in the last decade, according to researchers at Harvard Medical School.

As the Senate debates a new immigration bill and House Republicans work toward a bill that restricts access to government services for unauthorized immigrants who become legal citizens, the researchers concluded in a study released Wednesday that restricting immigration could deplete the fund.

Researchers looked at data from 2002 to 2009.

“The assumption that immigrants are just a drain has been a part of the argument that people should be denied services,” said Leah Zallman, lead researcher and an instructor at Harvard Medical School. “Immigration policy has been closely linked to Medicare’s finances.”

Studies had shown that immigrants use less health care than U.S.-born people, including in government programs, but no one had looked at their contributions to those programs.

In 2009, the researchers found, immigrants contributed $13.9 billion more to the Medicare Trust Fund than they used, while U.S.-born people spent $31 billion more than they contributed. Immigrants, Zallman said, essentially subsidize U.S. health care.

“I was surprised by the degree of subsidy,” Zallman said. “We didn’t see any changes in the amount of the [immigrant] subsidy each year, but there was a decline in net contribution of U.S.-born citizens.”

They found that immigrants ages 18 to 64 on average contributed only about $100 less a year than did U.S.-born people, which is contrary to conventional wisdom that immigrants don’t earn enough to contribute. Both U.S.-born citizens and immigrants older than 64 contributed less than they used: $3,333 for the U.S.-born and $2,099 for immigrants.

“We should carefully examine these assumptions that have led to denial of care,” Zallman said. She said the study was unable to include undocumented immigrants who paid into the system illegally through fake Social Security numbers.

The difference comes because there are more immigrants of working age than retirement age. The U.S.-born population is aging at a faster rate than it is creating a workforce to pay into the fund. Immigrants often go home after they retire or they’re ineligible to receive benefits because of their immigrant status, Zallman said.

“Baby Boomers are coming into retirement,” she said. “We’re not seeing that same decline in the immigrant population.

“Immigration policy has been closely linked to Medicare’s finances,” she said. The authors said allowing legal status for undocumented immigrants could mean more “on-the-books” employment, as well as higher-paying jobs. That, in turn, could mean more money for the fund.

“Encouraging a steady flow of young immigrants would help offset the aging of the U.S. population and the health care financing challenge that it presents,” states the report, which was published in the magazine Health Affairs.

A recent Heritage Foundation study predicted the United States would lose $6.3 trillion if it passed the Senate immigration law. The law would legalize 11 million unauthorized immigrants. One of the authors of the study was later found to have argued in his doctoral dissertation at Harvard in 2009 that immigrants naturally have a lower IQ than the “native white population” of the USA.

http://www.usatoday.com/story/news/politics/2013/05/29/immigration-health-costs-less-than-us-born/2367507/

See additional coverage of the Health Affairs study at The New York Times, Reuters, Los Angeles Times, The Wall Street Journal, The Washington Post, Kaiser Health News, Modern Healthcare, MedPage Today, Bloomberg News, NBC Latino, The Hill, Becker’s Hospital Review, National Journal, and CBS News, among other media outlets.

Immigrants give more to Medicare than they receive, a study finds

By Sabrina Tavernise
The New York Times, May 29, 2013

Immigrants have contributed billions of dollars more to Medicare in recent years than the program has paid out on their behalf, according to a new study, a pattern that goes against the notion that immigrants are a drain on federal health care spending.

The study, led by researchers at Harvard Medical School, measured immigrants’ contributions to the part of Medicare that pays for hospital care, a trust fund that accounts for nearly half of the federal program’s revenue. It found that immigrants generated surpluses totaling $115 billion from 2002 to 2009. In comparison, the American-born population incurred a deficit of $28 billion over the same period.

The findings shed light what demographers have long known: Immigrants are crucial in balancing the age structure of American society, providing an infusion of young, working-age adults who support the country’s aging population and help cover the costs of Medicare and Social Security. And with the largest generation in the United States, the baby boomers, now starting to retire, the financial help from immigrants has never been more needed, experts said.

Individual immigrant contributions were roughly the same as those of American citizens, the study found, but immigrants as a group received less than they paid in, largely because they were younger on average than the American-born population and fewer of them were old enough to be eligible for benefits. The median age of Hispanics, whose foreign-born contingent is by far the largest immigrant group, is 27, according to the Brookings Institution. The median age of whites in the United States is 42.

The study, which was published on the Web site of the journal Health Affairs on Wednesday, comes as Congress considers legislation that would eventually give legal status to the country’s 11 million unauthorized immigrants. The legislation has sparked a vigorous debate about whether immigrants ultimately contribute more than they receive from the federal budget. One of the sticking points has been whether immigrants should be eligible for government programs, including health benefits, before they qualify for citizenship, but while they are on the path to getting it.

The study was concerned only with Medicare, the federal program that accounts for about a fifth of all American health care expenditures. Experts said that the study’s findings served as a useful reminder that immigrants, at least for now, are extending the life of the beleaguered program, not hastening its demise.

“There’s this strong belief that immigrants are takers,” said Leighton Ku, the director of the Center for Health Policy Research at George Washington University. “This shows they are contributing hugely. Without immigrants, the Medicare trust fund would be in trouble sooner.” The belief prevails, for example, among some opponents of immigration reform.

The study did not grapple with the health care costs of immigrants over their full lifetimes, a calculation that economists say is critical to understanding their long-term impact on the federal budget.

“It’s just a snapshot of a point in time,” said Paul Van de Water, a visiting fellow at the liberal-leaning Center on Budget and Policy Priorities.

The study drew on two nationally representative federal surveys from the Census Bureau and the Department of Health and Human Services. Researchers included the contributions of legal residents who were not citizens, a group that is eligible for Medicare if certain requirements are met; unauthorized immigrants; and citizens who were born abroad.

It was not clear how much of the surplus was made up of earnings by immigrants in the country illegally, who are ineligible for most government programs.

The finding “pokes a hole in the widespread assumption that immigrants drain U.S. health care spending dollars,” said Leah Zallman, an instructor of medicine at Harvard Medical School and the lead author of the study.

Similar calculations have been made for Social Security. The chief actuary of the Social Security Administration, Stephen C. Goss, estimated that immigrants in the country illegally, some of whom assume fake Social Security numbers to provide cover for employers, generated a surplus of about $12 billion for the Social Security Trust Fund in 2010.

But that equation would change if unauthorized immigrants were to gain legal status under a new law and eventually began collecting Social Security once they were of retirement age. One major policy question is how much that might cost, experts said.

The Heritage Foundation, a conservative institute, estimated that the legislation’s changes, if implemented, could cost taxpayers more than $6 trillion. Critics of that calculation said it did not take into account the economic benefits that would arise from taking millions of people out of the shadow economy.

Mr. Goss, in a letter this month to Senator Marco Rubio, a Florida Republican, said that the legislation’s effect on the long-term health of Social Security would be positive in the long term.

Immigrants tend to be healthier than American-born citizens, and have lower mortality rates, research has found. Dr. Ku said there was evidence that individual immigrants actually use less health care than native-born Americans. He has calculated, for example, that immigrants’ medical costs were 14 percent to 20 percent less than those who were born in the United States, even after controlling for other factors such as emergency room visits and insurance coverage, which fewer immigrants have.

The study found that average expenditures among immigrant Medicare enrollees in 2009 were $3,923, lower than the average $5,388 expenditure among the American-born. The difference, however, was just shy of statistical significance, because of wide variations in medical expenditures and the small numbers of immigrant enrollees, which made the study’s margin of error wide.

Robert Rector, a senior research fellow at the Heritage Foundation, who is an author of the institute’s report earlier this month, said that looking at Medicare alone was not very useful, as it was just one slice of the entire entitlement pie. And the large immigrant youth population, which the study spends most of its time on, is familiar, he said.

“It’s a yawner of a study,” he said. “Young people don’t get Medicare. We don’t need several Ph.D.s to tell us that.”

Others defended the findings, saying that they showed immigrants were helping prop up the country’s retirement funds at the critical point when baby boomers were starting to retire.

“They’ll be paying into the system at the very time it is most strained,” said Patrick Oakford, a researcher on economic and immigration policy at the Center for American Progress, a liberal-leaning institute. He estimated that the average undocumented immigrant was 34 and therefore would not retire until 2046. 

http://www.nytimes.com/2013/05/30/health/immigrants-give-more-to-medicare-than-they-receive-a-study-finds.html?pagewanted=all&_r=0

See additional coverage of the Health Affairs study at USA Today, Reuters, Los Angeles Times, The Wall Street Journal, The Washington Post, Kaiser Health News, Modern Healthcare, MedPage Today,Bloomberg News, NBC Latino, The Hill, Becker’s Hospital Review, National Journal, and CBS News, among other media outlets.

Immigration Reform And The Financial Health Of Medicare

By Leah Zallman and Danny McCormick
Health Affairs blog, May 29, 2013

Politicians on Capitol Hill are currently engaged in policy disputes about two thorny issues that many see as closely linked: immigration reform and controlling runaway health care costs. The pervasive wisdom is that immigrants, many of whom are low-income, unauthorized and uninsured, rely on uncompensated care and Medicaid and drain medical resources that are predominantly contributed by native-born Americans though taxes. Curbing immigration, the argument goes, will reduce reliance on government-funded health services and help our nation reduce its healthcare spending.

This argument makes intuitive sense, but it fails to account for two key factors: immigrants contribute to health care financing — sometimes heavily — and they spend less — a lot less.

Our study, published today as a Health Affairs Web First article, examines these variables as they relate to the Medicare program and finds evidence that contradicts the pervasive wisdom. We calculated the total dollars contributed to and received from the Medicare Hospital Insurance Trust Fund (“Trust Fund”), which pays primarily for inpatient care, for both immigrants and U.S. born citizens. We found that between 2002 and 2009, immigrants contributed $115.2 billion in excess of what they utilized. During this same time frame, US born persons withdrew $28.1 billion more than they contributed. Although we could not measure the contributions to the Supplementary Medical Insurance Trust Fund (which primarily pays for outpatient care), we examined average expenditures by immigrants and US-born persons to this fund and found that immigrants spent less than US born persons: $175 per year less on average.

Immigrants generate a surplus for the Medicare Trust Fund primarily because many of them are working-age adults likely to participate in the labor force, a combination that generates large payroll tax payments. Immigrants with legal status contribute to the Medicare Trust Fund through payroll taxes under valid Social Security numbers. In addition, undocumented immigrants often contribute payroll taxes under Social Security numbers tied to invented names or belonging to someone else, because employers must report, but needn’t verify, a Social Security number for all employees. In spite of these contributions, many immigrants never receive services under Medicare, either because they are ineligible for Medicare since they did not work the required 40 quarters, or because they return to their country of origin before reaching the age of Medicare eligibility, 65.

Policy Implications

Our findings have implications for immigration reform policy. First, it is clear that policies that reduce immigration would almost certainly weaken Medicare’s financial health. The Medicare Trustees estimate that the Trust Fund will be exhausted within a decade. This has already led to drastic cost-cutting measures. Further weakening of Medicare’s finances through restriction of immigration could result in new taxes or government borrowing, restrictions on covered services, or increased cost sharing for patients with Medicare. The consequences of these latter two changes would almost certainly result in worse access to timely and effective care for millions of Medicare recipients.

Second, providing a path to citizenship for the estimated 11 million undocumented immigrants would affect Medicare’s finances in several ways. In the long term, it would likely increase the number of Medicare-eligible immigrants, and thus outlays on their behalf. On the other hand, it would probably increase immigrants’ payroll tax payments by reducing “off the books” employment and reducing barriers to higher paying jobs. However, these impacts are likely dwarfed by the age structure of the immigrant population. That is, encouraging a steady flow of young immigrants would help offset the health care financing challenges resulting from the aging of the US population.

The assumption that immigrants are a net drain on the health care economy has not only been used to argue for stricter limits on immigration, but also to deny access to medical care through government sponsored programs. For example, low-income immigrants who have legally been in the country for less than five years are banned from receiving Medicaid, even as they pay taxes. Many of these low-income immigrants find private insurance unaffordable, remain uninsured, and consequently forgo needed care. The fact that immigrants substantially subsidize the Medicare Trust Fund, which is responsible for 22 percent of all US health care spending, should cause us to rethink the prevailing descriptions of immigrants as net takers of health care resources and should, on grounds of fairness, prompt us to be less quick to deny access to care for immigrants through other public programs.

Leah Zallman, MD, MPH is a Junior Scientist at the Institute for Community Health at the Cambridge Health Alliance and an Instructor of Medicine at the Harvard Medical School.

Danny McCormick, MD, MPH is an Assistant Professor of Medicine at Harvard Medical School, Director of the Division of Social and Community Medicine in the Department of Medicine at the Cambridge Health Alliance, co-director of the Harvard Medical School Fellowship in General Medicine and Primary Care and he leads the Department of Medicine’s general medicine research team.

http://healthaffairs.org/blog/2013/05/29/immigration-reform-and-the-financial-health-of-medicare/?utm_source=rss&utm_medium=rss&utm_campaign=immigration-reform-and-the-financial-health-of-medicare

Does population health explain geographical variation in Medicare spending?

Geographic Variation in Fee-for-Service Medicare Beneficiaries’ Medical Costs Is Largely Explained by Disease Burden

By James D. Reschovsky, Jack Hadley and Patrick S. Romano
Medical Care Research and Review, May 28, 2013

Abstract

Control for area differences in population health (casemix adjustment) is necessary to measure geographic variations in medical spending. Studies use various casemix adjustment methods, resulting in very different geographic variation estimates. We study casemix adjustment methodological issues and evaluate alternative approaches using claims from 1.6 million Medicare beneficiaries in 60 representative communities. Two key casemix adjustment methods—controlling for patient conditions obtained from diagnoses on claims and expenditures of those at the end of life—were evaluated. We failed to find evidence of bias in the former approach attributable to area differences in physician diagnostic patterns, as others have found, and found that the assumption underpinning the latter approach—that persons close to death are equally sick across areas—cannot be supported. Diagnosis-based approaches are more appropriate when current rather than prior year diagnoses are used. Population health likely explains more than 75% to 85% of cost variations across fixed sets of areas.

http://mcr.sagepub.com/content/early/2013/04/26/1077558713487771.abstract

And…

Health Differences Explain Most Geographic Variation in Medicare Costs

Center for Studying Health System Change, May 28, 2013

Wide geographic variation in Medicare costs is largely explained by health differences across communities rather than inefficient care delivery, according to a Center for Studying Health System Change (HSC) study published online today in the journal Medical Care Research and Review.

Earlier research has asserted that Medicare could reduce spending by as much as 30 percent without harming health if all providers adopted treatment patterns found in low-cost areas, but the new Medical Care Research and Review study questions how well earlier studies accounted for differences in Medicare beneficiaries’ health status.

HSC Senior Fellow James D. Reschovsky, Ph.D., along with Jack Hadley, Ph.D., of George Mason University; and Patrick Romano, M.D., M.P.H., of the University of California, Davis, Center for Healthcare Policy and Research, examined multiple ways of adjusting for patient health, finding that a fuller accounting of health status explained at least 75 percent to 85 percent of Medicare geographic cost differences between high- and low-cost areas.

http://www.hschange.com/CONTENT/1353/

And…

Dartmouth Institute for Health Policy and Clinical Practice Responds to Reschovsky at al

By Jonathan Skinner, PhD
The Dartmouth Institute for Health Policy and Clinical Practice, May 29, 2013

There are three fundamental concerns with the Reschovsky et al (2013) geographic variations paper published online May 28, 2013 in Medical Care Research and Review.

The first and most important is that they include current HCCs – diagnostic billing codes – as “explanatory” factors for spending. … the authors’ use of the HCC billing codes would “explain” the more aggressive cardiologist’s behavior as worse health status, rather than attributing it to the more aggressive physician behavior.

But they do find that “non-discretionary” measures of disease, like hip fractures, are higher in high-cost regions.  Wouldn’t that lend credence to their claim that poor health explains higher spending?   I believe the answer is still no – because we cannot reproduce even those basic findings using population based Medicare claims data.

The final concern with this study is a more technical one, so bear with me.  Typically, HCC risk adjustment is predetermined by the HCC formula designed by CMS.  If someone has diagnosed COPD, Medicare would implicitly allow (say) 23% more expenditures as a consequence.  As far as I can tell from the methods section, this is not what they do. Instead, they throw the HCC diagnostic codes into the regression, and let the regression do its best to explain the regional variation.

Now of course, my views on this paper may be viewed as tainted, given my Dartmouth affiliation.  So it’s informative to consider the interim report by the IOM-convened panel of experts on regional variations – a panel that did not include any Dartmouth faculty.  The panel commissioned many studies of regional variation in Medicare, Medicaid, and in private insurance markets.  They read every paper in the literature, and conducted their own analysis of the data.   After sorting through all this evidence, they concluded, as we have:
 
Observation 4
Although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.

http://tdi.dartmouth.edu/press/updates/dartmouth-institute-for-health-policy-and-clincial-practice-responds-to-res

And…

Medicare Spending Variations Mostly Due To Health Differences, Study Concludes

By Jordan Rau
Kaiser Health News, May 28, 2013

The idea that uneven Medicare health care spending around the country is due to wasteful practices and overtreatment—a concept that influenced the federal health law — takes another hit in a study published Tuesday. The paper concludes that health differences around the country explain between 75 percent and 85 percent of the cost variations.

“People really are sicker in some parts of the country,” said Dr. Patrick Romano, one of the authors.

That’s a sour assessment for those hoping to wring large savings out of the health care system by making it more efficient. Some, such as President Barack Obama’s former budget director, Peter Orszag, assert that geographic variations in spending could mean that nearly a third of Medicare spending may be unnecessary.

The new paper is one of the sharpest attacks yet on the work of the Dartmouth Institute for Health Policy & Clinical Practice, whose three decades of research has popularized the theory that the unexplained regional differences in spending are due to the aggressiveness of some physicians to do more, in large part because it enriches them.

“The trouble with Dartmouth is they were trying to spin a simple story from a world which is far more complex and far more nuanced,” said James Reschovsky, the lead author on the paper. “They are to be credited for highlighting that there’s a lot of inefficiency in the delivery of health care in the United States. They defaulted by hanging their hat on geographic determinants of efficiency, and I think that premise is fundamentally being torn down, not only by my research, but also by the IOM work and a bunch of other studies.”

Dartmouth strongly disputed the study, which they said they could not replicate. Jonathan Skinner, a Dartmouth economist, called the study “fatally flawed” in an email. He noted that the Institute of Medicine’s preliminary report stated that “although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.”

Skinner also noted that Dartmouth researchers have never endorsed the idea of adjusting Medicare spending by region.

A 2008 “white paper” from Dartmouth directed at policy makers and titled “an agenda for change” implied the possibility of substantial savings if Medicare rooted out ineff
iciency and unnecessary treatments.

Dartmouth researchers have long maintained that experts shouldn’t trust Medicare diagnosis records, which the new study used for its analysis. They believe that doctors in some areas of the country are more aggressive in diagnosing people with serious ailments than doctors elsewhere.

Still, while faulting Dartmouth’s methods, the new paper left between 15 percent and 25 percent of geographic differences unexplained. And Romano said he agrees there are substantial differences in how medicine is practiced. “I really do believe there is huge practice variation, but I don’t think we see that variation at the level of these large geographic units,” he said. “We see those variations at the level of individual physician practices.”

http://www.kaiserhealthnews.org/Stories/2013/May/28/medicare-state-geographic-variation-costs.aspx

Comment:

By Don McCanne, M.D.

It has been well documented that there is considerable variation in Medicare spending both between and within geographical areas. What has been disputed is whether or not these differences are due to population health. This latest study indicates that population health explains about four-fifths of the differences in spending. If that is true, the differences in spending are largely warranted.

If the differences in spending are due to geography and physician behavior and not to how sick the patient is, then the onus of explaining how the excess spending could be precisely identified and recovered should be borne by those supporting this view.

Jonathan Skinner of the Dartmouth Institute has been a leading advocate of using accountable care organizations to ferret out this waste. It is difficult to conceptualize how providing care and making the providers “accountable” for it leads to recovery of this alleged waste, especially since accountability measures are so primitive and misdirected that they could never identify most of the excesses.

What is tragic is that this debate has distracted us from seriously considering changes that are well documented to be capable of recovering waste while providing greater value in our health care spending – changes that we could easily achieve by enacting and implementing a single payer national health program.

If there are crooks out there who are wasting our health care dollars, we can investigate them as outliers and then take appropriate measures as warranted. It would be much easier to do under a single payer system.

Immigrants heavily subsidize Medicare’s Trust Fund: Health Affairs study

Harvard Medical School and Hunter College School of Public Health researchers find immigrants generated surplus contributions of $115.2 billion in 2002-2009, $13.8 billion in 2009

FOR IMMEDIATE RELEASE: May 29, 2013
Contact: Mark Almberg, PNHP, mark@pnhp.org, (312) 782-6006

Immigrants, particularly noncitizens, pay billions more into Medicare’s Hospital Insurance Trust Fund than they withdraw in health benefits each year, according to researchers at Harvard Medical School and Hunter College School of Public Health. The study is being released today as a Web First by Health Affairs, and will also appear in the journal’s June issue.

In 2009 alone, immigrants paid $33.1 billion into the Trust Fund but used only $19.3 billion in health care paid for by the Trust Fund, yielding a surplus of $13.8 billion. About three-quarters of this surplus, $10.1 billion, came from noncitizens. The article concludes that reducing immigration would worsen Medicare’s financial health.

Payroll taxes are the major source of revenues for the Trust Fund, which mostly pays hospital bills. The overwhelming majority of immigrants are working age, have high rates of labor force participation, and hence pay substantial payroll taxes. Moreover, even undocumented immigrants often pay these taxes, usually under a borrowed or false Social Security number.

Trust Fund outlays for immigrants are low for several reasons. Few are elderly. Moreover, even some elderly immigrants are ineligible for Medicare because they have not worked the required 40 quarters in the U.S. under a valid Social Security number, lack legal status, or, if legal residents, do not meet the five-year (legal) residency requirement. Even among eligible immigrants, some may not use Medicare because they retire to their country of origin. Those who do enroll in Medicare use relatively little care, which probably reflects problems in access to care.

The study authors examined Trust Fund contributions and expenditures for each year between 2002 and 2009. They analyzed data from the Census Bureau’s Current Population Survey to determine tax contributions, and used the Medical Expenditure Panel Survey to examine medical expenses.

They found that immigrants contributed a surplus of between $11.1 billion and $17.2 billion per year, or a total of $115.2 billion dollars from 2002-2009. During the same years, U.S.-born persons generated a net deficit of $28.1 billion. In 2009 immigrants provided an average per capita surplus of $368, while native-born Americans generated a per capita deficit of $113. Noncitizen immigrants contributed a net subsidy of $466 per person.

“For years I have seen my immigrant patients be blamed for driving up health care costs,” said lead author Dr. Leah Zallman, an instructor in medicine at Harvard Medical School and staff physician at Cambridge Health Alliance, “and yet few acknowledge their contributions. Our study demonstrates that in one large sector of the U.S. health care economy, immigrants actually subsidize the care of native-born Americans.”

“The numbers completely contradict the widely held misperception that immigrants are a drain on the health system,” said Dr. Steffie Woolhandler, professor at Hunter College School of Public Health, visiting professor of medicine at Harvard, and co-founder of Physicians for a National Health Program. “Reducing immigration would worsen Medicare’s financial woes.”

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“Immigrants contributed an estimated $115.2 billion more to the Medicare Trust Fund than they took out in 2002-09,” Leah Zallman, M.D., M.P.H., Steffie Woolhandler, M.D., M.P.H., David Himmelstein, M.D., David Bor, M.D., M.P.H., Danny McCormick, M.D., M.P.H. Health Affairs, June 2013. Web First, May 29, 2013.

A free copy of the complete study will be available from May 29 through June 3 at 4 p.m. Eastern time at the following link: http://content.healthaffairs.org/content/early/2013/05/20/hlthaff.2012.1223.full
After that time the study will migrate to be part of the June print issue.

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Physicians for a National Health Program is a nonprofit research and educational organization of more than 18,000 doctors who support single-payer national health insurance, an improved Medicare for all. PNHP had no role in funding or otherwise supporting the study described above.

Cambridge Health Alliance (CHA) is an integrated health care system that serves Cambridge, Somerville, and Boston’s metro-north communities, and is a Harvard Medical School teaching hospital. With three hospital campuses, an extensive primary care network, and an employed physician model, CHA provides high-quality, culturally competent care to a large, diverse patient population.

The Hunter College School of Public Health, located in Manhattan, works with communities, nonprofits, private groups and government agencies to help people live healthier lives. It conducts research and creates new models of public health education and practice to solve urban health problems. Hunter College is the largest college in the City University of New York (CUNY) system.

Scribbling in the Chart

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, May 24, 2013

William Faulkner, the great American writer who was born in New Albany, Mississippi, wrote screenplays to support his family, although he didn’t really like the job, and referred to it as “mere scribbling.”

There is a story that when the Warner Brothers Studio office, where Faulkner wrote, was cleaned out, his desk contained an empty bottle and yellow pad upon which, 500 times, he had written the words: “Boy Meets Girl. Boy Meets Girl. Boy Meets Girl.”

When it comes to health care, many physicians might leave an echo of Faulkner’s scrawl in their desk drawer. It might read: “Coding and billing. Coding and billing. Coding and billing.”

Coding refers to selecting a five-digit code that labels an encounter with a patient, the code that will be sent on to an insurance company, or Medicare, or Medicaid, for payment. Billing refers to sending a claim to an insurer, electronically these days, for payment in a timely and efficient manner. Coding and billing depend upon what the doctor has written in the chart.

The idea of the medical chart might be that it should form a repository for in-the-moment descriptions of a patient’s history, clinical condition, and course. The chart serves the patient by communicating information vital to the patient’s future care.

One of my senior colleagues the other day stressed the value of narrative description in her charts. She believes that communicating a sense of her patient as a person remains essential to participating in the effort to become or stay healthy.

Accurate medical records are also the responsibility of every medical professional, with ethical and legal implications. A humane narrative may offer every element needed for future medical decision-making, and yet lack mention of one or two elements needed to justify a particular visit code.

I have heard health care administrators refer to this situation as “Money left on the table.” In order for an institution to collect the money “left on the table,” administrators will try to get the doctors to record key details in order to justify “accurate” or “appropriate” coding and billing.

Last year The New York Times looked at the implementation of electronic health records in this connection. At a Utica emergency room, following the implementation of an electronic health record, the proportion of patients who were coded as requiring the highest level of care rose 43 percent. After implementation of an electronic health record at a Tennessee hospital the use of the visit codes with the highest reimbursement rose 82 percent after the implementation of an electronic health record. The Times reported that “representatives for both hospitals said the increases reflected more accurate billing for services.”

Electronic health records have been shown to drive costs up in other ways also, for example, by prompting physicians to order more tests. And part of the motivation behind a move toward “bundled payments” and “accountable care organizations” and care coordination efforts is a recognition that fee-for-service billing games infuse the whole health system to a frenzy.

Now that most physicians in the United States are employees of hospitals or big health care corporations, we find a new source of scrutiny upon our charts. Quality improvement efforts, pay-for-performance schemes and all kinds other metrics center upon our notes in the record.

This can warp the purpose of the medical record. Instead of a document primarily meant to serve the patient, as well as something to serve present and future caregivers, the chart becomes a document primarily meant to justify financial remuneration for the institution. This wastes valuable time and resources. The worst examples are checkbox documents in which essential information is at risk of being overwhelmed by automatically generated data.

This introduces “mere scribbling” into our charts.

The experience of providing care then changes too, as we sit at screens, sometimes spending more time with the electronic representation of the patient than we have at the beside, mouse clicking our way through our exam and our orders, our documentation. We caregivers would like to be remembered for what we do at the bedside, not in front of the screen.

While we take seriously how well our documentation helps our fellow physicians and nurses, we don’t measure ourselves by how well our charts fit the needs of coding and billing — but the people with power over us, health care businesspeople, administrators, insurers, do exactly that.

For now this seems an inescapable compromise we must make. As William Faulkner told his agent, “In some ways Proust was lucky. He didn’t ever have to contend with Hollywood for his bread and butter.”

Dr. Andrew Coates practices internal medicine in upstate New York. He is president of Physicians for a National Health Program.

You can listen to Dr. Coates’ radio broadcast here: http://www.wamc.org/post/andrew-coates-scribbling-chart

New Hampshire AFL-CIO endorses H.R. 676

By Kay Tillow
Single Payer News, May 29, 2013

“On Saturday, May 4, the New Hampshire AFL-CIO unanimously passed a resolution supporting H.R. 676 and the adoption of a national single-payer health care system that covers all Americans for all necessary medical care including prescription drugs and dental,” reports President Mark MacKenzie.

New Hampshire is the 42nd state AFL-CIO federation to endorse H.R. 676, Expanded and Improved Medicare for All, sponsored by Congressman John Conyers Jr., D-Mich.

“H.R. 676 will save hundreds of billions of dollars by eliminating the private health insurance industry with its high overhead and profits,” said MacKenzie.

“As president of the New Hampshire AFL-CIO I am proud to have our members actively participate in the movement to win passage of H.R. 676 and to make health care a human right.”

In a separate development, on May 21, H.R. 676 gained another co-sponsor in Congress with the addition of Rep. Danny Davis (Ill.-7). H.R. 676 now has 42 co-sponsors.

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More on the Expanded and Improved Medicare for All Act

H.R. 676 would institute a single-payer health care system by expanding a greatly improved Medicare to everyone residing in the U.S.

H.R. 676 would cover every person for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental (including oral surgery, periodontics, endodontics), 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.

H.R. 676 ends deductibles and co-payments. H.R. 676 would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

In the current Congress, H.R. 676 has 42 co-sponsors in addition to Conyers.

H.R. 676 has been endorsed by 601 union organizations including 145 Central Labor Councils/Area Labor Federations and 42 state AFL-CIOs (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, NE, NJ, NY, NV, MA, RI, & NH).

For further information, a list of union endorsers, or a sample endorsement resolution, contact: Kay Tillow, All Unions Committee for Single Payer Health Care—H.R. 676, c/o Nurses Professional Organization (NPO) 1169 Eastern Parkway, Suite 2218, Louisville, KY 40217. Phone: (502) 636-1551. E-mail: nursenpo@aol.com Website: unionsforsinglepayer.org

Millions of the poorest will remain uninsured

States’ Policies on Health Care Exclude Some of the Poorest

By Robert Pear
The New York Times, May 24, 2013

The refusal by about half the states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance under President Obama’s health care law even as many others with higher incomes receive federal subsidies to buy insurance.

More than half of all people without health insurance live in states that are not planning to expand Medicaid.

People in those states who have incomes from the poverty level up to four times that amount ($11,490 to $45,960 a year for an individual) can get federal tax credits to subsidize the purchase of private health insurance. But many people below the poverty line will be unable to get tax credits, Medicaid or other help with health insurance.

http://www.nytimes.com/2013/05/25/us/states-policies-on-health-care-exclude-poorest.html?hp&_r=0&pagewanted=all

Comment:

By Don McCanne, M.D.

The poorest of the poor, those living below the federal poverty level, are ineligible for subsidies for the exchange plans, and they will not be able to enroll in Medicaid in those states that have refused to expand eligibility beyond those who are already qualified.

For those living in poverty, the Affordable Care Act (ACA) could have provided plans through the state exchanges with subsidies for 100 percent of the premiums and 100 percent of the out-of-pocket costs. Instead, it was decided to cover those in poverty with Medicaid, while limiting the income-indexed exchange subsidies to those living above 100 percent of the federal poverty level.

That was before the Supreme Court ruled that state participation in the Medicaid expansion could not be made mandatory. Since so many states opted out, millions of the very poor will not be eligible for Medicaid nor for the exchange plan subsidies. They will simply remain uninsured.

Because of the obstructionists in Congress, no legislative remedy is possible at this time. Too many members of Congress want to prove that ACA won’t work. Of course, they do not advance any program that will.

Even if all glitches were eliminated, the fundamental structure of ACA is irreparably flawed. It will leave 31 million uninsured, establish under-insurance as the new standard, and fail to control costs. So let’s replace it with a system that covers not only the poorest of the poor, but covers all of us – an improved Medicare for all.

Economist: North Carolina could save $18.7B by adopting single-payer model for health care

The U.S. health-care payment system is unsustainable, Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst, said Thursday night in Charlotte

By Jennifer Thomas
Charlotte (N.C.) Business Journal, May 24, 2013

North Carolina could save as much as $18.7 billion next year on health-care costs if it changed the way it finances health care.

The catch? That change would require a switch to a single-payer system in which one entity collects all health-care fees and pay related costs, says Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst.

“We have a system that was broken 10 years ago, and it’s getting worse,” he says. “You can’t fix it unless you change its fundamental basis.”

Friedman spoke Thursday night in Charlotte at the Health Care Justice meeting. That organization wants everyone in the community to have access to health care. It is a chapter of the Physicians for a National Health Program, which supports single-payer national health insurance.

Friedman has drafted financing plans for single-payer health systems for Maryland, Massachusetts and the United States. If adopted, he estimates such a payment model could result in $2 trillion in savings nationwide over the next decade mainly by cutting administrative costs and controlling prescription drug prices.

On Thursday night at the Midwood International and Cultural Center, he touted the need for universal-comprehensive coverage, in which everyone would have access to care. Individuals, businesses and the government stand to benefit, Friedman said.

Universal coverage would minimize billing expenses, avoid wasteful competition among insurers and eliminate adverse selection against people who are sickest, he said.

Friedman estimates that nationwide there is $1.5 trillion in waste annually when it comes to health-care spending. Such spending now accounts for roughly 18 percent of the gross domestic product. And it is expected to rise to 22 percent of the GDP within five years.

In North Carolina, health-care spending has risen more than 400 percent in North Carolina since 1990, Friedman said.

At the same time, per capita income has barely doubled, which puts increased pressure on a family’s income. In 1960, health-care spending accounted for just 7 percent of a family’s take home pay. That rose to 39 percent in 2010.

“More and more money is going to health care,” he said.

The current health-care payment system is unsustainable because it is focused on making profits, Friedman said. That results in waste, fragmented care delivery and significant administrative costs and monopolistic pricing, he added.

For example, he said drug prices are 60 percent higher in the U.S. than elsewhere.

Health insurers will spend nearly $200 billion on administrative costs in 2013, he noted.

Friedman expects the current payment system will collapse. He notes expanded access through federal health-care reform will fall short of providing universal coverage and does not do enough to stem rising health-care costs.

That means health insurance premiums will continue to rise, making it unaffordable for more individuals.

“Right now health-care is a lump-sum tax on individuals, especially sick individuals,” he said.

Jennifer Thomas covers health care, biotech, education and retail for the Charlotte Business Journal.

http://www.bizjournals.com/charlotte/news/2013/05/24/economist-nc-could-save-187b-by.html?page=all

Health care CEOs have highest pay

Health care tops other industries for highest median CEO pay

The Washington Post, May 23, 2013

Here’s a look at median CEO pay by industry last year, as calculated by executive pay research firm Equilar. For the fourth time in five years, health care CEOs got the most pay and utilities CEOs got the least.

—Health care: $11.1 million

—Industrial goods: $11 million

—Services: $10.9 million

—Financial: $9.8 million

—All companies: $9.7 million

—Consumer goods: $9.5 million

—Basic materials: $9.3 million

—Technology: $9.2 million

—Utilities: $7.5 million

http://www.washingtonpost.com/business/health-care-tops-other-industries-for-highest-median-ceo-pay/2013/05/23/8003ef12-c3be-11e2-9642-a56177f1cdf7_story.html

Comment:

By Don McCanne, M.D.

So health care CEOs have the highest median pay of all industries in the United States. But notice that their pay is not much higher than the median CEO pay in all industries. That brings up a couple of questions.

What do CEOs do?

Does their “contribution” to society warrant that level of pay?

Considering what CEOs do, do we really even want them in our health care system since it is an “industry” apart from all the rest?