By The Geisel School of Medicine at Dartmouth
Medical Xpress, August 5, 2020

The coronavirus pandemic has highlighted the numerous weaknesses in the U.S. healthcare system. Millions have lost their health insurance and millions more can barely afford it. Racial, ethnic, economic, and geographic disparities in health are widening as death rates from COVID-19 rise. And the financial solvency of hospitals and physician practices is at risk. At some point soon, health care reform will be high on the political agenda.

In the lead article for the current issue of NEJM Catalyst Innovations in Care Delivery, Elliott Fisher, MD, MPH, professor of medicine and health policy at Dartmouth, and one of the policy leaders who developed the concept of Accountable Care Organizations, lays out a path to reform that would provide universal coverage, real-time data and performance measures, and more robust payment models that would enable the market to improve care for all through informed choice of population health organizations (PHOs), providers, and treatments.

“There is a real risk that policy makers will get stuck in a fruitless debate between ‘single payer’ and ‘multi-payer’ approaches to achieving universal coverage,” said Dr. Fisher. “If we get another crack at major reform after the upcoming elections, we should address the underlying reasons that healthcare in the United States is so expensive and unequal.”

Responding to a pre-publication copy of the paper, Representative Peter Welch (D. VT), said: “Dr. Fisher helped develop the ACO model that has garnered strong bipartisan support. He has now clarified why costs nevertheless continue to rise and how we could do better. Dr. Fisher’s recommendations about how to empower the market to improve care and lower costs for all deserve serious attention. I look forward to working with my colleagues across the aisle—as we did with ACOs—to explore these ideas.”

The concept at the heart of the proposal—Population Health Organizations—is intended to address the limitations of the current ACO model, under which primary care focused provider organizations are responsible for the quality and total cost of care for their assigned patients and receive a share of any savings they achieve if they continue to meet quality standards. More than 30 million Americans now receive care under this payment model. “We should celebrate the broad bipartisan support and high levels of adoption seen for ACOs and other value-based payment models,” Dr. Fisher said. “And we must admit that while these models appear to achieve some savings, their overall impact has been less than what we hoped for.”

In his Catalyst paper, Dr. Fisher explains why the U.S. continues to see the inexorable increases in costs that have made healthcare unaffordable for so many. “Fragmented delivery, payment, and insurance systems have long been recognized to pose serious challenges to care coordination,” he writes. “Fragmentation also weakens incentives, discourages innovation, and makes it easy for providers and insurers to avoid efforts to control costs.” ACOs, for example, can be rewarded for lowering costs for the patients in their ACO contract while at the same time increasing costs to others. “Our current system can be seen as a balloon: push on one part and the expansion simply continues somewhere else.”

The solution is to shift from thinking of ACOs as a contract to seeing them as organizations paid under capitation to manage the health of all of their enrolled primary care patients—as Population Health Organizations. Fisher recommends that all Americans get to choose their PHO on statewide insurance exchanges where uniform benefits, limited cost-sharing, and transparency on quality would enable market forces to drive meaningful improvement in both cost and quality.

Other key elements of the “Single System Solution” include:

• A single, unified health information system, ensuring that clinicians have all of their patients’ health records when needed and where comprehensive quality and outcome measures empower consumer choice of treatments, providers, and PHOs;
• Universal coverage under which everyone would have access to the same basic benefit packages and choice of PHOs on statewide exchanges, which is the single best way to reduce disparities and eliminate the sense of exclusion experienced by those now relegated to the “safety net.”
• Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.

https://medicalxpress.com…

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Reforming Health Care: The Single System Solution

By Elliott S. Fisher, M.D., M.P.H.
NEJM Catalyst, September-October 2020 (Released August 5, 2020)

Full article (behind paywall):
https://catalyst.nejm.org…

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Comment:

By Don McCanne, M.D.

The policy community and politicians have gone out of their way to protect the private insurance industry from enactment and implementation of a national health program, especially the single payer model of Medicare for All.

The Affordable Care Act was designed specifically to maintain a role for private insurers both by protecting the private employer-sponsored plans and by establishing an exchange of competing private plans in the individual market.

Although the managed care revolution and its HMOs suffered from a backlash, it was decided that the concept of competing integrated health systems could be perpetuated by creating accountable care organizations (ACOs). Under this model health care professionals would be provided incentives to be accountable for both the quality and costs of the care provided.

Although the ACO experiment continues, it has largely failed to accomplish its goals of higher quality at lower costs. Elliott Fisher and his Dartmouth colleagues were primary architects of the ACO model. Now even he concedes, “their overall impact has been less than what we hoped for.”

There were some very significant design defects in the ACOs that caused a few of us to predict their failure. Fisher now proposes changes to correct the perceived defects (though he misses the fundamentals). His primary proposal is a switch to Population Health Organizations (PHOs). The concept is that the PHO is a “single system solution” (perhaps a rhetorical takeoff on the popularity of single payer reform?). All PHOs would provide the same benefit package, paid under capitation, while having a uniform national fee schedule, and share a unified health information system. The PHOs would be offered through exchanges that would operate as “active purchasers” (required to meet certain standards to qualify for listing) where they would compete based on quality and performance, but not prices.

It is ironic that the Dartmouth release touts PHOs as follows, “Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.” Those are characteristics of single payer Medicare for All more so than they would be of a market of competing PHOs with all of their administrative complexity.

But is a market of competing PHOs really a single system solution? Each PHO would have a separate network of hospitals, physicians and other health care professionals. With the entire health care system fragmented into competing silos, health care choice would certainly be limited, perhaps severely so if enough entrepreneurial-oriented PHO managers are competing in a small space.

Where this proposal really breaks down is that Fisher says that we should not waste an opportunity for reform by “arguing about single payer, multi-payer, or repeal and replace.” He states, “the single system approach — if implemented in a multi-payer model that preserves a role for private insurers — should satisfy the core interests of all key stakeholders: better, less expensive care for consumers; better support, information, and working environments for clinicians; and a continued important role not only for hospitals, but for insurers, too. Conflict is also likely to arise between advocates of single- or multi-payer approaches. I believe this is a false choice. It is certainly possible that a streamlined and well-regulated private insurance system could be as effective as government agencies that have been captured by provider interests — as is plausibly the case under Medicare” (referring to private Medicare Advantage?).

So the policy community is still fixated on the market concept of competition as a means of controlling costs. Competing private insurers have been responsible for much of the excesses, fragmentation and especially the profound administrative waste of our current health care financing system. It is not competition but rather cooperation that best serves the interests of patients. Instead of a fragmented system of competing PHOs, if we had only one single “population health organization,” composed of the entire health care delivery system, then patients and their health care professionals would have complete free choice in obtaining the best care possible. Of course, Medicare for All makes the entire health care delivery system a de facto single health organization for the entire population – the only “PHO” that you would need, though we wouldn’t call it that.

In a recent Quote of the Day we noted that Stuart Butler, an architect of the Affordable Care Act, wants us to “improve” ACA by moving private Medicare Advantage plans into the exchanges. Elliott Fisher, an architect of ACOs, now wants us to “improve” ACOs by converting them to PHOs. Both are recommending changes because of the failures of their own models. Please. No more failures. Let’s move smartly into the model that will work well for all of us: single payer improved Medicare for All.

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By Reed Abelson
The New York Times, August 5, 2020

Some of the largest companies, including Anthem, Humana and UnitedHealth Group, are reporting second-quarter earnings that are double what they were a year ago.

Anthem’s net income soared to $2.3 billion for the second quarter, from $1.1 billion in 2019, while UnitedHealth reported net earnings of $6.7 billion, compared to $3.4 billion for the same three months last year.

Although many hospitals have been overwhelmed by the coronavirus outbreaks raging from state to state, insurers have shelled out billions of dollars less in medical claims in the last three months because expensive, elective surgeries have been postponed in many places. Moreover, people have steered clear of doctors’ offices and emergency rooms in fear of contagion.

The companies’ staggering pandemic profits stand in stark contrast to the scores of small medical practices and rural hospitals that are struggling to stay open. And the earnings are putting a spotlight on the big insurance companies at a time when government officials in many states are facing massive budget shortfalls as businesses collapse, unemployment rises and tax revenues plummet.

But the companies may have even higher profits than is apparent. Some, like UnitedHealth, have large networks of doctors and other health care businesses, in addition to owning giant pharmacy benefit managers. There are no limits on how much these units can make, and many of the units sell their services directly to the insurer.

And in this presidential election year, the companies’ overly buoyant position could also reignite a discussion among Democrats about “Medicare for all,” a proposal that would replace the current private health care system with a government one that guarantees coverage for all U.S. residents.

“We’re looking at the fact that health care can’t be regulated by the marketplace,” said Representative Pramila Jayapal, the Washington State Democrat who is a strong proponent of Medicare for all.

“Who knows what’s going to happen by January?” Ms. Jayapal asked. “It’s entirely possible that everything shifts on health care, within weeks or months after the election.”

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

So how is our health care financing system working? For patients, many are losing their health insurance and others are facing financial hardship in spite of being insured. For small medical practices and rural hospitals? They are struggling and many are having to shut down. And for the large private insurers? Record profits!

If we had a single payer Medicare for All program, patients would have no financial barriers to care, and the health care delivery system would be adequately funded to be able to provide all essential services. And the expensive, private, for-profit insurance giants? Gone!

Reject the presidential candidates’ statements in opposition to Medicare for All. The down-to-earth conditions cry out for intensifying our advocacy for single payer Medicare for All. We must give the victors in the November election no choice but to accept the will of the people. No more health care coverage designed of, by, and for the private insurers. No more!

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By Jennifer Karas Montez, Jason Beckfield, Julene Kemp Cooney, Jacob M. Grumbach, Mark D. Hayward, Huseyin Zeyd Koytak, Steven H. Woolf, Anna Zajacova
The Milbank Quarterly, August 4, 2020

Abstract

Policy Points

• Changes in US state policies since the 1970s, particularly after 2010, have played an important role in the stagnation and recent decline in US life expectancy.
• Some US state policies appear to be key levers for improving life expectancy, such as policies on tobacco, labor, immigration, civil rights, and the environment.
• US life expectancy is estimated to be 2.8 years longer among women and 2.1 years longer among men if all US states enjoyed the health advantages of states with more liberal policies, which would put US life expectancy on par with other high‐income countries.

Context: Life expectancy in the United States has increased little in previous decades, declined in recent years, and become more unequal across US states. Those trends were accompanied by substantial changes in the US policy environment, particularly at the state level. State policies affect nearly every aspect of people’s lives, including economic well‐being, social relationships, education, housing, lifestyles, and access to medical care. This study examines the extent to which the state policy environment may have contributed to the troubling trends in US life expectancy.

Methods: We merged annual data on life expectancy for US states from 1970 to 2014 with annual data on 18 state‐level policy domains such as tobacco, environment, tax, and labor. Using the 45 years of data and controlling for differences in the characteristics of states and their populations, we modeled the association between state policies and life expectancy, and assessed how changes in those policies may have contributed to trends in US life expectancy from 1970 through 2014.

Findings: Results show that changes in life expectancy during 1970‐2014 were associated with changes in state policies on a conservative‐liberal continuum, where more liberal policies expand economic regulations and protect marginalized groups. States that implemented more conservative policies were more likely to experience a reduction in life expectancy. We estimated that the shallow upward trend in US life expectancy from 2010 to 2014 would have been 25% steeper for women and 13% steeper for men had state policies not changed as they did. We also estimated that US life expectancy would be 2.8 years longer among women and 2.1 years longer among men if all states enjoyed the health advantages of states with more liberal policies.

Conclusions: Understanding and reversing the troubling trends and growing inequalities in US life expectancy requires attention to US state policy contexts, their dynamic changes in recent decades, and the forces behind those changes. Changes in US political and policy contexts since the 1970s may undergird the deterioration of Americans’ health and longevity.

From the Discussion

The changing policy contexts of US states since the 1970s may have played a sizable role in shaping US life expectancy. Indeed, this study’s findings are consistent with the proposition that changes in state policy contexts have contributed to the growing gap in life expectancy across states since 1980 and suppressed overall gains in US life expectancy. This is particularly striking during the last five years of our study period (2010‐2014), in which we estimated that the shallow upward trend in US life expectancy would have been 25% steeper for women and 13% steeper for men had state policies not changed as they did.

The causal mechanisms linking state policies to life expectancy are complex. For example, environmental laws can shape exposure to toxic substances that damage respiratory and cardiovascular function, affect gene expression, disrupt endocrine function, and increase the risk of death. Civil rights laws may help protect individuals from the pernicious mental and physical health effects of racism, sexism, and other forms of discrimination. Living in a US state with weak protections for lesbian, gay, and bisexual populations may elevate rates of generalized anxiety disorder, post‐traumatic stress disorder, and dysthymia among these populations. Labor policies such as higher minimum wage and paid family leave can improve economic well‐being, health behaviors, birth outcomes, and access to prenatal care, and can decrease mortality rates. Tobacco control policies, such as higher excise taxes and indoor smoking bans, have reduced the prevalence of smoking. Restrictive abortion policies have been linked with women’s poverty, reduced employment, anxiety, poor physical health, and violence from the man involved in the pregnancy. And finally, access to firearms in the home is associated with greater risks of gun‐related homicide (particularly for female victims, thought to reflect partner victimization) and suicide. Collectively, these studies indicate that the mechanisms are numerous and complex and shape nearly all aspects of people’s lives.

From the Policy Implications

Although the importance of any specific domain in our study should be interpreted cautiously, the overarching conclusion is clear: states that have invested in their populations’ social and economic well‐being by enacting more liberal policies over time tend to be the same states that have made considerable gains in life expectancy.

Conclusions

Americans’ opportunities and constraints for living a healthy life are strongly shaped by structural conditions. Other factors such as individual behaviors and medical care are also important and must be part of a comprehensive strategy to improve population health and reduce inequalities; nevertheless, as McCartney and colleagues argued, “there should be no pretense or illusion that health inequalities can be eliminated, or even meaningfully reduced, without a primary focus on structural factors.” This study focused on US state policy contexts as an increasingly important structural factor. Our findings underscore that progress in understanding—and reversing—the troubling trends and growing disparities in US life expectancy requires attention to state policy contexts, their dynamic changes in recent decades, and the forces behind those changes.

The full article, well worth reading, is open access:
https://onlinelibrary.wiley.com…

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Comment:

By Don McCanne, M.D.

This meticulously researched study demonstrates that “states that have invested in their populations’ social and economic well‐being by enacting more liberal policies over time tend to be the same states that have made considerable gains in life expectancy.”

Policy matters. Those states that get policy right contribute to the health of their populations. Those states that are successful in enacting and implementing beneficial liberal policies that are health-enhancing are those states that get their politics right.

If the policies aren’t right and the politics are a barrier, then change the politics so that you can fix the policies. Simple.

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CMS.gov, August 3, 2020

On August 3, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces and solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, on or after January 1, 2021.

Since 1992, Medicare has paid for the services of physicians and other billing professionals under the PFS.

Payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for physician work, practice expense, and malpractice. These RVUs become payment rates through the application of a conversion factor. Payment rates are calculated to include an overall payment update specified by statute.

CY 2021 PFS Ratesetting and Conversion Factor

We are proposing a series of standard technical proposals involving practice expense, including the implementation of the third year of the market-based supply and equipment pricing update, and standard ratesetting refinements to update premium data involving malpractice expense and geographic practice cost indices (GPCIs).

With the budget neutrality adjustment to account for changes in RVUs, as required by law, the proposed CY 2021 PFS conversion factor is $32.26, a decrease of $3.83 from the CY 2020 PFS conversion factor of $36.09.

https://www.cms.gov…

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Comment:

By Don McCanne, M.D.

Each year, in their efforts to privatize Medicare, CMS has used innovative accounting maneuvers to increase the payment rates for the private Medicare Advantage (MA) plans, while neglecting the traditional Medicare program. This has allowed the MA plans to charge lower premium rates and to provide extra benefits which then gives the private plans an unfair competitive advantage over the traditional fee-for-service Medicare program (FFS). The resulting marketing advantage has been effective in increasing enrollment in the private MA plans.

Once enrollment increased in the private plans it was assumed that CMS would decrease funding of the traditional FFS Medicare program causing it to wilt on the vine (or be drowned in a bathtub, in the words of Grover Norquist). It looks like we are entering that phase.

One innovative accounting maneuver for FFS Medicare available to CMS is making a “budget neutrality adjustment.” Imagine the variables that they can conjure up to make these adjustments. Whatever they did, they are rationalizing a 10.6 percent reduction in FFS payments beginning in January – this in a system that many complain is already chronically underfunded.

What do you suppose physicians will do five months from now when they see a ten percent reduction in their FFS Medicare payments? That’s on top of the stresses of a pandemic and a recession. And the private insurance sector and their Wall Street barons are going to have the answers? We may be headed for more disruption, and not the good kind.

A well designed, single payer Medicare for All program could salvage our health care system, but we have to elect public stewards who are dedicated to the best interests of patients. Supporting the system through adequate funding is in the best interests of patients.

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University of Chicago Press Journals, American Association for the Advancement of Science EurekAlert!, July 31, 2020

According to recent Gallup polls, socialism is now more popular than capitalism among Democrats and young people, and support for “some form of socialism” among all Americans is at 43% (compared to 25% in 1942). Policies that went unmentioned or were declared out-of-bounds in elections four years ago–a federal jobs guarantee, single-payer health care, free college, massive tax hikes on the rich, and the Green New Deal–are commonplace in Democrats’ 2020 campaigns.

However, in “Freedom Now,” a new paper published by Alex Gourevitch and Corey Robin in Polity’s May Symposium on the Challenges Facing Democrats, there is still no clear, unifying idea behind this political shift. “One has not heard anything on the order of Franklin Roosevelt’s Commonwealth Club speech or Reagan’s story of the free market,” the authors write. If these policies are to have a chance of breaking through, they will need a grounding principle, or ideology name the enemy, organize the policies, orient the actions, state the destination, and provide the fuel for the movement.

Gourevitch and Robin propose that that idea is freedom. “While the left once understood freedom as emancipation from the economy, the right spent the twentieth century neutralizing and appropriating the idea of freedom by reinventing the economy as the true site of freedom.”

To reclaim freedom as a value of the left, the authors believe the first place to start is the unfreedom of the workplace. “In nearly every capitalist country, one of the leading elements of the legal definition of employment is subordination to the will of a superior.” That can mean that employees must urinate–or are forbidden to urinate. It can mean that they should be sexually appealing–or must not be sexually appealing. They may be told how to speak, what to say, whom to say it to, where to be, where to go, how to dress, when to eat, and what to read–all in the name of the job. “But isn’t the worker free to leave a bad boss? Formally speaking, yes,” the authors write. “But even if they are free to exit this workplace, they are not free to exit the workplace.”

Reclaiming “freedom” names the problem that an increasing number of people face today: systemic unfreedom in the neoliberal economy. By confronting that unfreedom, the left can do more than identify, in a coherent and cohesive way, the myriad problems that individuals are currently facing. The authors find the seeds of that idea in Bernie Sanders’s rhetoric about being “organizer in chief,” and in proposals from the Warren and Sanders camps that would strengthen workers’ right to strike and organize.

However, they note, “A real politics of freedom posits a belief in the capacity of people to revise the terms of their existence and a commitment to the institutions that make these collective revisions possible.” In other words, freedom is best realized not through tending our own gardens but through disciplined commitment and collective struggle, in activities like mass strikes and party politics. “These democratic struggles are not simply expressions and experiences of freedom, though they are that. They are also the means to the freedoms people deserve.”

https://www.eurekalert.org…

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Symposium on the Challenges Facing Democrats: Freedom Now

By Alex Gourevitch, Brown University and Corey Robin, Brooklyn College and the Graduate Center, City University of New York
University of Chicago Press Journals, Polity, July 2020

Abstract

Left-wing politics is resurgent. Self-proclaimed socialists are unexpectedly popular. Proposals like universal health care are a commonplace of Democratic campaigns. But there is not yet a clear, unifying idea behind this political shift. We propose that that idea is freedom. While the left once understood freedom as emancipation from the economy, the right spent the twentieth century neutralizing and appropriating the idea of freedom by reinventing the economy as the true site of freedom. To reclaim freedom as a value of the left, we have to begin with the daily experience of most people: the unfreedom of the workplace. The authoritarian organization of work is not just an offense against freedom; it also helps us understand how freedom requires emancipation both from the economy and within the economy, and why that emancipation requires mass struggle.

https://www.journals.uchicago.edu…

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Comment:

By Don McCanne, M.D.

In simplified terms, “Freedom Now,” by Alex Gourevitch and Corey Robin, discusses how the political right captured the rhetorical concept of freedom, but that it can be reclaimed by the left by escaping the unfreedom of the workplace. To try to understand what this means, both the press release and the abstract of the article are reproduced above, since rephrasing helps. Actually, I found that I had to read the full article (available for free at the journals.uchicago.edu link above) – twice.

In my years of advocating for a single payer national health program, I’ve found that it is often difficult to find a common ground of communication with conservatives, libertarians, and even neoliberals. When I extol the virtues of Medicare for All, one common response from the right is that having the government involved takes away your freedom. That response, of course, has become a meme.

But Gourevitch and Robin show us that it is the unfreedom of the workplace from which we need relief. They conclude, “A real politics of freedom posits a belief in the capacity of people to revise the terms of their existence and a commitment to the institutions that make these collective revisions possible. In this instance, that translates into the belief that freedom is best realized not through tending our own gardens but through disciplined commitment and collective struggle, in activities like mass strikes and party politics. These democratic struggles are not simply expressions and experiences of freedom, though they are that. They are also the means to the freedoms people deserve.”

Social programs provided by the government but not dependent on the workplace, such as single payer Medicare for All, Social Security retirement, unemployment insurance, disability insurance, long term care, public education including that beyond the primary and secondary levels that eliminates the bondage of student loans, federal jobs guarantee, food security programs, guaranteed housing, progressive tax policies, and the like – dare we use the term “socialism” – provide freedom by freeing us up from the unfreedom of the workplace advocated by those on the right who support the capitalistic neoliberalism of the marketplace workplace. With appropriate social programs, capitalism, markets and the workplace still work for us, but they don’t take away our freedom.

Read the full article. Twice. Or three times. Freedom belongs to all of us. When we see that this disciplined commitment and collective struggle when acted out are the means to the freedoms people deserve, we will be able to shout out the words promulgated by Martin Luther King, Jr.:

Free at last! Free at last! Thank God Almighty, we are free at last!

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By Stuart M. Butler, Ph.D.
JAMA Health Forum, July 30, 2020

The coronavirus disease 2019 (COVID-19) pandemic is forcing a much-needed questioning of the US health system. What is the right balance of authority between the federal government and the states? How should the profound inequities and gaps in the system be better addressed? Should emergency regulations, like those allowing more telemedicine and flexible funding, become permanent features of the system?

Hopefully, this reassessment will encompass a constructive conversation about the basic structure of the US health system and how it can be based on a more robust chassis. What should that guiding framework be? Although I view the system though a center-right lens, I believe a variant of the Medicare-for-all idea could prove to be a new chassis that can attract broad support.

In practice, unlike most high-income countries, the US has several different health systems for different segments of the population—each with distinctive rules, subsidy arrangements, and eligibility criteria. There is 1 system for poor individuals; an employment-based system for most working individuals and their families; and yet another for elderly individuals. Transitioning between these systems, as almost all US residents must do at some point, often means disruptions in coverage and care. Millions also continue to fall through gaps between these systems. Moreover, the amount of assistance available to individuals seeking coverage differs greatly depending on such circumstances as geography and work status.

Many progressives have responded to this patchwork by calling for Medicare to become the chassis for the whole system. However, the Medicare-for-all proposals advanced by such politicians as Sen Bernie Sanders (I, Vermont) and Sen Elizabeth Warren (D, Massachusetts) have encountered skepticism from many liberals, as well as heavy criticism from conservatives.

Concerns About Medicare for All

One objection is the enormous increase in federal expenditure that would be involved in such a switch, and although supporters point to the large savings in private expenditures, the net costs depend on many considerations and design features.

Another concern, applying to some versions of Medicare for all, is that although the Medicare benefit package is comprehensive, traditional Medicare has significant out-of-pocket costs for all but the lowest income beneficiaries (who qualify as “duals” for overlapping Medicaid coverage). This feature effectively requires seniors to purchase private “Medigap” coverage as a supplement.

A third concern is disruption. This is the other side of the coin associated with having multiple health systems in the US; Medicare for all would mean big changes for most individuals with existing coverage.

However, it is important to remember that even Medicare is really 2 distinct systems. The focus of Medicare-for-all proposals is traditional Medicare, which is a fee-for-service program with a detailed payment schedule administered by the government. But in parallel with this is Medicare Advantage, which operates differently from traditional Medicare with private plans receiving a single capitated payment for each beneficiary enrolled in their plan, adjusted according to the beneficiary’s general health condition.

Medicare Advantage as the Framework

Medicare Advantage for all could be a good starting point for a bipartisan discussion on creating a new framework for the US health system. Unlike the higher-profile Medicare-for-all approach, a Medicare Advantage–for-all approach would have several advantages. For instance:

Medicare Advantage has wide popular support as well as broad political support. Medicare Advantage enrollment has been growing rapidly, doubling in the last decade, with the proportion of Medicare beneficiaries in such plans now exceeding 34% and rising. Moreover, Republicans as well as Democrats have supported and expanded Medicare Advantage, and the idea of making Medicare Advantage plans available to younger US residents has begun to intrigue some reformers on the right.

The capitation system permits competing Medicare Advantage plans to offer a variety of benefits beyond a required core of basic benefits. Moreover, in contrast to traditional Medicare’s rigid and detailed payments system, it allows plans to explore different payments as a means of achieving greater efficiency and beneficiary satisfaction.

In contrast with the design of traditional Medicare, Medicare Advantage plans are generally consistent with the growing managed care pattern in nonelderly coverage, including within the employer-based system. Today, about 90% of Medicaid beneficiaries are enrolled in some form of managed care. Meanwhile, about two-thirds of workers with employment-based plans are enrolled in health maintenance organizations or other network coverage that is similar to most Medicare Advantage plans. Medicare’s income-adjusted premiums are also broadly compatible with the structure of income-based subsidies available for plans in state health insurance exchanges, and many insurers offer Medicare Advantage and health insurance exchange plans that have similar designs. Thus, for a large proportion of households, transitioning from their existing coverage to coverage more like Medicare Advantage plans would not involve a big adjustment.

Recent changes in laws and regulations allow Medicare Advantage plans to include more nonclinical services that can influence health, such as nonurgent transportation, nutritional services, and even some simple home modifications to reduce the risk of injuries. This reflects the growing interest in addressing so-called social determinants of health.

Gradual, Not Radical

Choosing Medicare Advantage as the organizing theme for reforming the whole US system does not necessarily imply there must be radical legislation that literally replaces all existing coverage with the current Medicare Advantage program. That would be unnecessarily disruptive and regimented. Rather, it should mean gradually adapting existing forms of coverage so that over time they become very similar to Medicare Advantage, and there would essentially be no change in coverage as individuals change jobs, lose their jobs, or retire.

One step toward that outcome would be to merge state exchange plans with Medicare Advantage plans in the state. Another would be to slowly reconcile the subsidy system available for exchange plans with the tax benefits for employer-sponsored insurance, such that a similar structure of income-related subsidies would apply to everyone enrolling in insurance. Seniors would continue to receive assistance toward the cost of coverage that is reflective of the payroll taxes they paid and the national commitment to their health care, at least until there was agreement on a more comprehensive revenue and financing system, and the state-federal share of support would continue for lower-income households. A third step would be to move further toward the place of work being just a convenient location to facilitate plan selection, with employers handling the mechanics of government subsidies and payments by workers, and to move away from employers as plan sponsors.

None of these steps are small details, of course. They are major issues and would involve contentious debate. But to reach eventual agreement on big changes in society, it is necessary to have a framework in mind that is likely to command broad support and that the current system could evolve toward with minimum disruption. Medicare Advantage for all is such a framework. Medicare for all is not.

https://jamanetwork.com…

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Medicare Advantage is a Shell Game

By Stephen Kemble, M.D., Physicians for a National Health Program
JAMA Published Comment, July 31, 2020

A fundamental problem with competing private plans in health care is that too much of the per-beneficiary financial risk is predictable due to pre-existing conditions and social determinants of health, so that the primary driver of competition is to avoid risk. This means “cherry picking” the healthy and “lemon dropping” sicker and costlier patients from Medicare Advantage (MA) plans. Risk adjustment is far too crude to prevent this, and efforts to make it more accurate encounter prohibitive complexity and administrative cost. There is pervasive evidence that MA plans do selectively enroll healthier-than-average Medicare beneficiaries, and sicker, more complex patients selectively disenroll from MA plans. There is also extensive evidence of increased coding intensity in MA plans to beat risk adjustment formulas, and MA plans carry much higher administrative cost than traditional Medicare. The outcome is that the MA program has never saved money for the Medicare program as a whole, and MA claims of more cost-effective care are much better explained by the favorable risk pool the MA plans have been able to secure.

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Comment:

By Don McCanne, M.D.

In response to the strong support of single payer Medicare for All there have been several sources recommending instead Medicare Advantage for All – using private insurance instead of a public insurance program based on an improved version of the traditional Medicare program. This particular article is important because of its author, Stuart Butler.

Stuart Butler was the primary architect of the Heritage reform proposal that led to the Patient Protection and Affordable Care Act (ACA), aka Obamacare. Butler’s views are more moderate than those of the conservative Heritage Foundation and thus he transferred to the centrist Brookings Institution. In this JAMA article, he labels himself as viewing the system through “a center-right lens.” As his article indicates, he rejects a publicly-administered Medicare for All program but rather supports a market of competing private plans. His primary innovation for ACA was the exchanges (marketplace) for the private plans that would receive government subsidies to make them more affordable. The market of private Medicare Advantage plans have far more similarities with the ACA exchanges than there are differences.

There are a great multitude of reasons why the private Medicare Advantage plans are vastly inferior to a well designed improvement in the traditional Medicare program. The JAMA comment provided by Stephen Kemble explains probably the most fundamental flaw, and it’s a matter of ethics. Medicare Advantage plans have profited by enrolling healthier, less expensive patients, and by gaming risk adjustment to qualify them for higher payments. The U.S. is noted for the profound administrative waste in its financing system, and Medicare Advantage plans add significantly to that waste, not only for their own excessive costs but also for the heavy financial burden they place on the health care delivery system.

Amongst other reasons that Medicare Advantage plans are inferior include: their restricted provider networks frequently do not allow access to the care that you need; coverage may be unstable as plans enter and leave markets at their will; rules may prohibit enrolling in supplemental Medigap plans if returning to traditional Medicare; plans may profit by withholding beneficial care that you did not know was available and appropriate for your circumstances; plans may not have contracts with centers of excellence; etc., etc.

Responding to a few additional points made by Stuart Butler:

• Butler says that Medicare for All has encountered skepticism from many liberals, but it is really some of the neoliberals and not the progressives who prefer market solutions who have been less supportive; the majority of Americans support Medicare for All
• Butler cites the objection to the increase in federal expenditures, but he concedes the offset of the large savings in private expenditures
• He notes that traditional Medicare has significant out-of-pocket costs requiring the purchase of Medigap plans, but a well designed Medicare for All program folds in the benefits of Medigap plans plus adds other important benefits, eliminating most out-of-pocket costs (except for the equitable taxes used to fund the system)
• He states that Medicare for All is disruptive, but, like John Lewis has said, this is good trouble – patients have their full choice of providers while eliminating financial barriers to care; that’s disruption we would all like to have
• He states that Medicare Advantage has popular support, but that is primarily because Congress provided an unfair competitive edge to private plans by enabling them to offer their plans at low premiums – virtually all enrollees would prefer traditional Medicare free at the time of service with a full choice of providers, if it were available, as it would be with Medicare for All
• He notes that Medicare Advantage can offer additional benefits beyond the core benefits, but if they are benefits that should be covered with taxpayer funds, then, in fairness, Congress should offer the same benefits through the traditional Medicare program
• He describes Medicare Advantage managed care as being advantageous, not acknowledging the managed care backlash of the 1990s
• He suggests merging ACA exchange plans with Medicare Advantage plans – of course he would

In conclusion, we tried Stuart Butler’s previous proposal, and we have a very expensive mess on our hands. Let’s not do that again. Let’s go straight to single payer improved Medicare for All. We need some good trouble.

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By Toren L. Fronsdal, Jay Bhattacharya, Suzanne Tamang
National Bureau of Economic Research, July 2020

Abstract

We study a unique all-payer data set spanning 38 states to examine the differences in inpatient reimbursement rates paid by traditional Medicare (TM), Medicare Advantage (MA), Medicaid, and private (under-65) insurers, and the differences in negotiated rates across the 60 largest private insurers. After controlling for enrollee and hospital mix, we find that private insurers pay 37 percent more than TM, and MA pays 10 percent more than TM for the five most common inpatient diagnoses. The correlation in risk-adjusted payments by private insurers and by TM at the same hospital for the same diagnosis is only 0.10. There is significant variation in negotiated prices within and across private payers. Among the five largest US insurers, the most expensive insurer negotiates prices that are 5-26 percent higher than the mean price for the 20 most common inpatient diagnoses. Additionally, we find a 10 percent increase in insurer market share corresponds to a 7 percent decrease in inpatient negotiated prices and a 10 percent decrease in the standard deviation of prices. This finding suggests that increased insurer market power allows payers to negotiate prospective payment contracts – rather than the more common fee-for-service payments – thereby offloading financial risk to providers.

From the Conclusion

We find an inverse relationship between insurer market share and negotiated prices. A 10 percent increase in insurer market share is associated with a 7 percent decrease in negotiated prices. Additionally, a 10 percent increase in insurer market share is associated with a 10 percent decrease in the standard deviation of negotiated prices at a provider. This suggests that insurers with greater market share are able to negotiate favorable payment structures that offload financial risk to the providers.

https://www.nber.org…

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Comment:

By Don McCanne, M.D.

Health care providers are paid to provide health care. Insurers are paid to accept and manage risk of health care costs. This study indicates that insurers with greater market share are able to offload financial risk to the providers. Then why do we need private insurers? About $600 billion of administrative costs could be recovered if we got rid of the private insurers – funds which could be used to expand comprehensive health care to everyone. The government should be the logical agent to accept and manage risk and would be under single payer Medicare for All.

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