PNHP

Time to abandon the ACO concept

Time to abandon the ACO concept

Next Generation ACO model hasn't saved money, study finds

By Maria Castellucci
Modern Healthcare, January 10, 2020

The experimental Next Generation Accountable Care Organization model didn’t save Medicare money during the first two performance years, according to an analysis released Friday from the agency.

Rather than reducing Medicare spending, the Next Generation ACO model, which is now in its fifth and final year, added $93.9 million to net Medicare spending during 2016 and 2017, the first two years of the program, the analysis found. The study, which was conducted by researchers at the University of Chicago and commissioned by the CMS, said the increase wasn’t statistically significant although at first glance it appears to be a blow for supporters of the model who claimed its been saving Medicare money.

But the results from the study are more complicated, according to David Muhlestein, chief research officer at Leavitt Partners. Medicare can save at most about 1% on spending for beneficiaries in the program because that’s how much they take from the ACOs at the beginning of performance years. The fact that the program was a wash for the agency in the first two years doesn’t make a huge difference because the bar for saving is so low, he said.

“Is the program ever going to solve our cost issues in Medicare? No. It’s all pretty minor,” he said.

The Next Generation ACO model is an experimental project from the CMS Center for Medicare and Medicaid Innovation that forces organizations to take on substantial downside risk.

According to the study, Medicare was unable to achieve savings during the first two years of the program—2016 and 2017—because they had to pay out more in savings than they recouped. In fact, before accounting for the payouts CMS had to make, the model actually decreased Medicare spending by $123.18 million during the first two years.

The CMS hasn’t announced if it will make the project a permanent part of the Medicare program, although the changes made to the Medicare Shared Savings Program in late 2018 resemble somewhat the Next Generation model because ACOs are forced to take on higher levels of downside risk the longer they are in the program.

https://www.modernhealthcare.com…

Next Generation Accountable Care Organization Model Evaluation

NORC at the University of Chicago, January 2020

After accounting for shared-savings payouts, the net impact of the NGACO model on Medicare spending cumulatively across PY1 and PY2 was a statistically insignificant $54.40 PBPY increase (+0.42 percent), totaling $92.99 million.

No impact on quality-of-care measures.

https://innovation.cms.gov…

Participants continue to drop out of Medicare ACO program

By Maria Castellucci
Modern Healthcare, January 10, 2020

Just 53 new accountable care organizations joined the Medicare Shared Savings program for the Jan. 1 start date, which is significantly less new entrants compared to previous years.

There are now 517 ACOs in the Medicare program versus in 2018 when there were 561 ACOs. The drop in new participants follows a recent trend from six months ago when only 66 new ACOs joined.

The National Association of ACOs blames the changes to the Medicare ACO program for the recent drops in participation. In late 2018, the CMS finalized an overhaul of the program that requires ACOs to take on downside financial risk sooner after years where most organizations were risk averse.

The growth of ACOs in risk-sharing tracks this year likely shows that the participants who decided to stay in the program are serious about taking on down-side risk, which is ultimately a good thing for the program, said David Muhlestein, chief research officer at Leavitt Partners. There were likely ACOs in the program that didn’t belong there because they had no intention of moving to downside risk. By forcing ACOs to take on risk eventually, the CMS is likely getting a stronger pool of participants ready and willing to do so.

https://www.modernhealthcare.com…

Comment:

By Don McCanne, M.D.

For the past decade the public and private policy community has been insisting that the way to control our very high health care spending has been to make the actual providers of health care accountable for both the costs and quality of the care they provide. Thus the establishment of the accountable care organizations (ACOs).

CMS and its advisers have been insisting that the success of the ACO model is dependent on the ACOs taking a substantial downside risk; that is, a substantial proportion of the financial risks of caring for these patients must be transferred from the insurer (Medicare) to the providers of care (the ACOs). Although they talk about transferring substantial risk, in these Next Generation models it is still a relatively small amount, but it is quite visible since it represents primarily the profit margins of the providers. A modest increase in bearing the costs of risk can result in significant losses for the providers.

Although they are lauding these organizations that are taking downside risk, it is no surprise that the number of organizations participating is now declining. Since the original Medicare Shared Savings Program is being leveraged into downside risk it should not be a surprise if participation declines throughout the program. So far the policy community is insisting that we continue with this (failed) experiment. They are dismissive of the ACOs that are leaving the program but express the hope that “a stronger pool of participants” is ready and willing to take the dive into this (foolish) venture.

What is sad is that CMS and much of the policy community have remained opposed to a model that is vastly more effective in reducing wasteful spending – the single payer model of an improved Medicare for All – as they insist that we continue with this failed experiment with ACOs.

Enough. Whether it’s due to their ideology or something else, those in control are not changing. We need to replace them with legislative and administrative public stewards who do care about the people of our nation and will thus enact and implement a program that will ensure that we all will have our health care needs met – a single payer improved Medicare for All – not after a decade or two of playing around with adding the additional, wasteful administrative complexity of a public option version of Medicare for All, but right now!

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The Future of National Health Insurance

Panel featuring Dr. Adam Gaffney

The Future of National Health Insurance: Debates During a U.S. Presidential Election Year

Harvard T.H. Chan School of Public Health, The Forum, January 13, 2020

The Democratic Presidential debates have surfaced two very different visions for the future of national insurance in the U.S. One is building on the Affordable Care Act enacted in 2010 by adding major changes, including allowing individuals to voluntarily purchase Medicare or another public option plan. The other is to enact a new, all-governmental health insurance program–Medicare for All.

What are the issues and implications for the U.S. of choosing either of these two paths? The Forum examined this critical question. As background, The Forum drew on results from a recent poll from The Commonwealth Fund, The New York Times, and the Harvard T.H. Chan School of Public Health. National experts examined the practical, economic and political challenges of health insurance proposals in 2020 and potential impacts on health care for millions of Americans.

PNHP president Dr. Adam Gaffney advocated single-payer reform, noting that “Medicare for All provides a unique set of tools to address the key problems that are facing Americans today.”

full video:
https://theforum.sph.harvard.edu…

Improving medication adherence through the VA approach

The Effect Of Veterans Health Administration Coverage On Cost-Related Medication Nonadherence

By Adam Gaffney, David H. Bor, David U. Himmelstein, Steffie Woolhandler, and Danny McCormick
Health Affairs, January 2020

Abstract

High out-of-pocket drug spending worsens adherence and outcomes, especially for patients who are poor, chronically ill, or members of minority groups. The Veterans Health Administration (VHA) system provides drugs at minimal cost, which could reduce cost-related medication nonadherence. Using data for 2013–17 from the National Health Interview Survey, we evaluated the association of VHA coverage with such nonadherence. Although people with VHA coverage were older and in worse health and had lower incomes than those with other coverage, VHA patients had lower rates of cost-related medication nonadherence: 6.1 percent versus 10.9 percent for non-VHA patients, an adjusted 5.9-percentage-point difference. VHA coverage was associated with especially large reductions in nonadherence among people with chronic illnesses and with reduced racial/ethnic and socioeconomic disparities in nonadherence. The VHA pharmacy benefit is a model for reform to address the crisis in prescription drug affordability.

From the Discussion

VHA coverage was associated with less cost-related medication nonadherence relative to other coverage, especially for people with chronic conditions, and was also associated with smaller racial/ethnic and income-based disparities in such nonadherence.

The rising prices of prescription drugs have spawned myriad reform proposals. However, although manufacturers’ pricing affects the costs paid by insurers (and the uninsured), insurers’ decisions regarding benefit design largely determine out-of-pocket spending for people with coverage. Except for Medicaid, most insurers impose substantial drug cost sharing. In many private insurance plans, out-of-pocket medication expenses can total thousands of dollars annually, especially for patients requiring “specialty drugs” such as cancer chemotherapy or biologics. Some plans even put low-price generics (for example, metformin) into high drug tiers that carry large copays. People with Medicare Part D coverage face a $415 deductible and 25 percent coinsurance for prescription drugs until they reach a “catastrophic coverage” threshold of $5,100, at which point limited out-of-pocket spending is still required. Consequently, seniors with hepatitis C face about $5,000 in out-of-pocket spending, on average, for the direct-acting antiviral ledipasvir-sofosbuvir—far higher than the $33 charge for a three-month course in the VHA. Similarly, seniors with COPD have out-of-pocket spending for inhalers that exceeds $1,600 per year, also many times higher than the costs for veterans, who may pay multiple $11 monthly copays. Hence, our findings of lower rates of cost-related medication nonadherence among VHA enrollees is not surprising.

Despite the VHA’s relatively generous coverage, its drug spending may be lower than that of private insurers because it pays much lower prices. As do health systems in several nations, the VHA uses a unified national formulary and a mix of government regulation and bargaining with manufacturers to purchase drugs at prices lower than those paid by the US private sector and similar to prices in Australia.

As previous researchers have done,10 we identified lower income as a risk factor for cost-related medication nonadherence. We observed higher rates of cost-related nonadherence among poor versus nonpoor VHA enrollees, presumably because even small copays may reduce adherence (the VHA exempts some but not all low-income people from copays). Similarly, when Oregon imposed small copays on Medicaid enrollees in 2003, prescription drug use fell 17 percent. The extreme price-sensitivity of low-income patients underscores the potential benefits of first-dollar prescription drug coverage, as implemented in Wales.

“Drugs don’t work,” Surgeon General C. Everett Koop once remarked, “in patients who don’t take them.” Eliminating out-of-pocket spending is one of the few interventions proven to increase medication adherence. Our findings suggest that drug coverage modeled on the VHA approach, which is often cited as a model for controlling drug prices, could also improve adherence and population health and reduce health disparities.

https://www.healthaffairs.org…

Physicians for a National Health Program, January 6, 2020

Patients with Veterans’ health coverage less likely than other insured Americans to skip medications because of cost: Harvard Study

National study finds that Veterans Health Administration (VA) enrollees, especially those with chronic illnesses, have fewer problems paying for medications. Findings support VA pharmacy benefit as a model to make drugs universally affordable

“We face a crisis in drug affordability,” noted senior author Dr. Danny McCormick, associate professor of medicine at Harvard Medical School and a primary care physician. “High copays and deductibles are forcing patients to skip their medications — even for serious illnesses like heart disease or lung disease — putting their health, and even their life at risk. The VA shows that there is a better way.”

“Our findings have important implications for the debate about the affordability of health reform,” noted Dr. Steffie Woolhandler, distinguished professor at the City University of New York’s Hunter College and lecturer (formerly professor) in Medicine at Harvard Medical School. “Both the House and Senate Medicare-for-All bills would borrow tools from the VA to cut drug costs, including price negotiations and a formulary. These steps could allow all Americans to afford their medications without burdensome copayments or deductibles,” she added.

Dr. Adam Gaffney, a pulmonary and critical care physician at Harvard Medical School, noted that while a VA-like drug benefit model could save money, it could also improve patients’ health. “Today, we have better drugs — more ways to help our patients — than ever before. But these drugs offer no help to patients who can’t afford to take them. By reforming how we pay for prescription medications, we can improve health outcomes, while bringing our drug spending in line with that of other rich nations.”

https://pnhp.org…

Comment:

By Don McCanne, M.D.

The Veterans Health Administration – a government program – makes prescription drugs more available at a lower total cost, thereby increasing medication adherence, resulting in an improvement in health outcomes. That is in sharp contrast to the private sector wherein medication adherence is reduced because of higher prices which results in poorer health outcomes.

The single payer model of an improved Medicare for All – a proposed government health care financing program – would make prescription drugs more accessible at a lower cost, much like the VA does, with an overall improvement in health outcomes.

No contest. So why do so many claim that we want to protect access to the private sector plans that are serving us so poorly (even if many do not realize how much better off they would be under an improved Medicare for All)? Could it be saturation with the false memes of private sector ideology? Can educating the public on the facts overcome this? We should step up our efforts and see what happens.

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New York Times asks us to quit fighting about ‘Medicare for All’

Can We Please Stop Fighting About ‘Medicare for All’?

One policy proposal has defined this Democratic race. It’s time to move on.

By Michelle Cottle
The New York Times, January 8, 2020

With strong support among the Democratic Party’s base, “Medicare for all” has emerged as a test of progressive bona fides in the race for the Democratic presidential nomination.

It has also emerged as something of a political morass into which the candidates keep stumbling.

The American health care system is, no doubt, deeply flawed, and health care was a hot topic in the 2018 midterm elections. But Medicare for all has dominated the Democratic race for too long, serving neither the candidates nor the electorate well.

A plan to blow up that system and throw 149 million people off their private insurance, while embraced by progressives, is viewed more skeptically by moderates and swing voters.

One could argue that it has already proved problematic for Senator Elizabeth Warren, who has been one of Medicare for all’s top champions in this race, along with Senator Bernie Sanders, who has been touting the idea nationally since his 2016 presidential run. Under pressure to explain how she would pay for her proposal, in November Ms. Warren released a detailed accounting of where the estimated $20.5 trillion that her plan would cost over 10 years would come from.

Her financing plan drew heavy fire as misguided and unrealistic, including from some of her Democratic competitors.

Many observers have noted that the Democratic debates — especially the first ones, which felt like a rolling seminar on medical insurance policy — have devoted a disproportionate amount of time to the candidates slashing at each other over who has the political courage — or naïveté — to go big on health care.

It is miring the Democrats in an unnecessary fight over a policy proposal that is divisive and that would require a political miracle to achieve without a progressive takeover of the Senate. And even then, it would most likely be difficult — remember how hard it was to pass Obamacare even with Democrats controlling both chambers?

With the Iowa caucuses less than a month away, Democrats need to move beyond the Medicare for all fixation. Enough time has been spent bickering over the particulars of an electorally risky proposal that is unlikely to come to pass, no matter who wins the White House.

Michelle Cottle is a member of the editorial board.

https://www.nytimes.com…

Comment (NYT Pick):

By Don McCanne, M.D.

An article published this week in the Annals of Internal Medicine confirms that over $600 billion in health care administrative costs is excessive under our uniquely inefficient system of financing health care. Those funds could be recovered by switching to a single payer model of Medicare for All. But they would not be recovered by merely adding a Medicare for All public option.

It is this $600 billion in savings that makes it possible to fill in the costs for the currently uninsured and those with excessive deductibles and other out-of-pocket costs such as surprise medical bills. Also switching from insurance premiums and out-of-pocket costs to equitable taxes would make health care affordable for each of us based on ability to pay, plus guarantee each of us coverage for life.

Maintaining our fragmented system of private plans and various public programs would forgo this $600 billion savings. Those who say that we should be allowed to choose between private plans and a public option have to realize that we each would be paying an average of $1,900 extra for wasteful administrative services that we don’t even want.

This is not just a question of ideological preferences for private insurance versus an improved Medicare program. It’s a matter of pocketbook economics.

https://www.nytimes.com…

Additional Comment:

By Don McCanne, M.D.

Of course, it is not just a matter of pocketbook economics. Much more importantly it is a matter of reducing personal financial hardship, physical suffering and even death.

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The Spin Doctors

For decades, the American Medical Association has fought single-payer tooth and nail. But the US’s corporatized health system hurts doctors too — and cracks are forming in the AMA’s opposition to Medicare for All.

By Jonathan Michels
Jacobin, January 9, 2020

Draft cards weren’t the only cards set on fire during the 1960s. Back then, at least one young medical student also burned their membership card in the powerful physicians’ organization that some had nicknamed the “American Murder Association.” While the Vietnam War ended long ago, people are still fighting for the physical and financial health of the US public — and the body count continues to rise.

Today, the American Medical Association (AMA) says it is the voice of American doctors. But it has long been a chief advocate of the country’s private health insurance system, which treats health care like a business and produces some of the worst health outcomes in the developed world.

Over the years, the AMA has lobbied against the passage of Medicare, obstructed civil rights campaigns to integrate hospitals and fight racism within the medical profession, and blocked or watered-down reforms that would limit the power of the health insurance industry.

Nowhere is the AMA’s intransigence more evident than in its nearly one-hundred-year-old opposition to publicly financed health care and especially single payer (Medicare for All, in today’s parlance).

Yet in a surprising move last August, the AMA abruptly withdrew from a corporate front group that aims to stymie the Medicare for All movement. The benign-sounding Partnership for America’s Health Care Future consists of nearly sixty organizations representing private health insurers, medical device manufacturers, and pharmaceutical and hospital executives.

“The AMA dropping out of the Partnership is very significant,” said Wendell Potter, a health industry executive turned whistleblower who regularly attended meetings in groups just like the Partnership. “It has to be seen as a big loss to the Partnership because the AMA is so well known and has been a reliable partner in years past.”

That isn’t to say the Partnership has let up. Last month, the Washington Post reported that 50 percent of all political advertising in Iowa ahead of the Democratic caucus had been paid for by the Partnership. You can also see the Partnership’s influence in their million-dollar attack ads broadcast during the 2020 Democratic presidential debates and on the lips of Democratic Party insiders parroting Partnership talking points to “build on what’s working in health care” rather than fighting for transformative reform.

So why did the AMA decide to leave? The AMA’s departure may have been an attempt to preserve its credibility in the face of a discredited health care system that it helped create and a response to mounting pressure within its own ranks. What we shouldn’t see it as is a surrender in the AMA’s war against health justice — a war it’s been waging for too long to quit now.

“AMA: Get Out Of The Way!”

This past June, physicians convened for the opening session of the AMA House of Delegates at the Hyatt Regency in Chicago. The well-dressed guests and the plush accommodations could have been any business convention or a meeting of the Fortune 500.

And then: raucous noise.

Demonstrators, led by disabled activists from ADAPT and a contingent of senior citizens, marched into the Hyatt Regency conference hall chanting loudly. Having breached hotel security, the group made their way to the conference hall holding cardboard protest signs carved into the shape of tombstones. Now face-to-face with the stunned doctors, the protesters dropped to the floor to symbolize the roughly 39,000 people who die unnecessarily each year due to lack of health insurance.

In front of a lectern splashed with the AMA logo, Susan Aarup, a disability rights activist, commandeered the meeting and proceeded to school the assembled professionals about how their health reform policies have negatively impacted her life.

“I had to go to the pharmacy because of a bladder infection,” Aarup yelled. “When I got to the pharmacy I found out they cancelled my health insurance.”

“That’s not right,” she said. “We need Medicare for All!”

Simultaneously, five hundred doctors, medical students, nurses, and other health care activists converged outside of the annual meeting to deliver a simple message to the AMA: drop your membership in the Partnership for America’s Health Care Future. Support Medicare for All or get out of the way.

“With AMA members comprising only 15 percent of physicians, they are not the voice of doctors anymore, and they definitely do not represent me or my fellow medical students,” Rush University medical student Alankrita Siddula told the crowd. “America has had enough, and Medicare for All will happen, whether the AMA is with us or not,” she said.

Two months after the demonstration, the association left the Partnership.

With its credibility on the line, the AMA’s withdrawal may represent a public relations concession to the protests. But it could also reflect strategic differences among members of the Partnership on the most effective way to kill Medicare for All.

What we see from the history of the AMA’s lobbying efforts is that its success often hinges on manipulating the US public’s trust of physicians to first outright oppose bold reform measures and then harness incremental reforms like the Affordable Care Act (ACA) that actually strengthen market forces.

The Partnership has made it clear that it will continue to oppose any reform option that seeks to expand government participation in health care. The AMA, in contrast, is opting for the appearance of open-mindedness, putting forward a slate of modest proposals to expand “access” to private health coverage under the ACA, which has also ensured more revenue for hospitals and physicians. “The AMA decided to leave the Partnership for America’s Health Care Future so that we can devote more time to advocating for these policies that will address current coverage gaps and dysfunction in our health care system,” AMA CEO James Madara told Politico after the announcement.

Former AMA president Donald Palmisano put it more clearly.

“I think we ought to put a stake in the heart of single payer,” Palmisano told the House of Delegates following the June protest. “We’ve done it before; we ought to do it again.”

A History of Exclusion

The AMA was founded in 1847 as a guild whose primary mission was to protect the business interests of physicians (overwhelmingly white and male) against encroachment from adversarial medical practitioners, competing interest groups, and the government. The AMA portrayed its efforts to professionalize medicine as guided by American ideals like individualism and freedom. What went unspoken was the role that money played in the AMA’s policy decisions even when it came to opposing efforts that sought to ameliorate patient suffering.

“The leaders of the American Medical Association saw early health care models — union welfare funds, prepaid physician groups — as a threat,” notes historian Christy Ford Chapin.

“A.M.A. members sat on state licensing boards, so they could revoke the licenses of physicians who joined these ‘alternative’ plans. A.M.A. officials likewise saw to it that recalcitrant physicians had their hospital admitting privileges rescinded.”

During the Jim Crow era, AMA leaders looked the other way when their Southern affiliates barred African-American physicians from becoming members. Their exclusionary policies helped grow the National Medical Association, a professional organization founded by black doctors that vocally supported single-payer health care when few physicians’ groups would even touch the issue.

The AMA eventually managed to exert control at every level of the medical profession. A pamphlet distributed to doctors in 1953 summed up the group’s dominance: “The Association began helping you the day you entered medical school and continues to aid your practice and guard your freedom. Even if you are not a member, it is your AMA to a certain extent.”

The public’s growing faith in doctors as the purveyors of scientific progress, meanwhile, endowed the AMA with prestige and credibility. Hospital administrators eagerly ceded control of medical care delivery to AMA doctors. Elected officials clamored to win the association’s support, afraid of paying a price for challenging the “voice of American medicine.”

Simultaneously, the AMA inculcated in patients the idea that medical care is a transaction tied to the marketplace and not a right.

In 1915, a group of progressive academics with the American Association of Labor Legislation (AALL) devised a plan to provide social health insurance for workers with the hopes of offsetting the physical and financial burdens associated with poverty and disease.

The AMA briefly supported the AALL plan in New York, to be funded by contributions from workers, employers, and the state, but the association’s conservative wing reversed course in 1920. The first shot in the AMA’s war against single payer was fired that year when 90 percent of the House of Delegates voted to oppose “any plan embodying the system of compulsory insurance … provided, controlled or regulated by any state or the Federal government.”

While the AALL plan won support from several interest groups, its prospects wilted because proponents placed too much emphasis on securing the backing of medical societies like the AMA instead of mobilizing workers themselves. More successful, writes Beatrix Hoffman in The Wages of Sickness, were employers and commercial health insurers, who amplified the AMA’s agenda by constructing their “self-interest as the public interest” in concert with one another, presaging coalitions like the Partnership.

The movement for national health insurance picked up steam again after World War II as labor unions pushed a single-payer plan and Harry Truman declared “health security for all” a top priority of his nascent presidency. Two-thirds of the American public supported Truman’s proposal for a national health insurance program.

An alarmed AMA stated beating the war drums. In 1948, it enlisted Campaigns, Inc., the world’s first political consulting firm, to lead the attack. Armed with a $5 million war chest amassed from $25 AMA membership fees, Campaigns, Inc. oversaw the delivery of 55 million pieces of propaganda, blending Cold War hysteria with nationalistic fervor that denounced single-payer health care as “socialized medicine.”

At the same time, the AMA recognized the potential of the burgeoning private health insurance market to keep single payer at bay. “The Voluntary Way Is the American Way,” AMA doctors told patients. The campaign was “the largest political offensive ever waged against a single piece of legislation in U.S. history,” Chapin writes. By the early 1950s, the movement for a national health program lay in ruins.

Not content to simply fight single payer, the AMA also provided cover for Jim Crow. It continued to justify its Southern medical societies’ discriminatory membership policies against African-American physicians as well as the association’s refusal to take a stand against segregated medical services, which threatened the health of millions of people.

Speaking to doctors with the Medical Committee for Human Rights (MCHR) in 1966, Martin Luther King, Jr excoriated the AMA for perpetuating racism in medicine and abdicating its moral obligation to advocate for the right of all people to quality health care. “Of all the forms of inequality,” King said, “injustice in health is the most shocking and the most inhuman because it often results in physical death. I see no alternative to direct action and creative nonviolence to raise the conscience of the nation.” On four separate occasions in the 1960s, physicians with the black-led National Medical Association marched alongside members of the MCHR and King’s Poor People’s Campaign to protest the AMA’s complicity with Jim Crow racism.

At the same time, many of these progressive forces were battling to ensure health care for seniors and the very poor. By fusing civil rights with the human right to health care, Medicare and Medicaid supporters were able to put forward a moral argument that even the AMA found difficult to spin.

Faced with the loss of millions of dollars in federal reimbursements, hospitals and the AMA conceded to these publicly funded programs at the zero hour.

“After Medicare’s passage, the reputation of the AMA as a collection of compassionate experts laboring for the public good lay in tatters,” Chapin writes.

Internal divisions within the AMA were further exacerbated when the organization’s own student section dissociated themselves from the organization over its refusal to support universal health care and civil rights. By the end of that decade, the association disavowed its discriminatory membership policies to save face.

In recent years, the AMA has taken a more progressive stance on certain issues, calling for more diversity in medicine and standing up for immigrants with DACA status. But the AMA has never addressed King’s fundamental concern: the continuation of an unjust and inequitable health care system.

Overcoming Entrenched Private Interests

The heated debate over Medicare for All comes at a time when more and more Americans are struggling under the weight of our deplorable health system. Despite the Affordable Care Act, 28 million Americans remain uninsured and an additional 41 million are underinsured. Even those with coverage often face impoverishment and bankruptcy from rising premiums, co-pays, and deductibles.

Each day brings fresh revelations about American drug companies’ disgusting opioid racketeering, which has fueled a public health disaster that claimed the lives of 47,000 people in 2017 alone. Giant nonprofit hospital systems, meanwhile, are coming under fire for suing their patients, garnishing their wages, and even seizing their homes in order to claw back the medical debt they incurred at their sickest and most vulnerable. No wonder some polls show upwards of 70 percent of the public supporting Medicare for All.

The AMA and its corporate allies are finding it more difficult to turn medical providers and patients away from Medicare for All with the same old scare tactics and half-measures. The reason for forming corporate front groups like the Partnership for America’s Health Care Future was to allow some of the most reviled industries in the United States like Big Pharma and private health insurance corporations to pool their resources while avoiding the appearance of being self-serving for attacking Medicare for All.

But the AMA’s departure is not the end of the corporate partnership to kill Medicare for All. Big Medicine, Big Pharma, private health insurance: they might at times appear to be competitors but when it comes to keeping health care in private hands and a steady source of revenue, they stand as one.

“They all point the finger of blame at each other publicly to divert any responsibility away from themselves for the problems that we have in our health care system,” Potter said. “Behind the scenes, they work together very closely when there is any threat to the status quo because the status quo largely works for all of them.”

Along with public support for Medicare for All, the AMA will also have to contend with increasing dissension among its base.

The AMA might still be the most prominent and powerful physicians’ group in the United States. It might still wield influence within the medical community through its Journal of the American Medical Association (JAMA) and in Washington, DC where it is the third largest lobbying group, behind only the National Association of Realtors and the US Chamber of Commerce.

But the AMA is not the sole voice of US doctors. An estimated 15 percent of doctors in the United States are AMA members, a precipitous drop from the 1950s when the organization claimed three-quarters of American physicians. The AMA’s power has been diffused by the rise of specialty physicians’ organizations as well as the founding of groups like Physicians for a National Health Program (PNHP) that provide an outlet for disgruntled doctors who feel hamstrung by corporate health care.

As a profession, doctors have been among the most adversely affected by the domination of the private insurance industry. Concern over physician burnout, rising student loan debt, and a sense of powerlessness in combating the racial and economic inequities unique to US medicine continues to fuel the explosion in single-payer activism on medical school campuses across the nation. A survey conducted by the AMA-affiliated Chicago Medical Society that found that the majority of practicing US physicians now support a single-payer system.

There is also clear evidence that AMA members themselves are split on the issue of single payer. In the wake of the June protest, 47 percent of the AMA House of Delegates voted to rescind the association’s opposition to national health care, leading some to speculate that it is only a matter of time before the association supports Medicare for All.

That might be too optimistic. The history of the AMA’s endless war against single payer suggests that if Medicare for All is defeated, it will most likely die with a target on its back from the AMA.

Yet the cracks forming within the AMA and the broader physicians’ community also bode well. We may just be able to win a giant step toward health care justice after all.

https://www.jacobinmag.com…

Perspective from Anne Case, Angus Deaton and Robert Putnam

Every American family basically pays an $8,000 ‘poll tax’ under the U.S. health system, top economists say

By Heather Long
The Washington Post, January 7, 2020

America’s sky-high health-care costs are so far above what people pay in other countries that they are the equivalent of a hefty tax, Princeton University economists Anne Case and Angus Deaton say. They are surprised Americans aren’t revolting against these taxes.

“A few people are getting very rich at the expense of the rest of us,” Case said at a conference in San Diego on Saturday. The U.S. health-care system is “like a tribute to a foreign power, but we’re doing it to ourselves.”

The U.S. health-care system is the most expensive in the world, costing about $1 trillion more per year than the next-most-expensive system — Switzerland’s. That means U.S. households pay an extra $8,000 per year, compared with what Swiss families pay. Case and Deaton view this extra cost as a “poll tax,” meaning it is levied on every individual regardless of their ability to pay. (Most Americans think of a poll tax as money people once had to pay to register to vote, but “polle” was an archaic German word for “head.” The idea behind a poll tax is that it falls on every head.)

Despite paying $8,000 more a year than anyone else, American families do not have better health outcomes, the economists argue. Life expectancy in the United States is lower than in Europe.

“We can brag we have the most expensive health care. We can also now brag that it delivers the worst health of any rich country,” Case said.

Case and Deaton, a Nobel Prize winner in economics, made the critical remarks about U.S. health care during a talk at the American Economic Association’s annual meeting, where thousands of economists gather to discuss the health of the U.S. economy and their latest research on what’s working and what’s not.

As calls grow among the 2020 presidential candidates to overhaul America’s health-care system, Case and Deaton have been careful not to endorse a particular policy.

“It’s the waste that we would really like to see disappear,” Deaton said.

After looking at other health systems around the world that deliver better health outcomes, the academics say it’s clear that two things need to happen in the United States: Everyone needs to be in the health system (via insurance or a government-run system like Medicare-for-all), and there must be cost controls, including price caps on drugs and government decisions not to cover some procedures.

https://www.washingtonpost.com…

Deaths of Despair and the Future of Capitalism

American Economic Association, Annual Meeting, January 3-5, 2020

Selected quotes from slides:

Anne Case

It is not inequality per se, but that the US system is grossly unfair

Unfair process generates despair for some, and huge rents for others, generating inequality

Roots of despair: Labor market decline for workers without a bachelor’s degree; Effects of which have been magnified through lass of community, marriage, meaning, status

Things that held life together and gave life meaning have badly eroded: Attachment to the labor market; A job with prospects; Marriage; Attachment to one’s children; Church affiliation; Community

Why has the decline of working class jobs hit the US so hard? Start from the most extreme: opioids; Move on to less extreme, but still bad, healthcare industry; Corporate behavior more generally; Upward (unfair) redistribution from poorer to richer

Destruction of white working class: Transfer of power from labor to capital; Labor weakened by decline of unions, globalization and automation; Instead of cushioning the impact, as was done in Europe, politics and corporations worked together to take advantage of labor; None more so than in healthcare industry

American Healthcare Industry: Healthcare is most expensive in the world, while delivering the worst health in rich world; While American healthcare is not so good at promoting health, it is very good at promoting financial well being of providers; Life expectancy is now falling, while money is redistributed upwards; Government, instead of stopping this, licenses the upward redistribution of income; Perfect example of how rent-seeking generates inequality: Enriching a few; At the expense of the many; jobs contracted out, wages held down, states forced to cut education and infrastructure budgets to pay their share of Medicaid; Family health insurance policy in 2018 cost $20,000: outsource for low skills; Profits and executive salaries in the health care sector soar

Multiple forces holding wages down for working class people: Loss of unions; Non-compete clauses; Many (most) people with employer provided health insurance don’t understand that health insurance is invisibly coming out of their wages – really messes up labor markets; Businesses contracting out lower skilled jobs in part to avoid paying for health care (no hope of climbing the ladder through hard work); Globalization and technical change are happening in all wealthy countries, but policy choices distribute gains differently

What is to be done? Different kinds of education? Rein in the cost of the health care industry? Find a way for labor to regain a voice at the table while the pie is being cut?

Robert Putnam

America today has reached historic levels of: Economic inequality; Political polarization; Social isolation; Cultural individualism

Conclusions: Today’s problems, including deaths of despair, are part of a longer, wider syndrome – a shift from an I-society to a we-society and back to an I-society; no simple causal story; Since problems are braided together, policy solutions to any single problem without addressing others may be unstable – for example, Obamacare; Americans faced the same interconnected challenges in the Gilded Age/Progressive Era, therefore seeks lessons from that UPSWING (How America came together a century ago and how WE can do it again)

Angus Deaton

Health care is so different here from what it is elsewhere. The Swiss (system) is the second most expensive in the world. They consume 12 percent of GDP. That 6 percent of GDP, which is the difference (from our 18 percent), actually matches quite well our estimates of waste. Six percent waste in health care is 50 percent more than we spend on our entire military. We were very careful not to endorse any one of the plans that are being debated, especially on the Democratic side, and partly because they’re talking about the wrong thing. They’re talking about coverage, and for the left in America, the lack of coverage has always been a problem. Obamacare did quite a lot about coverage, but it did nothing at all about costs. It’s costs that are killing us, not the lack of coverage.

Video with slides:
https://www.aeaweb.org…

Comment:

By Don McCanne, M.D.

It seems obvious that with our great wealth and high spending on health care we should be able to distribute health care equitably so that we all get the health care that we need. But as Anne Case, Angus Deaton and Robert Putnam show us, health care injustice is just one problem in a background of fundamental societal flaws that were predominant in the Gilded Age, diminished in the post World War II era, and have returned with a vengeance. Major features include income and wealth inequality with a rise and decline in simple fairness, the decline and then rise in political polarization, the problem of social isolation (Bowling Alone), and the I-society of the Gilded Age (I, me, mine) shifting to the WE-society mid-century (we, us, our), and now back to the I-society.

Admittedly, it is difficult to reform health care financing without considering other reforms that will promote the upswing that we need. Though Deaton and Case do not endorse a particular model of health financing reform, they do note that the system must be both universal and costs must be controlled. Putnam notes that America needs to come together as a WE-society.

Of course, the single payer model of an improved Medicare for All does this more effectively, considering the upswing that we need. As an egalitarian system it would help promote the WE-society. Funding the system through progressive taxes would reduce economic inequality. With broad support amongst society, political polarization would diminish. With the nation joining together, social isolation would also diminish. And as far as reducing waste in the system, the greatest impact that we could have would be through recovering the $600 billion per year that is wasted on administrative excesses, a far greater amount than could be recovered through any other efficiencies, though other beneficial changes certainly would be welcome as well.

Let’s recover that $600,000,000,000 in administrative waste and use it to make health care accessible and affordable for all of us.

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

Medicare for All plan would cover all Americans and is a way forward

By Kathleen Fagan, M.D., M.P.H.
TCPalm (Stuart, Fla.), Letters, January 8, 2020

This past month we’ve watched members of Congress try (and fail) to solve the problem of surprise medical bills. Forty percent of privately insured patients get “surprise” medical bills after an emergency room visit or hospital admission. These are bills not covered by their insurance. The average surprise medical bill from an emergency room visit is $628, and $2,040 from a hospital admission. Many families cannot pay these bills without going into debt.

Surprise medical bills are one of many problems with our health care system. The Affordable Care Act (ACA) has helped insure more people but not everyone, and does not solve the problem of surprise medical bills. The single payer “Medicare for All” plan would cover all Americans. Out-of-network, surprise medical bills would be eliminated, as every doctor and hospital would be paid directly through the program.

I have practiced medicine for over 40 years and have seen many patients fall through the cracks of our broken health care system. As a medical student, I believed that health care is a human right. I still believe that. I believe that we can create a health care system that is efficient, covers everyone, and does not financially cripple families. The single-payer Medicare for All plan is a way forward to achieve these goals. As we embark on this new decade, I want to see our political leaders work together to fix our broken health care system.

https://www.tcpalm.com…

Protecting Americans from surprise medical costs

By Ed Weisbart, M.D.
St. Louis Post-Dispatch, January 8, 2020

Breaking news: At the end of 2019, Congress failed to fix a major problem with American health insurance. This would be comically boring if so many lives and so much money were not at stake.

Chances are that you are among the majority of Americans who have received a surprise medical bill for something you thought was covered by your insurance. It might have been a lab test or prescription drug. It might have been a physician’s care or other service administered when you went to an emergency room or hospital. Or it might even have been that you didn’t realize you still have lots of deductible to meet before your insurer would pay anything.

The most recent data shows that 43% of emergency room visits and 42% of hospitalizations among privately insured Americans came with an “out-of-network” bill. And these bills are frequently large enough to be financial disasters: an average of $628 in the emergency room, and more than $2,000 for a hospitalization.

When asked how they would deal with an unexpected $500 medical bill, only 34% said in a poll that they could pay it outright. Nineteen percent said they would be unable to pay it all; 20% would put it on a credit card to pay off over time; 13% would put it on a credit card to pay the following month; 7% would borrow from a bank, payday lender, friend or family or make some sort of arrangement with the physician or hospital.

Sixteen percent of Americans have had to cut back on groceries, 17% cut back on clothing, 11% on non-Rx drugs, 8% on utilities, and 19% on our recreation — all just to pay for health care.

The problem is growing worse; 36% of people in small group plans, and an astonishing 71% of people with individually purchased insurance, now have plans that provide no coverage at all for out-of-network care.

One way or another, most Americans have had to deal with surprise medical bills. And across all party lines, 57% of us want this fixed even if that means hospitals or physicians would get paid less. Of course, the only physicians who might be paid less would be those taking unfair advantage of this problem and willfully extracting more money from their patients.

Shouldn’t Congress simply pass a bill to address it? The flaw in that logic was the word “simply.” You may have noticed, they tried last month. Even with bipartisan support, the lobbyists wouldn’t let it happen. And if you’ve not noticed, those powerful lobbyists run Congress.

Whenever we start piece-mealing our solution to the health care crisis, we create gaps and loopholes that the free market is happy to exploit.

Compare how these surprise bills would be addressed under a robust solution — Medicare for All — as opposed to a “public option.” Medicare for All would cover every American for all necessary care, including dentistry, eyeglasses, and hearing aids, while eliminating all copays and deductibles. It would be funded as are all other public services like schools, defense and fire departments. Surprise medical bills would be impossible.

The public option would do nothing to prevent surprise bills from emergency visits or hospitalizations, nothing to prevent surprise bills from unbearable deductibles and copayments, and would let our health care system grow increasingly complex and unsustainable.

Surprise bills from emergency care would not change under a public option. Private insurers could continue to refuse to cover out-of-network care. Under Medicare for All, all facilities would be covered, and patients would never be billed.

Surprise bills from hospital care would not change under a public option. Private insurers could continue to refuse to cover any out-of-network physicians and services, even as part of inpatient hospital care at an in-network hospital that the insurer approved in advance. Under Medicare for All, there would be no more networks and patients would never be billed directly.

Congress failed to solve this as a stand-alone problem. Don’t let them trick you into thinking a public option would solve it. If you hate surprises — particularly medical bill surprises — join the fight for Medicare for All. Accept no imitations or faux solutions.

Dr. Ed Weisbart chairs the Missouri chapter of Physicians for a National Health Program.

https://www.stltoday.com…

US Healthcare Industry Creating an Endless S**tstorm of Money-Grubbing Bureaucracy and Paperwork, Study Finds

A highly lucrative paper-pushing industry is unnecessarily costing already-broke Americans hundreds of billions of dollars.

By Maxwell Strachan
VICE, January 8, 2020

Capitalist though it may be, the U.S. healthcare industry is a bureaucratic, inefficient and unnecessarily complicated mess, which has created a highly lucrative paper-pushing industry that is unnecessarily costing already-broke Americans hundreds of billions of dollars a year, according to a new study published this week in the Annals of Internal Medicine.

The healthcare industry’s bureaucratic administrative costs set Americans back $812 billion in 2017, or just under $2,500 per person. Another way to think about those numbers: 34 percent of all U.S. costs related to “doctor visits, hospitals, long-term care and health insurance” essentially came from paperwork, according to the analysis, which was performed by researchers at Harvard Medical School, the City University of New York at Hunter College, and the University of Ottawa.

If you look at those numbers and think “Well, maybe that’s just what things cost,” please know this: You’re wrong. That same year, our neighbors to the North, Canada, spent $551 per person on their own health-care administration, or less than one-fourth what we did, which amounts to only 17 percent of their total national healthcare expenditures. Cut U.S. administrative costs to that level, the researchers calculate, and you’ve saved the country more than $600 billion a year. Congratulations.

Not enough for you? Let’s do some U.S. vs Canada comparisons of some more specific per-person administrative costs:

  • Nursing home, home care, and hospice administration: $255 in the U.S.; $123 in Canada.
  • Physicians’ insurance-related costs: $465 in the U.S.; $87 in Canada.
  • Insurers’ overhead: $844 in the U.S.; $146 in Canada.
  • Hospital administration: $933 in the U.S.; $196 in Canada.

So, what gives? Well, for one thing, Canada implemented a publicly funded universal healthcare system all the way back in 1962 that streamlined a lot of the administrative bullshit. Hospitals there are funded through “global budgets that set overall expenditure targets or limits (as opposed to fee-for-service arrangements),” according to Canada’s government website.

Who has lots of fee-for-service healthcare arrangements? Americans do, that’s who! As they say, time is money, and there is a lot of time being spent trying to deduce who owes whom what and when in our exceptionally complicated current insurance system. Ever entered a protracted and maddening multi-pronged battle with a doctor, hospital, and insurance company over an out-of-network bill? That’s some good old-fashioned administration, baby.

As the Los Angeles Times noted, these high administrative costs aren’t exactly leading Americans to the pinnacle of health and wellness. One 2007 study by the U.S. and Canadian governments found our overall health outcomes to be basically the same.

The share of the U.S. healthcare industry that can be lumped into the “administration” bucket has actually increased by around 3 percent since 1999, when the same researchers last performed the same analysis, and most of the reason can be boiled down to “the expanding role that private insurers have assumed in tax-funded programs such as Medicaid and Medicare.”

Not only that, but the researchers also believe their assessment might underestimate how much administrative costs have grown since 1999 for a variety of reasons. For one, they weren’t able to study administrative costs in dentistal care in 2017 like they were back in 1999, since the data for 2017 wasn’t available. So, yeah, it could be even worse than we think.

“The gap in health administrative spending between the United States and Canada is large and widening, and it apparently reflects the inefficiencies of the U.S. private insurance–based, multipayer system,” the authors write in the study’s abstract. “The prices that U.S. medical providers charge incorporate a hidden surcharge to cover their costly administrative burden.”

Unsurprisingly, the study’s researchers support a Medicare for All-type system.

https://www.vice.com…

Insurance networks have to go

By Valerie Domenici, Ph.D.
The Sentinel (Carlisle, Penn.), Letters, January 8, 2020

Dear Editor:

Every Jan. 1, millions of Americans switch to a new health plan. Inevitably, some of my patients find out I am no longer “in the network.” Treatment comes to a screeching halt while I start the process of joining that new “network” so we can get back to work.

I fill out form after form, obtain multiple background checks, fax copies of documents, sign affidavits, and so on. We wait for all of this to process. If the patient is very lucky, we are back to work in a few months. That’s the best-case scenario. It could take a year, or not happen at all.

Your provider can’t just decide to “take your insurance.” Each provider has to independently go through a long process for every single network they join. As a country, we spend hundreds of billions of dollars a year on unnecessary and burdensome administrative tasks like these.

Healthcare providers either have to stop providing healthcare to complete these tasks, or hire other people to do these tasks for them. As a result, we have armies of administrative staff going through the process of “credentialing and contracting” for every provider, office, and hospital in the country. This is a bloated bureaucracy that serves no legitimate purpose. And it’s expensive.

I support Medicare for All because it is not an efficient use of anybody’s time or money to do the same thing thousands of times when it could be done once. Under a national single-payer system, every doctor and hospital would be covered, and the entire concept of “networks” would cease to exist entirely. “Surprise” medical bills — as well as all other medical bills — would be gone. Patients would regain free choice of doctors and hospitals, and providers would be freed up to just do their jobs.

https://cumberlink.com…

Landmark administrative waste study updated

Health Care Administrative Costs in the United States and Canada, 2017

By David U. Himmelstein, M.D.; Terry Campbell, M.H.A.; Steffie Woolhandler, M.D., M.P.H.
Annals of Internal Medicine, January 7, 2020

Abstract

Background: Before Canada’s single-payer reform, its payment system, health costs, and number of health administrative personnel per capita resembled those of the United States. By 1999, administration accounted for 31% of U.S. health expenditures versus 16.7% in Canada. No recent comprehensive analyses of those costs are available.

Objective: To quantify 2017 spending for administration by insurers and providers.

Design: Analyses of government reports, accounting data that providers file with regulators, surveys of physicians, and census-collected data on employment in health care.

Setting: United States and Canada.

Measurements: Insurance overhead; administrative expenditures of hospitals, physicians, nursing homes, home care agencies, and hospices.

Results: U.S. insurers and providers spent $812 billion on administration, amounting to $2497 per capita (34.2% of national health expenditures) versus $551 per capita (17.0%) in Canada: $844 versus $146 on insurers’ overhead; $933 versus $196 for hospital administration; $255 versus $123 for nursing home, home care, and hospice administration; and $465 versus $87 for physicians’ insurance-related costs. Of the 3.2–percentage point increase in administration’s share of U.S. health expenditures since 1999, 2.4 percentage points was due to growth in private insurers’ overhead, mostly because of high overhead in their Medicare and Medicaid managed-care plans.

Limitations: Estimates exclude dentists, pharmacies, and some other providers; accounting categories for the 2 countries differ somewhat; and methodological changes probably resulted in an underestimate of administrative cost growth since 1999.

Conclusion: The gap in health administrative spending between the United States and Canada is large and widening, and it apparently reflects the inefficiencies of the U.S. private insurance–based, multipayer system. The prices that U.S. medical providers charge incorporate a hidden surcharge to cover their costly administrative burden.

From the Results

Total Costs of Health Care Administration: Health care administrative costs in the United States in 2017 totaled $812.0 billion, $2497 per capita ($2696 per insured person), or 34.2% of total spending in the categories for which data are available. The comparable estimates for Canada are $551 per capita ($593, assuming U.S. wage rates in doctors’ offices), or 17.0% of expenditures. The difference amounts to over $1900 per capita (or over $2100 per insured person), equivalent to more than $600 billion in excess administrative spending in the United States.

From the Discussion

Administration accounts for one third of United States health care expenditures, twice the amount in Canada. The gap in dollars per capita is even larger: a greater than 4-fold disparity.

Five decades ago, when the 2 nations’ payment strategies first diverged, their health care systems deployed similar numbers of administrative personnel: 43.8 persons per 10 000 population in the United States versus 40.8 persons per 10 000 population in Canada. In the interim, virtually all billing has been computerized and EHRs have become commonplace, but the promised breakthrough in administrative efficiency has not materialized. In 1983, administration accounted for 22% of U.S. health spending (versus 13.8% in Canada), rising to 31.0% (versus 16.7%) in 1999 and, as we report, 34.2% (versus 17.0%) in 2017. Expressed in per capita 2017 dollars, U.S. administrative costs increased from $818 in 1983 to $2497 in 2017.

https://annals.org…

Health care paperwork cost U.S. $812 billion in 2017, four times more per capita than in Canada

Study in leading medical journal links rise in bureaucracy — now 34.2% of health spending — to surging overhead of private insurers

Physicians for a National Health Program, January 6, 2020

A study published today in the Annals of Internal Medicine finds that health care bureaucracy cost Americans $812 billion in 2017. This represented more than one-third (34.2%) of total expenditures for doctor visits, hospitals, long-term care and health insurance. The study estimated that cutting U.S. administrative costs to Canadian levels would have saved more than $600 billion in 2017.

Health administration costs were more than fourfold higher per capita in the U.S. than in Canada ($2,479 vs. $551 per person) which implemented a single-payer Medicare for All system in 1962. Americans spent $844 per person on insurers’ overhead while Canadians spent $146. Additionally, doctors, hospitals, and other health providers in the U.S. spent far more on administration due to the complexity entailed in billing multiple payers and dealing with the bureaucratic hurdles insurers impose. As a result, hospital administration cost Americans $933 per capita vs. $196 in Canada. The authors note that in Canada hospitals are financed through lump-sum “global budgets” rather than fee-for-service, much as fire departments are funded in the U.S. Physicians’ billing costs were also much higher in the U.S., $465 per capita vs. $87 per capita in Canada.

The analysis, the first comprehensive study of health administration costs since 1999, was carried out by researchers at Harvard Medical School, the City University of New York at Hunter College, and the University of Ottawa. The authors, who also performed the 1999 study, analyzed thousands of accounting reports that hospitals and other health care providers filed with regulators, as well as census data on employment and wages in the health sector. They obtained additional data from surveys of physicians and government reports.

The researchers found that administration’s share of overall U.S. health spending rose by 3.2 percentage points between 1999 and 2017, from 31.0 % to 34.2%. Of the 3.2 percentage point increase, most (2.4 percentage points) was due to the expanding role that private insurers have assumed in tax-funded programs such as Medicaid and Medicare. Private managed care plans now enroll more than one-third of Medicare recipients and a majority of those on Medicaid; Medicare and Medicaid now account for 52% of private insurers’ revenues. Private insurers’ increasing involvement has pushed up overhead in those public programs; private Medicare Advantage plans take 12% or more of premiums for their overhead, while traditional Medicare’s overhead is just 2%, a difference of at least $1,155 per enrollee (per year).

The authors cautioned that their estimates probably understate administrative costs, and particularly the growth since 1999. Their 1999 study included administrative spending for some items such as dental care for which no 2017 data were available. Additionally, private insurance overhead has increased since the study’s completion, rising by 13.2% between 2017 and 2018 according to official health spending figures released in December.

“Medicare for All could save more than $600 billion each year on bureaucracy, and repurpose that money to cover America’s 30 million uninsured and eliminate copayments and deductibles for everyone,” said study senior author Dr. Steffie Woolhandler, a distinguished professor at the City University of New York (CUNY) at Hunter College and lecturer in Medicine at Harvard Medical School, where she previously served as a professor. “Reforms like a public option that leave private insurers in place can’t deliver big administrative savings,” Dr. Woolhandler added. “As a result, public option reform would cost much more and cover much less than Medicare for All.”

According to Dr. David Himmelstein, the study’s lead author who is an internist in the South Bronx, a distinguished professor at CUNY’s Hunter College and lecturer in Medicine at Harvard, “Americans spend twice as much per person as Canadians on health care. But instead of buying better care, that extra spending buys us sky-high profits and useless paperwork. Before their single-payer reform, Canadians died younger than Americans, and their infant mortality rate was higher than ours. Now Canadians live three years longer and their infant mortality rate is 22% lower than ours. Under Medicare for All, Americans could cut out the red tape and afford a Rolls Royce version of Canada’s system.”

“Health Care Administrative Costs in the United States and Canada, 2017.” David U. Himmelstein, M.D.; Terry Campbell, M.H.A.; and Steffie Woolhandler, M.D., M.P.H. Annals of Internal Medicine, published online ahead of print January 6, 2020. doi:10.7326/M19-2818

The Annals of Internal Medicine is the official journal of the American College of Physicians, the largest U.S. medical specialty society with 159,000 members.

In addition to their academic positions, Drs. Woolhandler and Himmelstein founded Physicians for a National Health Program, a 23,000 member organization that advocates for Canadian-style national health insurance in the U.S. Co-author Terry Campbell is Executive Director, Research Operations and Strategies at the University of Ottawa in Canada.

https://pnhp.org…

Comment:

By Don McCanne, M.D.

This meticulous study is an update of the landmark 2003 study by these same authors on comparing the costs of health care administration between the United States and Canada in 1999. That study showed that, though administrative burden in both countries was about the same before Canada implemented its single payer Medicare program, the administrative spending sharply diverged with the United States paying much more per capita than did Canada with its streamlined single payer system. This update shows that, of the further 3.2 percentage point increase in the administrative portion of U.S. health expenditures since 1999, 2.4 percentage points were due to growth in private insurers’ overhead.

The important conclusion is that, if the United States had the same administrative efficiency as does Canada, we could recover more than $600 billion per year by reducing our administrative bureaucracy. That is enough to extend coverage to the uninsured and underinsured while removing the financial barriers of deductibles and other cost sharing for everyone.

It is important to understand that these excess administrative costs are hidden in the prices we pay. Reform proposals that attempt to chisel away at prices while leaving in place this outrageous administrative waste has not and will not effectively address our excessive health care costs. Opponents of single payer reform tend to ignore much of this recoverable waste when they do their analyses that show that single payer reform is “too expensive.” Merely adding a public option – a Medicare for Some – also largely leaves in place these administrative excesses, only adding one more item onto the heap. This is why it is imperative that we implement the single payer model of an improved Medicare for All to reform our health care financing system.

Year after year discussion of such an efficient and equitable model of reform is shelved, often with comments that we need to build incrementally on what we have and eventually we can reach a program of Medicare for All – but we never get there. The incremental measures fail to correct the financing infrastructure defects that result in the profound administrative waste demonstrated in today’s report.

Many of us have been shouting our message from the rooftops for the past 30 years and more, and still the response is that we should tinker with what we have. In today’s dollars that $600 billion per year over the last 30 years amounts to double digit trillions of dollars we have wasted than can never be recovered. Worse, the care that was forgone by the underinsured and uninsured took a massive toll in financial hardship, human suffering and even death, which can never be reversed.

We’ve got $600 billion in recoverable waste to work with. Are we just going to keep dumping it down the administrative sewer?

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U.S. health system costs four times more to run than Canada’s single-payer system

By Melissa Healy
Los Angeles Times, January 7, 2020

Across the border in Canada, where a single-payer system has been in place since 1962, the cost of administering healthcare is just $551 per person — less than a quarter as much.

That spending mismatch, tallied in a study published this week in the Annals of Internal Medicine, could challenge some assumptions about the relative efficiency of public and private healthcare programs. It could also become a hot political talking point on the American campaign trail as presidential candidates debate the pros and cons of government-funded universal health insurance.

Progressive contenders for the Democratic nomination, including Sen. Bernie Sanders of Vermont and Sen. Elizabeth Warren of Massachusetts, are calling for a “Medicare for All” system. More centrist candidates, including former Vice President Joe Biden and former South Bend, Ind., Mayor Pete Buttigieg, have questioned the wisdom of turning the government into the nation’s sole health insurer.

It’s been decades since Canada transitioned from a U.S.-style system of private healthcare insurance to a government-run single-payer system. Canadians today do not gnash their teeth about co-payments or deductibles. They do not struggle to make sense of hospital bills. And they do not fear losing their healthcare coverage.

To be sure, wait times for specialist care and some diagnostic imaging are often criticized as too long. But a 2007 study by Canada’s health authority and the U.S. Centers for Disease Control and Prevention found the overall health of Americans and Canadians to be roughly similar.

Some Canadians purchase private supplemental insurance, whose cost is regulated. Outpatient medications are not included in the government plan, but aside from that, coverage of “medically necessary services” is assured from cradle to grave.

The cost of administering this system amounts to 17% of Canada’s national expenditures on health.

In the United States, twice as much — 34% — goes to the salaries, marketing budgets and computers of healthcare administrators in hospitals, nursing homes and private practices. It goes to executive pay packages which, for five major healthcare insurers, reach close to $20 million or more a year. And it goes to the rising profits demanded by shareholders.

Administering the U.S. network of public and private healthcare programs costs $812 billion each year. And in 2018, 27.9 million Americans remained uninsured, mostly because they could not afford to enroll in the programs available to them.

“The U.S.-Canada disparity in administration is clearly large and growing,” the study authors wrote. “Discussions of health reform in the United States should consider whether $812 billion devoted annually to health administration is money well spent.”

The new figures are based on an analysis of public documents filed by U.S. insurance companies, hospitals, nursing homes, home-care and hospice agencies, and physicians’ offices. Researchers from Hunter College, Harvard Medical School and the University of Ottawa compared those to administrative costs across the Canadian healthcare sector, as detailed by the Canadian Institute for Health Information and a trade association that represents Canada’s private insurers.

Compared to 1999, when the researchers last compared U.S. and Canadian healthcare spending, the costs of administering healthcare insurance have grown in both countries. But the increase has been much steeper in the United States, where a growing number of public insurance programs have increased their reliance on commercial insurers to manage government programs such as Medicare and Medicaid.

As a result, overhead charges by private insurers surged more than any other category of expenditure, the researchers found.

In U.S. states that have retained full control over their Medicaid programs, the growth of administrative costs was negligible, they reported. (The same was true for Canada’s health insurance program.) But in states that shifted most of their Medicaid recipients into private managed care, administrative costs were twice as high.

America’s Health Insurance Plans, a group representing private health insurance companies, said administrative practices shouldn’t be blamed for escalating the cost of care in the United States.

“Study after study continues to demonstrate the value of innovative solutions brought by the free market,” AHIP said in a statement. “In head-to-head comparisons, the free market continues to be more efficient than government-run systems.”

AHIP cited a recent report by the Medicare Payment Advisory Commission (MedPAC), an independent body that advises Congress. The report showed that Medicare Advantage plans — which are privately administered — deliver benefits at 88% of the cost of traditional Medicare.

Even so, the study authors concluded that if the U.S. healthcare system could trim its administrative bloat to bring it in line with Canada’s, Americans could save $628 billion a year while getting the same healthcare.

“The United States is currently wasting at least $600 billion on healthcare paperwork — money that could be saved by going to a simple ‘Medicare for All’ system,” said senior author Dr. Stephanie Woolhandler, a health policy researcher at Hunter College and longtime advocate of single-payer systems.

That sum would be more than enough to extend coverage to the nation’s uninsured, she said.

https://www.latimes.com…