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Single-Payer Reform—“Medicare for All”

Single-Payer Reform—“Medicare for All”

By Steffie Woolhandler, M.D., M.P.H. and David U. Himmelstein, M.D.
JAMA, Viewpoint, May 31, 2019

The prospect of single-payer “Medicare-for-all” reform evokes enthusiasm and concern. Proponents maintain that a single-payer system would be the simplest route to universal coverage; every US resident would qualify for comprehensive insurance under a public, tax-financed plan that would replace private insurers, Medicaid, and Medicare. Others are concerned that costs would escalate or that the government would limit and underfund care, particularly hospital care, which commands the largest share of health spending; innovation might lag; and government may infringe on medical decisions.

Physicians are understandably cautious about prescribing a radical cure for minor ills. However, current health policies have substantial shortcomings for many individuals, minor changes appear certain to fail, and the single-payer remedy may be less disruptive than often portrayed.

Few argue with the need for reform. The United States has fallen behind other nations in measures of life expectancy and access to care. Drug prices in the United States, already twice those in Europe, continue to increase, compromising patient adherence to vital medications, such as insulin. Twenty-nine million US residents remain uninsured, and co-payments and deductibles force many individuals with insurance to choose between skipping care and incurring overwhelming debts.

Many physicians feel frustrated by mandates and restrictions of insurers and by electronic health records (EHRs) with designs driven by the logic of billing. New payment modalities, euphemistically labeled “value-based,” favor large systems at the expense of small practices and community-controlled hospitals and impose new layers of quality reporting and fiscal managers. However, these payment modalities appear to have done little to improve care or moderate costs, and physicians continue to bear responsibility for patients even as their authority in many health care settings erodes.

Single-payer reform could mitigate the stresses on patients and clinicians. A well-designed reform could potentially generate large savings on billing-related costs and lower drug prices, which would make expanded coverage more affordable.

The current, fragmented payment system entails complexity that adds no value. Physicians and hospitals must navigate contracting and credentialing with multiple plans and contend with numerous payment rates and restrictions, preauthorization requirements, quality metrics, and formularies. Narrow clinician and hospital networks and the constant flux of enrollment/disenrollment as patients change jobs or their employers switch plans disrupt long-standing patient-physician relationships. Many insurers devote resources to recruiting profitable enrollees and encouraging unprofitable enrollees to disenroll.

This complexity drains resources from patient care. According to official estimates, insurance overhead is projected to cost an estimated $301.4 billion in 2019, including an estimated $252 billion for private insurers, approximately 12% of their premiums.1 In contrast, overhead is 1.6% in Canada’s single-payer system and 2.2% in Medicare’s fee-for-service plan. Reducing US systemwide insurance overhead to 2.2% could save an estimated $238.7 billion.1

The complex payment system also increases hospital costs and prices. Single-payer nations, such as Canada and Scotland, pay hospitals global budgets, analogous to the way US cities fund fire departments. That payment strategy obviates the need to attribute costs to individual patients and insurers and minimizes incentives for upcoding, gaming quality metrics, bolstering profitable “service lines,” and other financially driven exertions; a 1272-bed multihospital system in Toronto employs only 5.5 full-time equivalent employees to handle all billing and collections.2 A 2014 report suggested that administration consumes 12.4% of hospital budgets in Canada (and 11.6% in Scotland) vs 25.3% in the United States,3 a difference of an estimated $162 billion annually.

Interacting with multiple insurers also raises physicians’ overhead and, in turn, the prices they must charge. In 2016, an efficient group practice at a North Carolina academic medical center spent $99,581 (and 243 hours of physician time) per primary care physician on billing.4

As in Canada, a US single-payer system could pay physicians based on a simple fee schedule negotiated with medical associations. All patients would have the same coverage and office staff would not need to process prior authorizations, collect co-payments, or field pharmacists’ calls driven by the confusion that arises from multiple formularies. Anecdotal reports suggest that Canadian physicians have been spared much of the burden imposed by poorly conceived privacy regulations, “meaningful use” requirements, and quality and efficiency metrics.2 A 2011 study found that US physicians spent 4 times more money interacting with payers than their Canadian counterparts,5 who report spending only 24.7% of gross revenues on practice overhead (including rent and staff) and 4% of their workweek on insurance-related matters.6 US insurers try to detect billing abuses by demanding substantial amounts of documentation. In single-payer nations, the sole insurer can use comprehensive claims data to monitor for outlandish billing patterns.

A 2019 Congressional Budget Office (CBO) report7 concluded that single-payer reform could lower administrative costs, increase incentives to improve health, and substantially reduce the number of uninsured individuals. However, if undocumented immigrants were excluded, 11 million US residents could remain uninsured.

Realizing the benefits of single-payer reform entails many challenges and potential pitfalls. As the CBO report noted, the effects on the economy and individuals would depend on key features of the design of the program, such as how it paid clinicians and what services were covered. While single-payer reform could simplify bureaucracy and free up hospital resources and physicians’ time to meet the increased demand for care, poorly designed legislation might perpetuate Medicare’s burdensome payment and monitoring strategies. Even in a well-designed system, waiting time for care might increase; however, the Affordable Care Act, which covered 20 million uninsured individuals, did not significantly increase waiting time or compromise access for previously insured individuals. Nonetheless, enhanced funding for training programs might be needed to ensure an adequate supply of clinicians, particularly in primary and behavioral health care and in regions with physician shortages. In addition, as with Medicare, politics could affect decisions regarding coverage in a single-payer system.

Most individuals would have an insurance transition, but they could keep their physicians and would be spared future transitions. Although patients would not be able to choose among insurers, they would no longer face network restrictions and, in many cases, could have improved benefits. To protect innovation, some drug price savings could be used to augment federal research funding.

Single-payer reform would be best done at the federal level. Without federal waivers, state-based reforms cannot redirect federal and employer spending through the single-payer system, compromising the administrative savings needed to make expanded care affordable—a problem that bedeviled Vermont’s reform effort.

Consolidation of purchasing power in a public agency may raise concerns that funding reductions would endanger quality or cause rationing, and that physicians would essentially become tradesperson paid by a single entity. Schulman et al calculated that hospitals’ average margins would decline to −9% if all inpatient stays were reimbursed at Medicare’s current rates.8 While hospitals’ savings on their own administrative costs (as much as $162 billion) could allow them to transition to a leaner cost structure, a sensible phase-in plan would be needed. Although neither of the congressional Medicare-for-all bills calls for the adoption of Medicare’s rates, their budgeting is predicated on the assumption that hospitals could redirect resources from billing to clinical sites, allowing them to provide more care within current budgets.

Previous experience with coverage expansions is also reassuring. In Canada, mean physician income (in 2010 inflation-adjusted Canadian dollars) increased from about $100,000 in 1962 to $248,113 in 2010 (from 2.5 times the average worker’s income to 4.3 times),9 which was comparable to US physician income at the time. Similarly, hospital revenue per patient-day increased 8.9% annually in the 3 years after the 1959 startup of Canada’s universal hospital insurance program.10 The implementation of Medicare in 1966, the closest US analogue of a single-payer startup, also was associated with increased physician and hospital revenues.

State and federal legislators have introduced dozens of single-payer bills. Sixteen US senators and 110 representatives are cosponsoring companion Medicare-for-all bills that would implement universal, first-dollar coverage without network restrictions. Both federal bills would raise taxes, but those increases are projected to be fully offset by savings on premiums and out-of-pocket expenses. Both bills would augment funding for clinical services by redirecting funds now wasted on bureaucracy and excessive drug prices and the payer would pay physicians on a fee-for-service basis or salaries from hospitals or clinics that receive global budgets. The bill in the US House of Representatives adopts Canadian-style global budgeting for hospitals. However, the current US Senate bill retains Medicare’s payment strategies (although not Medicare’s payment rates), a provision that would modestly attenuate savings on hospital administration and maintain some unnecessary regulations that frustrate physicians. This shortcoming underscores the importance of physician input in crafting single-payer legislation.

Several legislators have introduced public-option (Medicare buy-in) proposals, portraying these proposals as more practical variants of Medicare for all. However, such reform would do little to simplify billing and paying, generating minimal administrative savings for clinicians or hospitals. Savings on insurance overhead would also be modest unless Medicare Advantage (in which overhead averages 13.7%) was excluded. Moreover, private insurers might selectively enroll healthy patients, turning the public option into a de facto high-risk pool requiring large subsidies. Hence, as the CBO report noted, expanded coverage would be costlier than under single-payer reform.

Halfway measures are politically attractive but economically unworkable. The $11,559 per capita that the United States spends on health care could provide high-quality care for all or it can continue to fund a vast health-managerial apparatus—it cannot do both.

https://jamanetwork.com…

References

  1. NHE historical and projections 1960-2027. Centers for Medicare & Medicaid Services website. Updated February 26, 2019. Accessed April 14, 2019.
  2. Meyer H. Why does the U.S. spend so much more on healthcare? Modern Healthcare. Published April 7, 2018. Accessed April 28, 2019. Google Scholar.
  3. Himmelstein DU, Jun M, Busse R, et al. A comparison of hospital administrative costs in eight nations. Health Aff (Millwood). 2014;33(9):1586-1594. PubMed | Google Scholar | Crossref.
  4. Tseng P, Kaplan RS, Richman BD, Shah MA, Schulman KA. Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA. 2018;319(7):691-697. doi: 10.1001/jama.2017.19148. Article | PubMed | Google Scholar | Crossref.
  5. Morra  D, Nicholson  S, Levinson  W, Gans  DN, Hammons  T, Casalino  LP. US physician practices versus Canadians.  Health Aff (Millwood). 2011;30(8):1443-1450.PubMed | Google Scholar | Crossref.
  6. Canadian Medical Association. Hours on administrative forms. 2017. Accessed April 28, 2019.
  7. Congressional Budget Office. Key design components and considerations for establishing a single-payer health care system. Published May 2019. Accessed May 29, 2019.
  8. Schulman KA, Milstein A. The Implications of “Medicare for All” for US hospitals [published online April 4, 2019]. JAMA. doi: 10.1001/jama.2019.3134. Article | Google Scholar.
  9. Grant HM, Hurley J. Unhealthy pressure: how physician pay demands put the squeeze on provincial health-care budgets. University Calgary Sch Public Policy Res Pap. 2013;6(22):1-35. Google Scholar.
  10. Reed LS, Carr W. Utilization and cost of general hospital care. Soc Secur Bull. 1968;31:12. Google Scholar.

JAMA – Woolhandler and Himmelstein explain single payer Medicare for All

Single-Payer Reform — “Medicare for All”

By Steffie Woolhandler, M.D., M.P.H.; David U. Himmelstein, M.D.
JAMA, Viewpoint, Health Policy, Published Online May 31, 2019

The prospect of single-payer “Medicare-for-all” reform evokes enthusiasm and concern. Proponents maintain that a single-payer system would be the simplest route to universal coverage; every US resident would qualify for comprehensive insurance under a public, tax-financed plan that would replace private insurers, Medicaid, and Medicare. Others are concerned that costs would escalate or that the government would limit and underfund care, particularly hospital care, which commands the largest share of health spending; innovation might lag; and government may infringe on medical decisions.

Physicians are understandably cautious about prescribing a radical cure for minor ills. However, current health policies have substantial shortcomings for many individuals, minor changes appear certain to fail, and the single-payer remedy may be less disruptive than often portrayed.

Few argue with the need for reform. The United States has fallen behind other nations in measures of life expectancy and access to care. Drug prices in the United States, already twice those in Europe, continue to increase, compromising patient adherence to vital medications, such as insulin. Twenty-nine million US residents remain uninsured, and co-payments and deductibles force many individuals with insurance to choose between skipping care and incurring overwhelming debts.

Many physicians feel frustrated by mandates and restrictions of insurers and by electronic health records (EHRs) with designs driven by the logic of billing. New payment modalities, euphemistically labeled “value-based,” favor large systems at the expense of small practices and community-controlled hospitals and impose new layers of quality reporting and fiscal managers. However, these payment modalities appear to have done little to improve care or moderate costs, and physicians continue to bear responsibility for patients even as their authority in many health care settings erodes.

Single-payer reform could mitigate the stresses on patients and clinicians. A well-designed reform could potentially generate large savings on billing-related costs and lower drug prices, which would make expanded coverage more affordable.

The current, fragmented payment system entails complexity that adds no value. Physicians and hospitals must navigate contracting and credentialing with multiple plans and contend with numerous payment rates and restrictions, preauthorization requirements, quality metrics, and formularies. Narrow clinician and hospital networks and the constant flux of enrollment/disenrollment as patients change jobs or their employers switch plans disrupt long-standing patient-physician relationships. Many insurers devote resources to recruiting profitable enrollees and encouraging unprofitable enrollees to disenroll.

This complexity drains resources from patient care. According to official estimates, insurance overhead is projected to cost an estimated $301.4 billion in 2019, including an estimated $252 billion for private insurers, approximately 12% of their premiums. In contrast, overhead is 1.6% in Canada’s single-payer system and 2.2% in Medicare’s fee-for-service plan. Reducing US systemwide insurance overhead to 2.2% could save an estimated $238.7 billion.

The complex payment system also increases hospital costs and prices. Single-payer nations, such as Canada and Scotland, pay hospitals global budgets, analogous to the way US cities fund fire departments. That payment strategy obviates the need to attribute costs to individual patients and insurers and minimizes incentives for upcoding, gaming quality metrics, bolstering profitable “service lines,” and other financially driven exertions; a 1272-bed multihospital system in Toronto employs only 5.5 full-time equivalent employees to handle all billing and collections. A 2014 report suggested that administration consumes 12.4% of hospital budgets in Canada (and 11.6% in Scotland) vs 25.3% in the United States, a difference of an estimated $162 billion annually.

Interacting with multiple insurers also raises physicians’ overhead and, in turn, the prices they must charge. In 2016, an efficient group practice at a North Carolina academic medical center spent $99 581 (and 243 hours of physician time) per primary care physician on billing.

As in Canada, a US single-payer system could pay physicians based on a simple fee schedule negotiated with medical associations. All patients would have the same coverage and office staff would not need to process prior authorizations, collect co-payments, or field pharmacists’ calls driven by the confusion that arises from multiple formularies. Anecdotal reports suggest that Canadian physicians have been spared much of the burden imposed by poorly conceived privacy regulations, “meaningful use” requirements, and quality and efficiency metrics. A 2011 study found that US physicians spent 4 times more money interacting with payers than their Canadian counterparts, who report spending only 24.7% of gross revenues on practice overhead (including rent and staff) and 4% of their workweek on insurance-related matters. US insurers try to detect billing abuses by demanding substantial amounts of documentation. In single-payer nations, the sole insurer can use comprehensive claims data to monitor for outlandish billing patterns.

A 2019 Congressional Budget Office (CBO) report concluded that single-payer reform could lower administrative costs, increase incentives to improve health, and substantially reduce the number of uninsured individuals. However, if undocumented immigrants were excluded, 11 million US residents could remain uninsured.

Realizing the benefits of single-payer reform entails many challenges and potential pitfalls. As the CBO report noted, the effects on the economy and individuals would depend on key features of the design of the program, such as how it paid clinicians and what services were covered. While single-payer reform could simplify bureaucracy and free up hospital resources and physicians’ time to meet the increased demand for care, poorly designed legislation might perpetuate Medicare’s burdensome payment and monitoring strategies. Even in a well-designed system, waiting time for care might increase; however, the Affordable Care Act, which covered 20 million uninsured individuals, did not significantly increase waiting time or compromise access for previously insured individuals. Nonetheless, enhanced funding for training programs might be needed to ensure an adequate supply of clinicians, particularly in primary and behavioral health care and in regions with physician shortages. In addition, as with Medicare, politics could affect decisions regarding coverage in a single-payer system.

Most individuals would have an insurance transition, but they could keep their physicians and would be spared future transitions. Although patients would not be able to choose among insurers, they would no longer face network restrictions and, in many cases, could have improved benefits. To protect innovation, some drug price savings could be used to augment federal research funding.

Single-payer reform would be best done at the federal level. Without federal waivers, state-based reforms cannot redirect federal and employer spending through the single-payer system, compromising the administrative savings needed to make expanded care affordable—a problem that bedeviled Vermont’s reform effort.

Consolidation of purchasing power in a public agency may raise concerns that funding reductions would endanger quality or cause rationing, and that physicians would essentially become tradesperson paid by a single entity. Schulman et al calculated that hospitals’ average margins would decline to −9% if all inpatient stays were reimbursed at Medicare’s current rates. While hospitals’ savings on their own administrative costs (as much as $162 billion) could allow them to transition to a leaner cost structure, a sensible phase-in plan would be needed. Although neither of the congressional Medicare-for-all bills calls for the adoption of Medicare’s rates, their budgeting is predicated on the assumption that hospitals could redirect resources from billing to clinical sites, allowing them to provide more care within current budgets.

Previous experience with coverage expansions is also reassuring. In Canada, mean physician income (in 2010 inflation-adjusted Canadian dollars) increased from about $100 000 in 1962 to $248 113 in 2010 (from 2.5 times the average worker’s income to 4.3 times), which was comparable to US physician income at the time. Similarly, hospital revenue per patient-day increased 8.9% annually in the 3 years after the 1959 startup of Canada’s universal hospital insurance program. The implementation of Medicare in 1966, the closest US analogue of a single-payer startup, also was associated with increased physician and hospital revenues.

State and federal legislators have introduced dozens of single-payer bills. Sixteen US senators and 110 representatives are cosponsoring companion Medicare-for-all bills that would implement universal, first-dollar coverage without network restrictions. Both federal bills would raise taxes, but those increases are projected to be fully offset by savings on premiums and out-of-pocket expenses. Both bills would augment funding for clinical services by redirecting funds now wasted on bureaucracy and excessive drug prices and the payer would pay physicians on a fee-for-service basis or salaries from hospitals or clinics that receive global budgets. The bill in the US House of Representatives adopts Canadian-style global budgeting for hospitals. However, the current US Senate bill retains Medicare’s payment strategies (although not Medicare’s payment rates), a provision that would modestly attenuate savings on hospital administration and maintain some unnecessary regulations that frustrate physicians. This shortcoming underscores the importance of physician input in crafting single-payer legislation.

Several legislators have introduced public-option (Medicare buy-in) proposals, portraying these proposals as more practical variants of Medicare for all. However, such reform would do little to simplify billing and paying, generating minimal administrative savings for clinicians or hospitals. Savings on insurance overhead would also be modest unless Medicare Advantage (in which overhead averages 13.7%) was excluded. Moreover, private insurers might selectively enroll healthy patients, turning the public option into a de facto high-risk pool requiring large subsidies. Hence, as the CBO report noted, expanded coverage would be costlier than under single-payer reform.

Halfway measures are politically attractive but economically unworkable. The $11 559 per capita that the United States spends on health care could provide high-quality care for all or it can continue to fund a vast health-managerial apparatus—it cannot do both.

https://jamanetwork.com…

Comment:

By Don McCanne, M.D.

This article, published by JAMA – the Journal of the American Medical Association – and written by Steffie Woolhandler and David Himmelstein – cofounders of Physicians for a National Health Program – is a highly credible, objective explanation of the single payer model of Medicare for All.

The article has been published online in advance of its publication in the June 25 edition of JAMA, and the paywall has been removed by the publisher. It is a very important article. The link above should be distributed widely to help enable others to understand just what this single payer Medicare for All proposal is all about.

There is nothing like facts to provide enlightenment.

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

The Surprising Origins of ‘Medicare for All’

By Abigail Abrams
Time, May 30, 2019

When Medicare was created in 1965, few Americans were talking about universal health care. Even fewer realized that the bureaucrats behind the program hoped that it would eventually become that.

With America at the height of Cold War anti-communist sentiment, the Social Security Administration staffers who set up Medicare did not articulate their goal, instead hoping that lawmakers would incrementally expand Medicare to include everyone — not just the elderly.

“The original idea behind Medicare was Medicare for all,” says Jonathan Oberlander, professor and chair of social medicine at University of North Carolina Chapel Hill

Now, more than a half-century later, “Medicare for All” has become a slogan for a number of different proposals by Democratic presidential candidates, members of Congress and liberal think tanks to expand government-sponsored health insurance to more Americans.

In some ways, the phrase “Medicare for All” is better known among voters than more precise terms such as universal health care, single-payer health care, socialized medicine or government-run health care, but that same flexibility also means that it is not always clear what a candidate means when using it.

Here’s a closer look at how “Medicare for All” became a catchphrase in U.S. politics and what it means.

Advocating for universal health care

The idea of the government ensuring that people have access to health care began long before Medicare. While local governments experimented with health care for centuries, the first national health insurance program came from Germany’s Otto von Bismarck in the 1880s. Other European countries followed with their own versions of government health care for workers, and by the early 1900s, reformers in the U.S. were advocating for a similar system.

The push was closely tied to the labor movement, according to Northern Illinois University history professor Beatrix Hoffman, who studies the politics of health reform. But businesses and doctors attacked the idea of government health care, and it soon died. This opposition also killed President Franklin Roosevelt’s desire to add health coverage to the Social Security Act in 1935. And when President Harry Truman took up the cause after World War II, the American Medical Association and other opponents used Cold War scare tactics to paint “health security,” as it was known then, as socialized medicine and kill the plan again.

“The defeat of the Truman plan was so massive, it was such a big failure, that supporters decided they were going to stop trying for universal coverage,” Hoffman says. “That’s when they invented the idea of Medicare for the elderly only.”

From Medicare’s start, it was a popular program. But it also quickly became expensive, and the 1970s turned to discussions about how to control health care costs — not exactly a helpful political environment for those looking to expand coverage.

The first major change to Medicare came in 1972 when Richard Nixon added individuals with disabilities and those with end-stage renal disease. But this took the program in a fundamentally new direction: serving as a fallback for people who couldn’t get insurance through their employers, rather than building toward universal coverage as Medicare’s designers had hoped.

Amid these discussions about how to rein in health care costs, Sen. Ted Kennedy introduced his first national health insurance plan in 1971, proposing financing it through payroll taxes. But this failed, along with the rest of the plans discussed at this time.

Still, someone else did see hope in Medicare. One of these failed plans came from Republican Sen. Jacob Javits, who proposed expanding Medicare to cover the entire country’s population. Javits still used the language of “national health insurance,” but he became one of the first people publicly associated with the phrase “Medicare-for-all” when the New York Times used it to describe his plan, declaring on April 15, 1970: “Medicare For All Is Asked By Javits.”

Finding the right political message

This phrasing did not take off right away. The Vietnam War and Watergate pushed health care reform from most lawmakers’ minds, and then the 1980s ushered in the conservative Reagan era.

As Congress turned away from the issue, activists took up the charge. The 1980s saw the birth of groups such as Physicians for a National Health Program, which brought doctors together to advocate for universal health care, and the growth of the Gray Panthers, which had been founded to fight ageism and other social issues and made health care a major part of its agenda.

The advocacy groups of the ’80s started by using “national health insurance” to describe their goal, but soon moved toward the phrase “single-payer” health care. The latter meant that their ideal national health program would have just one payer — the government — as opposed to the many payers of the private insurance industry.

“As doctors we like to be very clear about what we’re advocating for. So ‘single payer’ was an accurate description,” Dr. David Himmelstein, co-founder of Physicians for a National Health Program, told TIME.

Though some doctors’ groups were part of the early opposition to single-payer health care, Himmelstein says he and his colleagues found that when they talked to individual physicians, many supported the idea of universal health care. In these years, other groups such as the American College of Surgeons also joined the fight.

As Himmelstein and his co-founder Dr. Steffie Woolhandler built their group, they were inspired by Canada’s national health program, also called Medicare. But in the 1980s, Physicians for a National Health Program did not initially use the Medicare framing because they still saw plenty of flaws in the American version of the system. While Medicare was helpful to many patients who used it, critics said that it didn’t cover all medical expenses, its payment policies were overly complex and it still relied too much on private industry.

In contrast, the language of “single-payer” health care symbolized a kind of political purity, according to Yale political scientist and health care policy expert Jacob Hacker. “There was some thought that the word ‘payer’ made clear that you were still purchasing the good kind of health care that people knew and loved,” Hacker says. “Before people saw Medicare as the platform, they wanted to say ‘payer’ because they didn’t want to say it’s about socialized medicine.”

However accurate single-payer might have been, it did not really catch on outside health policy and activist circles. “It’s like trying to sell a house by describing its plumbing,” Hacker says.

By the 1990s, Democrats geared up to tackle health reform again under President Bill Clinton. But the Clinton Administration intentionally distanced itself from the single-payer model, instead taking a more moderate approach and sought to expand coverage to everyone while preserving private and employer insurance.

“That represented a shift in Democratic thinking to the right, that the only feasible way to pass health care reform was one that built on the status quo and built on private insurance,” says UNC’s Oberlander.

Again, alternative plans popped up, and this time Rep. Pete Stark proposed enrolling uninsured people in what he called “Medicare Part C.” But like the Javits plan in the 1970s, this did not gain traction. Instead Democrats pushed the Clintons’ plan, which proved too complicated for voters and ultimately imploded, setting back the cause of major health care reform.

Returning to Medicare

The new millennium brought a Republican administration and a resistance to pursuing big health care changes. When President George W. Bush created Medicare Part D, the legislation did not allow the federal government to negotiate drug prices, leaving progressives feeling frustrated and powerless against the growing power of the pharmaceutical industry.

Despite this, the rest of Medicare had substantially improved since its early days. Reforms to the program had brought down spending, and it now had low administrative costs plus a demonstrated ability to control prices, often giving it an advantage over private coverage. That made it popular not only with recipients but also among lawmakers.

In this climate, “Medicare-for-all” finally arrived in Congress. In 2003, Rep. John Conyers introduced the Expanded and Improved Medicare For All Act, a bill that would create a universal single-payer health care system. His fellow lawmakers largely ignored it at the time, but Conyers introduced the bill in each session of Congress until he resigned in December 2017 in the wake of sexual harassment allegations. In 2006, Kennedy also tried again, introducing the Medicare for All Act, which proposed gradually expanding coverage to include all citizens and legal residents.

Though these bills were not successful, they signaled a coming change in strategy from the technical language of single-payer to the aspirational message of expanding on Medicare to create an even better system.

“There were concerns that it was hard to communicate what single-payer really means,” says Randy Block, chair of the National Council of Gray Panther Networks, who has been involved in health care advocacy since the 1970s. “A big portion of Americans do know about Medicare, and it’s a vehicle for building on existing systems and for helping the public understand that it’s possible to do a good job.”

If the first steps in moving toward the use of Medicare-for-all were about people recognizing the program’s efficiency and familiarity, the final one has come from a growing sense of frustration with the country’s current health care system. In the years leading up to the Affordable Care Act, the public ramped up its anger at the insurance industry. People were tired of high premiums, losing insurance over pre-existing conditions or going bankrupt to afford life-saving care.

Barack Obama entered the White House promising to do something about that. He initially supported the idea of a “public option,” which would let consumers who didn’t have coverage through work or other existing programs buy in to a Medicare-like government plan. But the public option idea died during the ACA debates, and the final law, while the largest health care reform since 1965, was criticized by those on the left for not going far enough and continuously attacked by those on the right.

“The lack of any bipartisan buy in for the ACA — which was designed in ways that the advocates hoped would encourage that kind of bipartisan buy-in — has meant that the advocates have said, if you can’t get significant Republican support or any Republican support, why don’t we do something we really want to, like expand Medicaid and Medicare?” explains Hacker, the health policy expert whose public option plan helped inspire the ACA.

Medicare-for-all advocates like Vermont Sen. Bernie Sanders have certainly felt this way. The Senator has now put forth five versions of his Medicare for All Act, with the latest bill recently introduced in in April.

And his idea is increasingly popular. While his 2013 bill had zero co-sponsors, the current version has 14, including four of his fellow 2020 Democratic hopefuls. A recent poll from the nonpartisan Kaiser Family Foundation found that support for a national single-payer health plan has increased 16% since 2000. And when it comes to the actual “Medicare-for-all” terminology, 63% of voters had a positive reaction to the phrase.

One thing experts note, however, is that voters are not always clear on what “Medicare-for-all” really means. The same Kaiser poll also found that when voters were told the details of health plans, 56% supported a true Medicare-for-all plan and 74% said they favored a proposal that would give them the option to buy a Medicare-like plan or keep their current coverage if they like it. This would actually be closer to Hacker’s new work, which led to the “Medicare for America” proposal that was introduced by Connecticut Rep. Rosa DeLauro and Illinois Rep. Jan Schakowsky in the House.

“I think the enthusiasm for Medicare-for-all has outpaced the changes in the political reality that would make Medicare-for-all possible. It’s still a really big lift,” Hacker says.

While several Democratic presidential candidates have supported Sanders’ plan, it seems that many are still navigating the nuances of what that means politically. New Jersey Sen. Cory Booker and California Sen. Kamala Harris, for example, have said they support “Medicare-for-all” but don’t want to get rid of private insurance, while Pete Buttigieg said he believes the best way is to provide “Medicare for all who want it” and Joe Biden similarly told voters they should have the option of a Medicare-like plan. Even Massachusetts Sen. Elizabeth Warren has said she is looking at “different pathways” to reach universal coverage.

“Because the enthusiasm of Medicare-for-all is growing among Democratic voters, other Democrats like many of those running for president are trying to tap into that enthusiasm,” says Oberlander. “They’re trying to use the rhetoric and rhetorical advantages of Medicare expansions while avoiding the political liabilities of Medicare-for-all.”

As politicians have seen over the past century, the political liabilities can be dangerous. But warnings of socialism are unlikely to have the same effect in the era of Sanders and Rep. Alexandria Ocasio-Cortez that they did during the 1950s.

“Young people are not afraid of the word socialism,” Hoffman says. “I’ve noticed that is not the major line of attack anymore. The main thing that we hear now is how are you going to pay for it?”

These attacks may yet be successful. Just because a policy is popular among Democratic primary voters is no guarantee it can survive the general election, particularly against President Donald Trump. But even if no plan succeeds this cycle, experts and activists say the current wave of support for Medicare-for-all feels vastly different from previous reform efforts that died under Truman or Clinton.

“It’s not like people can come in and say let’s just do incremental reform. We did try that,” Hoffman says. “It’s not just that it didn’t completely work, but it was so vulnerable to attack. The only way to prevent that is to have full scale comprehensive reform.”

http://time.com…

The public’s views on health care costs

The Upcoming U.S. Health Care Cost Debate — The Public’s Views

By Robert J. Blendon, Sc.D., John M. Benson, M.A., and Caitlin L. McMurtry, S.M.
The New England Journal of Medicine, May 29, 2019

U.S. health care costs — and not merely prescription-drug prices — have risen to the top of the national agenda. More than two thirds (69%) of the U.S. public has said that reducing these costs should be a top priority for President Donald Trump and Congress in 2019, ranking it behind only strengthening the economy (70%) on a list of 18 possible priorities (Pew, 2019) (see table). Given a list of 13 possible health-specific priorities, about 9 in 10 Americans said both prescription-drug prices (92%) and lowering the overall cost of health care (88%) were extremely important (Politico–HSPH, December 2018). In addition, when asked how much of a problem each of 18 domestic issues was, respondents ranked affordability of health care first, with 70% saying it was “a very big problem” (Pew, September–October 2018). We reviewed 14 national public opinion polls from 2018 and 2019 to elucidate the public’s perspective on health care costs and possible solutions.

Although the United States spends 18% of its gross domestic product on health — more than any other industrialized country — that is not the focus of the public’s concerns. In fact, 69% of the public believes that the United States is spending too little on health (only 10% believes we’re spending too much) (NORC–GSS, 2018); 56%, too little on Medicare (10%, too much); and 42%, too little on Medicaid (17%, too much) (West Health–NORC, February 2018).

Instead, the driving force for concern is the belief that health care services are unreasonably priced and that what people pay for care harms their household’s financial situation. More than half (53%) of Americans say the cost of health care affects their own household’s financial situation “a lot” (Pew, March 2018). Forty percent say they’re dissatisfied with the total amount they pay for care (Gallup, 2018).

So why, according to the public, are health care costs so high? When given lists of 12 or more possible reasons identified by policy experts and the media, respondents focus on charges by pharmaceutical companies (78% in one survey, 79% in another), insurance companies (70%, 75%), and hospitals (71%, 74%) as the main causes (KFF, 2018; Politico–HSPH, 2019).

Unlike many experts, the public does not see overuse of services as a significant contributor to the cost problem that concerns them. Some 60% of Americans attribute high costs to unreasonably high prices for services and drugs; 23% believe that Americans are getting more health care and prescription drugs than they need; and 11% consider these two factors equally responsible (Politico–HSPH, 2019).

About three fourths (76%) of the public believes that Americans are paying too much for most care they receive, relative to its quality. A majority also believes that health insurance premiums are increasing primarily either to boost profits for insurance companies (47%) or to accommodate high prices for care (16%), not because care is better (21%) or coverage is broader (13%) (West Health–Gallup, 2019).

Numerous broad-based proposals for reducing U.S. health care costs have been put forth by experts and covered by the media. More than half the public supported five of the seven such proposals they were asked to consider: making greater efforts to prevent disease and ensure that people live healthier lives (84%), having the government facilitate competition among health care professionals and hospitals based on price and quality (67%), having the government establish limits on what health care professionals and hospitals can charge (65%), allowing people 50 to 64 years of age to buy into Medicare (61%), and changing our health care system so that most people have Medicare and there is little or no private health insurance (52%) (Politico–HSPH, 2019). Although experts see competition and government regulation as fundamentally different ways of controlling health care costs, Americans are nearly equally supportive of both.

The two proposals the public does not favor would restrict patient access to treatments and prescription drugs: allowing payers not to cover some services deemed by experts not to be beneficial enough to justify their high cost, and giving individuals tax incentives to buy high-deductible plans. Each proposal was favored by only 37% of the public (Politico–HSPH, 2019). The public’s opposition to allowing experts to make decisions based on cost-effectiveness was similar in 2019 (56%) to what it was in 2012, when 43% were in favor and 54% opposed.

When asked whether they thought the five proposals favored by the majority would greatly reduce health care costs, however, a preponderance of respondents said they didn’t think any of the five, including Medicare for All, would do so (Politico–HSPH, 2019).

A similar pattern can be seen in attitudes toward high prescription-drug costs. Shortly after May 11, 2018, when Trump released the outline of a plan to lower prescription-drug prices, the public was asked whether they favored or opposed four components of the plan. Although a majority supported three of the four proposals, they saw only one as likely to be effective: having the Food and Drug Administration approve more generic, over-the-counter, and biosimilar drugs to encourage greater competition. Sixty-six percent favored this proposal, and 56% believed it would lower drug prices (Politico–HSPH, June-July 2018).

A large majority (82 to 89%) favors allowing the federal government to negotiate with drug companies for lower medication prices for people on Medicare (West Health–NORC, August 2018; KFF, February 2019; HSPH–SSRS, 2019). A smaller majority (58%) believes that such negotiations would reduce prices (HSPH–SSRS, 2019).

When asked whether government or private health insurance companies would be better at controlling health care costs, nearly half (47%) of respondents said government, while 38% said private companies. Notably, 61% of Republicans were in the latter camp, and 65% of Democrats were in the former (Politico–HSPH, 2019). And when respondents who thought that government-set limits on what health care professionals and hospitals can charge would reduce U.S. health care costs were asked which level of government would do a better job of establishing these limits, there was a similar lack of consensus: 51% said the federal government, and 45% said state governments. Once again, a partisan split was evident: 69% of Democrats chose the federal government, whereas 63% of Republicans chose state governments (Politico–HSPH, 2019).

What can we conclude from these findings as we approach the 2020 election? First, health care costs are likely to be an important election issue. But unlike many experts and political leaders, most Americans are not particularly concerned about aggregate health spending, either overall or on the part of government. In fact, when asked about the possibility of the Medicare Part A trust fund running out of money in the next 10 years, only 25% of the public was very concerned that it would (Politico–HSPH, 2019).

The public sees the issue of health care costs primarily as a price problem, rather than one of overutilization. Thus, proposals focused principally on reducing overuse of care are likely to be less popular than those that address high prices directly. People are likely to support candidates who talk about increasing overall health spending, not reducing it. In addition, it’s important to recognize that the public has not reached a judgment about whether increased competition or government regulation is more effective in controlling health care costs.

This debate tracks with the partisan divide: Republicans generally believe that private health insurance and state governments would be more effective at reducing costs, whereas Democrats tend to support efforts by government, especially the federal government, to address the problem. Finally, given the public’s skepticism that any approach will greatly reduce health care prices, if they are to actively support particular cost-saving proposals, they will have to be shown that those approaches would actually reduce what they pay for care. And if the public’s view is going to converge with that of many experts, they will have to be convinced that overuse of services plays a greater role in high health care costs than they currently believe.

https://www.nejm.org…

Comment:

By Don McCanne, M.D.

This review of recent national public opinion polls on health care costs shows that the public is very concerned about high costs, and that they believe those high costs are due to high prices rather than overutilization of health care services.

They are less consistent in their views of what can be done about it, and that confusion is compounded by political polarization.

What they do want are approaches that would actually reduce what they pay for health care. If you could remove ideology and political bias from their thinking, and if they would look more carefully at the policy options, then support for the single payer Medicare for All model would certainly prevail.

If we could only figure out why so many cling tenaciously to the simplistic antigovernment rhetoric that expresses concepts that are not in the interests of the great majority of us – if we could understand that, then maybe we could improve our message beyond that of affordable health care for all (not that there is anything wrong with our message).

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State barriers to Medigap cause patients to re-enroll in Medicare Advantage

Limited Medigap Consumer Protections Are Associated With Higher Reenrollment In Medicare Advantage Plans

By David J. Meyers, Amal N. Trivedi, and Vincent Mor
Health Affairs, May 2019

In all but eight states, Medicare supplemental coverage (or Medigap) plans may deny coverage or charge higher premiums on the basis of preexisting health conditions. This may particularly affect chronically ill or high-need Medicare Advantage enrollees who switch to traditional Medicare and subsequently discover that they are unable to purchase affordable Medigap coverage. We found that in states with no Medigap consumer protections, high-need Medicare Advantage enrollees had a 16.9-percentage-point higher reenrollment rate in Medicare Advantage in the year after switching to traditional Medicare, compared to high-need enrollees in states with strong Medigap consumer protections—namely, guaranteed issue and community rating (charging all enrollees the same premium regardless of health condition). Expanding protections in the Medigap market may increase consumers’ access to this type of supplemental coverage.

From the Discussion

MA enrollees might not realize that in most states, if they switch to traditional Medicare, they might not be able to get Medigap coverage. Enrollees with higher health care needs are both more likely to leave MA and more likely to be denied access to Medigap coverage. These enrollees may then face out-of-pocket payments in traditional Medicare without any limits, causing financial burden and prompting reenrollment in MA.

Medicare beneficiaries with complex care needs often face a higher burden of costs and may benefit from a greater continuity of care. In most states these enrollees may face significant barriers to enrollment in Medigap that may increase their exposure to high out-of-pocket spending and lead to disruptions in the continuity of care if they need to switch between MA and traditional Medicare.

Additionally, in most states, even if an enrollee with a preexisting condition such as cancer does enroll in Medigap, they might not be able to receive any benefits to cover this condition during the first six months of enrollment. It is important to note that even if an enrollee has access to a Medigap plan, premiums are substantially higher in Medigap than in MA, which may place further limits on Medicare choices for lower-income enrollees.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

This is one more example of where Congress is neglecting the traditional Medicare program, in this case by allowing states to limit the effectiveness of Medigap plans which are required to ensure adequate catastrophic coverage in traditional Medicare. Those with complex problems who are enrolled in the private Medicare Advantage plans often become dissatisfied with their care, turning to traditional Medicare with Medigap backup. As this study reports, in most states affordable Medigap coverage is not guaranteed (if not selected when first becoming eligible for Medicare).

When we speak of an improved Medicare for All, that improvement includes benefits provided by the more generous Medigap plans (plus other uncovered benefits such as vision, hearing and long-term care).

Rather than fight two political battles – on to improve the benefits of the traditional Medicare program and a second to expand the improved Medicare to covering everyone – it would be better to enact and implement a single payer Medicare for All program in one step. The current path of incrementalism is leaving too many broke, sick, and sometimes dead. We have to end that.

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The insurers are rapidly becoming the health care delivery system

Blue Cross joins the doctors practice party

By Stephanie Goldberg
Modern Healthcare, May 21, 2019

If you can’t beat ’em, buy ’em: It’s a mantra health insurance giants like UnitedHealth Group and Humana have embraced for years as they’ve snapped up doctors practices to curb the cost of medical care. Now the parent of Blue Cross & Blue Shield of Illinois is getting into the game.

Health Care Service Corp., which owns Blue Cross plans in five states, is following its rivals’ lead, opening 10 primary care clinics in Texas next year and, in Pullman, launching a neighborhood center that offers everything from workshops on managing heart disease to yoga and meditation classes. As with its rivals’ earlier forays into physician practice acquisition, HCSC’s latest moves are made with several goals in mind, some that immediately redound to the bottom line—more tightly controlling where members seek care, for one—and others, like addressing social conditions from housing to food insecurity, that may improve results over the long haul.

A decade ago, the notion of insurers owning physicians groups was fairly unusual. There was a hope that payers and providers would be able to stay in different lanes and still bring costs down, says Carl McDonald, divisional senior vice president of treasury and business development at HCSC. “It just hasn’t quite worked out like that.”

In value-based payment models, which are slowly being adopted in many U.S. markets, insurers pay doctors a set amount per patient rather than reimbursing for each medical service. The arrangement aims to reward doctors who offer high-quality care at lower costs, but not all providers are open to the possibility of a financial loss.

Owning and operating medical practices, it turns out, is proving to be a more efficient way for insurers to trim hefty price tags for everything from lab tests to specialist visits. Getting closer to patients enables insurers to direct care, getting the cost outcomes they crave while controlling quality.

The 10 Dallas and Houston clinics are part of a joint venture between HCSC’s venture-capital arm and medical center operator Sanitas USA. The clinics are expected to control costs by referring patients to reasonably priced, quality specialists, and by educating patients about services that are covered, such as telemedicine or diabetes management.

“Everybody is basically playing catch-up to Optum,” the consulting and services unit of UnitedHealth, Akers says. Optum’s fast-growing medical care arm has been aggressively buying doctors groups. It’s acquiring DaVita Medical Group, which has 300 clinics in six states, for $4.3 billion.

America’s Health Insurance Plans, a lobbying group, says about 25 percent of its members are so-called integrated delivery systems, or organizations that include both payers and providers.

The new clinics from HCSC-owned Blue Cross & Blue Shield of Texas will be open to all Blue Cross members, as well as self-pay and Medicare patients. Sanitas is no stranger to the Blues. It already operates clinics with Florida Blue and Horizon Blue Cross & Blue Shield of New Jersey.

HCSC isn’t the only group looking to replicate such gains in Texas. In addition to traditional physicians groups, HCSC will be competing with Humana’s Partners in Primary Care unit, which plans to open five Houston clinics for patients with Medicare and Medicare Advantage, in which private companies contract with the government to offer Medicare beneficiaries additional benefits, such as dental care and wellness programs. Walgreens and VillageMD are also opening primary care clinics next to five Houston-area drugstores.

Blue Cross dominates the Illinois market, but that’s not the case in Texas. The Sanitas deal could help the insurer attract more members in the area, enabling it to more quickly grow its Medicare Advantage business.

Blue Cross of Illinois’ experiment in Pullman differs from a traditional clinic. The Blue Door Neighborhood Center, which opened late last month, works to address social determinants of health, including homelessness and food insecurity, by connecting residents—regardless of insurance carrier—with community resources. It also offers seminars on nutrition, behavioral health, diabetes and other conditions, as well as exercise classes.

Blue Door is a sign of the times, says Lyndean Brick, CEO of Advis Group, a healthcare consultancy in Chicago. “There is clear recognition, finally, that when we address (social determinants), overall healthcare improves,” she says. “All these other issues are really what cost the system incredible amounts of money. So while insurance companies are being good citizens when they do this, they’re also looking at the need to continue to drive financial profits.”

https://www.modernhealthcare.com…

Comment:

By Don McCanne, M.D.

We dream of a single payer Medicare for All system in which the highly inefficient, fragmented system of a multitude of private and public health insurers is replaced by a single efficient public payer, which would free up close to half a trillion dollars currently going to administrative waste – funds that could be directed to the health care delivery system that will fill the voids we have in health care today. But what happens to our dream when, right under our noses, the current payers become the health care delivery system?

One-fourth of the members of America’s Health Insurance Plans – the health insurance lobby organization – are already integrated delivery systems, and that transformation is accelerating. The insurers are rapidly becoming the health care delivery system. And to further solidify this transformation, they are now adding services to address the social determinants of health such as food and housing, as the insurers are “looking at the need to continue to drive financial profits.”

Go ahead and enact a single payer Medicare for All, but then how are you going to shut down the private insurers when they are the health care delivery system? If you try to break them up, what do you think our current Supreme Court would have to say about that?

We think that we’re in a battle with the private insurers, but now with the grasp they have of the medical industrial complex, it seems they may have already won. We can’t give up, but there is great urgency in doing all we can to save the system by reestablishing the primacy of the patient. Right now that profit thing is working pretty well for the insurers, and the patients are just pawns and the providers are the insurers’ tools.

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The Case For Medicare For All

Interview with Dr. Adam Gaffney

WBUR, May 28, 2019

Last week, we spoke with Boston University professor Jon Kingsdale, who helped bring universal health insurance coverage to Massachusetts. He explained why he believes moving to a single-payer health care system is too risky.

Today, we follow that conversation with a physician who supports moving to a single-payer system. Adam Gaffney, president of Physicians for a National Health Program, explains why he supports the current Medicare for All bills that have been filed in the House and Senate, and why he feels the benefits of moving to a single-payer system outweigh the risks.

https://www.wbur.org…

A priceless answer to the question of physician pay reduction under Medicare for All

Want to Expand Medicare? Then Answer the $5 Trillion Questions.

If you think the fight with insurance companies is tough, just wait until single-payer advocates have to go head-to-head with doctors.

By Mike Konczal
The Nation, May 13, 2019

The debate over expanding Medicare is at the center of the fight for the Democratic presidential nomination. Yet for such a crucial topic, there are still two questions that advocates—especially those championing Medicare for All—have yet to properly answer.

The first is how to take on the medical establishment and pay doctors less. Medicare for All would eliminate greedy and needless insurance companies, which will fight to the bitter end to keep making their fat profits. But even that battle pales in comparison with taking on the doctors, hospitals, and providers who charge private insurance higher prices for medical services. To understand this, consider where Medicare for All would get its savings. Proponents argue that Medicare for All would increase government spending but reduce overall spending on health care. That’s true; over the course of 10 years, Medicare for All could save $2 trillion. But only about 20 percent of those savings would come from eliminating insurance companies, while another 10 percent would come from cost controls on prescription drugs. The remaining 70 percent would come from cutting rates for medical providers. Without those cuts, health-care spending could increase more than $3 trillion under Medicare for All. That’s a $5 trillion swing, all determined by the question of how to tackle the medical establishment.

During a campaign, there’s good reason to focus on the insurance industry first; it’s the thing that most people absolutely hate about our broken health-care system. But if the campaign fails to make the case that the prices charged by medical providers are too high, then the politics could shift against Medicare for All once the doctors start complaining. The medical establishment will insist that hospitals will close, especially in poorer areas, and without a set of responses in place, that argument could imperil the push for health-care reform.

The political instinct will be to buy off the medical establishment, even as that increases the cost of the proposal. When Aneurin Bevan, the architect of Britain’s National Health Service, was asked how he overcame the initial resistance of doctors, he replied that he “stuffed their mouths with gold.” Today, that would involve maintaining the current high rates seen in private-insurance payments. And even then, when President Harry Truman tried to emphasize how much better off American doctors would be under his universal plan in 1945, they waged what was then the most expensive lobbying campaign in history to defeat it.

(The second question – who will bear the taxes – will not be addressed in this Quote of the Day, though the correct answer is that the taxes would be progressive and thus equitable for all. – DMc)

Mike Konczal is a contributor to The Nation and a fellow at the Roosevelt Institute.

https://www.thenation.com…

A Priceless Answer

The Nation, Letters, May 17, 2019

To justify sounding a false alarm that doctors’ opposition will torpedo single-payer health-care reform, Mike Konczal turns to a Koch-brothers-funded analysis that claims Medicare for All would either slash doctors’ income and hospital funding or break the bank [“The Score: $5 Trillion Questions,” May 13].

Konczal credulously adopts the Koch study’s underestimate of single-payer savings on insurance overhead. But more important, he (like that study) ignores overwhelming evidence that single-payer would save doctors and hospitals vast amounts on billing, insurance paperwork, and other wasteful tasks that are required by the current byzantine payment system but would be eliminated under single-payer. For instance, a recent Harvard Business School and Duke University study published in the Journal of the American Medical Association found that the average primary-care doctor at an efficient group practice spent $99,581 (and 243 hours) annually on billing. That’s four times what Canadian doctors spend interacting with insurers.

The $75,000 savings in per-doctor billing costs means doctors’ take-home pay could be stable even if their per-patient revenue goes down. It also means they could use the time they currently spend jousting with insurers to deliver (and bill for) more care.

A similar calculus applies to hospitals. At a six-hospital system in Toronto, the equivalent of just 5.5 full-time employees handle all insurance billing and patient collections. A comparable hospital system in the US employs more than 200 people for those tasks. US hospitals spend one-quarter of their budgets on administration, versus 12 percent in Canada. Streamlining hospital administration by paying hospitals global budgets (the way we currently pay fire departments and Canada pays hospitals) would produce major savings, freeing up vast resources for care. Indiscriminately slashing hospital budgets, by contrast, would be neither necessary nor desirable under Medicare for All reform—and the House and Senate bills propose no such thing.

All told, single-payer could save doctors and hospitals about $225 billion annually on billing and bureaucratic costs (in addition to about $220 billion saved on insurance overhead and tens of billions more from streamlining the billing for nursing homes, home-care agencies, etc., and by lowering drug prices), offsetting the costs of providing first-dollar comprehensive coverage to everyone in the nation. Even though Konczal doesn’t understand that, most doctors do. That (and altruism) explains why single-payer is now doctors’ favorite health-care-reform option and 23,000 have joined Physicians for a National Health Program.

David U. Himmelstein, MD
Co-Founder
Physicians for a National Health Program
New York City

Steffie Woolhandler, MD, MPH
Co-Founder
Physicians for a National Health Program
New York City

Adam Gaffney, MD, MPH
President
Physicians for a National Health Program
Boston

https://www.thenation.com…

Comment:

By Don McCanne, M.D.

Since prices have played an outsized role in driving up health care spending, it is widely assumed that price reductions under a single payer Medicare for All system would first have to come from the take-home income of physicians, thus likely provoking a rebellion by physicians against single payer reform. Having not completed his homework, Mike Konczal seems to have accepted this invalid conclusion, as have many others, including the media.

What is left out is that the single payer model would result in a tremendous reduction of administrative costs within the physicians’ practices. The overhead savings could very well be more than enough to offset potential fee reductions, thereby avoiding any reduction in take-home pay. Also physicians would be paid for care that is now provided as charity and for unavoidable care that the uninsured and underinsured currently may be unable to cover and thus is written off as bad debt. Plus they would no longer have to absorb the losses with Medicaid patients since they would transferred into the universal single payer program. There could also be some increase in the volume of services, increasing marginal income, because those who currently forgo care because of financial barriers would no longer have to since they would have access to guaranteed, prepaid health care.

Under this scenario, it is possible that physicians could see increases in net income, though we would assume that our public stewards would negotiate rates that are both fair for the health care delivery system and fair for the taxpayers. This goal is certainly achievable if we had our own public monopsony negotiating prices and global budgets for health care products and services serving the greater public good. That would be in sharp contrast to the dysfunctional health care market that we now have. Physicians could dump much of their administrative burden and devote more of their efforts to their altruistic pursuit of taking care of patients, and isn’t that what it’s all about?

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Dr. Ed Weisbart on “North Coast Perspectives”

PNHP-MO chair Dr. Ed Weisbart appeared on “North Coast Perspectives” on KEET-TV (Northern California PBS) on May 24, 2019. He made the case for improving and expanding the popular Medicare program to cover all Americans. He also previewed a series of talks he was giving on the west coast in support of single-payer Medicare for All.

More on high premiums and high out-of-pocket costs with employer plans

How Much U.S. Households with Employer Insurance Spend on Premiums and Out-of-Pocket Costs: A State-by-State Look

By Susan L. Hayes, Sara R. Collins, and David C. Radley
The Commonwealth Fund, May 23, 2019

In this brief, we use findings from the Current Population Survey (CPS), a federal survey of households, to report on the amounts that workers under age 65 and their dependents spent on premium contributions for their employer coverage and on out-of-pocket costs for health care.

This brief complements an earlier Commonwealth Fund state-level analysis of the size of employee premium contributions and deductibles reported by employers. The previous report looked at what workers were at risk of spending out of pocket to meet their deductibles when they used their insurance. This brief examines what workers report actually spending on care for themselves and their families.

Highlights

Premium Contributions

  • The median, or midpoint, of annual household spending on employer insurance premium contributions ranged from $500 (Hawaii) to $3,400 (South Dakota) in 2016–2017. In 11 states, households in the top 10 percent of spending on premium contributions paid $9,000 or more.
  • Across states, 6 percent to 17 percent of people with employer coverage had household premium contributions that were high relative to their income. High premium contributions relative to income were common across the South.

Out-of-Pocket Costs

  • Median annual out-of-pocket spending on medical care ranged from $360 (Hawaii) to $1,500 (Nebraska). In four states, households in the top 10 percent of out-of-pocket expenses spent $7,000 or more on these items.
  • Across states, 4 percent to 11 percent of people with employer coverage had high out-of-pocket costs relative to household income.

High Cost Burdens

  • An estimated 23.6 million Americans with employer coverage had high premium contributions or high out-of-pocket costs relative to income, or both.

Total Household Spending

  • The median amount spent on both premiums and out-of-pocket costs ranged from $1,500 (Hawaii) to $5,540 (South Dakota).

There is growing evidence that the primary driver of per capita costs in private insurance are prices paid to providers. These prices vary across states and even within the same markets since they are the consequence of private negotiations between providers and insurers. Hospitals with more leverage in their markets are able to negotiate higher prices with insurers and employers. To arrest the growth in premiums and deductibles, more attention needs to be paid to what we pay hospitals and physicians.

https://www.commonwealthfund.org…

Comment:

By Don McCanne, M.D.

We hear repeatedly that support for single payer Medicare for All declines significantly when individuals are told that under single payer they would lose their option of enrolling in a private health plan. They certainly can’t be referring to plans in the individual market since complaints about about high premiums and unaffordable deductibles are so prevalent. So they must be referring to plans obtained through work. Yet this report shows that high premiums and high out-of-pocket costs are now creating financial burdens for workers in employer-sponsored plans as well. Over 23 million American workers faced high costs relative to their incomes.

Nancy Pelosi, Donna Shalala and others keep telling us that individuals want to keep these plans. Really? They want unaffordable premiums? They want high deductibles that create barriers to care? They want the plans to take away their choices of their health care professionals by requiring use of the insurers’ provider networks? They enjoy the surprise bills for services that they thought were covered? They don’t mind at all the instability of employer-sponsored plans considering that 66 million people leave their jobs each year? And no mention is made in this report of the forgone wage increases that pay for the employers’ contributions to these plans. Do workers really want to continue with the flat wages that they have been putting up with?

Who might these people be who want to keep these plans? Some might be healthy individuals who need very little health care and figure that these plans will be there for them should the need for major health care arise. Many of them are likely unaware that they may be vulnerable to unexpected costs, and that they may be limited by restrictions in their choices in health care. It is likely that many others simply do not understand that a well designed, single payer Medicare for all program would eliminate premiums and deductibles, replacing them with equitable taxes that everyone could afford, while granting them the right to have complete free choice of their health care professionals and institutions. They could have the health care they want, and it would be prepaid.

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Ignoring evidence begot Medicare’s dangerous hospital readmissions penalty

By Stephen Soumerai and Kip Sullivan
STAT, May 21, 2019

Federal programs designed to cut costs and improve health by penalizing doctors and hospitals are failing at an alarming rate. Some of them actually harm patients, and many don’t cut costs. One in particular, the Hospital Readmissions Reduction Program (HRRP), may have caused thousands of deaths instead of preventing them, and probably hasn’t saved money during its seven years in operation.

The Centers for Medicare and Medicaid Services began reviewing the safety of this program on Jan. 19. It shouldn’t take CMS nearly four months to err on the side of caution and pull the plug on it.

The HRRP was imposed upon Medicare by the Affordable Care Act. Its goal makes sense: reduce the number of patients readmitted to hospitals soon after being discharged. But its approach — penalizing hospitals millions of dollars if their rate of readmissions within 30 days exceeds an arbitrary threshold — makes no sense at all.

The HRRP and other federal “pay for performance programs” were under fire before they began. Evidence suggested that some hospitals would try to avoid penalties by not readmitting patients within the 30-day window, or if they showed up in the emergency department during that time would treat them there and send them home or place them in so-called observation units rather than admitting them to the hospital. There were also indications that these kinds of programs would disproportionately harm socially disadvantaged individuals.

Influential health policy experts either ignored this evidence or downplayed it.

The behavior of the Medicare Payment Advisory Commission (MedPAC), an independent federal body that advises Congress on Medicare, illustrates the problem. In its June 2008 report published two years before the HRRP readmission penalties were enacted, 16 commissioners voted unanimously that “Congress should direct the Secretary to reduce payments to hospitals with relatively high readmission rates for select conditions.” The commission’s untested theory was that punishing hospitals for excess readmissions would nudge them to offer better discharge instructions and more services, such as nurses calling patients at home after discharge, which would somehow improve health so much that readmissions would drop.

The commissioners voted for this approach even though it had never been pilot tested and they could cite no evidence for it. They were, however, aware of its risks. In a section of the same 2008 MedPAC report, entitled “Undesirable responses,” the commissioners presaged the harm that the readmissions program could cause by listing possible negative side effects of the readmissions policy, including denial of care for “certain patients,” such as those who are frail or senile or who have trouble sticking with their management plans.

Long before MedPAC recommended the HRRP to Congress, research had already shown that readmission rates are heavily influenced by factors beyond hospitals’ control. The long list of factors that influence readmissions include, among other things, low income, limited education, race, poor diet, and not taking medications as prescribed. Medicare does not collect data on these key factors and, even if it did, it is impossible to predict how they affect hospital readmission rates. Hospitals that care for larger numbers of poor and very sick patients have paid millions more in HRRP penalties than hospitals that treat a smaller number of such patients, offering proof of this point.

A year before the HRRP began, hundreds of economists and health policy experts signed a letter to Congress defending Affordable Care Act programs that penalized doctors and hospitals for undesirable outcomes — such as readmissions — that are influenced by factors outside of physician and hospital control. These experts asserted without evidence that the ACA “contains essentially every cost-containment provision analysts have considered effective in reducing the rate of medical spending.”

The evidence hasn’t supported their optimism.

Large and rigorous studies have shown that death rates among hospitalized individuals rose after the HRRP began, likely because some critically ill patients were not re-hospitalized and given the inpatient care they needed. Equally worrisome, the discriminatory penalties were disproportionately levied on so-called safety-net hospitals that care for a high number of poor, uninsured, and very sick people. These hospitals are often underfunded to begin with, and the HRRP imposed a kind of reverse Robin Hood effect. This stealing from the poor is a problem with other pay-for-performance nostrums.

The most troubling data come from two recent studies of the HRRP that were published in the Journal of the American Medical Association. The largest of these examined its effects on death rates among patients with heart failure, heart attack, and pneumonia within the arbitrary 30-day post-discharge period. The authors reached three disturbing conclusions:

  • After readmission penalties were imposed, there was a significant increase in death rates among people with heart failure.
  • This increase occurred largely in patients who were never readmitted to the hospital but who died within the first 30 days after discharge.
  • There was almost no change in death rates among patients who had been readmitted to the hospital.

The study observed almost the same increase in pneumonia deaths. A smaller separate study also observed an increase in heart failure deaths.

And just two months ago, another time trend study published in JAMA also observed visible increases in heart failure deaths after the start of HRRP.

The likely reason for the increased death rates was that readmission penalties led to some people being denied lifesaving hospital admissions.

To make matters worse, the HRRP doesn’t even seem to save money. Studies show that it may have caused some hospitals to increase their use of emergency rooms and workarounds called observation stays in which patients are placed under observation in the hospital but are not admitted as inpatients, and so don’t count as readmissions.

The HRRP isn’t the only evidence-free federal penalty program that has failed to cut costs and that may be harming patients. Studies of other pay-for-performance programs demonstrated that, instead of improving care, they induced some doctors to “fire” their sickest and poorest patients to raise their quality scores and payments. A large Medicare physician pay-for-performance program known as the Merit-Based Incentive Payment System (MIPS) has been roundly criticized by several studies, including one published on Monday. Their work persuaded the Medicare Payment Advisory Commission to recommend to Congress that MIPS be repealed. MedPAC voted to repeal MIPS in January 2018. Although that decision attracted substantial attention in the health policy world, we haven’t heard a peep about it out of Congress, suggesting that MIPS could stay in existence for years.

The “wellness penalty” is another example of a risky program authorized by the Affordable Care Act. It lets employers increase health insurance premiums for people with high cholesterol or high blood pressure or weighing too much (any of which can be caused in part by genes) who don’t participate in wellness programs or improve their cholesterol, blood pressure, or weight. Some people have refused to participate in this kind of “preventive” testing and quit their jobs because they are worried that their records may not be private, raising fears of reduced employment opportunities in the future. A large controlled trial recently showed that such legislated wellness programs yield no health benefits, despite the efforts of a bloated $4 trillion “wellness” industry that has received business and government subsidies for decades.

Lazy thinking by legislators and advisers must stop. Policymakers must adopt a code of ethics analogous to the oath doctors swear to first do no harm. Just as we require controlled trials showing that new drugs are safe and effective before they can go on the market, we need to insist on the same standards for health policies. Objective methods already exist to measure the effects of national health policies. But doing this will require less hype, more honest interpretation of research, better awareness of the influence of special interests (including a vast consulting industry), and more circumspection from academic leaders when advising Congress.

If we agree that health policies should be shown to be safe and effective before implementation, then it follows that risky programs like the HRRP should be terminated.

Stephen Soumerai, Sc.D., is professor of population medicine, founding and former director of the Division of Health Policy and Insurance Research, and teaches research methods at Harvard Medical School. Kip Sullivan, J.D., is a member of the policy advisory board for Health Care for All Minnesota and the Minnesota chapter of Physicians for a National Health Program.

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