PNHP

It's Time for Single Payer

It's Time for Single Payer

By James C. Mitchiner, M.D.
ACEP News, Aug. 7, 2012

“You can always trust the Americans to do the right thing, once they’ve tried everything else.”

Winston Churchill’s iconic remark, reportedly issued at the dawn of America’s entry into World War II, is equally applicable to the present American health care debate and the crisis that spawned it.

Regardless of whether you are elated or disappointed with June’s historic Supreme Court decision upholding the constitutionality of the Affordable Care Act, it is certainly no panacea for the problems facing U.S. health care. Even with the law intact, and despite its best intentions, it will still leave some 25 million uninsured, underinsure millions more, expand the corporatization of health care, and do little to control the escalating costs of care over the long term.

So it’s clear we need to do the right thing: the creation of a national, universal, publicly funded health care system, free of the corrupting power of profit-oriented health insurance, and at the same time capable of passing constitutional muster. In short, the right thing is an expanded and improved Medicare-for-All program, otherwise known as single-payer.

Don’t be so shocked. For the last 30 years, we have tried all the alternatives, and none of them have worked. We have experimented with HMOs, PPOs, high-deductible health plans, health savings accounts, pay-for-performance, capitation, and disease management. These ideas have been promoted in various iterations, often with great fanfare, by public and private payers alike, yet none of them have shown long-term success at bending the cost curve. And the promise of the latest reforms du jour, such as Accountable Care Organizations and Patient-Centered Medical Homes, is speculative at best.

American health care is unique among the world’s democracies in that it was never planned in terms of enabling legislation or explicit constitutional authority. As others have stated, our employer-based insurance system, which now covers about 160 million Americans, was an accident of history. Its lineage can be traced to FDR’s wage and price control policies during World War II, where employers were permitted to offer workers health insurance in lieu of higher wages as a job inducement.

This benefit has evolved piecemeal into the Rube Goldberg complexity that is contemporary employer-sponsored health insurance, with some 1,200 private plans each doing the same things – medical underwriting, coordination of benefits, claims adjudication and denial, marketing, public relations, lobbying, litigating, and paying shareholder dividends and inflated CEO salaries while forcing individuals to pay a higher share of premiums, increased deductibles, expanded copays, or a combination of all three.

Taken as a whole, private insurers’ activities are duplicative, inefficient, wasteful of scarce health care resources, conducive of job lock, and completely misdirected in supporting the 21st-century health care agenda that America needs and deserves.

The objective of the ACA’s individual mandate was to remedy a flaw in the market for health insurance: the expectation by the uninsured that the costs of their inevitable illnesses would be benignly transferred to those fortunate to have coverage. If you believe that guaranteed issue and community-rating requires 100% participation in the health insurance market to sustain financial viability, clearly the most efficient mechanism to achieve this is not through an individual mandate, in which the heavy hand of government coerces people to do what they otherwise would not. If the federal government has a professed welfare interest in controlling health care costs, it can – and should – accomplish that goal through a more economically efficient single-payer mechanism.

Given that the primary business objective of a for-profit insurer is to make a profit, the fundamental question we should be asking is this: What is the marginal value of private health insurance? That is, what advantage vis-à-vis a single-payer model like Medicare does our system of private, profit-oriented health insurance convey to patients, providers, and employers? What exactly do private insurers do, above and beyond what Medicare does, that is deserving of their inflated premiums?

To my knowledge, there is no evidence that commercial insurance provides easier access or less hassle-free care, is more cost effective, produces care of higher quality, or has better consumer satisfaction ratings than Medicare (if anyone has evidence to the contrary, from the peer-reviewed health policy literature, please advise). And according to a recent poll, most Americans prefer to keep Medicare as it is, rather than switching to a premium-support financing mechanism as advocated by Rep. Paul Ryan (R-Wis.). Whatever bad things you can say about our government, at least the Feds are not required to make a profit but are required to answer to all taxpayers, rather than private shareholders who are concerned only with the bottom line.

Under a single-payer system, every American would receive a basic package that would include inpatient and outpatient care, primary care and specialty physician services, emergency care, preventive and restorative care, mental health and substance abuse services, dental care, prescription drugs, home health care, and long-term care. Doctors and other providers would be paid based on a fee-for-service schedule, as negotiated with state governments, with funding coming from progressive payroll taxes paid by both individuals and employers. Quality would be monitored and publicly reported, with financial incentives awarded to providers who followed clinical guidelines endorsed by their medical specialty societies. All services provided would be publicly accountable. Medical decision making at the bedside would be left to the physician.

Conceptually, single-payer is imbued with many myths and misconceptions.

Myth #1: Single-Payer Is One-Size-Fits-All

The No. 1 myth – the alpha myth – is that single-payer represents a choiceless, one-size-fits-all, government-run health care monopsony. This is a blatant falsehood. Single-payer is simply a more efficient and more equitable way of financing health care – and nothing more. By consolidating the administrative functions of insurance, it eliminates bureaucratic duplication and reduces administrative waste, saving time and money for employers, providers, state governments, and consumers alike. It would remove the profit motive from financing care, but not from delivering it. Single-payer would efficiently provide for all Americans – regardless of age, health condition, income, or employment status – universal health care that is portable, affordable, equitable, non-terminating, publicly accountable, and funded through progressive taxation, which for the average family would imply a small additional payroll tax that is much less than its current outlay for insurance premiums. A single-payer system would not supplant the private practice of medicine; you could go to a primary care doctor, specialist, hospital, pharmacist, and lab of your choice.

Myth #2: Canadian Health Care Would Be Bad for America

Americans love to repeat anecdotes about the supposedly lousy medical care our northern neighbors receive from their single-payer system, by demoralized and overworked doctors who work at ill-equipped hospitals with out-of-date technology. This is rubbish. Do Canadians often wait for weeks to see a specialist? Yes. Do Americans also wait? Yes. There is no evidence that Canadians are dropping dead in the streets while waiting for their emergency bypasses or appendectomies, nor is there any evidence that Canadian physicians are emigrating to the U.S. or other countries en masse. Further, there is no evidence that the quality of care in Canad
a, across the board, is inferior to that practiced in the U.S. Despite comparable rates of smoking and alcoholism, Canadians on average live longer than Americans by more than 2 years, and their infant mortality rate is less than ours. Finally, consider this: Canadians spend much less than we do for health care, both in per-capita dollars and as a percent of GDP, so I have no doubt that if we were to adopt a Canadian-style system and fund it to the tune of $2.6 trillion annually, we would not have 9-month waits for MRIs, even if every one of them was clinically indicated.

Myth #3: Market-Based Medicine Trumps Single-Payer

Some argue that our private, market-based system is fundamentally sound, that it should be freed of government regulation and tweaked to promote greater competition based on price, and thus choice of health insurance plans. Really? Does anyone seriously believe that purchasing health care services is fundamentally no different from buying a new car or a flat-screen TV? (If so, I suggest he or she take a course in health economics.) And would anyone seriously believe that Americans want a choice of health insurance, when what they really desire is a choice of doctors and hospitals? What could be more American, more consumer-friendly, and more constitutional than the ability to choose your health care provider based on whatever criteria you deem important? So why not cut out the middleman and let doctors, hospitals, and other providers compete on such things as quality, service, reputation, convenience, and other personal preferences, rather than having private insurers make these choices for us?

Just consider what “The Market” has done for health care in the last 30 years: a steady increase in the number of uninsured; a decrease in the choice of providers; diversion of resources into more profitable hospitals and services; consolidation of HMOs into health care oligopolies; underfunding of less profitable endeavors, such as public health, trauma centers, and mental health services; unaffordable prescription drugs; dissatisfied patients; frustrated physicians; and of course, an inexorably increasing trajectory of health care costs.

Myth #4: Single-Payer Would Stop Medical Innovation

To my knowledge, there is no correlation between innovation and a country’s method of health care financing. Many technologies and medical advances we now take for granted originated in nations with national health insurance, for example, CT scans and MRIs (Great Britain), laparoscopic cholecystectomy (Canada), percutaneous coronary angioplasty (Germany), and H. pylori treatment (Australia). The largest single source of funding for medical research in the U.S. is a government agency – the National Institutes of Health – which provided almost $31 billion in funding for medical research in fiscal year 2012. And in terms of per-capita drug R&D costs, the U.S. lags behind Britain and Sweden.

Myth #5: Single-Payer Is Impossible to Enact Politically

Perhaps this is true – for now. But if social change depended solely on what was politically pragmatic, women would not have achieved the right to vote in 1920, civil rights legislation would not have been enacted in 1964, and Medicare would have failed in 1965. We should always be careful to distinguish between what’s desirable and what’s doable. The fact that tort reform is certainly desirable, but not politically doable at the present time, has not stopped ACEP from investing significant time and financial resources to advocate for change. Public opinion polls have consistently shown that the level of public support for single-payer is 60% plus. A survey of physicians published 4 years ago showed that single-payer garnered 59% support among the 2,193 physicians polled (support among emergency physicians was even higher, at 69%). Despite this, there is no question that moving to a single-payer system will face enormous obstacles. What is needed, as columnist David Lazarus of the Los Angeles Times pointed out, is a “massive infusion of political courage and the willingness to forsake political purity.”

Myth #6: We Can’t Afford Single-Payer

Given our current system, perhaps the better statement would be “we can’t afford not to have single-payer.” The most recent financial projections portend no overall decrease in the cost trajectory for health care over the next 8 years, even if the ACA remains intact. Under a single-payer model, a modest increase in taxes would be overshadowed by savings from elimination of insurance premiums, offsets from economies of scale, decreased out-of-pocket payments, and the disappearance of cost-shifting. The annual savings from transforming to a single-payer system are estimated to be $400 billion. If you look at the cost curves for U.S. and Canadian health care, they were identical until the mid-1970s, when Canada’s health system was fully implemented. From then on, the curves diverged, with America’s climbing much faster than Canada’s. When Taiwan converted to single-payer in 1995, the costs went up in the first year, as expected, and then leveled off to a reasonable increase of about 3% per year.

What Does This Mean for Emergency Medicine?

Well, consider the ED as a de facto single-payer environment. Patients come to us by choice without needing to first check with their health plan (assuming they have one) to see if their ED visit is covered. We see them without asking them to pay in advance for their ED services, and their care is not predicated on their job, income, or insurance coverage. As emergency physicians, we have more autonomy than our primary care colleagues in terms of making diagnostic and therapeutic decisions without the nonsense of “pre-authorization” or other interference from an insurer who is interested only in the bottom line. While it’s nice to be able to make medical decisions without checking on insurance status, it would be even nicer if we actually got paid for every ED patient treated. Private insurance companies simply have no incentive – in fact, it’s not at all consistent with their business model – to pay for EMTALA-mandated services provided by out-of-network emergency physicians.

Looking again to Medicare as a single-payer model, consider how we emergency physicians interact with Medicare vs. private insurers. In 29 years of practice, I have never had to seek permission from a CMS official to admit a fee-for-service Medicare patient, have never had a consultant refuse a referral for a Medicare beneficiary, and have never had a pharmacist call me to say the prescription for my Medicare patient was not covered by the formulary. This is not true for some of my patients in managed care plans, including those who were sick enough to be admitted but had to be transferred because my hospital (which the patients self-selected) did not participate in their plan.

Single-payer is the only remaining option to simultaneously and synergistically expand access, control costs, preserve choice, and reduce disparities. There is simply no other efficient and constitutionally safe way to do this. Any other proposals are nothing more than tinkering around the edges and based on blind faith that some kind of future financial salvation will somehow save us from the impending health care meltdown. A single-payer, improved Medicare-for-All program would overhaul our dysfunctional health care financing system so that it works best for patients – and for physicians.

Dr. Mitchiner is an emergency physician in Ann Arbor, Mich., a former president of the Washtenaw County (Mich.) Medical Society, and a member of Physicians for a National Health Program. ACEP News is a publication of the American College of Emergency Physicians.

http://www.acepnews.com/in
dex.php?id=495&cHash=071010&tx_ttnews[tt_news]=1564#.UDbovKTZtfw.mailto

It’s Time for Single Payer

By James C. Mitchiner, M.D.
ACEP News, Aug. 7, 2012

“You can always trust the Americans to do the right thing, once they’ve tried everything else.”

Winston Churchill’s iconic remark, reportedly issued at the dawn of America’s entry into World War II, is equally applicable to the present American health care debate and the crisis that spawned it.

Regardless of whether you are elated or disappointed with June’s historic Supreme Court decision upholding the constitutionality of the Affordable Care Act, it is certainly no panacea for the problems facing U.S. health care. Even with the law intact, and despite its best intentions, it will still leave some 25 million uninsured, underinsure millions more, expand the corporatization of health care, and do little to control the escalating costs of care over the long term.

So it’s clear we need to do the right thing: the creation of a national, universal, publicly funded health care system, free of the corrupting power of profit-oriented health insurance, and at the same time capable of passing constitutional muster. In short, the right thing is an expanded and improved Medicare-for-All program, otherwise known as single-payer.

Don’t be so shocked. For the last 30 years, we have tried all the alternatives, and none of them have worked. We have experimented with HMOs, PPOs, high-deductible health plans, health savings accounts, pay-for-performance, capitation, and disease management. These ideas have been promoted in various iterations, often with great fanfare, by public and private payers alike, yet none of them have shown long-term success at bending the cost curve. And the promise of the latest reforms du jour, such as Accountable Care Organizations and Patient-Centered Medical Homes, is speculative at best.

American health care is unique among the world’s democracies in that it was never planned in terms of enabling legislation or explicit constitutional authority. As others have stated, our employer-based insurance system, which now covers about 160 million Americans, was an accident of history. Its lineage can be traced to FDR’s wage and price control policies during World War II, where employers were permitted to offer workers health insurance in lieu of higher wages as a job inducement.

This benefit has evolved piecemeal into the Rube Goldberg complexity that is contemporary employer-sponsored health insurance, with some 1,200 private plans each doing the same things – medical underwriting, coordination of benefits, claims adjudication and denial, marketing, public relations, lobbying, litigating, and paying shareholder dividends and inflated CEO salaries while forcing individuals to pay a higher share of premiums, increased deductibles, expanded copays, or a combination of all three.

Taken as a whole, private insurers’ activities are duplicative, inefficient, wasteful of scarce health care resources, conducive of job lock, and completely misdirected in supporting the 21st-century health care agenda that America needs and deserves.

The objective of the ACA’s individual mandate was to remedy a flaw in the market for health insurance: the expectation by the uninsured that the costs of their inevitable illnesses would be benignly transferred to those fortunate to have coverage. If you believe that guaranteed issue and community-rating requires 100% participation in the health insurance market to sustain financial viability, clearly the most efficient mechanism to achieve this is not through an individual mandate, in which the heavy hand of government coerces people to do what they otherwise would not. If the federal government has a professed welfare interest in controlling health care costs, it can – and should – accomplish that goal through a more economically efficient single-payer mechanism.

Given that the primary business objective of a for-profit insurer is to make a profit, the fundamental question we should be asking is this: What is the marginal value of private health insurance? That is, what advantage vis-à-vis a single-payer model like Medicare does our system of private, profit-oriented health insurance convey to patients, providers, and employers? What exactly do private insurers do, above and beyond what Medicare does, that is deserving of their inflated premiums?

To my knowledge, there is no evidence that commercial insurance provides easier access or less hassle-free care, is more cost effective, produces care of higher quality, or has better consumer satisfaction ratings than Medicare (if anyone has evidence to the contrary, from the peer-reviewed health policy literature, please advise). And according to a recent poll, most Americans prefer to keep Medicare as it is, rather than switching to a premium-support financing mechanism as advocated by Rep. Paul Ryan (R-Wis.). Whatever bad things you can say about our government, at least the Feds are not required to make a profit but are required to answer to all taxpayers, rather than private shareholders who are concerned only with the bottom line.

Under a single-payer system, every American would receive a basic package that would include inpatient and outpatient care, primary care and specialty physician services, emergency care, preventive and restorative care, mental health and substance abuse services, dental care, prescription drugs, home health care, and long-term care. Doctors and other providers would be paid based on a fee-for-service schedule, as negotiated with state governments, with funding coming from progressive payroll taxes paid by both individuals and employers. Quality would be monitored and publicly reported, with financial incentives awarded to providers who followed clinical guidelines endorsed by their medical specialty societies. All services provided would be publicly accountable. Medical decision making at the bedside would be left to the physician.

Conceptually, single-payer is imbued with many myths and misconceptions.

Myth #1: Single-Payer Is One-Size-Fits-All

The No. 1 myth – the alpha myth – is that single-payer represents a choiceless, one-size-fits-all, government-run health care monopsony. This is a blatant falsehood. Single-payer is simply a more efficient and more equitable way of financing health care – and nothing more. By consolidating the administrative functions of insurance, it eliminates bureaucratic duplication and reduces administrative waste, saving time and money for employers, providers, state governments, and consumers alike. It would remove the profit motive from financing care, but not from delivering it. Single-payer would efficiently provide for all Americans – regardless of age, health condition, income, or employment status – universal health care that is portable, affordable, equitable, non-terminating, publicly accountable, and funded through progressive taxation, which for the average family would imply a small additional payroll tax that is much less than its current outlay for insurance premiums. A single-payer system would not supplant the private practice of medicine; you could go to a primary care doctor, specialist, hospital, pharmacist, and lab of your choice.

Myth #2: Canadian Health Care Would Be Bad for America

Americans love to repeat anecdotes about the supposedly lousy medical care our northern neighbors receive from their single-payer system, by demoralized and overworked doctors who work at ill-equipped hospitals with out-of-date technology. This is rubbish. Do Canadians often wait for weeks to see a specialist? Yes. Do Americans also wait? Yes. There is no evidence that Canadians are dropping dead in the streets while waiting for their emergency bypasses or appendectomies, nor is there any evidence that Canadian physicians are emigrating to the U.S. or other countries en masse. Further, there is no evidence that the quality of care in Canada, across the board, is inferior to that practiced in the U.S. Despite comparable rates of smoking and alcoholism, Canadians on average live longer than Americans by more than 2 years, and their infant mortality rate is less than ours. Finally, consider this: Canadians spend much less than we do for health care, both in per-capita dollars and as a percent of GDP, so I have no doubt that if we were to adopt a Canadian-style system and fund it to the tune of $2.6 trillion annually, we would not have 9-month waits for MRIs, even if every one of them was clinically indicated.

Myth #3: Market-Based Medicine Trumps Single-Payer

Some argue that our private, market-based system is fundamentally sound, that it should be freed of government regulation and tweaked to promote greater competition based on price, and thus choice of health insurance plans. Really? Does anyone seriously believe that purchasing health care services is fundamentally no different from buying a new car or a flat-screen TV? (If so, I suggest he or she take a course in health economics.) And would anyone seriously believe that Americans want a choice of health insurance, when what they really desire is a choice of doctors and hospitals? What could be more American, more consumer-friendly, and more constitutional than the ability to choose your health care provider based on whatever criteria you deem important? So why not cut out the middleman and let doctors, hospitals, and other providers compete on such things as quality, service, reputation, convenience, and other personal preferences, rather than having private insurers make these choices for us?

Just consider what “The Market” has done for health care in the last 30 years: a steady increase in the number of uninsured; a decrease in the choice of providers; diversion of resources into more profitable hospitals and services; consolidation of HMOs into health care oligopolies; underfunding of less profitable endeavors, such as public health, trauma centers, and mental health services; unaffordable prescription drugs; dissatisfied patients; frustrated physicians; and of course, an inexorably increasing trajectory of health care costs.

Myth #4: Single-Payer Would Stop Medical Innovation

To my knowledge, there is no correlation between innovation and a country’s method of health care financing. Many technologies and medical advances we now take for granted originated in nations with national health insurance, for example, CT scans and MRIs (Great Britain), laparoscopic cholecystectomy (Canada), percutaneous coronary angioplasty (Germany), and H. pylori treatment (Australia). The largest single source of funding for medical research in the U.S. is a government agency – the National Institutes of Health – which provided almost $31 billion in funding for medical research in fiscal year 2012. And in terms of per-capita drug R&D costs, the U.S. lags behind Britain and Sweden.

Myth #5: Single-Payer Is Impossible to Enact Politically

Perhaps this is true – for now. But if social change depended solely on what was politically pragmatic, women would not have achieved the right to vote in 1920, civil rights legislation would not have been enacted in 1964, and Medicare would have failed in 1965. We should always be careful to distinguish between what’s desirable and what’s doable. The fact that tort reform is certainly desirable, but not politically doable at the present time, has not stopped ACEP from investing significant time and financial resources to advocate for change. Public opinion polls have consistently shown that the level of public support for single-payer is 60% plus. A survey of physicians published 4 years ago showed that single-payer garnered 59% support among the 2,193 physicians polled (support among emergency physicians was even higher, at 69%). Despite this, there is no question that moving to a single-payer system will face enormous obstacles. What is needed, as columnist David Lazarus of the Los Angeles Times pointed out, is a “massive infusion of political courage and the willingness to forsake political purity.”

Myth #6: We Can’t Afford Single-Payer

Given our current system, perhaps the better statement would be “we can’t afford not to have single-payer.” The most recent financial projections portend no overall decrease in the cost trajectory for health care over the next 8 years, even if the ACA remains intact. Under a single-payer model, a modest increase in taxes would be overshadowed by savings from elimination of insurance premiums, offsets from economies of scale, decreased out-of-pocket payments, and the disappearance of cost-shifting. The annual savings from transforming to a single-payer system are estimated to be $400 billion. If you look at the cost curves for U.S. and Canadian health care, they were identical until the mid-1970s, when Canada’s health system was fully implemented. From then on, the curves diverged, with America’s climbing much faster than Canada’s. When Taiwan converted to single-payer in 1995, the costs went up in the first year, as expected, and then leveled off to a reasonable increase of about 3% per year.

What Does This Mean for Emergency Medicine?

Well, consider the ED as a de facto single-payer environment. Patients come to us by choice without needing to first check with their health plan (assuming they have one) to see if their ED visit is covered. We see them without asking them to pay in advance for their ED services, and their care is not predicated on their job, income, or insurance coverage. As emergency physicians, we have more autonomy than our primary care colleagues in terms of making diagnostic and therapeutic decisions without the nonsense of “pre-authorization” or other interference from an insurer who is interested only in the bottom line. While it’s nice to be able to make medical decisions without checking on insurance status, it would be even nicer if we actually got paid for every ED patient treated. Private insurance companies simply have no incentive – in fact, it’s not at all consistent with their business model – to pay for EMTALA-mandated services provided by out-of-network emergency physicians.

Looking again to Medicare as a single-payer model, consider how we emergency physicians interact with Medicare vs. private insurers. In 29 years of practice, I have never had to seek permission from a CMS official to admit a fee-for-service Medicare patient, have never had a consultant refuse a referral for a Medicare beneficiary, and have never had a pharmacist call me to say the prescription for my Medicare patient was not covered by the formulary. This is not true for some of my patients in managed care plans, including those who were sick enough to be admitted but had to be transferred because my hospital (which the patients self-selected) did not participate in their plan.

Single-payer is the only remaining option to simultaneously and synergistically expand access, control costs, preserve choice, and reduce disparities. There is simply no other efficient and constitutionally safe way to do this. Any other proposals are nothing more than tinkering around the edges and based on blind faith that some kind of future financial salvation will somehow save us from the impending health care meltdown. A single-payer, improved Medicare-for-All program would overhaul our dysfunctional health care financing system so that it works best for patients – and for physicians.

Dr. Mitchiner is an emergency physician in Ann Arbor, Mich., a former president of the Washtenaw County (Mich.) Medical Society, and a member of Physicians for a National Health Program. ACEP News is a publication of the American College of Emergency Physicians.

http://www.acepnews.com/index.php?id=495&cHash=071010&tx_ttnews[tt_news]=1564#.UDbovKTZtfw.mailto

Dr. Mitchiner explains single payer to his emergency medicine colleagues, and to all of us

It’s Time for Single-Payer

By James C. Mitchiner, MD, MPH, American College of Emergency Physicians
ACEP News, August 7, 2012
“You can always trust the Americans to do the right thing, once they’ve tried everything else.”
Winston Churchill’s iconic remark, reportedly issued at the dawn of America’s entry into World War II, is equally applicable to the present American health care debate and the crisis that spawned it. Regardless of whether you are elated or disappointed with June’s historic Supreme Court decision upholding the constitutionality of the Affordable Care Act, it is certainly no panacea for the problems facing U.S. health care. Even with the law intact, and despite its best intentions, it will still leave some 25 million uninsured, underinsure millions more, expand the corporatization of health care, and do little to control the escalating costs of care over the long term. So it’s clear we need to do the right thing: the creation of a national, universal, publicly funded health care system, free of the corrupting power of profit-oriented health insurance, and at the same time capable of passing constitutional muster. In short, the right thing is an expanded and improved Medicare-for-All program, otherwise known as single-payer.
Don’t be so shocked. For the last 30 years, we have tried all the alternatives, and none of them have worked. We have experimented with HMOs, PPOs, high-deductible health plans, health savings accounts, pay-for-performance, capitation, and disease management. These ideas have been promoted in various iterations, often with great fanfare, by public and private payers alike, yet none of them have shown long-term success at bending the cost curve. And the promise of the latest reforms du jour, such as Accountable Care Organizations and Patient-Centered Medical Homes, is speculative at best. American health care is unique among the world’s democracies in that it was never planned in terms of enabling legislation or explicit constitutional authority. As others have stated, our employer-based insurance system, which now covers about 160 million Americans, was an accident of history. Its lineage can be traced to FDR’s wage and price control policies during World War II, where employers were permitted to offer workers health insurance in lieu of higher wages as a job inducement. This benefit has evolved piecemeal into the Rube Goldberg complexity that is contemporary employer-sponsored health insurance, with some 1,200 private plans each doing the same things – medical underwriting, coordination of benefits, claims adjudication and denial, marketing, public relations, lobbying, litigating, and paying shareholder dividends and inflated CEO salaries while forcing individuals to pay a higher share of premiums, increased deductibles, expanded copays, or a combination of all three. Taken as a whole, private insurers’ activities are duplicative, inefficient, wasteful of scarce health care resources, conducive of job lock, and completely misdirected in supporting the 21st-century health care agenda that America needs and deserves.
The objective of the ACA’s individual mandate was to remedy a flaw in the market for health insurance: the expectation by the uninsured that the costs of their inevitable illnesses would be benignly transferred to those fortunate to have coverage. If you believe that guaranteed issue and community-rating requires 100% participation in the health insurance market to sustain financial viability, clearly the most efficient mechanism to achieve this is not through an individual mandate, in which the heavy hand of government coerces people to do what they otherwise would not. If the federal government has a professed welfare interest in controlling health care costs, it can – and should – accomplish that goal through a more economically efficient single-payer mechanism.
Given that the primary business objective of a for-profit insurer is to make a profit, the fundamental question we should be asking is this: What is the marginal value of private health insurance? That is, what advantage vis-à-vis a single-payer model like Medicare does our system of private, profit-oriented health insurance convey to patients, providers, and employers? What exactly do private insurers do, above and beyond what Medicare does, that is deserving of their inflated premiums? To my knowledge, there is no evidence that commercial insurance provides easier access or less hassle-free care, is more cost effective, produces care of higher quality, or has better consumer satisfaction ratings than Medicare (if anyone has evidence to the contrary, from the peer-reviewed health policy literature, please advise). And according to a recent poll, most Americans prefer to keep Medicare as it is, rather than switching to a premium-support financing mechanism as advocated by Rep. Paul Ryan (R-Wis.). Whatever bad things you can say about our government, at least the Feds are not required to make a profit but are required to answer to all taxpayers, rather than private shareholders who are concerned only with the bottom line.
Under a single-payer system, every American would receive a basic package that would include inpatient and outpatient care, primary care and specialty physician services, emergency care, preventive and restorative care, mental health and substance abuse services, dental care, prescription drugs, home health care, and long-term care. Doctors and other providers would be paid based on a fee-for-service schedule, as negotiated with state governments, with funding coming from progressive payroll taxes paid by both individuals and employers. Quality would be monitored and publicly reported, with financial incentives awarded to providers who followed clinical guidelines endorsed by their medical specialty societies. All services provided would be publicly accountable. Medical decision making at the bedside would be left to the physician.
Conceptually, single-payer is imbued with many myths and misconceptions.
Myth #1: Single-Payer Is One-Size-Fits-All
The No. 1 myth – the alpha myth – is that single-payer represents a choiceless, one-size-fits-all, government-run health care monopsony. This is a blatant falsehood. Single-payer is simply a more efficient and more equitable way of financing health care – and nothing more. By consolidating the administrative functions of insurance, it eliminates bureaucratic duplication and reduces administrative waste, saving time and money for employers, providers, state governments, and consumers alike. It would remove the profit motive from financing care, but not from delivering it. Single-payer would efficiently provide for all Americans – regardless of age, health condition, income, or employment status – universal health care that is portable, affordable, equitable, nonterminating, publicly accountable, and funded through progressive taxation, which for the average family would imply a small additional payroll tax that is much less than its current outlay for insurance premiums. A single-payer system would not supplant the private practice of medicine; you could go to a primary care doctor, specialist, hospital, pharmacist, and lab of your choice.
Myth #2: Canadian Health Care Would Be Bad for America
Americans love to repeat anecdotes about the supposedly lousy medical care our northern neighbors receive from their single-payer system, by demoralized and overworked doctors who work at ill-equipped hospitals with out-of-date technology. This is rubbish. Do Canadians often wait for weeks to see a specialist? Yes. Do Americans also wait? Yes. There is no evidence that Canadians are dropping dead in the streets while waiting for their emergency bypasses or appendectomies, nor is there any evidence that Canadian physicians are emigrating to the U.S. or other countries en masse. Further, there is no evidence that the quality of care in Canada, across the board, is inferior to that practiced in the U.S. Despite comparable rates of smoking and alcoholism, Canadians on average live longer than Americans by more than 2 years, and their infant mortality rate is less than ours. Finally, consider this: Canadians spend much less than we do for health care, both in per-capita dollars and as a percent of GDP, so I have no doubt that if we were to adopt a Canadian-style system and fund it to the tune of $2.6 trillion annually, we would not have 9-month waits for MRIs, even if every one of them was clinically indicated.
Myth #3: Market-Based Medicine Trumps Single-Payer
Some argue that our private, market-based system is fundamentally sound, that it should be freed of government regulation and tweaked to promote greater competition based on price, and thus choice of health insurance plans. Really? Does anyone seriously believe that purchasing health care services is fundamentally no different from buying a new car or a flat-screen TV? (If so, I suggest he or she take a course in health economics.) And would anyone seriously believe that Americans want a choice of health insurance, when what they really desire is a choice of doctors and hospitals? What could be more American, more consumer-friendly, and more constitutional than the ability to choose your health care provider based on whatever criteria you deem important? So why not cut out the middleman and let doctors, hospitals, and other providers compete on such things as quality, service, reputation, convenience, and other personal preferences, rather than having private insurers make these choices for us?
Just consider what “The Market” has done for health care in the last 30 years: a steady increase in the number of uninsured; a decrease in the choice of providers; diversion of resources into more profitable hospitals and services; consolidation of HMOs into health care oligopolies; underfunding of less profitable endeavors, such as public health, trauma centers, and mental health services; unaffordable prescription drugs; dissatisfied patients; frustrated physicians; and of course, an inexorably increasing trajectory of health care costs.
Myth #4: Single-Payer Would Stop Medical Innovation
To my knowledge, there is no correlation between innovation and a country’s method of health care financing. Many technologies and medical advances we now take for granted originated in nations with national health insurance, for example, CT scans and MRIs (Great Britain), laparoscopic cholecystectomy (Canada), percutaneous coronary angioplasty (Germany), and H. pylori treatment (Australia). The largest single source of funding for medical research in the U.S. is a government agency – the National Institutes of Health – which provided almost $31 billion in funding for medical research in fiscal year 2012. And in terms of per-capita drug R&D costs, the U.S. lags behind Britain and Sweden.
Myth #5: Single-Payer Is Impossible to Enact Politically
Perhaps this is true – for now. But if social change depended solely on what was politically pragmatic, women would not have achieved the right to vote in 1920, civil rights legislation would not have been enacted in 1964, and Medicare would have failed in 1965. We should always be careful to distinguish between what’s desirable and what’s doable. The fact that tort reform is certainly desirable, but not politically doable at the present time, has not stopped ACEP from investing significant time and financial resources to advocate for change. Public opinion polls have consistently shown that the level of public support for single-payer is 60% plus. A survey of physicians published 4 years ago showed that single-payer garnered 59% support among the 2,193 physicians polled (support among emergency physicians was even higher, at 69%). Despite this, there is no question that moving to a single-payer system will face enormous obstacles. What is needed, as columnist David Lazarus of the Los Angeles Times pointed out, is a “massive infusion of political courage and the willingness to forsake political purity.”
Myth #6: We Can’t Afford Single-Payer
Given our current system, perhaps the better statement would be “we can’t afford not to have single-payer.” The most recent financial projections portend no overall decrease in the cost trajectory for health care over the next 8 years, even if the ACA remains intact. Under a single-payer model, a modest increase in taxes would be overshadowed by savings from elimination of insurance premiums, offsets from economies of scale, decreased out-of-pocket payments, and the disappearance of cost-shifting. The annual savings from transforming to a single-payer system are estimated to be $400 billion. If you look at the cost curves for U.S. and Canadian health care, they were identical until the mid-1970s, when Canada’s health system was fully implemented. From then on, the curves diverged, with America’s climbing much faster than Canada’s. When Taiwan converted to single-payer in 1995, the costs went up in the first year, as expected, and then leveled off to a reasonable increase of about 3% per year.
What Does This Mean for Emergency Medicine?
Well, consider the ED as a de facto single-payer environment. Patients come to us by choice without needing to first check with their health plan (assuming they have one) to see if their ED visit is covered. We see them without asking them to pay in advance for their ED services, and their care is not predicated on their job, income, or insurance coverage. As emergency physicians, we have more autonomy than our primary care colleagues in terms of making diagnostic and therapeutic decisions without the nonsense of “pre-authorization” or other interference from an insurer who is interested only in the bottom line. While it’s nice to be able to make medical decisions without checking on insurance status, it would be even nicer if we actually got paid for every ED patient treated. Private insurance companies simply have no incentive – in fact, it’s not at all consistent with their business model – to pay for EMTALA-mandated services provided by out-of-network emergency physicians.
Looking again to Medicare as a single-payer model, consider how we emergency physicians interact with Medicare vs. private insurers. In 29 years of practice, I have never had to seek permission from a CMS official to admit a fee-for-service Medicare patient, have never had a consultant refuse a referral for a Medicare beneficiary, and have never had a pharmacist call me to say the prescription for my Medicare patient was not covered by the formulary. This is not true for some of my patients in managed care plans, including those who were sick enough to be admitted but had to be transferred because my hospital (which the patients self-selected) did not participate in their plan.
Single-payer is the only remaining option to simultaneously and synergistically expand access, control costs, preserve choice, and reduce disparities. There is simply no other efficient and constitutionally safe way to do this. Any other proposals are nothing more than tinkering around the edges and based on blind faith that some kind of future financial salvation will somehow save us from the impending health care meltdown. A single-payer, improved Medicare-for-All program would overhaul our dysfunctional health care financing system so that it works best for patients – and for physicians.

Dr. Mitchiner is an emergency physician in Ann Arbor, Mich., a former president of the Washtenaw County (Mich.) Medical Society, and a member of Physicians for a National Health Program.
http://www.acepnews.com/index.php?id=495&cHash=071010&tx_ttnews[tt_news]=1564#

Single payer is not on the table in next week’s presidential election. It should be. This article explains why.
Dr. Mitchiner’s explanation of single payer, addressed to his emergency medicine colleagues, is so clear, concise and compelling that it should be widely distributed so others can understand the imperative of a single payer system – an improved Medicare for all.
It should be downloaded from the ACEP link above, or from the PNHP link below. Both can be converted into printer friendly formats by clicking “Printer friendly” (ACEP) or “Print page” (PNHP). Then be sure that as many people as possible read it and then share it with others. And on the Internet, this needs to go viral!
https://pnhp.org/news/2012/november/its-time-for-single-payer

Baicker: The insurance value of Medicare

The Insurance Value of Medicare

By Katherine Baicker, Ph.D., and Helen Levy, Ph.D.
The New England Journal of Medicine, October 31, 2012

Medicare is an insurance program. The reason we have health insurance at all is not that health care is expensive, but rather that there is great uncertainty about who will need very expensive and potentially lifesaving care and when they will need it. Medicare should give beneficiaries not just access to medical care, but also protection from the risk of catastrophic spending. At the same time, Medicare — like any good insurance — should not cover so much care so generously that beneficiaries end up consuming too much care of questionable value and driving up costs for everyone. Thus, setting cost sharing for Medicare beneficiaries is a balancing act: too little cost sharing means patients have no incentive to spend Medicare dollars wisely; too much means Medicare fails to perform its insurance function.

How well does Medicare do at this balancing act? Not very. Medicare by itself offers only limited protection against economic ruin. The basic benefit lacks a cap on out-of-pocket spending, so beneficiaries are exposed to the risk of open-ended cost sharing that can generate substantial financial strain (or deplete assets for surviving spouses). Moreover, the odds of facing a catastrophic expense mount over time.

Beneficiaries without any supplemental coverage thus do not have enough insurance and face too much risk. This risk is one reason that 90% of beneficiaries obtain some other type of insurance (e.g., retiree health benefits, Medigap, Medicare Advantage, or Medicaid). But beneficiaries with generous supplemental coverage probably have too much insurance. “Too much insurance” may seem like a nonsensical concept, but there is ample evidence that when copayments are lower, patients consume more care, much of which is of questionable benefit to health. The systemwide effects are considerable: the increasing prevalence of health insurance in the United States is estimated to be responsible for about half the increase in per capita health care spending between 1950 and 1990. Having little or no cost sharing may lead enrollees to consume low-value care and drive up the cost of Medicare for everyone.

Nonpartisan and bipartisan groups such as the Congressional Budget Office, the National Commission on Fiscal Responsibility and Reform (also known as the Bowles–Simpson Commission), and the Medicare Payment Advisory Commission have advanced proposals that would address the imbalance in risk facing beneficiaries in the current Medicare program. Although these groups do not propose exactly the same fixes, some of the basic ideas are the same: First, put a cap on the out-of-pocket spending that beneficiaries are responsible for — as most private plans already do — so that those with no other coverage are protected from catastrophic costs. Second, restrict “first-dollar coverage” (coverage with no cost sharing by beneficiaries) in Medicare supplemental insurance, either by banning it or by imposing a surcharge on plans that provide it.

These proposals are controversial. Placing a cap on beneficiary cost sharing would increase program spending at a time when there is intense pressure to cut spending. Restricting first-dollar supplemental coverage would cut program spending but is politically unpopular because it requires lawmakers to tell most beneficiaries that they cannot have the insurance (often private insurance) they are used to having. Furthermore, crude cost sharing that ignores the differences in health benefits produced by different types of care could reduce consumption of highly effective care as much as it reduces consumption of low-value care, especially for low-income populations. Nonetheless, striking a better balance between spreading risk and promoting efficiency would make Medicare a better insurance program.

Medicare was always intended not just to increase access to care but to protect the elderly from financial ruin. As President Lyndon Johnson said when signing Medicare into law in 1965, “No longer will illness crush and destroy the savings that [older Americans] have so carefully put away over a lifetime so that they might enjoy dignity in their later years.”

http://www.nejm.org/doi/full/10.1056/NEJMp1210789?query=TOC#t=article

Comment:

By Don McCanne, MD

Although cost sharing is a topic that we have covered before, Katherine Baicker, coauthor of this NEJM article, is very influential in the policy arena, and the issue is sure to be addressed further as politicians look for cost savings in health care, especially as they seek bipartisan solutions to reduce government spending on the Medicare “entitlement.” Both Barack Obama and Mitt Romney have indicated that Medicare entitlement reform will be on the agenda regardless of who is elected as president.

So what is the purpose of a public insurance program such as Medicare? That’s easy. It is or should be designed to ensure that beneficiaries receive the health care that they need when they need it, without having to face a financial hardship. The most effective design to accomplish this would be to cover all necessary medical costs with no cost sharing whatsoever. Financial barriers to health care would be eliminated.

But some say that  the purpose of insurance is to protect against catastrophic losses only, and that it is not intended to protect against routine expenses. The problem with this definition is that far too many individuals do not have enough disposable income to pay those routine expenses, so high-deductible coverage often defeats the goals of ensuring access and preventing financial hardship in the face of medical need.

What about a lower deductible and other forms of cost sharing such as copayments and coinsurance? Same thing. There are still too many who do not have enough disposable income to pay their share plus their other bills.

Let’s go back to what the purpose of a public health insurance program should be. It should remove financial barriers to care. Does cost sharing enhance this function? No, just the opposite. Cost sharing deliberately introduces financial barriers to care. Why? As Baicker and Levy state in this article, “Medicare — like any good insurance — should not cover so much care so generously that beneficiaries end up consuming too much care of questionable value and driving up costs for everyone.” This disregards the fact that it is almost impossible for patients and even doctors to segregate out which care is “questionable.”

Thus the intent of cost sharing is to control spending, not to improve access nor to protect personal finances, both of which it can worsen. The question then arises, is there any better way of controlling spending, especially by methods that would be even more effective? Of course. Simplify administration, establish global budgets, use regional planning to budget capital improvements, reinforce the primary care infrastructure, and switch to administered pricing to ensure fairness. In other words, change to a single payer financing system. Other nations have proven that you do not need cost sharing to control spending.

Though Medicare pays only about half of health care costs on average for seniors, many soften the blow through the use supplemental plans such as Medigap, retiree health benefit programs, or Medicare Advantage. These authors and many others contend that patients must be exposed to first dollar coverage (remember: to control spending, not to improve access nor financial security), and this should be done by either banning supplemental coverage or by penalizing it with surcharges, presumably to be paid by the beneficiaries.

This concept is now so prevalent that we can fully anticipate that it will be part of the entitlement reform that our politicians are clamoring fo
r. Medicare coverage is already inadequate, and they want patients to have even greater exposure to health care costs. Instead, we need to eliminate deductibles and coinsurance from Medicare to ensure both access and financial security. Switching to a single payer improved Medicare that covers everyone is the Medicare entitlement reform that we really need, not just for our seniors but for the rest of us as well.

Baicker: The insurance value of Medicare

The Insurance Value of Medicare

By Katherine Baicker, Ph.D., and Helen Levy, Ph.D.
The New England Journal of Medicine, October 31, 2012
Medicare is an insurance program. The reason we have health insurance at all is not that health care is expensive, but rather that there is great uncertainty about who will need very expensive and potentially lifesaving care and when they will need it. Medicare should give beneficiaries not just access to medical care, but also protection from the risk of catastrophic spending. At the same time, Medicare — like any good insurance — should not cover so much care so generously that beneficiaries end up consuming too much care of questionable value and driving up costs for everyone. Thus, setting cost sharing for Medicare beneficiaries is a balancing act: too little cost sharing means patients have no incentive to spend Medicare dollars wisely; too much means Medicare fails to perform its insurance function.
How well does Medicare do at this balancing act? Not very. Medicare by itself offers only limited protection against economic ruin. The basic benefit lacks a cap on out-of-pocket spending, so beneficiaries are exposed to the risk of open-ended cost sharing that can generate substantial financial strain (or deplete assets for surviving spouses). Moreover, the odds of facing a catastrophic expense mount over time.
Beneficiaries without any supplemental coverage thus do not have enough insurance and face too much risk. This risk is one reason that 90% of beneficiaries obtain some other type of insurance (e.g., retiree health benefits, Medigap, Medicare Advantage, or Medicaid). But beneficiaries with generous supplemental coverage probably have too much insurance. “Too much insurance” may seem like a nonsensical concept, but there is ample evidence that when copayments are lower, patients consume more care, much of which is of questionable benefit to health. The systemwide effects are considerable: the increasing prevalence of health insurance in the United States is estimated to be responsible for about half the increase in per capita health care spending between 1950 and 1990. Having little or no cost sharing may lead enrollees to consume low-value care and drive up the cost of Medicare for everyone.
Nonpartisan and bipartisan groups such as the Congressional Budget Office, the National Commission on Fiscal Responsibility and Reform (also known as the Bowles–Simpson Commission), and the Medicare Payment Advisory Commission have advanced proposals that would address the imbalance in risk facing beneficiaries in the current Medicare program. Although these groups do not propose exactly the same fixes, some of the basic ideas are the same: First, put a cap on the out-of-pocket spending that beneficiaries are responsible for — as most private plans already do — so that those with no other coverage are protected from catastrophic costs. Second, restrict “first-dollar coverage” (coverage with no cost sharing by beneficiaries) in Medicare supplemental insurance, either by banning it or by imposing a surcharge on plans that provide it.
These proposals are controversial. Placing a cap on beneficiary cost sharing would increase program spending at a time when there is intense pressure to cut spending. Restricting first-dollar supplemental coverage would cut program spending but is politically unpopular because it requires lawmakers to tell most beneficiaries that they cannot have the insurance (often private insurance) they are used to having. Furthermore, crude cost sharing that ignores the differences in health benefits produced by different types of care could reduce consumption of highly effective care as much as it reduces consumption of low-value care, especially for low-income populations. Nonetheless, striking a better balance between spreading risk and promoting efficiency would make Medicare a better insurance program.
Medicare was always intended not just to increase access to care but to protect the elderly from financial ruin. As President Lyndon Johnson said when signing Medicare into law in 1965, “No longer will illness crush and destroy the savings that [older Americans] have so carefully put away over a lifetime so that they might enjoy dignity in their later years.”
http://www.nejm.org/doi/full/10.1056/NEJMp1210789?query=TOC#t=article

Although cost sharing is a topic that we have covered before, Katherine Baicker, coauthor of this NEJM article, is very influential in the policy arena, and the issue is sure to be addressed further as politicians look for cost savings in health care, especially as they seek bipartisan solutions to reduce government spending on the Medicare “entitlement.” Both Barack Obama and Mitt Romney have indicated that Medicare entitlement reform will be on the agenda regardless of who is elected as president.
So what is the purpose of a public insurance program such as Medicare? That’s easy. It is or should be designed to ensure that beneficiaries receive the health care that they need when they need it, without having to face a financial hardship. The most effective design to accomplish this would be to cover all necessary medical costs with no cost sharing whatsoever. Financial barriers to health care would be eliminated.
But some say that  the purpose of insurance is to protect against catastrophic losses only, and that it is not intended to protect against routine expenses. The problem with this definition is that far too many individuals do not have enough disposable income to pay those routine expenses, so high-deductible coverage often defeats the goals of ensuring access and preventing financial hardship in the face of medical need.
What about a lower deductible and other forms of cost sharing such as copayments and coinsurance? Same thing. There are still too many who do not have enough disposable income to pay their share plus their other bills.
Let’s go back to what the purpose of a public health insurance program should be. It should remove financial barriers to care. Does cost sharing enhance this function? No, just the opposite. Cost sharing deliberately introduces financial barriers to care. Why? As Baicker and Levy state in this article, “Medicare — like any good insurance — should not cover so much care so generously that beneficiaries end up consuming too much care of questionable value and driving up costs for everyone.” This disregards the fact that it is almost impossible for patients and even doctors to segregate out which care is “questionable.”
Thus the intent of cost sharing is to control spending, not to improve access nor to protect personal finances, both of which it can worsen. The question then arises, is there any better way of controlling spending, especially by methods that would be even more effective? Of course. Simplify administration, establish global budgets, use regional planning to budget capital improvements, reinforce the primary care infrastructure, and switch to administered pricing to ensure fairness. In other words, change to a single payer financing system. Other nations have proven that you do not need cost sharing to control spending.
Though Medicare pays only about half of health care costs on average for seniors, many soften the blow through the use supplemental plans such as Medigap, retiree health benefit programs, or Medicare Advantage. These authors and many others contend that patients must be exposed to first dollar coverage (remember: to control spending, not to improve access nor financial security), and this should be done by either banning supplemental coverage or by penalizing it with surcharges, presumably to be paid by the beneficiaries.
This concept is now so prevalent that we can fully anticipate that it will be part of the entitlement reform that our politicians are clamoring for. Medicare coverage is already inadequate, and they want patients to have even greater exposure to health care costs. Instead, we need to eliminate deductibles and coinsurance from Medicare to ensure both access and financial security. Switching to a single payer improved Medicare that covers everyone is the Medicare entitlement reform that we really need, not just for our seniors but for the rest of us as well.

Privately-run NHS hospital racks up £4.1m loss

Fury as first privately run NHS hospital racks up £4.1m loss

By Nick Dorman
People.co.uk, October 28, 2012

Bosses at Britain’s first privately-run NHS hospital have asked for a bailout just six months after taking over.

In a major blow to Tory plans to privatise the health service further, contractor Circle racked up losses of £4.1million at Hinchingbrooke.

Now the firm, which is run by a former Goldman Sachs banker and has expressed an interest in running other hospitals, has been forced to ask the local NHS trust for a cash advance.

The hospital has fallen 19 places from the top of a Government league table of patient ­satisfaction since it was taken over by Circle.

Last night Unison health union said this raises big questions over Tory ­privatisation plans for the NHS.

Spokesman Anne Mitchell added: “This should force a rethink. Right from the start our view was a private company would not have the experience to run a large hospital like Hinch­-ingbrooke.

“They made many claims which they are now ­failing miserably to deliver.”

Shadow health minister Jamie Reed said: “Patients are paying the price for David Cameron’s eagerness to hand the NHS to private companies.”

http://www.people.co.uk/news/uk-world-news/2012/10/28/fury-as-first-privately-run-nhs-hospital-racks-up-4-1m-loss-102039-23936289/

And…

Hinchingbrooke losses double Circle Health estimate

BBC News, October 25, 2012

The first NHS hospital to be run by a private company has revealed losses in the firm’s first six months in charge were almost double those forecast.

Circle Health took over management of Hinchingbrooke Hospital in Cambridgeshire in February.

The board reported that 46 nursing posts had been cut so far at the Huntingdon hospital under Circle’s management.

Karen Webb, regional director for the Royal College of Nursing (RCN) union, said: “The RCN doesn’t see how [quality care] can be achieved by removing nurses from the system.

http://www.bbc.co.uk/news/uk-england-cambridgeshire-20087078

And…

Ali Parsa: Government should not be running hospitals

By Andrew Cave
The Telegraph, August 4, 2012

“It’s all about bringing entrepreneurialism, ownership and a sense of engagement into health care,” says Parsa, pointing out that the company subsidiary delivering the health care is 49.9pc owned by hospital staff.

So, how big can Circle become? Parsa, who came to the UK by himself from Iran at the age of 16 a few years after the 1979 Islamic revolution and built up and sold a media promotions company before moving into investment banking with Credit Suisse, Merrill Lynch and Goldman Sachs, apparently sees no limit.

“I’m an entrepreneur with ambition,” he says. “And I didn’t come to run a small company in Circle. We came to create a very large organisation.

“On a 10 to 20-year view, I think the scale of private companies running NHS health care in Britain could be huge. I honestly cannot see why we should not be running many, many hospitals in the UK.

“And if we are doing a great job in the UK 10 or 20 years from now, there’s no reason why we should not be doing the same thing all over the world.”

http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/9450088/Ali-Parsa-Government-should-not-be-running-hospitals.html

Comment:

By Don McCanne, MD:

Britain’s Conservative Prime Minister David Cameron has been eager to privatize their National Health Service. What a great start. Hinchingbrooke, now privately managed by former Goldman Sachs banker Ali Parsa, has racked up losses of £4.1 million and has plummeted on the Government’s new patient satisfaction league table. Apparently Cameron and his Conservatives are blind as to what has happened across the Atlantic.

Of significance is that the tendering process for this arrangement began under the Labour government. Just as the Democrats here have supported an expansion of privatization through private insurers and private managed care organizations, Labour seems to be complicit in Britain’s move toward privatization. Taking care of the one percenters seems to be an international phenomenon. Sad.

Privately-run NHS hospital racks up £4.1m loss

Fury as first privately run NHS hospital racks up £4.1m loss

By Nick Dorman
People.co.uk, October 28, 2012
Bosses at Britain’s first privately-run NHS hospital have asked for a bailout just six months after taking over.
In a major blow to Tory plans to privatise the health service further, contractor Circle racked up losses of £4.1million at Hinchingbrooke.
Now the firm, which is run by a former Goldman Sachs banker and has expressed an interest in running other hospitals, has been forced to ask the local NHS trust for a cash advance.
The hospital has fallen 19 places from the top of a Government league table of patient ­satisfaction since it was taken over by Circle.
Last night Unison health union said this raises big questions over Tory ­privatisation plans for the NHS.
Spokesman Anne Mitchell added: “This should force a rethink. Right from the start our view was a private company would not have the experience to run a large hospital like Hinch­-ingbrooke.
“They made many claims which they are now ­failing miserably to deliver.”
Shadow health minister Jamie Reed said: “Patients are paying the price for David Cameron’s eagerness to hand the NHS to private companies.”
http://www.people.co.uk/news/uk-world-news/2012/10/28/fury-as-first-priv…
And…

Hinchingbrooke losses double Circle Health estimate

BBC News, October 25, 2012
The first NHS hospital to be run by a private company has revealed losses in the firm’s first six months in charge were almost double those forecast.
Circle Health took over management of Hinchingbrooke Hospital in Cambridgeshire in February.
The board reported that 46 nursing posts had been cut so far at the Huntingdon hospital under Circle’s management.
Karen Webb, regional director for the Royal College of Nursing (RCN) union, said: “The RCN doesn’t see how [quality care] can be achieved by removing nurses from the system.
http://www.bbc.co.uk/news/uk-england-cambridgeshire-20087078
And…

Ali Parsa: Government should not be running hospitals

By Andrew Cave
The Telegraph, August 4, 2012
“It’s all about bringing entrepreneurialism, ownership and a sense of engagement into health care,” says Parsa, pointing out that the company subsidiary delivering the health care is 49.9pc owned by hospital staff.
So, how big can Circle become? Parsa, who came to the UK by himself from Iran at the age of 16 a few years after the 1979 Islamic revolution and built up and sold a media promotions company before moving into investment banking with Credit Suisse, Merrill Lynch and Goldman Sachs, apparently sees no limit.
“I’m an entrepreneur with ambition,” he says. “And I didn’t come to run a small company in Circle. We came to create a very large organisation.
“On a 10 to 20-year view, I think the scale of private companies running NHS health care in Britain could be huge. I honestly cannot see why we should not be running many, many hospitals in the UK.
“And if we are doing a great job in the UK 10 or 20 years from now, there’s no reason why we should not be doing the same thing all over the world.”
http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemic…

Britain’s Conservative Prime Minister David Cameron has been eager to privatize their National Health Service. What a great start. Hinchingbrooke, now privately managed by former Goldman Sachs banker Ali Parsa, has racked up losses of £4.1 million and has plummeted on the Government’s new patient satisfaction league table. Apparently Cameron and his Conservatives are blind as to what has happened across the Atlantic.
Of significance is that the tendering process for this arrangement began under the Labour government. Just as the Democrats here have supported an expansion of privatization through private insurers and private managed care organizations, Labour seems to be complicit in Britain’s move toward privatization. Taking care of the one percenters seems to be an international phenomenon. Sad.

Using Canada's Health System as Model Might Cut U.S. Costs: Study

By Steven Reinberg, HealthDay Reporter
U.S. News and World Report, Oct. 30, 2012

TUESDAY, Oct. 30 (HealthDay News) — Since 1980, health care costs in the United States could have been about $2.15 trillion less if Canadian cost-saving measures had been used, according to a new study.

Over the same period, health care spending in the United States grew nearly three times faster than in Canada’s Medicare program, even though Canadian law bans co-payments and deductibles, the City University of New York researchers noted.

“Canada’s Medicare program has been much more successful in controlling costs than the U.S. Medicare program,” said Dr. Steffie Woolhandler, a professor in CUNY’s School of Public Health.

Many factors play into the difference, Woolhandler said.

“Canada’s system is a real single-payer system — our system is single-payer for only a portion of the population,” she said.

This results in higher administrative costs in the United States compared to Canada, Woolhandler said. “In the U.S., administrative costs are about 31 percent of health care costs and it’s about 16 percent in Canada,” she said.

In addition, hospitals in Canada are paid less than in the United States. Also, the Canadian government negotiates drug prices to get the lowest cost, while the U.S. government is prohibited by law from negotiating drug costs for Medicare patients, Woolhandler said.

Medical malpractice costs also are lower in Canada, she noted.

Even though costs are lower in Canada, health outcomes are akin to the those for the United States, Woolhandler said.

“Canadians’ life expectancy is longer than in the United States,” she said. “Access to care is better in Canada.”

In the United States, access to care is limited by costs, Woolhandler said. One criticism of the Canadian system is that people have to wait for care, but Woolhandler says those who have to wait are only a small minority of patients.

Woolhandler, who was a founder of Physicians for a National Health Program, is an advocate for a true single-payer system in the United States.

“The Unites States has serious problems with costs of health care generally and costs of Medicare specifically,” she said. “We need to look at the cost-control methods used in Canada that have worked rather than unproven methods proposed by politicians that are unlikely to work.”

The report was published in the Oct. 29 issue of the journal Archives of Internal Medicine.

For the study, Woolhandler and Dr. David Himmelstein, also a professor in the CUNY School of Public Health, analyzed American and Canadian Medicare spending.

They found, after adjusting for inflation, U.S. Medicare spending rose almost 200 percent from 1980 to 2009; Canada’s rose 73 percent.

Woolhandler noted that some politicians want to replace Medicare with a voucher system that seniors could use to buy health insurance. Others advocate incentives to limit care. Neither option is a proven way of cutting costs, Woolhandler said.

One critic says the analysis by Woolhandler and Himmelstein is “superficial” and doesn’t take into account the differences between the United States and Canada.

“There are a hundred other reasons for the differences, which are difficult to disentangle about how we practice medicine in the U.S.,” said Stuart Altman, a distinguished professor of national health policy at Brandeis University’s Heller School for Social Policy and Management, in Waltham, Mass.

The U.S. medical care system is more expensive to run, he said. For one thing, people in medicine in the United States make more money than in Canada, Altman said.

Altman said there is really no way to bring costs down in the United States.

“We are trying to do that,” he said. “We are trying to rearrange the delivery system to be more efficient, but once we have climbed up that ladder and created this delivery system, it’s very hard to climb back down.”

“The only hope we have is to slow the rate of growth,” Altman said. “There is no way, short of a catastrophe, to walk down that ladder and bring our health care system to look like Canada or anyone else.”

“Health care in other countries is a social service,” he said. “In the United States, it’s big business.”

More information

For more information on U.S. health care costs, visit the Kaiser Family Foundation.

Copyright © 2012 HealthDay. All rights reserved.

http://health.usnews.com/health-news/news/articles/2012/10/30/using-canadas-health-system-as-model-might-cut-us-costs-study

Using Canada’s Health System as Model Might Cut U.S. Costs: Study

By Steven Reinberg, HealthDay Reporter
U.S. News and World Report, Oct. 30, 2012

TUESDAY, Oct. 30 (HealthDay News) — Since 1980, health care costs in the United States could have been about $2.15 trillion less if Canadian cost-saving measures had been used, according to a new study.

Over the same period, health care spending in the United States grew nearly three times faster than in Canada’s Medicare program, even though Canadian law bans co-payments and deductibles, the City University of New York researchers noted.

“Canada’s Medicare program has been much more successful in controlling costs than the U.S. Medicare program,” said Dr. Steffie Woolhandler, a professor in CUNY’s School of Public Health.

Many factors play into the difference, Woolhandler said.

“Canada’s system is a real single-payer system — our system is single-payer for only a portion of the population,” she said.

This results in higher administrative costs in the United States compared to Canada, Woolhandler said. “In the U.S., administrative costs are about 31 percent of health care costs and it’s about 16 percent in Canada,” she said.

In addition, hospitals in Canada are paid less than in the United States. Also, the Canadian government negotiates drug prices to get the lowest cost, while the U.S. government is prohibited by law from negotiating drug costs for Medicare patients, Woolhandler said.

Medical malpractice costs also are lower in Canada, she noted.

Even though costs are lower in Canada, health outcomes are akin to the those for the United States, Woolhandler said.

“Canadians’ life expectancy is longer than in the United States,” she said. “Access to care is better in Canada.”

In the United States, access to care is limited by costs, Woolhandler said. One criticism of the Canadian system is that people have to wait for care, but Woolhandler says those who have to wait are only a small minority of patients.

Woolhandler, who was a founder of Physicians for a National Health Program, is an advocate for a true single-payer system in the United States.

“The Unites States has serious problems with costs of health care generally and costs of Medicare specifically,” she said. “We need to look at the cost-control methods used in Canada that have worked rather than unproven methods proposed by politicians that are unlikely to work.”

The report was published in the Oct. 29 issue of the journal Archives of Internal Medicine.

For the study, Woolhandler and Dr. David Himmelstein, also a professor in the CUNY School of Public Health, analyzed American and Canadian Medicare spending.

They found, after adjusting for inflation, U.S. Medicare spending rose almost 200 percent from 1980 to 2009; Canada’s rose 73 percent.

Woolhandler noted that some politicians want to replace Medicare with a voucher system that seniors could use to buy health insurance. Others advocate incentives to limit care. Neither option is a proven way of cutting costs, Woolhandler said.

One critic says the analysis by Woolhandler and Himmelstein is “superficial” and doesn’t take into account the differences between the United States and Canada.

“There are a hundred other reasons for the differences, which are difficult to disentangle about how we practice medicine in the U.S.,” said Stuart Altman, a distinguished professor of national health policy at Brandeis University’s Heller School for Social Policy and Management, in Waltham, Mass.

The U.S. medical care system is more expensive to run, he said. For one thing, people in medicine in the United States make more money than in Canada, Altman said.

Altman said there is really no way to bring costs down in the United States.

“We are trying to do that,” he said. “We are trying to rearrange the delivery system to be more efficient, but once we have climbed up that ladder and created this delivery system, it’s very hard to climb back down.”

“The only hope we have is to slow the rate of growth,” Altman said. “There is no way, short of a catastrophe, to walk down that ladder and bring our health care system to look like Canada or anyone else.”

“Health care in other countries is a social service,” he said. “In the United States, it’s big business.”

More information

For more information on U.S. health care costs, visit the Kaiser Family Foundation.

Copyright © 2012 HealthDay. All rights reserved.

http://health.usnews.com/health-news/news/articles/2012/10/30/using-canadas-health-system-as-model-might-cut-us-costs-study

What Canada can teach us about fixing Medicare

By Sarah Kliff
The Washington Post, Wonk Blog, Oct. 30, 2012

There are a lot of big differences between health care in the United States and Canada. But when you look at how the two countries provide care for the elderly, it’s actually pretty similar. Both countries run an insurance plan for those over 64 that covers a defined set of benefits.

Canada has managed to provide those benefits, however, for a whole lot less. In this week’s Archives of Internal Medicine, David Himmelstein and Steffie Woolhandler look at the growth of spending on the elderly in the United States and Canada. It finds that, for the over 64 population, both in government programs, Medicare spending has grown significantly faster in the United States than in Canada.

Back in 1980, Medicare spent an average of $1,215 on each beneficiary. In Canada, that number stood at $2,141. The difference largely had to do with the level of benefits: Canadian health insurance covers about 80 percent of seniors’ medical costs, whereas Medicare covers about half. (More than 40 percent of Medicare beneficiaries will spend all assets on out-of-pocket costs during the last five years of life, according to one study.)

Since then, United States per capita spending has grown three times as quickly as it has in Canada. Here’s what that looks like in graph form, using data from the Himmelstein and Woolhandler study:

Per capita health spending growth in the elderly population, 1981-2009

If American health spending on seniors had grown at the Canadian rate, Himmelstein and Woolhander estimate we would have spent $2.1 trillion less on Medicare benefits in the past three decades.

There are certain parts of the Canadian health-care system that would be pretty hard to replicate here in the United States.. One reason Canadian seniors’ coverage costs less is that they’re part of a universal coverage system, where everyone receives government-sponsored insurance. Having everyone in the same purchasing pool makes it easier for the government to negotiate lower rates. This also lowers administrative costs, as all health spending flows through one payer.

Medicare already has a lot of leverage in the United States, with over 50 million members. Getting even more leverage would mean adding more members — in other words, a more nationalized system like Canada’s.

Canada also works under a global budget for its health-care spending: It sets a finite amount that it’s willing to spend on medical care, and figures out how much it will pay doctors within those confines. The United States hasn’t usually been friendly to global budgets — there’s concern about coverage becoming too skimpy — although there is recent movement in this direction. Massachusetts recently became the first state to set a global cap on its health-care spending.

Himmelstein and Woolhandler point out that the Canadian system relies more on primary care doctors, who make up 51 percent of the physician population. In the United States, that number stands at 32 percent. “Primary care–centered health systems are,” they note, “Generally thriftier.”

That’s one change that could, theoretically, happen in the United States. It would, however, likely involve a trade-off, as fewer specialty doctors mean longer wait times to see a specialist. A Commonwealth Fund survey in 2010 found that 59 percent of respondents reported waiting more than four weeks for an appointment with a specialist, more than double the number in the United States.

This isn’t necessarily a trade-off on quality; Canada tends to do pretty well when it comes to international comparisons of health-care outcomes. It would, however, be a big change from how we deliver health care in the United States right now, with much easier access to speciality doctors.

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/30/what-canada-can-teach-us-about-fixing-medicare/

Important: We have the wrong Medicare program

Cost Control in a Parallel Universe: Medicare Spending in the United States and Canada

By David U. Himmelstein, MD; Steffie Woolhandler, MD, MPH
Archives of Internal Medicine, October 29, 2012 (Online First)

As the United States was implementing Medicare in 1966, Canada was phasing in its own Medicare program, which covered all Canadians under provincially administered plans. While these provincial plans varied, all incorporated significant payment reforms—global budgeting of hospitals and stringent capital expenditure controls—and banned copayments and deductibles.

Before the mid-1960s, the 2 nations’ health care financing systems were similar, and health care costs were comparable. Since then, overall US costs have grown more rapidly, but no study has compared spending for the elderly—the populations covered by Medicare in both nations.

Results

US Medicare spending per elderly enrollee rose from $1215 in 1980 to $9446 in 2009 (an inflation-adjusted 198.7% increase). The comparable increase for Canada was 73.0% (from $2141 to $9292). Canada’s higher base-year spending reflects its more comprehensive benefits, covering about 80% of seniors’ total health costs, vs about 50% in US Medicare.

The Table lists actual US Medicare spending from 1980 through 2009 and projected spending and savings had US costs risen at the lower Canadian rate. Projected savings totaled $154.2 billion in 2009 and $2.156 trillion for 1980 through 2009.

For the 1971-2009 period, US costs rose 374.1% vs 126.3% for Canada, and estimated foregone savings were $2.9024 trillion.

Comment

Medicare spending has grown nearly 3 times faster in the United States than in Canada since 1980. Had US Medicare costs risen at Canadian rates, rather than a deficit of $17.1 billion in 2009, the Medicare Hospital Trust Fund would have realized a $32.3 billion surplus. Savings on Medicare Part B would have been even larger. By 2009, the $2.156 trillion in excess spending attributable to US Medicare’s faster growth was equivalent to more than one-sixth of the national debt.

Several features of Canada’s program help constrain costs. First, the single-payer system has simplified administration, holding administrative costs to 16.7% of overall spending vs 31.0% in the United States. Although US Medicare’s internal overhead costs are low, it remains one among many payers. Hence providers’ administrative costs are inflated by having to deal with a multitude of payers and track eligibility, attribute costs, and bill for individual patients and services.

Second, Canadian hospitals receive prospectively determined global operating budgets, removing incentives to provide unnecessary care while simplifying billing and administration. However, unlike accountable care organization payment schemes in the United States, capital costs are not folded into the global budgets but distributed separately through an explicit health-planning process. Canadian hospitals cannot use operating surpluses to fund new buildings or equipment but must request separate capital appropriations. Hence, they cannot expand by overproviding lucrative services, gaming the payment system through upcoding, avoiding unprofitable patients, or cost shifting.

Third, 51% of Canada’s physicians are primary care practitioners vs 32% in the United States. Primary care–centered health systems are generally thriftier. Canada’s outpatient fee schedules are also less technology skewed than in the United States.

Fourth, Canada’s provincial plans have used their concentrated purchasing power to limit drug and device prices.

Finally, litigation and malpractice costs have remained relatively low in Canada.

Life expectancy at age 65 years is longer and has grown faster in Canada than in the United States since 1980 (and 1971), offering reassurance that cost control has not compromised quality. A meta-analysis suggests that clinical outcomes are, if anything, better for Canadians than for insured Americans.

To some, US Medicare’s grim financial health suggests an even grimmer conclusion: it can no longer keep its promise of all needed care for the elderly population. Some would replace it with vouchers that seniors could use to purchase private coverage. Others suggest upending the current payment system by inverting volume-based incentives, offering instead profits to organizations that limit utilization. Yet the efficacy of these drastic solutions remains unproven. Canada’s road-tested cost-containment methods offer an alternative.

http://archinte.jamanetwork.com/article.aspx?articleid=1387588

PNHP Press Release:
https://pnhp.org/news/2012/october/canada’s-health-costs-for-seniors-rising-slowly-points-way-to-medicare-solvency-ar

Comment:

By Don McCanne, MD

This study is particularly important because it compares spending in our Medicare program for beneficiaries 65 and older with Canadian Medicare spending for the same age population during the same decades studied. This apples to apples comparison reveals that there is no contest. Since 1971, we’ve spent almost $3 trillion more than we would have had we used Canada’s payment reforms. The Medicare Hospital Trust Fund would have had a huge surplus by now, and nobody would be claiming that Medicare is “going broke.”

The difference is due to economic policies that really do work. Single payer advocates already know what these are, but for those who need a reminder, they are listed in the Comment in the original article above.

Not only did Canadians more effectively control their health care cost increases, their life expectancy grew more rapidly during the same time period. They benefited more under their cost efficient Medicare model.

We have enough understanding of health policy science to predict that the current proposals to control spending in the United States will either have very little impact, or, much worse, will reduce spending by making health care access even more unaffordable.

Comparing the two Medicare programs, the Canadian system pays about 80 percent of health care costs, whereas our Medicare program pays only about half. Also, Canada has banned copayments and deductibles for physician and hospital services – a mainstay of the perverse, misguided efforts to control health spending in the United States. We can control spending without imposing financial penalties on people accessing health care that we want them to have.

It is time for all of us to express our OUTRAGE! We can no longer accept inaction by our politicians because they fear the political consequences. We have to make them understand that they face dire political consequences if they don’t act. As FDR said, “Make me do it.” It’s time to get in their faces!

Canadian Example Offers a Possible Path to Curbing US Medicare Costs

By Mike Mitka
news@JAMA, Oct. 29, 2012

While Medicare costs continue to rise and Democrats and Republicans promote various plans to curb such spending, 2 researchers suggest politicians look north to Canada for solutions.

In a Research Letter published today in the Archives of Internal Medicine, the authors compare Medicare spending from 1980 through 2009 in the United States and in Canada, which has a similar Medicare program. They found US Medicare spending per elderly enrollee rose from $1215 in 1980 to $9446 in 2009, an inflation-adjusted increase of 198.7%. In Canada, spending per elderly enrollee increased from $2141 to $9292, a 73.0% increase. Canada’s higher initial spending reflects its more comprehensive benefits, covering about 80% of seniors’ total health costs compared with about 50% in US Medicare. Had US Medicare spending grown at the same rate as in Canada, more than $2 trillion (one-sixth of the national debt) would have been saved.

Coauthor Steffie Woolhandler, MD, MPH, School of Urban Public Health at Hunter College, City University of New York, discusses her publication:

“Regardless who wins the election, we will be facing big cuts in the Medicare program, but many seniors don’t have the money to pay for their own health care plans. So we wanted to see what happened in Canada with its senior citizens. In many ways Canada’s plan looks like US Medicare; however, they have been much more successful at cost control than us, and we quantified this.

“In the United States, costs in Medicare have risen 3 times faster than in Canada’s Medicare. There are several reasons for this. Administrative costs are about 31% of overall spending in the United States [including both public and private insurance] and only 16.7% in Canada. If we look at the US Medicare program, the overhead cost is only 2% versus 14% for private insurance, but then the hospitals and doctors have extremely high paperwork costs because they have to work with various insurers, and this spills over into administrative costs in Medicare.

“Canada has health planning with teeth. They make sure facilities are built where they’re needed. There is strict control of building new buildings and buying new equipment: hospitals don’t expand willy-nilly. Canadians pay about 40% less for their medications because the government steps in and makes bulk purchases.

“And when we start talking outcomes, it looks like Canada’s health care system is delivering. Canadians do live 2 years longer than people in the United States. And if measured starting at age 65, Canadians have seen more improvement in their life expectancy than seen in the United States.

“We in the physician community need to take some leadership here and tell the politicians that we need to use these road-tested cost controls, and we cannot accept that people may be denied or will not be able to afford care.”

http://newsatjama.jama.com/2012/10/29/author-insights-canadian-example-offers-a-possible-path-to-curbing-us-medicare-costs/