By Rachel Bluth
Kaiser Health News, January 16, 2019

Scrolling through the GoFundMe website reveals seemingly an endless number of people who need help or community support. A common theme: the cost of health care.

Of the $5 billion the company says it has raised (in eight years), about a third has been for medical expenses from more than 250,000 medical campaigns conducted annually.

The prominence of the medical category is the symptom of a broken system, according to CEO Rob Solomon. He said he never realized how hard it was for some people to pay their bills: “I needed to understand the gigantic gaps in the system.”

Solomon talked to Kaiser Health News’ Rachel Bluth about his company’s role in financing health care and what it says about the system when so many people rely on the kindness of strangers to get treatment.

Q: KHN and other news outlets have reported that hospitals often advise patients to crowdfund their transplants. It’s become almost institutionalized to use GoFundMe. How do you feel about that?

It saddens me that this is a reality. Every single day on GoFundMe we see the huge challenges people face. Their stories are heartbreaking.

Some progress has been made here and there with the Affordable Care Act, and it’s under fire, but there’s ever-widening gaps in coverage for treatment, for prescriptions, for everything related to health care costs. Even patients who have insurance and supposedly decent insurance [come up short].

I would love nothing more than for “medical” to not be a category on GoFundMe. The reality is, though, that access to health care is connected to the ability to pay for it. If you can’t do that, people die. People suffer. We feel good that our platform is there when people need it.

Q: What have you learned that you didn’t know before?

I guess what I realized [when I came] to this job is that I had no notion of how severe the problem is. You read about the debate about single-payer health care and all the issues, the partisan politics. What I really learned is the health care system in the United States is really broken. Way too many people fall through the cracks.

The government is supposed to be there and sometimes they are. The health care companies are supposed to be there and sometimes they are. But for literally millions of people they’re not. The only thing you can really do is rely on the kindness of friends and family and community. That’s where GoFundMe comes in.

Q: But what does this say about the system?

The system is terrible. It needs to be rethought and retooled. Politicians are failing us. Health care companies are failing us. Those are realities. I don’t want to mince words here. We are facing a huge potential tragedy. We provide relief for a lot of people. But there are people who are not getting relief from us or from the institutions that are supposed to be there. We shouldn’t be the solution to a complex set of systemic problems. They should be solved by the government working properly, and by health care companies working with their constituents. We firmly believe that access to comprehensive health care is a right and things have to be fixed at the local, state and federal levels of government to make this a reality.

https://khn.org…

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Comment:

By Don McCanne, M.D.

We’ve all heard stories about how individuals were referred to the GoFundMe crowdsourcing website when they were unable to pay for their medical care. What we don’t hear is how much of the unmet need can be filled by GoFundMe. Based on the numbers in this article, they have collected an average of about $200 million a year for health care costs. That is about 00.006 percent of our $3.5 trillion annual health care expenditures – a bit short of the need. Charity just won’t do it; the bill is too big.

Although we certainly admire the efforts of GoFundMe CEO Rob Solomon, he is the first to say, “access to comprehensive health care is a right and things have to be fixed at the local, state and federal levels of government to make this a reality.” It seems like this cries out for Single Payer Medicare for All, federally funded and administered on a regional and local basis. Nothing like good ol’ egalitarian solidarity.

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By Justin McCarthy
Gallup, January 14, 2019

Seventy percent of Americans describe the current U.S. healthcare system as being “in a state of crisis” or having “major problems.” This is consistent with the 65% to 73% range for this figure in all but one poll since Gallup first asked the question in 1994.

Although the percentage of Americans saying U.S. healthcare has major problems or is in crisis has been fairly flat over the past two decades, Democrats’ and Republicans’ views have changed within that time frame.

From 2001 to 2009, Democrats and Democratic-leaning independents were considerably more likely than Republicans and Republican-leaning independents to say healthcare had major problems or was in crisis. Democrats’ negative assessments then decreased in the rest of President Barack Obama’s first term, after passage of the Affordable Care Act (ACA) in 2010, at the same time that Republicans’ concerns mounted. By 2012, the lines crossed, so that during most of Obama’s second term, Republicans were significantly more likely than Democrats to perceive significant or critical problems in the healthcare system.

Now, with Republican President Donald Trump in office, partisan views have flipped again, with Democrats more likely to be concerned.

The difference between the two major parties on this measure was just five percentage points in 2017, Trump’s first year, when 76% of Democrats and 71% of Republicans said healthcare had major problems or was in crisis. This expanded to a 28-point gap in 2018, when 84% of Democrats and 56% of Republicans expressed these views — the largest partisan gap on this measure in Gallup’s trend since 2001.

The 2018 poll was conducted on the heels of last year’s midterm elections, in which Democratic candidates highlighted key problems with the healthcare system — especially coverage.

https://news.gallup.com…

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Comment:

By Don McCanne, M.D.

Consistently since 1994 (except 9/11/2001) about seven-tenths of the nation has believed that the U.S. health care system is in a state of crisis or has major problems. That view persists today.

The intensity of this view has varied with the politics. During the administration of George W. Bush, the Democrats thought the system was worse than did the Republicans. Following the passage of the Affordable Care Act under Barack Obama, the Republicans thought the system was worse. At the time of the midterm elections last year, the opinions flipped again when the Democrats had campaigned on the need to fix our system with Medicare for All whereas the Republicans abandoned their attack on Obamacare and called only for guaranteed issue – not excluding people from insurance because of preexisting conditions.

Although political polarization is certainly a reality, we should temper our views on this particular difference. It should be noted that the graph is truncated – the bottom 30 percent is not included. It looks like the two sides switched positions two times, but, in fact, except for 2001, at all times the majority of both parties believed that health care was in a state of crisis or had major problems.

The point is that a majority of all Americans, regardless of party affiliation, believes that we have very serious problems with our health care system. The main difference is that the Republicans have failed to come up with any effective solutions and thus currently consider the crisis less pressing, whereas the Democrats are now more concerned, in spite of Obamacare, and thus many support a proven solution: Single Payer Medicare for All. It would fix the problems, and everyone, regardless of political affiliation, needs to understand that.

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By Gerard F. Anderson, Peter Hussey, and Varduhi Petrosyan
Health Affairs, January 2019

Abstract

A 2003 article titled “It’s the Prices, Stupid,” and coauthored by the three of us and the recently deceased Uwe Reinhardt found that the sizable differences in health spending between the US and other countries were explained mainly by health care prices. As a tribute to him, we used Organization for Economic Cooperation and Development (OECD) Health Statistics to update these analyses and review critiques of the original article. The conclusion that prices are the primary reason why the US spends more on health care than any other country remains valid, despite health policy reforms and health systems restructuring that have occurred in the US and other industrialized countries since the 2003 article’s publication. On key measures of health care resources per capita (hospital beds, physicians, and nurses), the US still provides significantly fewer resources compared to the OECD median country. Since the US is not consuming greater resources than other countries, the most logical factor is the higher prices paid in the US. Because the differential between what the public and private sectors pay for medical services has grown significantly in the past fifteen years, US policy makers should focus on prices in the private sector.

From the introduction

Much has happened in the US and other OECD countries in health policy and health care delivery in the intervening fifteen years. Since 2003 there has been much greater attention given to the cost of treating people with chronic conditions, a greater emphasis on value-based care, more people entering managed care programs, the passage of the Affordable Care Act, the introduction of electronic medical records, consolidation of hospitals and insurers, and many other changes designed to lower the level of spending in the US. As a result, it is important to assess whether the general conclusion that prices are responsible for most of the difference in health spending remains valid and what, if anything, has changed.

Health spending

US per capita health spending was $9,892 in 2016. The US spending level was 25 percent higher than that of Switzerland ($7,919), the country with the next-highest expenditure per capita; 108 percent higher than that of neighboring Canada ($4,753) and 145 percent higher than the OECD median of $4,033. The US spent 17.2 percent of its GDP on health care in 2016, and the OECD median was 8.9 percent.

Public versus private spending

The US financed 50.9 percent of its health care from private sources in 2016, compared to the OECD median of 25.0 percent. It is noteworthy that the differential between the prices paid by public and private insurers in the US has increased drastically since the 2003 article was written. In 2000 the price differential between what public and private insurers paid was approximately 10 percent. The Medicare Payment Advisory Commission recently estimated that private insurers pay prices that are 50 percent higher than what Medicare pays. Increased attention needs to be paid to the prices paid in the private sector.

Spending on pharmaceuticals

In 2015 per capita spending on pharmaceuticals varied from $171 in Poland to $1,011 in the US, with most of the OECD countries spending $400–$600. Recent studies found that prices for brand-name pharmaceuticals were responsible for most of the difference in pharmaceutical spending, with the US providing a considerable portion of the profits to the pharmaceutical industry.

Supply of physicians

In 2015 the US had 19 percent fewer practicing physicians per 1,000 population than the median OECD country (2.6 versus 3.2). The median OECD country had 12.1 medical school graduates in 2015 per 100,000 population, while the US had only 7.5. The US also had the lowest percentage of generalist physicians among the twenty-eight countries with data available, according to the OECD definition: 11.9 percent. The OECD median was 27.9 percent.

Supply of nurses

The US nurse-to-population ratio declined from 2000 to 2015, when it was 7.9 per 1,000 population—20 percent below the OECD median (9.9 per 1,000).

Hospitals

The US had 26 percent fewer inpatient acute care hospital beds per 1,000 population (2.5) than the median OECD country (3.4) in 2015.

Medical technology

The US was second (after Japan) in MRI units per million population and third (after Japan and Australia) in CT scanners per million population in 2015.

Explanations for differences

There is a growing literature on administrative costs. A Commonwealth Fund comparison of health insurance administrative costs showed that the US spent $737 per capita on administration, compared to $94 per capita in the median OECD country. The next-highest-spending country after the US (Switzerland) had administrative costs of only $280. In 2017 Steffie Woolhandler and David Himmelstein estimated that the US would save about $617 billion (about 20 percent of its total health spending) if it moved to a single-payer system. A study comparing administrative costs of physicians in Canada and the US found that US physicians spend considerably more on administrative services than Canadian physicians do.

Health spending versus health care provision

The 2003 article discussed how the buy and sell sides of the marketplace operate. The subsequent literature has validated the arguments made in the 2003 article. First, many OECD countries continue to use their monopsony power to control prices, while the US continues to have geographic areas with providers able to obtain “rents” from having monopolies in their community. Second, the current literature continues to show that the US buy side continues to be highly fragmented by international standards.

A series of recent articles has examined the relationship between the market power of providers in a community and health outcomes and found association with higher prices but very little correlation with health outcomes. These studies show that insurance companies are strengthening their market power through consolidation, while hospitals and physicians’ practices merge into giant conglomerates, strengthening their sell-side market power and driving up the prices.

In the US the evidence suggests that consolidation of insurers does not necessarily lead to lower premiums, copayments, or deductibles, but it shifts profits from providers to insurers, thereby transferring revenues from providers to insurers and not to society.

It’s still the prices, stupid

In 2000 the US had fewer physicians per 1,000 population, physician visits per capita, and acute care beds per capita, as well as fewer hospital admissions per 1,000 population and acute care days per capita, compared to the median OECD country. The US was still not devoting more real resources to health care than most other OECD countries in 2015 or 2016. At that time, the US had 26 percent fewer hospital beds per capita, 20 percent fewer practicing nurses, and 19 percent fewer practicing physicians per capita, compared to the OECD median country. Because the US is still not devoting more real resources to medical care than the typical OECD country, we believe that the conclusion that “it’s the prices, stupid,” remains valid. What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

The really important finding of this update of the classic study, “It’s the Prices, Stupid,” is that the conclusion has not changed: Health care spending in the United States is the highest largely because our prices are the highest.

There are a couple of quotes in this update that warrant special attention:

“In the US the evidence suggests that consolidation of insurers does not necessarily lead to lower premiums, copayments, or deductibles, but it shifts profits from providers to insurers, thereby transferring revenues from providers to insurers and not to society.”

Got that? The consolidation of the private insurers has not resulted in benefits to health care consumers nor to society at large. It has shifted profits from providers to insurers. It makes you wonder why the American Medical Association and the American Hospital Association continue to support a financing system heavily dependent on private insurers when those insurers are draining the providers of their profits, which then must be compensated for by yet higher prices.

“What is different between 2003 and 2016 is that the differential between what public and private insurers pay for health care services has become wider. Lowering prices in the US will need to start with private insurers and self-insured corporations.”

Got that one too? The private insurers have been more successful in enabling the increase in health care prices than has the public sector. Success here of course means more profit from higher prices, but not success in controlling excess health care spending to benefit society.

The authors conclude that lowering prices will need to start with private insurers and self-insured corporations, but the past three-quarters of a century has provided more than ample evidence that private insurers and self-insured corporations have been incompetent or derelict in their efforts to control prices; both have been far more concerned with tending to maximizing their own profits.

Single payer advocates understand that reducing prices does not mean cutting physician and hospital payments to unacceptably low levels, but rather it means reducing prices by increasing efficiency of the financing system by eliminating profound administrative excesses, negotiating fair rates, eliminating diversion of funds to passive investors, and use of global budgets similar to financing of other publicly-funded facilities like fire departments.

There are two models that have been proven to be effective: a national health service (socialized medicine) or a single payer social insurance program like an improved Medicare that covers everyone (Single Payer Medicare for All). For the United States, the latter would be less disruptive, not to mention that it already has a following within the nation in a large part because of the popularity of our traditional Medicare program.

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By Liz Farmer
Governing, January 9, 2019

The cost of retiree health care is spiraling out of control. In just two years, according to a recent S&P Global Ratings report, unfunded retiree health-care liabilities across the 50 states increased by $100 billion to now just under $700 billion.

The problem is becoming so alarming that Dearborn, Mich., recently borrowed money to help fill the gap, a move deemed risky by financial analysts. A more acceptable approach taking hold, thanks in part to the Affordable Care Act (ACA), is scrapping government-sponsored health plans and instead paying for retirees to purchase a plan on a private health insurance exchange. The change is expected to save some cities hundreds of millions of dollars and make their annual retiree health-care costs more predictable.

Retiree health care, also known as other post-employment benefits (OPEB), is one of the fastest-growing line items in government budgets. That’s because retirees are living longer and medical costs are rising faster than the rate of inflation.

In recent years, some governments have tried to manage costs by simply cutting health-care benefits — something they legally can’t do with pensions. In 2014, Memphis, Tenn., eliminated its 70 percent subsidy for retiree health insurance, and instead, plugged those savings into its vastly underfunded pension system. But unions fought the cuts, suing and pressuring the city to reinstate health care for retirees. With the subsidy gone, agencies were having problems with recruitment and retention, particularly police and fire departments where officers tend to retire well before the Medicare-eligible age of 65.

When Mayor Jim Strickland took office in 2016, he immediately tasked the city’s new chief human resources officer, Alexandra Smith, to fix the problem. That’s when the idea of turning to a health insurance exchange first emerged.

Private exchanges are different than the public, ACA exchanges. The idea is the same in that they pool risk and allow users to shop for their own health plans. But private exchanges are run by insurance and benefits companies. They have been around for much longer, generally catering to the 65 and older crowd looking for a health plan to supplement their Medicare coverage.

In recent years, governments, such as Cobb County, Ga., and the state of Ohio, have turned to these private exchanges for their Medicare-eligible retirees as a way to cut down on costs. But thanks to the ACA, private exchanges can expand their market to include users who are not yet eligible for Medicare. That’s opening up new options for governments that are paying for health care for younger retirees.

For Memphis, joining an exchange gave the city a chance to control their health-care costs because the insurer — rather than the city — is on the hook for big claims.

Shifting that responsibility, says Smith, dropped the city’s OPEB liability by $300 million to total $415 million. Costs going forward will also be more predictable, around $19 million per year. “The volatility we would have had by having retirees on our group insurance plan would have been much higher,” she says. “Now we’re able to better predict what our annual payments are.”

It also gave the city something to offer its younger retirees. While Memphis didn’t reinstate its 70 percent subsidy, it offers $5,000 annually for individuals and $10,000 for public safety retirees in the form of a health reimbursement account for those who aren’t eligible yet for Medicare. The money helps cover a significant portion of the premiums for retirees who buy a plan on the exchange.

Meanwhile, the idea is gaining traction. Ohio’s police and fire pension has already made the jump, and the state’s public employee pension plan is considering a similar move.

http://www.governing.com…

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Comment:

By Don McCanne, M.D.

Public employers, in order to help control the costs of their retiree health benefit programs, are dropping the retirees from their own government-sponsored health plans and instead giving retirees a health reimbursement account (HRA) that can be used to purchase health plans through a private insurance exchange. The plan in Memphis provides an example as to how that can work out for the employers and for the retirees.

Instead of paying a 70 percent premium subsidy towards the government-sponsored health plan, Memphis is paying into the HRAs an amount that reduces their post-employment benefit obligation by $300 million, a savings for Memphis of 42 percent! That’s great for their city budget, but what does that do for the retirees?

To begin with, private insurers generally have significantly greater administrative costs, higher executive compensation schedules, plus a need to divert funds to investors (or build capital margins for nonprofits), plus there are the additional administrative costs of the private exchanges. If the retirees have 42 percent fewer funds for their retiree coverage and the coverage is now more expensive than the previous government-sponsored plan, then what gives? It would require some combination of much higher insurance premiums (likely greater than the funds in their HRAs), much greater deductibles and other cost sharing, and a reduction in the health benefits covered by the private plans. All of these can place a significant financial burden on individuals now trying to get by on their modest pensions. They might have to deplete their assets, if they have any, and health care access may be impaired because of these financial barriers. This can’t be good.

We have to end our dependence on an overpriced, inefficient, inequitable, fragmented health care financing system dominated by private insurers. We can do that by enacting and implementing a Single Payer Medicare for All program. Although support is increasing, inertia remains a problem, and we may have to start taking to the streets to get it to happen.

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