By Seema Verma
Health Affairs Blog, August 9, 2018

For many years we have heard health care policymakers from both political parties opine about the need to move to a health care system that pays for the value of care delivered to patients, rather than the mere volume of services.

From the moment I became Administrator of the Centers for Medicare & Medicaid Services (CMS), I have been committed to using every tool at my disposal to move our health care system towards value-based care.

One set of value-based payment models that CMS has been closely reviewing are initiatives involving Accountable Care Organizations (ACOs).

In this post I will unpack key features of Medicare’s ACO initiatives and provide an overview of CMS’s new proposal for the Medicare Shared Savings Program, called “Pathways to Success.”

Upside-Only Versus Two-Sided ACOs

The majority of Medicare’s ACOs – 460 of the 561 or 82% of Shared Savings Program ACOs in 2018 – are in the upside-only “Track 1” of the Shared Savings Program, meaning that they share in savings but do not share in losses.  Currently, ACOs are allowed to remain in the one-sided track for up to six years.

The results show that ACOs that take on greater levels of risk show better results for cost and quality over time. (See Kip’s comments.)

The current combination of six years of upside-only risk, which involves bonus payments if spending is low but no risk of losses if spending goes up, along with the provision of waivers may be encouraging consolidation.  Such consolidation reduces choices for patients without controlling costs.  This is unacceptable.

The proposed changes included in Pathways to Success would shorten the maximum amount of time permitted in upside-only risk to allow a maximum of two years, or one year for ACOs identified as having previously participated in the Shared Savings Program under upside-only risk.

Streamlining the program, extending the length of agreements, and accelerating the transition to two-sided risk would result in reduced administrative burden and greater savings for patients and taxpayers.

Looking Forward

ACOs can be an important component of the move to a value-based system, but after six years of experience, the program must evolve to deliver value.  The time has come to put real “accountability” in Accountable Care Organizations.

https://www.healthaffairs.org…

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Seema Verma Hyperventilates About Tiny Differences Between ACOs Exposed to One-and Two-Sided Risk

By Kip Sullivan, J.D.
The Health Care Blog, August 21, 2018

There is no meaningful difference between the performance of Medicare ACOs that accept only upside risk (the chance to make money) and ACOs that accept both up- and downside risk (the risk of losing money). But CMS’s administrator, Seema Verma, thinks otherwise. According to her, one-sided ACOs are raising Medicare’s costs while two-sided ACOs are saving “significant” amounts of money. She is so sure of this that she is altering the rules of the Medicare Shared Savings Program (MSSP). Currently only 18 percent of MSSP ACOs accept two-sided risk. That will change next year. According to a proposed rule CMS published on August 9, ACOs will have at most two years to participate in the MSSP exposed to upside risk only, and after that they must accept two-sided risk.

That same day, Verma published an essay on the Health Affairs blog in which she revealed, presumably unwittingly, how little evidence she has to support her decision. The data Verma published in that essay revealed that one-sided ACOs are raising Medicare’s costs by six-one-hundredths of a percent while two-sided ACOs are cutting Medicare’s costs by seven-tenths of a percent. Because these figures do not consider the expenses ACOs incur, and because the algorithms CMS uses to assign patients to ACOs and to calculate ACO expenditure targets and actual performance are so complex, this microscopic difference is meaningless.

As pathetic as these figures are, they fail to take into account ACO start-up and operating costs. CMS doesn’t know or care what those costs are. The only relevant information we have are some undocumented statements by the staff of the Medicare Payment Advisory Commission (MedPAC) to the effect that ACO overhead is about 2 percent of their benchmarks (their predicted spending). I suspect 2 percent is low, but let’s take it at face value and do the math. If, as Verna’s data indicates, two-sided ACOs save Medicare seven-tenths of a percent net (that is, considering both CMS’s shared-savings payments to some ACOs and penalties other ACOs that lose money pay to CMS), but these ACOs spend 2 percent doing whatever it is ACOs do, that means the average two-sided ACO is losing one percent.

The good news is that Verma may have hastened the demise of a program that isn’t working. Whether Congress ultimately pulls the plug on the ACO project will depend on whether ACO advocates will concede at some point that the ACO fad was based on faith, not evidence, and has failed to work. I predict they will refuse to admit failure and will instead peddle another equally ineffective solution, for example, overpaying ACOs (as the Medicare Advantage insurers and their predecessors have been for the last half-century). I base my prediction on the behavior of ACO advocates. The history of the ACO movement indicates ACO proponents don’t make decisions based on evidence.

Facing the Evidence

Evidence that the ACO project is failing is piling up. All three of CMS’s two-sided ACO programs – the PGP demo, the Pioneer demo, and the Next Generation program – saved only a few tenths of a percent, while CMS’s mostly two-sided program, the MSSP, raised costs by a smidgeon. All four programs have raised costs if we take into account the ACOs’ start-up and operating costs and CMS’s cost of administering these complex programs. Evidence indicting the other major “value-based payment” fads – medical homes, bundled payments, and pay-for-performance schemes – is also piling up. The simultaneous failure of all these fads to cut costs spells trouble ahead for the Affordable Care Act (because it relies on “value-based payment reforms” for cost containment), MACRA (because it also relies on “value-based payment” theology), and our entire health care system (because the big insurance companies and the major hospital-clinic chains are spending more money on “value-based payment” fads than those fads are saving, and because these 1,000-pound gorillas are using the establishment’s endorsement of ACOs, medical homes etc. as an excuse to become 2,000-pound gorillas).

The root cause of our nation’s chronic inability to adopt effective cost-containment policies is the chronic inability of the American health policy establishment to make decisions based on evidence, not groupthink. Seema Verma’s decision to bet the farm on two-sided-risk ACOs is the latest example of this problem.

http://thehealthcareblog.com…

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Comment:

By Don McCanne, M.D.

We can thank Seema Verma for showing us that all of the talk about value-based payment – paying for value instead of volume through the establishment of accountable care organizations – was never really about value. Her insistence in shoving providers into downside risk reveals that it was always about reducing federal spending on Medicare. But that hasn’t changed her deceptive rhetoric about value and accountability.

Thank goodness we have astute analysts such as Kip Sullivan. The excerpts from his critique of Verma’s views as expressed in her Health Affairs Blog article should tempt you to read his entire critique at The Health Care Blog (link above).

The nonsense about ACOs has to go so we can get down to fixing the real problems with our health care financing system – the inequities, lack of universality, and lack of affordability for far too many individual patients. So let’s turn up the volume on a well designed, single payer, improved Medicare for all.

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

By Drew Altman
Axios, August 20, 2018

Share under age 65 who were uninsured or had problems affording care in 2017:

All people – 26.2%
15.5% – Insured but struggled with affordability
10.7% – Uninsured

People in fair or poor health – 46.4%
32.9% – Insured but struggled with affordability
13.5% – Uninsured

We still have an uninsured problem in the U.S., but we have a far broader health care affordability problem that hits sick people especially hard.

Why it matters:  It’s time to think more broadly about who’s having trouble paying for the health care they need. The combination of lack of insurance and affordability affects about a quarter of the non-elderly population at any one time, but almost half of people who are sick.

Now that the Affordable Care Act has expanded health coverage, the percentage of the non-elderly population that is uninsured is now just under 11%, the lowest level ever recorded. But as the chart shows:

* Another 15.5% who have insurance either skipped or delayed care because of the cost or reported that they or someone in their family faced problems paying their bills in 2017.

* That brings the total percentage of non-elderly people with insurance and affordability problems to 26.2%.

More striking: nearly half of all people in fair or poor health — 46.4% — are uninsured or have affordability problems despite having coverage.

* That includes 13.5% who were uninsured and in fair or poor health — arguably the worst off in the entire system — and another 32.9% percent who have insurance but said they or a family member have had a problem affording care in the last year.

It’s not surprising that people who are sicker and need more care would have more problems paying for it. But arguably an insurance system should work best for people who need it the most.

All this says a lot about current health care politics.

* It helps explain why so many people name health their top issue, despite the progress that has been made in covering the uninsured. And everyone who’s sick and can’t afford medical care has family members and friends who see what they are going through, creating a political multiplier effect.

* It is also why health care is substantially an economic issue as well as an issue of access to care. When people have trouble paying medical bills, it’s a hard hit to their family budgets — causing many people to take a second job, roll up more debt, borrow money, and forego other important family needs.

For as long as I have been in the field, we have used two measures more than any others to gauge the performance of the health system: the number of Americans who are uninsured and the percentage of GDP we spend on health. Both measures remain valid today.

The bottom line: If we want a measure that captures how people perceive the system when the number of uninsured is down and overall health spending has moderated, we need better ways of counting up the much larger share of the population who are having problems affording care.

And whatever big policy idea candidates are selling, from single payer on the left to health care choices on the right, the candidate who connects that idea to the public’s worries about paying their medical bills is the one who will have found the secret sauce.

https://www.axios.com…

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Comment:

By Don McCanne, M.D.

More boring numbers. But wait. These may be the most important numbers of all when we look at how our health care financing system is working. For the very people that our system should be designed to help – people in fair to poor health – it is not working well for nearly half of them!

Think about that.

When you need health care, the deductibles may create a financial barrier to care, potentially impairing access or creating a financial hardship.

When you need health care, the insurance premiums may be unaffordable and you end up uninsured, potentially creating an even greater financial hardship along with impaired access to care.

When you need health care, the insurers have likely limited you to physicians and hospitals that they have selected for their networks, preventing you from obtaining what may be more appropriate care outside of their networks, not to mention creating a greater financial burden when care outside of the network is unavoidable.

One-fourth of people under 65 are uninsured or struggle with affordability of health care.

But the most damning feature of our health care financing system is that nearly one-half of people under 65 who are in fair to poor health are uninsured or struggle with affordability of health care. This is a crisis that necessitates replacing our current costly but highly dysfunctional health care financing system with one that actually works – a well designed, single payer, improved Medicare for all.

This is an emergency. People are suffering, some are facing financial hardship or even personal bankruptcy, and others are dying!

We do not need more money. We are already spending enough. We merely need to restructure the financing system so that it is both universal and equitable in removing financial barriers to care. That is exactly what a single payer system is designed to do.

The clincher? Drew Altman reminds us that we have a choice between “single payer” and “health care choices.” Well, that’s not quite accurate because it is single payer that allows free choices in actual health care services whereas it is the insurers that give you choices of insurance products as they take away your choices in health care.

Altman’s challenge to find the “secret sauce” that addresses the public’s worries about paying their medical bills is the easiest challenge we’ve faced. Contrast the moral imperative of the single payer model, which brings affordable care to everyone, with the insurance industry’s “health care choices” – their deceptive euphemism for choosing a product from their highly profitable market of private insurance plans, even though they are not serving the interests of one-half of people under 65 who are in fair to poor health – the very population that an ethical health care financing system should be targeting.

This is a really simple concept that everyone should be able to understand. Share it widely.

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

By Hannah Holzer
The Sacramento Bee, August 15, 2018

Changes at California’s pension giant will force more than 14,000 CalPERS members and their dependents in the Sacramento region and Bay Area to find a new health plan over the coming year.

The California Public Employees’ Retirement System recently negotiated its lowest premium increases in the past 21 years, which will mean lowered health premiums for 800,000 members in 2019.

As a result of the changes, CalPERS will part ways with two major providers — Health Net and Blue Shield — in some areas.

“The medical groups and hospitals members will have access to could change depending on their choice of health plan,” (CalPERS spokeswoman Stephanie) Buck said. “Members can call the doctor’s office and ask if they are affiliated with the health plan and the hospital they prefer to use. They may also contact the health plans directly.”

“The primary differences between most of the HMO (health maintenance organization) plans offered through CalPERS is a plan’s network of providers.”

“Blue Shield was not the only plan that struggled with the cost of care reflecting the price within the Bay Area region,” Buck said. “UnitedHealthcare also exited the region for contracting agencies and schools, and some other plans in the region had premium increases.” Contracting agencies are the employers that go through CalPERS for their health plans.

“We want to keep our insurance and our doctors. …We have not received any explanations of any reasons for this harsh decision which endangers our health,” said David Lerman, who currently has insurance coverage with Blue Shield through CalPERS.

“CalPERS health plans contract with a network of providers, and each year CalPERS and its contracted health plans re-evaluate these networks,” Buck said. “Depending on a variety of factors, not least of which is cost, providers ask that their coverage areas change for certain plans.”

https://www.sacbee.com…

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Comment:

By Don McCanne, M.D.

Think back twenty years ago and try to remember what health insurance coverage you had then. Unless you are over 85 and on Medicare the chances are very great that you do not have the same coverage now. For many reasons the market for private health plans, whether employer-sponsored or individual, continually changes.

The California Public Employees’ Retirement System (CalPERS), as the second largest system in the nation (next to the Federal Employees Health Benefit Program), has one of the most stable health care coverage programs in the U.S., but not even CalPERS can guarantee that you can keep your same coverage from one year to the next. Since most plans today use provider networks, and the composition of the networks varies from one plan to the next, that means that you may have to change your physicians and other health care professionals, and maybe even your hospitals, whenever your insurance changes.

(It should be mentioned that California has a “continuity of care” provision in which, in certain specific situations, a patient may continue with the same doctor or hospital for a limited period of time, making the transition less disruptive.)

Median employment tenure is now about four years (BLS), so, for that reason alone, change in insurance coverage is frequent. Besides changing jobs, other reasons for changing or losing coverage can include your employer changing plans offered, loss of employment, inability to afford coverage, retirement, income above the threshold for public coverage through Medicaid, loss of eligibility for COBRA, and the like.

The point is that since coverage is not stable, insurer designated networks are not stable either, and thus choice of physicians and other providers may be sacrificed merely because we insist on perpetuating our highly fragmented system of financing health care.

If we had a single health program that included everyone permanently, such as an improved version of our traditional Medicare program (without the private Medicare Advantage plans and their networks) then each of us would have our choice of physicians and hospitals – for life.

It seems foolish that we give up lifetime freedom of choice of our physicians and hospitals just to keep the insurance that we have only temporarily (changing an average of every four years) when virtually all of us look forward to going on Medicare permanently at age 65. Why should only our seniors and those with long term disabilities and chronic renal disease be treated so well? Why not all of us?

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

By Jonathan Chait
New York Magazine, Daily Intelligencer, August 16, 2018

The American health care system developed, like a deformed tree, around employer-sponsored insurance as its core feature. This has made it extremely hard to build a single, simple universal system, because it would require moving people out of health care they have into something new, and require turning their premium contributions into taxes.

If you could sit down face to face with every American and calmly talk them through the numbers step by step, you could probably convince them to feeling comfortable giving up employer-sponsored insurance. Since you can’t do that, the only option is passing a bill in a hysterical atmosphere where the insurance industry and conservatives bombard the public with warnings of massive middle-class tax hikes and tens of millions of Americans losing their current insurance to get moved onto a government plan.

If we didn’t have an employer-based system already, it might be politically feasible to build a single-payer system. But the politics of uprooting that deformed tree are extremely imposing. You can read a history of the struggle for universal health care, like Jonathan Cohn’s Sick, or Paul Starr’s Remedy and Reaction, to understand why most liberals (and Democratic elites) believe the growth of the employer system has tragically blocked the political path to single payer.

Those conclusions, built up over decades of experience and polling data, inform the mainstream liberal view of health care. Since it’s just too hard to convince people they’ll be better off paying taxes instead of premiums, and exchanging their current insurance for a government health care plan, the path to universal coverages lies in working around the existing system. Paul Krugman made this case last year, and so did I.

To quote the column of mine… “Yes, in an imaginary, rational world, people could be reassured that Medicare will be as good as what they have, and the taxes will merely replace the premiums they’re already paying. In reality, people are deeply loss-averse and distrustful of politicians.” Krugman doesn’t deny that either. “You’d have to convince most of these people both that they would save more in premiums than they pay in additional taxes, and that their new coverage would be just as good as the old,” he writes… “This might in fact be true, but it would be one heck of a hard sell.”

It’s possible, of course, that this political analysis is wrong, or that it will change one day.

If single-payer advocates can come up with a way to get around the political obstacles in the way of single payer, they should say what they are. (I have seen many such efforts, though none have struck me as persuasive.) More to the point, you’re never going to enact single payer unless you can address the political obstacles.

http://nymag.com…

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Comment:

By Don McCanne, M.D.

Jonathan Chait is correct. The benefits of a well designed, single payer, improved Medicare for all are not in dispute. It is not the policies that are a problem, but rather it is the political obstacles that have prevented us from enacting and implementing such a system.

We are moving again into a debate on the left – the progressives supporting a bona fide single payer Medicare for all system, and the centrists expropriating the Medicare for all rhetoric to support a public option with a Medicare label. The ideologues on the right don’t have to do anything. The left will self-destruct thereby confirming that Chait’s point is correct – the political obstacles are great.

An important point here is that the policy message must remain intact. You do not discard essential policy positions as you sit down to negotiate a compromise, such as supporting the incremental step of enacting a public option with a Medicare label. We did that before.

Although the single payer purists were ejected from the process, the center-left supported a public option, but then in negotiations allowed it to be transformed from a strong public model, as described by Jacob Hacker, into a very weak model even stripped of some of the beneficial features of private commercial insurance just to be sure that it would not be a competitive threat in the private market. Even that was too much, and so the emasculated public option was abandoned. That’s what happens when you compromise on policy.

Incremental steps merely tweak our dysfunctional, inequitable, unaffordable, administratively overburdened system – perpetuating most of the defects that cry out for reform. We basically have the single payer policy right. We do not want to negotiate that away as the center-left did last time.

Although the barriers are political, it is a mistake to make them partisan. That’s obvious when you look at the obstructionism of the Republicans who for years demanded that we replace the Affordable Care Act with their own model that it turns out never really existed. It definitely would be a mistake, as mentioned above, for the Democrats to move forward now with this intra-party divide on single payer Medicare for all versus a Medicare public option for some.

The right understands the well designed single payer model. The recent Mercatus report is an example, even if the single payer concept was modified to try to discredit the concept. They still showed that everyone would be covered with a $2 trillion savings over a decade (though the results would be much more impressive had they accurately analyzed a model such as PNHP’s). Also, in a recent Quote of the Day, two libertarians in separate reports indicated that they too understand the benefits of the single payer model. So we don’t want to change policy, and, on the politics, we want to end partisanship and start communicating better.

But to the really important point in Chait’s article, he says that we are not persuasive in our suggestions on how to get around the political obstacles in the way of single payer. He has a point since we currently do not have a single payer system in spite of a quarter of a century of trying. But what we don’t want to do is to walk away because the political barriers are too great, thereby making that a self-fulfilling prophecy (Chait and Krugman, take note). So how do we get around those barriers?

First, as Chait indicates, is eduction. We must be unrelenting in getting out the word on just what an improved Medicare is all about. As the understanding of the concept increases, coalition and grassroots organizing must be utilized to help spread the word. Polling indicates that these efforts have been effective, but the process is very slow and laborious.

Chait, Krugman and others have acknowledged the clear benefits of the single payer model while they have become somewhat dismissive because of the political challenges. Rather than an expression of pessimism on their part, it seems to me that they are expressing realism with their understanding of how difficult the process is. We certainly understand that as well, as we have lived with this all these years.

Education. Coalitions. Activism. Grassroots organizing. These activities in all of their permutations. Be there and do it. Maybe Chait doesn’t think this is persuasive, but it is what we have, and it can work as those in the civil rights movement have shown us (and Social Security, and Medicare, and the end of the Vietnam war, and so on). We must keep on. As FDR said, “make me do it.”

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

By Aparna Higgins, Mark McClellan
Health Affairs Blog. August 15, 2018

The secretary of the Department of Health and Human Services (HHS) recently highlighted value-based transformation as one of the department’s top four priorities, with an emphasis on “putting the consumer in charge, letting them determine value.” While definitions of value may vary based on beneficiary preferences, objective, reliable, and meaningful quality and cost measures are important components of individuals’ and health care providers’ assessment of value. However, obtaining such measures of value in practice has proven challenging. To address concerns with the usefulness of and burden of implementing the quality measures currently in use, the Centers for Medicare and Medicaid Services (CMS) launched its Meaningful Measures initiative. Its first task is to review the extent to which existing quality measures are fulfilling the needs of consumers and providers and identifying priority gaps.

The success of APMs and patient engagement in care more generally is inextricably linked to the quality of the measures that are used in these APMs, and the burden versus benefit of collecting these measures. As CMS seeks to further evolve payment models, it is important for policy makers to consider what kinds of measures we would want to invent that can then be tied to a set of alternative payments. The approach presented in this blog post can serve as a starting point for a dialogue on this topic. Many of the concepts presented here need further discussion, refinement, and development. The Meaningful Measures initiative can provide a platform for such discussion and help launch a re-engineering of measures and measurement.

https://www.healthaffairs.org…

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Assessing the Medicare Advantage Star Ratings

By Dan Jamieson, Monisha Machado-Pereira, Stephanie Carlton, and Cara Repasky
McKinsey & Company, July 2018

Every October since 2009, the Centers for Medicare and Medicaid Services (CMS) has released comprehensive data on Medicare Advantage (MA) health plan performance through its Star Ratings program. The program’s goals are to incentivize health insurers to improve their MA plans and encourage consumers to enroll in high-quality plans. To investigate whether these goals are being met, we analyzed CMS’s data for 2018 and previous years.

On average, the plans’ scores have risen substantially, both overall and on the 22 individual quality measures that have been used consistently since the program’s inception.

The overall scores are based on the scores assigned to specific measures, many of which have been modified since the program’s inception. However, 22 of the measures have been used consistently since 2009. (We call this set the consistent measures.) After calculating the enrollment-weighted average scores for each of the consistent measures, we found that all but two have risen over time.

From the table of measures included in all Star Ratings years:

Improving or maintaining physical health

3.4 – Weighted-average Star Rating, 2009

2.8 – Weighted-average Star Rating, 2018

https://www.mckinsey.com…

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Comment:

By Don McCanne, M.D.

These days it seems that the policy community is deeply involved in issues related to quality, accountability, incentives, and the such, through value-based alternative payment models such as accountable care organizations or systems such as Medicare Advantage plans. Is optimal care of the patient being lost in all of this?

Recently there has been some celebration of the success of the Star Ratings used for the private Medicare Advantage plans, supposedly showing that quality is improving. If you look at the McKinsey report, you will find the scores for 22 quality measures used during the last decade. The plan providers have been told repeatedly what will be measured; the measurements were taken, and the Star Ratings were assigned. It should be no surprise that the scores improved. It’s not even an open-book test; it’s a one-page cheat sheet with all the answers.

What is alarming is that the most important score – the one for “improving or maintaining physical health” – deteriorated! While the providers have been busy making sure that they scored well, the patients have been neglected (as anyone who has watched their health care professional spend their contact time staring at the computer can attest to).

Yet the governmental and private members of the policy community plow on with nebulous goals of imposing accountability and quality through alternative payment models such as accountable care organizations. But look at the hope for the future as described by Aparna Higgins and Mark McClellan:

“It is important for policy makers to consider what kinds of measures we would want to invent that can then be tied to a set of alternative payments”… though “Many of the concepts presented here need further discussion, refinement, and development.”

We’re moving forward with policies that we haven’t even invented yet?

My twin and I started in private practice the same month that Medicare and Medicaid were implemented, joining our father and older brother. To them it was almost like a miraculous change. We could just take care of the patients and not worry about other issues such as how payment would be made.

Alas, it didn’t last. Insurers were granted the right to contract with physicians. Managed care moved in with a vengeance. Medicare began its march to privatization with the opening of the Medicare Advantage market. And now we face MIPS, APMs, ACOs, and, according to Higgins and McClellan, whatever else the policy makers “would want to invent” even if lacking in “further discussion, refinement, and development.”

Let’s get back to the original precepts of Medicare: removing financial barriers to essential health care services; place the patients first. Medicare does have some problems that we can easily fix, so let’s do that, include everyone, and then move forward with health care that actually will maintain and improve physical health. The McKinsey report shows that we’re not doing that now. But we don’t need to reinvent the traditional Medicare program, we just need to fix it.

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

By Billy Wynne
Health Affairs Blog, August 15, 2018

Now that a report funded by the Koch Brothers™ (do they have a logo?) accidentally fueled the single payer movement by demonstrating a national coverage system would be cheaper than the irrational hodgepodge we have now, it’s important to continue to weigh the evidence regarding which approach to universal coverage would be optimal.

The focal point of the single payer cause is Senator Bernie Sanders’ “Medicare for All” proposal. (Spoiler alert: it’s not actually Medicare. More on that in a minute). While I happen to believe the single payer crowd’s intentions are in the right place, I have to wonder, for starters, whether the arguably most conservative developed nation will adopt one of the most liberal, socialized approaches to health care coverage.

Instead, I continue to believe that a regime that truly leverages the existing Medicare program in a way that minimizes disruption and maximizes market forces will produce the cheapest, highest quality, most sustainable, and – to use a loaded term – American result.

Sanders Plan 101

Perhaps the most interesting thing about the Sanders Medicare for All plan, scooped above, is that it would not actually extend Medicare to everyone. To the contrary, section 901 of his bill would halt all Medicare benefits, effectively repealing the program in its entirety.

Instead, his proposal would institute a wholly new program, with different benefit design and brand new administrative infrastructure. For example, a new list of essential benefits is outlined in the legislation, the elaborate Medicare cost-sharing scheme would be replaced with first dollar coverage, and the prescription drug program would be replaced with a national formulary.

Medicare Advantage 101

Instead, what if we actually did just expand the stable, beloved Medicare program to include everyone, with emphasis on competition between the traditional benefit and increasingly popular Medicare Advantage plans? In a prior post, I took a closer look at the basic Medicare benefit design. Here, I’d like to explain how the Medicare Advantage (MA), or Part C, program works and what it could offer to a national coverage regime.

MA carriers are required to cover all traditional Medicare benefits (Parts A and B) and offer at least one plan that includes an accompanying prescription drug (Part D) component.

A key strategy that these plans use to reduce costs, which is not deployed in the traditional Medicare program, is limited provider networks. As explained in a prior post, this function lies at the core of why health plans can continue to play an important role in our system.

In 2017, MA plan payments were, on average, equal to the costs of delivering the traditional Medicare benefit.

Unlike traditional Medicare, MA plans are required to cap annual enrollee out of pocket spending on outpatient services at $6700. Using those rebates described above, 50 percent of plans offered coverage that caps that liability at below $5000 in 2017. Also, about half of plans were able to eliminate the Part D deductible altogether.

In Other Words…

I don’t think we need a wholly new coverage regime that upends 20 percent of our economy and, with its centralization of decision-making within the federal government, will never earn the broad support necessary to pass, much less make it sustainable.

After the ACA, I think we’re weary of conjuring new coverage regimes from whole cloth. We have plenty in this country already. Let’s pick the one that has proven itself for decades and increasingly leverages competition between commercial carriers and a government administered option to deliver high-value choices to its consumers. In other words: Medicare.

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Health Affairs Comment:

By Don McCanne, M.D.

Which proposal is actual Medicare, or, for that matter, which is an “American” result? An improved version of the traditional Medicare program expanded to include everyone, or an expanded market of private Medicare Advantage health plans? Instead of diverting this into a rhetorical debate, we should look at which policies applied to nearly one-fifth of our economy would serve us all best.

Although the traditional Medicare program grants the individual the right to choose their health care professionals and institutions – a right that private Medicare Advantage plans restrict by use of provider networks – out-of-pocket expenses are still too high, especially considering the lack of a cap on those expenses.

Private Medicare Advantage plans pay physicians at the same rates as traditional Medicare – much lower than private commercial insurance rates – but they did not achieve this through competition in the marketplace; it was through government fiat – government administered pricing in the private sector. Not only are payment rates lower, but the cap was enacted only for private plans and not for the traditional Medicare program.

Since the out-of-pocket costs are too high, those in the traditional Medicare program require supplemental coverage through retiree plans, dual Medicaid coverage, or they must turn to overpriced Medigap plans which are the main competition for the Medicare Advantage plans. It is the lower premiums plus lower out-of-pocket costs plus a few expanded benefits that the Medicare Advantage plans can offer that has resulted in their popularity. In spite of this advantage, two-thirds still enroll in the traditional Medicare even though it may cost them more (unfairly so since the government gives this advantage to the private plans while denying it to the traditional Medicare program – as part of an ongoing effort to privatize Medicare).

Suppose Congress made the premiums and cost sharing equivalent in the two programs, which of them would be in a better position to manage our health care financing? It is well known that the traditional program has much lower administrative costs (under 3%) thus more of the funds go to health care. But what is not commonly realized is that “Medicare Advantage insurer revenues are 30 percent higher than their healthcare spending” (NBER No. 23090). 30 percent! The taxpayers are getting a terrible deal from the private Medicare Advantage insurers.

There are, of course, many other advantages to a single payer, improved Medicare for all such as true universality, savings from administrative efficiency, improved resource allocation, and an equitable method of progressive financing that removes financial barriers to care while making health care affordable for all.

That rhetoric about an American result? Improving the traditional Medicare program that is still revered by a majority of Americans, or disrupting the system by turning our public funds over to the private insurance industry profiteers? Which America do we really want?

https://www.healthaffairs.org…

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By Larisa Antonisse and Rachel Garfield
Kaiser Family Foundation, August 7, 2018

Summary

A central question in the current debate over work requirements in Medicaid is whether such policies promote health and are therefore within the goals of the Medicaid program. Work requirements in welfare programs in the past have had different goals of strengthening self-esteem and providing a ladder to economic progress, versus improving health. This brief examines literature on the relationship between work and health and analyzes the implications of this research in the context of Medicaid work requirements. We review literature cited in policy documents, as well as additional studies identified through a search of academic papers and policy evaluation reports, focusing primarily on systematic reviews and meta-analyses. Key findings include the following:

Being in poor health is associated with increased risk of job loss, while access to affordable health insurance has a positive effect on people’s ability to obtain and maintain employment.

There is limited evidence on the effect of employment on health, with some studies showing a positive effect of work on health yet others showing no relationship or isolated effects. There is strong evidence of an association between unemployment and poorer health outcomes, but authors caution against using these findings to infer that the opposite relationship (work causing improved health) exists. While unemployment is almost universally a negative experience and thus linked to poor outcomes, especially poor mental health outcomes, employment may be positive or negative, depending on the nature of the job (e.g., stability, stress, hours, pay, etc.). Further, most studies note major limitations in our ability to draw broad conclusions on health and work, including:

• Job availability and quality are important modifiers in how work affects health; transition from unemployment to poor quality or unstable employment options can be detrimental to health.
• Selection bias in the research (e.g., healthy people being more likely to work) and other methodological limitations restrict the ability to determine a causal work-health relationship.

Studies note several caveats to and implications of the research on work and health that are particularly relevant to work requirements in Medicaid. For example:

• The work-health relationship may differ for the Medicaid population compared to the broader populations studied in the literature, as Medicaid enrollees report worse health than the general population and face significant challenges related to social determinants of health.
• Limited job availability or poor job quality may moderate or reverse any positive effects of work.
• Work or volunteering to fulfill a requirement may produce different health effects than work or volunteer activities studied in existing literature.
• Loss of Medicaid coverage under work requirements could negatively impact health care access and outcomes, as well as exacerbate health disparities.

https://www.kff.org…

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NBER Working Paper No. 24899: The Effect of Disenrollment from Medicaid on Employment, Insurance Coverage, Health and Health Care Utilization

By Thomas DeLeire
National Bureau of Economic Research, August 2018

This study examines the effect of a Medicaid disenrollment on employment, sources of health insurance coverage, health, and health care utilization of childless adults using longitudinal data from the 2004 Panel of the Survey of Income and Program Participation. From July through September 2005, TennCare, the Tennessee Medicaid program, disenrolled approximately 170,000 adults following a change in eligibility rules. Following this eligibility change, the fraction of adults in Tennessee covered by Medicaid fell by over 5 percentage points while uninsured rates increased by almost 5 percentage points relative to adults in other Southern states. There is no evidence of an increase in employment rates in Tennessee following the disenrollment. Self-reported health and access to medical care worsened as hospitalization rates, doctor visits, and dentist visits all declined while the use of free or public clinics increased. The Tennessee experience suggests that undoing the expansion of Medicaid eligibility to adults that occurred under the Affordable Care Act likely would reduce health insurance coverage, reduce health care access, and worsen health but would not lead to increases in employment.

http://www.nber.org…

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New in GOP logic: Antipoverty programs worked so well, we must get rid of them

By Sasha Abramsky
Los Angeles Times, August 10, 2018

For many decades now the GOP has sought to undo the New Deal and the Great Society. But a report released last month from the White House’s Council of Economic Advisors, lost in a sea of grabbier news items, applies a new logic to the goal of shredding the safety net.

According to “Expanding work requirements in non-cash welfare programs,” comprehensive antipoverty programs are no longer necessary because 50 years of antipoverty programs — yes, those same interventions long hated, and their effectiveness belittled, by the GOP — have succeeded so spectacularly that poverty is largely a thing of the past.

The report claims that the War on Poverty led to “the success of the United States in reducing material hardship,” but “that it also came at the cost of discouraging self-sufficiency.” It proceeds to lay out a case for limiting access to benefits and setting in place work requirements in exchange for basic nutritional and medical benefits.

This is beyond disingenuous. Yes, in the years after 1964, when President Lyndon Johnson launched the War on Poverty, the percentage of poor Americans did significantly decline; by some measures it was cut in half from about 22% of the population down to about 11%. But over the last 40 years it has rebounded with a vengeance.

http://www.latimes.com…

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Expanding Work Requirements in Non-Cash Welfare Programs

The Council of Economic Advisers, July 2018

Aiming to transition more non-disabled working-age Americans into the workforce, President Trump signed an executive order in April 2018 instructing agencies to reform their welfare programs by encouraging work and reducing dependence, in part by strengthening and expanding work requirements.

https://www.whitehouse.gov…

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Comment:

By Don McCanne, M.D.

Heath care financing programs should be designed to enable individuals to have affordable access to the health care that they need. Medicaid is specifically designed to assist low-income individuals in obtaining that care who otherwise do not have the resources to pay for it. How does having a work requirement to qualify for Medicaid help with this goal of improving access? Well, it doesn’t.

The Kaiser Foundation report shows that a Medicaid work requirement can have many deleterious effects. In fact, penalizing unemployed individuals by disqualifying them from Medicaid coverage can “negatively impact health care access and outcomes, as well as exacerbate health disparities.” Isn’t that the opposite of what we should be doing? So why should we have a policy in place that does that?

The NBER paper shows that disenrolling individuals from the Tennessee Medicaid program reduced health care coverage, reduced health care access, worsened health outcomes, but did not lead to increases in employment. There is a disconnect between Trump’s executive order to expand work requirements to qualify for non-cash welfare programs and achieving the goals of those programs, including health care under Medicaid.

What is this, tying health care to work? A well designed health care financing program should ensure affordable access to health care for everyone, regardless of any other considerations. A work program should be designed to ensure that all capable individuals can get the work that is most appropriate for them. But one program should not be dependent on the other.

Again, health care for low-income individuals should not be dependent on their work status. Everyone who needs health care should have it. Instead of a separate program for those with lower incomes – Medicaid – we should have one program that is equitable, affordable, efficient, and accessible for everyone – a well designed, single payer, improved Medicare for all. We can also go to work on ensuring that decent jobs with decent wages are available to individuals based on their capabilities, but that should be a separate project.

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By Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D., and Adam Gaffney, M.D.
The Nation, August 10, 2018

Last week, Charles Blahous at the Koch-funded Mercatus Center at George Mason University published a study suggesting that Bernie Sanders’s single-payer health-care plan would break the bank. But almost immediately, various observers—including Sanders himself—noted that according to Blahous’s own estimates, single payer would actually save Americans more than $2 trillion over a decade. Blahous doubled down on his argument in The Wall Street Journal, and on Tuesday, The Washington Post’s fact-checker accused Democrats of seizing “on one cherry-picked fact” in Blahous’s report to make it seem like a bargain.

The Post is wrong to call this a “cherry-picked fact”—it’s a central finding of the analysis—but it is probably right that single-payer supporters shouldn’t make too much of Blahous’s findings. After all, his analysis is riddled with errors that actually inflate the cost of single payer for taxpayers.

First, Blahous grossly underestimates the main source of savings from single payer: administrative efficiency. Health economist Austin Frakt aptly demonstrated the “bewildering complexity of health care financing in the United States” in The New York Times last month, citing evidence that billing costs primary-care doctors $100,000 apiece and consumes 25 percent of emergency-room revenues; that billing and administration accounts for one-quarter of US hospital expenditures, twice the level in single-payer nations; and that nearly one-third of all US health spending is eaten up by bureaucracy.

Overall, as two of us documented recently in the Annals of Internal Medicine, a single-payer system could cut administration by $500 billion annually, and redirect that money to care. Blahous, in contrast, credits single payer with a measly fraction of that—or $70 billion—in administrative savings.

Our profit-driven multi-payer system is the source for this outlandish administrative sprawl. Doctors and hospitals have to negotiate contracts and fight over bills with hundreds of insurance plans with differing payment rates, rules, and requirements. Simplifying the payment system would free up far more money than Blahous estimates to expand and improve coverage.

Next, Blahous lowballs the potential for savings on prescription drugs. He assumes that a single-payer system couldn’t use its negotiating clout to push down drug prices, ignoring the fact that European nations and the US Veterans Affairs system achieve roughly 50 percent discounts relative to the US private sector. (Single payer’s only drug savings, he argues, will come from shifting 15 percent of brand-name prescriptions to generics.) Hence Blahous foresees only $61 billion in drug savings in 2022, even though tough price negotiations would likely achieve threefold higher savings.

Third, Blahous underestimates how much the government is already spending on health care. For instance, he omits the $724 billion that federal agencies are expected to pay for employees’ health benefits over the 10 years covered by his analysis, which would simply be redirected to Medicare for All. He also leaves out the massive savings to state and local governments, which would save nearly $3.6 trillion on employee benefits and another $5.3 trillion on Medicaid and other health programs. Hence, much of the “new money” needed to fund Sanders’s reform is already being collected as taxes.

Yes, there will need to be some new taxes—albeit much less than Blahous estimates. But those new taxes would just replace—not add to—current spending on premiums, co-pays, and deductibles. Additionally, at least some of the new taxes would be virtually invisible. For instance, the $10 trillion that employers would otherwise pay for premiums could instead be collected as payroll taxes. Similarly, Medicare for All would relieve households of the $7.7 trillion they’d pay for premiums and $6.3 trillion in out-of-pocket costs under the current system.

It’s easy to get lost in the weeds here. But at the end of the day, even according to Blahous’s errant projections, Medicare for All would save the average American about $6,000 over a decade. Single payer, in other words, shifts how we pay for health care, but it doesn’t actually increase overall costs—even while providing first-dollar comprehensive coverage to everyone in the nation. The Post’s fact-checker is wrong: Single-payer supporters can and should trumpet this important fact.

Of course, the most important benefits of single payer are altogether invisible in economic analyses like the one performed by Blahous. No matter what injury or illness we faced, we would be forever freed from one great worry: the cost of our care. It’s hard to put a price tag on that kind of freedom. Yet, paradoxically, even the slanted analysis of a libertarian economist provides evidence that it would be fiscally responsible.

Steffie Woolhandler is a Distinguished Professor of Public Health at the City University of New York at Hunter College.

David U. Himmelstein is a Distinguished Professor of Public Health at the City University of New York at Hunter College.

Adam Gaffney is a pulmonary and critical care specialist at the Cambridge Health Alliance and Harvard Medical School, and President-elect of Physicians for a National Health Program.

https://www.thenation.com…

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Fact-Checking the Fact-Checkers on Medicare-for-All

By Matt Bruenig
People’s Policy Project, August 13, 2018

Two weeks ago, the libertarian Mercatus Center released a report estimating the cost of Bernie Sanders’ Medicare-for-All (M4A) proposal. Like most think tank products, the author and communications team behind the Koch-funded Mercatus report carefully cultivated a certain kind of media coverage in pursuit of their political agenda. In this case, the political goal was to undermine M4A by getting journalists to write that it was impossibly expensive.

This careful bit of framing and deception by Mercatus initially worked out as planned. They got the Associated Press to write a story with the lede “Sen. Bernie Sanders’ ‘Medicare for all’ plan would boost government health spending by $32.6 trillion over 10 years.” Because of the way the AP wire service works, that means the story showed up on just about every news website in the country: ABC News, Bloomberg, Washington Post, and so on.

But this initial success slipped away from Mercatus because folks like myself quickly noticed that, buried in the report’s tables, the author had actually found that Sanders’ plan would save $2 trillion. That’s right: the same estimate with the scary $32.6 trillion figure they were promoting to all the journalists in the country also said that the US could insure 30 million more Americans, virtually eliminate out-of-pocket expenses, and cover dental, vision, and hearing care for everyone all while spending $2 trillion less over the next 10 years. After this was pointed out, the coverage of the report changed dramatically and Bernie Sanders put out a video thanking the Koch brothers for their positive study.

Needless to say, Mercatus was not thrilled that its attempt to torpedo M4A had become one of the leading talking points in its favor and so it badly wanted a do-over. The preferred theater for their do-over was gullible and biased fact-checkers who they successfully coached into declaring that Bernie Sanders is lying using their inane truth-o-meter and Pinocchio-based measures.

Politifact pointed to the alternative scenario to declare the claim that the Mercatus study says M4A will save $2 trillion “Half True.” The AP, which I didn’t even realize did fact-checking, called the claim “spin.” And the Washington Post gave the claim 3 Pinocchios out of a possible 4 Pinocchios, which apparently means it is a “significant factual error” or contains “obvious contradictions.”

Think for a second about how completely absurd these three suspiciously identical fact-check pieces are. They acknowledge that Sanders and others are right that the Mercatus estimate does say there will be $2 trillion in savings. But then they say Sanders is mostly lying because he does not also talk about alternative scores of totally different plans that are not his plan.

As noted by Vox’s Dylan Scott, the really important takeaway of the Mercatus report is not whether Sanders’ plan saves precisely $2 trillion, but rather that the report confirms that the general Medicare-for-All idea is clearly doable. If you play around with the utilization rates, the provider rates, the coverage areas, and the actuarial value variables, you can generate estimates that range from modest savings to modest spending increases, meaning that a national health insurer that covers everyone in the country is clearly in reach, if we want it.

https://www.peoplespolicyproject.org…

***

Comment:

By Don McCanne, M.D.

It is an unequivocal fact that a well designed, single payer, Medicare for All system, as proposed by Physicians for a National Health Program, would provide first-dollar, comprehensive coverage to everyone in the nation while making health care forever affordable for each one of us. The Mercatus study and the reaction to it is a distraction that does not change this indisputable fact.

Charles Blahous’ Mercatus analysis of Bernie Sanders’ single payer plan was seriously flawed by omissions, incorrect assumptions, and inclusion of alternative policies that were not a part of Sanders’ legislation. In spite of this, Blahous included in his report, though buried, the conclusion that the proposal would cover everyone while saving Americans $2 trillion over a decade.

The fact-checkers then jumped in to criticize those who reported this favorable finding from Blahous’ analysis. The fact-checkers were wrong to report that other findings in the Mercatus report more or less invalidated this contention. More importantly, there were other highly credible reports describing the deficiencies and errors in the Blahous analysis. The fact-checkers ignored these reports and assumed that Blahous’ statements were complete and factual, which they were not. That resulted in the fact-checkers assigning their demerits to the wrong party when it should have been Blahous who was challenged on his facts.

This is not a petty dispute over spin. It is a much more serious matter. The single payer Medicare for All model is now widely supported, to the chagrin of opponents, but this dispute threatens that support.

On the one side, the medical-industrial sector is joining forces to mount an intensive campaign to counter the Medicare for All movement. They have formed “Partnership for America’s Health Care Future” (PAHCF) with a mission of improving what’s working in health care and fixing what’s not, specifically “building on the strength of employer-provided health coverage and preserving Medicare, Medicaid, and other programs that so many Americans depend on.” Members of this coalition include, amongst others, AHIP, AMA, PhRMA, Federation of American Hospitals, and the BlueCross BlueShield Association. Watch their spin. We are going to have to preempt it.

On the other side, progressive politicians are running on a platform that includes Medicare for All. But when you listen carefully to them or check their websites, some are saying that a good place to start would be with allowing the purchase of Medicare as a public option (which would be disastrous since it would create inertia, perpetuating and compounding virtually all of the problems with our highly dysfunctional, fragmented system of financing health care).

Further, a new Medicare for All caucus has formed in the House of Representatives. It is rumored that they intend to rewrite HR 676, the Expanded & Improved Medicare for All Act. In the name of compromise it is likely that there will be pressure to move incrementally towards Medicare for All by leaving employer-sponsored plans in place and by offering a Medicare public option that will likely be under the private Medicare Advantage program. After all, at this time we can’t afford the $32 trillion program that Blahous is warning us about, so the fact-checkers tell us.

I’m much more worried about our friends than our enemies. A decade ago our friends kicked us out of the negotiations and brought us Obamacare. By now we could have had everyone covered at a cost we could afford, but instead we have tens of millions of uninsured and underinsured who are losing their choices in health care while our national health care expenditures increase at twice the rate of inflation, all the while perpetuating suffering, hardship, and premature death.

Be sure that the Medicare for All Congressional Caucus continuously hears our voices loud and clear.

Partnership for America’s Health Care Future:
https://americashealthcarefuture.org…

Medicare for All Congressional Caucus:
https://jayapal.house.gov…

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