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Enjoy health care deflators, or would you rather be a frog?

Enjoy health care deflators, or would you rather be a frog?

Medical cost trend: Behind the numbers 2019

PwC, June 2018

PwC’s Health Research Institute (HRI) projects a 6 percent medical cost trend in 2019, consistent with the 5.5-7 percent range of the previous five years. But employers continue to struggle to contain their employee coverage costs. Medical costs continue to grow, yet the workforce’s health and performance aren’t improving. Average labor productivity growth of 1.1 percent over the last 10 years falls far below the 2.3 percent average of the last seven decades. Efforts by employers to cut utilization have mostly run their course. Employers and consumers are plagued by high prices that continue to grow because of new, expensive medical services and drugs, and other factors, such as consolidation.

HRI’s analysis measures anticipated medical cost trend in the employer-based market, which covers about half of non-elderly Americans.

HRI’s research points to three factors inflating medical cost trend in 2019:

Inflator #1: Care anywhere and everywhere

New high-touch points of care—from retail clinics to video visits to urgent care in the home— have popped up over the past few years.

Many consumers are seeking out care in settings outside of the traditional doctor’s office; of those surveyed with employer-based insurance, 60 percent said they have received care in an urgent care center, 25 percent in a retail health clinic and 11 percent by video visit. At the same time, consumers with employer-based insurance are increasingly willing to receive care in settings outside of the traditional doctor’s office.

Achieving appropriate utilization will require employers, payers and providers to strike a balance between access and convenience to avoid delaying care or creating unnecessary demand.

Inflator #2: Provider megamergers

In 2017, the number of announced hospital and health system deals increased nearly 13 percent from 2016, the highest number of transactions since 2000. Of 115 health system and hospital mergers announced in 2017, 10 were mega-deals involving sellers with net annual revenues of at least $1 billion. The intent of these deals is to achieve scale to invest in the infrastructure and programs necessary to drive quality, convenience and customer satisfaction, and ultimately deliver value to consumers, employers and health insurers. The short-term result is often higher prices.

“There has been little to no action taken to stop providers from concentrating or taking price increases,” said Sherry Glied, dean of New York University Wagner Graduate School of Public Service. “If inflation ramps up and consolidation continues, expect to see strong upward pressure on prices.”

As the market becomes more concentrated, medical prices may rise in two main ways. First, overnight price increases may occur when the acquiring organization has higher reimbursement rates. Second, “You’re going to increase prices because you’ll have more leverage to negotiate higher prices going forward,” said Thomas Getzen, former executive director of the International Health Economics Association.

Movement to a more consolidated provider landscape is expected to continue, with 72 percent of provider executives surveyed by HRI noting that reorganization is important to their organization’s success over the next five years.

Inflator #3: Physician consolidation and employment

As physicians consolidate, prices can rise. Physicians are increasingly practicing in larger, concentrated groups because of acquisitions by other physician groups, hospitals and health systems.

Physicians working in highly concentrated markets charge 14 to 30 percent more than their counterparts working in less concentrated markets.

The percentage of physicians employed by hospitals grew to 42 in 2016 from 26 in 2012.
While this shift has been occurring for several years among primary care physicians and certain specialties—such as cardiology—it’s now more widespread. A recent HRI survey shows medical and surgical specialists’ interest in employment by a hospital, health system or medical group is on par with that of primary care physicians’; those specialties largely remained unconsolidated until recently.

Three factors are tempering the spending increases:

Deflator #1: Flu impact

The 2017-18 influenza season was the worst in several years. Hospitalizations, mortality and prevalence were up across the country. A bad flu season can significantly affect medical cost trend in one year but be a deflator in the next when flu cases return to the mean.

Deflator #2: Care advocacy

Employers and health plans are offering care advocacy services to help employees manage their high deductible health plans (HDHPs), creating a dampening effect on medical cost trend for 2019. Seventy-two percent of employers surveyed by PwC offered health advocacy services to their employees in 2018; in 2016, that percentage was 57 percent.

Employers have increasingly relied on HDHPs to keep medical costs under control. But though HDHPs may reduce utilization, they also may deter necessary care for early diagnosis or management of chronic conditions. With the healthcare system’s ever-expanding number of care options, limited price transparency and complexity, consumers often struggle to navigate the system and make the best use of their benefits. Patient advocacy services have existed for several decades but were primarily offered as an exclusive, concierge-type service available to only a select few. This is changing as employers and health plans see such services’ value for their employees and members.

Health Care Services Corporation (HCSC), a not-for-profit health insurance company based in Chicago that operates Blue Cross Blue Shield plans in five states, has started a program for large, self-funded employers that supplies live advocates to help consumers estimate and compare costs, analyze treatment options and identify the most cost-effective treatment plans. Third party health advocacy firms such as Accolade Inc., based in Plymouth Meeting, Pa., and Quantum Health Inc., based in Columbus, Ohio, offer treatment decision support, transparency tools, provider coordination, help with integrated behavioral health needs, and even logistical help, such as transportation support.

Carolyn Young, chief actuary at Accolade, told HRI that when a member calls for help in finding a specialist, an Accolade health assistant will find out why the member wants to see a specialist, determine whether a primary care visit will suffice, conduct the search for the proper provider, help prepare the member for the appointment and, depending on the circumstance, follow up with the member after the appointment.

Deflator #3: The high-performance network

Employers are looking to high-performance networks after years of selling employees on HDHPs. Employees’ increased interest in plans other than HDHPs and their willingness to select a plan with a limited choice of doctors or hospitals make high-performance networks, which trade lower costs for a limited provider network.

In a recent HRI survey, 64 percent of respondents with employer-based coverage who are enrolled in an HDHP said they would select a non-HDHP next year, even if it meant paying a higher premium. Forty-four percent of consumers with employer-based insurance surveyed by HRI said they would select a health plan with a limited choice of doctors or hospitals under certain circumstances, such as lower monthly premiums, lower deductibles and access to quality providers.

Employers increasingly are implementing or considering performance-based networks created and maintained by a health plan or are contracting directly with providers or accountable care organizations (ACOs). Employers that say they have implemented a performance-based network increased by 267 percent since 2014, while those saying they have implemented direct contracting increased by 80 percent. Consumers are interested. Of those 44 percent surveyed by HRI who are willing to limit their provider choice, nearly all said they would do so if the providers were high quality.

Many providers are positioning for high-performance networks. Sixty-three percent of provider executives surveyed by HRI in 2017 said they plan for their organization to be included in a narrow network plan in the next five years, and 59 percent said they will engage in direct-to-employer contracting in the next five years. Providers’ capacity to engage in high-performance networks should continue to expand as hospitals and health systems consolidate and physicians increasingly are employed by hospitals and health systems.

New combinations

The healthcare market has seen significant deal activity in the last year.

Any meaningful changes to the existing healthcare system will take significant time and require capturing and integrating data, developing new capabilities and hiring new staff. So it’s too early to measure these potential healthcare system disruptors’ impact. They may have a deeper understanding of consumer experience and behavioral data than traditional healthcare companies do. The disruptors aim to bring best practices from other industries to create a more streamlined patient experience and better outcomes. Whether they also can achieve cost savings will depend first on their ability to successfully integrate, and then on whether they can effect lower prices.

PwC Health Research Institute report (38 pages):
https://www.pwc.com…

***

Comment:

By Don McCanne, M.D.

Employer-sponsored plans were the sector of health care financing that the Affordable Care Act (ACA) was designed to protect. Although the rate of increase in health care spending has declined from double digits since the enactment of ACA, spending is still increasing at 6 percent – twice the rate of inflation. Since these increases are not sustainable, employers are not standing still.

There is much in this report, but perhaps the greatest interest will be found in the eight paragraphs excerpted above – under “Deflator #2: Care advocacy” and “Deflator #3: The high-performance network.” The traditional relationship between patients and their health care professionals is being displaced by the medical-industrial concept in which physicians, nurses and other professionals are relegated to the workforce while disruptors take control of the reins.

It doesn’t have to be this way, but I suspect that most physicians will be relegated to a subservient role unless they are willing to comply with the will of the disruptors by becoming transformed from princes into frogs – Frog Kings, that is.

(Grimm Brothers – The Frog King – https://germanstories.vcu.edu/grimm/frog.html)

Wouldn’t it be better to take control by fixing Medicare and then expanding it to take care of everyone. Then we would spring loose the bands on our hearts.

Obscure? Not really.

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Social Insurance in the Great Recession

The Great Recession worsened blood pressure and blood glucose levels in American adults

By Teresa Seeman, Duncan Thomas, Sharon Stein Merkin, Kari Moore, Karol Watson, and Arun Karlamangla
PNAS – Proceedings of the National Academy of Sciences, March 27, 2018

Abstract

Longitudinal, individual-specific data from the Multi-Ethnic Study of Atherosclerosis (MESA) provide support for the hypothesis that the 2008 to 2010 Great Recession (GR) negatively impacted the health of US adults. Results further advance understanding of the relationship by (i) illuminating hypothesized greater negative impacts in population subgroups exposed to more severe impacts of the GR and (ii) explicitly controlling for confounding by individual differences in age-related changes in health over time. Analyses overcome limitations of prior work by (i) employing individual-level data that avoid concerns about ecological fallacy associated with prior reliance on group-level data, (ii) using four waves of data before the GR to estimate and control for underlying individual-level age-related trends, (iii) focusing on objective, temporally appropriate health outcomes rather than mortality, and (iv) leveraging a diverse cohort to investigate subgroup differences in the GR’s impact. Innovative individual fixed-effects modeling controlling for individual-level age-related trajectories yielded substantively important insights: (i) significant elevations post-GR for blood pressure and fasting glucose, especially among those on medication pre-GR, and (ii) reductions in prevalence and intensity of medication use post-GR. Important differences in the effects of the GR are seen across subgroups, with larger effects among younger adults (who are likely still in the labor force) and older homeowners (whose declining home wealth likely reduced financial security, with less scope for recouping losses during their lifetime); least affected were older adults without a college degree (whose greater reliance on Medicare and Social Security likely provided more protection from the recession).

From the Discussion

Differences by age, educational attainment, and homeownership provide additional insights by exploiting two defining features of the GR. First, the collapse of the housing and stock markets resulted in dramatic declines in the wealth of those who owned housing and those who were invested in the stock market, including those invested through a retirement account. With homeownership at historically high levels and the shift out of company-provided retirement plans, many older adults were exposed to increases in economic insecurity that were both unanticipated and unprecedented in almost a century. Second, earnings opportunities of those in the labor market were negatively affected as the labor market froze, job insecurity spiraled, and real wages declined for many workers.

For those on medication, BP rose most for the younger cohort, irrespective of level of education, all of whom were more likely in the labor market and concerned about retirement in the coming years. BP also rose significantly for those in the older cohort who were better educated and so more likely invested in the stock market and owned their home (among the better educated, 78% owned their home but only 59% among the less educated owned their home). The effects were substantially and significantly smaller for one group on medication: those age at least 65 at the start of the GR who had not completed college. They are the least likely to be working and most likely to rely on Social Security for income rather than a retirement plan invested in the stock market; these people were, therefore, likely to be the least affected by the recession among the four demographic groups.

Patterns for glucose by education and homeownership for those not on medications are similar to the patterns for BP for those not on medication, with significant increases seen among the younger cohort, again irrespective of education or home- ownership. The pattern for glucose among those on medication differs from that for BP, with significant increases seen only among younger adults who do not have a college education and among older adults who own a home. These increases are very large: 11 to 15% relative to each individual’s prerecession trend, possibly reflecting the extent to which these groups were (i) more vulnerable with respect to glucose regulation, being on medication even before the recession, and (ii) among the most heavily impacted by (i) unemployment among the younger cohort [as unemployment rates climbed 16% for those who did not complete high school while never exceeding 5% for those who completed college] and (ii) housing market upheavals among the older cohort.

Our findings provide support for the hypothesis that the economic and social stresses associated with the GR had a deleterious impact on adult health as seen in increases in BP and glucose. Importantly, the patterning of the health changes shows that the worst of the health impacts is among subgroups likely more negatively impacted by the Great Recession: younger adults (who are most likely still in the labor force) and better educated older homeowners (who are most likely invested in the stock market as well as their home). Direct examination of homeownership confirms that older homeowners indeed had the largest increases in BP and glucose from pre- to post-GR. The smallest effects were seen for less educated and nonhomeowning older adults (i.e., those no longer in the labor force and without “investment” in the housing market).

http://www.pnas.org…

***

Comment:

By Don McCanne, M.D.

It is not surprising that the stresses of the Great Recession resulted in worsened blood pressure and blood glucose levels in American adults. But when looking at the subgroups, this study reinforces the importance of our social insurance programs – Medicare and Social Security.

Younger adults were stressed by a decline in earnings opportunities because of the freezing of the labor markets, spiraling job insecurity, and a decline in real wages. Older homeowners with private retirement accounts experienced decline in their investments, including a decline in the value of their homes, at a time that they were nearing retirement. Not unexpected, their health parameters were worse.

Of great importance is the fact that the least affected were those over 65 without a college education and who had little decline in wealth because they did not own their homes and were not as dependent on investments in private retirement accounts. They were protected by Social Security and Medicare, demonstrating the stability (if not the generosity) of social insurance programs when compared to private, individual investments.

Obviously an improved Medicare for all would provide everyone with social insurance covering health care regardless of the status of our economy. Social Security could also be improved to ensure basic income when unemployed, disabled, or retired. This study confirms, once again, that social insurance is good for our health. Private investment is great, but it should be built on a solid foundation of social insurance.

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Justice Department will not defend guaranteed issue nor community rating

Justice Dept. Says Crucial Provisions of Obamacare Are Unconstitutional

By Robert Pear
The New York Times, June 7, 2018

The Trump administration told a federal court on Thursday that it would no longer defend crucial provisions of the Affordable Care Act that protect consumers with pre-existing medical conditions.

Under those provisions of the law, insurance companies cannot deny coverage or charge higher rates to people with pre-existing conditions.

The Justice Department said the provisions were part of an unconstitutional scheme that required most Americans to carry health insurance.

In a court case filed by Texas and 19 other states, the Justice Department said in a brief on Thursday that the requirement for people to have insurance — the individual mandate — was unconstitutional.

If that argument is accepted by the federal court, it could eviscerate major parts of the Affordable Care Act that remain in place despite numerous attacks by President Trump and his administration. Insurers could again deny people coverage because of their medical condition or history.

The Supreme Court upheld the individual mandate in 2012 as an exercise of the government’s power to tax. But since Congress repealed the tax last year, the mandate and the law’s consumer protections can no longer be justified, the Justice Department said.

The mandate cannot be interpreted as a tax “because it will raise no revenue as Congress has eliminated the monetary penalty,” the department said in a brief filed in the Federal District Court in Fort Worth.

The Justice Department said that the protections for people with pre-existing conditions were inseparable from the individual mandate and must also be struck down.

But it did not go as far as Texas and the other states, which argued that all of the Affordable Care Act and the regulations issued under it were now invalid.

The 2010 health care law includes many other provisions, such as the creation of health insurance marketplaces, premium subsidies for low- and moderate-income people and expansion of the Medicaid program, as well as changes in Medicare and public health services.

The Justice Department did not challenge those provisions of the law. Indeed, it said, they can continue to operate without the individual mandate.

By contrast, the department said, the Supreme Court held that the individual mandate was “closely intertwined” with the requirement for insurers to offer coverage to all consumers at the same basic prices, regardless of their health status.

Attorney General Jeff Sessions sent a letter to congressional leaders on Thursday notifying them that he would not defend the constitutionality of the individual mandate or the requirement for insurers to sell insurance to all applicants at standard rates — the “guaranteed issue” and “community rating” provisions.

https://www.nytimes.com…

***

Comment:

By Don McCanne, M.D.

Amongst the more important provisions of the Affordable Care Act were the requirements for guaranteed issue and community rating. For individuals with preexisting conditions, insurers could not deny them coverage nor could they charge them higher premiums than are charged for others in the same age group. This corrected two of the most serious defects in the individual insurance market that existed before enactment of ACA and made insurance available to many who otherwise could not purchase the plans.

Now Attorney General Jeff Sessions says that he will no longer defend these provisions. If the courts uphold his position, individuals with significant health care needs may find insurance with adequate benefits to be either unaffordable or not even available to them. Then concepts such as “universal” or “affordable” become moot.

How does this compare to our traditional Medicare program? The courts have already ruled that Part A of Medicare – the hospital benefit – is mandatory and must be accepted if the individual also accepts Social Security benefits. However, this does not apply to Part B – the physician benefits – nor to Part D – the drug benefits. Thus the courts have ruled that the government can require certain mandates in health care, but it also demonstrates that our current Medicare program needs to be improved, for this and for a great many other reasons. So a single payer, improved Medicare for all should be able to pass constitutional muster.

Once we have an improved Medicare that covers everyone, instead of thinking of it as some sort of unwanted government mandate, most of us would think of it as an automatic program ensuring health care financing for all of us – one that we have earned though our individual contributions based on ability to pay – guaranteed, affordable health care forever.

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Dr. Adam Gaffney on ‘The Katie Halper Show’

PNHP secretary Dr. Adam Gaffney appeared on “The Katie Halper Show” on TYT (The Young Turks) Interviews on June 11, 2018. He discussed PNHP’s recently published proposal for comprehensive pharmaceutical reform and the need to address drug development and safety in addition to negotiating prices and guaranteeing access.

Future physicians ask if the AMA is ready for single payer

Is this the year the AMA finally joins the single-payer movement?

By Jonathan Michels, Robertha Barnes, and Sydney Russell Leed
STAT, June 8, 2018

Fifty years ago this month, at the 1968 meeting of the American Medical Association, a fourth-year medical student named Peter Schnall seized the microphone and scolded several hundred of the most prestigious, highly educated white men in America.

“Organized medicine has never felt responsible and accountable to the American people for its actions and continues to deny them any significant voice in determining the nature of services offered to them,” Schnall chastised the group.

Today, in the midst of a revived Poor People’s Campaign, physicians and medical students are again pressuring the AMA to be more responsive to the needs of the nation’s uninsured and underinsured. At the AMA’s House of Delegates annual meeting in Chicago this weekend, its Medical Student Section will ask the AMA to end its decades-long opposition to a single-payer health insurance program, a system better known as Medicare for All that would be publicly financed but privately delivered. Why bother? For better or for worse, the AMA sets the agenda for American health policy.

Our wildly inefficient system is currently dominated by private insurance companies, a health care model spearheaded by the AMA. It produces some of the worst health outcomes in the industrialized world — the U.S. has the highest infant mortality rate and the highest number of avoidable deaths — and devours an ever-increasing share of our economy, with health spending accounting for a whopping 17.9 percent of our gross domestic product. Despite the improvements of the Affordable Care Act, 28 million Americans remain uninsured, without access to primary care that could prevent costly and life-threatening diseases. Those fortunate enough to have insurance face prohibitively expensive co-pays, premiums, and deductibles that limit access to care, and medical expenses are a leading cause of bankruptcy.

Contrary to the AMA’s assertions, a single-payer system would give health care providers more autonomy because their clinical decisions wouldn’t be second-guessed by insurance companies. Patients would have free choice of any doctor, allowing providers to compete based on quality of care. Physicians would spend less time on administrative responsibilities like paperwork and billing, and more time seeing patients, which boosts both their work satisfaction and income.

Will the AMA choose to move toward guaranteeing health care as a human right or continue down the wrong side of history by linking patients’ health to the vagaries of the private insurance market?

The activists who staged the protest at the AMA meeting in 1968 hoped that the organization would finally recognize health as a human right. It didn’t. A lot has changed in the ensuing 50 years. It’s time the AMA does, too.

Jonathan Michels is a premedical student at the University of North Carolina at Greensboro. Robertha Barnes is an MS/MD student at SUNY Upstate Medical University. Sydney Russell Leed is an MD/MPH student at SUNY Upstate Medical University. All are board members of Physicians for a National Health Program, an organization that advocates for an improved and expanded Medicare for All health system.

https://www.statnews.com…

***

Comment:

By Don McCanne, M.D.

The destiny of health care lies in the hands of our nation’s present and future medical students. We are very proud of the student members of the board of Physicians for a National Health Program who authored this inspiring article. They represent the values that health care needs.

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

Is this the year the AMA finally joins the single-payer movement?

By Jonathan Michels, Robertha Barnes, and Sydney Russell Leed
STAT, June 8, 2018

Fifty years ago this month, at the 1968 meeting of the American Medical Association, a fourth-year medical student named Peter Schnall seized the microphone and scolded several hundred of the most prestigious, highly educated white men in America.

“Organized medicine has never felt responsible and accountable to the American people for its actions and continues to deny them any significant voice in determining the nature of services offered to them,” Schnall chastised the group.

“Shut up!” yelled the doctors, who were accustomed to being treated with respect and deference, not with outrage and indignation.

Schnall’s outburst, coordinated by members of Martin Luther King Jr.’s Poor People’s Campaign and the Medical Committee for Human Rights, aimed to be a wake-up call to an institution that was highly successful at protecting physicians’ “interests against encroachment” but failed to meet the public health and human needs of patients by opposing both civil rights and the expansion of safety-net health programs.

At a time when Jim Crow racism harmed the health of millions of African-Americans in the South, the AMA repeatedly rebuffed requests from the National Medical Association, an organization that represents African-American physicians, to work together to end racial health disparities.

Even after the passage of the Civil Rights Act in 1964, the AMA allowed local medical societies to discriminate against physicians and patients of color. The AMA also mobilized attacks against major social programs intended to benefit all Americans, from Social Security to Medicare and Medicaid. In 1948, the AMA leadership spent millions on a campaign to characterize President Truman’s popular universal health care plan as “socialized medicine.”

Today, in the midst of a revived Poor People’s Campaign, physicians and medical students are again pressuring the AMA to be more responsive to the needs of the nation’s uninsured and underinsured. At the AMA’s House of Delegates annual meeting in Chicago this weekend, its Medical Student Section will ask the AMA to end its decades-long opposition to a single-payer health insurance program, a system better known as Medicare for All that would be publicly financed but privately delivered. Why bother? For better or for worse, the AMA sets the agenda for American health policy.

It is clear to medical students that no matter how well they are trained, far too many Americans will remain sick and poor under market-based medicine.

Our wildly inefficient system is currently dominated by private insurance companies, a health care model spearheaded by the AMA. It produces some of the worst health outcomes in the industrialized world — the U.S. has the highest infant mortality rate and the highest number of avoidable deaths — and devours an ever-increasing share of our economy, with health spending accounting for a whopping 17.9 percent of our gross domestic product. Despite the improvements of the Affordable Care Act, 28 million Americans remain uninsured, without access to primary care that could prevent costly and life-threatening diseases. Those fortunate enough to have insurance face prohibitively expensive co-pays, premiums, and deductibles that limit access to care, and medical expenses are a leading cause of bankruptcy.

Contrary to the AMA’s assertions, a single-payer system would give health care providers more autonomy because their clinical decisions wouldn’t be second-guessed by insurance companies. Patients would have free choice of any doctor, allowing providers to compete based on quality of care. Physicians would spend less time on administrative responsibilities like paperwork and billing, and more time seeing patients, which boosts both their work satisfaction and income. In fact, when Canada implemented its single-payer program, physicians enjoyed long-term salary increases.

The AMA’s opposition to Medicare for All puts the organization at odds with the public and with America’s doctors. Sixty percent of Americans believe the federal government has a responsibility to provide health coverage for all; 51 percent specifically support the creation of a single-payer health system, as does the majority (56 percent) of practicing physicians. The single-payer bill in the House of Representatives, H.R. 676, now has a record 122 co-sponsors; in the Senate, Bernie Sanders introduced his updated Medicare for All Act in 2017 with a record 16 Senate co-sponsors, including most of the leading Democratic contenders for president in 2020.

In the AMA’s evaluation of these and other health system reform proposals, it asserts that a national health program could lead to a concentration of market power in the hands of the government, limiting patient choice and physician autonomy: “Reform proposals should balance fairly the market power between payers and physicians or be opposed.”

Although the AMA’s membership has steadily declined since the 1950s, it remains the most powerful doctors group in the country. The growing Medicare for All campaign is unlikely to be won without its support.

Will the AMA choose to move toward guaranteeing health care as a human right or continue down the wrong side of history by linking patients’ health to the vagaries of the private insurance market?

The activists who staged the protest at the AMA meeting in 1968 hoped that the organization would finally recognize health as a human right. It didn’t. A lot has changed in the ensuing 50 years. It’s time the AMA does, too.

Jonathan Michels is a premedical student at the University of North Carolina at Greensboro. Robertha Barnes is an MS/MD student at SUNY Upstate Medical University. Sydney Russell Leed is an MD/MPH student at SUNY Upstate Medical University. All are board members of Physicians for a National Health Program, an organization that advocates for an improved and expanded Medicare for All health system.

https://www.statnews.com…

Again, medical bankruptcy is not a myth

On March 22, 2018, The New England Journal of Medicine (NEJM) published a Perspective article by Carlos Dobkin, Amy Finkelstein, Raymond Kluender, and Matthew J Notowidigdo titled “Myth and measurement — the case of medical bankruptcies” concluding, “our findings suggest that medical factors play a much smaller role in causing U.S. bankruptcies than has previously been claimed.”

Along with other background material, this was covered in the Quote of the Day for March 22, 2018:

https://pnhp.org…

Today, June 7, 2018, the NEJM has published a response by David Himmelstein, Steffie Woolhandler and Elizabeth Warren:

***

Re: Myth and Measurement — The Case of Medical Bankruptcies

The New England Journal of Medicine, Correspondence, June 7, 2018

TO THE EDITOR

Dobkin et al. have made an important contribution in clarifying the relationship between health shocks and economic risk; like us, they have shown that health crises have major economic consequences for families and that even the insured are not adequately protected. However, in their Perspective article (March 22 issue), they mischaracterize our studies implicating medical problems as contributors to approximately 60% of personal bankruptcies, and their claim that medical bankruptcies are uncommon rests on methodologic choices that do not capture all medical causes of bankruptcy.

Contrary to their claim that our inferences about the causal relationship between medical bills and bankruptcy did not align with our respondents’ experiences, almost everyone we labeled “medically bankrupt” explicitly told us that medical problems caused their bankruptcy. For example, 41.8% of debtors interviewed specifically cited illness as a cause of their bankruptcy, 37.8% cited illness-related income loss, and 54.9% cited medical costs.

Dobkin et al. estimate the share of bankruptcies attributable to hospitalization from the change in slope of bankruptcy-filing trends after an index hospitalization. Yet, their data show that the rate began rising before hospitalization. Since the rate of bankruptcy does not increase with age, the increasing rate of bankruptcy before hospitalization could well be due to previous medical costs. Estimated bankruptcy rates based only on a change in filings after an index hospitalization are probably underestimates. In addition, they excluded anyone hospitalized in the 3 years before the study period, thus omitting many people with frequent hospitalizations — a group likely to be at high risk for medical bankruptcy.

The authors assume that hospitalization is the sole indicator of a medical problem that could lead to financial distress. But families can drown in medical debts without a hospitalization — they may spend hours in an emergency department after an accident, followed by months of physical therapy, or have chronic conditions requiring drugs costing tens of thousands of dollars. The authors explain that most people who incur high total medical expenditures have been hospitalized. Yet out-of-pocket — not total — expenditures are most salient to bankruptcy risk; an analysis of 2015 Medical Expenditure Panel Survey data reveals that only 18.2% of out-of-pocket spending was incurred by people hospitalized during the year. In effect, the authors excluded the people who incurred 81.8% of out-of-pocket costs.

Finally, the analysis by Dobkin et al. is not designed to measure bankruptcy associated with a child’s or spouse’s illness. However, a child’s terminal illness or a spouse’s long-term care can bankrupt a family.

Although they acknowledge the limitations of their analysis, the authors assert that their results “suggest that medical factors play a much smaller role in causing U.S. bankruptcies than has previously been claimed.” Yet medical bills account for a majority of unpaid debts sent to collection, and many other studies confirm that illness often inflicts financial suffering.

Debtors’ self-reports do have limitations. But hospitalization is only part of the story, and understanding medical bankruptcy requires multiple forms of empirical investigation, including asking debtors about their histories. Characterizing debtors’ self-reports as “myth” is demeaning to people struggling with health care costs, and artificially narrowing the definition of medical bankruptcy does not improve understanding of its causes.

David U. Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
City University of New York at Hunter College, New York, NY

Elizabeth Warren, J.D.
U.S. Senate, Washington, DC

RESPONSE

The authors reply: Himmelstein et al. argue that if bankruptcy filers are asked what caused their bankruptcy, a large share will say medical expenses. But their approach is not a credible way to estimate the causes of bankruptcy. It is akin to asking patients with cardiac disease what caused their heart attack; they probably do not know whether it was poor genes, poor diet, stress, or other factors. A related problem is social desirability bias, which makes it hard to take at face value explanations reported by the bankruptcy filers.

Causal estimates require isolating a potential cause and its effect on the outcome of interest. This is why we examined the effect of hospitalizations on bankruptcy and why other, similar studies have examined the effect of automobile accidents or cancer diagnoses on bankruptcies. These studies corroborate our conclusion that medical bankruptcies are a very small share of personal bankruptcies.

Continuing to focus on medical bankruptcies distracts from the actual considerable economic costs of illness and injury. Our research highlights that for Americans — even those with health insurance — hospitalizations substantially decrease employment and income; by contrast, in Denmark, people are heavily insured against reduced earnings due to illness and injury. It is here that research and policy need to focus.

Amy Finkelstein, Ph.D.
Raymond Kluender, B.S.
Massachusetts Institute of Technology, Cambridge, MA

Matthew J. Notowidigdo, Ph.D.
Northwestern University, Evanston, IL

https://www.nejm.org…

***

Comment:

By Don McCanne, M.D.

It is difficult to understand why Amy Finkelstein and her colleagues are fixated on discrediting the landmark study on medical bankruptcy when they concede the “considerable economic costs of illness and injury.” There are a plethora of studies confirming the magnitude of medical debt and that our current health care financing system leaves far too many exposed to financial hardship.

Finkelstein et al make the very valid point that we we need to be insured against reduced earnings due to illness and injury – a point also made in the classic medical bankruptcy study by Himmelstein et al: “improved programs are needed to replace breadwinners’ incomes when they are disabled or must care for a loved one.” In focusing narrowly on income loss, it would be wrong to neglect the profound consequences of debt due to medical bills, even for those who are insured.

Suggesting that medical bankruptcy is a myth risks reducing the political support needed to revise our health care financing system so that it does not add financial hardship as an additional consequence of illness or injury. We emphatically do need a well designed, single payer national health program – an improved Medicare for all.

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

There is a solution to rising health costs

By Jay Brock, M.D.
Fredericksburg (Va.) Free Lance-Star, June 7, 2018

Single-payer is the solution to rising healthcare costs

Your June 1 editorial [Obamacare premiums set to rise again] did a good job of pointing out the flaws in Obamacare: It is getting more expensive and unaffordable, especially for working and middle-class families who are self-employed or whose employers do not cover health care. And it’s failing to “bend the health care cost curve.”

What the editorial failed to do, however, is to present an alternative to the present dysfunctional health insurance system that you so rightly deplore.

In spite of your proclaiming that there is still no “cure” in sight, there is a viable alternative that has been successful in other advanced nations: A single-payer system such as National Improved Medicare for All.

NIMA would provide universal coverage to everyone living here, and do so while fixing many of the major flaws of the current system. It would decrease health care costs for 95 percent of hardworking American families, increase competition, decrease government interference, bend the health care cost curve, increase the number of people contributing into the system and be great for business.

Rather than complain about how bad the current system is (and you can blame interference from politicians for much of this), it behooves the Free Lance–Star to advocate for its replacement.

If you know a system that is better than National Improved Medicare for All, let’s hear it.

http://www.fredericksburg.com…

Myth and Measurement — The Case of Medical Bankruptcies

By David U. Himmelstein, M.D.; Steffie Woolhandler, M.D., M.P.H.; and Elizabeth Warren, J.D.
New England Journal of Medicine, June 7, 2018

To the Editor:

Dobkin et al.1 have made an important contribution in clarifying the relationship between health shocks and economic risk; like us, they have shown that health crises have major economic consequences for families and that even the insured are not adequately protected. However, in their Perspective article (March 22 issue),2 they mischaracterize our studies implicating medical problems as contributors to approximately 60% of personal bankruptcies,3,4 and their claim that medical bankruptcies are uncommon rests on methodologic choices that do not capture all medical causes of bankruptcy.

Contrary to their claim that our inferences about the causal relationship between medical bills and bankruptcy did not align with our respondents’ experiences, almost everyone we labeled “medically bankrupt” explicitly told us that medical problems caused their bankruptcy. For example, 41.8% of debtors interviewed specifically cited illness as a cause of their bankruptcy, 37.8% cited illness-related income loss, and 54.9% cited medical costs.4

Dobkin et al. estimate the share of bankruptcies attributable to hospitalization from the change in slope of bankruptcy-filing trends after an index hospitalization. Yet, their data show that the rate began rising before hospitalization. Since the rate of bankruptcy does not increase with age, the increasing rate of bankruptcy before hospitalization could well be due to previous medical costs. Estimated bankruptcy rates based only on a change in filings after an index hospitalization are probably underestimates. In addition, they excluded anyone hospitalized in the 3 years before the study period, thus omitting many people with frequent hospitalizations — a group likely to be at high risk for medical bankruptcy.

The authors assume that hospitalization is the sole indicator of a medical problem that could lead to financial distress. But families can drown in medical debts without a hospitalization — they may spend hours in an emergency department after an accident, followed by months of physical therapy, or have chronic conditions requiring drugs costing tens of thousands of dollars. The authors explain that most people who incur high total medical expenditures have been hospitalized. Yet out-of-pocket — not total — expenditures are most salient to bankruptcy risk; an analysis of 2015 Medical Expenditure Panel Survey data reveals that only 18.2% of out-of-pocket spending was incurred by people hospitalized during the year. In effect, the authors excluded the people who incurred 81.8% of out-of-pocket costs.

Finally, the analysis by Dobkin et al. is not designed to measure bankruptcy associated with a child’s or spouse’s illness. However, a child’s terminal illness or a spouse’s long-term care can bankrupt a family.

Although they acknowledge the limitations of their analysis, the authors assert that their results “suggest that medical factors play a much smaller role in causing U.S. bankruptcies than has previously been claimed.” Yet medical bills account for a majority of unpaid debts sent to collection, and many other studies confirm that illness often inflicts financial suffering.5,6

Debtors’ self-reports do have limitations. But hospitalization is only part of the story, and understanding medical bankruptcy requires multiple forms of empirical investigation, including asking debtors about their histories. Characterizing debtors’ self-reports as “myth” is demeaning to people struggling with health care costs, and artificially narrowing the definition of medical bankruptcy does not improve understanding of its causes.

https://www.nejm.org…

References

1. Dobkin C, Finkelstein A, Kluender R, Notowidigdo MJ. The economic consequences of hospital admissions. Am Econ Rev 2018;102:308-352. Crossref | Medline

2. Dobkin C, Finkelstein A, Kluender R, Notowidigdo MJ. Myth and measurement — the case of medical bankruptcies. N Engl J Med 2018;378:1076-1078. Full Text | Medline

3. Himmelstein DU, Warren E, Thorne D, Woolhandler S. Illness and injury as contributors to bankruptcy. Health Aff (Millwood) 2005;24:Suppl Web Exclusives:W5-63–W5-73. Crossref | Medline

4. Himmelstein DU, Thorne D, Warren E, Woolhandler S. Medical bankruptcy in the United States, 2007: results of a national study. Am J Med 2009;122:741-746. Crossref | Web of Science | Medline

5. Banegas MP, Guy GP Jr, de Moor JS, et al. For working-age cancer survivors, medical debt and bankruptcy create financial hardships. Health Aff (Millwood) 2016;35:54-61. Crossref | Medline

6. Consumer Financial Protection Bureau. Consumer credit reports: a study of medical and non-medical collections. December 2014 (http://files.consumerfinance.gov…).

The myth of Medicare’s projected insolvency

Headlines, June 5, 2018

The New York Times: Medicare’s Trust Fund Is Set To Run Out In 8 Years. Social Security, 16.

The Washington Post: A Crucial Medicare Trust Fund Will Run Out Three Years Earlier Than Predicted, New Report Says

The Wall Street Journal: Social Security Expected To Dip Into Its Reserves This Year

The Associated Press: Trustees Report Warns Medicare Finances Worsening

USA Today: Medicare, Social Security Face Money Challenges, Affordable Care Act

Modern Healthcare: Medicare Funds Drying Up Faster Than Estimated

Bloomberg: Medicare Fund Falls Short In 2026, Sooner Than Last Forecast

Politico: Medicare To Go Broke Three Years Earlier Than Expected, Trustees Say

https://khn.org…

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Medicare Financial Outlook Worsens

By Phil Galewitz
Kaiser Health News, June 5, 2018

Medicare’s financial condition has taken a turn for the worse because of predicted higher hospital spending and lower tax revenues that fund the program, the federal government reported Tuesday.

In its annual report to Congress, the Medicare board of trustees said the program’s hospital insurance trust fund could run out of money by 2026 — three years earlier than projected last year.

Juliette Cubanksi, associate director of Kaiser Family Foundation’s Medicare Policy Program, cautioned that the report doesn’t mean Medicare is going bankrupt in the next decade but Part A will only be able to pay 91 percent of covered benefits starting in 2026.

She noted that Congress has never let the trust fund go bankrupt. In the early 1970s, the program came within two years of insolvency. But the 2026 estimate marks the closest the program has come to insolvency since 2009, the year before the Affordable Care Act was approved.

Joe Baker, president of the Medicare Rights Center, said Congress still has plenty of time to act without making changes that harm beneficiaries.

“I worry about fear mongering and the need to do something radical to the program,” he said.

https://khn.org…

***

Comment:

By Don McCanne, M.D.

Every year the Medicare trustees project the year in which the funds for Part A of Medicare will be inadequate to pay the full costs for that year, based on anticipated revenue and spending. Each year the media then report the pending insolvency of Medicare. This is nonsense.

Although revenues and demographics may change, adjustments are made to keep the program fully funded. Only if Congress were to decide to destroy Medicare would funding be reduced below sustainable levels. This is particularly ironic since this year the Republicans in their budget have already made a statement that we do not have to have adequate revenues to pay our bills – producing a budget with a trillion dollar deficit.

Our job is to elect representatives who support Medicare – not just for current beneficiaries but for everyone, in an improved version. The inevitable political support would ensure full funding forever.

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

Police arrest 20 protesters with Poor People’s Campaign at State Capitol

By Michael Aldrich and Jordyn Pair
The (Nashville) Tennessean, June 5, 2018

Twenty protesters from the Poor People’s Campaign were arrested Monday outside the governor’s office, according to the campaign. The protest was the campaign’s fourth consecutive protest over the past few weeks.

The Poor People’s Campaign is a grassroots movement with a broad platform that fights against systemic racism, economic inequality, environmental concerns and the overall moral state of the nation. The campaign is currently hosting a “40 Days of Moral Action” movement, with a mass rally in Washington, D.C., on June 23. Monday’s Nashville protest was part of more than 30 similar protests across the nation.

The Tennessee chapter has marched each Monday since May 14, focusing on a different topic each week and engaging in civil disobedience. Metro Nashville Police arrested 20 protesters last week and 21 people on May 21.

The protest began on the steps of the legislative plaza in downtown Nashville, where a group of around 50 people sang rally songs and gave speeches about health care and maintaining the environment.

The ecological arm of the movement’s platform includes a focus on renewable energy, fully-funded public water and sanitation, and protection of public lands, as well as bans on environmentally-dangerous mining of resources.

The protest is about “right to health and healthy environment,” said Beth Foster, 44, tri-chair of the Tennessee Poor People’s Campaign.

“It’s time the people be taken care of,” Foster said. “It is an honor to be able to do what we can.”

The weekly protests are part of the “40 Days of Moral Action,” a movement designed to shift national discussion away from issues like homosexuality and abortion — issues Foster calls “private, individual choices,” — and toward problems like systemic racism, poverty, the war economy, and ecological degradation.

“I think anybody who’s honest with themselves will know that these are immoral issues,” Foster said.

Foster has attended all three previous protests and been arrested twice.

Joe Fennell, 32, a freelance landscaper, said legislators need to support common people, not just the wealthy.

“We’re trying to communicate the message that lawmakers need to start putting Tennesseans first. Too many times they’ve handed out massive subsidies to big corporations while poor neighborhoods crumble,” Fennell said. “They’ll hear us in the streets, hear us in the courts or hear us in the voting booth.”

Fennel said he’d attended all four Nashville protests, but had only been arrested once.

Members of the Poor People’s Campaign say issues like health and being environmentally conscious are interconnected.

Amy Pragnell, 47, is especially passionate about people having access to fresh food.

“Being a chef, I understand food can be affordable,” Pragnell said.

Pragnell said densely urban and rural areas can struggle with food deserts, where there is a lack of accessible grocery stores with fresh food.

“Having affordable as well as accessible food for people all over is important,” Pragnell said. “Especially with children, they need affordable and accessible food.”

Pragnell said she did not plan to partake in the civil disobedience portion of the protest.

But she still supported their efforts.

“My heart will always be arrested with these people,” she said.

At 3 p.m., the crowd — carrying buckets of dirt, gardening tools and plants — moved to a patch of lawn down the street to create a “people’s garden.” A group of around twenty people spread the dirt out on the lawn and placed the plants in it.

A group of police stood by, although no arrests were made at the time.

The group then moved to the capitol building to attempt to see the governor. They were turned away at the office door.

Chants of “everybody’s got a right to live” and “everybody in, nobody out” echoed in the halls as roughly 35 members of the campaign sat outside the governor’s office.

“It’s a working office,” said Highway Patrol Trooper Brandon Smith, 35, who was part of a small group of troopers guarding the door. “They have to make an appointment to see the governor.”

The group then continued to chant and speak out on health care.

‘We’re all going to die,” Carol Paris, the president of the Physicians for a National Health Program, told the group. “We don’t need to die unnecessarily.”

Paris then asked if anyone had a “health care story to share.”

Tennessee state troopers told the group they had to leave the building when it closed at 4:30 p.m. They told protesters anyone who remained would be arrested.

Pragnell said it can be difficult to tell if legislators are even listening.

“There are few that do,” she said. “I can say that with confidence.”

https://www.tennessean.com…