PNHP

Everyone should have access to health insurance

Everyone should have access to health insurance

By Ashley Duhon and Sara Robicheaux
The (Baton Rouge, La.) Advocate, Letters, March 28, 2018

As a medical student, you never forget the first time a patient says, “Thank you for your help, but I can’t afford it.” It’s the one sentence that could stop any treatment plan, regardless of the potential benefits.

Medical textbooks aid in the diagnosis and treatment of patients, but they fail to tell us how to help a patient who cannot afford care. Like millions of Americans, many of our patients leave clinics with a choice between addressing their critical health needs or paying for basic necessities. As medical students and future physicians, we cannot ignore the system that denies our patients access to the care they need and deserve.

Over the course of history — from the Greensboro sit-ins of the 1960s civil rights movement to today’s high school students leading the fight for stricter gun regulations — students have been powerful agents of social and political change.

Based on this proud tradition of student-led activism, we recently gathered in New Orleans with more than 100 fellow medical students from across the country for the annual summit of Students for a National Health Program (SNaHP). SNaHP is a national organization of medical and health professional students advocating for a single-payer, Medicare-for-all health system. The event was organized and led by passionate students who believe every patient deserves access to quality, affordable health care. Wearing our white coats and holding “Medicare for All” signs, we danced and marched in a second line parade for health justice, crossing paths with University Medical Center and Tulane Medical Center.

The day concluded with a keynote presentation by Bethany Bultman, CEO of the New Orleans Musicians’ Clinic, who explained how the majority of performance artists in New Orleans are uninsured and rely on the Musicians’ Clinic to access basic health services. Musicians are at the heart of the city’s culture, but fall through the cracks of our fractured health system — often earning too much money to qualify for Medicaid, but not enough to afford private insurance.

Musicians aren’t the only New Orleanians who experience health care rationing. According to data from the U.S. Census Bureau, approximately 54,417 people in New Orleans still do not have any form of health insurance.

Our medical education can only benefit our future patients if an insurance company deems they are worthy of care. While we are taught to see all patients as humans deserving of the highest quality care, private insurers see patients as nothing but profit. We will not stand for a system that prevents us from providing the care our patients need. In this historic political moment of student-led activism, our time is now. Your health is too important for it not to be.

The authors are medical students at Louisiana State University Health Sciences Center in New Orleans.

http://www.theadvocate.com…

NORC poll shows affording health care remains a serious problem

Americans' Views of Healthcare Costs, Coverage, and Policy

West Health Institute, NORC at the University of Chicago, March 2018

Five Things You Should Know

1) Three quarters of Americans say that our country doesn’t get good value for what we spend on healthcare.

2) Forty percent say they skipped a recommended medical test or treatment in the last 12 months due to cost, and 32 percent were unable to fill a prescription or took less of it because of its cost.

3) Four in 10 say they fear the costs associated with a serious illness, which is more than the number who say they fear the illness itself.

4) Over half of Americans say they received a medical bill they thought was covered by insurance or where the amount they owed was higher than expected, and more than a quarter say they had a medical bill turned over to a collection agency in the past 12 months.

5) About half of Americans disapprove of the way their representative in Congress is handling the cost of healthcare.

Also…

Americans’ support for a single payer healthcare system has increased from 2017 to 2018.

In February 2018, 46 percent of Americans strongly or somewhat favored a single payer healthcare system, compared to 38 percent who said the same in an AP-NORC poll conducted in January 2017. Opposition to single payer has decreased during the same period, to 28 percent in 2018 from 39 percent in 2017. The number who say they neither favor nor oppose has remained steady in 2018 compared to 2017 (24 percent vs. 22 percent).

Americans who say they have experienced significant financial consequences due to healthcare costs are slightly more likely to favor a single payer system (50 percent vs. 41 percent). Employed adults are more likely to favor single payer healthcare (52 percent vs. 38 percent), as are Democrats compared with independents or Republicans (62 percent vs. 35 percent and 29 percent). On the other hand, blacks are more likely to oppose single payer than Hispanics (29 percent vs. 18 percent).

http://www.norc.org…

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Comment:

By Don McCanne, M.D.

This new NORC poll confirms once again that our health care financing system is failing too many Americans, with 40 percent saying they skipped a recommended medical test or treatment in the last 12 months due to cost. In fact, the financial barriers are so great that more fear the costs associated with a major illness than fear the illness itself.

Although this poll does not show quite as much support for single payer as do most other polls, it does show that more individuals support single payer than oppose it and that support has increased in the past year while the opposition has decreased.

The most common reason given for continued opposition to single payer is that it would be disruptive to the dominant coverage in the United States – employer-sponsored health plans. Yet this poll shows that employed adults are more likely to favor single payer (52 percent favor vs. 38 percent oppose).

We still have more educating to do, but this poll shows that we’re certainly headed in the right direction.

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Our multiple-payer system of health care just isn’t working

By Jay D. Brock, M.D.
Washington Post, Letters, March 27, 2018

Regarding the March 23 editorial “Maryland’s ingenious plan to fix Obamacare”:

Under our current multiple-payer system of health care, we have two major problems: Too many people have no (or unaffordable) health coverage, and we spend too much for the health care we get as a nation. Our incomprehensibly complicated and costly health insurance system diverts hundreds of billions of dollars into wasteful administrative costs rather than providing real care to real patients. Politicians can interfere with the system at will, causing more disruption that results in poor health outcomes as well as medical bankruptcies for hundreds of thousands of hard-working families each year.

Our current multiple-payer system doesn’t work well for many people or many providers — just ask patients and physicians. But it does inure to the benefit of the health insurance industry.

The editorial can recommend a little trimming here, and maybe even a little real change there, but the underlying problems remain: The current system is unwieldy, unworkable, overpriced and ultimately out of control, because in our system no one is really in charge. No one is ultimately responsible for getting everyone the health care they need rather than the health care they can afford.

Anyone have a better idea on how to solve these problems other than single-payer, national health care, which would still give Americans the best health care available?

https://www.washingtonpost.com…

Documentation of why ‘volume to value’ is failing us

Transformation of the Health Care Industry: Curb Your Enthusiasm?

By Lawton R. Burns and Mark V. Pauly
The Milbank Quarterly, March 5, 2018

Policy Points

* Policymakers seek to transform the US health care system along two dimensions simultaneously: alternative payment models and new models of provider organization.

* This transformation is supposed to transfer risk to providers and make them more accountable for health care costs and quality.

* The transformation in payment and provider organization is neither happening quickly nor shifting risk to providers. The impact on health care cost and quality is also weak or nonexistent.

* In the longer run, decision makers should be prepared to accept the limits on transformation and carefully consider whether to advocate solutions not yet supported by evidence.

Abstract

Context

There is a widespread belief that the US health care system needs to move “from volume to value.” This transformation to value (eg, quality divided by cost) is conceptualized as a two‐fold movement: (1) from fee‐for‐service to alternative payment models; and (2) from solo practice and freestanding hospitals to medical homes, accountable care organizations, large hospital systems, and organized clinics like Kaiser Permanente.

Methods

We evaluate whether this transformation is happening quickly, shifting risk to providers, lowering costs, and improving quality. We draw on recent evidence on provider payment and organization and their effects on cost and quality.

Findings

Data suggest a low prevalence of provider risk payment models and slow movement toward new payment and organizational models. Evidence suggests the impact of both on cost and quality is weak.

Conclusions

We need to be patient in expecting system improvements from ongoing changes in provider payment and organization. We also may need to look for improvements in other areas of the economy or to accept and accommodate prospects of modest improvements over time.

From the Conclusion

In conclusion, analysts and advocates may need to come to terms with the likelihood that the triple aim cannot be achieved over the long term. Rising real incomes for consumers and technical progress in discovering health‐improving but cost‐increasing new technologies may mean that cutting spending growth rates much further is not a practical goal. We may need to have more realistic expectations that, for example, the kind of high‐value but cost‐increasing care that led to dramatic improvements in cardiovascular health may be the best we can expect, and along with these improvements we should expect continuation of spending growth at an uncomfortable but not breakaway pace.

The transformation from “volume to value” in health care at this point appears to be driven more by ideology and aspiration than by evidence. To date, APMs show limited improvements in quality and even more limited reduction in costs. If improving quality does not consistently lead to lower costs but only to better health outcomes, we need to rethink the triple aim, tolerate a time when we get more health than wealth, and continue to search for other undiscovered strategies of cost containment.

https://onlinelibrary.wiley.com…

***

Comment:

By Don McCanne, M.D.

This well researched analysis (182 references!) reveals that all of the attention given to transforming our health care system from “volume to value” is misguided primarily because it is driven by ideology and aspiration rather than by evidence.

The data we do have on accountable care organizations (ACOs) and alternative payment models (APMs) have thus far failed to show greater accountability through risk transfer to providers, and thus there has been only a negligible impact on health care cost and quality. New models of provider organization through vertical and horizontal integration have failed to provide significant improvements in the triple aim (care, health and cost).

The reason this failure is so important to understand is that the attention of policymakers, politicians, and the industry has been diverted to these ineffective but intrusive, administratively wasteful, and sometimes expensive interventions while ignoring proven policies that not only would improve quality and control costs but would also address other important goals of reform that are being neglected such as universality, accessibility, efficiency, and equity. Of course, those goals would be achieved by enacting and implementing a well designed single payer national health program – an improved Medicare for all – though the authors of this article do not venture there.

The publisher has allowed free access to this article. Although long (53 pages) it is worth downloading (at least the link) to use as an explanation to incrementalists and others of just why the the misguided campaign for volume to value needs to be set aside so that we can move forward with proven policies that will ensure quality health care for everyone.

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

Adopting single-payer healthcare won’t be easy. That doesn’t make it not worthwhile.

By Robert Vinetz, M.D.
Los Angeles Times, Letters, March 25, 2018

To the editor:

The healthcare bill itself, SB 562, may be dead in the water. But the issue of single-payer healthcare (not-for-profit, publicly financed, guaranteed, lifetime, health care for all) in California is not. (“Medical tourists, undocumented immigrants and ballooning costs: California’s path to single payer is rocky,” editorial, March 17)

The strong surfacing of the legislation may not have created a tsunami of support in the California Assembly, but the waves it created are drawing attention from politicians, the media and the public.

The Times Editorial Board, in highlighting the obstacles on the “rocky path to single payer,” affirms: “Attaining universal insurance coverage is vital for both moral and economic reasons, as it’s instrumental in controlling ever-rising healthcare costs. And single payer may very well be the most efficient way to get there.”

What’s needed now is for our legislators to smooth out the path and finally create a good single-payer system. The public and the media must educate and push them to do so.

http://www.latimes.com…

We need universal health care

By Russell Noblett, M.D.
The Roanoke (Va.) Times, Letters, March 25, 2018

There is a saying that “necessity is the mother of invention.” Compassion is a form of necessity. It fosters creative thought. With compassion, even a very difficult problem, such as universal health care, can be fixed. Without compassion, it is impossible.

In 2000 the Virginia General Assembly created the FAMIS (Family Access to Medical Insurance Security) program. FAMIS provides comprehensive health coverage during pregnancy to women with incomes up to $24,887 (200 percent of poverty income). This is too high for Medicaid, but too low to purchase health insurance. FAMIS covers about 65,000 poor pregnant women in Virginia yearly.

In a recent article, a respected doctor began by describing a pregnant woman for whom he recently cared in the hospital. The reader expected to hear more about this patient. Instead, the author bemoaned being paid only $200 by Medicaid for this care. (The reader was left to imagine what $200 might mean to the poor new mother.)

We have forgotten why we are in medicine. Indeed, we have forgotten what it means to be a society. There is no better use of our last dollar than caring for each other.

Medicaid pays only 50 to 60 percent of what private insurance pays to hospitals and doctors. However, it results in a five percent decrease in childhood mortality. Still, studies show that Medicaid is associated with poorer outcomes overall, due most likely to sicker patients at entry, and to difficulty finding primary care doctors who will take Medicaid.

This situation is fixable with creative compassion: with earlier universal coverage, adequate funding and doctors in it for the care-giving.

https://www.roanoke.com…

When competition isn’t working, FDA’s Gottlieb recommends more competition

Capturing the Benefits of Competition for Patients

Speech by Scott Gottlieb, M.D., Commissioner of Food and Drugs
America’s Health Insurance Plans’ (AHIP) National Health Policy Conference, March 7, 2018

Excerpts

Congress has charged FDA with advancing policies that maintain a balance between encouraging and rewarding medical innovation and facilitating robust and timely market competition.

I want to focus my remarks today on access to generic and other follow-on medicines and, in particular, on the market for biosimilars – or follow on versions of branded, innovator biologics.

I firmly believe in the importance of market based incentives that encourage continued entrepreneurship, investment and risk taking – all leading to the discovery and costly development of new medicines.

At the same time, robust competition expands patient access to more affordable products like generics and biosimilars.

I’m concerned about that balance today. Because while we see a growing number of sponsors pursuing biosimilar development programs, the economics of development are currently unstable; and the pipeline of biosimilar products that we hope for could be dramatically affected by the weakening of market incentives to bring these products to patients.

In competitive insurance markets, savings from the competition between branded drugs, generics, biologics, and biosimilars should be passed along to patients, employers, and payors.

But I’m concerned that, in some cases, this isn’t the way markets are operating today.

Current rebating and contracting practices — combined with the increased consolidation that we’re seeing in many segments of the drug supply chain — has produced some misaligned incentives.

The top three PBMs control more than two-thirds of the market; the top three wholesalers more than 80%; and the top five pharmacies more than 50%. Market concentration may prevent optimal competition. And so the saving may not always be passed along to employers or consumers.

Too often, we see situations where consolidated firms — the PBMs, the distributors, and the drug stores — team up with payors. They use their individual market power to effectively split some of the monopoly rents with large manufacturers and other intermediaries rather than passing on the saving garnered from competition to patients and employers.

In the long run, the interests of patients, providers, and manufacturers are not well served by these arrangements, precisely because these practices encourage large list price increases to fuel the pricing schemes.

And so, we continue to see a backlash against these Kabuki drug-pricing constructs — constructs that obscure profit taking across the supply chain that drives up costs; that expose consumers to high out of pocket spending; and that actively discourage competition.

Patients shouldn’t be penalized by their biology if they need a drug that isn’t on formulary. Patients shouldn’t face exorbitant out of pocket costs, and pay money where the primary purpose is to help subsidize rebates paid to a long list of supply chain intermediaries, or is used to buy down the premium costs for everyone else. After all, what’s the point of a big co-pay on a costly cancer drug? Is a patient really in a position to make an economically-based decision? Is the co-pay going to discourage overutilization? Is someone in this situation voluntary seeking chemo?

Of course not. Yet the big co-pay or rebate on the costly drug can help offset insurers’ payments to the pharmacy, and reduce average insurance premiums. But sick people aren’t supposed to be subsidizing the healthy.

That’s exactly the opposite of what most people thought they were buying when they bought into the notion of having insurance.

Now I understand that there’s a perverse incentive to use that rebated money to lower premium costs, since most health plans compete on the sticker cost of their premiums. But we’re living in a world where financial toxicity is a real concern for patients. And every member of the drug supply chain needs to take responsibility for addressing it.

Bringing more drug competition to the market, and addressing the high cost of medicines, is a top priority of the Administration and of the Secretary of Health and Human Services.

And we’re working closely with Secretary Alex Azar on crafting policy options that can improve competition, access, and the chance for patients to benefit from safe, effective, and lower cost biosimilar alternatives.

Currently, PBMs and insurers profit from the spread between Wholesale Acquisition Cost (WAC) and the actual rebated price.  These rebates can amount to tens or hundreds of million dollars in annual PBM revenues.

Manufacturers typically tie these rebates to volume, or having a health plan maintain a drug on a preferred formulary status. So, if a health plan puts a biosimilar in that preferred formulary position, the plan might lose the rebates on their entire volume of the innovator biologic.

Here’s the rub.

When biosimilars launch, their initial discount is typically on the order of 15% or 20%. And unless the plan can switch all their patients over to the biosimilar, the cost of the lost rebates on the patients who remain on the original biologic won’t be offset by value of the discount on the biosimilar, and the smaller number of patients who are started on it.

This is especially true since the number of patients who’ll immediately migrate to biosimilar therapy is likely to be small, making it difficult for biosimilar sponsors to launch with deep, volume-based rebates.

This means that PBMs have a significant financial incentive to limit the uptake of biosimilars to continue the flow of large rebate payments.

And health plans have a big disincentive to switch to the biosimilar, and lose the incumbent rebates paid on the innovator biologic.

Everybody wins. The health plans get the big rebates. The PBMs get paid on these spreads. And branded sponsors hold onto market share.

Everyone that is, but the patients, who in the long run, don’t benefit from the full value of increased competition Congress intended.

I truly believe that we’re in the midst of an epoch of medical innovation.

The impact of the innovations we’re laying claim to will be comparable to the introduction of antibiotics in the mid-20th Century.

But patient access to these innovations will depend on reforms that require every incumbent in the drug supply chain to take greater restraint for putting patients at the heart of their decision-making process.

It will depend on steps we take, working together, to empower market competition based on delivering the best clinical outcomes. Doing this with the long run in mind. And patient care at the heart of what we do.

We’re not there today.

Instead, we have a lot of finger pointing that ignores shared complicity for pricing practices that are eroding trust in both payors and innovators.

https://www.fda.gov…

***

Comment:

By Don McCanne, M.D.

FDA Commissioner Scott Gottlieb, in this address to AHIP, the insurance lobby organization, explains how the pharmaceutical industry and especially the middlemen intermediaries are benefiting greatly from our supposedly market based system of financing drugs. But while the industry prospers, patients are ending up on the short end.

Clearly market competition is not working to benefit the patient-consumer. So Dr. Gottlieb says, “patient access to these innovations will depend on reforms that require every incumbent in the drug supply chain to take greater restraint for putting patients at the heart of their decision-making process.”

But that is not the way markets work. They do not put patients at the heart of their decision making. They do not volunteer to place restraints on their profits. Profits are what drive businesses, and prices tend to be set at what the market will bear.

Yet Gottlieb says that we must work together “to empower market competition.” No, in health care that does not work. Instead we need to empower our own government to distribute our resources based on patient need. The most effective, efficient and equitable way to do that would be to enact and implement an improved Medicare for all. The sooner the better.

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

Dr. Steffie Woolhandler on ‘Laura Flanders’

PNHP co-founder Dr. Steffie Woolhandler appeared on “The Laura Flanders Show” on CUNYTV, LinkTV, FreeSpeech TV, and the Manhattan Neighborhood Network on March 23, 2018. She discussed the much touted health care initiative from Amazon, JPMorgan Chase, and Berkshire Hathaway, and why single payer remains the only real option for reform.

Ten Million Americans Could Bring H.R. 676 into Reality Land—Relief for Anxiety, Dread and Fear

Medicare for all is what the Pentagon does. It is what President Harry Truman wanted from Congress back in the nineteen forties. It is time.

By Ralph Nader
Common Dreams, March 23, 2018

Polls show that over 125 million adults in our country already favor full Medicare for all, with free choice of doctor and hospital without stifling networks. I say ‘already’ because, as of yet, there is no major national campaign underway showing that an ‘everybody in, nobody out’ system of health insurance costs less, with better outcomes, is simpler, without maddeningly inscrutable or fraudulent  bills, co-pays, deductibles and additional trap doors set by a bunch of greedy corporations. The campaigns that exist today are receiving too little on-the-ground assistance for such a widely-supported issue.

A super-majority of only 535 members of Congress—Senators and Representatives—can make that decision. The bill—H.R. 676, the ‘Expanded & Improved Medicare for All Act’—is now supported by 121 House Democrats—two thirds of all the Democrats in the House of Representatives. So that’s a good start.

H.R. 676 has been referred to several, regular, Committees of the House whose Chairs are all Republican corporatists. So there have been no public hearings. The bill, not surprisingly, is not moving at all.

Millions of Americans have had the bitter experience of denials of health care, staggering bills, pay-or-die drug prices and even loved ones dying because they couldn’t afford health insurance (about 35,000 a year based on Harvard Medical School experts).  So, in the next month, imagine what would happen, if just ten million of the 125 million who support full Medicare for all wrote, telephoned or emailed their two Senators and Representative demanding action and a written response by their lawmakers (who don’t pay postage).

Just ten million Americans making the least difficult effort—perhaps ending with a demand for a town meeting back home to educate the negative solons—would strike the Congressional Dome like a thunderbolt. Are there a dozen leaders among you up for launching such an electrifying internet mobilization?

Not to be confused with other lesser health insurance bills, mostly in the Senate, H.R. 676 is the real thing. It covers ‘all individuals in the U.S. with free health care that includes all medically necessary care, such as primary care and prevention, dietary and nutritional therapies, dental services, and vision care.’ No more premiums, co-pays or gaping deductibles.

How does H.R. 676 pay for all these services? Five ways:

  1. From existing sources of government revenues for health care;
  2. By increasing personal income taxes on the top 5% of income earners;
  3. By instituting a progressive excise tax on payroll and self-employment income;
  4. By instituting a tax on unearned income (such as on capital gains); and
  5. By instituting a tax on stock and bond transactions. Amounts that would have been appropriated for federal public health care programs, including Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), are transferred and appropriated to carry out this bill.

Presently, all Canadians are covered at an average per capita cost half of what Americans—insured and uninsured—are having to spend for health care. The system proposed in H.R. 676 is similar to Canadian Medicare. It includes public funding and free choice of private delivery of health care. It also has provisions for better record keeping, prevention and quality control. There is even transition retraining for all those clerical and administrative jobs that would not be necessary after displacement of the present bloated, wasteful, redundant health care sub-economy.

What would happen to the giant health insurance companies such as Aetna and United Healthcare? They would be prohibited from selling insurance that duplicates the benefits provided under H.R. 676. They could only sell benefits that are not deemed ‘medically necessary,’ such as certain cosmetic surgery operations.

Rep. Keith Ellison (Dem.-Minn.), the deputy chairman of the Democratic National Committee (DNC), is officially the lead House Democrat on the bill, which indicates that the DNC may be getting a little more interested in endorsing such legislation.

Meanwhile, Rep. Ellison is talking it up everywhere he travels. He says:

One of the consistent applause lines we’re all hearing is: ‘We need Medicare for all.” There’s a lot of folks who feel that it’s time for us to organize around that. It’s a better policy, at a better price. People in labor, people all over the country, they’re going to be driving the public conversation, raising the dialogue about this
.What some people think is a really important progressive position is just what the rest of the industrialized world does.

Medicare for all is what the Pentagon does. It is what President Harry Truman wanted from Congress back in the nineteen forties!! It is time.

So will the first ten million Americans step up and be counted by sending messages directly to their Senators and Representatives in the month of April? The amount of time required to send a letter, an email or a telephone call is so brief that activated citizens could be called the modern “Minutemen” for universal health insurance. Just think of all the tasks you do every day that take far more time, like trying to figure out bills, denials, exclusions, from this basic human right.

Go to SinglePayerAction.org to get the details, the motivation and the groups with which to connect. The Congressional telephone switchboard is 202-224-3121. Make sure to give your legislators your name and contacts; they’ll take the call or letter more seriously.

https://www.commondreams.org…

The myth that medical bankruptcies are rare

Myth and Measurement — The Case of Medical Bankruptcies

By Carlos Dobkin, Ph.D., Amy Finkelstein, Ph.D., Raymond Kluender, B.S., and Matthew J. Notowidigdo, Ph.D.
The New England Journal of Medicine, March 22, 2018

During the push to pass the Affordable Care Act, President Barack Obama often described the “crushing cost of health care” that was causing millions of Americans to “live every day just one accident or illness away from bankruptcy” and repeatedly stated that the high cost of health care “causes a bankruptcy in America every 30 seconds.” Stories of illnesses and injuries with financial consequences so severe that they caused households to file for bankruptcy were used as a major argument in support of the 2010 Affordable Care Act. And in 2014, Senators Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) cited medical bills as “the leading cause of personal bankruptcy” when introducing the Medical Bankruptcy Fairness Act, which would have made the bankruptcy process more forgiving for “medically distressed debtors.” But it turns out that the existing evidence for “medical bankruptcies” suffers from a basic statistical fallacy; when we eliminated this problem, we found compelling evidence of the existence of medical bankruptcies but discovered that medical expenses cause many fewer bankruptcies than has been claimed.

Policymakers’ beliefs about the frequency of medical bankruptcies are based primarily on two high-profile articles that claim that medical events cause approximately 60% of all bankruptcies in the United States. In these studies, people who had gone bankrupt were asked whether they’d experienced health-related financial stress such as substantial medical bills or income loss due to illness. People were also asked whether they went bankrupt because of medical bills. People who reported any of these events were described as having experienced a medical bankruptcy. This approach assumes that whenever a person who reports having substantial medical bills experiences a bankruptcy, the bankruptcy was caused by the medical debt. The fact that, according to a 2014 report from the Consumer Financial Protection Bureau, about 20% of Americans have substantial medical debt, yet in a given year less than 1% of Americans file for personal bankruptcy, suggests that this assumption is problematic. Clearly, many people face medical debt but do not go bankrupt. Even after correction for overly broad definitions of “medical” expenses, the existing, widely cited evidence on medical bankruptcy is built on the fallacy that when two things occur together there is necessarily a causal relationship between them.

To understand the problem, consider an analogous line of inquiry: suppose we want to know which factors increase a person’s chances of becoming a technology billionaire. Investigation of recent technology giants might suggest that dropping out of college is a high-return strategy (think: Bill Gates, Steve Jobs, and Mark Zuckerberg [dropping out of Harvard seems to have a particularly high payoff]). By examining only college dropouts who have already became technology billionaires rather than all college dropouts, this analysis misses the fact that most college dropouts do not go on to lucrative careers in the tech business. A similar problem pervades the current literature on medical bankruptcy. The studies mentioned above examine the experiences only of people who went bankrupt, but it is impossible to infer the role of medical expenses in causing bankruptcy without information on the proportion of the population with large medical expenses that did not go bankrupt.

To estimate the share of bankruptcies actually caused by medical factors, we therefore selected a sample of people who were admitted to the hospital in California and tracked information on their annual credit reports, including whether and when they filed for bankruptcy. Because we examined the relationship between when people go to the hospital and the timing of any bankruptcy, we were able to estimate the increase in bankruptcy filings caused by illness or injury, rather than the fraction of people filing for bankruptcy who happen to have substantial medical expenses.

Our study was based on a random stratified sample of adults 25 to 64 years of age who, between 2003 and 2007, were admitted to the hospital (for a non–pregnancy-related stay) for the first time in at least 3 years. We linked more than half a million such people to their detailed credit-report records for each year from the period 2002–2011.

The results show a clear effect of hospital admission on bankruptcy: the rate of bankruptcies rises sharply in the years after hospital admission, and this change is statistically significant (at conventional levels) both 1 and 4 years after the admission, after which bankruptcies appear to level off. This finding indicates that the expenses that result from the illness or injury that caused the hospital admission — for example, out-of-pocket medical costs and lost labor income — cause some people to file for bankruptcy. However, the magnitude of the bankruptcy effect is much smaller than previously thought: we estimate that hospitalizations cause only 4% of personal bankruptcies among nonelderly U.S. adults, which is an order of magnitude smaller than the previous estimates described above.

Of course, these results do not cover all potential medical bankruptcies. They do not consider hospitalizations for children or for the elderly — although in other work we found that hospitalizations have no effect on bankruptcy rates among the elderly. Our results are also specific to our population — people in California hospitalized for non–childbirth-related conditions who have not had a hospital admission in the previous 3 years (although they may, and often do, have additional admissions over the subsequent years).

Perhaps most obviously, our analysis excludes illness and injuries that do not result in a hospital admission. However, our sample of hospitalized people is likely to include most people with large medical expenses: in the Medical Expenditure Panel Survey, we estimated that about 63% of people in the top 5% of annual medical spending (at least $8,433) had had a hospitalization in that year. This finding suggests that focusing on hospitalized people probably does not lead to vast underestimation of the effect of all illness and injury on bankruptcy rates.

Our results also do not speak to the financial costs of hospital admissions outside the bankruptcy-filing decision. We have found that hospitalizations cause increased out-of-pocket spending on medical care, increased medical debt, and decreased employment and income. These costs may have considerable adverse consequences, and evidence from the Oregon Health Insurance Experiment indicates that they can be partially ameliorated by health insurance. But our findings suggest that medical factors play a much smaller role in causing U.S. bankruptcies than has previously been claimed. Overemphasizing “medical bankruptcies” may distract from an understanding of the true nature of economic hardship arising from high-cost health problems.

http://www.nejm.org…

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The Economic Consequences of Hospital Admissions

By Carlos Dobkin, Amy Finkelstein, Raymond Kluender, and Matthew J. Notowidigdo
The American Economic Review, February 2018

Abstract

We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills and bankruptcy, and reduce earnings, income, access to credit and consumer borrowing. The earnings decline is substantial compared to the out-of-pocket spending increase, and is minimally insured prior to age-eligibility for Social Security Retirement Income. Relative to the insured non-elderly, the uninsured non-elderly experience much larger increases in unpaid medical bills and bankruptcy rates following a hospital admission. Hospital admissions trigger less than 5 percent of all bankruptcies.

https://www.aeaweb.org…

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Illness And Injury As Contributors To Bankruptcy

By David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler
Health Affairs, February 2, 2005

Abstract

In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9–2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.

From the Discussion

Only broad reforms can address these problems. Even universal coverage could leave many Americans vulnerable to bankruptcy unless such coverage was much more comprehensive than many current policies. As in Canada and most of western Europe, health insurance should be divorced from employment to avoid coverage disruptions at the time of illness. Insurance policies should incorporate comprehensive stop-loss provisions, closing coverage loopholes that expose insured families to unaffordable out-of-pocket costs. Additionally, improved programs are needed to replace breadwinners’ incomes when they are disabled or must care for a loved one.

https://pnhp.org…

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Medical Bankruptcy in the United States, 2007: Results of a National Study

By David U. Himmelstein, M.D., Deborah Thorne, Ph.D., Elizabeth Warren, J.D., Steffie Woolhandler, M.D., M.P.H.
The American Journal of Medicine, August 2009

Abstract

BACKGROUND: Our 2001 study in 5 states found that medical problems contributed to at least 46.2% of all bankruptcies. Since then, health costs and the numbers of un- and underinsured have increased, and bankruptcy laws have tightened.

METHODS: We surveyed a random national sample of 2314 bankruptcy filers in 2007, abstracted their court records, and interviewed 1032 of them. We designated bankruptcies as “medical” based on debtors’ stated reasons for filing, income loss due to illness, and the magnitude of their medical debts.

RESULTS: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.

CONCLUSIONS: Illness and medical bills contribute to a large and increasing share of US bankruptcies.

From the Discussion

Medical impoverishment, although common in poor nations, is almost unheard of in wealthy countries other than the US. Most provide a stronger safety net of disability income support. All have some form of national health insurance.

The US health care financing system is broken, and not only for the poor and uninsured. Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.

https://pnhp.org…

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Getting Sick Can Be Really Expensive, Even for the Insured

By Margot Sanger-Katz
The New York Times, March 21, 2018

When you get really sick, the medical bills may not be your biggest financial shock.

New research shows that for a substantial fraction of Americans, a trip to the hospital can mean a permanent reduction in income. Some people bounce right back, but many never work as much again. On average, people in their 50s who are admitted to the hospital will experience a 20 percent drop in income that persists for years. Over all, income losses dwarfed the direct costs of medical care.

The authors of the paper, published in The American Economic Review, were surprised by how often an illness or injury could upend the finances of Americans with health insurance.

“I had sort of  assumed that if they had health insurance, then they had economic protections against health shocks,” said Amy Finkelstein, an economist at M.I.T. and an author of the paper.  “I hadn’t thought about the idea that even with the best gold-plated, fancy health insurance, you could still have a lot of economic risk.”

The researchers focused on hospitalization because it’s one of the easiest ways to pinpoint when a person’s health declines substantially.

But the costs of illness are not always limited to medical bills. Being sick can make it hard to work. Though people who had insurance were better protected from hospital bills than people who were uninsured, both groups faced a substantial risk that they would lose income, and a substantially increased chance that they would declare bankruptcy after leaving the hospital.

To the authors, the lesson of the paper is that standard health insurance isn’t enough — policymakers need to think about ways to better protect people against the income risks that accompany illness.

David Himmelstein, a professor of public health at Hunter College, was the co-author of a much-cited paper estimating that medical problems were responsible for a large proportion of American bankruptcies. (Another co-author was the Harvard Law professor Elizabeth Warren, now a Massachusetts senator.) Dr. Himmelstein said, based on his research and his experience as a physician, that he wasn’t surprised to see how lost work was contributing to the financial travails of the sick. His original paper called not just for health insurance, but also for disability insurance.

“It’s why when we wrote about this we titled our paper ‘illness and injury’ as a cause of bankruptcy, not ‘medical expenses’ as a cause of bankruptcy,”  he said.

https://www.nytimes.com…

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Comment:

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.

The NEJM commentary (and the longer NBER paper on which the commentary is based) use slanted statistics based on unsupportable assumptions to reach a wrong conclusion.

The authors’ whole estimate rests on four incorrect assumptions:

Faulty Assumption 1 – That illness starts at the moment of an initial hospitalization. Dobkin et al’s own data strongly suggests that this is not true, since the bankruptcy filing rates were already climbing in the three years prior to the initial hospitalization. This incorrect assumption would cause them to substantially underestimate the true medical bankruptcy rate of hospitalized persons.

Faulty Assumption 2 – That people with a hospitalization within the three years prior to the period they looked at have the same medical bankruptcy rate as those with no prior hospitalizations. In essence, their study leaves out most people with very frequent hospitalizations – the sickest group and probably a group at high risk of medical bankruptcy.

Faulty Assumption 3 – That people who were not hospitalized are at no risk of medical bankruptcy. They justify this assumption by citing data that most high COST patients are hospitalized. While that is true, people who are hospitalized during the year account for less than 20% of total out-of-pocket spending. So their study assumes that non-hospitalized people (who incur more than 80% of out-of-pocket costs) do not experience medical bankruptcy.

Faulty Assumption 4 – That overall bankruptcy rates were stable during the study period. In fact, a major bankruptcy reform occurred midway through their data collection period, the 2005 BAPCA law. BAPCA was designed to reduce debtors’ access to bankruptcy courts, and caused a dramatic dip in bankruptcy filings. This would tend to reduce bankruptcies in the period after hospitalization (relative to the pre-hospitalization baseline) and cause them to underestimate the bankrupting effects of illness.

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Additional Comment:

By Don McCanne, M.D.

Although our health care financing system is the most expensive in the world it all too often has failed to prevent financial hardship in the face of medical need. Insured or not, patients often face onerous medical bills compounded by reduction in income due to their illness or injury.

In their original landmark article, “Illness And Injury As Contributors To Bankruptcy,” David Himmelstein and his colleagues stated, “Insurance policies should incorporate comprehensive stop-loss provisions, closing coverage loopholes that expose insured families to unaffordable out-of-pocket costs. Additionally, improved programs are needed to replace breadwinners’ incomes when they are disabled or must care for a loved one.”

There is no question that medical debt, including loss of income due to injury or illness, has been a major contributor to personal bankruptcy, though usually not the sole cause. Without medical debt and disability, many would have avoided the formality of bankruptcy, and thus the label of “medical bankruptcy” is appropriate. Regardless of labels, the $3.3 trillion we are spending on health care is not preventing financial hardship for too many of those with medical needs. We clearly need a better method of financing health care – a single payer national health program, aka Improved Medicare for All – plus better financial support systems for disability and unemployment due to medical causes.

Carlos Dobkin and his colleagues have published an article concurring with the problem of financial hardship for a selected set of individuals requiring hospitalization, emphasizing the great burden of loss of income in association with those illnesses or injuries. In their original paper they challenge the studies demonstrating the high prevalence of medical bankruptcy by concluding, “Hospital admissions trigger less than 5 percent of all bankruptcies.”

Yet in the New York Times article co-author Amy Finkelstein states, “I had sort of  assumed that if they had health insurance, then they had economic protections against health shocks. I hadn’t thought about the idea that even with the best gold-plated, fancy health insurance, you could still have a lot of economic risk.” So medical need and financial hardship clearly do go hand in hand here in the United States.

What is more difficult to understand is why they use their study of selected hospitalizations to try to dismiss the concept of medical bankruptcy when they recognize what a problem medical debt is.

Further, in their comment above, David Himmelstein and Steffie Woolhandler explain why peculiarities – faulty assumptions – of the Dobkin study extrapolated an underestimate of the prevalence of medical bankruptcies. Dobkin et al are right in their emphasis on loss of income associated with large medical expenses, but they are wrong to be dismissive of medical bankruptcy.

The primary reason for this long message is that Carlos Dobkin and his colleagues now apparently feel compelled to publish an article in The New England Journal of Medicine titled, “Myth and Measurement — The Case of Medical Bankruptcies.” Though acknowledging the tremendous burden of medical debt, they state, “Overemphasizing ‘medical bankruptcies’ may distract from an understanding of the true nature of economic hardship arising from high-cost health problems.” What? Economic hardship is economic hardship.

The problem with their NEJM article is that we are going to hear over and over again from the opponents of comprehensive reform the statement, “MEDICAL BANKRUPTCY IS A MYTH.”

What does that contribute to the cause? Do they contend that their spuriously low number indicating hospitalizations cause 5 percent of bankruptcies is a perfectly acceptable consequence of our dysfunctional health care financing system? Why did they do this? Extrapolating, do they think that they really made a case for rejecting an improved Medicare for all? They didn’t. They just helped to make the case for it while pouring more poisonous rhetoric onto the fire.

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After a Hospital Stay, People are More Likely to Go Bankrupt

By Kate Sheridan
Newsweek, March 21, 2018

The effect that unexpected hospital bills have on Americans’ decisions to declare bankruptcy may be overstated, an article published Wednesday in the New England Journal of Medicine claims—but one expert says the new numbers don’t show the whole picture.

Researchers looked at credit reports of more than 500,000 people who were admitted to a hospital in California between 2003 and 2007. About 4 percent of all the bankruptcies that happened between 2002 and 2011 appeared to be related to a hospitalization—even among people who were uninsured, for whom the rate was still only 6 percent.

People did seem more likely to declare bankruptcy after going to a hospital—but not by all that much, the study found. “Rates of medical bankruptcy are much, much lower than we had thought and has been claimed,” Amy Finkelstein, a health economist at the Massachusetts Institute of Technology and one of the authors of the paper, told Newsweek.

That’s not to say medical bankruptcies aren’t happening—four percent is more than zero. But Finkelstein and her colleagues believe focusing on bankruptcy may be missing the forest for one relatively rare tree. “We find that going to a hospital is associated with a 20 percent decline in employment and earnings over the next four years. That’s just extraordinarily high,” she said, referencing another recent paper. “And this is even for people with health insurance.”

That’s because health insurance doesn’t cover some of the consequences of being sick, like missing work—which exist even in places where health insurance coverage is stronger and more widespread. “[Other researchers found] similar adverse effects on earnings and employments in Denmark,” Finkelstein said. “But the big difference is that in Denmark, most of that lost earnings and employment is insured through things like sick pay and disability insurance.”

That helps explain why bankruptcy is still a problem in the United States, even if it’s smaller than we once thought; while the Affordable Care Act may have patched some holes in the social safety net by expanding Medicaid eligibility to cover more people, disability insurance and unemployment insurance is still weak.

“We’ve had a major push for health insurance coverage in the United States, and much of it was predicated on these claims,” Finkelstein said. “And it turns out that that was the wrong problem to be focusing on.”

Dr. David Himmelstein disagrees—in his eyes, Finkelstein and her team’s methods don’t really capture medical bankruptcy. Himmelstein, a professor at Hunter College’s School of Urban Public Health in New York City, published his own estimate in 2009 in the American Journal of Medicine; one of his co-authors on that paper is now-Senator Elizabeth Warren (D-MA). By their estimate, nearly two-thirds of all bankruptcies are due to medical expenses. For that paper, they surveyed people who had filed bankruptcy and asked them if medical problems forced them to file.

The advantage of Finkelstein’s approach—having years of real-life data, linking bankruptcies and hospitalizations that actually happened rather than asking people for a post hoc explanation—is one of its weakness in Himmelstein’s eyes. “The question really is, does illness cause bankruptcy. And they only count you as having been ill if you were hospitalized. But we know that a huge number of people who were ill were not hospitalized,” he said. “To say that our data is wrong is to say people lied.”

He’s also concerned that Finkelstein and her team’s analysis, which looked only at people who had only been hospitalized once in a three year time period, leaves out a group of particularly sick people—and potentially a group that’s at the highest risk of a medical bill-related bankruptcy.

Though they may disagree about the numbers, both Himmelstein and Finkelstein agree on one thing: the problem with high medical bills is not necessarily one that health insurance can solve. Though high deductible plans may strain many Americans’ savings, the majority of hospital bills are already taken care of by insurance. Strengthening social safety net programs might be able to mitigate the financial impact of serious illnesses—something Himmelstein said he’d like to see. “If that’s the result, that would be great,” he said—but he’s skeptical that Finkelstein’s results will really be interpreted as an endorsement of something like a stronger disability insurance program. “I think it’s much more likely that it’s going to be used to scoff at the real problems that people have paying for care.”

Finkelstein, at least, certainly isn’t scoffing. Problems absolutely exist, but “we’re saying, don’t focus on bankruptcy, focus on earnings and employment,” she said. “My hope, as a researcher, is that policy discussions and policy proposals are based on a better understanding of what the actual problems are.”

http://www.newsweek.com…

What’s So Good About Health Care?

By Eric Salk, M.D.
The New York Times, Letters, March 21, 2018

To the Editor:

Re: “Why Is U.S. Health Care So Expensive? Some of the Reasons You’ve Heard Turn Out to Be Myths” (The Upshot, March 13):

It’s true that “analysts are fond of describing the system as wasteful, with too many patients getting too many services.” But those of us on the front lines know that large segments of the population have no real access to quality medical care, and even those with “good insurance” struggle through a maze of barriers and increased costs.

The United States has some of the highest administrative costs in the world because of our fractured, multipayer, profit-based system. Private insurers add zero value but drive up costs through administrative waste and profiteering, and require hospitals and doctors to maintain complex billing and cost-tracking bureaucracies.

While no system is perfect, we have an excellent solution in the form of Medicare. A single-payer plan like H.R. 676, “Medicare for All,” could save an estimated $617 billion a year by slashing administrative waste in the private insurance industry ($504 billion) and bargaining down drug prices ($113 billion), freeing up money for universal coverage without any net increase in health spending.

Dr. Salk is medical director of emergency medicine at the Charlotte Hungerford Hospital.

https://www.nytimes.com…