PNHP

Single-Payer Advocates in Congress Double Down With Medicare for All Caucus

Single-Payer Advocates in Congress Double Down With Medicare for All Caucus

By Michael Corcoran
Truthout, July 20, 2018

When Medicare was created 53 years ago this month, it was over the objections of Ronald Reagan. On behalf of the American Medical Association, Reagan warned that should Medicare become law, it would lead to “a mechanism for national health insurance capable of indefinite expansion in every direction until it includes the entire population.”

More than five decades of frustration later, advocates are still fighting to make Reagan’s “nightmare” of universal health care a reality. The recent formation of the Medicare for All Caucus by House progressives could prove to be an important development in this pursuit, according to members and advocates who introduced the new caucus at a press conference on July 19.

“We are united today by a common conviction that health care is a human right,” said Rep. Pramila Jayapal during the launch. “One of the best ways to ensure health care for all is to use the system that already exists for millions of seniors [in] Medicare.”

Jayapal founded the new caucus with Reps. Debbie Dingell and Keith Ellison. The caucus had 66 founding members at the 10 am press conference, but by midday that number was 70, according to a list provided to Truthout by Dingell’s office.

The California Nurses Association, National Nurses United, Public Citizen, Physicians for a National Health Program (PNHP), Health Care-Now, Our Revolution and other organizations were also supportive.

“For the first time ever, we have a congressional caucus that is committed to achieving Medicare for All,” said Martese Chism, a registered nurse and board member of the California Nurses Association, who spoke at the launch.

Others praised what they see as an important shift in how to tackle the issue.

The new caucus “clearly marks a shift in congressional approach to Medicare for All from more passive support to laying the groundwork for potential passage of this legislation, depending on how the makeup of Congress shakes out in the coming years,” said Benjamin Day, executive director of Healthcare-NOW, in an interview with Truthout.

Educating the Public

The press conference emphasized health care as a human right and also sought to educate the public about a policy about which there is a great deal of misinformation.

“The congressional Medicare for All caucus will help build the evidence base for Medicare for All,” Jayapal said. “Our goal is to sponsor briefings on a variety of topics, from the basics of Medicare for All to financing, to universal health systems around the world.”

For instance, it is common for critics and much of the mainstream media to emphasize new taxes without mentioning long-term savings. Others often portray single-payer as a radical idea, when in fact, it is within mainstream international norms: The widespread lack of health care coverage within the current US system is what stands apart as an outlier.

Countries that have public, universal health care systems spend considerably less on health care than the US. The per capita spending for the US, according to the Organization for Economic Cooperation and Development (OECD), is $10,029 — by far the largest in the world. The OECD average is less than $5,000.

“We pay a lot more than any other rich country, and we get a lot less,” said Robert Weissman, director of Public Citizen, at the press conference.

Despite paying such hefty sums, the US has poor outcomes compared to other rich countries. The US ranks 27th among the 36 OECD nations in life expectancy and 24th in infant mortality rates, with its outcomes falling far behind those of nations with publicly financed health care. These facts are not controversial, but they are also not well known.

“It is important to make the economic case for single-payer,” Carol Paris, president of PNHP, told Truthout. “If we want to do this, we need to get small businesses on board and try to win bipartisan support for the policy.”

Paris also notes that many Democratic Party alternative plans — general iterations of the public option — are trying to benefit from the popularity of Medicare for All. One example is the Center for American Progress plan, Medicare Extra for All. The plan is not a single-payer one — in fact it preserves employer-based care — but the name has blurred the distinction, leading to headlines such as: “finally, a universal program that would work for everyone.”

“These policies try to win support by using the popularity of Medicare for All as a brand — but they are not single-payer plans. They don’t have the cost savings, and many of them are not even universal,” Paris said. “If this caucus can help study those bills and explain how they are different from single-payer, that would be a valuable service.”

Using Grassroots Pressure to Seize the Current Momentum

Support for Medicare for All is at an all-time high in Congress. The surge in support came more than a year ago when, on the heels of the Bernie Sanders campaign, cosponsors to single-payer legislation in the House jumped from 62 in the last Congress to a record 122 in the current Congress: well more than half the House Democratic Caucus. Sanders’s own bill further accelerated the energy behind the movement.

Despite all the momentum for the policy, there are also some grim realities that progressives need to wrestle with if they want to succeed in their fight for universal health care. Most notably is that while Democratic Party voters are unambiguous in their support of the policy, the Democratic leadership is opposed to the policy: Medicare for All was shot down by delegates in the platform committee meeting in 2016, and the Democratic Congressional Campaign Committee is actively undermining the policy throughout the midterm elections. Meanwhile, the for-profit health industry continues to spend millions lobbying and contributing to candidates and members of Congress.

“There is also the major task of moving the rest of the Democratic Party on board,” Day said. “We took a major leap on that last year during the repeal-and-replace fight, but the work needs to continue … until we reach a tipping point where Democratic leadership feels they have to embrace Medicare for All and actively fight for it. I expect that will only happen with significant grassroots pressure.”

Grassroots pressure has proven to be instrumental not only in defeating Trumpcare, but also in keeping pressure on politicians to adopt single-payer positions.

“The Medicare for All Caucus is by no means a substitute for grassroots organizing,” Paris said. “In fact, it exists largely because of strong grassroots pressure.”

There is also a concern among some single-payer advocates that some co-sponsors of Medicare for All supported the measure mainly to avoid facing unruly and critical crowds at town halls, rather than due to a more genuine willingness to back it. Some co-sponsors to Sanders’s bill made a point to add qualifiers to their support.

Former Sen. Al Franken, for instance, who later resigned in response to allegations of sexual harassment and assault, had offered many qualifiers within his statement of support, undercutting Sanders’s bill as “aspirational,” a “starting point,” and less important than “bipartisan policies that improve our current health care system.”

Kamala Harris also gave about as lukewarm an endorsement as is possible, saying “all people should have access to affordable health care, and as we talk about moving toward a single-payer system” (emphasis added).

All of this has led to skepticism over how serious some Democrats are in supporting single-payer. Skepticism will likely persist toward the 52 co-sponsors of the House bill who have not joined the new caucus.

Paris, however, warns against knee-jerk criticism. “Each situation should be case-by-case. There could be reasonable reasons why someone doesn’t join the caucus,” she told Truthout. “But it is a good opportunity for constituents to raise the issue and talk with their representatives about Medicare for All and why we need it.”

https://truthout.org…

Private insurers are not controlling spending growth

Growth In Spending On Privately Insured Drives Much Of U.S. Health Spending Growth In 2017 And Early 2018

By Corwin N. Rhyan
Altarum, July 19, 2018

A new Altarum research brief estimates private versus public health spending on a timely basis and finds that:

* Spending and price growth among the privately-insured population accelerated in 2017 and early 2018 relative to Medicare and Medicaid, despite very low growth in private insurance enrollment. This reverses the trend seen from 2009 through 2016, when private spending growth was near or below Medicare and Medicaid rates.

* Since the start of the economic recovery in 2009, total Medicaid spending has grown by 72.6%—more than Medicare (50.7%) and private payer spending (49.4%)—largely due to increases in enrollment, although Medicaid spending has slowed significantly, averaging only 2.3% since January 2017.

* On a per enrollee basis, private payer spending has grown 45.9% since 2009, three times the rate of Medicare and Medicaid per enrollee spending.

* Faster rising private prices are a major factor in the divergence between public and private spending growth, with private prices up 8.2% since June 2014, although recent data show an uptick in public prices as well.

* Breaking down spending growth attributable to enrollment, prices, and utilization & intensity, we find more than half the growth in both Medicare and Medicaid spending since 2014 is due to higher enrollment, while private spending growth over this period has been driven almost entirely by higher prices and increased utilization & intensity, in nearly equal measure.

https://altarum.org…

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Comment:

By Don McCanne, M.D.

This Altarum study shows that half of the growth in spending in Medicaid and Medicare has been due to the increased enrollment in each of these programs. In contrast, there has been little increase in enrollment in private plans so almost all of the spending increase has been due to higher prices and due to increased utilization & intensity of care.

Unlike the total spending increases in each sector, Figure 3 on page 4 of their report (link above) demonstrates the spending increase per enrollee in each sector. Clearly the private plans have been ineffective in controlling prices and in controlling utilization & intensity of care, whereas the government programs – Medicaid and Medicare – have been quite effective, resulting in a much slower spending increase per enrollee.

With everyone being concerned about our very high health care spending, the lesson here shouldn’t be too difficult. Don’t use private health plans to try to control spending. Instead improve Medicare and expand it to cover everyone; that will place us on a sustainable spending trajectory.

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

Support expanding health care for all

By Keanan McGonigle
The (Baton Rouge, La.) Advocate, Letters, July 19, 2018

As a future health care professional, I watched with bated breath over the past year as Congress moved to strip our citizens of health insurance time after time. Through the power of advocacy from millions across the country, this thankfully did not come to pass. In our state, Gov. John Bel Edwards’ expansion of Medicaid afforded coverage to 288,641 Louisiana residents.

Yet lawmakers at the federal and state level continue to attack access to health insurance through administrative and legislative maneuvers. U.S. Rep. Cedric Richmond, who represents the New Orleans and Baton Rouge area, played a key role in fighting back efforts to reduce health coverage. Louisiana’s 2nd Congressional District made enormous gains in health insurance through the Affordable Care Act, with nearly 86,506 people gaining coverage through the Medicaid expansion.

Yet there are still nearly 87,000 uninsured residents of Rep. Richmond’s district. The time has come for access to health insurance for all become the law of the land. A bill currently in the House of Representatives would make this a reality through expanded and improved Medicare for all.

This law would ensure that all of Richmond’s constituents who gained insurance through Medicaid expansion keep it and expand coverage to those remaining 87,000 uninsured. Passage of the bill would ensure that Richmond would not need to fight attacks on access during every legislative cycle. This bill, HR 676, would only stand to benefit the citizens of Richmond’s district; however, he is not currently a co-sponsor. As chair of the Congressional Black Caucus, Richmond has demonstrated leadership time and again, showing strength through the events of Charlottesville, Virginia and elsewhere. Yet on this front, Richmond has failed to show the strength that we, his constituents, need.

With 36 out of 43 Democratic members of the CBC — a full 84 percent of membership — already signed on as cosponsors, Richmond is, in fact, lagging behind his colleagues. The time has come for access to health insurance to be a reality for all Americans, but especially for citizens of Louisiana’s 2nd Congressional district. With the reinvigoration of the Poor People’s campaign fighting for a moral budget here in Louisiana and nationwide, now is the time for action. We need Rep. Richmond to stand up and be a leader among his colleagues and for his constituents. Richmond cannot wait any longer — his constituents’ lives depend on it.

The author is a medical student in New Orleans.

https://www.theadvocate.com…

Alaska Information

Contact Information

PNHP-AK (Anchorage)
Contact: Jen Perkins, MD
Email: jenperki@gmail.com
Facebook: facebook.com/PNHPAK

Upcoming Events

February 20, 2020: Panel discussion on Medicare for All as the answer to surprise medical bills at the Writer’s Block Bookstore and Cafe in Anchorage.

Health insurers are after your personal data

Health Insurers Are Vacuuming Up Details About You — And It Could Raise Your Rates

By Marshall Allen
ProPublica, July 17, 2018

Excerpts:

To an outsider, the fancy booths at last month’s health insurance industry gathering in San Diego aren’t very compelling. A handful of companies pitching “lifestyle” data and salespeople touting jargony phrases like “social determinants of health.”

But dig deeper and the implications of what they’re selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.

With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They’re collecting what you post on social media, whether you’re behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.

Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you’re stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.

Are you a woman who’s purchased plus-size clothing? You’re considered at risk of depression. Mental health care can be expensive.

Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks. 

“We sit on oceans of data,” said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm’s booth. And he isn’t apologetic about using it. “The fact is, our data is in the public domain,” he said. “We didn’t put it out there.”

Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn’t be used to set prices. But as a research scientist from one company told me: “I can’t say it hasn’t happened.”

At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry’s data gathering runs counter to its touted, and federally required, allegiance to patients’ medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.

Patient advocates warn that using unverified, error-prone “lifestyle” data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person’s rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.

This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry’s bewildering web of strategies and inside deals often have little to do with patients’ needs. As the series’ first story showed, contrary to popular belief, lower bills aren’t health insurers’ top priority.

To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. The company says it uses the information to link patients’ medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.

Optum’s marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person’s clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company’s current marketing materials say it combines claims and clinical information with social media interactions.

But patient advocates are skeptical health insurers have altruistic designs on people’s personal information.

The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called “cherry-picking” and “lemon-dropping,” experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.

The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients’ personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.

Robert Greenwald, faculty director of Harvard Law School’s Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they’re subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.

At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.

Ruane said he has used IBM Watson Health’s socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don’t know the medical history of people seeking coverage. A region with too many sick people, or with patients who don’t take care of themselves, might not be worth the risk.

The LexisNexis booth was emblazoned with the slogan “Data. Insight. Action.” The company said it uses 442 non-medical personal attributes to predict a person’s medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people’s cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients’ health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.

McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.

Before the conference, I’d seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: “There could be an opportunity.”

Data scientist Cathy O’Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O’Neil, author of the book “Weapons of Math Destruction,” which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.

https://www.propublica.org…

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Comment:

By Don McCanne, M.D.

It’s obvious that massive amounts of data are being collected on each one of us, and this data is being purchased by the private health insurance companies. They say that this data is only being used to help patients get the care they need, but does that really fit with the business model of the insurers?

Are they really paying for this data in order to be able to pay for more care that patients would not be receiving except for the wisdom of the insurers in identifying the medical needs of their clients and then arranging for additional care?

When you listen to the quarterly reports of the major health insurers, they boast about increased revenues, increased profits, and low medical loss ratios – the latter being important because it shows that they are being successful in limiting the amount of health care that they pay for. That seems to be the opposite of their avowed use of these massive pools of data to obtain more care for their clients.

Furthermore, when the United States is already infamous for its profoundly wasteful administrative excesses in health care, doesn’t it seem illogical that we would expand these excesses through this superfluous, massive data management?

The full ProPublica article is quite long, but it is worth reading if you wish to understand more details about this nefarious mismanagement of our personal data.

If we had a single payer, improved Medicare for all, would our public stewards be accessing this massive amount of data in order to stratify the needs of various sectors of patients, avoiding those with greater needs? Of course not. The system would be designed to serve all patients well, including those with the greatest needs. The sooner we get rid of the private insurers, the better.

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

It’s time for a single-payer health care system in the US. Here’s why.

There are many arguments for a single-payer system, but for us it comes down to this: the incentive structure of the current system isn’t working.

By Kate de Klerk, OMS IV, and Mayra Salazar, OMS III
The DO, Opinion, July 17, 2018

The Student Osteopathic Medical Association is asking the House of Delegates to take up an important question: should AOA support a “Medicare for All” single-payer health care system? Support is steadily growing in the U.S., with a majority of Americans and many physicians indicating that they support a single payer health care system.

This is a controversial topic and some may consider support for a single-payer system naive and idealistic. However, we invite you to suspend any skepticism and engage in this conversation with us.

As DOs and medical students, there is probably much more that unites us than divides us. As students, we want to work in an efficient health care system, but not one where arbitrary cost-cutting trumps clinical judgment and evidence-based approaches to care. We want to see equitable distribution of resources in health care, but when many DO students’ debt burdens are over $240,000, we also want to protect wages so that we can pay back loans and achieve financial stability.

Issues in the health care space are multi-faceted and Medicare for All is not a panacea. However, we think this shift would greatly benefit both patients and providers.

A fundamentally flawed system

Health care is exceedingly complicated and prohibitively expensive for patients. Despite many positive changes introduced by the Affordable Care Act, patient satisfaction with health insurance reached a 10-year low in 2015, according to the American Consumer Satisfaction Index, with many patients reporting that they don’t understand their health plans.

Our current system is also unaffordable for many Americans. As high-deductible, high co-pay plans become the norm in health care, 29% of patients with high-deductible plans report not seeking care because of cost. A system that discourages patients from getting care when they need it is fundamentally flawed.

The current system also presents challenges for physicians. Physicians report that they are spending more time on paperwork and less time interacting with patients. In 2017, 70% of physicians reported spending more than 10 hours on administration per week, with 32% of doctors spending more than 20 hours.

A 2014 study estimated that billing and insurance-related costs in health care were roughly $471 billion annually, a number that has grown exponentially since the 1970s. Physicians also experience frustrating limitations placed upon them by insurance companies, with formularies dictating treatment plans, rather than medical best practices or clinical judgment.

How Medicare for All would work

The current Medicare for All plan is outlined in House (H.R. 676) and Senate (S. 1804) bills that would expand and improve Medicare. In brief, this would be a publicly funded, privately operated health care system. The system would introduce universal coverage, spreading cost and risk out among all taxpayers. It’s predicted that a majority of Americans would spend significantly less on health care each year than they currently do. The proposed system would do away with co-pays and deductibles, and patients would have autonomy when choosing their health care providers. Physicians would benefit from simplified administrative processes and have greater autonomy in treating patients.

There are many strong arguments in favor of a single-payer system, but for us it comes down to this: the incentive structure of the current system isn’t working.

Health insurance companies are by-and-large for-profit, with inherent tensions between the provision of health care and the goal of maximizing profits. A quick look at the Fortune 500 reveals that the business of health insurance is one of the most profitable industries. UnitedHealth ranks fifth on the Fortune 500, ahead of Amazon.com at #8 and Alphabet (Google) at #22.

Insurance companies are not lean operations. They are large bureaucracies that have increased inefficiency in the health care system and deprioritized health outcomes. It is thought that switching to a single payer system would save roughly $200 billion annually by eliminating overhead costs alone and also reduce billing and paperwork expenses. Rising out-of-pocket costs and decreased usage of the health care system help a company’s bottom line, but have dangerous consequences on the health of Americans.

People over profits

When compared to other developed nations, the United States consistently ranks near the bottom for most health metrics. While there are interesting disruptors entering the market, such as Oscar and Collective Health, a for-profit system will never yield the kind of efficiency and equitable distribution of health care resources that we think are possible.

A Medicare for All system is also unlikely to result in major sacrifices on the part of providers. Various economic projections suggest that, for most physicians, transitioning to a single-payer system would not significantly impact income or satisfaction in the long-term.

We think that movement toward a Medicare for All system is inevitable. Perhaps it will look different than the current bills, but there is a groundswell of support for a system that places people over profits. The question members of the AOA House of Delegates should ask themselves is, do you want to be at the forefront of this change, or will you sit back and wait for others to lead the way?

https://thedo.osteopathic.org…

NYT: Austin Frakt accurately describes administrative waste in health care

Hidden From View: The Astonishingly High Administrative Costs of U.S. Health Care

By Austin Frakt
The New York Times, July 16, 2018

It takes only a glance at a hospital bill or at the myriad choices you may have for health care coverage to get a sense of the bewildering complexity of health care financing in the United States. That complexity doesn’t just exact a cognitive cost. It also comes with administrative costs that are largely hidden from view but that we all pay.

Because they’re not directly related to patient care, we rarely think about administrative costs. They’re high.

A widely cited study published in The New England Journal of Medicine used data from 1999 to estimate that about 30 percent of American health care expenditures were the result of administration, about twice what it is in Canada. If the figures hold today, they mean that out of the average of about $19,000 that U.S. workers and their employers pay for family coverage each year, $5,700 goes toward administrative costs.

That New England Journal of Medicine study is still the only one on administrative costs that encompasses the entire health system. Many other more recent studies examine important portions of it, however. The story remains the same: Like the overall cost of the U.S. health system, its administrative cost alone is No. 1 in the world.

One obvious source of complexity of the American health system is its multiplicity of payers. A typical hospital has to contend not just with several public health programs, like Medicare and Medicaid, but also with many private insurers, each with its own set of procedures and forms (whether electronic or paper) for billing and collecting payment. By one estimate, 80 percent of the billing-related costs in the United States are because of contending with this added complexity.

“The extraordinary costs we see are not because of administrative slack or because health care leaders don’t try to economize,” said Kevin Schulman, a professor of medicine at Duke. “The high administrative costs are functions of the system’s complexity.”

“One can have choice without costly complexity,” said Barak Richman, a professor of law at Duke. “Switzerland and Germany, for example, have lower administrative costs than the U.S. but exhibit a robust choice of health insurers.”

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Reader Comment:

By Don McCanne, M.D.

European private plans such as those in Switzerland and the Netherlands have very little similarity to private plans in the United States since they are very tightly regulated. Changing our fragmented system of public and private plans into a system of highly regulated private plans would be about as disruptive as improving Medicare and providing it to everyone. But the efficiencies of an improved Medicare for all would be much greater (lower administrative costs), and the financing would be more equitable, not to mention that there would be a multitude of other advantages through an improved Medicare for all.

It’s clear that we can’t continue with the same dysfunctional system. If we are going to change it, we might as well do it right.

https://www.nytimes.com…

***

Comment:

By Don McCanne, M.D.

It is refreshing to see The New York Times publish an article accurately describing the profound administrative waste that uniquely characterizes the health care financing system in the United States. The public needs to understand how huge this waste is in order to better understand how we would be able to pay for a health care system that was expanded to include everyone without requiring deductibles and copayments.

Austin Frakt’s well researched article includes links to several classic articles on administrative excesses, some of which were authored by the PNHP leadership, especially cofounders Steffie Woolhandler and David Himmelstein. The article is well worth retaining to keep as a reference on administrative waste.

A well designed single payer system – an improved Medicare for all – not only recovers most of the administrative waste (while continuing to finance essential administrative services), it also attacks the problem of out-of-control health care pricing. Other single payer policies such as improving allocation of our health care resources also would make our health care system more affordable and equitable so that all of us can be assured that we could receive the essential health care services that we need.

That starts with getting rid of silly ideas such as the concept that patient-consumers can make health care affordable by shopping wisely, or that health care professionals need to be more accountable for costs when they are already swamped just trying to take care of their patients. Rather we need to begin by recovering the half a trillion dollars that we are wasting on administration and exorbitant pricing and redirecting that to patient care instead.

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

The health coach is ready to see you

Transforming Health Care from the Ground Up

By Vijay Govindarajan and Ravi Ramamurti
Harvard Business Review, July-August 2018

The U.S. health care system desperately needs reform to rein in costs, improve quality, and expand access. Federal policy changes are essential, of course; however, top-down solutions alone cannot fix a wasteful and misdirected system. The industry also needs transformation from the bottom up, by entrepreneurs and intrapreneurs.

Innovation by Start-Ups: Iora Health

Rushika Fernandopulle realized that in order to build the right business model and scale it, he needed private capital. In 2010 he cofounded Iora Health, a for-profit company, and raised more than $6 million from three venture capital firms. The new company opened four offices, each with a self-insured employer or union benefits manager as its chief insurance partner. From the start, he wanted to be sure his model could be scaled geographically, so he selected sites from different parts of the country with different patient mixes. One was in Hanover, New Hampshire (in partnership with Dartmouth College), another in Las Vegas (with the Culinary Health Fund), the third in Brooklyn (with Freelancers Union), and the fourth in Dorchester, Massachusetts (with the New England Carpenters Benefit Funds).

This time, Fernandopulle didn’t mess around with partial solutions. He instituted a fully capitated payment system focused on primary care that required no fees, no coinsurance, and no copays. Instead Iora charged insurers a flat monthly fee per member that was twice their historical spending on primary care. He hired four health coaches for every doctor—paying them a fifth of a doctor’s salary and half of a nurse’s. He spent an outsize chunk of his start-up money on a custom IT system—and had no reservations about the cost.

Patient focus.

Iora’s goal was not to deliver health care but to empower patients to take control of their own health. “What we are really trying to do is change behavior,” Fernandopulle told us. At Iora, that change was driven by three innovations that worked together in a virtuous cycle: a capitation-based business model, a health coach for every patient, and a customized IT platform. Capitated payments eliminated any concern about whether a particular patient interaction was billable, so consultations that once required a visit to a doctor’s office could now take place via convenient technologies such as phone, e-mail, and Skype, and they didn’t necessarily involve a doctor. That cleared the way for more involvement from health coaches, whose frequent patient interactions were facilitated by the IT platform. The platform, which tracked all patient data and made it available to doctors, health coaches, and patients, was designed not to facilitate fee-for-service billing but to enable better health outcomes.

Iora wasn’t the only provider to use health coaches in its practice. Omada Health and others used them, too, but they recruited coaches with prior health care experience, whereas Iora recruited people with qualities such as empathy, compassion, and gregariousness and then trained them in the medical skills they would need.

Iora’s health coaches proactively managed each patient’s well-being and intervened the moment trouble arose, especially with chronic-care patients whose costliest problem was noncompliance. Health coaches did some work that doctors and nurses did—such as taking vital signs and drawing blood—but they also engaged patients in new ways. They ran smoking cessation clinics, and they took diabetic patients to the grocery store and helped them shop for food. They led Zumba classes and served as confidants and cheerleaders. They trained patients to manage some of their care, such as monitoring blood pressure and insulin levels. This kind of task shifting, from doctors to health coaches and from health coaches to patients, saved money. More important, the coaches were better at many aspects of care than doctors—and they loved their work. But it was the capitated payment system that was the real game changer. Under the legacy fee-for-service systems, providers need a high volume of patient visits and procedures in order to make money. Under its capitation system, Iora makes money only if its patients stay healthy and thus require fewer tests and procedures. It was a completely different business model, one focused on value, relationships, outcomes, and the long game. Hybrid payment systems like Renaissance, Fernandopulle realized, created internal conflict. It had to be all or nothing. Iora’s capitated model would save on administrative costs by reducing paperwork and would encourage other cost-saving measures to make the most of the flat-fee dollars. Iora clinics, for example, performed many of their own lab tests and processed their own blood work, which was cheaper and faster than sending the tests out. But the big savings would come from the investment in intensive and creative primary care that would reduce downstream expense on specialist and hospital care as patients stayed healthier. For patients with chronic conditions, Fernandopulle expected to see returns in the first year; the payoff for healthier patients would take longer. But he believed that every dollar he saved his partners in fees for ultrasounds, kidney dialysis, bypass surgeries, and other downstream costs generated additional buy-in for his capitated model.

Cost control.

When necessary, Iora provided patients with specialist care, but there, too, Iora saved money by contracting specialists as consultants to the primary care practice—essentially inviting cardiologists, nephrologists, and others to join the gig economy. When Fernandopulle asked the head of endocrinology at a top hospital what percentage of endocrine clinic patients could be managed by a primary care physician with a little expert advice by phone or e-mail, the answer was an astonishing 80%. A formal study of e-consultations by PCPs across 10 specialty areas, including neurology, rheumatology, dermatology, and nephrology, confirmed that on average, primary care physicians were able to address problems in those areas for 60% of patients. By 2017, seven years after he launched Iora Health, Fernandopulle’s premise had proved itself. It had reduced hospitalizations for its members by 40% and cut total health care spending by 15% to 20%—far beyond the 4% to 5% needed to recoup Iora’s higher spending on primary care. Its patient retention rate was 98%, and its Net Promoter Score among patients was in the 90s. Some 90% of patients had their blood pressure under control, compared with an average of 60% across providers in the industry. Employee attrition, at a mere 2.5%, was off the charts. Iora was increasing the number of patients it served by well over 50% a year, largely by attracting seniors through contracts with Medicare Advantage plans. Iora now has 24 locations in eight cities and employs more than 400 people. It has raised $125 million in venture capital, including from long-term investors such as Rice University’s endowment fund and Singapore’s Temasek.

Lessons for start-up innovators.

Iora’s success, and that of half a dozen other start-ups we studied, suggests some general principles by which innovators can attack U.S. health care’s bloated costs, uneven quality, and access limitations. Fernandopulle and the other visionary founders took a clean-slate approach, building new business models from scratch. They launched ambitious, for-profit ventures right out of the gate. They thought from day one about how to scale their models by tapping into venture capital and private equity funding. They did not hesitate to make big strategic investments, including in technology, as Iora did with its customized IT system. Finally, they thought carefully about what kind of payment system would best fit their purpose, considering risk-sharing alternatives such as capitation and bundled payments.

In our research, we’ve seen several Iora-like start-ups. CareMore, for example, uses health coaches called extensivists to deliver capitated primary care, with a focus on geriatric patients. Other disruptive start-ups we studied look quite different. Consider Health City Cayman Islands, a for-profit hospital launched in 2014 by Dr. Devi Shetty, the founder of Narayana Health in India. Seeking to replicate innovative practices honed in India and to target American patients, Health City opened in a location near the United States but outside its regulatory sphere. This approach involved making innovative, even radical, decisions about where to locate, whether to build or buy (management opted to build from scratch), whom to partner with (it chose Ascension), how to price (bundles), and how to crack the U.S. market. Health City launched as a modest 104-bed facility for cardiology and orthopedic care, but the plan is to develop a large for-profit system, investing $2 billion over the next 10 to 15 years. Health City’s transparent, bundled prices—which are 60% to 75% lower than those in the United States—serve its disruptive strategy of luring American patients from legacy hospitals.

As Fernandopulle points out, if his company and others like it can capture even 20% of the $350 billion in wasted health care spending per year, it would amount to a staggering sum. By our calculation, if companies with Iora’s primary care–focused approach enrolled one-third of America’s projected 55 million seniors in 2020 into Medicare Advantage plans, the country could save $30 billion to $40 billion a year in avoided spending on secondary and tertiary care. And if those companies reaped 20% of the value thus created, their market capitalization could be upwards of $100 billion, even with a price-earnings multiple of just 15.

Numbers like that are a powerful incentive for change. They will no doubt motivate many health care innovators to expand access to quality care, enabling patients to enjoy good health. If you’re looking for a starting point, start there.

https://hbr.org…

***

Comment:

By Don McCanne, M.D.

For a health care system that is overpriced and underperforming, it seems that reform should be based on improving our allocation of higher quality essential health care services. By any measure, that requires a top down, comprehensive approach for which governments are best suited. Yet much of the effort comes from the bottom up in the medical-industrial community, with the support and encouragement of business academics such as these authors.

A quick read of the endorsement by Professors Govindarajan and Ramamurti of Rushika Fernandopulle’s creation of Iora seems like just anther description of the successes of venture capital and the individuals driving the innovations. But for those who want to see the changes in our health care system that we desperately need, especially in the financing, Fernandopulle’s model is particularly disconcerting.

In perhaps overly simplified terms, let’s look at what he has done. He begins with venture capital – a financing method designed solely to create monetary rewards – a terrible start when applied to health care since the goal should be to maintain and improve health which requires spending money, not generating more. He then structures his health care model based on primary care, but not the usual team of physicians, nurses and other health care professionals, but rather on an army of health coaches – individuals with no health care qualifications but rather who receive only on-the-job training. These health coaches are intended to replace a significant portion of the functioning of fully trained health care professionals, especially doctors and nurses (ratio of four health coaches to one physician), though much of the work they do is song and dance (taking diabetics grocery shopping, and leading Zumba classes?). For those patients who have more serious problems, often requiring the services of specialists, they have managed to keep the majority of them away from the specialists. They make a big point that a major element of their success is capitation which is why they provide specialized services within the primary care environment. Referring patients out requires paying for those services whereas retaining them within the practice allows them to keep more of their capitation payments (success defined by net profit).

Most of the health care professionals with whom I have been associated would find problems with this. There is something sacred about the science and art of health care as it is applied to the patient. The model described here places business success above all else, and any quasi-semblance of sanctity must fall under other unfamiliar gods that do not frequent the halls of health care justice.

We know what health policies would work to improve the welfare of the American patient. So what is this diversion from health policy science into what some might describe as ethics? Well, that’s precisely it. The business community thrives on matters of money and profits, but the health professions thrive on the well being of the individual.

The authors of this article in Harvard Business Review have simplified this as the advantages of bottom up versus top down management, but if that is what this really is all about, then we need to unify the nation for the top down approach that would bring health care justice to all.

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Higher premiums, higher deductibles, and narrower networks in exchange markets

The High Cost of Healthcare: Patients See Greater Cost-Shifting and Reduced Coverage in Exchange Markets 2014-2018

Physicians for Fair Coverage, Research by Avalere, July 2018

Executive Summary

The expansion in coverage due to the Affordable Care Act (ACA) increased the number of insured Americans by 20 million. Although access to health insurance has expanded significantly in recent years, and the ACA instituted important protections for patients, those who gained insurance through ACA health insurance exchanges are being offered plans that make them bear an increasing portion of their healthcare costs since the law was implemented. Access to health insurance is not sufficient if patients cannot afford to purchase coverage or utilize their benefits due to high premiums, high out-of-pocket costs, limited networks, and insufficient state and federal patient protections.

This paper outlines the key challenges facing patients in plans insurance companies offer through ACA health insurance exchange markets and details the changes in patient cost-sharing. This paper will demonstrate that:

1. Health plan networks have grown increasingly narrow, limiting patient access to in-network providers, with specialties like anesthesiologists, radiologists, and emergency physicians often out-of-network in exchange plans;

2. Non-subsidized exchange marketplace premiums have increased faster relative to other markets, such as employer-sponsored insurance and Medicare Advantage, since 2014;

3. Deductibles and maximum out-of-pocket limits (MOOPs) have grown across all payers, placing a higher financial burden on sicker patients;

4. Despite the growth in deductibles and MOOPs, cost-sharing for services after the deductible has remained relatively constant, though patients are increasingly required to pay coinsurance to access their care; and

5. Federal and state rules around network adequacy have not kept pace with the growing patient burden.

Key Stats

* In 2017, 68% of healthcare plans in the exchange market offered restrictive networks, compared with 48% in 2014.

* Average ACA exchange market premiums increased 28% from 2014 to 2017.

* Plans covered between 34% – 66% fewer providers than other markets.

* Almost 90% of enrollees in ACA exchange plans had deductibles above $1,300, the IRS definition of a high deductible plan.

* Several top insurance companies saw profit margins in Q1 for 2018 that were the highest in a decade, and all six of the largest insurance companies paid their CEOs over $17 million in 2017.

https://endtheinsurancegap.org…

Full report:
https://endtheinsurancegap.org…

***

Comment:

By Don McCanne, M.D.

A decade ago the individual health insurance market was in total disarray and thus was one of the primary motivators to enact the Affordable Care Act (ACA). Under ACA these plans became more tightly regulated and subsidies inversely related to income were provided to make the premiums and cost-sharing more affordable. How is this working?

To try to keep premiums affordable, the more popular plans were designed to have low actuarial values – the insurers pay a lower percentage of the allowed charges – and the insurers were allowed to limit their networks enabling them to negotiate lower prices. This kept costs down for those eligible for subsidies and credits, but for middle-income individuals who were not eligible, out-of-pocket spending has been excessive and often not affordable.

Has the situation improved since the plans were first implemented? No, it’s worse now. Premiums have increased, high deductibles have become routine, and the use of restrictive networks has expanded, all this while profit margins have increased for the top insurers and their CEOs.

The problem is that this is the nature of private health insurance. Plans are designed to be successful business products. To improve markets they shift risk and costs to patients and they impair patient access to health care through network restrictions and the financial barriers of high deductibles.

Does anybody believe it will get better? Are insurers going to lower their premiums, lower their deductibles, and expand their networks while covering all essential health care benefits? No, they are going to continue to squeeze to enhance their margins. We can anticipate even higher deductibles, higher coinsurance instead of copays, greater tiering of health care services and products, more restrictive access, especially to specialized services, and the new thing will be the introduction of plans with sharply curtailed benefits such as the association health plans that the Trump administration will be pushing.

Yet the politicians have been saying that we need to protect our current system but add the option of being able to purchase a public plan. Some are now latching on to the Medicare for all rhetoric but when pressed they say, “yes, Medicare for all by allowing a buy-in to the Medicare program” – merely a public option with a new but misleading label. Merely adding a public option to our highly dysfunctional, fragmented financing system will have virtually no impact on resolving the problems inherent in our system.

If we want true universality, comprehensiveness, equity, assured access, and affordability for every one us, we are going to have to dump the current system and enact and implement a well designed, single payer, expanded and improved Medicare for all. Nothing else will do, that is unless we are ready to nationalize our entire health care delivery system and convert it into a national health service. Shall we do a poll?

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‘Medicare Advantage Premium Support For All’ – a terrible proposal

Creating Medicare Advantage Premium Support For All, Part 4: Financing

By Billy Wynne
Health Affairs Blog, July 9, 2018

In this post, I will illustrate how current spending by the federal government, states, and employers could be repurposed to fund universal Medicare coverage that emphasizes competition among private, Medicare Advantage plans and the traditional fee-for-service option, deployed via a premium support benefit model.

As pundits, commentators, and industry stakeholders begin to converge on the wisdom of “Medicare Advantage for All,” let’s take another step down the path of specifying exactly what that means and why it is both economically and politically viable.

The Tally

Starting with the current Medicare per capita spending of $12,139, age-adjusting that by 44 percent, then taking a 4 percent haircut for premium support-induced competition yields an average cost of providing the existing Medicare benefit to a non-Medicare enrollee of $5,127. That is more than 10 percent less than the per capita funding available from current non-Medicare health care programs ($5,721).

(Here I pause for rabid, health policy wonk golf clapping.)

I’m not here to fool anyone or advance a political agenda. I just think our current approach is radically, audaciously absurd. It’s like we’re investing every last morsel of our industriousness and ingenuity into getting it wrong. I posit that, with about the same amount of effort, we can get it right.

(For a full understanding of the proposal by Billy Wynne you should read all four of his posts. Links to the previous three posts are available in Part 4.)

***

Posted Comment:

By Don McCanne, M.D.

Premium support is supposedly dependent on competition between private plans, but we’ve had competing private plans for well over half a century, and yet our costs are highest of all nations. This also neglects the profound administrative waste that is uniquely characteristic of our fragmented, dysfunctional health care financing system.

Besides high prices and administrative waste, the premium support model would also perpetuate the loss of choice of health care professionals and institutions because of the dependence on provider networks. Perhaps even worse, the perpetuation of high deductibles and other cost sharing would continue to impair access because of lack of affordability, not to mention creating financial hardship, especially for America’s working families.

A model that would correct these defects without increasing spending would be a single payer, improved Medicare for all. The efficiency of such a system would save a few hundred billion dollars in administrative costs, and administered (negotiated) prices would become sustainable over time. Planning and separate budgeting of capital improvements would improve allocation of our health care resources. That wouldn’t reduce spending much, but it would redistribute it to better serve the currently uninsured and underinsured. Everyone would have free choice of actual health care, not the artificial choice of health plan intermediaries. And the system would be funded equitably though progressive tax policies without the necessity of erecting cost-sharing financial barriers to care.

Considering the money that’s already being wasted in private Medicare Advantage plans, a “Medicare Advantage for All” seems to only perpetuate the high costs and impaired choices in our current health care financing system. It is no wonder that AHIP finds it attractive, but instead we should be supporting reform that would be attractive to patients.

https://www.healthaffairs.org…

***

Financing Medicare Into The Future: Premium Support Fails The Risk-Bearing Test

By Sherry A. Glied
Health Affairs, July 2018

Abstract

One often-discussed option for controlling Medicare spending is to switch to a premium-support design. This would shift part of the risk of future health care cost increases from the federal treasury to Medicare beneficiaries. The economics of risk bearing suggests that this would be a mistake for three reasons. First, political decisions, not beneficiary choices, are the critical determinants of future health care costs. Second, only Congress can take into account the consequences of cost-containment decisions for both current and future generations. Third, the federal government is best able to diversify against the risk of future cost growth. Tying Medicare spending to the government’s budget so that Congress sees the benefits of tough cost containment choices is the only way to force the program to make those politically difficult decisions. Economic efficiency is served by retaining the program’s current structure instead of shifting risk to beneficiaries.

From the Introduction

Some members of Congress see entitlement reform—namely, a restructured Medicare program—as the best strategy for bringing federal expenditures in line with newly reduced revenues, particularly as the baby-boom generation swells Medicare rolls.

One frequently touted option is to shift the program to a premium-support structure. Under this structure, the federal government would provide each Medicare beneficiary with a specified allotment (sometimes called a voucher or defined contribution) that the beneficiary could use to purchase health insurance. Beneficiaries would be responsible for all additional premium costs if they chose insurance costing more than the allotted amount.

In some respects, premium support resembles the current Medicare Advantage program, under which many beneficiaries opt in to private health plans. If beneficiaries choose a plan that costs less than the Medicare Advantage benchmark, which is based on the local per capita cost of traditional fee-for-service Medicare, they gain extra benefits and save money on premiums and cost sharing. But premium support would change that model in one very significant respect.

The current Medicare Advantage benchmark rises over time as Medicare utilization and congressionally mandated provider payment levels rise. The savings from premium-support plans, however, are realized by changing that benchmark so that it rises more slowly over time.

Advocates of premium support argue that it would control Medicare expenditures by harnessing competition among health plans and by giving beneficiaries strong incentives to make wise health plan choices. That can be debated. But what is clear is that premium support would transform the federal government’s current open-ended obligation, or entitlement, by making the government’s liability more fixed and predictable and shifting much of the risk and burden of unanticipated future health care cost increases to Medicare beneficiaries. Such a reallocation is bad policy because it leads to inefficient risk bearing. It is inconsistent with the clear guidance that economics provides about how to most efficiently allocate risk.

Who should bear the uncertainty of cost projections?

Legislators see the uncertainty of Medicare spending forecasts and the challenges of designing and implementing legislation to slow the growth of Medicare spending as reasons to shift more of the risk of future Medicare spending growth to beneficiaries through a move to premium support. This intuition is backward. Political decisions, not beneficiary choices, are the critical determinants of future health care costs.

Leaving beneficiaries with the responsibility for cost increases also doesn’t make sense. Beneficiaries cannot plausibly forecast their future health care costs, so they cannot effectively save to protect themselves against these costs. They also cannot turn to private insurance for protection. No private market does or can exist against risks that are highly correlated across everyone in a society, and the costs associated with political decisions and unforeseen health care technologies are exemplars of such correlated costs.

The federal government is best situated to bear the risks associated with unanticipated changes in future health care costs, the federal government is best able to shape the future costs of the program, and only the federal government can appropriately trade off current costs and future technological advances against each other. The economic case is clear: The federal government, not individual beneficiaries, should bear the risk of future increases in the cost of Medicare. Premium support is bad economics.

https://www.healthaffairs.org…

***

Comment:

By Don McCanne, M.D.

You can access on the PNHP website (www.pnhp.org) a multitude of articles on why competing private Medicare Advantage plans and the financing of them through premium support are terrible ideas. The quirk covered today has to do with the extreme to which others are going in order to latch onto the popular “Medicare for All” rhetoric to advance their inadequate or detrimental schemes for reform.

“Medicare Advantage Premium Support For All” is a real head-shaker, representing policies that are just about the opposite of what we mean by a “single payer, improved Medicare for all” (my posted comment on the HA Blog, reproduced above, clarifies this).

Sherry Glied, dean of the Robert F. Wagner Graduate School of Public Service at New York University, explains why premium support is bad economics. She concludes, “The federal government, not individual beneficiaries, should bear the risk of future increases in the cost of Medicare.” That should apply to all of us, and that is why we need an improved Medicare for all.

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Corporate medicine is about money – duh!

Is private equity helping or hurting healthcare?

By Harry Gamble
Modern Healthcare, July 10, 2018

Some view third-party investment in physician practices as a vital trend that offers economies of scale that make healthcare more efficient. Others believe it fosters monopoly control while driving up prices. But nearly everyone agrees that further consolidation within the U.S. healthcare market is coming.

“The days of Marcus Welby are behind us,” said Anthony LoSasso, professor of health policy and administration at the University of Illinois at Chicago’s School of Public Health. “The uncertainty over healthcare policy in Washington is probably driving the integrated healthcare delivery systems and large hospitals to bulk up almost as a counterweight to the uncertainty they face. They know that if you are bigger, you are in a better position to survive whatever may come your way.”

“I think the jury is still out on whether those larger systems can translate that scale into quality improvements,” he said. “What I do know is they can translate that scale into price increases. That means insurers are going to have to pay more, which translates on the consumer side into higher premiums.”

But the jury is in for Marni James-Carey, executive director of the Association of Independent Doctors.

“We know that when corporate medicine takes over the practice of independent medicine, costs go up, quality goes down, and patients and doctors lose,” she said. “We don’t need a study for any of this. We just need common sense to prevail.

“This is all about capturing market share so you can have more bargaining power with payers, and get more money in reimbursement for the same procedure. That’s what causes costs to go up,” she said.

Craig Garthwaite, director of the Health Enterprise Management Program at Northwestern’s Kellogg School of Management, said recent pricing controversies in the pharmaceutical industry (think Martin Shkreli) have left some consumers fearing a repeat performance by large-scale physician practices.

“Some see private equity firms as really for-profit for-profits, for lack of a better term,” Garthwaite said. “These are firms that are often not involved in the medical field, but move in because they see an attractive investment opportunity.”

“To date, we see this more in pharmaceuticals rather than in providers,” he continued. “Outside companies realized a glaring market imperfection in pharmaceuticals, and found that if they were willing to price to the limit of their monopoly power, they could make an exceptional amount of money. So people might be worried that the same thing could happen with providers.”

http://www.modernhealthcare.com…

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The real driver of health care spending

By Edward M Murphy
CommonWealth, July 9, 2018

The revenue and profitability of these corporations support the proposition that high pharmaceutical prices and insurance-related administrative costs account for much of the extraordinary expense of our system. US health policy, or the absence thereof, has enabled these businesses annually to drive costs up for the benefit of their bottom line. That effect will continue. Not surprisingly, the big health care companies are developing new strategies to enhance their businesses and drive their profits going forward.

The term now heard often among health care giants is “vertical integration,” which means combining upstream suppliers with downstream buyers to control the flow of business. If this strategy persists, health care delivery will evolve significantly although it is unlikely to become less expensive. The most prominent current example of vertical integration is the planned $68 billion acquisition of Aetna by CVS.

How would these companies work together? A Wall Street analyst recently described the vision as a way to “identify high risk patients and preemptively get them into a Minute Clinic.” Thus, your health insurer could send you to a local store for diagnosis, treatment, drugs, and anything else you might need from the shelves. This will keep even more of the health care dollar under their control.

Similarly, Cigna is in the process of acquiring Express Scripts, a huge pharmacy benefits manager, for $54 billion, another attempt to bring more services under one roof. United Health, a leader of vertical integration, previously bought a pharmacy benefit manager but co-pays and deductibles for its patients have continued to climb.

If this course continues, the health care system will evolve quickly, giving fewer and larger companies even more market leverage. Integration of this kind benefits the large corporations that initiate it but there is no evidence it will lead to lower costs, improved access, or enhanced quality. These changes are driven by highly focused corporate financial interests and are occurring without reference to public policy. That’s because there is no coherent public policy to guide these changes.

It is not in the interest of huge profit-making corporations to restrain the overall cost of the US health care system. In fact, their interest is served by driving health care expenditures higher. Any progress will require driving down pharmaceutical pricing and reducing administrative costs imposed by middlemen. We are not doing that yet but, ultimately, we must.

https://commonwealthmagazine.org…

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Comment:

By Don McCanne, M.D.

Three quotes from these two articles say it all:

“Outside companies realized a glaring market imperfection in pharmaceuticals, and found that if they were willing to price to the limit of their monopoly power, they could make an exceptional amount of money. So people might be worried that the same thing could happen with providers.”

“It is not in the interest of huge profit-making corporations to restrain the overall cost of the US health care system. In fact, their interest is served by driving health care expenditures higher.”

“These changes are driven by highly focused corporate financial interests and are occurring without reference to public policy. That’s because there is no coherent public policy to guide these changes.”

Ouch.

No coherent public policy? How about enacting and implementing a publicly financed, publicly administered, single payer, improved Medicare for all? Now!

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

Interruptions in private health insurance are routine, but hazardous

Interruptions In Private Health Insurance And Outcomes In Adults With Type 1 Diabetes: A Longitudinal Study

By Mary A. M. Rogers, Joyce M. Lee, Renuka Tipirneni, Tanima Banerjee, and Catherine Kim
Health Affairs, July 2018

Abstract

Type 1 diabetes mellitus, which often originates during childhood, is a lifelong disease that requires intensive daily medical management. Because health care services are critical to patients with this disease, we investigated the frequency of interruptions in private health insurance, and the outcomes associated with them, for working-age adults with type 1 diabetes in the United States in the period 2001–15. We designed a longitudinal study with a nested self-controlled case series, using the Clinformatics Data Mart Database. The study sample consisted of 168,612 adults ages 19–64 with type 1 diabetes who had 2.6 mean years of insurance coverage overall. Of these adults, 24.3 percent experienced an interruption in coverage. For each interruption, there was a 3.6 percent relative increase in glycated hemoglobin. The use of acute care services was fivefold greater after an interruption in health insurance compared to before the interruption and remained elevated when stratified by age, sex, or diabetic complications. An interruption was associated with lower perceived health status and lower satisfaction with life. We conclude that interruptions in private health insurance are common among adults with type 1 diabetes and have serious consequences for their well-being.

From the Introduction

The Bureau of Labor Statistics estimates that between the ages of 18 and 50, Americans hold an average of twelve different jobs. Particularly for younger workers, the jobs tend to be of short duration: 69 percent of jobs held by people ages 18–24 last for less than one year, as do 36 percent of jobs held by people ages 35–44. This has health consequences because, for the majority of working adults in the United States, health insurance coverage has traditionally been tied to employment. For working adults without employer-sponsored insurance, the Affordable Care Act (ACA) Marketplaces provide an opportunity for coverage. However, there remain challenges regarding affordability with self-funded plans and disparities in premiums across different areas of the country.

Interruptions in health insurance affect access to health care services, particularly for patients with chronic conditions. Type 1 diabetes mellitus is one such lifelong chronic disease, often originating in childhood, and requires intensive daily medical management. People with type 1 diabetes are at exceptional risk because of their requirement for insulin and the supplies necessary for insulin delivery.

From the Discussion

Interruptions in private health insurance are common among working-age adults with type 1 diabetes in the United States. Overall, one in four experienced at least one interruption in coverage, over an average period of 2.6 years. There were considerable consequences associated with the interruptions. Use of acute care services increased greatly after an interruption in coverage—with differences ranging from fourfold to sevenfold, depending upon the length of the interruption. As the number of interruptions increased, so did HbA1c levels, in a dose-response manner. For each additional break in coverage, there was a 3.6 percent relative increase in HbA1c. Satisfaction with life and perceived health status were lower among adults with interruptions in insurance, compared to those with continuous coverage.

Patients with type 1 diabetes face particular challenges in the management of their disease. Interruptions in health insurance are common in the United States, and such interruptions increase the use of costly acute care services such as ED visits and hospitalizations. We do not anticipate that these challenges will diminish in the near future, because of the instability of health insurance markets and the increase in temporary employment and contract work without employer-sponsored insurance. In the US, 50.1 percent of private-sector establishments offered health insurance to their employees in 2012, a share that declined to 45.3 percent in 2016.

https://www.healthaffairs.org…

***

Comment:

By Don McCanne, M.D.

One of the most serious policy defects of the U.S. health care financing system is that it is uniquely characterized by interruptions in health care coverage, yet we seem to take that for granted. This study of type 1 diabetics who have a continual need for health care brings into focus the seriousness of gaps in health care coverage, but these gaps can affect all of us because of the unpredictability of future health care needs.

Our health care coverage is heavily dependent on employer-sponsored plans, yet job stability is no longer the norm; it is the exception. Almost everyone can anticipate some interruptions in their health care coverage.

For the type 1 diabetics in this study, interruptions in private insurance coverage resulted in poorer control of their diabetes as measured by their glycated hemoglobin levels; they required a fivefold increase in health care services, and the interruptions were associated with lower perceived health status and lower satisfaction with life. Imagine the difficulties that other individuals with interruptions in coverage would have if they suddenly experienced severe traumatic events or the onset of a major illnesses.

Yet we accept this, even praising our employer-sponsored plans as the part of our health care financing system that is working very well and that we want to protect. Nonsense. As the authors state, “We do not anticipate that these challenges will diminish in the near future, because of the instability of health insurance markets and the increase in temporary employment and contract work without employer-sponsored insurance.”

By design, a single payer national health program – an improved Medicare for all – never has any interruptions in coverage, throughout life. And this is only one of a great multitude of advantages of a well designed, single, publicly financed and publicly administered health care financing program that covers absolutely everyone and would cost no more than our current, highly dysfunctional system. What are we waiting for?

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