By Frank Newport
Gallup News, December 1, 2017

Americans’ preferences for a government-run healthcare system versus a system based on private insurance are now divided. This marks a significant shift in attitudes from earlier this decade, when Americans consistently preferred the private insurance option.

Since 2010, Gallup updates have shown as much as a 27-percentage-point gap in favor of the private insurance system versus one run by the government. That gap shrank to 10 points last year and essentially disappeared in this year’s survey, conducted Nov. 2-8, with 48% preferring the private health insurance system and 47% preferring the government-run system.

Two-thirds of Democrats and independents who lean Democratic favor a government-run system. Three-quarters of Republicans and independents who lean Republican favor a system based on private insurance.

Predictable and Large Partisan Gap in Views on Government-Run Versus Private Insurance-Based Health System

Favor government-run system
22% – Republicans/Leaners
67% – Democrats/Leaners

Favor system based on private insurance
76% – Republicans/Leaners
29% – Democrats/Leaners

Although the 22% of Republicans who support a government-run system is low on an absolute basis, it is the highest in Gallup’s seven-year trend. Republicans’ shift in attitudes accounts for most of the overall increase in support for the government system in this year’s update.

Majority Doesn’t Know Enough to Have Opinion on “Medicare for All,” Single-Payer Health System

Question asked: As you may know, some senators have proposed a “Medicare-for-all,” single-payer health insurance program that would be administered by the federal government and financed through taxes. Please tell me if you favor or oppose this proposal, or if you don’t know enough to say?

17% – Favor
21% – Oppose
61% – Don’t know enough to say

http://news.gallup.com…

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Comment:

By Don McCanne, M.D.

Although other polls suggest that there is about 60 percent support for single payer, the wording of this Gallup poll indicates that the nation is split between its preference for a “government-run system” versus a “system based on private insurance.” This is consistent with trends in other polls since it represents a significant shift in the results of Gallup polls away from a clear preference for private insurance to a point now where opinion is evenly divided (with this specific wording).

An important observation is that most of the change is due to an increase in support amongst Republicans and those leaning Republican, even though still a distinct minority. We should keep in mind that Republicans and independents need to be a targeted audience for the single payer message.

Another important result is that 61 percent of those polled “don’t know enough to say” whether they favor or oppose “a ‘Medicare-for-all,’ single-payer health insurance program that would be administered by the federal government and financed through taxes” that “some senators have proposed.” Although this may reflect the fact that people have not heard enough about the Sanders bill specifically, it does suggest that we have to make a greater effort to see that “single payer” becomes a meme that everyone understands and automatically supports.

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By Eric T. Roberts, PhD; Alan M. Zaslavsky, PhD; J. Michael McWilliams, MD, PhD
Annals of Internal Medicine, November 28, 2017

Abstract

Background:
When risk adjustment is inadequate and incentives are weak, pay-for-performance programs, such as the Value-Based Payment Modifier (Value Modifier [VM]) implemented by the Centers for Medicare & Medicaid Services, may contribute to health care disparities without improving performance on average.

Objective:
To estimate the association between VM exposure and performance on quality and spending measures and to assess the effects of adjusting for additional patient characteristics on performance differences between practices serving higher-risk and those serving lower-risk patients.

Design:
Exploiting the phase-in of the VM on the basis of practice size, regression discontinuity analysis and 2014 Medicare claims were used to estimate differences in practice performance associated with exposure of practices with 100 or more clinicians to full VM incentives (bonuses and penalties) and exposure of practices with 10 or more clinicians to partial incentives (bonuses only). Analyses were repeated with 2015 claims to estimate performance differences associated with a second year of exposure above the threshold of 100 or more clinicians. Performance differences were assessed between practices serving higher- and those serving lower-risk patients after standard Medicare adjustments versus adjustment for additional patient characteristics.

Setting:
Fee-for-service Medicare.

Patients:
Random 20% sample of beneficiaries.

Measurements:
Hospitalization for ambulatory care–sensitive conditions, all-cause 30-day readmissions, Medicare spending, and mortality.

Results:
No statistically significant discontinuities were found at the threshold of 10 or more or 100 or more clinicians in the relationship between practice size and performance on quality or spending measures in either year. Adjustment for additional patient characteristics narrowed performance differences by 9.2% to 67.9% between practices in the highest and those in the lowest quartile of Medicaid patients and Hierarchical Condition Category scores.

Limitation:
Observational design and administrative data.

Conclusion:
The VM was not associated with differences in performance on program measures. Performance differences between practices serving higher- and those serving lower-risk patients were affected considerably by additional adjustments, suggesting a potential for Medicare’s pay-for-performance programs to exacerbate health care disparities.

http://annals.org…

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Practices with high-risk patients are vulnerable to value-based payment penalties

By Maria Castellucci
Modern Healthcare, November 29, 2017

The use of pay-for-performance payment models could drive providers to turn away low-income patients with complex care needs, a new study suggests.

The report, published this week in Annals of Internal Medicine, found practices that cared for high-risk patients were more likely to receive financial penalties under the CMS’ Value-based Payment Modifier program because their patients had higher rates of hospitalization, mortality and Medicare spending.

The mandatory program penalized or rewarded physicians based on their quality outcomes and cost of care. The program was a precursor to and was replaced by the Medicare Access and CHIP Reauthorization Act (MACRA).

“These penalties are disproportionately affecting practices serving sicker and poorer patients,” said Eric Roberts, an author of the study and assistant professor of health policy and management at the University of Pittsburgh. “This could send providers the wrong signal that if they want to avoid penalties, treating more complex patients isn’t advantageous for them.”

The study also found that outcomes didn’t improve among practices after the program went into effect even though they were financially penalized if their performance didn’t improve.

The study adds to a growing debate among health policy experts regarding the value of pay-for-performance payment models. Concerns have been raised that such models don’t motivate providers to improve and financially penalize providers who treat low-income patients.

In an editorial in response to the Annals study, Dr. Ashish Jha, a professor of health policy and management at the Harvard School of Public Health, along with other colleagues wrote, “It is high-time to abandon (the standalone pay-for-performance) model.”

Although it will take a few more years before the impact of MIPS can be evaluated, the program probably also disproportionately penalizes safety-net providers just like the Value-based Payment Modifier Program because it’s set-up similarly, Roberts said.

http://www.modernhealthcare.com…

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Comment:

By Don McCanne, M.D.

This study provides confirmation that not only does a value-based payment modifier (P4P) fail to improve performance, it also exacerbates health care disparities. Although this study was done on the earlier CMS Value-Based Payment Modifier, the results with the MIPS program under MACRA are expected to be the same because of a similar set-up. This suggests that we would be better off by eliminating the MIPS program.

This does not mean that we should ignore quality. A single payer system is an ideal vehicle in which to achieve quality improvement. The following link is to a classic paper by Gordon Schiff, et al, describing a better-quality alternative under single payer:

https://pnhp.org…

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By Liran Einav and Amy Finkelstein
National Bureau of Economic Research, November 2017

Abstract

We describe research on the impact of health insurance on healthcare spending (“moral hazard”), and use this context to illustrate the value of and important complementarities between different empirical approaches. One common approach is to emphasize a credible research design; we review results from two randomized experiments, as well as some quasi-experimental studies. This work has produced compelling evidence that moral hazard in health insurance exists – that is, individuals, on average, consume less healthcare when they are required to pay more for it out of pocket – as well as qualitative evidence about its nature. These studies alone, however, provide little guidance for forecasting healthcare spending under contracts not directly observed in the data. Therefore, a second and complementary approach is to develop an economic model that can be used out of sample. We note that modeling choices can be consequential: different economic models may fit the reduced form but deliver different counterfactual predictions. An additional role of the more descriptive analyses is therefore to provide guidance regarding model choice.

From the Introduction

We make no attempt to review the voluminous empirical literature on the topic (moral hazard in health insurance). Rather, we select only a few specific papers – drawing (grossly) disproportionately on our own work – to illustrate the relationship and complementarities between different empirical approaches used to study the same topic. Our focus is thus not only on describing (some of) what we know, but also on how we know it.

We begin by defining the object of interest: what “moral hazard” means in the context of health insurance, and why it is of interest to economists. We then discuss work on three specific questions related to moral hazard in health insurance. First, we describe work that has tested whether moral hazard in health insurance in fact exists. There is a clear affirmative answer, with much of the most-convincing existing evidence coming from large- scale randomized experiments: Just like almost any other good, individuals increase their healthcare utilization when the price they have to pay for it is lower. Second, we describe work that tries to assess the nature of the consumer response. In particular, we ask whether individuals respond to the dynamic incentives that arise from the non-linear health insurance contracts. Again, the general finding is positive, with much of the evidence driven by quasi- experimental studies. Finally, we describe work that attempts to forecast what healthcare spending would be under contracts we do not observe in the data. This requires a more complete model of individual behavior.

In the final section, we conclude by returning to our main goal in writing this paper, and discuss the cross-pollination across the methods and approaches used in the three preceding sections. While all methods were used in the context of the same broad topic, the more specific questions they answer are slightly different. We highlight the value of each approach, and the important interactions between them.

From the Conclusions

It is a great time to be an empirical economist. We have a rich tradition of economic modeling and structural estimation to draw upon. And we are the beneficiaries of an improved (and improving!) reduced form tool kit for identifying causal effects. Both can be applied to the large, and rich administrative data sets that researchers are increasingly accessing. By combining these approaches – within and across papers – our production possibility frontier will expand even further.

http://www.nber.org…

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Merriam-Webster

moral: of or relating to principles of right and wrong in behavior

hazard: a source of danger

https://www.merriam-webster.com

***

Comment:

By Don McCanne, M.D.

What is the meaning of “moral hazard”? By a dictionary definition it sounds as if it is a source of danger emanating from wrong behavior. Whatever it is, it doesn’t sound good.

In health insurance moral hazard refers to the inverse relationship between out-of-pocket spending and the amount of health care one attempts to access. The more one has to spend to access care, the less likely the individual will receive that care regardless of how beneficial it may be. Thus moral hazard does sound bad since cost sharing (deductibles, copayments, and coinsurance) cause individuals to forgo beneficial health care services. But wait.

That isn’t what the supporters of cost sharing (consumer-directed health care) mean when they refer to moral hazard. They contend just the opposite – that it is a moral hazard (bad) when an individual accesses care for free (i.e., the care is fully covered by insurance) – care that would have been forgone had payment been required.

Think about this. We have some individuals in the policy community who believe that a health care financing system should assist individuals in getting the care they should have, and thus financial barriers are bad. Others in the policy community believe that individuals should be deterred from getting health care that would otherwise be paid for through collective funds, whether private insurance risk pools or publicly-financed government programs, and thus financial barriers are good whereas receiving care without a related payment is bad. Thus there is a sharp contrast in the belief in the social contract of solidarity.

It seems obvious. Preventing access to beneficial care is bad, and removing those barriers is good, even though the latter has been labeled by the pro-market policy wonks with the pejorative term, “moral hazard.” And yet this concept has generated an entire industry within the policy community producing endless studies over how “beneficial” consumer-directed health care is. No wonder the authors, members of that camp, state, “It is a great time to be an empirical economist.” It is also a great time to be a loan shark or a bankruptcy attorney.

We do not need more studies of moral hazard. When the advocates of consumer-directed health care advocate for more high deductibles, we should soundly reject the concept based on the dictionary definition of immoral hazard.

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By William W. Dornburgh
Times Union, November 26, 2017

I am neither a Democrat nor a Republican, neither a conservative nor a liberal. I am a pragmatist.

The Affordable Care Act has imposed federal mandates on both the insurance industry and on those who are uninsured either voluntarily or otherwise. The insurance companies can’t make a profit under that system, so the government subsidizes them with cash. That should be an abomination to both conservatives and liberals alike. The ACA mandates that people buy policies they can’t afford or don’t want, and the insurance companies are mandated to sell policies that don’t meet normal underwriting standards. The ACA is a law that is seriously flawed. It is not regulation, but control.

In national polls, people favor coverage of pre-existing conditions and say health care should be a “right.” That means that health care should be available to all, regardless of ability to pay or one’s health condition. That is the political wave of the future that the Democrats will eventually act upon when they will inevitably control Congress. The Republicans may as well accept that reality while they still have an opportunity to draft the legislation by compromise.

The ACA has abolished the concept of risk management, an underlying insurance principle. By mandating what must be paid, the health insurance industry is reduced to merely a payment mechanism, a “middle man.” It is an antiquated system complicated by 50 states that have a say in the insurance products that can or cannot be sold within their boundaries, all of which is complicated by Medicaid.

The majority of health care professionals, and probably most corporate employers, would prefer a single payer system, in which the federal government would be the sole “middle man.”

That is not as radical as it may sound. Single payer is not socialized medicine, but a centralized payment system as is Medicare. A universal Medicare system could retain deductibles and co-pays as Medicare does now. The insurance industry would still have a more limited participation by offering supplementary insurance policies to cover the deductibles and co-pays that Medicare does not pay. It would surely be a more economical, less costly alternative than the chaotic system we have now.

And how should we pay for such an ambitious program? First let’s note that universal Medicare will relieve individuals and businesses of the burden of dealing with a multitude of insurance products as well as paying ever-increasing premiums, a considerable financial burden. Workers and employers would no longer have Medicare payroll taxes. The role of Medicaid would be significantly reduced if not eliminated. The cumulative benefits are significant.

The primary source of funding would be a dedicated value added tax. Some object that it would fall disproportionately upon the poor, but such a tax is paid mostly by those who buy the most products and therefore would fall mainly on the wealthiest among us. The give-and-take of compromise would be necessary.

The economist in me acknowledges that our current unwieldy health care system urgently needs to be overhauled. A centralized payment system is not only a more economic solution, but more pragmatic than what we have now. My guess is that the insurance industry would breathe a sigh of relief to get the ACA off of its back and settle for offering supplemental policies.

Let us compromise and get it over with and move on to much other pressing problems, such as abolishing pennies and nickels.

William W. Dornburgh, of Cooperstown, is an economist and former banker who has served on insurance company and hospital boards.

http://www.timesunion.com…

***

Comment:

By Don McCanne, M.D.

Many supporters of the Affordable Care Act say that they do not believe that single payer is politically feasible and thus the pragmatic approach to reform is to continue to support ACA. But is supporting an outrageously expensive and administratively inefficient system that leaves so many without affordable access to health care truly pragmatic? Of course not.

This is why today’s message is so important. William W. Dornburgh, an economist and former banker who has served on insurance company and hospital boards, has observed our dysfunctional system, not from a political perspective but from the perspective of economics, banking, insurance, and hospital care, and he has concluded that the current system is not pragmatic, but single payer is.

His general arguments are very persuasive. Some of the details, not so much. Deductibles and copayments are a problem because they create financial barriers to care, so they should be eliminated. Single payer contains costs in a more patient-friendly way. Increasing single payer Medicare for all benefits to include those that would be covered by private supplementary Medigap plans would allow us to eliminate them, thus reducing the waste and administrative inefficiency caused by these superfluous plans. He suggests that the primary source of funding should be a value added tax, but considering the massive shift of income and wealth to the top, more progressive tax policies would be in order.

But his fundamental thesis is right on. Single payer is far more pragmatic than ACA, and it is time that we said so. We need to call out those who profess to be pragmatists in supporting the highly flawed ACA model. Pragmatism it is not.

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