PNHP

NYT Letter: Astute advice for Buffett, Bezos and Dimon

NYT Letter: Astute advice for Buffett, Bezos and Dimon

Letter: The 3 Giants’ Health Plan

By Elizabeth R. Rosenthal, M.D.
The New York Times, January 31, 2018

To the Editor:

Re: “3 Giants Form Health Alliance, Rocking Insurers” (front page, Jan. 31):

Before spending lots of time, effort and money developing a new health care “product,” Warren E. Buffett of Berkshire Hathaway, Jeff Bezos of Amazon and Jamie Dimon of JPMorgan Chase should realize that using a market approach to health care has failed miserably in this country.

They should go with Mr. Buffett’s earlier assessment. He suggested that despite “limited knowledge,” he thought that single payer is probably the best system, adding: “We are such a rich country. In a sense, we can afford to do it.”

Instead of reinventing the wheel, they should consult a group of experts who understand the needs of patients and populations and who have for many years studied the public policies that can best fulfill these needs. Physicians for a National Health Program, on whose board I sit, would be glad to oblige.

Dr. Elizabeth Rosenthal is a dermatologist. She resides in Larchmont, N.Y.

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

It is great news that these icons of the business world – Buffett, Bezos and Dimon – recognize that there are serious problems with our health care system and that they want to do something about it. But looking for technological advances to build on and tweak our current system will leave in place most of the flawed policies that result in very high costs with only mediocre performance.

There is no doubt that they could make some improvements within a customized system designed to serve their own employees, even if also extended to employees of other larger corporations. But most individuals outside of their companies would still be exposed to our highly dysfunctional system, so the net social good would be very limited.

On the other hand, if they advocated for a well designed single payer system, it would bring to their own businesses the efficiencies which would achieve their goal of cost containment while at the same time improving the allocation of our resources within the entire health care delivery system – serving well not only their companies but all of us. Further, it is likely that it would be much less expensive for them to advocate for a single payer system than to spend large sums in trying to leverage their own internal systems with expensive technological innovations – innovations that frequently fall far short of their idealistic goals.

These gentlemen have a chance to make a difference. Before they pull all stops, they should take a very careful look at a better system that would serve all of us quite well. Elizabeth Rosenthal’s astute, concise advice should be considered and pursued.

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

An open letter to the CEOs of Amazon, Berkshire Hathaway, and JPMorgan Chase

February 1, 2018

Dear Mr. Bezos, Mr. Buffett, and Mr. Dimon:

As a physicians and health justice advocates, we agree with you that health care is among the greatest issues facing society today. Your tremendous resources provide a unique opportunity to advocate for a health program to benefit all Americans: a universal, single-payer system.

Mr. Buffett describes our profit-based health system as a “tapeworm,” a parasite whose survival depends on its ability to drain nutrients from the host. How did our health care system reach that sorry state?

Our nation faces a catastrophic failure on two levels. First, the market has failed to deliver affordable health care to those who need it most. More importantly, our elected officials have failed to enact the reforms that could remedy health care’s woes because they are unwilling to offend big donors from the insurance and pharmaceutical industries. Instead, they’ve nibbled around the edges with incremental reforms like the Affordable Care Act. The ACA not only failed to kill the tapeworm of profit-based health care, it fattened it up with government subsidies, fueling the twin drivers of health costs—profits and administrative bloat.

Adding one more well-intentioned layer to our labyrinthine health care financing arrangements cannot fix them. Instead, we must to move to one simple nonprofit financing system, known as single payer or Medicare for all. In fact, Mr. Buffett recently supported single payer and said that as a nation “we can afford to do it.” Medicare for all would bring desperately needed financial stability to the lives of everyday Americans, to every unit of government, and to businesses large and small.

As you turn your focus towards health care, we urge you to meet with policy experts who have studied this problem for decades, as well as the health care professionals operating at the front lines of this crisis. Physicians for a National Health Program is a 22,000-member nonprofit research and education organization that advocates for single-payer health care. Our “Physicians’ Proposal for Single-Payer Health Care Reform” is a research-based plan for expanding health coverage to all Americans while eliminating the waste and profiteering of private insurance, and the inefficiencies they inflict on doctors and hospitals.

We would be happy to meet with you to discuss how single payer could benefit your workers, your bottom line, and the American economy as a whole.

Sincerely,

Carol Paris, M.D.
President, Physicians for a National Health Program

Health Insurance Reform in the United States – What, How, and Why?

By Adam Gaffney, M.D.
Journal of Policy Analysis and Management, Point/Counterpoint, Winter 2018

Last summer, Republican efforts to repeal the Affordable Care Act (ACA)—seven-years in the making—dramatically collapsed. Yet, if the failed Senate vote in July marked a pause in conservative reform efforts, it only further animated the health care reform debate on the left side of the political spectrum. In this article, I argue that one of the reform models under discussion—single-payer national health insurance (NHI)—is the most potent and realistic policy solution.

First, I make the case that universal coverage is economically feasible. Second, I examine why achieving universal coverage remains paramount. Third, I describe how universal coverage can be quickly and effectively achieved via NHI enrollment. Fourth, I discuss benefit design, emphasizing the importance of comprehensive benefits, and first-dollar coverage. And finally, I explore the role of the public and private sectors, arguing that health care coverage must remain entirely within the public sphere if the goal of universal health care is to be, at long last, attained.

CAN WE AFFORD UNIVERSAL COVERAGE?

First: Can the United States afford universal coverage? Multiple lines of evidence demonstrate that we most certainly can. Table 1 provides estimates of population coverage, together with health care spending, for 11 OECD nations in 2015. While the United States is at the bottom of the list in terms of coverage, it is at the top of the list in terms of health care spending. A host of high-income nations have been able to achieve near 100 percent coverage despite their much lower levels of health care spending, and some of these nations—like Canada and the United Kingdom—have done this while eliminating cost sharing for most services.

Table 1

Table 1. Health care spending and coverage in 11 OECD Nations, 2015

The experience of Taiwan—which implemented a NHI system in 1995—further bolsters the case for the affordability of universal health care. There, the costs of a rapid single-payer universal coverage expansion, and the resultant increase in health care utilization, were offset by other savings, such that the “total increase in national health spending between 1995 and 2000 was not more than the amount that Taiwan would have spent, based on historical trends” (Lu & Hsiao, 2003). Taiwan was thus able to implement a universal single-payer program with comprehensive benefits without an acceleration in national health spending growth, despite the fact that the nation began with a much higher baseline proportion of uninsured than the United States has currently (i.e., 43 percent vs. 9 percent 1) (Lu & Hsiao, 2003).

A back-of-the-envelope estimate further confirms the economic feasibility of universal coverage under NIH in the United States. A study of the cost of care for the uninsured found that for 2013, the uninsured used about half as much health care resources ($2,443) as the insured ($4,876) a year (Coughlin et al., 2014). These investigators used such figures to estimate that $121 billion was spent on the uninsured in 2013, suggesting that the uninsured might have been covered in that year for a similar (additional) sum. If we reduce that figure to account for the decline in the number of uninsured since 2013 and then inflate it for rising medical spending, we have a rough, back-of-the-envelope figure of $92 billion annually to cover all of the uninsured, including undocumented immigrants. 2

Though it may seem like a large sum, that figure represents only a small fraction of the savings that could be generated via the greater efficiencies of a single-payer system, discussed below. Together with evidence from other high-income nations abroad, it thus provides strong support for the affordability of universal coverage through NIH in the United States.

WHAT WOULD BE THE BENEFITS OF UNIVERSAL COVERAGE?

Even if we can afford universal coverage, is it worth the price? Though there has been some debate on whether coverage saves lives, a recently published review has strengthened the case that it indeed has such a protective effect (Woolhandler & Himmelstein, 2017a). For instance, the investigators note that three quasi-experimental difference-in-differences studies and most longitudinal observational studies support an association between coverage and reduced mortality, with an odds ratio of dying among the insured vs. the uninsured ranging from 0.71 to 0.97. And while the Oregon Medicaid experiment—the only randomized trial to examine the question (Finkelstein et al., 2012)—did not have a statistically significant protective effect on mortality, Woolhander and Himmelstein note that the direction of the effect was consistent with benefit, and in any event that the study was underpowered for this outcome.

Lowering mortality, of course, is not the only goal of universal coverage. Another review found that coverage had a beneficial impact on patient finances, health care access and use, the management of some chronic conditions, self-rated health, as well as on mortality (Sommers, Gawande, & Baicker, 2017).

It is worth noting that these sorts of benefits—especially on mortality—figured heavily in the debate over the repeal of the ACA. Yet, it is notable that every argument wielded against the repeal of the ACA on the grounds of lives lost also serves as a powerful argument for proceeding to universal coverage. For instance, it was estimated that under the Senate ACA repeal bill, 49 million would be uninsured by 2026 (Congressional Budget Office, 2017). However, 28 million are predicted to remain uninsured without the repeal. It seems hard to argue that having 49 million uninsured produces an unacceptable amount of unnecessary death and suffering, while leaving 28 million uninsured does not.

HOW DO WE GET EVERYONE ENROLLED?

While the goal of “universal coverage” today garners support from a diversity of voices, the devil is in the policy details. Against the single-payer approach advocated in this article, for instance, some argue for an incremental path to universal coverage by building on the ACA.

Perhaps the most prominent incremental reform is a “public option” plan added to the ACA marketplaces. However, it seems unlikely that such a reform would bring us towards universal coverage. While a public option might have lower premiums (Congressional Budget Office, 2013), it could potentially serve as something of a high-risk pool, enrolling sicker and most costly individuals, thereby raising premiums in the public plan while effectively subsidizing the profits of private insurers. Yet even assuming this could be avoided, there is no clear evidence that a public option would take us to universal coverage: The CBO’s 2013 scoring of a public option, after all, predicted that it would produce no significant reduction in the number of the uninsured (Congressional Budget Office, 2013).

A second proposed incremental approach to universal coverage would be to strengthen the ACA’s individual mandate. Some point to international examples—in particular, the Netherlands and Switzerland—to make this case. For instance, Herzlinger et al. assert that more “firm penalties” and a more “forceful approach” towards the individual mandate could achieve universal coverage in the United States (Herzlinger, Richman, & Boxer, 2017). They and others cite the example of Switzerland (which essentially has universal coverage), where penalties for being uninsured are more severe as compared to those of the ACA, and where those who misrepresent their insurance status can even be subject to imprisonment (Ginneken & Rice, 2015). Should we follow the Dutch and Swiss roads to universal coverage, for instance, by imposing a stiffer individual mandate penalty, instead of taking the single-payer path?

Absolutely not. After all, as Timothy Jost has written, not only are the Dutch and Swiss models often misrepresented, it is by no means clear that they are the best reform models to follow. The insurance plans sold in these nations are considered social services, not commodities (for this reason, the Dutch plans are not subject to European Union rules on competition, while in Switzerland, for-profit companies are barred from even selling basic plans) (Jost, 2009). But perhaps most critically, as Jost notes, the “managed competition” mandate-model reforms in both countries was not deployed to effect universal coverage, which had already been mostly achieved prior to the implementation of these reforms. And, critically, neither reform seems to have controlled costs, with Switzerland remaining the second most expensive health care system after the United States (Jost, 2009).

There are other reasons not to embrace these models. For instance, a 2015 study examining mandates in Germany, the Netherlands, and Switzerland found that even with these strict mandates, some remain uninsured, underinsured, or in default on their premiums (Ginneken & Rice, 2015). Premium defaulters and those who remain uninsured, moreover, are similar to the uninsured in the United States: they are more likely to be migrants, have low incomes, or be young, the study notes. These experiences cast doubt on using the ACA’s mandates to achieve universal coverage.

It is also worth noting that achieving universal coverage within a private-insurance framework may be prohibitively expensive. As will be later discussed, single-payer systems are capable of achieving much lower levels of administrative spending, savings needed to cover the cost of universal coverage.

Instead of a complicated patchwork approach, the most effective way to cover everybody would be instead to simply cover everybody through an NHI program. Some have suggested that enrolling everybody via a sweeping, quickly implemented “Medicare-for-all” system would entail a great deal of disruption. However, it is worth looking at the 1966 implementation of Medicare to see that this need not be the case. Medicare was signed into law by President Lyndon B. Johnson on July 30, 1965, and its benefits began on July 1, 1966, giving the Social Security administration less than a single year to enroll all of the nation’s seniors (Marmor, 2000, 87). And remarkably, it succeeded: by July 1, 1966, an overwhelming majority (18.9 million) of the nation’s 19.1 million seniors were enrolled in Medicare Part A, and more than 90 percent were enrolled in the voluntary “Part B” program (History of SSA During the Johnson Administration, 1963–1968; Marmor, 2000, 87). While it might be argued that times have changed—for instance, that Medicare’s administrators were dealing with a tabula rasa—this is not true. For instance, slightly more than half of seniors were enrolled in insurance plans prior to Medicare’s implementation (Davis, Schoen, & Bandeali, 2015, 9).

Finally, the example of Taiwan parallels that of Medicare. That nation also rapidly covered almost the entirety of the eligible population: Only 57 percent were covered before NHI’s implementation in 1995, vs. 96 percent by the end of the following year (Lu & Hsiao, 2003).

Such experiences provide firm evidence that when there is a will to universal coverage, there is a way.

WHAT WOULD BENEFIT DESIGN LOOK LIKE?

Single-payer proposals (Gaffney et al., 2016) and bills (H.R. 676, now sponsored by a majority of House Democrats) propose that comprehensive benefits—such as inpatient and outpatient care, dental care, long-term care, mental health care, and pharmaceuticals—be covered under NHI. This is essential for a number of reasons. First, these basic categories of benefits are required by all or nearly all at some point in the life course: There is no reason to relegate certain categories of medically-necessary services to the private insurance market. For instance, widespread lack of dental coverage—especially among the elderly and those of low income—produces unnecessary suffering, disability, and sometimes death, likely exacerbating social inequality in the United States (Otto, 2017).

Second, excluding important medical benefits from coverage may not only deprive individuals of important health care services, but in some instances may serve to increase rather than decrease health care spending. For example, though the single-payer Canadian Medicare system provides universal access to physicians’ services and hospital care, it does not provide universal access to prescription drugs. Yet this lack of public drug plan does not produce savings, but rather imposes costs, insofar as it leaves Canada with less leverage in drug price negotiations. According to one estimate, a universal public pharmaceutical plan might bring down total drug spending by 32 percent in Canada (Morgan et al., 2015).

Another benefit design issue relates to cost-sharing. At least since the RAND Health Insurance Experiment (HIE)—which found that imposing cost-sharing reduced health care utilization and spending without obvious harm to the health of the study population as a whole (Brook et al., 1983)—some have taken it as given that cost-sharing is a necessary and safe tool for cost containment. Yet evidence suggests that cost-sharing is not only unnecessary for cost control, but hazardous to health.

For instance, the RAND HIE itself found that cost-sharing might harm disadvantaged individuals, as it seemed to lead to higher blood pressure and hence potentially higher mortality (Brook et al., 1983). Moreover, cost-sharing has again and again been shown to reduce the use of both appropriate and inappropriate forms of health care (Brot-Goldberg et al., 2015), not surprising given that distinguishing the two reliably is generally thought to require a medical degree. Reducing the use of appropriate health care, in turn, can have adverse health consequences. For some children, for instance, cost-sharing reduces the use of asthma inhalers, and increases hospitalizations (Karaca-Mandic et al., 2012). And among adults with diabetes, high-deductibles reduce visits to specialists, and also increase visits to emergency rooms for diabetes-related complications (Wharam et al., 2017).

Cost-sharing is also unnecessary to control costs. For instance, for at least some specific types of health care (like medications after a myocardial infarction), the absence of cost-sharing may have a positive impact on health, and thus ultimately be at least cost-neutral (i.e., by reducing other forms of health spending) (Choudhry et al., 2011). But, additionally, as previously mentioned, some nations—like Canada and the United Kingdom—have abolished cost sharing while controlling health spending.

WHAT IS THE ROLE OF THE PRIVATE MARKET?

Under NHI, health providers can be a mix of public and (not-for-profit) private. However, health insurance should be entirely public, for a critical reason: The greater administrative simplicity produced by a single-payer is one of the key sources of savings to pay for universal coverage (Gaffney et al., 2016).

A body of literature supports the argument that public single-payers are more administratively efficient. For instance, whereas the administrative overhead of traditional Medicare is only 2 percent, that of private Medicare advantage plans is 11 percent, and that of total private insurance plans 13 percent (Davis, Schoen, & Bandeali, 2015, 23). The Taiwanese NHI, meanwhile, has startlingly (perhaps excessively) low administrative overhead, at little more than 1 percent of operating expenses (Cheng, 2015). And when looking beyond insurer overhead to total health system administrative costs (which include providers’ billing-related costs), it is notable that at least in 1999, 16.7 percent of Canadian health care dollars went to administrative activities, as compared to 31.0 percent in the United States (Woolhandler, Campbell, & Himmelstein, 2003).

As a result of such differences in administrative efficiency, the transition to a single-payer system might yield savings in excess of $500 billion a year, funds that could be then used to pay for the proposed system of comprehensive, first-dollar, equitable coverage for all (Woolhandler & Himmelstein, 2017b).

CONCLUSION

Some concede that single-payer NIH is the best policy option, yet point to the problem of political feasibility, noting that the prospects for sweeping reform at the national level, in the current climate, are slim. Yet, later or (one hopes) sooner, the political climate will change, opening the door for more progressive policy solutions, including those—like single-payer reform—that now seem farfetched.

It is also worth noting the political hurdles that would be encountered with more incremental reforms. For instance, a meaner individual mandate penalty is unlikely to serve politicians well as a rousing rallying cry. The mandate is perhaps the ACA’s most unpopular provision, supported by a mere 35 percent of Americans (Kirzinger, Sugarman, & Brodie, 2016). In contrast, majorities of poll respondents say they support “Medicare-for-all” (57 percent) and “single-payer” (53 percent) (Hamel, Wu, & Brodie, 2017).

Enrolling everybody in the nation into a single NHI program therefore remains the most efficient, effective, and perhaps most likely road to creating a right to health care in America.

ACKNOWLEDGMENTS

The author wishes to thank Professors David Himmelstein and Steffie Woolhandler for their years of mentorship, as well as for reading this manuscript.

The author is active in the not-profit organization, Physicians for a National Health Program, which advocates for single-payer reform. He has no financial conflict of interest with any relevant commercial entities.

1. Figures of the number of the uninsured in the United States throughout this article are from: National Health Interview Survey (Cohen, Zammitti, & Martinez, 2017).

2. The number of the uninsured is 36.2 percent lower now as a result of the ACA’s coverage expansion, or 28.6 million uninsured in 2016 vs. 44.8 million in 2013 (I assume a figure for 2017 that is unchanged from 2016). CMS’s National Health Expenditure tables show that per capita health spending rose from $9,110 in 2013 to a projected $10,833 in 2017, or an 18.9 percent increase. Thus, I reduced the $121 billion figure by 36.2 percent to account for the fall in the number of the uninsured, and then inflated it by 18.9 percent to account for rising medical spending. Of note, this approach to calculating the cost of covering the uninsured is somewhat similar (and relies on the same study of the cost of uncompensated care), but not identical, to that employed by a recent economic study on the cost of a single-payer bill for California, commissioned by supporters (Pollin et al., 2017).

BIOGRAPHY

Adam Gaffney is an Instructor in Medicine at Harvard Medical School, The Cambridge Hospital (e-mail: agaffney@challiance.org).

http://onlinelibrary.wiley.com…

P4P should incite the policy community

Pay for performance: a dangerous health policy fad that won’t die

By Kip Sullivan and Stephen Soumerai
STAT, January 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

  • Do not improve the health of patients
  • Harm sicker and poorer patients
  • Encourage doctors and hospitals to avoid or “fire” sicker patients who drag down quality scores due to factors outside physicians’ control
  • Cause some doctors to stop using lifesaving treatments if they don’t result in bonuses
  • Create interruptions in needed medical care
  • Reduce job satisfaction and undermine altruism and professionalism among doctors
  • Cause doctors to game quality measures. For example, a Medicare program that punished hospitals for hospital-acquired infections actually induced some hospitals to characterize infections acquired after admission as “present upon admission” or to simply not report the infection rather than reduce actual infection rates.

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.

https://www.statnews.com…

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Performance-based financing in low-income and middle-income countries: isn’t it time for a rethink?

By Elisabeth Paul, Valéry Ridde, et al
BMJ Global Health, January 13, 2018

Abstract

This paper questions the view that performance-based financing (PBF) in the health sector is an effective, efficient and equitable approach to improving the performance of health systems in low-income and middle-income countries (LMICs). PBF was conceived as an open approach adapted to specific country needs, having the potential to foster system-wide reforms. However, as with many strategies and tools, there is a gap between what was planned and what is actually implemented. This paper argues that PBF as it is currently implemented in many contexts does not satisfy the promises. First, since the start of PBF implementation in LMICs, concerns have been raised on the basis of empirical evidence from different settings and disciplines that indicated the risks, cost and perverse effects. However, PBF implementation was rushed despite insufficient evidence of its effectiveness. Second, there is a lack of domestic ownership of PBF. Considering the amounts of time and money it now absorbs, and the lack of evidence of effectiveness and efficiency, PBF can be characterised as a donor fad. Third, by presenting itself as a comprehensive approach that makes it possible to address all aspects of the health system in any context, PBF monopolises attention and focuses policy dialogue on the short-term results of PBF programmes while diverting attention and resources from broader processes of change and necessary reforms. Too little care is given to system-wide and long-term effects, so that PBF can actually damage health services and systems.

http://gh.bmj.com…

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Comment:

By Don McCanne, M.D.

We are living through the generation of health policy research. By applying health policy science we should be able to improve the quality of health care while controlling costs. But what we are seeing instead is the widespread implementation of schemes without adequate evidence of their effectiveness. P4P – pay for performance – is one such scheme.

We now have overwhelming evidence that P4P does not work as intended. It does not improve performance, supposedly by giving rewards for (largely flawed) measures of performance, but, in fact, it can create perverse incentives that impair outcomes, as Kip Sullivan and Stephen Soumerai explain.

Furthermore, Elisabeth Paul, Valéry Ridde and their colleagues show us that the widespread acceptance and implementation of this concept throughout the world “can actually damage health services and systems.”

Right now we are swamped with policy concepts that are being adopted on a wholesale basis without adequate evidence of either effectiveness or safety – an approach that is antithetical to the health sciences. Just a couple of examples of these schemes include ACOs, MIPS, APMs, and now VVP (to be covered soon in another Quote of the Day).

How have we been doing with this applied health policy that lacks scientific support? Costs continue to be outrageous while we have compromised access through the financial barriers of underinsurance; we have reduced choice through limited provider networks, and we have left tens of millions uninsured.

In sharp contrast are the proven policies inherent in a well designed single payer system. Our immediate attention should be redirected to enacting and implementing those policies instead. Once we have an efficient financing infrastructure in place we will have a much better foundation on which to use the tools of health policy science to improve efficiency and outcomes.

Instead of wasting our time with a parked cart on a fallow field, we should be nurturing the horse and sowing the field. In health policy, P4P and the other schemes have shown us that we are wasting our time with a horseless cart. Our pathetic results should be no surprise.

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

Pay for performance: a dangerous health policy fad that won’t die

The latest research shows that this carrot-and-stick approach to improving health care doesn't work.

By Kip Sullivan and Stephen Soumerai
STAT News, Jan. 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

With all the bad news about pay-for-performance programs and their destructive effects, it would be easy to assume that the concept will soon die a well-deserved death. In an editorial accompanying the Annals of Internal Medicine study, Harvard’s Ashish Jha and Boston University’s Austin Frakt, both of whom had previously expressed sympathy for paying bonuses, argued that it was time to abandon pay-for-performance programs. The Annals study “should be the final nail in the coffin of the current generation of P4P [pay-for-performance],” they wrote.

Yet we aren’t celebrating the death of this policy because evidence has never mattered to its proponents. Bonus-and-penalty policies became wildly popular among policymakers and the insurance industry, even though there was no evidence supporting the fad when it took off in the early 2000s. Although research indicting pay for performance has piled up since then, policymakers and academic cheerleaders have either ignored it or argued that pay for performance only needs tweaking.

But their suggested tweaks, such as increasing payments to doctors, don’t work. A nationwide incentive and penalty program in the United Kingdom paid an extra $40,000 per year on average to family doctors and still failed to improve care.

In the early 2000s, pay for performance was endorsed by influential groups and individuals, including the Medicare Payment Advisory Commission and Donald Berwick, who was later to become President Obama’s administrator of the Centers for Medicare and Medicaid Services. These endorsements cited no research. As one review paper put it in 2006, pay-for-performance programs “are being implemented in a near-scientific vacuum.”

Despite the lack of evidence, proponents hyped the costly policy with great confidence. “There’s no question that pay for performance will work,” said Thomas Scully, CMS administrator under President George W. Bush, in 2003. Berwick, who had declared in 1995 that pay-for-performance policies are “toxic,” “naïve,” and “absolutely wrong,” asserted in 2003 that payment for performance should become “a top national priority.” Berwick’s 180-degree reversal illustrates how powerful pay-for-performance folklore had become by the early 2000s, even without a shred of good evidence.

Thanks to the groundless cheerleading by health-policy heavyweights, bonus-and-penalty programs spread like crabgrass through the American health care system. By the late 2000s, objective research on pay for performance began to trickle in. By the early 2010s, there was more than enough evidence to conclude that it does not work and even harms patients. Jha and Frakt concluded that practices that care for lower income or sicker patients received greater penalties, “essentially creating a reverse Robin Hood effect” that may have “exacerbated existing disparities in care.”

The Medicare Payment Advisory Commission and other critics of Medicare’s current pay-for-performance program have adopted a baffling response to this research. They argue that Medicare should terminate its program but that other organizations should continue to use the same crude pay-for-performance schemes that Medicare uses. Jha and Frakt, for example, justify the abandonment of pay for performance on the ground that “alternative payment models,” most notably accountable care organizations, “have exhibited more promising performance than standard P4P programs.”

We disagree. Accountable care organizations have failed just as badly as pay for performance, in large part because they, just like Medicare, dish out rewards and penalties using the same crude “performance” measures.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.

https://www.statnews.com…

What will Amazon, Berkshire Hathaway and JPMorgan Chase do for health care?

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare; Goal is to improve U.S. employee satisfaction while reducing overall costs

Business Wire, January 30, 2018

SEATTLE & OMAHA, Neb. & NEW YORK–(BUSINESS WIRE)–Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) announced today that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.

Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes,” said Berkshire Hathaway Chairman and CEO, Warren Buffett.

“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon founder and CEO. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he added.

The effort announced today is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon. The longer-term management team, headquarters location and key operational details will be communicated in due course.

https://www.businesswire.com…

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Comment:

By Don McCanne, M.D.

The headline in this morning’s online edition of The New York Times: “Amazon, Berkshire Hathaway and JPMorgan Team Up to Disrupt Health Care.” Disruption? Above is reproduced the actual full statement from Business Wire (A Berkshire Hathaway Company). So what is their message?

For decades the business community has struggled with trying to provide health benefits for their employees, but costs have continued to rise well in excess of inflation in spite of policies put in place to slow the growth in costs – policies that have displeased employees such as high deductibles and other cost sharing and narrow provider networks that limit choice in health care, not to mention passing some of the premium increases on to the employees.

In this communication, Warren Buffett, Jeff Bezos and Jamie Dimon acknowledge the need to ensure employee satisfaction and the need to control health care costs. They have now decided to join forces to use their brilliance and expertise to finally solve this problem for the benefit of their own employees. As successful businessmen they have decided that the best approach would be to establish a not-for-profit independent company looking for solutions in technology that will “provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”

Warren Buffett says, “Our group does not come to this problem with answers.”

Jeff Bezos says, “The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty… Success is going to require talented experts, a beginner’s mind…”

Jamie Dimon says, “Our people want transparency, knowledge and control when it comes to managing their healthcare.”

The release states, “The longer-term management team, headquarters location and key operational details will be communicated in due course.”

So they do not have a plan, but they plan to have a plan.

They intend to start with talented experts, but they appear to be looking in the technology world when they need to turn to the health policy arena since mere technological gimmicks are not going to have a significant impact on the problems that concern them.

The obvious caveat when they turn to the policy community is that they have to sort out those who propose policies proven to be capable of achieving their goals from those who propose policies based predominantly on anti-government, pro-market ideology. We already have the latter, and it is what has brought us to our knees. Several other nations have the former which has provided them with comprehensive care for everyone at an average of half of what we spend per capita on health care.

Warren Buffett already knows this. He recently said, “With my limited knowledge, I think that (single payer) probably is the best system. We are such a rich country. In a sense, we can afford to do it.”

An independent health benefit company serving their employees, even if including the employees of a large conglomeration of other companies, could not adapt most of the beneficial features of a well designed single payer model. Most of the policy defects that result in the dysfunction of our health care financing would remain in place. As smart businessmen, the last thing they should want is to invest considerable effort and resources into a venture that proves pretty much for naught.

Rather than setting up yet another technology-based company wouldn’t it be better to begin with a group of experts who understand the health needs of patients and the community at large and the public policies that would deliver on those needs? But leave out those who place markets first such as the insurers, pharmaceutical executives, for-profit corporate executives and the like.

Maybe Buffett, Bezos and Dimon should simply arrange a visit with us at Physicians for a National Health Program. Not only are we physicians, we are also policy people who support policy for the people, not for the rent seekers.

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

Medicare’s out-of-pocket costs eroding Social Security payments

Medicare Beneficiaries’ Out-of-Pocket Health Care Spending as a Share of Income Now and Projections for the Future

By Juliette Cubanski, Tricia Neuman and Karen E. Smith
Kaiser Family Foundation, January 2018

From the Executive Summary

Medicare helps pay for the health care needs of 59 million people, including adults ages 65 and over and younger adults with permanent disabilities. Even so, many people on Medicare incur relatively high out-of- pocket costs for their health care, including premiums, deductibles, cost sharing for Medicare-covered services, as well as spending on services not covered by Medicare, such as long-term services and supports and dental care. The financial burden of health care can be especially large for some beneficiaries, particularly those with modest incomes and significant medical needs.

Key Findings

* In 2013, Medicare beneficiaries’ average out-of-pocket health care spending was 41 percent of average per capita Social Security income; the share increased with age and was higher for women than men, especially among people ages 85 and over.

* Medicare beneficiaries’ average out-of-pocket health care spending is projected to rise as a share of average per capita Social Security income, from 41 percent in 2013 to 50 percent in 2030.

* Half of beneficiaries in traditional Medicare spent at least 14 percent of their per capita total income on out-of-pocket health care costs in 2013. The spending burden was higher for people ages 85 and over, in poor health, and with modest incomes.

* More than one-third (36 percent) of beneficiaries in traditional Medicare, and half of those with incomes below $20,000, spent at least 20 percent of their per capita total income on out-of-pocket health care costs in 2013. By 2030, more than 4 in 10 (42 percent) traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

From the Policy Implications

This analysis shows that out-of-pocket health care costs are a substantial and growing burden for many people with Medicare, consistent with other recent research. We found that out-of-pocket health care spending represented a sizable share (41 percent) of Medicare beneficiaries’ per capita Social Security income, on average, in 2013, and is expected to consume half of Social Security income in 2030. Some beneficiaries face greater average out-of-pocket spending as a share of average per capita Social Security income than others, including older women and beneficiaries ages 85 and over. For other beneficiaries, average out-of-pocket health care spending represents a relatively lower share of their average per capita Social Security income, likely due in part to coverage from Medicaid and the Part D Low-Income Subsidy program, which reduces the spending burden, including black beneficiaries and those under age 65. Using a different measure of the out-of- pocket spending burden based on per capita total income, we found that half of beneficiaries in traditional Medicare spent at least 14 percent of their total income on out-of-pocket health care costs in 2013, while more than one-third of beneficiaries spent at least 20 percent. By 2030, more than 4 in 10 traditional Medicare beneficiaries are projected to spend at least 20 percent of their total income on out-of-pocket health care costs.

Our results suggest that efforts to strengthen and improve the protections offered by Medicare, Medicaid, and Social Security may be needed to ensure greater retirement security for future generations of older Americans.

http://files.kff.org…

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Three ways to cut — and improve — Medicare

By Ed Weisbart
STAT, January 17, 2018

The Republicans are right. We should cut Medicare. And I know how: Keep Medicare’s funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.

Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.

The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. It’s just a matter of political will.

Ed Weisbart, M.D., is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.

https://www.statnews.com…

***

Comment:

By Don McCanne, M.D.

Social Security and Medicare are intended to provide financial security for the elderly and individuals with major disabilities. Yet average out-of-pocket expenses for Medicare will soon consume half of the average per capita Social Security payments. That’s not much security.

Many individuals do have other income sources to help pay the out-of-pocket expenses of Medicare, but, even there, over 40 percent are expected to spend at least 20 percent of their total income on health-related out-of-pocket costs.

Once again it is obvious that out-of-pocket expenses for Medicare beneficiaries are too high, especially for those heavily dependent on Social Security.

The solution is simple. Expand Medicare benefits to include those covered by Medigap, retiree plans, the Part C Medicare Advantage plans, and the Part D drug coverage, while cutting back on Medicare premiums, deductibles and coinsurance. We could pay for this expansion with the administrative savings and other efficiencies gained through enactment of a single payer Medicare for all program. Let’s do it.

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

Speed Up on Single Payer

Our First Concern Should Be Health Care For All

By John Marty
Commonweal, January 29, 2018

The United States, the wealthiest nation on the planet, remains the only industrialized country that fails to provide health care for everyone. Our dysfunctional health-care system is bankrupting families and killing people by failing to provide needed care.

Contrary to the headline on J. Peter Nixon’s November 21, 2017, article advising Democrats to “Slow Down on Single Payer,” we ought to be ashamed at the mere tinkering that is being done to our health-care system. Slowing down in our response to the health-care crisis is the worst thing we can do. Nixon correctly points out that a single health plan that covers all Americans has been a goal of progressives since the 1930s, yet he warns about pushing too fast. I share his concern about the strength of the political opposition, but that does not justify inaction when lives are at stake. And lives are at stake. Occasionally these tragedies catch the public eye. But there is virtually no public awareness that, week in and week out, people die from a lack of access to medical care. Preventing those senseless tragedies and making sure everyone has access to health care should be our first concern.

In my thirty years in the Minnesota Senate, I have been fighting Republican efforts to take away access to health care. However, I am also frustrated at Democratic politicians who are unwilling to propose real solutions. Yes, the Affordable Care Act expanded insurance coverage for millions and a “public option” might give better coverage to some. These Democratic proposals are far better than Republican efforts to eviscerate Medicaid or weaken Medicare. But they fail to meet the essential goal of providing care for all. Instead of devoting our energy to dismissing the idea of a more rational health-care system as “extreme and unrealistic,” as Nixon does, let’s begin by examining our goals. Here are some basic principles that any good health-care system must meet:

  • Cover everyone.
  • Cover all medical needs, including dental, vision, hearing, mental health, prescriptions, long-term care, alcohol and drug treatment.
  • Let patients choose their doctors and hospitals.
  • Reduce costs by fair pricing and cutting administration, not by denying care.
  • Affordable to all (premiums based on income).
  • Focus on preventive care to improve health.
  • Ensure sufficient providers to avoid waiting lines.
  • Maintain our nation’s leadership in medical care, research, and technology.
  • Pay providers in a fair and timely manner.
  • Simple, understandable funding, and payment system.

Each of these principles is important and must be met. Republican “repeal and replace” attempts fail to meet any of these goals. But neither do Democratic attempts to plug gaps in our broken insurance system. These gaps will not be closed until we replace private health insurance with health care for all. In Minnesota, we have proposed a Minnesota Health Plan to cover everyone. The MHP would be bound to these principles. It is a health plan focused on well-being and public health, not profits or politics. Although I would welcome passage of such legislation at the federal level, the urgency of the crisis calls for a push at both state and federal levels. In Canada, passage of universal health care in Saskatchewan led to universal coverage across the country within a few years.

A commonsense system like the MHP would prevent the problems that Nixon is concerned about, such as waiting lines for care. The comprehensive benefits, along with the elimination of copayments and deductibles, mean that even people with “gold” or “platinum” insurance plans would be better off under MHP. Equally important, it is patient-centered. Patients choose their providers, and medical decisions are made by patients and their doctors, not by government or insurance companies. Payments under our MHP model would be made through a “single-payer” system (roughly analogous to Medicare). Economic analysis of single-payer proposals in the United States and the success of such systems in other countries show that universal coverage is actually less expensive than our current patchwork system.

Nixon cites a dubious analysis of Senator Bernie Sanders’s health proposal that claims it would cost $32 trillion over ten years. But continuing to pay for that care in the current irrational, bureaucratic manner will cost far more than that.

Our state proposal—which could be replicated in other states—would be financed from the same sources as our current system:

More than half of all health-care spending is currently paid by the state and federal government, and we would continue to use those dollars.

Individuals and families would continue to pay premiums, but instead of paying them to Blue Cross or some other insurer, they would be paid to the Minnesota Health Plan. Those payments would replace not only current premiums, but also the copays, the deductibles, and out-of-pocket expenses for dental and other care that currently bankrupt many. Also, instead of premiums based on age or medical condition, MHP premiums would be based on ability to pay—most people would pay much less, though some would pay more—and it would be affordable to all.

Instead of an employer mandate, and instead of the annual burden of shopping for an insurance plan, employers would pay a payroll tax. And they wouldn’t have to worry that hiring an older worker will drive up their premiums.

To briefly explain why an efficient universal health-care system is less expensive than our current dysfunctional mess, look at two of the biggest cost drivers in medicine. First, our current system overpays because of completely irrational pricing. As reported in the New York Times, a national comparison of hospitals showed pricing for the simplest form of knee replacement ranged from about $3,400 to about $55,800. Hospitals charging the low-end prices are not undercharging; they set prices sufficient to cover their costs. Those radical price disparities—unrelated to costs or benefits—show that some purchasers of health care are being charged as much as ten to fifteen times what is reasonable. A logical single-payer system negotiates prices, resulting in rational costs. 

Second, our current system is bloated with enormous administrative waste. To understand the significance of the administrative savings under single payer, consider an analogy. If public schools were funded the way we fund hospitals, each teacher would spend time each day calculating the time and resources they devote to each student. The school would allocate janitorial costs, facility costs, and administrative overhead to students. The school would bill each family and their “education insurance plans.” Those insurance plans would pay for different services at different rates, with different copayments. Because education is expensive, employers would offer “school coverage” for their employees’ children. Those without employer coverage would shop for school insurance on the individual market. Because of the high cost of individual policies, the government would step in to subsidize coverage. Even so, not all families would have “education coverage” and many families would struggle to pay. As a result, schools would spend additional resources to collect payments and cost-shift unpaid expenses to other students. Setting aside additional complications such as teachers or schools being “out-of-network,” this would still be a costly, bureaucratic nightmare. It would harm education outcomes by shifting resources from teaching to billing and insurance. Financially, it would cost a fortune to pay for the billing clerks, accountants, and price negotiators for the schools, plus all the operating costs for the “school insurance” companies. Eliminating this billing and insurance bureaucracy from our health-care system would result in huge savings.

Martin Luther King Jr. said that “of all the forms of inequality, injustice in health care is the most shocking and inhumane.” For those who choose to address that moral imperative, Nixon’s alternatives are not acceptable. This is not rocket science. Virtually every other industrialized country provides health care to all their people, and most do it for less than half as much as the United States, usually with better outcomes. Addressing this injustice is not “extreme and unrealistic.” This is a cause worth fighting for, and a cause we will win.

John Marty has been a member of the Minnesota Senate since 1987. He is a former chair of the Senate Health Committee, and author of a recent book, “Healing Healthcare.” The book can be downloaded in e-book format for free at mnhealthplan.org.

https://www.commonwealmagazine.org…

Cacophony on drug pricing

Among those who want to lower drug prices, there’s cacophony, not consensus

By Erin Mershon
STAT, January 26, 2018

Of all his campaign promises, President Trump’s vow to bring down drug prices was perhaps the most popular.

An assortment of interest groups spoke out loudly and passionately on the need for action, from hospitals to doctors to insurers to generic drug makers to patients themselves.

Instead, congressional efforts to lower drug prices are at a total standstill. In interviews with STAT, lobbyists, lawmakers, and congressional staffers, Republicans and Democrats alike, said the most powerful health industry players conspicuously disagree about exactly how to move forward. Every group pushes its own priorities and strategies — a cacophony that makes it unlikely that crushing drug prices will change any time soon.

The disarray was on full display at a recent congressional hearing, when representatives from nearly every major trade group with any stake in the country’s drug prices — AMA, AHIP, and AHA included — spent almost an hour and a half testifying without more than a cursory discussion of how Congress could fix the problem. When they finally did talk solutions, outside of buzzy phrases like “increase transparency,” almost none of their answers matched.

So why can’t the broader health care industry agree on how to make drugs more affordable? Here are five factors.

1. Health care lobbyists are stuck playing defense.

2. Congress isn’t jumping to act.

3. Each industry has very different priorities, even when they do agree.

4. All the major players have a stake in the status quo.

5. There’s no silver bullet.

https://www.statnews.com…

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Pharma gets a seat at the table at private dinner with Trump at Davos

By Rebecca Robbins
STAT, January 25, 2018

The leaders of drug makers Novartis and Bayer joined President Trump on Thursday evening at a private dinner in Davos, the snowy Swiss resort that’s playing host this week to a gathering of elites from around the globe.

Vas Narasimhan, who officially becomes CEO of Novartis (NVS) next week, and Bayer (BAYN) CEO Werner Baumann were among the 15 European business executives invited to the event. The White House’s goal for the evening: to encourage the companies to make investments in the U.S. and to encourage others to join them, National Economic Council Director Gary Cohn told reporters earlier this week.

Trump is the first sitting president in two decades to attend the annual four-day meeting of the World Economic Forum, which draws a who’s-who list of politicians, one-percenters, and pharmaceutical royalty. Trump is scheduled Friday to deliver a speech, in which he’s expected to tout the tax cuts introduced by the new tax law and make the case for trade policies more favorable to U.S. interests.

A year ago, then-President-elect Trump famously declared that drug companies are “getting away with murder” when it comes to pricing their drugs, but the administration has yet to take any significant policy steps to drive prices down.

https://www.statnews.com…

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Comment:

By Don McCanne, M.D.

Virtually everyone agrees that drug costs are too high, but the private sector’s response has been to attempt to reshuffle the drug money wherein each stakeholder is trying to get a larger share, while collectively they are doing nothing of significance to control our global drug costs. When the private sector is out of control, it is time for the government to step in.

During his campaign, Donald Trump promised repeatedly that he would bring down drug prices. But after a year in office, he has done nothing, until now. And what is he doing? He is attending the World Economic Forum in Davos, Switzerland. That is a meeting about power players moving money around, not about social policy to benefit the people. He hosted a private dinner that included leaders in the pharmaceutical industry – an industry that he said was “getting away with murder.” That certainly is not an environment wherein discussions would take place on strategies to lower the cost of drugs for the benefit of patients.

In her article, STAT Correspondent Erin Mershon lists five reasons why the broader health care industry is unable to reach agreement on making drugs more affordable. A common thread is that each sector of the broader industry is primarily concerned about its own priorities and strategies, and that has resulted in cacophony without progress.

But Mershon’s fifth point – that there is no silver bullet – is an observation that might be expected with a story background exemplified by the meeting in Davos. Instead of looking for silver bullets that the billionaires can share, we should be looking for solutions to the drug cost problems that patients face.

Ah, but there is a golden bullet that would work – a well designed single payer national health program with bulk purchasing and prices negotiated by our own public stewards.

Let’s just hope that when President Trump returns home he doesn’t continue his discussions with the industry stakeholders over dinner at Mar-a-Lago. That’s not the environment we need right now. People are dying for lack of affordability of drugs that reduce suffering and save lives.

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

Find your savings in single payer

By Carol Krush, M.D.
Minneapolis Star Tribune, Letters, January 26, 2018

Regarding “Tricky operation” (Jan. 21) by Dr. Steve Calvin: Those on the left do not believe that “Medicare and Medicaid dollars flow from a magical federal fountain providing an ever-increasing flow that will never run dry.” Rather, it is the excessive administrative overhead of our private health insurance system that is draining our country, its individuals and businesses.

A single-payer system would spend fewer dollars on administration. For example, Medicare, which is a single-payer system, spends less than 3 percent on administration vs. 15 percent to 20 percent with private insurance. Not only that, a single-payer system, by including everyone, would have greater ability to control costs by negotiating down the exorbitant prices Americans pay for prescription drugs. And it could create uniform reasonable transparent charges for other overpriced segments of our current system.

Fiscal conservatives might want to look at the savings single-payer could achieve, through stemming the flow of public dollars that are already being used to support our health care system. Not only does our current multipayer system prevent or delay individuals from getting needed health care, leading to unhealthier workers, but wages are stagnant and global competitiveness is reduced due to rising premiums.

Calvin introduces many important ideas for improving our system, such as regulatory reform, innovative efficiency, transparency, reevaluation of pricing, and roles of doctors and hospitals. But if the bipartisan Minnesota Senate Select Committee on Health Care Consumer Access and Affordability does not take a serious look at the elements of state Sen. John Marty’s comprehensive Minnesota Health Plan, then it will fail to address the central issues it seeks to solve: access and affordability.

Dr. Carol Krush is a retired family physician.

http://www.startribune.com…

Medicaid ensures earlier access and more timely management for urgent surgical conditions

Association of the Affordable Care Act Medicaid Expansion With Access to and Quality of Care for Surgical Conditions

By Andrew P. Loehrer, M.D., M.P.H.; David C. Chang, Ph.D., M.P.H., M.B.A.; John W. Scott, M.D., M.P.H.; Matthew M. Hutter, M.D., M.P.H.; Virendra I. Patel, M.D., M.P.H.; Jeffrey E. Lee, M.D.; Benjamin D. Sommers, M.D., Ph.D.
JAMA Surgery, January 24, 2018

Key Points

Question: How was Medicaid expansion under the Patient Protection and Affordable Care Act associated with patient presentation with and management of common surgical conditions?

Findings: In this study of patients with 1 of 5 common surgical conditions, Medicaid expansion was associated with a 7.5–percentage point increase in insurance coverage at the time of hospital admission. The policy was also associated with patients obtaining care earlier in their disease course and with an increased probability of receiving optimal care for those conditions.

Meaning: The Patient Protection and Affordable Care Act’s Medicaid expansion was associated with increased coverage of patients, earlier presentation with common diagnoses, and improved surgical care.

From the Introduction

Uninsured and underinsured patients are significantly more likely to delay care and present with more complicated disease for conditions including appendicitis, cholecystitis, diverticulitis, aortic aneurysms, and lower extremity peripheral artery disease (PAD). Insurance status is also associated with decreased probability of receiving optimal care for such diagnoses, including a lower likelihood of minimally invasive surgery, a lower likelihood of receiving immediate cholecystectomy for acute cholecystitis, and a higher likelihood of amputation for vascular disease. The acute onset or deterioration of these diagnoses provides an ideal setting for studying short-term changes in presentation and management after population-wide insurance coverage expansion. As more individuals gain insurance coverage, one might also expect a greater probability of patients presenting earlier and with less severe disease at the time of diagnosis and in turn receiving more timely and less morbid management.

https://jamanetwork.com…

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How Medicaid Fails The Poor

By Avik Roy

There are many problems with Obamacare. But the law’s cruelest feature is what it will do to low-income Americans who are already struggling. Study after study shows that patients on Medicaid do no better, and often do worse, than those with no insurance at all.

https://www.encounterbooks.com…

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Comment:

By Don McCanne, M.D.

Some conservatives have suggested that Medicaid provides such little benefit that patients might do better with no insurance at all (Avik Roy, above). This totally ignores the fact that Medicaid removes financial barriers to health care and thus improves access. The benefit of having affordable access to care is demonstrated in the study by Andrew Loehrer, et al.

The authors showed that Medicaid expansion under the Affordable Care Act resulted in more individuals being covered by the program, and that individuals with one of five major, urgent surgical conditions presented earlier in the course of their illness thus enabling management at a stage with less complexity and more favorable outcomes.

We already know that the uninsured frequently delay obtaining care and end up worse off for it. This also applies to the underinsured – people with deductibles and other cost-sharing that create a reluctance to seek care as expeditiously as they should. One of the great advantages of Medicaid is that there is usually no cost sharing and thus no hesitation because of concerns about out-of-pocket costs (though, unfortunately, several conservative governors are trying to change that now).

The lesson here is not that Medicaid is a better program – it has too many other deficiencies – but rather that requiring payment as a condition of receiving care may result in worse outcomes. A well designed single payer system has measures to contain health care spending that are much more patient-friendly than out-of-pocket cost sharing.

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

Employer-sponsored plans have not controlled price inflation

2016 Health Care Cost and Utilization Report

Health Care Cost Institute, January 2018

The Health Care Cost Institute’s (HCCI) 2016 annual report on U.S. health care cost and utilization trends finds that Americans under the age of 65 who were insured through their employer spent more than ever on health care, and spending grew faster in 2016 than in recent years.

The report covers the period 2012 through 2016 and includes claims data from four national insurance companies: Aetna, Humana, Kaiser Permanente, and UnitedHealthcare.

Health Care Spending Trends

Health care spending per person for the commercially insured reached a new high of $5,407 in 2016. Total spending per person in 2016 was 4.6% higher than 2015. This was the highest annual total spending growth observed during the 2012-2016 study period; much greater than the 2.8% growth from 2012 to 2013.

Increasing Prices Drive Health Care Spending Growth

Health care spending is the product of two components: price and utilization. From 2012 to 2016, increases in spending were almost entirely attributable to increases in price. In 2016, high growth in prices was partially offset by a net decrease in utilization.

From 2012 to 2016, we observed increases in prices each year and across nearly all service categories. The greatest cumulative price increase was seen in prescription drugs, with 24.9% price growth. Inpatient services also experienced very high price growth, with prices increasing 24.3% between 2012 and 2016.

In contrast, utilization of most services declined over the 2012-2016 period, with the exception of prescription drugs, which increased 1.8%. The utilization of inpatient services had the largest decline, with admissions rates decreasing 12.9% between 2012 and 2016. This decline in use resulted in relatively low inpatient spending growth despite the high price growth. Conversely, the small increase in use of prescription drugs, coupled with high price growth, led to very high spending growth.

Inpatient Spending Trends

Between 2012 and 2016, spending on inpatient admissions grew 8%.

The biggest driver of the higher inpatient spending in 2016 was surgical admissions.

Inpatient Use Continued to Decline but Prices Rose Substantially

Within the inpatient category, declines in the use of both medical admissions and surgical admissions drove the overall decline in utilization. Every sub-category of inpatient admissions experienced double-digit price increases, with cumulative growth ranging from 18% to 30%. The increase in prices more than made up for the decline in use, causing inpatient spending to increase between 2012 and 2016.

Outpatient Spending Trends

In 2016, outpatient services had the highest annual spending growth of any service category, at 6%.

Within the outpatient services category, emergency room (ER) visits and outpatient surgeries accounted for the largest share of spending.

Outpatient Prices Drove Spending Growth

From 2012 to 2016, utilization of most outpatient services declined, but we did observe modestly higher utilization of ancillary services and emergency room visits towards the end of the study period.

Emergency room visits. Between 2012 and 2016, the price of an outpatient ER visit increased by 31%. The price increase, in combination with the slight increase in use, drove 40% of the increase in total outpatient spending between 2012 and 2016.

Outpatient surgery. Prices rose 19% from 2012 to 2016. Despite the decline in use, surgery continued to account for the largest share of outpatient spending and was responsible for 28% of the cumulative increase in spending on outpatient services.

Professional Services Spending Trends

Professional services—including visits to physicians, administered drugs, anesthesia, radiology, pathology, and related services–made up the largest share of health care spending in 2016, but had relatively low spending growth between 2012 and 2016, rising a cumulative 11%.

Utilization of PCP and Specialist Visits is Shifting

We rarely observe a decline in spending on health services. Within the professional services category, however, two types of services had net declines from 2012 and 2016. Spending on professional radiology services fell by 3%, but more striking was the 6% decrease in spending on office visits to PCPs.

The decline in spending on PCP office visits over the study period was driven by the 18% decline in use of these visits. In contrast, the increased utilization of specialist visits contributed to a 31% spending increase for those visits.

Prescription Drug Spending Trends

Prescription drugs had the highest cumulative spending growth (27%) of any service category during the study period.

Out-Of-Pocket Spending Trends

From 2012 to 2016, total OOP spending per person increased slightly each year. In dollars, the average increase was relatively small – a total of $88. It is important to note that our OOP data does not include consumer spending on premiums, which studies suggest are rising considerably and adding to the overall health care spending burden for consumers. In addition, our per person OOP metrics do not reflect the OOP costs of using a certain service, but consider OOP spending as an average across the population – including those who used no services at all.

The cumulative growth in OOP spending (12%) was outpaced by total spending (15%). However, like total spending, OOP spending growth appears to be on the rise after a few years of relatively low growth. In 2016, we observed a modest increase of 3.6% in OOP spending per person, up from a 2.9% increase in 2015.

http://www.healthcostinstitute.org…

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Comment:

By Don McCanne, M.D.

This study is important because it shows what impact private commercial health plans offered by employers are having on prices and utilization.

The Patient Protection and Affordable Care Act was supposed to protect health care benefits and control excessive price increases. Prices are way up, and utilization is down in spite of the need, indicating that current policies have not achieved either goal.

Another goal was to expand primary care to improve access, efficiency, and value, yet one of the more alarming findings in this report is that primary care office visits declined by 18%, whereas the increase in specialist visits resulted in 31% greater spending for those visits.

The architects of the Affordable Care Act wanted to protect employer-sponsored plans because, they said, these plans were the part of the health care financing system that was already working well. Yet these private commercial insurers have brought us even higher prices, reduced access but with higher net spending, and a shift from efficient primary care to more expensive specialized services.

These private commercial insurers are selling us an awful lot of very wasteful and intrusive administrative services, and yet they are not doing their job of improving efficiency and value in our health care system. They gotta go.

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