By Don McCanne, M.D.

When Ronald Reagan became president the Dow Jones Industrial average was about 800. Now the Reagan era has brought it to almost 25,000. So the nation’s optimism is resting on a bubble; you can bet your bitcoins on that.

We have problems, beginning with the most expensive and dysfunctional health care financing system of all wealthy nations (what this blog is all about). Although that is a multi-trillion dollar problem, it is only but a small portion of all of our nation’s and the world’s ills.

Recite in your mind some of the many problems we have. You realize that most of them have reasonable solutions – solutions that most of us support. So why are we not moving forward to address them?  In yesterday’s message, Benjamin Page and Martin Gilens described what has gone wrong and what we can do about it. Basically we need better public policies along with government officials dedicated to carrying them out.

What is holding us back? We are a Democracy aren’t we? Well, that seems to be a problem. Although we have the right to vote, most of us are unable to influence what actually happens in government. In their classic 2014 paper in Perspectives on Politics, Gilens and Page showed us that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.”

What we lack is policy responsiveness to ordinary citizens – Page and Gilens’ definition of democracy. What we need is for all of us who care to join together in a social movement for Democracy. Only then can we hope to make progress in combating the other ills of our society (including correcting the deficiencies in our expensive but dysfunctional health care system).

As you see, for the last message of the year, I decided to repeat yesterday’s theme – the most important message I’ve sent out all year. Read “Democracy in America?” and then let’s all join together and act on it.

Benjamin I. Page and Martin Gilens, “Democracy in America? What Has Gone Wrong and What We Can Do About It”
The University of Chicago Press, November 2017
http://press.uchicago.edu…

Quote of the Day on “Democracy in America?”
December 28, 2017
https://pnhp.org…

Martin Gilens and Benjamin I. Page, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens”
Perspectives on Politics, September 2014
https://www.cambridge.org… (page has link to full article)

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CBS News, December 26, 2017

An Associated Press analysis of new figures from the government found that 7.3 million of the 8.8 million consumers signed up so far for next year come from states Trump won in the 2016 presidential election.

“There’s politics, and then there’s taking care of yourself and your family,” said analyst Chris Sloan of the consulting firm Avalere Health. “You can have political views about a program like the Affordable Care Act, but when you get an opportunity to get subsidized health insurance for you and your family … politics is a distant consideration.”

https://www.cbsnews.com…

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Donald J. Trump (@realDonaldTrump)

Twitter, December 26, 2017

Based on the fact that the very unfair and unpopular Individual Mandate has been terminated as part of our Tax Cut Bill, which essentially Repeals (over time) ObamaCare, the Democrats & Republicans will eventually come together and develop a great new HealthCare plan!

https://twitter.com/realDonaldTrump

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Comment:

By Don McCanne, M.D.

Over four-fifths of those enrolling in plans offered though the ACA exchanges come from states that supported Donald Trump in the presidential election after he campaigned on repealing Obamacare. Before passing judgment on these people, keep in mind that many were looking forward to the promised replacement plans. When it turned out that the replacement plans were a hollow promise, the subsidized plans offered through the exchanges were a much better choice than remaining uninsured.

President Trump now says, “…the Democrats & Republicans will eventually come together and develop a great new HealthCare plan!” Replacement is still the goal for all but the libertarian ideologues.

And what would that new plan be? The majority support a national health program. Very few decline Medicare once they become eligible for it, though it could stand some improvements. The logical “great new HealthCare plan” would be a well designed single payer program – an improved Medicare that covered everyone.

Will the current Democrats and Republicans in Congress bring it to us? If they don’t, we should reject and replace them with politicians who will.

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By Emily Swanson and Ricardo Alsonso-Zaldivar, Associated Press
The Christian Science Monitor, December 21, 2017

As President Trump completes his first year in office, Americans are increasingly concerned about health care, and their faith that government can fix it has fallen.

A new poll by The Associated Press-NORC Center for Public Affairs Research finds that 48 percent named health care as a top problem for the government to focus on in the next year, up 17 points in the past two years.

The poll allows Americans to name up to five priorities and found a wide range of top concerns, including taxes, immigration, and the environment. But aside from health care, no single issue was named by more than 31 percent.

And 7 in 10 of those who named health care as a top problem said they had little to no confidence that government can improve matters. The public was less pessimistic in last year’s edition of the poll, when just over half said they lacked confidence in the problem-solving ability of lawmakers and government institutions.

Rumblings of discontent have political repercussions for next year’s midterm elections and the presidential contest in 2020, said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health, who follows opinion trends on health care.

“It’s the issue that won’t go away,” said Professor Blendon. “Given the news cycle, taxes should be first, the economy should be second, and this health care thing should be buried.”

https://www.csmonitor.com…

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New Year, Same Priorities: The Public’s Agenda for 2018

The Associated Press-NORC Center for Public Affairs Research
Interviews: 11/30-12/4/2017

Q31. Thinking about the problems facing the United States and the world today, which problems would you like the government to be working on in the year 2018? Please list up to 5 problems. (Open-ended question)

48% – Health care (all)
31% – Taxes/tax reform
27% – Immigration/border wall/DACA
18% – Environment/climate change
17% – Education
15% – Racism/racial inequality/racial issues
15% – Trump
15% – Economy, general

Q32. For each of these problems that you mentioned, how much effort would you like the federal government to devote to solving this problem in the year 2018?

Health care (all)
81% – A lot of effort/ great deal of effort
10% – A moderate amount of effort
2% – No effort/only a little effort

Q33. How confident are you in the ability of the federal government to make progress on this problem in 2018?

Health care (all)
6% – Very/extremely confident
24% – Moderately confident
72% – Not at all/slightly confident

http://www.apnorc.org…

AP-NORC Report:
http://apnorc.org…

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Comment:

By Don McCanne, M.D.

This poll was taken in the first week of December – a time when there was intense coverage of tax legislation. Yet in an open-ended question about problems that the government should be working on in 2018, heath care was far and away the greatest concern of Americans represented in this poll, up 17 points in the past two years, in spite of the implementation of the Affordable Care Act.

Four-fifths would like to see the government devote a lot or a great deal of effort to solving this problem in 2018. Yet only seven percent are confident in the ability of the federal government to make progress on health care.

Americans are very concerned about our health care system; they want something done about it, and they want it done now. Yet they are not at all confident that the government can make progress on reform.

If there ever was a time to change the government (changing the agenda of the current actors, or replace them), that time is now. Join in the groundswell of citizen action to bring us Democracy in America.

(Coming soon, a brief review of “Democracy in America?” by Benjamin Page and Martin Gilens.)

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By Stephen Zuckerman, Laura Skopec, Stuart Guterman
The Commonwealth Fund, December 21, 2017

Abstract

Issue: Medicare Advantage (MA), the program that allows people to receive their Medicare benefits through private health plans, uses a benchmark-and-bidding system to induce plans to provide benefits at lower costs. However, prior research suggests medical costs, profits, and other plan costs are not as low under this system as they might otherwise be.

Goal: To examine how well the current system encourages MA plans to bid their lowest cost by examining the relationship between costs and bonuses (rebates) and the benchmarks Medicare uses in determining plan payments.

Methods: Regression analysis using 2015 data for HMO and local PPO plans.

Findings: Costs and rebates are higher for MA plans in areas with higher benchmarks, and plan costs vary less than benchmarks do. A one-dollar increase in benchmarks is associated with 32-cent-higher plan costs and a 52-cent-higher rebate, even when controlling for market and plan factors that can affect costs. This suggests the current benchmark-and-bidding system allows plans to bid higher than local input prices and other market conditions would seem to warrant.

Conclusion: To incentivize MA plans to maximize efficiency and minimize costs, Medicare could change the way benchmarks are set or used.

From the Discussion

Prior to the Affordable Care Act, research indicated that Medicare Advantage plan costs, as reflected in plan bids, were not as low as they might have been, in part because of overly generous benchmarks. This study indicates that, after the ACA lowered MA benchmarks, plans in areas with high benchmarks have continued to exhibit their market power through costs that are higher than those for plans in areas with low benchmarks (holding input prices and other factors constant).

MA plans also receive higher rebates in regions where benchmarks are high. It appears that plans use some of the additional revenue resulting from these high benchmarks to provide an even greater level of benefits or reduced cost-sharing to attract enrollees compared to what plans in other areas provide. (Plans receive between 50 percent and 70 percent of the difference between their bid and the benchmark as a rebate if their bid is lower than the benchmark. Plans must, by law, use rebates to provide supplemental benefits or lower premiums to enrollees, less a portion to cover administrative costs and profits.) Overall, for each one-dollar difference in benchmarks, we find that plan costs (including profits) are 32 cents higher and rebates 52 cents higher. Thus, high benchmarks allow plans to be less efficient than they might be otherwise. That is because they can still earn sufficient rebates to fund the extra benefits that attract enrollees, even after controlling for plan cost determinants such as beneficiary health risks, input prices, plan type, plan quality, and MA market concentration. Clearly, the MA bidding system is not fostering a highly competitive Medicare Advantage market, and costs to the Medicare program could likely be lower with more robust competition.

MA plans may continue to capture some of the variation in benchmarks as extra revenue — above and beyond factors that would justifiably drive cost differences — without passing along all potential gains to beneficiaries in the form of extra benefits or to the Medicare program in the form of savings.

http://www.commonwealthfund.org…

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Comment:

By Don McCanne, M.D.

This is yet one more study that shows that the taxpayers are paying the private Medicare Advantage plans too much – as the authors state, more than they would be paid if this were a truly competitive market. Even the rebates, which are to be used to increase benefits, are also used to increase payment for the excessive administrative services that they are selling us, and, egregiously, to increase profits. No wonder that the private insurers continue to expand their participation in the Medicare Advantage markets.

This, of course, fits in with Paul Ryan’s agenda to shift to a premium support (voucher) model for Medicare. Overpay the plans so they can displace the traditional Medicare program and then ratchet down the value of the premium support voucher. That will shift ever more of the costs of health care onto the backs of the Medicare beneficiaries. That’s unfortunate, but with the tax legislation signed by President Trump today the budget deficit will be out of control and we will have no other choice, according to Ryan.

Bah! Humbug! We do have a much better choice. Improve the traditional Medicare program and then expand it to cover everyone. And paying for it? The new tax legislation has created a massive amount of untapped reserves. We will have no choice but to make use of those funds to fill the gap left by those workers who cannot afford the taxes that would be required to pay a full, equally divided portion of our national health expenditures. In this Holiday Season we should give thanks in advance to those who are wealthy enough to help ensure that each of us has the health care that we need.

Happy Holidays!

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By Katherine Baicker, Ph.D., and Amitabh Chandra, Ph.D.
The New England Journal of Medicine, December 21, 2017

In these times of heated rhetoric about what various health care reforms can and cannot accomplish, both hopeful and doomsday stories abound. Proponents and opponents of reforms often claim that their views are grounded in evidence, but it’s not always clear what they mean by that — particularly given the wide range of often incompatible views. Voters, physicians, and policymakers are left to wade through a jumble of anecdotes, aspirations, associations, and well-designed studies as they try to evaluate policy alternatives. Having a clear framework for characterizing what is, and isn’t, evidence-based health policy (EBHP) is a prerequisite for a rational approach to making policy choices, and it may even help focus the debate on the most promising approaches.

EBHP, we believe, has three essential characteristics. First, policies need to be well-specified; a slogan is not sufficient. For example, “expand Medicaid” isn’t a policy. “Expand existing Medicaid benefits to cover all adults below the poverty line” is closer — but, of course, moving to a specific, implementable program requires vastly more detail.

Second, implementing EBHP requires us to distinguish between policies and goals. This distinction is important in part because different people may have different goals for a particular policy.

Third, EBHP requires evidence of the magnitude of the effects of the policy, and obtaining such evidence is an inherently empirical endeavor. Introspection and theory are terrible ways to evaluate policy.

What makes for “rigorous enough evidence”? Professional medical societies have developed gauges of the strength of evidence to support clinical guidelines, and we should demand nothing less for health policy. No study is perfect, and important policy questions are rarely answered definitively by any one study. Nor does pointing to a large literature with similar results prove a point if those studies share a common weakness such as an inability to control for confounders.

There is also a key difference between “no evidence of effect” and “evidence of no effect.” The first is consistent with wide confidence intervals that include zero as well as some meaningful effects, whereas the latter refers to a precisely estimated zero that can rule out effects of meaningful magnitude. These nuances are often lost when “evidence” is deployed in policy debates.

The effect of a policy, of course, also depends on the design and implementation details and the program particulars, and evidence needs to speak to those particulars. It is also important to consider the full range of a policy’s effects — its costs and benefits, and how each of these evolves over time.

Making health policy on the basis of evidence will always be a fraught and uncertain endeavor, and each component we outline here comes with challenges.

In addition, just as the distinction between policies and goals is often muddied, interpretations of the evidence are often flavored by the implicit goals of the analyst.

Finally, even a rich body of evidence cannot guarantee that a policy will achieve its goals, and waiting for that level of certainty would paralyze the policy process. In health policy — as in any other realm — it is often necessary to act on the basis of the best evidence on hand, even when that evidence is not strong.

Just because something sounds true doesn’t mean that it is, and magical thinking won’t improve our health care system. EBHP helps separate facts from aspiration. But as important as evidence is to good policy choices, it can’t tell us what our goals should be — that’s a normative question of values and priorities. Better policy requires being both honest about our goals and clear-eyed about the evidence.

http://www.nejm.org…

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Comment:

By Don McCanne, M.D.

What role should evidence-based health policy play in the design of our system of health care financing? Before answering that, we need to decide what the goals are. Then we need to survey various policies that might achieve those goals. Finally we should look at the evidence as to how effective each of those policies might be. How are we doing?

Of course, the goals are most important. At PNHP we believe that everyone should have access to comprehensive health care that is of reasonable quality and is affordable – goals achievable only through the collective effort of government working with the public and private health care delivery system. Others believe that health care should be an individual responsibility thus they have a goal of minimizing the role of government. Obviously the selection of policies, whether evidence-based or not, would be quite different for these sharply divergent goals.

When you have a system that is designed to cover absolutely everyone, what evidence-based studies do you need to be sure everyone really is covered? Silly question – you don’t need any studies, everyone is automatically covered. Accessible? Regional planning with appropriate allocation of resources – no policy studies, you just do it. Comprehensive? Simply cover appropriate care (which might be guided by evidence-based health care studies, but you don’t need evidence-based policy studies). Affordable? Fund the system using progressive tax policies – you do not need an evidence-based policy study to show that those who can afford it need to pay more than those who can’t.

A prime example of placing evidence-based policy before goals is the classic RAND Health Insurance Experiment. That study showed that requiring cost sharing payments when receiving health care reduced total spending on health care. Although it is conceded that cost sharing (deductibles, copayments, or coinsurance) does reduce the use of beneficial health care, little attention has been paid to that. Instead, the policy of cost sharing, especially high deductibles, has been used for the goal of reducing spending, while ignoring the goal of affordable access to health care. This demonstrates why the goals are so much more important. This tradeoff satisfies the supporters of individual responsibility in health care but fails for those who support health care for everyone.

We are seeing a similar process with ACOs, MACRA, MIPS, APMs and other policies that supposedly replace volume with value, or quality instead of quantity. What are the goals? Although some lip service is given to quality, reduced spending is the real goal. The goals of health care justice as supported by PNHP are nowhere in sight. So we have moved forward in implementing these policies, but are they evidence-based? Many studies have been done and many more are in process, but the evidence is that they are relatively ineffective. Yet the public and private bureaucrats are implementing them because of their perceived goal when, in fact, they do not have adequate evidence that these policies are effective.

Evidence-based health policies may be of value in limited circumstances. But the real debate is over the goals. Let’s fight that one out now. Universality, access, equity, affordability, comprehensiveness, and administrative efficiency are the goals to which we should aspire. We do not need decades of building an evidence-based case for implementing the policies that effectuate these goals.

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By Katharina Janus and Etienne Minvielle
Health Affairs Blog, December 15, 2017

Unlike the United States, where abolishing Obamacare was a key pillar of the new president’s pre-election platform and a big focus of his first year in office, Germany and France seem to agree that they would, in general, like to keep the systems they have. After all, they perform relatively well in terms of outcomes, life expectancy, and other critical indicators in comparison to resources consumed as a percentage of GDP.

What can we learn nevertheless from each other across the pond, taking the newly established European axis as one unit and the evolving United States system as the example from a new world.

Solidarity, “Health Care For All,” And (Almost) “The Same Services For All”

Many European health care systems go back to the idea of Bismarck (roughly 150 years ago) that when individuals’ incomes and ability to pay for care are unequal, we carry a social responsibility as citizens to redistribute resources. Under this redistribution, administered by the government, the rich pay for the poor, smaller families pay for larger families, and the younger pay for the older. Most Europeans willingly accept this notion—it is deeply ingrained in their culture. What is more, Europeans accept that we have to kick in some money, from time to time, to prevent the failure of an important market—such as the health care market— that has not found its own equilibrium. On the other hand, large parts of the United States society have elected leaders who favor a smaller government and believe that market forces require only limited regulation. Instead of fearing market failure, these leaders seem to relish a Darwinian view of health care markets where only the wealthy have true access and wide choice in the care they receive.

Free Choice—No “Gated Health Care Community”

A major right of both French and German health care systems is the right to choose your doctor freely and have those services he or she deems necessary covered with co-pays that are as little as €10 in Germany and more nuanced in France where a visit without referral to any specialist might reduce reimbursement rates to 30% of total costs, but is covered with referral. How can Europe afford this luxury of free choice and (nearly) full coverage?

The first answer is to look at prices: If you compare services in Europe with those in the United States, you will realize that prices for regular lab, x-ray, and doctor visits are a fraction of what they amount to in the United States.

Second, European medicine does not have the same level of provider dominance as the United States where clinicians, making all diagnostic and treatment decisions, have the greatest influence on costs. In European systems, governmental regulation frequently caps expenses. Developing closed networks to keep costs in check, the United States system has essentially rationed access while requiring additional resources to manage and coordinate these networks.

This management awareness in the United States has facilitated advances in population health management and created a better mindset for actually managing care in pathways across sectors.

The Comparative Paradox

And here lies the cross-pond health care system paradox: European systems—like Germany and France—pursue a strictly regulated ideological framework that is based on solidarity, equality, and social responsibility but once people have been socialized into this framework they can eat à la carte—choosing to utilize care freely and as much as they want. The United States represents the opposite: a free market system as a framework in which participants can (or cannot, due to limited financial resources) choose freely from the “prix fixe formule” (as one says in France). In this scenario, one can buy insurance at various levels, pay co-pays and deductibles, eventually having to find help to understand all these options, and then once they are “in”—though not necessarily fully covered—they must live with limited choices in a gated system.

What can we learn from each other? This question puts Europe in a much better position because, even though the United States might benefit from learnings from Europe at a macro-level (including those social care reforms that improve living conditions and are known to reduce health care costs as a consequence), these ideas are unlikely to find fertile ground in the United States where ideology makes many policymakers less receptive to such lessons. Europe in turn can learn a lot from the United States system on a micro level—how to manage populations and connect sectors. Nobody really coordinates or manages care in many European systems, so there is room for improvement. As a caveat, one might say that the European systems work well and one should never change a system that is already running well.

It remains to be evaluated whether a further investment in health care management contributes to better outcomes as a result of coordinated care pathways. And the assessment to what extent these outcomes are “better” than with less management will most likely lie in the eye of the beholder.

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From the comment by Ted Marmor:

This article raises issues about learning policy lessons in health care, especially between the industrial democracies of continental Europe and the US. The descriptions are useful, the evaluation of the European experience is optimistic, but the interpretation of their meaning for lessons is misleadingly simple and negative. The US cannot learn because our ideology prevents. Why then did Medicare pass, which in 1965 was an example of social insurance (Part A in the model of Germany’s sick funds)? What about Social Security as social insurance? There is no reason to cut off discussion and limit the discussion so sharply.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

What can we learn from Europe about health care? That’s simple – solidarity, equity, and social responsibility.

And what can Europe learn from the United States? Managed care under the nebulous ideology of free markets? But the authors appropriately caution, “one might say that the European systems work well and one should never change a system that is already running well.”

If you look at the cost/performance ratios of the various health systems, the United States is an outlier, in the worst way. Maybe it is time for us to finally accept the facts and start becoming more diligent students of better systems of health care.

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December 18, 2017

H.R. 1, the Tax Cuts and Jobs Act, not only increases inequality, it further expands the deficit in the face of an austere budget. That will create greater pressure to reduce essential spending on important social programs, including Medicare. These tax policies are the exact opposite of what we need. Please vote against this cruel tax bill.

Don McCanne, M.D.
San Juan Capistrano, CA

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Comment:

By Don McCanne, M.D.

What does this message to my congressman have to do with single payer?

We already have a major budget deficit.

The congressional leadership has already indicated that spending on social programs, including Medicare, will have to be modified to reduce the deficit.

The tax bill before Congress, H.R. 1, the Tax Cuts and Jobs Act, will be voted on this week, and that would further increase the deficit if it passes (considered a near certainty now).

Therefore even greater reductions in social programs will be used to close the deficit gap.

Medicare is already an inadequate program, paying only about half of the health care costs of our senior citizens. If we expect to use an improved version of Medicare as the basis of a single payer national health program then we need to halt the march towards the privatized premium support model (vouchers) that would shift even more costs onto the backs of Medicare beneficiaries.

We need to protect, improve and expand Medicare instead of taking a sledge hammer to it. Tell your members of Congress today to vote against this cruel tax legislation. (My Senators, Dianne Feinstein and Kamala Harris, have already committed to voting against it.)

Incidentally, this tax bill includes applying chained CPI to the tax code. This will negatively impact future Social Security benefits. The process of clobbering social programs has already begun.

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