What would Brexit mean for the NHS?

By Denis Campbell
The Guardian, June 14, 2016

Alongside the economy and immigration, the NHS has emerged as a key battleground in the EU debate. That is because the leave campaign decided early on to deploy the health service as a core argument in their plea to voters. Leave leaders Boris Johnson and Michael Gove have said consistently since campaigning began in April that Brexit could free up up to £8bn extra a year to spend on the NHS.

Leaving the EU would not, however, provide more money to spend on the NHS, according to the Institute of Fiscal Studies. “Rather, it would leave us spending less on public services, or taxing more, or borrowing more.”

Labour has dismissed the leave campaign’s claim of a bigger NHS budget as “misleading, simplistic and complete and utter nonsense”. Its own analysis concludes that a post-Brexit economic slump could force the government to cut the Department of Health’s budget by £10.5bn – the equivalent of every hospital in England having to shed 1,000 nurses and 155 doctors.

And last week, Tory MP and former GP Sarah Wollaston defected from the Vote Leave campaign saying its claim that Brexit would unlock up to £350m a week for the NHS “simply isn’t true”.

https://www.theguardian.com/society/2016/jun/14/brexit-nhs-health-social-care-disabled-people-eu-referendum

***

Pharma, researchers, NHS face uncertainty after Brexit win

By Helen Collis
Politico, June 24, 2016

Britain’s Brexit result today ignites a long period of uncertainty in the health sector, on the relocation of the European Medicines Agency, on staffing the National Health Service and on funding research.

http://www.politico.eu/article/pharma-researchers-nhs-face-uncertainty-after-brexit-win/

***

EU referendum: Nigel Farage backtracks on Vote Leave’s ‘£350m for the NHS’ pledge hours after result

By Jon Stone
Independent, June 24, 2016

Nigel Farage has disowned a pledge to spend £350 million of European Union cash on the NHS after Brexit.

The Ukip leader was asked on ITV’s Good Morning Britain programme whether he would guarantee that the money pledged for the health service during the campaign would now be spent on it.

Speaking on the morning of the referendum result he however said he had never made any such pledge.

When it was pointed out that Vote Leave emblazoned the £350 million claim onto the side of a tour bus and drove it around the country, Mr Farage said: “It wasn’t one of my adverts – I can assure you! I think they made a mistake in doing that.

http://www.independent.co.uk/news/uk/politics/eu-referendum-result-nigel-farage-nhs-pledge-disowns-350-million-pounds-a7099906.html

There was certainly no uniformity of opinion on what impact Brexit might have on their National Health Service. Now that the results are in, we still will not know until the destabilization begins to settle down.

So what is the most likely outcome? The basic structure of their revered health system will likely remain intact, but it may be subjected to tweaking, the nature of which will depend on the ideology prevalent in the political environment after the shakeup occurs, already beginning with the announcement that Conservative Prime Minister David Cameron will resign.

What impact will this have on health care reform in the United states? Virtually none. The probable Democratic presidential nominee has said that she will perpetuate the current system, adding minor beneficial tweaks. The probable Republican presidential nominee will likely accept the recommendations in the white paper released by the House Republicans which basically proposes perpetuating the current system with tweaks that they consider to be beneficial from a conservative perspective.

Bernie Sanders and colleagues are attempting to shift the Democratic platform to a position of support for a single payer national health program – Medicare for All – but Hillary Clinton has already made it very clear that she would not support such a change.

We can sympathize with the difficulties faced by the Europeans as they work out the Brexit problems and what is to follow. But if we are to learn from this, we must understand how important it is to be informed on public policy and then to elect politicians who will carry out a pledge to make our nation work well for all of us. We don’t seem to be doing that now. We do not have the prospect of a Usexit since we have nowhere to go.

New Directions in Health Care Podcast: Controlling Rising Drug Costs

By Sandy Hausman
The Commonwealth Fund, June 22, 2016

Prescription drug spending, a significant driver of overall health care costs, has been rising rapidly over the last few years. This episode explores the reasons for higher drug prices, including the introduction of new high-value medications, potentially inefficient research and development, and a lack of price regulation. Producer Sandy Hausman interviews Commonwealth Fund President David Blumenthal, M.D., Duke-Margolis Center for Health Policy Director Mark McClellan, M.D., and Johns Hopkins University School of Public Health Professor Gerard Anderson about the underlying causes and potential solutions.

At Johns Hopkins University’s School of Public Health, Professor Gerard Anderson argues government should more aggressively regulate drug prices.

“There are no rules. There’s no legislation. You just basically, as a drug company, have the ability to set the price, and if the government has given you a monopoly – and that’s what a patent is – then there are no competitors for your drug, and so you can charge essentially whatever you want. You don’t have to worry that a lot of people won’t have access to the drug, because you’re going to make a lot of money on a few people, and that’s exactly what happens.”

He adds that even generic drug makers may be charging too much.

“Five drugs companies—and soon it will be four—in the generic drug industry control over half of the market, and the reason why generic drugs have been inexpensive in the past is pure price competition. They’re selling exactly the same product. That’s what a generic drug is, but they’re selling it on the basis of price competition, but if there’s not a lot of competitors, then you don’t get very good price competition.”

But Mark McClellan warns against the imposition of price controls, since they may limit patient access to certain medications.

“In the United Kingdom, which has significantly lower drug prices than the United States, there is a government body set up that reviews whether or not the price set by a manufacturer is worth it for certain kinds of patients, and in some patients makes a decision that the price is not worthwhile. That’s negotiating leverage. That means that unless the price comes down, people don’t have as much access to the drug.”

As that debate continues, Dr. Blumenthal says the federal government has found some ways to negotiate for better prices.

“The Veterans Administration and the Department of Defense negotiate drug prices and have the statutory authority to set an upper limit on drug prices — that is the lowest amount that any single purchaser can get from a drug company, and there are other drug price controls that are imposed, for example, by states on behalf of their Medicaid programs. When you put California and New York together — two blue states that often pioneer with these kinds of new programs — those are big parts of the national market.”

Podcast link:
http://www.commonwealthfund.org/interactives-and-data/multimedia/podcasts/new-directions-in-health-care/drug-costs

Transcript link:
http://www.commonwealthfund.org/~/media/files/multimedia/podcasts/drug-prices.pdf

As usual, Professor Gerard Anderson is right again. Between patents for brand products and consolidation in the generic market, drug prices are out of control. He argues that the government should more aggressively regulate prices.

You may remember Anderson as coauthor with Uwe Reinhardt et al. of the classic Health Affairs article, “It’s the Prices, Stupid.”

Mark McClellan argues that government involvement in setting drug prices risks impairing access to higher priced drugs, but it is the excessive prices in the United States that creates much greater access problems because of the lack of affordability.

David Blumenthal points out that the Veterans Administration, the Department of Defense, and some state Medicaid programs have been effective in limiting drug prices, thus the government does have the potential to play a very important role in combating price gouging by the pharmaceutical industry.

And, of course, with a well designed, government funded and administered single payer system our drug costs would be brought down to reasonable, fair levels – for all of us, collectively.

A Better Way to Fix Health Care

By Speaker Paul Ryan
abetterway.speaker.gov, June 22, 2016

Our Principle

In a confident America, everyone has access to quality, affordable health care.

Our Challenge

Obamacare is making things worse by the day. It drives up premiums and deductible costs for individuals, families, and businesses. It forces people off the plans they like. It fuels waste, fraud, and abuse. And it cannot be fixed. Its knot of regulations, taxes, and mandates cannot be untangled. Obamacare must be fully repealed so we can start over and take a new approach.

Our Vision

Over the years, House Republicans have put forward hundreds of ideas to improve health care, ranging from targeted proposals to full alternatives to Obamacare. This is the first time we are unifying these efforts into a single health care plan.

This isn’t a return to the pre-Obamacare status quo. And it isn’t just an attempt to replace Obamacare and leave it at that. This is a new approach. It’s a step-by-step plan to give every American access to quality, affordable health care.

Our plan recognizes that people deserve more patient-centered care, not more bureaucracy. That means more choices, not more mandates. You should have the freedom and the flexibility to choose the care that’s best for you. Insurers should compete for your business, and treat you fairly—no matter what. You and your family should have access to the best life-saving treatments in the world. And as you get older, Medicare should give you more choices too. At every step, you should be in the driver’s seat. This is a better way.

A Better Way to Fix Health Care – Snapshot (3 pages):
http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-Snapshot.pdf

A Better Way: Health Care – Policy Paper (37 pages):
http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-PolicyPaper.pdf

***

Comment:

By Don McCanne, M.D.

As their vision states, the House Republicans have organized their previous concepts on health care reform into a single policy paper. It is heavy on rhetoric that is deceptive and bordering on dishonesty in that their proposals are cloaked in language suggesting that these are beneficial policies when many of them are actually detrimental.

The report includes a rehash of familiar proposals: health savings accounts, selling insurance across state lines, association health plans, medical liability, Medicaid block grants, and converting Medicare to a premium support program. There is really not much new here.

But what is missing are the details that would allow for an objective analysis of the impact were these polices converted into legislation. However, it is easy to translate their rhetoric into what they are really proposing: they would reduce the role of the federal government in financing health care, shifting responsibilities to the states and especially to the the markets, while sharply increasing the financial burden on patients.  Since more of the responsibility for paying for health care would shift to the individual, it is likely that the greatest impact would be to significantly impair access to health care due to financial barriers, especially the lack of cash on hand.

Just one example of their rhetoric:

“Currently under Medicare, for example, beneficiaries and physicians (and other providers) are not allowed to agree to a different treatment regimen for a Medicare covered service. Our plan would develop a personalized care demonstration program that would give beneficiaries and health care professionals the ability to voluntarily enter into an arrangement for items and services outside of the Medicare system. While participating in this voluntary demonstration project, Medicare beneficiaries would still retain their Medicare benefits. With the proper oversight, this is a common-sense approach to giving our seniors the opportunity to make medical financing decisions with their physicians without direct interference from Washington. These freedoms can also help to ensure that Medicare beneficiaries maintain the access to health care professionals they deserve by increasing flexibility and thus the number of physicians who participate in Medicare.”

Sounds great – freedom to purchase the care you want instead of that dictated by the federal government. No, that isn’t the point. The policy they advocate for here is to allow physicians to charge Medicare patients full fees for authorized services. That currently is not allowed unless a physician totally opts out of the Medicare program – not a practical consideration for most physicians. Why do they have this rule? Without it a two-tiered Medicare program would be created – a concierge tier for the wealthy, and an underfunded welfare program for the rest of us.

But how about a little perspective here? The Republicans propose repealing the Affordable Care Act and then replacing it with slight variants of many of the policies contained in the act. They leave in place most of the health care financing infrastructure: Medicare, Medicaid, employer-sponsored plans, individual plans with public and private exchanges, and private payment. They merely tweak the existing system. The tweaks cause private insurance to become even less effective in providing financial security; the profound administrative waste is perpetuated, and oversight of the outrageous pricing in health care is reduced.

We’ve already had enough of this. It’s time – past time – to demand reform that works, that would make health care affordable for everyone who needs it. It’s time for a single payer national health program – an improved Medicare for all.

PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

A Better Way to Fix Health Care

By Speaker Paul Ryan
abetterway.speaker.gov, June 22, 2016

Our Principle

In a confident America, everyone has access to quality, affordable health care.

Our Challenge

Obamacare is making things worse by the day. It drives up premiums and deductible costs for individuals, families, and businesses. It forces people off the plans they like. It fuels waste, fraud, and abuse. And it cannot be fixed. Its knot of regulations, taxes, and mandates cannot be untangled. Obamacare must be fully repealed so we can start over and take a new approach.

Our Vision

Over the years, House Republicans have put forward hundreds of ideas to improve health care, ranging from targeted proposals to full alternatives to Obamacare. This is the first time we are unifying these efforts into a single health care plan.

This isn’t a return to the pre-Obamacare status quo. And it isn’t just an attempt to replace Obamacare and leave it at that. This is a new approach. It’s a step-by-step plan to give every American access to quality, affordable health care.

Our plan recognizes that people deserve more patient-centered care, not more bureaucracy. That means more choices, not more mandates. You should have the freedom and the flexibility to choose the care that’s best for you. Insurers should compete for your business, and treat you fairly—no matter what. You and your family should have access to the best life-saving treatments in the world. And as you get older, Medicare should give you more choices too. At every step, you should be in the driver’s seat. This is a better way.

A Better Way to Fix Health Care – Snapshot (3 pages):
http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-Snapshot.pdf

A Better Way: Health Care – Policy Paper (37 pages):
http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-PolicyPaper.pdf

As their vision states, the House Republicans have organized their previous concepts on health care reform into a single policy paper. It is heavy on rhetoric that is deceptive and bordering on dishonesty in that their proposals are cloaked in language suggesting that these are beneficial policies when many of them are actually detrimental.

The report includes a rehash of familiar proposals: health savings accounts, selling insurance across state lines, association health plans, medical liability, Medicaid block grants, and converting Medicare to a premium support program. There is really not much new here.

But what is missing are the details that would allow for an objective analysis of the impact were these polices converted into legislation. However, it is easy to translate their rhetoric into what they are really proposing: they would reduce the role of the federal government in financing health care, shifting responsibilities to the states and especially to the the markets, while sharply increasing the financial burden on patients.  Since more of the responsibility for paying for health care would shift to the individual, it is likely that the greatest impact would be to significantly impair access to health care due to financial barriers, especially the lack of cash on hand.

Just one example of their rhetoric:

“Currently under Medicare, for example, beneficiaries and physicians (and other providers) are not allowed to agree to a different treatment regimen for a Medicare covered service. Our plan would develop a personalized care demonstration program that would give beneficiaries and health care professionals the ability to voluntarily enter into an arrangement for items and services outside of the Medicare system. While participating in this voluntary demonstration project, Medicare beneficiaries would still retain their Medicare benefits. With the proper oversight, this is a common-sense approach to giving our seniors the opportunity to make medical financing decisions with their physicians without direct interference from Washington. These freedoms can also help to ensure that Medicare beneficiaries maintain the access to health care professionals they deserve by increasing flexibility and thus the number of physicians who participate in Medicare.”

Sounds great – freedom to purchase the care you want instead of that dictated by the federal government. No, that isn’t the point. The policy they advocate for here is to allow physicians to charge Medicare patients full fees for authorized services. That currently is not allowed unless a physician totally opts out of the Medicare program – not a practical consideration for most physicians. Why do they have this rule? Without it a two-tiered Medicare program would be created – a concierge tier for the wealthy, and an underfunded welfare program for the rest of us.

But how about a little perspective here? The Republicans propose repealing the Affordable Care Act and then replacing it with slight variants of many of the policies contained in the act. They leave in place most of the health care financing infrastructure: Medicare, Medicaid, employer-sponsored plans, individual plans with public and private exchanges, and private payment. They merely tweak the existing system. The tweaks cause private insurance to become even less effective in providing financial security; the profound administrative waste is perpetuated, and oversight of the outrageous pricing in health care is reduced.

We’ve already had enough of this. It’s time – past time – to demand reform that works, that would make health care affordable for everyone who needs it. It’s time for a single payer national health program – an improved Medicare for all.

PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

In U.S., Healthcare Insecurity at Record Low

By Jeffrey M. Jones and Nader Nekvasil
Gallup, June 20, 2016

Fewer Americans reported not having enough money in the past 12 months to pay for necessary healthcare and/or medicines for themselves or their families than at any point since Gallup and Healthways began tracking this metric in 2008. From 2008 through 2013, the percentage of Americans who experienced difficulty in the past 12 months affording healthcare and medicine was fairly steady, hovering near the average of 18.7%. Since then, the average has been 16.4%, including the new quarterly low of 15.5% in the most recent quarter.

The increase in the percentage of Americans having health insurance is likely a key reason why fewer Americans are struggling to pay for healthcare. Generally, those without health insurance are at least three times more likely to report not having enough money for healthcare/medicine than their counterparts with health insurance. In the most recent quarter, 41.8% of the uninsured said they had struggled to pay for healthcare costs, compared with 12.3% of those with insurance.

Bottom Line

Although roughly one in six Americans report having times in the past year when they were unable to afford the healthcare or medicine they needed, this is down significantly from just three years ago. The expansion of health insurance coverage to millions more Americans under the Affordable Care Act is likely a major factor in the decline of healthcare insecurity, demonstrating a concrete benefit of the law.

At the same time, there are growing concerns that health insurance costs are set to rise in many parts of the country, as insurers and states adjust to the new healthcare market. These increases would mostly affect Americans who do not qualify for a health insurance subsidy under the Affordable Care Act.

http://www.gallup.com/poll/192914/healthcare-insecurity-record-low.aspx

***

Comment:

By Don McCanne, M.D.

The headlines reporting the results of this Gallup survey are celebrating the decline in health care insecurity (e.g., “Fewer Americans Are Having Trouble Paying Health Care Bills, Gallup Finds” – Kaiser Health News). Although any improvement is always good news, a 17 percent decline in health care insecurity is not much to celebrate (declining from 18.7% to 15.5%). Filling the glass less than one-fifth full is disappointing when we could have had a full glass.

The graph in the article shows a very modest decline, but even it is deceptive since it is truncated. The bottom of the graph is cut off at 10% and the top at 24%, but imagine showing the range at 0% to 100%. The curve would look quite flat, demonstrating visually how unimpressive the gain is.

Although it is shameful that 41.8% of the uninsured are struggling with medical bills, 12.3% of those who are insured still face health care insecurity, and many of the insured who are not have simply been fortunate enough to not require a significant amount of health care. So having insurance is not working well for many of those who do need health care.

The health care insecurity described refers only to medical bills; it does not refer to other costs of illness such as lost income. But a well designed single payer system with first dollar coverage for all essential health care services could virtually eliminate medical bills (though a person might still be responsible for charges for services and products that might not be appropriate for a taxpayer financed system). Removing financial barriers is a crucial step toward improving health care access.

Let’s enact single payer. Then we can celebrate.

In U.S., Healthcare Insecurity at Record Low

By Jeffrey M. Jones and Nader Nekvasil
Gallup, June 20, 2016

Fewer Americans reported not having enough money in the past 12 months to pay for necessary healthcare and/or medicines for themselves or their families than at any point since Gallup and Healthways began tracking this metric in 2008. From 2008 through 2013, the percentage of Americans who experienced difficulty in the past 12 months affording healthcare and medicine was fairly steady, hovering near the average of 18.7%. Since then, the average has been 16.4%, including the new quarterly low of 15.5% in the most recent quarter.

The increase in the percentage of Americans having health insurance is likely a key reason why fewer Americans are struggling to pay for healthcare. Generally, those without health insurance are at least three times more likely to report not having enough money for healthcare/medicine than their counterparts with health insurance. In the most recent quarter, 41.8% of the uninsured said they had struggled to pay for healthcare costs, compared with 12.3% of those with insurance.

Bottom Line

Although roughly one in six Americans report having times in the past year when they were unable to afford the healthcare or medicine they needed, this is down significantly from just three years ago. The expansion of health insurance coverage to millions more Americans under the Affordable Care Act is likely a major factor in the decline of healthcare insecurity, demonstrating a concrete benefit of the law.

At the same time, there are growing concerns that health insurance costs are set to rise in many parts of the country, as insurers and states adjust to the new healthcare market. These increases would mostly affect Americans who do not qualify for a health insurance subsidy under the Affordable Care Act.

http://www.gallup.com/poll/192914/healthcare-insecurity-record-low.aspx

The headlines reporting the results of this Gallup survey are celebrating the decline in health care insecurity (e.g., “Fewer Americans Are Having Trouble Paying Health Care Bills, Gallup Finds” – Kaiser Health News). Although any improvement is always good news, a 17 percent decline in health care insecurity is not much to celebrate (declining from 18.7% to 15.5%). Filling the glass less than one-fifth full is disappointing when we could have had a full glass.

The graph in the article shows a very modest decline, but even it is deceptive since it is truncated. The bottom of the graph is cut off at 10% and the top at 24%, but imagine showing the range at 0% to 100%. The curve would look quite flat, demonstrating visually how unimpressive the gain is.

Although it is shameful that 41.8% of the uninsured are struggling with medical bills, 12.3% of those who are insured still face health care insecurity, and many of the insured who are not have simply been fortunate enough to not require a significant amount of health care. So having insurance is not working well for many of those who do need health care.

The health care insecurity described refers only to medical bills; it does not refer to other costs of illness such as lost income. But a well designed single payer system with first dollar coverage for all essential health care services could virtually eliminate medical bills (though a person might still be responsible for charges for services and products that might not be appropriate for a taxpayer financed system). Removing financial barriers is a crucial step toward improving health care access.

Let’s enact single payer. Then we can celebrate.

NBER Working Paper 22353: Insurance and the High Prices of Pharmaceuticals

By David Besanko, David Dranove, Craig Garthwaite
National Bureau of Economic Research, June 2016

Abstract

We present a model in which prospective patients are liquidity constrained, and thus health insurance allows patients access to treatments and services that they otherwise would have been unable to afford. Consistent with large expansions of insurance in the U.S. (e.g., the Affordable Care Act), we assume that policies expand the set of services that must be covered by insurance. We show that the profit-maximizing price for an innovative treatment is greater in the presence of health insurance than it would be for an uninsured population. We also show that consumer surplus is less than it would be if the innovation was not covered. These results show that even in the absence of moral hazard, there are channels through which insurance can negatively affect consumer welfare. Our model also provides an economic rationale for the claim that pharmaceutical firms set prices that exceed the value their products create. We empirically examine our model’s predictions by studying the pricing of oncology drugs following the 2003 passage of Medicare Part D. Prior to 2003, drugs covered under Medicare Part B had higher prices than those that would eventually be covered under Part D. In general, the trends in pricing across these categories were similar. However, after 2003 there was a far greater increase in prices for products covered under Part D, and as result, products covered by both programs were sold at similar prices. In addition, these prices were quite high compared to the value created by the products – suggesting that the forced bundle of Part D might have allowed firms to capture more value than their products created.

From the Introduction

While our model is too stylized to offer precise numerical predictions, a canonical example that broadly fits real world data confirms some of the model’s surprising implications. First, we show that the profit- maximizing price for products is far greater in the presence of health insurance than it would be for an uninsured population, and consumer surplus is lower. The decrease in consumer surplus is quite large and exceeds the consumption smoothing benefits of health insurance for these products. We further show that this negative effect on consumer welfare grows as the number of innovative products increases. In fact, as the number of innovative products covered by insurance increases, the high prices they charge for their products eventually cause some consumers to not purchase insurance, resulting in a decrease in total surplus. We note that these results do not rely on moral hazard in that it exists even when customers never buy a product at a price that exceeds its value. Therefore, these results show that even in a situation where insurers could eliminate moral hazard (either through well designed cost sharing or effective managed care organizations) there are still other channels through which insurance can reduce welfare.

We note that the ability of firms to capture more value than they create solely results from regulations requiring an insurance bundle and that without these regulations, even in the presence of moral hazard, a monopolist selling an innovative product would be constrained by the effect that its price would have on insurance premiums.

From the Conclusions

While health insurance bears many similarities to more traditional financial insurance products, it also conveys the important benefit of breaking the liquidity constraint that many consumers face when attempting to purchase costly but valuable medical goods and services, including high priced pharmaceutical treatments. Previous work has asserted that this increase in access represents a benefit for consumers. However, our results, which endogenize the prices charged by the monopoly manufacturers of high value products, demonstrate that consumers may actually enjoy less consumer surplus, even in the absence of moral hazard. This occurs because insurance allows firms to more fully price out the expected benefits that their drugs generate for consumers, charging prices that may be far higher than what they would select if patients had to pay the entire price of their drugs out of pocket. This not only reduces consumer surplus, it may also reduce total surplus if some consumers are liquidity constrained from purchasing insurance. Thus, regulations requiring insurers to provide coverage for all new high-value products, such as the minimum insurance definition of the ACA, can decrease consumer surplus and, potentially, decrease total surplus.

While there may be worries that attempts at price controls in pharmaceuticals will be welfare reducing through reduced innovation, our results suggest that some existing regulations may provide incentives for innovation that are themselves not welfare maximizing because they are based on prices that exceed value.

http://www.nber.org/papers/w22353

***

Comment:

By Don McCanne, M.D.

Although this paper is quite technical, the conclusions are straightforward. Health insurance makes expensive products and services affordable for patients and thus they will use them – a desirable policy outcome since patients will then receive the care they should have. But beyond that, by bundling services and products into the same insurance package, it allows monopoly manufacturers of high value products, such as expensive pharmaceuticals, to charge prices that exceed the value their products – an undesirable policy outcome.

The authors indicate that the mandate to include certain benefits in insurance products, such as the essential health benefits required by the Affordable Care Act, allows the firms to capture more value than their products created (i.e., charge prices greater than the value of the product).

Those preferring market solutions might suggest that specific mandated insurance benefits be eliminated thus creating a greater sensitivity to high prices. But since far too many patients do not have enough liquid assets to pay these high prices (they are “liquidity constrained”), they would have to do without beneficial health care services and products that are truly unaffordable in the absence of insurance. This is yet one more example of why the tradeoffs in depending on a market of insurance plans can lead to excessive prices and financial barriers to care.

A single payer system does not depend on markets to set prices and make determinations on coverage. Rather they include all essential services and products and use government-administered negotiated pricing to be sure that prices do not exceed value. Patients get the care they need without an excess drain on our collective funds.