Response to Criticisms of Our Analysis of the Sanders Health Care Reform Plan

By Linda J. Blumberg, John Holahan, Lisa Clemans-Cope, Matthew Buettgens
Urban Institute, May 18, 2016

Abstract

The Sanders campaign and David Himmelstein and Steffie Woolhandler reacted with sharp criticisms to our recent report, The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending. In this brief, we discuss our key assumptions in these areas of disagreement and highlight ways in which we may have actually underestimated overall costs of the Sanders proposal. By and large our assumptions are laid out thoroughly in the original paper, but here we use them to address the specific statements made by the campaign.

Conclusion

All cost estimates of new programs carry some uncertainty, but ours are based in the best empirical literature and data, methodological expertise, and a deep knowledge of the health care system. We believe we have made conservative assumptions with regard to this proposed plan, but it is possible we have somewhat overestimated administrative costs and underestimated long-term care and assorted other costs; we acknowledge this, of course. However, using reasoned analysis based upon empirical research and in-depth knowledge of the US health care system, there is no way to avoid the conclusion that the Sanders plan, while achieving universal coverage, would massively increase federal spending and require much larger tax increases than he has proposed.

http://www.urban.org/research/publication/response-criticisms-our-analysis-sanders-health-care-reform-plan

***

Doubling Down on Errors: Urban Institute Defends Its Ridiculously High Single Payer Cost Estimates

By Steffie Woolhandler and David Himmelstein
The Huffington Post, May 22, 2016

Last week we posted a critique of the Urban Institute’s (UI) absurdly biased report that claimed Sen. Bernie Sanders’ proposal for single-payer health reform would cause a massive increase in health spending. Now, the report’s authors have issued a 12-page rejoinder to our criticism. But that response is riddled with distortions, misinterpretations and glaring factual errors. Moreover, they now make it clear that they didn’t even try to estimate the costs of Sanders’ (or our) single-payer proposals. Instead, they made up their own reform proposal and costed that out.

Our critique identified three main problems with the UI’s projection that implementing single payer would boost total health spending by $519 billion in 2017. First, UI ignored about 75 percent of the administrative savings that single-payer reform would achieve. Second, it substantially underestimated single payer’s savings on prescription drugs. And finally, it posited an absurdly large increase in the utilization of health care under single payer, far more than could possibly be provided by the current supply of doctors and hospitals.

Below, we briefly discuss the UI’s response to those criticisms, and the facts of the matter.

1. Administrative savings, Part 1: The original UI report projected that single payer could cut insurance overhead from the current 9.5 percent of health spending ($341 billion) to 6 percent ($215 billion). As they now admit, they were modeling a compromised single-payer system, in which private managed care insurers like UnitedHealthcare would continue to play a major role, as they do in the Medicare Advantage program. (Neither we nor Sanders have suggested such a continued role for private insurers.) We pointed out that Canada’s single-payer system runs for 1.8 percent overhead (a figure they impugn, but which is taken directly from Canada’s official health statistics), and is similar to the overhead in the traditional Medicare program. Reducing our insurance overhead to the Canadian level would mean cutting it to “only” $65 billion. There’s no reason to believe we can’t be as efficient as Canada if we, like Canada, proscribe participation by private insurers.

The UI rejoinder argues that “it would be inadvisable to cut administrative costs so much that important functions could not be carried out effectively under a new system. Such functions include rate setting for many different providers of different types facing different costs across the country; quality control over care provision; development, review, and revision of regulations; oversight for fraudulent activity; provider oversight and enforcement of standards; bill payment to providers; consumer services; and more.” Of course traditional Medicare (and Canada) are already doing all of those things, and the UI response gives no reason why $65 billion can’t do the job.

2. Administrative savings, Part 2: The original UI estimate projected that single-payer reform wouldn’t realize any savings on the vast amounts hospitals and doctors currently spend on billing and paperwork. Yet, Sanders’ (and our) proposals would enormously simplify this billing and paperwork. We noted that reliable studies published in the most respected medical and policy journals have documented these provider administrative savings, and that numerous single-payer estimates by the Congressional Budget Office, the Government Accountability Office and private consultants have all assumed that these savings would occur.

In response, our UI colleagues continue to project zero administrative savings for providers, but say: “We agree that administrative costs would fall, but we do not agree they would be close to zero as HW [Himmelstein and Woolhandler] assert.” Actually, we never asserted any such thing. We wrote that “U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single-payer systems like Canada’s or Scotland’s. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.” Our estimate that cutting U.S. providers’ administrative costs to Canadian levels would save about $2.57 trillion over 10 years was based on this well-established (and peer-reviewed) data.

3. Drug prices: The latest UI piece restated their conviction that a U.S. single-payer system could get only half the discounts that single-payer systems in other nations have gotten from drug companies (and would actually raise drug prices for patients currently on Medicaid). They continue to offer no reason why the discounts would be so small. Moreover, they now claim that Himmelstein and Woolhandler “argue incorrectly that we ignored savings from paying less for prescription drugs.” In fact we didn’t ignore their estimated savings, but said they should be two-fold higher than the 25 percent they projected.

4. Utilization of care, Part 1: The original UI report estimated that single-payer reform would cause a $519 billion increase in health spending in 2017, even accounting for some savings on administration and drugs. But we noted that there just aren’t enough hospital beds or doctors to meet the huge surge in visits and hospitalizations they predict. To back up our claim we cited data from Canada (when its single-payer reform was implemented) and the U.S. (when Medicare and Medicaid were implemented). These data document that no, or very modest increases in society-wide use of care, occurred, and that instead care shifted from the rich and healthy to the sick and poor.

In response, the UI rejoinder says: “Contrary to HW’s [Himmelstein and Woolhandler’s] claim in their article, health care use and spending for the elderly population did increase substantially once the Medicare program was implemented in 1965.” Here (as in their claim about our statement on providers’ administrative costs) they have misquoted us. We wrote that “between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visits,” and that “the same thing happened in hospitals.” While we are well aware that utilization by the elderly and the poor went up after Medicare and Medicaid were implemented, the point is that there was a compensatory, slight reduction in utilization by other Americans, reflecting the limitations imposed by the existing supply of hospital beds and doctors (most of whom were already working full time).

Here’s the actual data on the number of doctor visits per person (not just the elderly) before and after Medicare/Medicaid:

(Table in original article – link below)

And here’s the actual data on the total number of hospitalizations:

(Table in orignal article – link below)

In sum, we were correct in stating that the overall utilization of care showed no surge.

5. Utilization of care, Part 2: We noted in our critique that the lack of a surge in overall utilization in Canada, or with the start-up of Medicare/Medicaid, reflected a shift of care, with the newly insured poor and sick patients getting more of the care they needed, and the healthy and wealthy getting less elective and unnecessary care.

The UI rejoinder disputes that such a shift could occur. “HW [Himmelstein and Woolhandler] indicate that use would increase for the newly insured but would decrease by a similar amount for those already covered as physicians cease unnecessary services for those otherwise covered and perform additional necessary care for those otherwise uninsured. This assumption is faulty for two major reasons. First, no uniform definition of what is necessary and unnecessary exists in medical care; if such a definition existed, insurers would stop paying for all unnecessary care under our current health system. Second, there is absolutely no reason to believe that higher-income, currently insured individuals would lower their use of care under provider supply constraints.”

Their puzzlement displays a lack of familiarity with the considerable literature on variability in the utilization of care between different areas in the U.S., as well as the actual practice of medicine. John Wennberg and colleagues long ago observed that the number of surgical operations in a community showed only modest correlation with needs of the population, but was strongly correlated (r=.64) with the supply of surgeons.

As any doctor knows, doctors play a large role in regulating the amount of care they deliver. If we have no free appointment slots for the next month we’re likely to put off seeing our healthy patients a bit longer. Gastroenterologists often perform unnecessary screening colonoscopies. That’s not something many patients would demand. Indeed, the Aday paper referenced (to support a different point) in the UI rejoinder makes exactly our point: “After Medicare and Medicaid were introduced, providers may have begun to ration the number of visits by the ‘well-to-do’ to accommodate the influx of low-income patients with newly acquired purchasing power and a backlog of unmet need.”

In sum, there’s considerable evidence that doctor routinely adjust the utilization of care by their patients, and that when many additional people gain coverage, doctors shift care to this newly insured group, and compensate by reducing unneeded care for the wealthy and healthy.

6. What system was the UI analyzing? The UI researchers claimed to be estimating the budgetary impact of Sen. Sanders’ proposal. Yet now they tell us, “To be politically acceptable, compromises would have to be made, and those compromises are reflected in our assumptions.” In other words, their estimates are not actually based on the reform that Sanders (or we) have recommended. Instead they assume that the insurance and drug companies are too powerful to really rein in.

Overall, the UI response misrepresents key elements of our critique, and fails to address the erroneous assumptions that underlay their original analysis. Single-payer systems elsewhere provide more and better care at a lower price than we pay. The administrative bloat of our market-driven payment system accounts for much of the difference. While we recognize that a transition to a true single-payer system faces stiff political headwinds, it’s medically and economically feasible. And as Sen. Sanders has shown, political climates can be changed.

Drs. Woolhandler and Himmelstein are internists in the South Bronx, professors at the City University of New York School of Public Health at Hunter College, and lecturers in medicine at Harvard Medical School. The opinions expressed do not necessarily reflect those institutions’.

http://www.huffingtonpost.com/steffie-woolhandler/urban-institute-errors-single-payer-costs_b_10100836.html

***

Comment:

By Don McCanne, M.D.

The media continue to cite the flawed Urban Institute analysis of the costs of single payer while ignoring the actual facts as presented by David Himmelstein and Steffie Woolhandler. Yet the Urban Institute authors twice have felt compelled to answer the Himmelstein/Woolhandler criticism of their analysis. Woolhandler and Himmelstein respond here to Urban’s doubling down of errors in their second response.

The fundamental fact remains: “Single-payer systems elsewhere provide more and better care at a lower price than we pay.” The $3 trillion we are already spending on health care is enough to finance a comprehensive single-payer system here in the United States.

Shifting more health care spending to the federal budget is not a flaw of single payer, as Urban implies, but actually a benefit because it makes the funding more equitable and efficient.

We need to hold the media to the truth – the full truth.

Response to Criticisms of Our Analysis of the Sanders Health Care Reform Plan

By Linda J. Blumberg, John Holahan, Lisa Clemans-Cope, Matthew Buettgens
Urban Institute, May 18, 2016

Abstract

The Sanders campaign and David Himmelstein and Steffie Woolhandler reacted with sharp criticisms to our recent report, The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending. In this brief, we discuss our key assumptions in these areas of disagreement and highlight ways in which we may have actually underestimated overall costs of the Sanders proposal. By and large our assumptions are laid out thoroughly in the original paper, but here we use them to address the specific statements made by the campaign.

Conclusion

All cost estimates of new programs carry some uncertainty, but ours are based in the best empirical literature and data, methodological expertise, and a deep knowledge of the health care system. We believe we have made conservative assumptions with regard to this proposed plan, but it is possible we have somewhat overestimated administrative costs and underestimated long-term care and assorted other costs; we acknowledge this, of course. However, using reasoned analysis based upon empirical research and in-depth knowledge of the US health care system, there is no way to avoid the conclusion that the Sanders plan, while achieving universal coverage, would massively increase federal spending and require much larger tax increases than he has proposed.

http://www.urban.org/research/publication/response-criticisms-our-analysis-sanders-health-care-reform-plan

***

Doubling Down on Errors: Urban Institute Defends Its Ridiculously High Single Payer Cost Estimates

By Steffie Woolhandler and David Himmelstein
The Huffington Post, May 22, 2016

Last week we posted a critique of the Urban Institute’s (UI) absurdly biased report that claimed Sen. Bernie Sanders’ proposal for single-payer health reform would cause a massive increase in health spending. Now, the report’s authors have issued a 12-page rejoinder to our criticism. But that response is riddled with distortions, misinterpretations and glaring factual errors. Moreover, they now make it clear that they didn’t even try to estimate the costs of Sanders’ (or our) single-payer proposals. Instead, they made up their own reform proposal and costed that out.

Our critique identified three main problems with the UI’s projection that implementing single payer would boost total health spending by $519 billion in 2017. First, UI ignored about 75 percent of the administrative savings that single-payer reform would achieve. Second, it substantially underestimated single payer’s savings on prescription drugs. And finally, it posited an absurdly large increase in the utilization of health care under single payer, far more than could possibly be provided by the current supply of doctors and hospitals.

Below, we briefly discuss the UI’s response to those criticisms, and the facts of the matter.

1. Administrative savings, Part 1: The original UI report projected that single payer could cut insurance overhead from the current 9.5 percent of health spending ($341 billion) to 6 percent ($215 billion). As they now admit, they were modeling a compromised single-payer system, in which private managed care insurers like UnitedHealthcare would continue to play a major role, as they do in the Medicare Advantage program. (Neither we nor Sanders have suggested such a continued role for private insurers.) We pointed out that Canada’s single-payer system runs for 1.8 percent overhead (a figure they impugn, but which is taken directly from Canada’s official health statistics), and is similar to the overhead in the traditional Medicare program. Reducing our insurance overhead to the Canadian level would mean cutting it to “only” $65 billion. There’s no reason to believe we can’t be as efficient as Canada if we, like Canada, proscribe participation by private insurers.

The UI rejoinder argues that “it would be inadvisable to cut administrative costs so much that important functions could not be carried out effectively under a new system. Such functions include rate setting for many different providers of different types facing different costs across the country; quality control over care provision; development, review, and revision of regulations; oversight for fraudulent activity; provider oversight and enforcement of standards; bill payment to providers; consumer services; and more.” Of course traditional Medicare (and Canada) are already doing all of those things, and the UI response gives no reason why $65 billion can’t do the job.

2. Administrative savings, Part 2: The original UI estimate projected that single-payer reform wouldn’t realize any savings on the vast amounts hospitals and doctors currently spend on billing and paperwork. Yet, Sanders’ (and our) proposals would enormously simplify this billing and paperwork. We noted that reliable studies published in the most respected medical and policy journals have documented these provider administrative savings, and that numerous single-payer estimates by the Congressional Budget Office, the Government Accountability Office and private consultants have all assumed that these savings would occur.

In response, our UI colleagues continue to project zero administrative savings for providers, but say: “We agree that administrative costs would fall, but we do not agree they would be close to zero as HW [Himmelstein and Woolhandler] assert.” Actually, we never asserted any such thing. We wrote that “U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single-payer systems like Canada’s or Scotland’s. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.” Our estimate that cutting U.S. providers’ administrative costs to Canadian levels would save about $2.57 trillion over 10 years was based on this well-established (and peer-reviewed) data.

3. Drug prices: The latest UI piece restated their conviction that a U.S. single-payer system could get only half the discounts that single-payer systems in other nations have gotten from drug companies (and would actually raise drug prices for patients currently on Medicaid). They continue to offer no reason why the discounts would be so small. Moreover, they now claim that Himmelstein and Woolhandler “argue incorrectly that we ignored savings from paying less for prescription drugs.” In fact we didn’t ignore their estimated savings, but said they should be two-fold higher than the 25 percent they projected.

4. Utilization of care, Part 1: The original UI report estimated that single-payer reform would cause a $519 billion increase in health spending in 2017, even accounting for some savings on administration and drugs. But we noted that there just aren’t enough hospital beds or doctors to meet the huge surge in visits and hospitalizations they predict. To back up our claim we cited data from Canada (when its single-payer reform was implemented) and the U.S. (when Medicare and Medicaid were implemented). These data document that no, or very modest increases in society-wide use of care, occurred, and that instead care shifted from the rich and healthy to the sick and poor.

In response, the UI rejoinder says: “Contrary to HW’s [Himmelstein and Woolhandler’s] claim in their article, health care use and spending for the elderly population did increase substantially once the Medicare program was implemented in 1965.” Here (as in their claim about our statement on providers’ administrative costs) they have misquoted us. We wrote that “between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visits,” and that “the same thing happened in hospitals.” While we are well aware that utilization by the elderly and the poor went up after Medicare and Medicaid were implemented, the point is that there was a compensatory, slight reduction in utilization by other Americans, reflecting the limitations imposed by the existing supply of hospital beds and doctors (most of whom were already working full time).

Here’s the actual data on the number of doctor visits per person (not just the elderly) before and after Medicare/Medicaid:

(Table in original article – link below)

And here’s the actual data on the total number of hospitalizations:

(Table in orignal article – link below)

In sum, we were correct in stating that the overall utilization of care showed no surge.

5. Utilization of care, Part 2: We noted in our critique that the lack of a surge in overall utilization in Canada, or with the start-up of Medicare/Medicaid, reflected a shift of care, with the newly insured poor and sick patients getting more of the care they needed, and the healthy and wealthy getting less elective and unnecessary care.

The UI rejoinder disputes that such a shift could occur. “HW [Himmelstein and Woolhandler] indicate that use would increase for the newly insured but would decrease by a similar amount for those already covered as physicians cease unnecessary services for those otherwise covered and perform additional necessary care for those otherwise uninsured. This assumption is faulty for two major reasons. First, no uniform definition of what is necessary and unnecessary exists in medical care; if such a definition existed, insurers would stop paying for all unnecessary care under our current health system. Second, there is absolutely no reason to believe that higher-income, currently insured individuals would lower their use of care under provider supply constraints.”

Their puzzlement displays a lack of familiarity with the considerable literature on variability in the utilization of care between different areas in the U.S., as well as the actual practice of medicine. John Wennberg and colleagues long ago observed that the number of surgical operations in a community showed only modest correlation with needs of the population, but was strongly correlated (r=.64) with the supply of surgeons.

As any doctor knows, doctors play a large role in regulating the amount of care they deliver. If we have no free appointment slots for the next month we’re likely to put off seeing our healthy patients a bit longer. Gastroenterologists often perform unnecessary screening colonoscopies. That’s not something many patients would demand. Indeed, the Aday paper referenced (to support a different point) in the UI rejoinder makes exactly our point: “After Medicare and Medicaid were introduced, providers may have begun to ration the number of visits by the ‘well-to-do’ to accommodate the influx of low-income patients with newly acquired purchasing power and a backlog of unmet need.”

In sum, there’s considerable evidence that doctor routinely adjust the utilization of care by their patients, and that when many additional people gain coverage, doctors shift care to this newly insured group, and compensate by reducing unneeded care for the wealthy and healthy.

6. What system was the UI analyzing? The UI researchers claimed to be estimating the budgetary impact of Sen. Sanders’ proposal. Yet now they tell us, “To be politically acceptable, compromises would have to be made, and those compromises are reflected in our assumptions.” In other words, their estimates are not actually based on the reform that Sanders (or we) have recommended. Instead they assume that the insurance and drug companies are too powerful to really rein in.

Overall, the UI response misrepresents key elements of our critique, and fails to address the erroneous assumptions that underlay their original analysis. Single-payer systems elsewhere provide more and better care at a lower price than we pay. The administrative bloat of our market-driven payment system accounts for much of the difference. While we recognize that a transition to a true single-payer system faces stiff political headwinds, it’s medically and economically feasible. And as Sen. Sanders has shown, political climates can be changed.

Drs. Woolhandler and Himmelstein are internists in the South Bronx, professors at the City University of New York School of Public Health at Hunter College, and lecturers in medicine at Harvard Medical School. The opinions expressed do not necessarily reflect those institutions’.

http://www.huffingtonpost.com/steffie-woolhandler/urban-institute-errors-single-payer-costs_b_10100836.html

The media continue to cite the flawed Urban Institute analysis of the costs of single payer while ignoring the actual facts as presented by David Himmelstein and Steffie Woolhandler. Yet the Urban Institute authors twice have felt compelled to answer the Himmelstein/Woolhandler criticism of their analysis. Woolhandler and Himmelstein respond here to Urban’s doubling down of errors in their second response.

The fundamental fact remains: “Single-payer systems elsewhere provide more and better care at a lower price than we pay.” The $3 trillion we are already spending on health care is enough to finance a comprehensive single-payer system here in the United States.

Shifting more health care spending to the federal budget is not a flaw of single payer, as Urban implies, but actually a benefit because it makes the funding more equitable and efficient.

We need to hold the media to the truth – the full truth.

Survey of Non-Group Health Insurance Enrollees, Wave 3

By Liz Hamel, Jamie Firth, Larry Levitt, Gary Claxton, and Mollyann Brodie
Kaiser Family Foundation, May 20, 2016

This survey is the third in a series that seeks to shed light on the experiences and opinions of those purchasing their own health insurance in the non-group market.

A somewhat higher share of non-group enrollees now report being in plans with high deductibles than did so in 2015. In the current survey, about half (49 percent) of those with ACA-compliant non-group coverage say their plan has an annual individual deductible of at least $1,500 or a family deductible of at least $3,000, up from just over a third (36 percent) last year. Those with Marketplace plans are somewhat less likely to report having a high deductible (46 percent, compared with 61 percent of those in ACA-compliant non-Marketplace plans), likely because many Marketplace enrollees qualify for cost-sharing subsidies that lower their deductible.

Health plan ratings and satisfaction with coverage

Similar to the trend in overall plan ratings, the current survey finds those with ACA-compliant non-group plans are less likely than in previous years to say their coverage is an “excellent” or “good” value for what they pay for it. Just over half (54 percent) now rate the value of their coverage as “only fair” or “poor” (up from 42 percent in 2015 and 39 percent in 2014). Those with employer-sponsored coverage, who generally pay a lower portion of their premium, are more likely than those with non-group coverage to see their plan as at least a “good” value for the money, but the share of this group saying the value is “only fair” or “poor” has also increased, from 28 percent in 2014 to 40 percent in 2016.

A majority of enrollees also say they are satisfied with their plan’s premium (54 percent of all those in ACA-compliant plans and 59 percent of those in Marketplace plans), and about half say the same about their deductible (50 percent of ACA-compliant enrollees and 51 percent of Marketplace enrollees). However, satisfaction with premiums and deductibles has declined since 2014. Nearly half now say they are dissatisfied with their plan’s annual deductible (47 percent among all those ACA-compliant plans and 46 percent in Marketplace plans), and four in ten are dissatisfied with their monthly premium (43 percent and 40 percent, respectively).

Each of these trends toward more negative ratings of non-group coverage may be related to the fact that more enrollees now report being in high-deductible plans (as noted above, 49 percent of those with ACA-compliant plans now have a high-deductible plan, up from 36 percent in 2015). The latest survey finds that those with high-deductible plans give their coverage lower ratings overall and are less likely than their counterparts in lower-deductible plans to say they are satisfied not only with their deductible, but also with their copays and premiums.

Financial protection of health insurance

About half (51 percent) of non-group enrollees with ACA-compliant plans say they feel well-protected by their health insurance; however, the share saying they feel vulnerable to high medical bills has risen over the past two years, from 36 percent in 2014 to 45 percent in the current survey. Again, it’s notable that while those with employer coverage are more likely than non-group enrollees with ACA-compliant plans to say they feel well-protected, this group has also seen a similar increase in the share saying they feel vulnerable (from 26 percent in 2014 to 36 percent today).

Half (50 percent) of those with ACA-compliant plans say it is difficult for them to afford the out-of-pocket health care costs not covered by insurance, and a similar share (46 percent) say it’s difficult to afford their monthly premiums (nearly identical to the 45 percent who said so in 2014). A similar percentage (51 percent) says it is difficult for them to afford paying off debt, while a much larger share (71 percent) reports difficulty saving money for retirement, education, and other purposes. Ranking lower in terms of difficulty, a third (33 percent) say they find it difficult to afford basic necessities like food, housing, and utilities.

Not surprisingly, those whose plans have higher deductibles are more likely than those with lower deductibles to say it is difficult for them to afford their out-of-pocket health care costs (58 percent versus 43 percent). This is despite the fact that those with high-deductible plans report higher incomes on average than those whose plans have lower deductibles.

Plan utilization and reported problems

Among those who’ve had ACA-compliant non-group coverage for at least a year, many report having problems with their plans. Most commonly, just over a third (36 percent) say their plan paid less than they expected for a bill, about a quarter (26 percent) say their plan wouldn’t cover or required a very expensive copay for a drug prescribed by their doctor, one in five (21 percent) say they were surprised to find their plan wouldn’t pay anything for care they thought was covered, and a similar share (20 percent) say that a particular doctor they wanted to see wasn’t covered by their plan.

Those who are heavier utilizers of health insurance are more likely than their counterparts to report some of these problems, including their plan paying less than they expected for a bill (47 percent versus 31 percent), their plan not covering a prescription or requiring a very expensive copay (37 percent versus 20 percent). Heavy utilizers are also more likely to report problems paying medical bills in the past 12 months (31 percent versus 16 percent).

In addition to problems with their plans, one in five (20 percent) of those who’ve had ACA-compliant coverage for at least a year say there was a time in the last 12 months when they or another family member covered by their plan needed medical care but did not get it because of the cost. Nearly as many (16 percent) say there was a time in the past year when they did not fill a prescription because of the cost.

Opinions of the Affordable Care Act among those with non-group coverage

As in previous waves of the survey, and as is true among the general population, overall views of the Affordable Care Act among those with non-group coverage are largely divided, with 46 percent saying they have a favorable view of the law and 48 percent unfavorable. Even among this population – whose views one might expect to be divided more on the basis of experience – the biggest differences in opinion are along partisan lines, with 75 percent of Democrats having a favorable view of the law, 79 percent of Republicans expressing an unfavorable view, and independents divided (40 percent favorable, 44 percent unfavorable).

Similar to last year, the largest divide in how people feel the law has impacted them is partisan, with Democrats overwhelmingly feeling they’ve benefited and Republicans overwhelmingly feeling they’ve been negatively affected.

From the Discussion

The share of enrollees who see their plan as a good value has been declining, reflecting growing dissatisfaction with premiums and cost-sharing. Some enrollees who have had their plan for a year or more report expensive drug copays, as well as surprise medical bills and other unexpected expenses they thought their plan covered.

http://kff.org/health-reform/poll-finding/survey-of-non-group-health-insurance-enrollees-wave-3/

***

Comment:

By Don McCanne, M.D.

Today’s report confirms the growing dissatisfaction with higher premiums and greater cost-sharing of not only ACA-compliant non-group plans but also employer-sponsored group plans as well. The share saying that they feel vulnerable to high medical bills has increased to 45 percent for non-group enrollees and 36 percent for those with employer coverage.

One of the most important functions of health insurance is to provide financial security in the face on medical need. In spite of the Affordable Care Act, that security is deteriorating.

The burden of insurance premiums could be greatly reduced by financing the system through equitable taxes based on the ability to pay. The burden of cost sharing could be greatly reduced by adopting a philosophy of pre-paid health care which has worked well in certain integrated health systems and in the health financing systems of many other nations.

Instead of erecting financial barriers to care, cost containment can be achieved through patient-friendly policies characteristic of a well designed single payer system. Let’s change direction.

Survey of Non-Group Health Insurance Enrollees, Wave 3

By Liz Hamel, Jamie Firth, Larry Levitt, Gary Claxton, and Mollyann Brodie
Kaiser Family Foundation, May 20, 2016

This survey is the third in a series that seeks to shed light on the experiences and opinions of those purchasing their own health insurance in the non-group market.

A somewhat higher share of non-group enrollees now report being in plans with high deductibles than did so in 2015. In the current survey, about half (49 percent) of those with ACA-compliant non-group coverage say their plan has an annual individual deductible of at least $1,500 or a family deductible of at least $3,000, up from just over a third (36 percent) last year. Those with Marketplace plans are somewhat less likely to report having a high deductible (46 percent, compared with 61 percent of those in ACA-compliant non-Marketplace plans), likely because many Marketplace enrollees qualify for cost-sharing subsidies that lower their deductible.

Health plan ratings and satisfaction with coverage

Similar to the trend in overall plan ratings, the current survey finds those with ACA-compliant non-group plans are less likely than in previous years to say their coverage is an “excellent” or “good” value for what they pay for it. Just over half (54 percent) now rate the value of their coverage as “only fair” or “poor” (up from 42 percent in 2015 and 39 percent in 2014). Those with employer-sponsored coverage, who generally pay a lower portion of their premium, are more likely than those with non-group coverage to see their plan as at least a “good” value for the money, but the share of this group saying the value is “only fair” or “poor” has also increased, from 28 percent in 2014 to 40 percent in 2016.

A majority of enrollees also say they are satisfied with their plan’s premium (54 percent of all those in ACA-compliant plans and 59 percent of those in Marketplace plans), and about half say the same about their deductible (50 percent of ACA-compliant enrollees and 51 percent of Marketplace enrollees). However, satisfaction with premiums and deductibles has declined since 2014. Nearly half now say they are dissatisfied with their plan’s annual deductible (47 percent among all those ACA-compliant plans and 46 percent in Marketplace plans), and four in ten are dissatisfied with their monthly premium (43 percent and 40 percent, respectively).

Each of these trends toward more negative ratings of non-group coverage may be related to the fact that more enrollees now report being in high-deductible plans (as noted above, 49 percent of those with ACA-compliant plans now have a high-deductible plan, up from 36 percent in 2015). The latest survey finds that those with high-deductible plans give their coverage lower ratings overall and are less likely than their counterparts in lower-deductible plans to say they are satisfied not only with their deductible, but also with their copays and premiums.

Financial protection of health insurance

About half (51 percent) of non-group enrollees with ACA-compliant plans say they feel well-protected by their health insurance; however, the share saying they feel vulnerable to high medical bills has risen over the past two years, from 36 percent in 2014 to 45 percent in the current survey. Again, it’s notable that while those with employer coverage are more likely than non-group enrollees with ACA-compliant plans to say they feel well-protected, this group has also seen a similar increase in the share saying they feel vulnerable (from 26 percent in 2014 to 36 percent today).

Half (50 percent) of those with ACA-compliant plans say it is difficult for them to afford the out-of-pocket health care costs not covered by insurance, and a similar share (46 percent) say it’s difficult to afford their monthly premiums (nearly identical to the 45 percent who said so in 2014). A similar percentage (51 percent) says it is difficult for them to afford paying off debt, while a much larger share (71 percent) reports difficulty saving money for retirement, education, and other purposes. Ranking lower in terms of difficulty, a third (33 percent) say they find it difficult to afford basic necessities like food, housing, and utilities.

Not surprisingly, those whose plans have higher deductibles are more likely than those with lower deductibles to say it is difficult for them to afford their out-of-pocket health care costs (58 percent versus 43 percent). This is despite the fact that those with high-deductible plans report higher incomes on average than those whose plans have lower deductibles.

Plan utilization and reported problems

Among those who’ve had ACA-compliant non-group coverage for at least a year, many report having problems with their plans. Most commonly, just over a third (36 percent) say their plan paid less than they expected for a bill, about a quarter (26 percent) say their plan wouldn’t cover or required a very expensive copay for a drug prescribed by their doctor, one in five (21 percent) say they were surprised to find their plan wouldn’t pay anything for care they thought was covered, and a similar share (20 percent) say that a particular doctor they wanted to see wasn’t covered by their plan.

Those who are heavier utilizers of health insurance are more likely than their counterparts to report some of these problems, including their plan paying less than they expected for a bill (47 percent versus 31 percent), their plan not covering a prescription or requiring a very expensive copay (37 percent versus 20 percent). Heavy utilizers are also more likely to report problems paying medical bills in the past 12 months (31 percent versus 16 percent).

In addition to problems with their plans, one in five (20 percent) of those who’ve had ACA-compliant coverage for at least a year say there was a time in the last 12 months when they or another family member covered by their plan needed medical care but did not get it because of the cost. Nearly as many (16 percent) say there was a time in the past year when they did not fill a prescription because of the cost.

Opinions of the Affordable Care Act among those with non-group coverage

As in previous waves of the survey, and as is true among the general population, overall views of the Affordable Care Act among those with non-group coverage are largely divided, with 46 percent saying they have a favorable view of the law and 48 percent unfavorable. Even among this population – whose views one might expect to be divided more on the basis of experience – the biggest differences in opinion are along partisan lines, with 75 percent of Democrats having a favorable view of the law, 79 percent of Republicans expressing an unfavorable view, and independents divided (40 percent favorable, 44 percent unfavorable).

Similar to last year, the largest divide in how people feel the law has impacted them is partisan, with Democrats overwhelmingly feeling they’ve benefited and Republicans overwhelmingly feeling they’ve been negatively affected.

From the Discussion

The share of enrollees who see their plan as a good value has been declining, reflecting growing dissatisfaction with premiums and cost-sharing. Some enrollees who have had their plan for a year or more report expensive drug copays, as well as surprise medical bills and other unexpected expenses they thought their plan covered.

http://kff.org/health-reform/poll-finding/survey-of-non-group-health-insurance-enrollees-wave-3/

Today’s report confirms the growing dissatisfaction with higher premiums and greater cost-sharing of not only ACA-compliant non-group plans but also employer-sponsored group plans as well. The share saying that they feel vulnerable to high medical bills has increased to 45 percent for non-group enrollees and 36 percent for those with employer coverage.

One of the most important functions of health insurance is to provide financial security in the face on medical need. In spite of the Affordable Care Act, that security is deteriorating.

The burden of insurance premiums could be greatly reduced by financing the system through equitable taxes based on the ability to pay. The burden of cost sharing could be greatly reduced by adopting a philosophy of pre-paid health care which has worked well in certain integrated health systems and in the health financing systems of many other nations.

Instead of erecting financial barriers to care, cost containment can be achieved through patient-friendly policies characteristic of a well designed single payer system. Let’s change direction.

Commentary: Single-payer essential to controlling health-care costs

By David Woods
The Philadelphia Inquirer, May 16, 2016

One hears these days mutterings by disaffected Americans that if Donald Trump becomes president, they will pack their bags and leave for Canada. One assumes, of course, that no wall will be built along the border to thwart their exit.

I made the reverse trip. Having emigrated from Britain to Canada, where I became the editor in chief of the Canadian Medical Association Journal, I opted to come to the United States in 1988 for personal reasons.

But I was also taken with American rugged individualism and a health-care system focused on market forces and competition. I wrote articles for the Economist Intelligence Unit and other periodicals on the wonders of the American system. In print, I debated longtime advocates of single-payer national health insurance, extolling the virtues of the health-care market that others abhorred.

Gradually, though, I too began to have doubts about market-driven health care. Over the 25 years that I’ve lived on the U.S. side of the border, I’ve come to the view that the American health-care system – which still leaves 11 percent of the population uninsured, despite the Affordable Care Act – is inferior to the health systems in Canada and the United Kingdom.

One of the ACA’s architects, Dr. Ezekiel Emanuel, describes the U.S. health system as a “terribly complex, blatantly unjust, outrageously expensive, grossly inefficient, error-prone system.” Unfortunately, that’s still true, six years after the ACA’s passage.

The reform didn’t address the fundamental problem in U.S. health care: It’s more about profit than patients.

Controlling health-care costs is essential to the long-term financial health of the United States. A single-payer system would make truly universal coverage affordable, costing no more than we already spend on health care. Of the $3.1 trillion the United States will spend on health care this year, 63 percent is taxpayer-financed, funding Medicare, Medicaid, and Veterans Affairs, along with private coverage for government employees and tax subsidies for employers.

Because of its fragmented, profit-driven system, the United States spends 18.1 percent of gross domestic product on health care, compared with about 8 percent in Britain and 11 percent in Canada. Much of U.S. health spending is simply wasted. For example, 25.3 percent of hospital expenditures go to administrative costs, compared with 12.4 percent in Canada, where there is a single payer in each province and hospitals are mainly funded on a global or lump-sum basis.

Canadians also save money by training a higher percentage of primary-care doctors relative to specialists, negotiating drug prices with pharmaceutical companies, and prohibiting drug companies from advertising directly to consumers. These measures would save Americans billions annually. Americans spend $1,010 per capita on pharmaceuticals; Swedes spend less than half that, according to the Organization for Economic Cooperation and Development. The reason? Sweden doesn’t pay the list price.

Lobbying and influence-peddling by the pharmaceutical and insurance industries keeps the United States from adopting a single-payer health system. Several presidential candidates this season seemed completely under their hypnotic sway. The private insurance industry brazenly tells me, now a U.S. voter, which doctors I can see, charges me astronomical premiums, not to mention co-pays and deductibles, and then wants me to believe that having publicly funded health care that would allow me to go to any doctor in the United States without a $5,000 deductible would be “socialism.”

And don’t believe the widely held U.S. notion that Canadians suffer long waits for care. That’s a canard. We are not going to cut U.S. health spending to Canadian levels. With our much higher level of spending, waits would not be an issue, even with the population aging. Japan and many countries in Europe already have higher percentages of elderly citizens than the graying of the baby boomers is projected to produce.

In his book In Search of the Perfect Health System, British economist Mark Britnell notes that the British love their single-payer National Health Service because of its fairness; it’s available to everyone. He even quotes a former U.K. finance minister who said that the NHS is the closest thing the English have to a religion. Their single-payer system keeps quality indexes up and costs down for the population at large. This enables the British to invest additional funds in education and economic stimulation, areas that also contribute to health and well-being.

The United States should take a lesson from the example of nations with single-payer systems. They offer a measure of hope and optimism that high-quality health care can be the right of all Americans, if they demand it.

David Woods is a former editor in chief of the Canadian Medical Association Journal.

http://www.philly.com/philly/health/20160516_Commentary__Single-payer_essential_to_controlling_health-care_costs.html

***

Comment:

By Don McCanne, M.D.

This article by David Woods is an important contribution to our efforts to inform our colleagues and the public on the true facts about the single payer model of reform. It is particularly credible since the author is a former editor-in-chief of the Canadian Medical Association Journal who was attracted to the market-driven U.S. health care system, but then, through his personal experiences, recognized its clear inferiority to single payer systems.

Woods concludes, “the example of nations with single-payer systems… offer a measure of hope and optimism that high-quality health care can be the right of all Americans, if they demand it.”

Commentary: Single-payer essential to controlling health-care costs

By David Woods
The Philadelphia Inquirer, May 16, 2016

One hears these days mutterings by disaffected Americans that if Donald Trump becomes president, they will pack their bags and leave for Canada. One assumes, of course, that no wall will be built along the border to thwart their exit.

I made the reverse trip. Having emigrated from Britain to Canada, where I became the editor in chief of the Canadian Medical Association Journal, I opted to come to the United States in 1988 for personal reasons.

But I was also taken with American rugged individualism and a health-care system focused on market forces and competition. I wrote articles for the Economist Intelligence Unit and other periodicals on the wonders of the American system. In print, I debated longtime advocates of single-payer national health insurance, extolling the virtues of the health-care market that others abhorred.

Gradually, though, I too began to have doubts about market-driven health care. Over the 25 years that I’ve lived on the U.S. side of the border, I’ve come to the view that the American health-care system – which still leaves 11 percent of the population uninsured, despite the Affordable Care Act – is inferior to the health systems in Canada and the United Kingdom.

One of the ACA’s architects, Dr. Ezekiel Emanuel, describes the U.S. health system as a “terribly complex, blatantly unjust, outrageously expensive, grossly inefficient, error-prone system.” Unfortunately, that’s still true, six years after the ACA’s passage.

The reform didn’t address the fundamental problem in U.S. health care: It’s more about profit than patients.

Controlling health-care costs is essential to the long-term financial health of the United States. A single-payer system would make truly universal coverage affordable, costing no more than we already spend on health care. Of the $3.1 trillion the United States will spend on health care this year, 63 percent is taxpayer-financed, funding Medicare, Medicaid, and Veterans Affairs, along with private coverage for government employees and tax subsidies for employers.

Because of its fragmented, profit-driven system, the United States spends 18.1 percent of gross domestic product on health care, compared with about 8 percent in Britain and 11 percent in Canada. Much of U.S. health spending is simply wasted. For example, 25.3 percent of hospital expenditures go to administrative costs, compared with 12.4 percent in Canada, where there is a single payer in each province and hospitals are mainly funded on a global or lump-sum basis.

Canadians also save money by training a higher percentage of primary-care doctors relative to specialists, negotiating drug prices with pharmaceutical companies, and prohibiting drug companies from advertising directly to consumers. These measures would save Americans billions annually. Americans spend $1,010 per capita on pharmaceuticals; Swedes spend less than half that, according to the Organization for Economic Cooperation and Development. The reason? Sweden doesn’t pay the list price.

Lobbying and influence-peddling by the pharmaceutical and insurance industries keeps the United States from adopting a single-payer health system. Several presidential candidates this season seemed completely under their hypnotic sway. The private insurance industry brazenly tells me, now a U.S. voter, which doctors I can see, charges me astronomical premiums, not to mention co-pays and deductibles, and then wants me to believe that having publicly funded health care that would allow me to go to any doctor in the United States without a $5,000 deductible would be “socialism.”

And don’t believe the widely held U.S. notion that Canadians suffer long waits for care. That’s a canard. We are not going to cut U.S. health spending to Canadian levels. With our much higher level of spending, waits would not be an issue, even with the population aging. Japan and many countries in Europe already have higher percentages of elderly citizens than the graying of the baby boomers is projected to produce.

In his book In Search of the Perfect Health System, British economist Mark Britnell notes that the British love their single-payer National Health Service because of its fairness; it’s available to everyone. He even quotes a former U.K. finance minister who said that the NHS is the closest thing the English have to a religion. Their single-payer system keeps quality indexes up and costs down for the population at large. This enables the British to invest additional funds in education and economic stimulation, areas that also contribute to health and well-being.

The United States should take a lesson from the example of nations with single-payer systems. They offer a measure of hope and optimism that high-quality health care can be the right of all Americans, if they demand it.

David Woods is a former editor in chief of the Canadian Medical Association Journal.

http://www.philly.com/philly/health/20160516_Commentary__Single-payer_essential_to_controlling_health-care_costs.html

This article by David Woods is an important contribution to our efforts to inform our colleagues and the public on the true facts about the single payer model of reform. It is particularly credible since the author is a former editor-in-chief of the Canadian Medical Association Journal who was attracted to the market-driven U.S. health care system, but then, through his personal experiences, recognized its clear inferiority to single payer systems.

Woods concludes, “the example of nations with single-payer systems… offer a measure of hope and optimism that high-quality health care can be the right of all Americans, if they demand it.”

A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive

By Margot Sanger-Katz
The New York Times, May 16, 2016

Bernie Sanders’s chances at enacting a “political revolution” are all but gone. But that doesn’t mean his policy agenda won’t continue to be felt in this election or future Democratic platforms.

One of his signature proposals is to move the country’s health care system to a government-run, single-payer system.

But also last week, a detailed analysis of the Sanders health care plan from researchers at the Urban Institute showed that it would probably cost the government double what the campaign proposed. It is the second credible analysis to suggest that the Sanders plan costs more than advertised. (The other comes from the Emory health policy professor Kenneth Thorpe.)

The Sanders campaign and its academic allies dispute some of the Urban Institute’s assumptions. A critique of the Urban analysis from David Himmelstein and Steffie Woolhandler, professors of public health at the City University of New York, argues, for example, that drug prices could be pushed even lower. And the Sanders team says that the researchers overestimated the costs associated with administering the government program. But it doesn’t argue that the prices paid to medical providers could be cut more sharply.

http://www.nytimes.com/2016/05/17/upshot/why-single-payer-health-care-would-probably-still-be-expensive.html

***

Blog Post: What’s Wrong with Margot Sanger-Katz’s Single Payer Analysis

By Adam Gaffney
The Progressive Physician, May 17, 2016

Yesterday, New York Times health care reporter Margot Sanger-Katz, whose work I very much respect, entered the debate on the costs of Sanders’ single payer plan in a piece I find problematic, headlined “A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive.” I should first concede, however, the central argument of her article: it is true that a US single payer system would still be relatively expensive as compared to other single payer systems. We would, that is to say, continue to spend more than the United Kingdom or Canada if we transitioned to single payer. At the same time, there would nonetheless be enormous savings from such a transition, and these savings would allow us to affordably achieve real universal health care. This, in my opinion, would still be an excellent deal.

The background to this debate are two analyses of the Sanders’ single payer proposal—the first by economist Kenneth Thorpe and the second by the Urban Institute—both of which claimed that the actual costs of Sanders’ single payer plan would be significantly higher than what his campaign has predicted. The assumptions of each have been convincingly contested by colleagues David Himmelstein and Steffie Woolhandler: among other points, they argue that both analyses underestimate administrative savings and overestimate the cost of increased health care use resulting from a coverage expansion.

Anyway, without delving into the details, there is something rather puzzling when looking at the analyses of Thorpe and the Urban Institute from a broader perspective. How is it that single payer would massively increase costs in the United States, as these reports contend, even while countries with single payer-type systems—like Canada and the United Kingdom—have much, much lower health care costs than we do?

To answer, a quick side note: our total health spending is, by definition, equal to the quantity of health services delivered multiplied by their price. The US does not consistently use more health services than other high-income nations. Therefore, the fact that we have higher health care costs is mostly explained by higher unit prices for services, as Sanger-Katz and others note. Now us single payer advocates cite lower administrative costs (and lower drug spending) as the major sources of savings under US single payer (effectively lowering the “price” side of the equation). But Sanger-Katz argues that this would be insufficient: prices would have to be slashed across the board, and some services would have to be cut:

Making the American health care system significantly cheaper would mean more than just cutting the insurance companies out of the game and reducing the high administrative costs of the American system. It would also require paying doctors and nurses substantially lower salaries, using fewer new and high-tech treatments, and probably eliminating some of the perks of American hospital stays, like private patient rooms.

Such a transition would, she notes, have some scary sounding downstream consequences: “…making big cuts all at once to doctors and hospitals could cause substantial disruptions in care. Some hospitals would go out of business. Some doctors would default on their mortgages and student loans.” My understanding is that we aren’t really allowed to effectively default on student loans, but admittedly this all sounds rather dicey.

But this frightful health care meltdown isn’t even in the cards. She is correct in a narrow sense: it’s true that immediately lowering US health care expenditures to, say, that of the United Kingdom — i.e. from 16.4% to 8.5% of gross domestic product — would require major, disruptive reductions in spending across the board. However, nobody is contending that we do that. The central claim for US single payer is more modest. Use the enormous administrative savings generated under single payer financing in combination with pharmaceutical savings to cover everybody with comprehensive benefits and no cost-sharing. Overall national health spending would, it is true, remain roughly the same (though we could better control cost growth moving forward). But this scenario of widespread hospital bankruptcies and the end of private (or semiprivate?) hospital rooms is a fantasy: nobody wants it to happen, and it’s not happening.

It’s worth noting that there is also a jarringly inconsistent aspect to single-payer critiques that warn of the threat to health care workers’ income. As Woolhandler and Himmelstein note in an article in the Huffington Post, the Urban Institute simultaneously asserted that the coverage expansion under single payer would lead to an enormous increase in spending on physician services — by $1.6 trillion over a decade!—while simultaneously asserting that physician salaries would be “squeezed.” Whatever one thinks of how much physicians should be paid, it’s hard how these would both happen at the same time.

Transitioning to single payer will not mean reducing our health care expenses to British levels: that is probably not possible, and is certainly not desirable. But that’s not to say that the savings from adopting a single payer financing system wouldn’t be substantial—we’re talking hundreds of billions annually on administrative savings alone, plus more by reducing drug prices to European levels. With that money, we’ll build a much more decent health care system for all to use without having to worry about the cost of being sick, of being pregnant, or simply of obtaining preventive care. No wonder a majority of the country wants it.

Dr. Adam Gaffney is a clinical and research fellow in pulmonary and critical care medicine at Massachusetts General Hospital. His writing has appeared in the New Republic, Los Angeles Review of Books, USA Today, Salon, CNN.com, Dissent, US News & World Report, Jacobin, In These Times, and elsewhere.

https://theprogressivephysician.net/2016/05/17/blog-post-whats-wrong-with-margot-sanger-katzs-single-payer-analysis/

***

Comment:

By Don McCanne, M.D.

There have been a multitude of recent media reports indicating that a single payer program, as proposed by Bernie Sanders, would cost much more than previous estimates have shown. These reports rely on recent analyses by the Urban Institute and by Emory Professor Kenneth Thorpe. Unfortunately, these analyses are being given more credibility than the contrasting conclusions of the nation’s two leading experts on single payer – Professors David Himmelstein and Steffie Woolhandler.

NYT’s Margot Sanger-Katz reiterated the conclusion that “the Sanders plan costs more than advertised.” She is highly credible, and, in fact, she did link to an article on the topic by Himmelstein and Woolhandler. But she suggests that prices paid to medical providers must be cut more sharply than proposed, and, by this, seems to accept the fact that Sanders’ single payer proposal is more expensive than anticipated. You may want to read her full article (link above) to better understand Adam Gaffney’s response.

Adam Gaffney’s full blog response is reproduced here, along with the live links, because it is imperative that we not allow the sometimes blind acceptance by the media of the two recent analyses that use dubious assumptions to refute the great body of policy literature that confirms the efficiency and effectiveness of the single payer model. Gaffney sets the record straight.

Study Gaffney’s response and also the prior responses of Himmelstein and Woolhandler (live links in article) so that you will be prepared to refute the claims that single payer is unaffordable. It’s our current highly dysfunctional system that is not affordable.

(Keep in mind that some of the misunderstanding is due to the fact that one view is referring only to federal spending and the taxes to pay for it whereas another view is referring to our total national health expenditures, public and private combined. Obviously transferring private health care spending to the federal government would cause federal spending and taxes to increase – the claim being made – but total spending under a well designed single payer system would remain about the same, with administrative and price savings being used for expanded benefits and coverage.)

A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive

By Margot Sanger-Katz
The New York Times, May 16, 2016

Bernie Sanders’s chances at enacting a “political revolution” are all but gone. But that doesn’t mean his policy agenda won’t continue to be felt in this election or future Democratic platforms.

One of his signature proposals is to move the country’s health care system to a government-run, single-payer system.

But also last week, a detailed analysis of the Sanders health care plan from researchers at the Urban Institute showed that it would probably cost the government double what the campaign proposed. It is the second credible analysis to suggest that the Sanders plan costs more than advertised. (The other comes from the Emory health policy professor Kenneth Thorpe.)

The Sanders campaign and its academic allies dispute some of the Urban Institute’s assumptions. A critique of the Urban analysis from David Himmelstein and Steffie Woolhandler, professors of public health at the City University of New York, argues, for example, that drug prices could be pushed even lower. And the Sanders team says that the researchers overestimated the costs associated with administering the government program. But it doesn’t argue that the prices paid to medical providers could be cut more sharply.

http://www.nytimes.com/2016/05/17/upshot/why-single-payer-health-care-would-probably-still-be-expensive.html

***

Blog Post: What’s Wrong with Margot Sanger-Katz’s Single Payer Analysis

By Adam Gaffney
The Progressive Physician, May 17, 2016

Yesterday, New York Times health care reporter Margot Sanger-Katz, whose work I very much respect, entered the debate on the costs of Sanders’ single payer plan in a piece I find problematic, headlined “A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive.” I should first concede, however, the central argument of her article: it is true that a US single payer system would still be relatively expensive as compared to other single payer systems. We would, that is to say, continue to spend more than the United Kingdom or Canada if we transitioned to single payer. At the same time, there would nonetheless be enormous savings from such a transition, and these savings would allow us to affordably achieve real universal health care. This, in my opinion, would still be an excellent deal.

The background to this debate are two analyses of the Sanders’ single payer proposal—the first by economist Kenneth Thorpe and the second by the Urban Institute—both of which claimed that the actual costs of Sanders’ single payer plan would be significantly higher than what his campaign has predicted. The assumptions of each have been convincingly contested by colleagues David Himmelstein and Steffie Woolhandler: among other points, they argue that both analyses underestimate administrative savings and overestimate the cost of increased health care use resulting from a coverage expansion.

Anyway, without delving into the details, there is something rather puzzling when looking at the analyses of Thorpe and the Urban Institute from a broader perspective. How is it that single payer would massively increase costs in the United States, as these reports contend, even while countries with single payer-type systems—like Canada and the United Kingdom—have much, much lower health care costs than we do?

To answer, a quick side note: our total health spending is, by definition, equal to the quantity of health services delivered multiplied by their price. The US does not consistently use more health services than other high-income nations. Therefore, the fact that we have higher health care costs is mostly explained by higher unit prices for services, as Sanger-Katz and others note. Now us single payer advocates cite lower administrative costs (and lower drug spending) as the major sources of savings under US single payer (effectively lowering the “price” side of the equation). But Sanger-Katz argues that this would be insufficient: prices would have to be slashed across the board, and some services would have to be cut:

Making the American health care system significantly cheaper would mean more than just cutting the insurance companies out of the game and reducing the high administrative costs of the American system. It would also require paying doctors and nurses substantially lower salaries, using fewer new and high-tech treatments, and probably eliminating some of the perks of American hospital stays, like private patient rooms.

Such a transition would, she notes, have some scary sounding downstream consequences: “…making big cuts all at once to doctors and hospitals could cause substantial disruptions in care. Some hospitals would go out of business. Some doctors would default on their mortgages and student loans.” My understanding is that we aren’t really allowed to effectively default on student loans, but admittedly this all sounds rather dicey.

But this frightful health care meltdown isn’t even in the cards. She is correct in a narrow sense: it’s true that immediately lowering US health care expenditures to, say, that of the United Kingdom — i.e. from 16.4% to 8.5% of gross domestic product — would require major, disruptive reductions in spending across the board. However, nobody is contending that we do that. The central claim for US single payer is more modest. Use the enormous administrative savings generated under single payer financing in combination with pharmaceutical savings to cover everybody with comprehensive benefits and no cost-sharing. Overall national health spending would, it is true, remain roughly the same (though we could better control cost growth moving forward). But this scenario of widespread hospital bankruptcies and the end of private (or semiprivate?) hospital rooms is a fantasy: nobody wants it to happen, and it’s not happening.

It’s worth noting that there is also a jarringly inconsistent aspect to single-payer critiques that warn of the threat to health care workers’ income. As Woolhandler and Himmelstein note in an article in the Huffington Post, the Urban Institute simultaneously asserted that the coverage expansion under single payer would lead to an enormous increase in spending on physician services — by $1.6 trillion over a decade!—while simultaneously asserting that physician salaries would be “squeezed.” Whatever one thinks of how much physicians should be paid, it’s hard how these would both happen at the same time.

Transitioning to single payer will not mean reducing our health care expenses to British levels: that is probably not possible, and is certainly not desirable. But that’s not to say that the savings from adopting a single payer financing system wouldn’t be substantial—we’re talking hundreds of billions annually on administrative savings alone, plus more by reducing drug prices to European levels. With that money, we’ll build a much more decent health care system for all to use without having to worry about the cost of being sick, of being pregnant, or simply of obtaining preventive care. No wonder a majority of the country wants it.

Dr. Adam Gaffney is a clinical and research fellow in pulmonary and critical care medicine at Massachusetts General Hospital. His writing has appeared in the New Republic, Los Angeles Review of Books, USA Today, Salon, CNN.com, Dissent, US News & World Report, Jacobin, In These Times, and elsewhere.

https://theprogressivephysician.net/2016/05/17/blog-post-whats-wrong-with-margot-sanger-katzs-single-payer-analysis/

There have been a multitude of recent media reports indicating that a single payer program, as proposed by Bernie Sanders, would cost much more than previous estimates have shown. These reports rely on recent analyses by the Urban Institute and by Emory Professor Kenneth Thorpe. Unfortunately, these analyses are being given more credibility than the contrasting conclusions of the nation’s two leading experts on single payer – Professors David Himmelstein and Steffie Woolhandler.

NYT’s Margot Sanger-Katz reiterated the conclusion that “the Sanders plan costs more than advertised.” She is highly credible, and, in fact, she did link to an article on the topic by Himmelstein and Woolhandler. But she suggests that prices paid to medical providers must be cut more sharply than proposed, and, by this, seems to accept the fact that Sanders’ single payer proposal is more expensive than anticipated. You may want to read her full article (link above) to better understand Adam Gaffney’s response.

Adam Gaffney’s full blog response is reproduced here, along with the live links, because it is imperative that we not allow the sometimes blind acceptance by the media of the two recent analyses that use dubious assumptions to refute the great body of policy literature that confirms the efficiency and effectiveness of the single payer model. Gaffney sets the record straight.

Study Gaffney’s response and also the prior responses of Himmelstein and Woolhandler (live links in article) so that you will be prepared to refute the claims that single payer is unaffordable. It’s our current highly dysfunctional system that is not affordable.

(Keep in mind that some of the misunderstanding is due to the fact that one view is referring only to federal spending and the taxes to pay for it whereas another view is referring to our total national health expenditures, public and private combined. Obviously transferring private health care spending to the federal government would cause federal spending and taxes to increase – the claim being made – but total spending under a well designed single payer system would remain about the same, with administrative and price savings being used for expanded benefits and coverage.)