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Neoliberal Health Model Comes Home to Roost in the United States—If We Let It

Neoliberal Health Model Comes Home to Roost in the United States—If We Let It

Obamacare repeats an approach to expanding private health insurance that has not worked in other countries, new study finds

FOR IMMEDIATE RELEASE, May 1, 2016
Contact: Howard Waitzkin, M.D., Ph.D., cell: 505-453-7078, waitzkin@unm.edu
Contact: Ida Hellander, M.D., cell: 708-941-7100, ida@pnhp.org

The model for Obamacare is not new and actually adopts an approach to expanding health insurance that several other countries such as Colombia, Chile, and Mexico have tried without success, a new study reports. 

An article published in the May 2016 issue of Monthly Review traces the origins of Obamacare to policies that the World Bank and other international financial institutions have promoted since the early 1990s.

These “neoliberal” health reforms have used tax revenues to buy private insurance coverage and have privatized health services, the study found. As a result, according to the article, corporate profits have soared, the safety net of public hospitals and clinics has deteriorated, and health costs have increased.

The study’s lead author, Dr. Howard Waitzkin, discovered that these ideas originated in work by economists in the U.S. military sector and then began to influence health policy when one of those economists, Alain Enthoven, moved into health economics after the Vietnam War.

This orientation entered into the design of Colombia’s health reform of 1994, Hillary Clinton’s proposal in the United States during the same year, and the Massachusetts insurance plan that Mitt Romney proposed as governor during 2006, the authors, with backgrounds in health research and activism, argue.

The article shows that the same approach surfaced again as Obamacare, after Barack Obama received the largest campaign contributions in history from the private insurance industry and switched his position from supporting a public-sector, single-payer approach that he had favored as a state legislator.

“In countries like Colombia that have adopted the neoliberal model,” study co-author Dr. Ida Hellander said, “access to care has not improved significantly, but the costs of care have increased rapidly, in parallel to sharp increases in corporate profits.” In Colombia, according to the article, negative effects of the reform include delayed payments, corruption, high overhead, increasing legal actions due to denial of care, and illegal investment of health funds by for-profit insurance companies.

Based on prior neoliberal reforms, Dr. Waitzkin predicted, “Obamacare is likely to fail, finally opening the door for a national health program in the United States that recognizes health care as human right rather than a commodity to be bought and sold in a marketplace.”

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Howard Waitzkin and Ida Hellander, “Obamacare: The Neoliberal Model Comes Home to Roost in the United States—If We Let It” Monthly Review, May 2016, is available on-line at http://monthlyreview.org.

Dr. Howard Waitzkin is Distinguished Professor Emeritus of Sociology at the University of New Mexico and Adjunct Professor of Internal Medicine at the University of Illinois. Dr. Ida Hellander is Director of Health Policy and Programs at Physicians for a National Health Program, Chicago, Illinois.

Obamacare: The Neoliberal Model Comes Home to Roost in the United States—If We Let It

By Howard Waitzkin and Ida Hellander
Monthly Review, May 1, 2016

As the Affordable Care Act (ACA, otherwise known as Obamacare) continues along a very bumpy road, it is worth asking where it came from and what comes next. Officially, Obamacare represents the latest in more than a century of efforts in the United States to achieve universal access to health care. In reality, Obamacare has strengthened the for-profit insurance industry by transferring public, tax-generated revenues to the private sector. It has done and will do little to improve the problem of uninsurance in the United States; in fact, it has already begun to worsen the problem of underinsurance. Obamacare is also financially unsustainable because it has no effective way to control costs. Meanwhile, despite benefits for some of the richest corporations and executives, and adverse or mixed effects for the non-rich, a remarkable manipulation of political symbolism has conveyed the notion that Obamacare is a creation of the left, warranting strenuous opposition from the right.

Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured—at least 27 million people, according to the non-partisan Congressional Budget Office—and at least twice that number will remain underinsured.1 Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction.2 Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs.3 These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders.4 The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.5 A conservative projection shows that premiums and out-of-pocket expenditures for the average family will equal half of the average family income by 2019 and the full average family income itself by 2029.6

The Origins of Obamacare

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades. The year 1994 was a significant one for health reform worldwide. Colombia enacted a national program of “managed competition,” to replace its existing health system, which had been based largely on public hospitals and clinics. The World Bank mandated and partly financed the reform, and President César Gaviria and his colleagues promoted the reform to financial elites at the World Economic Forum and elsewhere. That same year a similar proposal, designed by the U.S. insurance industry and spearheaded by Hillary Clinton, was advanced but ultimately abandoned. The right wing opposed the plan as a big-government boondoggle, while on the left, opposition centered on the massively increased, tax-subsidized role that the plan would create for the private insurance industry, especially a handful of the nation’s largest companies.

During the 1990s, several European countries considered proposals for health reform that followed a similar model of privatization, “managed competition,” and increased access of the private insurance industry to public health care trust funds.7 Although a few, like the Netherlands and the United Kingdom, implemented elements of such reforms, most European countries did not, acceding to opposition from left-oriented parties, labor unions, and civic organizations.

In Latin America, Asia, and some African nations, for-profit multinational insurance corporations, mostly based in the United States, tried to expand their operations. Access to public social security trust funds, previously designated to provide retirement and health care benefits, proved a primary motivation for this expansion.8 Conferences and publications organized by the World Bank and insurance companies legitimated such efforts by recruiting progressive spokespersons such as Desmond Tutu in South Africa.9

Then, in 2006, Republican Governor Mitt Romney in Massachusetts implemented a reform that required all state residents to buy insurance through the state system if they did not already hold insurance coverage. Romney later disavowed the reform during his 2012 presidential campaign, but the same overall structure re-emerged in Obamacare.

While framed as programs to improve access for the poor and underserved, these initiatives facilitated the efforts of for-profit insurance corporations providing “managed care.” The corporations could collect prepaid capitation fees or other premiums from government agencies administering trust funds, as well as from employers and patients, and could invest the reserves at high rates of return. Insurance corporations also profited by denying or delaying necessary care through strategies such as utilization review and preauthorization requirements; cost-sharing such as copayments, deductibles, co-insurance, and pharmacy tiers; limiting access to only certain physicians; and frequent redesign of benefits.

Such proposals fostered neoliberalism. They promoted multiple competing, for-profit, private insurance corporations. Programs and institutions previously based in the public sector were cut back and, if possible, privatized. Overall government budgets for public-sector health care were reduced. Private corporations gained access to public trust funds. Public hospitals and clinics entered into competition with private institutions, their budgets were determined by demand rather than supply, and prior global budgets for safety net institutions were not guaranteed. Insurance executives made operational decisions about services, and their authority superseded that of physicians and other clinicians.

The Strange Career of Neoliberal Health Reform

The roots of the neoliberal model for health reform emerged initially from Cold War military policy. The economist Alain Enthoven provided much of the intellectual framework for these early efforts. Enthoven had worked as Assistant Secretary of Defense under Robert S. McNamara during the Kennedy and Johnson administrations. While at the Pentagon between 1961 and 1969, he led a group of analysts who developed the “planning-programming-budgeting system” (PPBS) and cost-benefit analysis, intended to promote more cost-effective spending decisions for military expenditures.10 After leaving the military sector, Enthoven emerged as the principal architect of “managed competition,” which became the prevailing model for the Clinton reform, Romney-care, Obamacare, and neoliberal health reform throughout the world. Decades later, he remains a strong advocate for this model.11

After a brief excursion between 1969 and 1973 as vice president and then president of Litton Industries, a major military contractor, Enthoven joined the faculty at Stanford in 1973 as a professor of both management and health care economics. There his work on health policy incorporated several elements common to military and medical systems (Table 1): distrust of professionals, deference to managers, choice among competing alternatives, and cost-benefit analysis, but not necessarily cost reduction.12

Table 1

By 1977, only four years after leaving the defense sector, Enthoven offered the Carter Administration his proposal for a Consumer Choice Health Plan. Although Carter rejected the plan, Enthoven soon published the proposal.13 In this early work, Enthoven presented the basic concepts of most subsequent health reform proposals; Obamacare incorporates this same overall structure.

During the 1980s, Enthoven collaborated with managed care and insurance executives to refine the proposal. A new name, “managed competition,” proved attractive to business leaders, who met regularly in Jackson Hole, Wyoming.14 The five largest insurance corporations funded this group, as well as providing support for Bill Clinton’s presidential campaign and Clinton’s Health Security Act.

Several conditions led to the creation of Obamacare as a reform that enhanced the fortunes of the private insurance industry. Campaign financing, as usual, played a major role. Obama, who as a state legislator in Illinois had favored a single-payer approach, drastically changed his position as a presidential candidate. For the 2008 campaign, Obama received the largest financial contributions in history from the insurance industry, more than three times the contributions received by his Republican rival, John McCain. With funding from the insurance industry and financial corporations linked to Wall Street, Obama became the first presidential candidate in history able to turn down government funds for his campaign.15

The Boilerplate Neoliberal Health Reform

The neoliberal health agenda, including Obamacare, emerged as one component of a worldwide agenda developed by the World Bank, International Monetary Fund, and other international financial institutions. This agenda to promote market-driven health care facilitated multinational corporations’ access to public-sector health and social security trust funds. An underlying managerial ideology claimed, nearly always without evidence, that corporate executives could achieve superior quality and efficiency by “managing” medical services in the marketplace.16 Enthoven and colleagues in academic health economics participated in this effort, refining terms and giving the enterprise a scholarly credibility.

Health reform proposals across different countries have resembled one another closely. The specific details of each plan appeared to conform to a word-processed, cookie-cutter template, in which only the names of national institutions and local actors have varied. Six broad features have characterized nearly all neoliberal health initiatives (Table 2).

Table 2

1. Organizations of providers. One element of neoliberal proposals involves large privately controlled organizations of health care providers. These organizations operate under the direct control or strong influence of private, for-profit insurance corporations, in collaboration with hospitals and health systems. The organizations may employ health care providers directly, or may contract with providers in a preferred network. In the Clinton proposal, these organizations were named Accountable Health Partnerships (AHPs). In Obamacare, they are called Accountable Care Organizations (ACOs). (Technically, ACOs are supported only in Medicare, although Obamacare accelerated organizational consolidation in anticipation of broader implementation of payment reform.) The Colombian health reform labels them Provider Institutions of Health Services (Instituciones Prestadores de Servicios de Salud, or IPSSs).

In this model, for-profit managed care organizations (MCOs), usually subsidiaries of multinational insurance corporations, offer health plans competitively. In reality, competition is constrained by the small number of organizations large enough to possess the financial resources and infrastructure required under the reform proposals, as well as consolidation in the private insurance industry. The MCOs contract with or employ large numbers of health practitioners. This approach drastically reduces medical practice based on fee-for-service reimbursement. Instead, physicians and hospitals are largely absorbed into MCOs.

2. Organizations of purchasers. A second element of neoliberal proposals involves large organizations purchasing or facilitating the purchase of private health insurance, usually through MCOs. The Clinton proposal referred to these organizations as Health Insurance Purchasing Cooperatives (HPICs), even though they were not necessarily organized as member-owned or worker-owned cooperatives. Under Obamacare, the federal and state health insurance “exchanges”—later renamed “marketplaces” to reflect the reality of private corporations selling their services with government subsidies and coordination—fulfill a similar role. The ACA does allow a small role for non-profit Consumer-Operated and Oriented Plans (COOPs), which so far have not achieved financial success.17 In Colombia, the corresponding entities are called Corporations Promoting Health (Empresas Promotoras de Salud, or EPSs); some EPSs likewise misleadingly include “cooperative” in their names (such as SALUDCOOP in Bogotá).18

Such organizations purchase or facilitate the purchase of health plans from private insurance corporations, which in turn contract with large privately controlled organizations of health care providers (such as the AHPs, ACOs, or IPSSs described above). In the United States, the marketplaces serve the “non-group market”—mainly people who previously paid for their own coverage or were uninsured. Private health plans on the marketplaces are heavily subsidized from general tax revenues, while public programs such as Medicaid and Medicare are rapidly becoming privatized. Instead of 1 to 2 percent overhead, as in the traditional Medicare program, private Medicare Advantage plans show overhead costs and profits of at least 14 percent.19 In Colombia, purchasing organizations contract with provider organizations to deliver care for the previously uninsured, with funding provided by the federal government through national and local tax revenues and a payroll tax (termed the “subsidized regime”), and other purchasing organizations contract with companies that provide health insurance for workers and their families through the social security system (the “contributory regime”).

3. Constriction of public hospitals and safety net providers. Public hospitals at the state, county, or municipal levels compete for patients covered under public programs like Medicaid or Medicare with private hospitals participating as subsidiaries or contractors of insurance corporations or MCOs. With less public-sector funding, public hospitals reduce services and programs, and many eventually close. Although community health centers (CHCs) sometimes enjoy temporary improvements in funding, as in Obamacare, they increasingly serve as the providers of last resort for the remaining uninsured and underinsured. As a result, CHCs remain vulnerable to cutbacks and face an insecure future. Under Obamacare, multiple public hospitals have closed or are on the brink of closure.20 In Colombia, public hospitals and clinics also have faced budget cuts and closures, and those that survive confront those of the newly insured with access barriers, such as high copayments. Similar problems have occurred in Argentina, Mexico, Brazil, and other countries in Latin America.21

4. Tiered benefits packages. Neoliberal proposals define benefits packages in hierarchical tiers. The national reform provides a minimum package of benefits that experts view as essential, and individuals or their employers can buy additional coverage. Poor and near poor people in the U.S. Medicaid program are eligible for benefits that used to be free of cost-sharing, but since Obamacare passed, states increasingly have imposed premiums and copayments.

With “minimum benefits packages,” for instance, all women are entitled to pap smears. But treatment of cervical cancer revealed by pap-smear screening would not necessarily be covered, or might require cost sharing, leaving women vulnerable to different local government funding and policies. Benefits for treatment of cervical cancer for poor women with positive pap smears have varied according to the financial resources and policies of different states or municipalities. This variability has occurred in Colombia, Mexico, and other countries that have adopted minimum benefits packages.

In the United States, neoliberal reforms also have included tiered benefits packages. The Clinton proposal aimed to create “uniform effective health benefits” required under all health plans, but it also would have allowed the sale of additional benefits to patients or employers able to afford them. Under Obamacare, a package of minimum essential services may be only partially insured. Various metals—bronze, silver, gold, platinum—identify the tiers of coverage, where bronze represents the lowest tier (covering 60 percent of in-network health care expenses) and platinum the highest (90 percent). Individuals’ and families’ premiums cost the most under the most valuable metal, and their out-of-pocket copayments average the least. However, these percentages represent actuarial calculations of the insurance companies’ financial payouts for services during a year among all beneficiaries at a specific tier; therefore, an individual or family expecting 60 percent coverage may pay much more in actual premiums, deductibles, and copayments. Under Obamacare, the “value” of coverage in a tier is strictly a financial calculation, based on actuarial principles in accounting. Similar tiered benefit approaches to both services and medications have been instituted within managed care programs under Medicare (as well as Medicare Part D, for medications) and Medicaid.

5. Complex multi-payer and multi-payment financing. Financial flows under neoliberal health policies are very complex (Chart 1). The costs of administering these flows and other components of neoliberal policies also are quite high (about 25 to 28 percent of total health care expenditures) and keep increasing. Under Obamacare, administrative overhead—also referred to administrative “waste,” since the costs do not contribute to direct patient services—grew 10.6 percent in 2014, faster than any other component of health care except medications. Private insurance overhead is projected to increase by $273.6 billion from 2014 through 2022.22 Below, we describe the structure and sources of these various financial flows.

Chart 1

Outflow of payments: Each insured person is considered a “head,” for whom a “capitation” must be paid to an insurance company or MCO. Capitated payments have historically been justified on the theory that organizations receiving the payments would encourage prevention, so their costs for providing expensive services would decrease, and their earnings increase. In practice, the prepaid capitation payments became a source of capital that MCOs could invest in the global financial marketplace, leading to an estimated return on equity of about 16 percent.23

Inflow of funds: Funds for capitation payments come from several sources. One source involves premiums paid by workers and their families. Contributions from employers comprise a second source. The proportion of premiums paid by workers and their families versus that paid by employers differs according to the benefit package selected by employers.

Public-sector trust funds provide a third source of capitated payments. Low-income individuals and families, the unemployed, and those without employer-provided health insurance are subjected to a “means test” requiring full documentation of their financial resources and expenses. Those with incomes below this means-tested limit, after other resources such as homes, cars, and prior savings are considered, receive a subsidy from a public-sector trust fund. Under the Clinton plan and Obamacare, the trusts funds have involved Medicaid and Medicare. Medicaid trust funds include federal and state components that vary widely according to state-level decisions about using state revenues to improve eligibility and covered services under Medicaid. In the Colombian health program, the national social security system into which employees and employers contribute for health and retirement benefits became a public-sector trust fund (Fondo de Solidaridad y Garantía [Fund of Solidarity and Gaurantee], or FOSYGA), used for capitated payments to private MCOs. Another trust fund, intended for the poor and uninsured, was created from the tax-generated budgets of the national Ministry of Health as well as the regional, state, and municipal health authorities (Fondo de Solidaridad del Régimen Subsidiado [Solidarity Fund of the Subsidized Regime]).

Copayments and deductibles comprise a fourth source of payments. Copayments require out-of-pocket payments that patients make at the time that they receive services. The rationale for copayments rests on the largely untested assumption that people are less likely to use unneeded services if they must pay something when services are provided (the “point of delivery”). For the insured, the size of the copayments usually decreases as premiums increase. Under Obamacare, for instance, those who pay higher premiums for the more precious metal plans usually pay lower copayments at the point of delivery. The evidence that copayments reduce unnecessary utilization for the non-poor is very limited; for the poor, there is strong evidence that copayments of any size reduce necessary care.24 Deductibles are payments that patients must make at the beginning of each period of insurance coverage, before the insurance will begin to pay. In principle, deductibles are likewise intended to reduce unnecessary utilization, but like copayments, actually can become barriers to obtaining needed care. For instance, the least precious metal tiers of Obamacare require deductibles as large as $6,000 per person per year, inhibiting patients from seeking anything other than catastrophic care.

Taxes are a fifth source for the inflow of capitated funds to insurance corporations. Workers pay such taxes as a deduction from their pay, and employers pay taxes as a proportion of their payrolls. In neoliberal programs, these payroll taxes shift to public-sector trusts funds and then enter the flow of funds that MCOs receive for capitated services. But most neoliberal health programs also depend on additional taxes, usually general income taxes, to create and maintain the public-sector trust funds devoted to care for the poor. In the United States and Colombia, the income tax system remains regressive overall, as the rich pay a proportionately much smaller part of their income as taxes, exploiting the tax code’s myriad loopholes and exemptions. As a result, the non-rich contribute proportionally more to neoliberal health programs through taxes, on top of their premiums, copayments, and deductibles.

6. Changes in tax code. Partly because they increase administrative costs and profits, neoliberal reforms usually lead to higher taxes. In Colombia, payroll taxes for employers and employees have increased substantially, to approximately 11 percent.25 Under the Clinton proposal, changes in the tax code would have restricted corporate and individual tax deductions for health insurance, therefore providing incentives to purchase less expensive coverage overall. Obamacare reduces tax deductions and imposes a tax for so-called Cadillac insurance plans that go beyond the specified minimum coverage standards.

In addition, Obamacare calls for penalties, administered by the Internal Revenue Service, for those who do not purchase mandatory insurance coverage. One rationale for tax code changes usually involves claims that reduced tax deductions and tax penalties for non-adherence will lead to decreased overall costs for health care. However, the increased administrative costs of restructuring the tax code and then enforcing those changes generally go unrecognized.

Appraisals of Neoliberal Health Reforms

Advocates of neoliberal health reform have produced evaluations that, as expected, show favorable results. For instance, the 2000 World Health Report of the World Health Organization (WHO), supported in part by the World Bank, ranked the world’s health systems using a conceptual orientation and methodology that received criticism worldwide.26 In the rankings, “choice” of insurance plan was a defining criterion in evaluating health system performance. From this perspective, universal, publicly delivered health systems that covered everyone but did not encourage choice among private insurers ranked lower than those that did. As a result, Colombia (ranked 22nd in the world and first in Latin America), Chile (33rd), Costa Rica (36th), and even the United States (37th) ranked higher than Cuba (39th), despite Cuba’s much admired, accessible health system and outstanding health indicators. Brazil ranked very low, 125th, due to its attempt to achieve a unified health system, codified in the Brazilian constitution of 1988.

The co-director of the WHO’s ranking project, Julio Frenk, later became an architect of neoliberal reform as Mexico’s minister of health. He and his colleagues described Mexico’s reform in The Lancet, again prompting complaints for their unsubstantiated claims of success.27 Despite wide criticism of the WHO ranking project and of the reforms in Mexico, Frenk and his coworkers have become leading proponents of the neoliberal approach, which in recent years has taken on the misleading name, “universal health coverage” (UHC)—referring to private or public insurance coverage.28 UHC does not mean “health care for all”—a delivery system that provides equal services for the entire population, regardless of an individual’s or family’s financial resources.29

As leaders of Latin American social medicine have pointed out, the UHC orientation has become “hegemonic” in global health policy circles.30 Those limited studies that have analyzed UHC’s outcomes in countries such as Colombia, Chile, and Mexico, based on data rather than mere assertions of success, have not confirmed the ideological claims favoring managed care, market competition, efficiency, cost reduction, or quality. Under UHC, access barriers persist or worsen as costs and corporate profits expand.31

Such contrasts became clear in the case of Colombia, which was considered pathbreaking by the neoliberal powers that be. The World Bank sponsored the reform and also evaluated it favorably, despite acknowledging a few methodological weaknesses, such as a lack of randomized data or ability to infer causality.32 The ideological assumption underlying such appraisals—that the public sector only interferes with the market—emerged from a study of Colombia’s reform released in 2009 by the Inter-American Development Bank: “Achieving universal coverage faces several hurdles…because of the existence of safety-net providers that act as substitutes for insurance and provide incentives to ride the system for free…. The resistance of public hospitals to forgoing supply-side subsidies cannot be underestimated.”33

By contrast, evaluations of the Colombian reform not tied to its sponsors have found mostly adverse effects. An influential study by Thomas Tsai published in The Lancet determined that in 2008 alone, Colombian citizens initiated approximately 143,000 lawsuits (tutelas) due to denial of treatment by private insurance companies, costs outstripped public funding, and there was inadequate “citizen consultation” in improving the program.34 Other research showed that profit-seeking permeated the system, that insurance covered too few services, and that the system was unable to address the health impacts of poor living conditions.35 An ethnographic study analyzed attempts to protect the system’s market structure in the courts.36 A prominent senator, Jorge Robledo, documented monopolistic practices, delayed payments, corruption, high overhead, increasing legal actions due to denial of care, and illegal investment of health funds by for-profit insurance companies. Robledo concluded: “Statute 100 [the reform’s legal name] does not work, because it is not a law intended for the health of Colombians, but rather a law intended to finance the business of the health of Colombians.”37

Many countries have rejected the neoliberal model, and have instead constructed health systems based on the goal of “health care for all” (HCA). Such countries strive to provide universal access to care without tiers of differing benefit packages for rich and poor. For instance, Canada prohibits private insurance coverage for services provided by its national health program. Because Canada’s wealthy must participate in the publicly financed system, the presence of the entire population in a unitary system assures a high-quality national program. In Latin America, countries trying to advance the HCA model include Bolivia, Brazil, Cuba, Ecuador, Uruguay, and Venezuela. The inevitable failure of Obamacare may open a space, finally, for even the United States to pursue a national health program that does not follow the neoliberal model.

The Single-Payer Proposal

As a non-neoliberal model, a single-payer national health program (NHP) in the United States essentially would create “Medicare for all.” Under such a plan, the government collects payments from workers, employers, and Medicare recipients, and then distributes funds to health care providers for the services that Medicare patients receive. Because it is such a simple system, the administrative costs under traditional Medicare average just 1 to 2 percent.38 The vast majority of Medicare expenditures pay for clinical services. Such a structure has achieved substantial savings by reducing administrative waste in Canada, Taiwan, and other countries.

The following features of a single-payer option come from the proposals of Physicians for a National Health Program (PNHP), a group of more than 20,000 medical professionals, spanning all specialties, states, age groups, and practice settings.39 According to the PNHP proposals, coverage would be universal for all needed services, including medications and long-term care. There would be no out-of-pocket premiums, copayments, or deductibles. Costs would be controlled by “monopsony” financing from a single, public source. The NHP would not permit competing private insurance and would eliminate multiple tiers of care for different income groups. Practitioners and clinics would be paid predetermined fees for services, without any need for costly billing procedures. Hospitals would negotiate an annual global budget for all operating costs. For-profit, investor-owned facilities would be prohibited from participation. Most non-profit hospitals would remain privately owned. To reduce overlapping and redundant facilities, capital purchases and expansion would be budgeted separately, based on regional health planning goals.

Funding sources would include current federal spending for Medicare and Medicaid, a payroll tax on private businesses less than what businesses currently pay for coverage, and an income tax on households, with a surtax on high incomes and capital gains. A small tax on stock transactions would be implemented, while state and local taxes for health care would be eliminated.40 Under this financing plan, 95 percent of families would pay less for health care than they previously paid in insurance premiums, deductibles, copayments, other out-of-pocket spending, and reduced wages.

From the corporate viewpoint, the insurance and financial sectors would lose a major source of capital accumulation. At the same time, other large and small businesses would experience a stabilization or reduction in health care costs. Companies that do not currently provide health insurance would pay more, but far less than the cost of buying private coverage.

National polls have consistently shown that about two-thirds of people in the United States favor the single-payer approach.41 Ninety-three members of Congress, led by Representative John Conyers and Senator Bernie Sanders, have co-sponsored single-payer legislation.42 What, then, are the obstacles to a single-payer plan, and should such a program be the ultimate goal for the U.S. health system?

Moving Beyond Single Payer

The coming failure of Obamacare will mark a moment of transformation in the United States, where neoliberalism has come home to roost. For that moment, those struggling for a just and accessible health system will need to address some profound changes that have occurred during the era of neoliberalism. These changes pertain to the shifting social class position of health professionals, and to the increasingly oligopolistic and financialized character of the health insurance industry.

First, the social class position of physicians and other health professionals has changed drastically. Previously, most physicians worked in individual or group practices. Although some were employees receiving relatively high salaries and benefits, most were small entrepreneurs. In the “fee-for-service” system, they seldom accumulated capital on the scale of industrialists or financiers, but they still saw themselves and others saw them as members of an “upper class.” Some Marxist-oriented theorists viewed them as members of a “professional managerial class.”43

Physicians increasingly have become employees of hospitals or practices at least partially owned by large health systems. In a large 2015 survey, 63 percent of all physicians reported being employed, including 72 percent of women physicians.44 These changes mainly reflect the increased costs of owning a private practice, due to billing and other administrative requirements. In the average practice, annual overhead costs have reached about $83,000 per physician in the United States, compared to $22,000 in Canada.45 As a result, doctors mostly have become employees of hospital and health system corporations, where relatively high salaries tend to mask the reality of their employee status.

Before neoliberalism, physicians for the most part owned or controlled their own means of production and conditions of practice. Although their work was often challenging, they could decide their own hours, staff members, how much time to spend with patients, what to record about their visits in medical records, and how much to charge for their services. Today, the corporations for which physicians work control all of these decisions. This loss of control over the conditions of work has caused much unhappiness in the profession. An esteemed clinician described the change as “working on the factory floor.”46

With loss of control over the work process and a reduced ability to generate very high incomes, the medical profession has become proletarianized.47 Due to their lingering mystique of professionalism and relatively high incomes, physicians often do not realize that their malaise reflects in large part their changing social class position. In a way, they have joined that highest stratum of workers which Lenin and others referred to as the “aristocracy of labor.”48 From Samir Amin’s perspective, the current wave of “generalized proletarianization” has engulfed the medical profession: “A rapidly growing proportion of workers are no more than sellers of their labor power to capital…a reality that should not be obscured by the apparent autonomy conferred on them by their legal status.”49

Beyond the changing class position of health professionals, the transition as Obamacare collapses will need to address the oligopolistic character of the insurance industry, alongside the consolidation of large health systems. Obamacare has increased the flow of capitated public and private funds into the insurance industry and thus has extended the overall financialization of the global economy.50

In this context, it is important to reconsider the distinction between national health insurance (NHI) and a national health service (NHS). NHI involves socialization of payments for health services but usually leaves intact private ownership at the level of infrastructure. Except for a small proportion of institutions like public hospitals and clinics, under NHI the means of production in health care remain privately owned. Canada is the best-known model of NHI. The PNHP proposal and Congressional legislation that embodies the singer-payer approach are based on the Canadian model of NHI.

An NHS, by comparison, involves socialization of both payment for health services and the infrastructure through which services are provided. Under an NHS, the state generally owns and operates hospitals, clinics, and other health institutions, which become part of the public sector rather than remaining under private control. In the capitalist world, Scotland and Sweden provide examples of NHSs, where most health infrastructure exists within the public sector and most health professionals are employees of the state. For such countries, the state apparatus includes elements that provide “welfare state” services, including health care, that, however vital, ultimately protect the capitalist system. In the socialist world, Cuba offers the clearest remaining model of an NHS where a private sector does not exist. In the United States, a legislative proposal introduced during the 1970s and 1980s by Representative Ronald Dellums explicitly adopted the goal of an NHS.

The PNHP single-payer proposal emerged from a retreat in New Hampshire during 1986, where activists struggled with these distinctions. Although most participants at the retreat had worked hard for the Dellums NHS proposal, they reached a consensus—albeit with some ambivalence—to shift their work to an NHI proposal based on Canada. The rationale for this shift involved two main considerations. First, Canada’s proximity and cultural similarity to the United States would make it more palatable for the U.S. population, and especially its Congressional representatives. Secondly, a Canadian-style NHI proposal could be “doctor-friendly.” Under the PNHP proposal, physicians could continue to work in private practice, clinics, or hospitals. The main difference for physicians was that payments would be socialized, so that the physicians would not have to worry about billing and collecting their fees for services provided.

While PNHP has achieved great success in its research and policy work, these efforts, and those of many other organizations supporting single payer, have not yet generated a broad social movement working toward a Canadian-style NHI. Meanwhile, the neoliberal model, with all its benefits for the ruling class and drawbacks for everyone else, has solidified its hegemony. Partly as a result, physicians and other health professionals are becoming proletarianized employees of an increasingly consolidated, profit-driven, financialized health care system. And under Obamacare, the state has continued to prioritize protection of the capitalist economic system, in this case by overseeing huge subsidies for private insurance and pharmaceutical corporations.

Under these circumstances, it is no longer evident that socialization of payments for health services under a single payer NHI is the only goal toward which progressive forces should struggle.51 PNHP calls for the removal of for-profit corporations from U.S. health care. But that change will not occur within the context of capitalism as we know it. As neoliberalism draws to a close and as Obamacare collapses, a much more fundamental, socialist transformation needs to reshape not just health care, but also the capitalist state and capitalist society.

Howard Waitzkin is Distinguished Professor Emeritus of Sociology at the University of New Mexico and practices internal medicine part-time in rural New Mexico and Illinois. His books include Medicine and Public Health at the End of Empire (Paradigm, 2011).

Ida Hellander is a longtime advocate for single-payer health reform in the United States.

http://monthlyreview.org/2016/05/01/obamacare/#fn3

Notes

1. Congressional Budget Office, “,” March 2015, ; Rachel Nardin et al., “The Uninsured after Implementation of the Affordable Care Act: A Demographic and Geographic Analysis,” Health Affairs blog, June 6, 2013, http://healthaffairs.org.

2. Robert Pear, “Many Say High Deductibles Make Their Health Law Insurance All but Useless,” New York Times, November 14, 2015.

3. David Himmelstein and Steffie Woolhandler, “The Post-Launch Problem: The Affordable Care Act’s Persistently High Administrative Costs,” Health Affairs blog, May 27, 2015, http://healthaffairs.org; David U. Himmelstein et al., “A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far,” Health Affairs 33, no. 9 (2014): 1586–94; Steffie Woolhandler, Terry Campbell, and David U. Himmelstein, “Costs of Health Care Administration in the United States and Canada,” New England Journal of Medicine 349, no. 8 (2003): 768–75.

4. “Health Insurance CEO Pay Skyrockets in 2013,” Health Care-NOW!, May 5, 2014, http://healthcare-now.org.

5. “National Health Expenditure Projections 2012–2022,” Centers for Medicare and Medicaid Services, http://cms.gov.

6. Richard A. Young and Jennifer E. DeVoe, “Who Will Have Health Insurance in the Future? An Updated Projection,” Annals of Family Medicine 10, no. 2 (2012): 156–62.

7 .Howard Waitzkin, Medicine and Public Health at the End of Empire (Boulder, CO: Paradigm, 2011), chapter 8.

8. Howard Waitzkin and Celia Iriart, “How the United States Exports Managed Care to Third World Countries,” Monthly Review 52, no. 1 (May 2000): 21–35; Karen Stocker, Howard Waitzkin, and Celia Iriart, “The Exportation of Managed Care to Latin America,” New England Journal of Medicine 340, no. 14 (1999): 1131–36.

9. Waitzkin and Iriart, “How the United States Exports Managed Care to Third World Countries.”

10. Alain C. Enthoven and K. Wayne Smith, How Much Is Enough? Shaping the Defense Program, 1961–1969 (New York: Harper and Row, 1971).

11. For more on the sources of neoliberal health reform in the military, see Howard Waitzkin, “The Strange Career of Managed Competition: Military Failure to Medical Success?” American Journal of Public Health 84 (1994): 482–89; Alain C. Enthoven, “Commentary: Setting the Record Straight—A Reply to Howard Waitzkin,” American Journal of Public Health 84 (1994): 490–93; Howard Waitzkin, “A Rejoinder,” American Journal of Public Health 84 (1994): 493–94. For Enthoven’s more recent packaging of the same perspective, see Alain C. Enthoven, “Market Forces and Efficient Health Care Systems,” Health Affairs 23, no. 2 (2004): 25–27; Alain C. Enthoven and Wynand P. M. M. van de Ven, “Going Dutch—Managed-Competition Health Insurance in the Netherlands,” New England Journal of Medicine 357, no. 24 (2007): 2421–23.

12. Waitzkin, “The Strange Career of Managed Competition.”

13. Alain C. Enthoven, “Consumer-Choice Health Plan,” New England Journal of Medicine 298, nos. 12 and 13 (1978): 650–58, 709–20; and Health Plan: The Only Practical Solution to the Soaring Cost of Medical Care (Reading, MA: Addison-Wesley, 1980).

14. Alain C. Enthoven, Theory and Practice of Managed Competition in Health Care Finance (Amsterdam: North-Holland, 1988); Alain C. Enthoven and Richard Kronick, “A Consumer Choice Health Plan for the 1990s,” New England Journal of Medicine 320, nos. 1 and 2 (1989): 29–37, 94–101; Paul Ellwood, Alain Enthoven, and Lynn Etheredge, “The Jackson Hole Initiatives for a Twenty First Century American Health Care System,” Health Economics 1, no. 3 (1992): 149–68.

15. For information about Obama’s switch from single-payer to market-oriented principles and the campaign contributions that supported this conversion, see: “Barack Obama on Single Payer in 2003,” https://pnhp.org; Brad Jacobson, “Obama Received $20 Million from Healthcare Industry in 2008 Campaign,” The Raw Story, January 12, 2010, http://rawstory.com. Obama’s support from the insurance industry deteriorated slightly in 2012: Center for Responsive Politics, “2012 Presidential Race,” http://opensecrets.org.

16. Deborah Levine and Jessica Mulligan, “Overutilization, Overutilized,” Journal of Health Politics, Policy and Law 40, no. 2 (2015): 421–37.

17. “Health Policy Brief: The CO-OP Health Insurance Program (updated),” Health Affairs, updated January 23, 2014, http://healthaffairs.org.

18. Entidad Promotora de Salud Organismo Cooperativo, Directorio de Empesas, Colombia, http://informacion-empresas.co.

19. Kip Sullivan, “How to Think Clearly about Medicare Administrative Costs: Data Sources and Measurement,” Journal of Health Politics, Policy and Law 38 , no. 3 (2013): 479–504.

20. Sharita R. Thomas et al., “A Comparison of Closed Rural Hospitals and Perceived Impact,” North Carolina Rural Health Research Program, April 2015, http://shepscenter.unc.edu; Chad Terhune, “Closure of Three Southland Hospitals May Be Part of a Trend,” Los Angeles Times, April 3, 2013.

21. Waitzkin, Medicine and Public Health at the End of Empire, chapters 9–10.

22. Himmelstein and Woolhandler, “The Post-Launch Problem.”

23. “Are Health Insurers Making Huge Profits?” The Economist, May 5, 2010, http://economist.com.

24. Nicole Lurie et al., “Termination of Medi-Cal Benefits,” New England Journal of Medicine 314, no. 19 (1986): 1266–68.

25. Ursula Giedion and Manuela Villar Uribe, “Colombia’s Universal Health Insurance System,” Health Affairs 28, no. 3 (2009): 853–63.

26. World Health Report 2000 Geneva: World Health Organization, 2000), http://who.int. For critiques, see Celia Almeida et al., “Methodological Concerns and Recommendations on Policy Consequences of the World Health Report 2000,” Lancet 357, no. 9269 (2001): 1692–97; Vicente Navarro, “Assessment of the World Health Report 2000,” Lancet 356, no. 9241 (2000): 1598–1601.

27. Felicia M. Knaul et al., “The Quest for Universal Health Coverage: Achieving Social Protection for All in Mexico,” Lancet 380, no. 9849 (2012): 1259–79; Waitzkin, Medicine and Public Health at the End of Empire, chapter 9; Asa Cristina Laurell, “Three Decades of Neoliberalism in Mexico: The Destruction of Society,” International Journal of Health Services 45 , no. 2 (2015): 246–64.

28. Julio Frenk, “Leading the Way towards Universal Health Coverage: A Call to Action,” Lancet 385, no. 9975 (2015): 1352–58.

29. Howard Waitzkin, “Universal Health Coverage: The Strange Romance of The Lancet, MEDICC, and Cuba,” Social Medicine 9, no. 2 (2015): 93–97.

30. Nila Heredia et al., “The Right to Health: What Model for Latin America?” Lancet 385, no. 9975 (2015): 34–37.

31. Waitzkin, Medicine and Public Health at the End of Empire, chapter 9; Asa Cristina Laurell, “Three Decades of Neoliberalism in Mexico”; Amit Sengupta, “Universal Health Coverage: Beyond Rhetoric,” International Development Research Centre, Occasional Paper No. 20, November 2013, http://municipalservicesproject.org; David Stuckler et al., “The Political Economy of Universal Health Coverage,” background paper for the First Global Symposium on Health Systems Research, Montreux, Switzerland, November 16–19, 2010, http://pacifichealthsummit.org

32. Giedion and Villar Uribe, “Colombia’s Universal Health Insurance System.”

33. Amanda L. Glassman et al., From Few to Many: Ten Years of Health Insurance Expansion in Colombia (Washington, DC: Inter-American Development Bank, 2009).

34. Thomas C. Tsai, “Second Chance for Health Reform in Colombia,” Lancet 375, 9709 (2010): 109–10.

35. Ingrid Vargas et al., “Barriers of Access to Care in a Managed Competition Model: Lessons from Colombia,” BMC Health Services Research 10, no. 297 (2010): 1–12, http://biomedcentral.com.

36. César E. Abadía-Barrero, “Neoliberal Justice and the Transformation of the Moral: The Privatization of the Right to Health Care in Colombia,” Medical Anthropology Quarterly (October 21, 2014).

37. Senator Jorge Robledo, “Saludcoop: The Greatest Robbery of Public Assets,” speech in a plenary session of the Colombian Senate, September 9, 2014. Published October 15, 2014, http://colombiasupport.net.

38. Himmelstein and Woolhandler, “The Post-Launch Problem.”

39. Physicians for a National Health Program, “Proposal of the Physicians’ Working Group for Single-Payer National Health Insurance,” submitted for publication, https://pnhp.org; Himmelstein et al., “A National Health Program for the United States: A Physicians’ Proposal”; Kevin Grumbach et al., “Liberal Benefits, Conservative Spending: The Physicians for a National Health Program Proposal,” JAMA 265, no. 19 (1991): 2549–54; Charlene Harrington et al., “A National Long-Term Care Program for the United States: A Caring Vision,” JAMA 266, no. 21 (1991): 3023–29.

40. Gerald Friedman, “Funding HR 676: The Expanded and Improved Medicare for All Act: How We Can Afford a National Single-Payer Health Plan,” https://pnhp.org.

41. “New Poll on Single Payer and a Medicare Buy-In,” survey conducted by GBA Strategies, January 9–15, 2015, https://pnhp.org.

42. “The Expanded & Improved Medicare For All Act (H.R. 676),” Physicians for a National Health Program, https://pnhp.org.

43. Barbara Ehrenreich and John Ehrenreich, “The Real Story behind the Crash and Burn of America’s Managerial Class,” Alternet, February 13, 2013, http://alternet.org; Barbara and John Ehrenreich, “The Professional-Managerial Class,” Radical America 11, no. 2 (March/April 1977): 7–31.

44. Carol Peckham, “Medscape Physician Compensation Report 2015,” http://medscape.com; Elisabeth Rosenthal, “Apprehensive, Many Doctors Shift to Jobs with Salaries,” New York Times, February 13, 2014, http://nytimes.com

45. Dante Morra et al., “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting with Payers,” Health Affairs 30, no. 8 (2011): 1443–50.

46. John D. Stoeckle, “Working on the Factory Floor,” Annals of Internal Medicine 107, no. 2 (1987): 250–51.

47. John B. McKinlay and Joan Arches, “Towards the Proletarianization of Physicians,” International Journal of Health Services 15, no. 2 (1985): 161–95; Adam Reich, “Disciplined Doctors: The Electronic Medical Record and Physicians’ Changing Relationship to Medical Knowledge,” Social Science & Medicine 74, no. 7 (2012): 1021–28.

48. Eric Hobsbawm, “Lenin and the ‘Aristocracy of Labor,’” Monthly Review 64, no. 7 (December 2012): 26–34.

49. Samir Amin, “Contra Hardt and Negri: Multitude or Generalized Proletarianization?” Monthly Review 66, no. 6 (November 2014): 25–36.

50. In this sense, the financial flows of health insurance cohere with Foster’s comment, “At the more stratospheric level represented by contemporary finance, the general formula for capital, or M-C-M′, is being increasingly supplanted by the circuit of speculative capital, M-M′, in which the production of use values disappears altogether and money simply begets more money.” John Bellamy Foster, “The Epochal Crisis,” Monthly Review 65, no. 6 (October 2013): 1–12.

51. Howard Waitzkin, ed., The Collapse of Capitalist Health Care and the Road Ahead (New York: Monthly Review Press, 2016, forthcoming).

James Burdick: “Talking About Single Payer”

Health Care Equality for America

By Dr. James F. Burdick
Near Horizons Publishing, May 5, 2016

From the Introduction

Fifteen years ago, when the Clinton health reform plan failed, I began to feel that something was missing, something so fundamental that it seemed hard to understand why almost no one mentioned it: The doctors were missing from the design.

This book corrects that error. It describes a powerful role for doctors in the novel national structure that I propose to allow us to move beyond the incomplete successes of the Patient Protection and Affordable Care Act (ACA). Opinions from a variety of authorities are quoted to provide rich independent sources of understanding about the complex realities and difficult choices we face. Much of this is relevant to any systematic improvement in the U.S. health care system, but out of it emerges in particular a compelling argument in favor of a national single payer system giving access to care for everyone.

These convictions issue in part from my career as an active clinician and health care administrator. I have seen problems from the inside which has given me a clear vision of the power that only doctors can bring to saving our health care system.

One of the most important reasons that single-payer health plans have failed to take hold in American politics is the fear that government-sponsored health care will put decisions in the hands of government bureaucrats, leading to rationing, red-tape, and cost overruns. My plan removes these obstacles by putting decision-making powers in the hands of trusted medical professionals, backed by empirical research and a robust electronic medical records system. Doctors can unite behind my plan to help ensure passage of a single-payer plan that will provide quality, affordable health care to all Americans. Most single payer health plan proposals include some sort of decision-making board. The difference, in the case of the Health Security Board in my proposal, is its private character.

Health care and its delivery involve a complex of issues and all must be considered for such a major restructuring. Costs, issues regarding doctors and hospitals, drugs, devices, diagnostic tests, electronic medical records, professional involvement and the general social challenges in our country are all part of the single payer system talked about in this book. The final structure proposed in the last chapter is my vision for how best to serve patients through a synthesis of all of these topics.

The ideas here are not just my opinions – far from it. I have gathered disparate views from knowledgeable individuals through a series of interviews and researched the literature extensively to underscore a variety of important perspectives.

James F. Burdick is a Professor of Surgery at the Johns Hopkins School of Medicine, Past President of UNOS, the Organ Procurement and Transplant Network contractor, and prior Director of the Division of Transplantation in the Healthcare Systems Bureau of the Health Resources Services Administration.

http://media.chelseagreen.com/talking-about-single-payer

The Table of Contents and the first 20 pages can be previewed at the following link:

http://www.amazon.com/Talking-About-Single-Payer-Equality/dp/0997054530

Oh no, not another book on single payer! No, this is not “just another” single payer book. It is complementary to books that have already been published on the topic.

Professor Burdick not only is very well informed on health policy in general and single payer more specifically, he also is dedicated to the cause of health care justice which certainly helps him to sort out good and bad policy. His extensive background as a transplant surgeon and as a health care administrator also provides him with the adroitness to apply effective health policy principles to our health care system. For this book he also interviewed numerous well qualified individuals who provide a broad spectrum of views that are helpful in understanding single payer – even learning the “how not to” from the few expressing negative views.

Burdick does present some new ideas – maybe not entirely new but placing a new emphasis on them. Most significantly, he proposes a Health Security Board composed of qualified professionals rather than government bureaucrats. This board would have a much greater role than the Patient-Centered Outcomes Research Institute (PCORI) established by the Affordable Care Act or the United Kingdom’s National Institute for Health and Care Excellence (NICE). Such concepts along with others should be considered when moving forward in developing the definitive design of a single payer national health program.

Burdick does have some relatively minor differences with some of the opinions expressed on the website of Physicians for a National Health Program, though none of them are compelling enough to motivate fundamental change in the standard single payer model of reform. In fact, tomorrow an updated version of the Physicians’ Proposal will be released, reflecting six years under the Affordable Care Act. It is still the golden standard of single payer.

Medicare decreases spending without changing volume, compared to private insurers

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

By Jacob Wallace and Zirui Song
Health Affairs, May 2016

Abstract

To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers—including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter — or 32.4 percent — upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare’s purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.

http://content.healthaffairs.org/content/35/5/864.abstract

***

Comment:

By Don McCanne, M.D.

This study looked at the changes in spending and volume of services for individuals who, at age 65, transferred from private insurance to the traditional Medicare program. The authors showed that the volume of services remained the same, but spending went down, which reflects the lower provider prices that Medicare pays compared to private insurers.

One suggestion that has been made to “save Medicare” from future federal budget deficits would be to increase the eligibility age from 65 to 67. They showed that this would actually increase our national health expenditures without changing the volume of services, not exactly the health care cost containment that we are seeking.

Conservatives and neoliberals might think that the increase in spending would be worth it just to advance their ideological goal of relying less on government spending and more on the private sector. But a portion of the reduction in federal spending would be offset by increased Medicaid coverage for those eligible, and increased ACA premium tax credits and  cost-sharing subsidies, resulting in tax revenue losses and greater outlays. Not a good deal at all.

Others have suggested that we should expand Medicare enrollment, perhaps by reducing the eligibility age in 5 year increments. Although it would be an extrapolation of this study, it is not unreasonable to assume that we could significantly reduce our expenditures without any change in the volume of services for those who otherwise would have been privately insured.

Or go all the way. Replace the private insurers with a Medicare for all program. Not only is Medicare a more efficient purchaser of health care services, the recovery of much of the profound administrative waste of our fragmented financing system would be enough to fully fund a health care system for all without increasing our national health expenditures from the current level.

Remember who the patient is. It is not the government budget. It is the people who need health care. Establishing a well-designed single payer Medicare-for-all system would take care of the people, and the government budget would perk along just fine.

Medicare decreases spending without changing volume, compared to private insurers

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

By Jacob Wallace and Zirui Song
Health Affairs, May 2016

Abstract

To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers—including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter — or 32.4 percent — upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare’s purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.

http://content.healthaffairs.org/content/35/5/864.abstract

This study looked at the changes in spending and volume of services for individuals who, at age 65, transferred from private insurance to the traditional Medicare program. The authors showed that the volume of services remained the same, but spending went down, which reflects the lower provider prices that Medicare pays compared to private insurers.

One suggestion that has been made to “save Medicare” from future federal budget deficits would be to increase the eligibility age from 65 to 67. They showed that this would actually increase our national health expenditures without changing the volume of services, not exactly the health care cost containment that we are seeking.

Conservatives and neoliberals might think that the increase in spending would be worth it just to advance their ideological goal of relying less on government spending and more on the private sector. But a portion of the reduction in federal spending would be offset by increased Medicaid coverage for those eligible, and increased ACA premium tax credits and  cost-sharing subsidies, resulting in tax revenue losses and greater outlays. Not a good deal at all.

Others have suggested that we should expand Medicare enrollment, perhaps by reducing the eligibility age in 5 year increments. Although it would be an extrapolation of this study, it is not unreasonable to assume that we could significantly reduce our expenditures without any change in the volume of services for those who otherwise would have been privately insured.

Or go all the way. Replace the private insurers with a Medicare for all program. Not only is Medicare a more efficient purchaser of health care services, the recovery of much of the profound administrative waste of our fragmented financing system would be enough to fully fund a health care system for all without increasing our national health expenditures from the current level.

Remember who the patient is. It is not the government budget. It is the people who need health care. Establishing a well-designed single payer Medicare-for-all system would take care of the people, and the government budget would perk along just fine.

Does the neoliberal label apply to our health care system?

Obamacare: The Neoliberal Model Comes Home to Roost in the United States — If We Let It

By Howard Waitzkin and Ida Hellander
Monthly Review, May 2016

(Excerpts)

Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured — at least 27 million people, according to the non-partisan Congressional Budget Office — and at least twice that number will remain underinsured. Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction. Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs. These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders. The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades.

Such proposals fostered neoliberalism. They promoted multiple competing, for-profit, private insurance corporations. Programs and institutions previously based in the public sector were cut back and, if possible, privatized. Overall government budgets for public-sector health care were reduced. Private corporations gained access to public trust funds. Public hospitals and clinics entered into competition with private institutions, their budgets were determined by demand rather than supply, and prior global budgets for safety net institutions were not guaranteed. Insurance executives made operational decisions about services, and their authority superseded that of physicians and other clinicians.

The Boilerplate Neoliberal Health Reform

Health reform proposals across different countries have resembled one another closely. The specific details of each plan appeared to conform to a word-processed, cookie-cutter template, in which only the names of national institutions and local actors have varied. Six broad features have characterized nearly all neoliberal health initiatives.

1. Organizations of providers. One element of neoliberal proposals involves large privately controlled organizations of health care providers. These organizations operate under the direct control or strong influence of private, for-profit insurance corporations, in collaboration with hospitals and health systems.

2. Organizations of purchasers. A second element of neoliberal proposals involves large organizations purchasing or facilitating the purchase of private health insurance, usually through MCOs.

3. Constriction of public hospitals and safety net providers. Public hospitals at the state, county, or municipal levels compete for patients covered under public programs like Medicaid or Medicare with private hospitals participating as subsidiaries or contractors of insurance corporations or MCOs. With less public-sector funding, public hospitals reduce services and programs, and many eventually close. Although community health centers (CHCs) sometimes enjoy temporary improvements in funding, as in Obamacare, they increasingly serve as the providers of last resort for the remaining uninsured and underinsured. As a result, CHCs remain vulnerable to cutbacks and face an insecure future.

4. Tiered benefits packages. Neoliberal proposals define benefits packages in hierarchical tiers. The national reform provides a minimum package of benefits that experts view as essential, and individuals or their employers can buy additional coverage. Poor and near poor people in the U.S. Medicaid program are eligible for benefits that used to be free of cost-sharing, but since Obamacare passed, states increasingly have imposed premiums and copayments.

5. Complex multi-payer and multi-payment financing. Financial flows under neoliberal health policies are very complex. The costs of administering these flows and other components of neoliberal policies also are quite high (about 25 to 28 percent of total health care expenditures) and keep increasing. Under Obamacare, administrative overhead — also referred to administrative “waste,” since the costs do not contribute to direct patient services — grew 10.6 percent in 2014, faster than any other component of health care except medications.

6. Changes in tax code. Partly because they increase administrative costs and profits, neoliberal reforms usually lead to higher taxes.

Many countries have rejected the neoliberal model, and have instead constructed health systems based on the goal of “health care for all” (HCA). Such countries strive to provide universal access to care without tiers of differing benefit packages for rich and poor. For instance, Canada prohibits private insurance coverage for services provided by its national health program. Because Canada’s wealthy must participate in the publicly financed system, the presence of the entire population in a unitary system assures a high-quality national program. In Latin America, countries trying to advance the HCA model include Bolivia, Brazil, Cuba, Ecuador, Uruguay, and Venezuela. The inevitable failure of Obamacare may open a space, finally, for even the United States to pursue a national health program that does not follow the neoliberal model.

The Single-Payer Proposal

The following features of a single-payer option come from the proposals of Physicians for a National Health Program (PNHP), a group of more than 20,000 medical professionals, spanning all specialties, states, age groups, and practice settings. According to the PNHP proposals, coverage would be universal for all needed services, including medications and long-term care. There would be no out-of-pocket premiums, copayments, or deductibles. Costs would be controlled by “monopsony” financing from a single, public source. The NHP would not permit competing private insurance and would eliminate multiple tiers of care for different income groups. Practitioners and clinics would be paid predetermined fees for services, without any need for costly billing procedures. Hospitals would negotiate an annual global budget for all operating costs. For-profit, investor-owned facilities would be prohibited from participation. Most non-profit hospitals would remain privately owned. To reduce overlapping and redundant facilities, capital purchases and expansion would be budgeted separately, based on regional health planning goals.

Funding sources would include current federal spending for Medicare and Medicaid, a payroll tax on private businesses less than what businesses currently pay for coverage, and an income tax on households, with a surtax on high incomes and capital gains. A small tax on stock transactions would be implemented, while state and local taxes for health care would be eliminated. Under this financing plan, 95 percent of families would pay less for health care than they previously paid in insurance premiums, deductibles, copayments, other out-of-pocket spending, and reduced wages.

Moving Beyond Single Payer

The coming failure of Obamacare will mark a moment of transformation in the United States, where neoliberalism has come home to roost. For that moment, those struggling for a just and accessible health system will need to address some profound changes that have occurred during the era of neoliberalism. These changes pertain to the shifting social class position of health professionals, and to the increasingly oligopolistic and financialized character of the health insurance industry.

Beyond the changing class position of health professionals, the transition as Obamacare collapses will need to address the oligopolistic character of the insurance industry, alongside the consolidation of large health systems. Obamacare has increased the flow of capitated public and private funds into the insurance industry and thus has extended the overall financialization of the global economy.

In this context, it is important to reconsider the distinction between national health insurance (NHI) and a national health service (NHS). NHI involves socialization of payments for health services but usually leaves intact private ownership at the level of infrastructure. Except for a small proportion of institutions like public hospitals and clinics, under NHI the means of production in health care remain privately owned. Canada is the best-known model of NHI. The PNHP proposal and Congressional legislation that embodies the singer-payer approach are based on the Canadian model of NHI.

The PNHP single-payer proposal emerged from a retreat in New Hampshire during 1986, where activists struggled with these distinctions. Although most participants at the retreat had worked hard for the Dellums NHS proposal, they reached a consensus — albeit with some ambivalence — to shift their work to an NHI proposal based on Canada. The rationale for this shift involved two main considerations. First, Canada’s proximity and cultural similarity to the United States would make it more palatable for the U.S. population, and especially its Congressional representatives. Secondly, a Canadian-style NHI proposal could be “doctor-friendly.” Under the PNHP proposal, physicians could continue to work in private practice, clinics, or hospitals. The main difference for physicians was that payments would be socialized, so that the physicians would not have to worry about billing and collecting their fees for services provided.

While PNHP has achieved great success in its research and policy work, these efforts, and those of many other organizations supporting single payer, have not yet generated a broad social movement working toward a Canadian-style NHI. Meanwhile, the neoliberal model, with all its benefits for the ruling class and drawbacks for everyone else, has solidified its hegemony. Partly as a result, physicians and other health professionals are becoming proletarianized employees of an increasingly consolidated, profit-driven, financialized health care system. And under Obamacare, the state has continued to prioritize protection of the capitalist economic system, in this case by overseeing huge subsidies for private insurance and pharmaceutical corporations.

http://monthlyreview.org/2016/05/01/obamacare/

***

Encyclopedia Britannica

Neoliberalism: ideology and policy model that emphasizes the value of free market competition.

Neoliberal ideology and policies became increasingly influential, as illustrated by the British Labour Party’s official abandonment of its commitment to the “common ownership of the means of production” in 1995 and by the cautiously pragmatic policies of the Labour Party and the U.S. Democratic Party from the 1990s.

http://www.britannica.com/topic/neoliberalism

***

A Neoliberal’s Manifesto

By Charles Peters, Founder and Editor
The Washington Monthly, May 1983

If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives, we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

http://www.washingtonmonthly.com/features/1983/8305_Neoliberalism.pdf

***

Comment:

By Don McCanne, M.D.

The majority of Americans would like to see a high quality health care system that is affordable and accessible for everyone. We do not have that now. Why not?

Progressives/liberals generally recognize that costs and market dysfunctions require a major role of government in financing health care. Conservatives/libertarians believe that free markets can fulfill that role with the exception that those impoverished not by choice need private charity or the helping hand of government. But it is those in the middle – the moderates – who determine policy through the election process. So who are they?

They are both Republicans and Democrats. In health care, they support private financing, primarily through insurance, though they support public tax expenditures to help pay for the most common coverage – employer-sponsored plans. They also support Medicare for seniors and those with disabilities, and most support Medicaid for low-income individuals and families.

In fact, President Obama abandoned single payer in favor of the Heritage Foundation proposal, based on these principles, since it had broad bipartisan support – or so he thought, until the Republicans decided that a political defeat for Obama was more important than improving our health care system.

So what happened to these moderates? The Republicans have retreated toward the right where they would try to tolerate the conservative tea party faction. The moderate Democrats did not move to the left but instead also moved somewhat toward the right into the pro-market neoliberal niche. Following the groundwork laid by President Reagan, President Bill Clinton followed a neoliberal path in which “the era of big government is over” (State of the Union, 1996). The neoliberals then became the establishment force in the Democratic Party. President Obama, whether voluntarily or through political obstructionism, did not change the direction of the party. The likely next president has indicated that she will follow the neoliberal Clintonian path as well and not change direction in health care.

Today’s article describes how neoliberalism and its advocacy of using markets instead of the government to control the financing of health care has resulted in our overpriced and underperforming health care system, as if the neoliberals have failed to see the irony of a health care system that is already 60 percent funded through the tax system and that has failed to conform to free market dynamics.

Whatever labels are used, the majority of Americans support Medicare. If we already had an improved version of Medicare that included everyone, the support would be near unanimous. The neoliberals either need to take a reality check on their ideology, or they need to attend the next local tea party function and listen to the voices extolling the virtues of a society without a functioning government.

Letter: Frayed health care

By Dr. Arthur J. Sutherland III
The Commercial Appeal, May 1, 2016

MEMPHIS — Recent articles in local and national publications have documented increasing stress in health care for the providers.

Locally, Dr. Frank Masur wrote about finding a sense of helplessness in physicians that can lead to depression and thoughts of early retirement.

Nationally, ethicist Arthur Kaplan sees physician burnout as a public health crisis. He quotes a recent study from the Mayo Clinic documenting burnout rising from 45.5 percent of doctors in 2011 to 54.4 percent in 2014.

This is a real problem, since doctors who feel this way can commit more errors. They suffer from compassion fatigue from their own emotional issues. Four hundred doctors committed suicide in 2015, which is double the rate of the population average. So there is trouble for patients in having a workforce that is burned out, and trouble for doctors in terms of their own health and wellness.

Dr. Don McCanne, senior scholar for Physicians for a National Health Program, feels that this crisis of professional burnout also undermines the all-important physician-patient relationship.

A major contributor to burnout is the subversion of physician independence to the massive misdirected oversight interposed by public and private insurance bureaucracies that waste tremendous resources while creating havoc in our health care delivery system.

We need to understand that public policies that make health care worse are unethical policies. We need to expand and improve Medicare for All, a single-payer system that would bring health care equity and justice to everyone in the U.S.

http://www.commercialappeal.com/opinion/letters-to-the-editor/Letter-Frayed-health-care-377665261.html

Colorado Weighs Replacing Obama’s Health Policy With Universal Coverage

By Jack Healy
The New York Times, April 28, 2016

DENVER — For years, voters in this swing state have rejected tax increases and efforts to expand government. But now they are flirting with a radical transformation: whether to abandon President Obama’s health care policy and instead create a new, taxpayer-financed public health system that guarantees coverage for everyone.

The estimated $38-billion-a-year proposal, which will go before Colorado voters in November, will test whether people have an appetite for a new system that goes further than the Affordable Care Act. That question is also in play in the Democratic presidential primaries.

The state-level effort, which supporters here call the ColoradoCare plan, would do away with deductibles. It would allow patients to choose doctors and specialists without distinguishing between those “in network” and those “out of network.” It would largely be paid for with a tax increase on workers and businesses, and cover everyone in the state. Supporters say most people would end up saving money.

Insurance groups, chambers of commerce and conservatives have already lined up in opposition. They say the plan’s details are vague, its size and cost galling. The proposed health system would have a budget bigger than that of Colorado’s entire state government. A new 10 percent tax on payroll and incomes to pay for the system would push Colorado’s tax rates to some of the highest in the nation.

The proposal’s chance of success is dubious. Colorado has a mixed record when it comes to ballot measures, though it has passed some notable ones over the years, including marijuana legalization and the Taxpayer Bill of Rights, an anti-tax, anti-spending constitutional amendment.

But the proposal had enough support to garner 100,000 signatures, which put it on the ballot. It has also worried insurers, and some in the medical community and the business community, enough for them to organize in opposition, even enlisting a Democratic former governor to help in their campaign.

In this season of political discontent, the notion of dismantling the health insurance system has tapped an aquifer of frustration from voters. People say that even after the Affordable Care Act, they still pay too much in premiums, plus thousands in deductibles, and still have to worry about being bankrupted by a disabling car crash or an extended hospital stay.

“I think insurance is one of the biggest jokes and crooks,” said Brandon Barta, 38, of Denver. He said his father, Dixon, who worked at a gas station, never received aggressive enough treatment for his prostate cancer. He died last May at the age of 64.

“He was overlooked,” Mr. Barta said.

Mr. Barta said he was intrigued by the idea of a universal health plan that covered maternity care, checkups, emergency room visits and hospital stays, all the way through end-of-life care. Like millions of Americans, he has health insurance tied to his work. His coverage lapsed recently when he switched jobs to start working for a golf entertainment complex, and he is still waiting for his new plan to kick in.

Still, he has questions about how universal coverage would work and how much it would cost taxpayers like him.

The answers: If a majority of voters say yes, the system would start running in 2019, and essentially be a start-up health cooperative bigger than companies like Nike and American Express, according to the Colorado Health Institute, an independent policy group. A 21-person elected board would set the benefits and budgets. The system would be financed by payroll taxes of 3.3 percent for workers and 6.7 percent for employers. It would impose a 10 percent tax on investment income, people who are self-employed and some small-business income.

In the contest for the Democratic presidential nomination, Hillary Clinton, echoing many moderate Democratic leaders here, has said that she wants to keep and improve the Affordable Care Act, Mr. Obama’s signature legislative legacy. But her opponent, Senator Bernie Sanders, who won Colorado’s Democratic caucuses last month by nearly 20 points, has advocated abandoning the health law for a “Medicare for all” approach. His proposal is similar to the ColoradoCare plan.

The campaign over the Colorado initiative has had the unusual effect of putting conservative critics in the position of defending Mr. Obama’s health plan against an assault from the left. At the same time, it is energizing progressives, who say the Affordable Care Act was a giveaway to the insurance industry that, even with an estimated 20 million people newly insured, has left too many others without coverage.

“No matter how long we hang in there with the Affordable Care Act, we will never cover everybody,” said Jeanne Nicholson, a former Democratic state senator and nurse who is a leading supporter of universal care here. “We don’t understand why we should compromise and say some people can have bronze coverage, some can have silver and some can have gold. Why can’t we all have platinum plus?”

Nathan Wilkes, 42, who lives in the Denver suburbs, said that years of trying to get care for his son, who has hemophilia, had worn his family thin and made him an advocate for universal coverage. He said the family had spent thousands of dollars and destroyed its credit because of insufficient coverage. The Affordable Care Act offered some benefits, he said, but its gaps were still too big and “not sustainable.”

Unlike its conservative neighbors, Colorado jumped to get on board with the Affordable Care Act. It set up its own insurance marketplace and expanded Medicaid coverage for poorer residents. But there have been stumbles. People in mountain towns with few providers faced eye-popping premiums for coverage. Colorado’s biggest health cooperative, Colorado HealthOP, shut down in October, forcing more than 80,000 people to find new plans.

Colorado’s plan would replace many private workplace plans, but it would sit alongside Medicare and federal health coverage for veterans, and private insurers could still sell coverage to people who wanted more.

The Colorado Health Institute, an independent policy group, said the plan’s passage would be “the most far-reaching health care reform in any state” since the Affordable Care Act.

“It’s replacing a system that I think has become really dysfunctional,” said Irene Aguilar, a Democratic state senator and physician who is leading the effort. “The game has been rigged by the for-profit corporations to ensure they win.”

Opponents say that it could wreck the state’s humming economy and drive away doctors and businesses, and that its costs could spiral out of control.

If it passes, ColoradoCare would become part of the state Constitution, and become virtually impossible to significantly alter without a statewide vote. It would also fall outside the reach of the Taxpayer Bill of Rights, a 1992 amendment to the Colorado Constitution that put strict limits on spending and new taxes.

“It would be a disastrous economic impact on the state,” said Walker Stapleton, Colorado’s treasurer and a co-chairman of the opposition campaign. “If you think legalized pot brought a lot of people to Colorado, you should try free health care.”

Like many other Republicans here, Mr. Stapleton opposed the Affordable Care Act and continues to criticize how it has been put in place. But to defeat the new initiative, he now finds himself defending the federal health law.

Sean Duffy, a Republican and a spokesman for the opposition campaign, said many of his neighbors in the conservative Denver suburb of Highlands Ranch had eagerly signed the petition to put the question on the November ballot because they saw it as a way to get rid of Obamacare.

Some Democratic officials also oppose the state’s universal care effort. They include Gov. John Hickenlooper, who said during his 2014 re-election fight that he was “no big fan of the Affordable Care Act.”

Colorado’s previous Democratic governor, Bill Ritter, also opposes it.

Michelle Lucero, general counsel at Children’s Hospital Colorado, is among the health care officials lining up against the measure. (The hospital itself also opposes it.) She worries that it could threaten research dollars or drive away doctors.

“They’re going to choose to go to a state that’s not hamstrung by this,” she said.

http://www.nytimes.com/2016/04/29/us/colorado-weighs-replacing-obamas-health-policy-with-universal-coverage.html?_r=1

Does the neoliberal label apply to our health care system?

Obamacare: The Neoliberal Model Comes Home to Roost in the United States — If We Let It

By Howard Waitzkin and Ida Hellander
Monthly Review, May 2016

(Excerpts)

Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured — at least 27 million people, according to the non-partisan Congressional Budget Office — and at least twice that number will remain underinsured. Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction. Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs. These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders. The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades.

Such proposals fostered neoliberalism. They promoted multiple competing, for-profit, private insurance corporations. Programs and institutions previously based in the public sector were cut back and, if possible, privatized. Overall government budgets for public-sector health care were reduced. Private corporations gained access to public trust funds. Public hospitals and clinics entered into competition with private institutions, their budgets were determined by demand rather than supply, and prior global budgets for safety net institutions were not guaranteed. Insurance executives made operational decisions about services, and their authority superseded that of physicians and other clinicians.

The Boilerplate Neoliberal Health Reform

Health reform proposals across different countries have resembled one another closely. The specific details of each plan appeared to conform to a word-processed, cookie-cutter template, in which only the names of national institutions and local actors have varied. Six broad features have characterized nearly all neoliberal health initiatives.

1. Organizations of providers. One element of neoliberal proposals involves large privately controlled organizations of health care providers. These organizations operate under the direct control or strong influence of private, for-profit insurance corporations, in collaboration with hospitals and health systems.

2. Organizations of purchasers. A second element of neoliberal proposals involves large organizations purchasing or facilitating the purchase of private health insurance, usually through MCOs.

3. Constriction of public hospitals and safety net providers. Public hospitals at the state, county, or municipal levels compete for patients covered under public programs like Medicaid or Medicare with private hospitals participating as subsidiaries or contractors of insurance corporations or MCOs. With less public-sector funding, public hospitals reduce services and programs, and many eventually close. Although community health centers (CHCs) sometimes enjoy temporary improvements in funding, as in Obamacare, they increasingly serve as the providers of last resort for the remaining uninsured and underinsured. As a result, CHCs remain vulnerable to cutbacks and face an insecure future.

4. Tiered benefits packages. Neoliberal proposals define benefits packages in hierarchical tiers. The national reform provides a minimum package of benefits that experts view as essential, and individuals or their employers can buy additional coverage. Poor and near poor people in the U.S. Medicaid program are eligible for benefits that used to be free of cost-sharing, but since Obamacare passed, states increasingly have imposed premiums and copayments.

5. Complex multi-payer and multi-payment financing. Financial flows under neoliberal health policies are very complex. The costs of administering these flows and other components of neoliberal policies also are quite high (about 25 to 28 percent of total health care expenditures) and keep increasing. Under Obamacare, administrative overhead — also referred to administrative “waste,” since the costs do not contribute to direct patient services — grew 10.6 percent in 2014, faster than any other component of health care except medications.

6. Changes in tax code. Partly because they increase administrative costs and profits, neoliberal reforms usually lead to higher taxes.

Many countries have rejected the neoliberal model, and have instead constructed health systems based on the goal of “health care for all” (HCA). Such countries strive to provide universal access to care without tiers of differing benefit packages for rich and poor. For instance, Canada prohibits private insurance coverage for services provided by its national health program. Because Canada’s wealthy must participate in the publicly financed system, the presence of the entire population in a unitary system assures a high-quality national program. In Latin America, countries trying to advance the HCA model include Bolivia, Brazil, Cuba, Ecuador, Uruguay, and Venezuela. The inevitable failure of Obamacare may open a space, finally, for even the United States to pursue a national health program that does not follow the neoliberal model.

The Single-Payer Proposal

The following features of a single-payer option come from the proposals of Physicians for a National Health Program (PNHP), a group of more than 20,000 medical professionals, spanning all specialties, states, age groups, and practice settings. According to the PNHP proposals, coverage would be universal for all needed services, including medications and long-term care. There would be no out-of-pocket premiums, copayments, or deductibles. Costs would be controlled by “monopsony” financing from a single, public source. The NHP would not permit competing private insurance and would eliminate multiple tiers of care for different income groups. Practitioners and clinics would be paid predetermined fees for services, without any need for costly billing procedures. Hospitals would negotiate an annual global budget for all operating costs. For-profit, investor-owned facilities would be prohibited from participation. Most non-profit hospitals would remain privately owned. To reduce overlapping and redundant facilities, capital purchases and expansion would be budgeted separately, based on regional health planning goals.

Funding sources would include current federal spending for Medicare and Medicaid, a payroll tax on private businesses less than what businesses currently pay for coverage, and an income tax on households, with a surtax on high incomes and capital gains. A small tax on stock transactions would be implemented, while state and local taxes for health care would be eliminated. Under this financing plan, 95 percent of families would pay less for health care than they previously paid in insurance premiums, deductibles, copayments, other out-of-pocket spending, and reduced wages.

Moving Beyond Single Payer

The coming failure of Obamacare will mark a moment of transformation in the United States, where neoliberalism has come home to roost. For that moment, those struggling for a just and accessible health system will need to address some profound changes that have occurred during the era of neoliberalism. These changes pertain to the shifting social class position of health professionals, and to the increasingly oligopolistic and financialized character of the health insurance industry.

Beyond the changing class position of health professionals, the transition as Obamacare collapses will need to address the oligopolistic character of the insurance industry, alongside the consolidation of large health systems. Obamacare has increased the flow of capitated public and private funds into the insurance industry and thus has extended the overall financialization of the global economy.

In this context, it is important to reconsider the distinction between national health insurance (NHI) and a national health service (NHS). NHI involves socialization of payments for health services but usually leaves intact private ownership at the level of infrastructure. Except for a small proportion of institutions like public hospitals and clinics, under NHI the means of production in health care remain privately owned. Canada is the best-known model of NHI. The PNHP proposal and Congressional legislation that embodies the singer-payer approach are based on the Canadian model of NHI.

The PNHP single-payer proposal emerged from a retreat in New Hampshire during 1986, where activists struggled with these distinctions. Although most participants at the retreat had worked hard for the Dellums NHS proposal, they reached a consensus — albeit with some ambivalence — to shift their work to an NHI proposal based on Canada. The rationale for this shift involved two main considerations. First, Canada’s proximity and cultural similarity to the United States would make it more palatable for the U.S. population, and especially its Congressional representatives. Secondly, a Canadian-style NHI proposal could be “doctor-friendly.” Under the PNHP proposal, physicians could continue to work in private practice, clinics, or hospitals. The main difference for physicians was that payments would be socialized, so that the physicians would not have to worry about billing and collecting their fees for services provided.

While PNHP has achieved great success in its research and policy work, these efforts, and those of many other organizations supporting single payer, have not yet generated a broad social movement working toward a Canadian-style NHI. Meanwhile, the neoliberal model, with all its benefits for the ruling class and drawbacks for everyone else, has solidified its hegemony. Partly as a result, physicians and other health professionals are becoming proletarianized employees of an increasingly consolidated, profit-driven, financialized health care system. And under Obamacare, the state has continued to prioritize protection of the capitalist economic system, in this case by overseeing huge subsidies for private insurance and pharmaceutical corporations.

http://monthlyreview.org/2016/05/01/obamacare/

***

Encyclopedia Britannica

Neoliberalism: ideology and policy model that emphasizes the value of free market competition.

Neoliberal ideology and policies became increasingly influential, as illustrated by the British Labour Party’s official abandonment of its commitment to the “common ownership of the means of production” in 1995 and by the cautiously pragmatic policies of the Labour Party and the U.S. Democratic Party from the 1990s.

http://www.britannica.com/topic/neoliberalism

***

A Neoliberal’s Manifesto

By Charles Peters, Founder and Editor
The Washington Monthly, May 1983

If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives, we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

http://www.washingtonmonthly.com/features/1983/8305_Neoliberalism.pdf

The majority of Americans would like to see a high quality health care system that is affordable and accessible for everyone. We do not have that now. Why not?

Progressives/liberals generally recognize that costs and market dysfunctions require a major role of government in financing health care. Conservatives/libertarians believe that free markets can fulfill that role with the exception that those impoverished not by choice need private charity or the helping hand of government. But it is those in the middle – the moderates – who determine policy through the election process. So who are they?

They are both Republicans and Democrats. In health care, they support private financing, primarily through insurance, though they support public tax expenditures to help pay for the most common coverage – employer-sponsored plans. They also support Medicare for seniors and those with disabilities, and most support Medicaid for low-income individuals and families.

In fact, President Obama abandoned single payer in favor of the Heritage Foundation proposal, based on these principles, since it had broad bipartisan support – or so he thought, until the Republicans decided that a political defeat for Obama was more important than improving our health care system.

So what happened to these moderates? The Republicans have retreated toward the right where they would try to tolerate the conservative tea party faction. The moderate Democrats did not move to the left but instead also moved somewhat toward the right into the pro-market neoliberal niche. Following the groundwork laid by President Reagan, President Bill Clinton followed a neoliberal path in which “the era of big government is over” (State of the Union, 1996). The neoliberals then became the establishment force in the Democratic Party. President Obama, whether voluntarily or through political obstructionism, did not change the direction of the party. The likely next president has indicated that she will follow the neoliberal Clintonian path as well and not change direction in health care.

Today’s article describes how neoliberalism and its advocacy of using markets instead of the government to control the financing of health care has resulted in our overpriced and underperforming health care system, as if the neoliberals have failed to see the irony of a health care system that is already 60 percent funded through the tax system and that has failed to conform to free market dynamics.

Whatever labels are used, the majority of Americans support Medicare. If we already had an improved version of Medicare that included everyone, the support would be near unanimous. The neoliberals either need to take a reality check on their ideology, or they need to attend the next local tea party function and listen to the voices extolling the virtues of a society without a functioning government.

Focus groups confirm that ACA is not affordable for many

Is ACA Coverage Affordable for Low-Income People? Perspectives from Individuals in Six Cities

By Jennifer Tolbert, Robin Rudowitz, and Melissa Majerol
Kaiser Family Foundation, April 21, 2016

Millions of people have gained access to health insurance coverage under the Affordable Care Act (ACA) through Medicaid and the Marketplaces. While research shows that coverage improves access to care and promotes financial stability, issues around access and affordability remain, and are more acute for the low-income population. To learn more about how low-income individuals have fared with their new coverage, we conducted nine focus groups (three groups with Medicaid enrollees and six groups with low-income Marketplace enrollees) in six states (California, Florida, Maryland, Missouri, Ohio, and Virginia).  Many participants were struggling financially and reported substantial debt (including medical debt). Many had ongoing physical and mental health needs and were accessing health services to treat those conditions. Following are key themes from the groups:

1.  New coverage did not change underlying financial struggles and hardship due to medical debt incurred prior to gaining coverage. Many participants were stretched financially, had limited capacity to absorb unexpected costs, and struggled with finding secure employment in their area.

2.  Medicaid stands up well for the lowest income participants in terms of ease of enrollment, out-of-pocket costs and affordability, and ability to find providers and access care. A small number of participants reported trouble affording care that wasn’t covered (particularly for vision or dental) and difficulty finding some providers, including mental health providers.

3.  Largely due to premium tax credits in the Marketplace, premiums were generally affordable, but out-of-pocket costs weighed heavily on Marketplace participants, especially those with high deductible plans. Many reported being overwhelmed by plan choices. Some were able to make trade-offs to purchase higher cost plans with lower deductibles to meet anticipated care needs, but not everyone was able to afford higher premiums.

4.  The fear of unknown costs was a constant worry for many Marketplace participants. Many got bills for services they thought were covered, such as screenings, colonoscopies and mammograms when issues were discovered and treated. These bills caused many to avoid getting needed care. Marketplace participants also reported trouble affording care that wasn’t covered by their plan, notably vision and some dental services.

5.  Most participants had accessed care and were positive overall about new ACA coverage through Medicaid and the Marketplace. They were grateful that coverage was available to them, particularly those who had been previously ineligible for Medicaid or barred from private coverage due to pre-existing conditions. However, many Marketplace participants wanted coverage to be more affordable.

While people were grateful for coverage, unexpected bills, dealing with insurance companies, and facing known deductibles were sources of stress which made those with Marketplace coverage fearful to use the coverage they had. They were particularly frustrated by the out-of-pocket costs, which were unaffordable to many and wanted insurance that didn’t come with so many hidden costs.

http://kff.org/health-reform/issue-brief/is-aca-coverage-affordable-for-low-income-people-perspectives-from-individuals-in-six-cities/

Issue Brief:

http://kff.org/report-section/is-aca-coverage-affordable-for-low-income-people-perspectives-from-individuals-in-six-cities-issue-brief-8867/

***

Comment:

By Don McCanne, M.D.

This report of nine focus groups confirms that real people have found that the Affordable Care Act (ACA) often fails to provide access to affordable care.

Although the leading candidate for president has said that she wants to build on ACA, reducing premiums and deductibles pours yet more tax money into what is the most expensive and least efficient model of health care financing. The model cannot really be fixed if we want true value in health care. It needs to be replaced with a model that does work – a single payer national health program – Improved Medicare for All.

Focus groups confirm that ACA is not affordable for many

Is ACA Coverage Affordable for Low-Income People? Perspectives from Individuals in Six Cities

By Jennifer Tolbert, Robin Rudowitz, and Melissa Majerol
Kaiser Family Foundation, April 21, 2016

Millions of people have gained access to health insurance coverage under the Affordable Care Act (ACA) through Medicaid and the Marketplaces. While research shows that coverage improves access to care and promotes financial stability, issues around access and affordability remain, and are more acute for the low-income population. To learn more about how low-income individuals have fared with their new coverage, we conducted nine focus groups (three groups with Medicaid enrollees and six groups with low-income Marketplace enrollees) in six states (California, Florida, Maryland, Missouri, Ohio, and Virginia).  Many participants were struggling financially and reported substantial debt (including medical debt). Many had ongoing physical and mental health needs and were accessing health services to treat those conditions. Following are key themes from the groups:

1.  New coverage did not change underlying financial struggles and hardship due to medical debt incurred prior to gaining coverage. Many participants were stretched financially, had limited capacity to absorb unexpected costs, and struggled with finding secure employment in their area.

2.  Medicaid stands up well for the lowest income participants in terms of ease of enrollment, out-of-pocket costs and affordability, and ability to find providers and access care. A small number of participants reported trouble affording care that wasn’t covered (particularly for vision or dental) and difficulty finding some providers, including mental health providers.

3.  Largely due to premium tax credits in the Marketplace, premiums were generally affordable, but out-of-pocket costs weighed heavily on Marketplace participants, especially those with high deductible plans. Many reported being overwhelmed by plan choices. Some were able to make trade-offs to purchase higher cost plans with lower deductibles to meet anticipated care needs, but not everyone was able to afford higher premiums.

4.  The fear of unknown costs was a constant worry for many Marketplace participants. Many got bills for services they thought were covered, such as screenings, colonoscopies and mammograms when issues were discovered and treated. These bills caused many to avoid getting needed care. Marketplace participants also reported trouble affording care that wasn’t covered by their plan, notably vision and some dental services.

5.  Most participants had accessed care and were positive overall about new ACA coverage through Medicaid and the Marketplace. They were grateful that coverage was available to them, particularly those who had been previously ineligible for Medicaid or barred from private coverage due to pre-existing conditions. However, many Marketplace participants wanted coverage to be more affordable.

While people were grateful for coverage, unexpected bills, dealing with insurance companies, and facing known deductibles were sources of stress which made those with Marketplace coverage fearful to use the coverage they had. They were particularly frustrated by the out-of-pocket costs, which were unaffordable to many and wanted insurance that didn’t come with so many hidden costs.

http://kff.org/health-reform/issue-brief/is-aca-coverage-affordable-for-low-income-people-perspectives-from-individuals-in-six-cities/

Issue Brief:

http://kff.org/report-section/is-aca-coverage-affordable-for-low-income-people-perspectives-from-individuals-in-six-cities-issue-brief-8867/

This report of nine focus groups confirms that real people have found that the Affordable Care Act (ACA) often fails to provide access to affordable care.

Although the leading candidate for president has said that she wants to build on ACA, reducing premiums and deductibles pours yet more tax money into what is the most expensive and least efficient model of health care financing. The model cannot really be fixed if we want true value in health care. It needs to be replaced with a model that does work – a single payer national health program – Improved Medicare for All.

Paul Ryan does not seem to understand high-risk pools

Ryan wants to end Obamacare cost protections for sick consumers

By David Morgan
Reuters, April 27, 2016

U.S. House of Representatives Speaker Paul Ryan called on Wednesday for an end to Obamacare’s financial protections for people with serious medical conditions, saying these consumers should be placed in state high-risk pools.

In election-year remarks that could shed light on an expected Republican healthcare alternative, Ryan said existing federal policy that prevents insurers from charging sick people higher rates for health coverage has raised costs for healthy consumers while undermining choice and competition.

The rule, a cornerstone of President Barack Obama’s Affordable Care Act, has been praised by patient advocates for providing access to medical care for people who previously could not afford private health insurance. The Affordable Care Act also bars insurers from excluding coverage for pre-existing conditions.

“Less than 10 percent of people under 65 are what we call people with pre-existing conditions, who are really kind of uninsurable,” Ryan, a Wisconsin Republican, told a student audience at Georgetown University.

“Let’s fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage,” he said. “You dramatically lower the price for everybody else. You make health insurance so much more affordable, so much more competitive and open up competition.”

High-risk pools, which existed before the healthcare law, are state-level entities that guarantee coverage for people with health problems. Analysts say they can be prohibitively expensive and offer less than optimal health coverage.

http://www.reuters.com/article/us-usa-health-ryan-idUSKCN0XP00C

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Comment:

By Don McCanne, M.D.

House Speaker Paul Ryan has promised to produce the Republican alternative to the Affordable Care Act, likely before the Republican convention in July. In his comments at Georgetown University yesterday he discussed what would be the most important policy supposedly designed to control health care spending for the vast majority of Americans: Establish state level risk pools for the 10 percent of people with the greatest health care needs. Let’s see what that means.

The top 10 percent of individuals in spending account for 65 percent of health care costs. By removing them from the standard insurance pools that means that the other 90 percent would have to pay insurance premiums that funded only 35 percent of total health care. Ryan says that this would lower insurance premiums through competition, but that is nonsense. Premiums would be much lower because two-thirds of health care costs are pulled out of the insurance plans in the marketplace. Surely most Americans would be happy with private insurance premiums that were one-third of what they would be if everyone were included. It would be a very popular program, and the Republicans would take credit for it.

But what about the 10 percent of people who account for two-thirds of our health care costs. Their premiums would have to be about 7 times what the premium would be if everyone were covered under a common risk pool, or about 20 times what everyone else is paying. As Paul Ryan says, they are “really kind of uninsurable.” So he proposes high-risk pools at the state level, with subsidized premiums. Expecting the states to subsidize two-thirds of our health care costs is a non-starter. Without massive increases in taxes, which are opposed by the Republicans anyway, the states would not be able to fund those pools.

We already have considerable experience with state high-risk pools. In recent decades, thirty-five states established such pools, and overall they were a spectacular failure. Also, the Affordable Care Act authorized temporary Pre-Existing Condition Insurance Plans (PCIP) which were also high-risk pools. These plans proved to be prohibitively expensive to administer, prohibitively expensive for consumers to purchase, and offered much less than optimal coverage, often with annual and lifetime limits, coverage gaps, and very high premiums and deductibles.

It is so obvious on the face of it. Most of us might be happy with our low premiums, but we would be very unhappy with the massive increases in regressive state taxes that would be enacted to pay for this. Vermont’s reform effort failed once the tax consequences were recognized, and that wasn’t even for high-risk pools.

As I wrote in a previous Quote of the Day, “With a single payer system this problem disappears. Funding is based on ability to pay, through the tax system, and not on the basis of anticipated medical expenses. Everyone receives the care they need, regardless of their health status. The fragmented plans supported by the repeal and replace people cannot do that.”