PNHP

Accountable care organizations don’t cut costs. It’s time to stop the managed care experiment

Accountable care organizations don’t cut costs. It’s time to stop the managed care experiment

By Kip Sullivan and James G. Kahn, M.D., M.P.H.
STAT, August 23, 2021

For the last half-century, Congress has endorsed essentially the same approach to cutting health care costs, an approach that came to be called “managed care” by the mid-1980s. Based on the assumption that U.S. health care costs are double those of other wealthy nations because doctors order services patients don’t need, the solution is to “manage” doctors and provide financial incentives that nudge them to cut services.

The managed care approach has not only failed to cut costs, it has contributed to health care inflation by encouraging mergers and driving up administrative costs. The failure of the accountable care organization (ACO), a prominent iteration of managed care, illustrates the problem.

The ACO label was invented at a 2006 meeting of the Medicare Payment Advisory Commission (MedPAC). The concept was tested between 2005 and 2010 in the Physician Group Practice (PGP) Demonstration. In 2009, even as early results of the PGP project were showing that the accountable care concept wouldn’t work, Congress added provisions to the Affordable Care Act requiring the Centers for Medicare and Medicaid Services (CMS) to insert accountable care organizations into the traditional Medicare program.

ACOs are hospital-clinic chains that sign contracts with insurers (in Medicare’s case, with CMS) to share financial risk. That means an accountable care organization splits profits with CMS if profits are made and shares losses if losses occur. They work like this: CMS sets expenditure targets for accountable care organizations at the beginning of each year. At the end of the year, CMS sends ACOs that have spent less than their target a “shared savings payment.” In some programs, ACOs that exceed their target pay CMS a penalty.

In an article published online this month in the Journal of General Internal Medicine, we reviewed evaluations of all four of Medicare’s accountable care experiments that CMS has conducted since 2005. All four failed to affect Medicare spending; their impacts ranged from tiny savings of a few tenths of a percent to equally tiny losses. If we include in our calculations the costs that accountable care organizations incur in their futile efforts to reduce Medicare spending, such as contracting with insurance companies to manage risk and hiring more nurses, these organizations actually raise health care costs.

ACOs are supposed to work best for a population living with many chronic illnesses, such as Medicare enrollees. If these programs can’t cut Medicare costs, they clearly can’t cut costs for the whole country.

Why did accountable care organizations fail?

We see two main reasons for the failure of accountable care organizations: The diagnosis was wrong and the prescription was wrong.

The key assumption underlying the nation’s managed care experiment is that U.S. health care costs are high because Americans get too many medical services, and this overuse is caused by the fee-for-service method of paying doctors. Fee for service creates a financial incentive for doctors to order more tests and do more procedures, something doctors allegedly cave in to. That, anyway, was the diagnosis promoted in the early 1970s by proponents of health maintenance organizations, an early form of managed care, and it is the diagnosis offered today by ACO proponents.

In its June 2009 “Report to Congress,” for example, the Medicare Payment Advisory Commission claimed that the “ACO’s role is to create a set of incentives strong enough to overcome the incentives in the [fee-for-service] system to drive up volume….”

But the assumption that overuse is widespread, and that all overuse is caused by doctors caving in to fee-for-service incentives, is wrong. Over the last two decades, research has clearly demonstrated that overuse of medical care isn’t why health care costs are rising. Per capita health care costs in the U.S. are high compared with other nations because the prices at which medical services and drugs are sold is excessive.

In any sector of the economy, total spending is a function of price and quantity (or volume). Price times quantity yields total spending. American policymakers have focused on the quantity factor when they should have focused on the price factor. In a Health Affairs article aptly titled, “It’s The Prices, Stupid,” health policy expert Gerard F. Anderson and colleagues concluded that (the italics are ours) “the difference in spending [between the US and other countries] is caused mostly by higher prices for health care goods and services in the United States.”

Why are U.S. prices so high? Because incessant consolidation of its health care system gives those who sell medical services and drugs the power to raise prices. And the huge cost of administering the country’s stunningly complex health care system motivates sellers to raise prices: Excessive administrative costs account for 15% of the $4 trillion the U.S. spends annually on health care, or more than $2,000 per person.

The accountable care organization solution has failed not just because it addressed the wrong problem (overuse rather than excessive prices and inefficiency) but also because these organizations were never clearly defined. From the moment the ACO label was concocted by the Medicare Payment Advisory Commission at its November 9, 2006, meeting, accountable care organizations have always been “defined” in terms of the aspirations of its proponents.

The following “definition” by accountable care organization proponents Mark McClellan, a former CMS administrator and a former FDA commissioner, and colleagues is typical: “ACOs consist of providers who are jointly held accountable for achieving measured quality improvements and reductions in the rate of spending growth …. while caring for a defined population of patients.” Is it possible to be more vague than that? “Providers” are “held accountable” (by unidentified parties using unidentified means) for “measured improvements” (measured at an unknown cost to providers and the measurer) in the “cost and quality” of health care delivered to a (poorly) “defined population.”

In addition to being vague, the ACO proposition has failed because it rested on a false premise: doctors work primarily for money and can be induced to stop ordering unnecessary services if they could make money by doing so. But most physicians don’t work primarily for money. They are motivated to provide high-quality care, solve complex challenges, and see their patients prosper. Behavioral economists call these intrinsic motivations — and they are undermined by the monetary penalties and rewards deployed by accountable care organizations.

These twin defects in the ACO proposal — a wrong diagnosis along with a poorly defined and evidence-free prescription — have plagued the managed care experiment since health maintenance organizations were formalized in the 1970s. The widespread adoption of the cost-containment tactics pioneered by those organizations was the primary cause of an explosive growth in administrative costs and mergers, both of which drove up prices, that began in the late 1980s.

Health maintenance organizations, accountable care organizations, and other managed care “reforms” have not just failed — they have backfired, aggravating the problem they were supposed to solve.

It is long past time to abandon managed care. We should rely instead on lessons learned from other countries that have adopted single-payer systems, price controls, and universal coverage with uniform benefits. The results in cost control and longevity are impressive.

Kip Sullivan is a member of the advisory board of Health Care for All Minnesota. Dr. James G. Kahn is emeritus professor of health policy at the University of California San Francisco.

https://www.statnews.com…

24.4 million children – including millions with serious illnesses – had no or inadequate health coverage in 2019: Harvard study

New analysis finds the number of uninsured children rose to 6.3 million during the first three years of the Trump Administration, while the number with only partial coverage rose to 18.1 million

FOR IMMEDIATE RELEASE: August 23, 2021

Contact: Adam Gaffney, M.D., M.P.H., agaffney@cha.harvard.edu 
Steffie Woolhandler, M.D., M.P.H., swoolhan@hunter.cuny.edu
Clare Fauke, communications specialist, Physicians for a National Health Program,  clare@pnhp.org

In a study published Monday, researchers at Harvard Medical School and the City University of New York at Hunter College find that the number of uninsured children rose from 5.9 million to 6.3 million between 2016-19. During that same period, the number of children with inadequate coverage (a group often labeled “underinsured”) increased from 16.2 million to 18.1 million.

The study analyzed data on 128,621 children from the National Survey of Children’s Health. The researchers considered children uninsured if they lacked coverage at any point during the year. Children were classified as underinsured if their parent/guardian reported that their insurance never or only sometimes covered the services and providers they needed, or that it imposed unreasonable out-of-pocket costs—following the definition used in earlier studies.

The study found that the proportion of children with inadequate insurance (either uninsured or underinsured) was lower in ACA Medicaid expansion states (30.9%) than in non-expansion states (35.3%). Somewhat surprisingly, underinsurance was more common among privately-insured (34.8%) than publicly-insured (17.5%) children, likely reflecting the high copayments and deductibles in many private plans.

The researchers found that nearly one in three children with serious chronic illnesses or impairments were inadequately insured, including an average of 154,349 children with diabetes each year, 304,292 with heart disease, 1,902,839 with attention-deficit disorder, and 2,081,189 with asthma.

“Children’s health coverage was deteriorating even while the economy was booming,” noted Dr. Steffie Woolhandler, a primary care physician and Distinguished Professor at the City University of New York’s Hunter College and Lecturer at Harvard Medical School. “On the eve of the COVID-19 pandemic millions of American families couldn’t afford the care their children needed, increasing their medical and financial vulnerability,” Woolhandler added.

Dr. Adam Gaffney, a pulmonary and critical care physician at Harvard Medical School and the Cambridge Health Alliance, noted, “Much recent debate has centered on the critical need to expand coverage for older adults. Our findings indicate that there are also huge coverage gaps for kids. Some proposed reforms—like covering all children under Medicaid—would offer a partial fix. But we found that even kids with Medicaid often couldn’t get the care they needed. Only universal national health insurance reform can assure access to care for both kids and adults.”

“Medical Uninsurance and Underinsurance Among US Children: Findings From the National Survey of Children’s Health, 2016-2019,” Adam Gaffney, M.D., M.P.H.; Samuel Dickman, M.D.; Christopher Cai, M.D.; Danny McCormick, M.D., M.P.H.; David U. Himmelstein, M.D.; Steffie Woolhandler, M.D., M.P.H.; JAMA Pediatrics.

Published online first August 23, 2021

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 24,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.

ACOs Fail to Save Medicare Money, Even With Do Overs

Promise vs. Practice: the Actual Financial Performance of Accountable Care Organizations, Journal of General Internal Medicine, August 13, 2021, by James G. Kahn and Kip Sullivan

We collect and compare financial performance data from all four CMS ACO programs from 2005 to 2018, examining net CMS cost. …

We found that overall, ACO programs roughly broke even from the CMS perspective. That is, when bonuses CMS paid to ACOs are subtracted from gross savings, the programs lost money or saved no more than a few tenths of a percent. …

[I]t is time to draw the ACO experiment to a close. We now have a decade of impressive empirical evidence demonstrating minimal if any benefit from ACOs of several designs. This model arose from laudable goals, drawing on theories of human and organizational behavior. However, reality as measured in formal evaluations failed to align with theory. ACOs have not worked for Medicare and will not work for the broader health care system. Indeed, CMS recently ended the Next Generation ACO program. However, CMS is launching another unproven program, direct contracting, to replace the open structure of traditional Medicare.

We propose instead turning to empirically proven tools used by other high-income nations to control health care costs. These include uniform benefits, simplified financing that dramatically reduces payer and provider overhead, removal of profit for primary insurance, regulation of pharmaceutical prices, and public control of capital investments.

Comment:

By Jim Kahn, M.D., M.P.H.

This article (full disclosure: I’m an author) settles once and for all the results of this CMS foray into financially incentivizing physician behavior. It didn’t work. This could have been predicted, and indeed was by HJM contributors Steffie Woolhandler and David Himmelstein in 2012, as cited in the article. But CMS wasn’t listening.

Now CMS is pursuing another unproven and misguided idea about how to manipulate health systems using managed care: direct contracting in traditional Medicare. I wrote about it in this space. It won’t save money, and it will shift health care dollars to managers and shareholders. Do we really need to wait another 15 years for the failure of another misguided experiment?

Let’s follow the advice of the authors: “uniform benefits, simplified financing…, removal of profit for primary insurance, regulation of pharmaceutical prices, and public control of capital investments.”

How do we get there? Single payer.

http://healthjusticemonitor.org…

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Two Decades Into the Quality Improvement Era, Health Care Quality is Falling

Trends in Diabetes Treatment and Control in U.S. Adults, 1999–2018, New England Journal of Medicine, June 10, 2021, by Fang M et al.

Methods: We conducted a cross-sectional analysis of data from adults with diabetes in the United States participating in the National Health and Nutrition Examination Survey (NHANES) to assess national trends in diabetes treatment and risk-factor control from 1999 through 2018.

Results: Diabetes control improved from 1999 to the early 2010s among the participants but subsequently stalled and declined. Between 2007–2010 and 2015–2018, the percentage of adult NHANES participants with diabetes in whom glycemic control (glycated hemoglobin <7%) was achieved declined from 57.4% to 50.5%. … From 2011–2014 to 2015–2018, the percentage of participants in whom blood-pressure control (<140/90 mm Hg) was achieved decreased from 74.2% to 70.4%.

Trends in Blood Pressure Control Among US Adults With Hypertension, 1999-2000 to 2017-2018, JAMA, September 9, 2020, Muntner P et al.

Design, Setting, and Participants: Serial cross-sectional analysis of National Health and Nutrition Examination Survey data, weighted to be representative of US adults, between 1999-2000 and 2017-2018…

Results: …the age-adjusted estimated proportion with controlled BP increased from 31.8% in 1999-2000 to 48.5% in 2007-2008 (P < .001 for trend), remained stable and was 53.8% in 2013-2014 (P = .14 for trend), and then declined to 43.7% in 2017-2018 (P = .003 for trend).

NOTE: Confidence intervals removed to improve readability.

Comment:

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.

Hypertension and diabetes are the most common causes of excess mortality in the US for which excellent treatments are available. Yet despite two decades of health policies allegedly focused on quality improvement, control of both conditions has deteriorated. The only plausible explanation is worsening access to care. This compelling indictment of the US healthcare system mandates fundamental reexamination of how we pay for, organize and deliver care.

To quote the sign Archie Cochrane (the true founder of evidence based medicine) carried to a demonstration in the 1930s, “All effective treatments must be free.”

http://healthjusticemonitor.org…

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Prior Authorization: Less Care, More Illness, Higher Profits

Aetna creates new obstacle to care for seniors, highlighting need for prior authorization reform, California Medical Association, August 10, 2021

One of the nation’s largest health insurance companies has created new bureaucratic hurdles for patients that could prevent many from receiving cataract surgery – part of a trend of insurance companies creating new “prior authorization” requirements that create hurdles for patients and physicians, reduce availability of health care services, and increase insurance company profits at the expense of patient care.

It has become common practice for health insurance companies to create new obstacles for patients, in hopes of not having to provide essential health care to those who need it. The reason for these types of obstacles is simple: Fewer surgeries performed translates to larger insurance company profits.

Like other insurance companies, Aetna has enjoyed record profits through the COVID-19 pandemic. The company, which was acquired by CVS Health in 2018, saw its operating income increase from $1.06 billion in 2019 to $3.07 billion in 2020.

Prior authorization requirements can be challenging for patients, creating  barriers to care and increasing administrative burdens for physicians who must spend time and resources to get approvals as insurance companies design and administer increasingly complex prior authorization systems.

The time delays and administrative burdens also continue to undermine health care outcomes. Most startlingly, in a 2020 American Medical Association survey, 30% of physicians reported that prior authorization led to a serious adverse event for a patient in their care such as hospitalization, medical intervention to prevent permanent impairment, or even disability or death.

Comment:

By Don McCanne, M.D.

Creating barriers to care in order to increase profits is a prime function of private insurers. To them, it is more important than taking measures to be sure that patients receive the care that they need. Prior authorization is a method designed to prevent patients from receiving the care that has been recommended.

How would a public insurance program, such as single payer Medicare for All, differ? Such programs are structured to enable everyone to obtain the care that they need, whereas insurer profits don’t even exist.

Why do our national policies continue to support private insurers through ACA insurance exchanges, Medicare Advantage plans, tax preferences for private employer-sponsored plans, and other government support of private insurance entities?

Health care justice for all is a primary goal of a universal public insurance program. That has to be preferred to the more expensive, inequitable, profit-driven system that we now have that leaves so many without the care they need while driving others into medical debt, not to mention the potential for disability or even death. Doesn’t our government care about us, the people?

http://healthjusticemonitor.org…

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Medicine’s undeniable role in U.S. racism

By Brenda Gazzar
Code Wack Podcast, August 16, 2021

Featuring Dr. Linda Rae Murray, MD, MPH, former Chief Medical Officer – Primary Care for the Cook County Bureau of Health Services & “full-time troublemaker,” discussing the artificial separation between social, structural, and personal racism.

Transcript

Welcome to Code WACK!, your podcast on America’s broken healthcare system and how Medicare for All could help. I’m your host, Brenda Gazzar.

How has American medicine played a role in propagating racism? How does racism put Black people and Native Americans at a higher risk for illness and death? To find out, we spoke to Dr. Linda Rae Murray, a physician who spent 40 years in clinical practice helping the medically underserved. She retired in 2014 from her post as the chief medical officer for the Cook County Department of Public Health of the Cook County Health & Hospital System in Illinois. She’s been a voice for social justice and health as a basic human right for more than fifty years. 

Welcome to Code WACK!, Dr. Murray.

Murray: My pleasure.

Q: So I’d love to hear a little bit about you. When you graduated from medical school in 1977, what was the landscape like for female African American physicians?

Murray: Well, I don’t think there’s anything unusual about that time period. In 1977, we were entering a period of retrenchment in the United States. Conservatism and Reaganism was coming to the fore but the situation for Black physicians of all genders has never been good, so it wasn’t good then. This is a period as I started my residency training where the public sector was under attack. Public hospitals were being defunded. We lost a number of hospitals around the country and we lost a number of public hospitals in St. Louis, Philadelphia and other places.

Q: One of the biggest problems in American healthcare has been racism. It’s well documented, but still many Americans don’t acknowledge it. Can you give us some examples of social and structural racism in health care?

Murray: Well, the medical care system, and health care in general is a part of our culture and society and so structural racism is the underpinning of what goes on in America and so I am always concerned about how that racism seeps into the structure of a country. So I don’t care what you start with, you can start with where services are available. When I was a resident, only the United States and South Africa were the only ones that didn’t try to provide universal coverage for its population. Today it’s only us in terms of rich countries.

And so when you talk about structural racism in medicine, American medicine plays a special role in propagating through up until really the 1950s the notion that (Black people) were biologically inferior — that was a major strong strain of American medicine, and how the structure is set up with everything we do, what kind of jobs you have or don’t have, what kind of exposures you have, an inability to access diagnostic services and curative services. These are all things that are obvious in medical care settings, but the real harm that structural racism does goes far beyond the medical setting, far beyond the hospital or the exam room. It goes into all aspects of American life.

Q: Hmmm. Thank you. This idea that people of color are biologically inferior, how does and how did that manifest itself?

Murray: So I want to be careful here about our language again. Western racism in the modern era, in the past couple of 100 years, is based on a hierarchy and so all of those hierarchies put Africans at the bottom of racial hierarchy so when we say people of color, that’s an important political concept but in terms of racial hierarchy, Africans are at the bottom — and so I don’t care whether you’re talking about the Bell Curve, which argues that that’s why Blacks have poor education outcomes, or whether you’re talking about old-fashioned “eugenics movement,” this is a notion that has run through our history so from a medical point of view in terms of American medicine, this notion that these negative traits and positive traits, they are inherited and that far outweighs whatever else happens to people.

So that concept we still have today whether you’re talking about outcomes at the Olympics or sportscasters that argue that, you know, Blacks are somehow differently made as beings. And, you know, so a Black basketball player will be skilled, a white basketball player would be smart. You see these kinds of differences that exist all along. I am concerned as we look at modern genetics. We’ve done some studies as recently as 2016 that showed an extraordinarily surprising number of medical students and residents believe certain myths about African Americans, about Blacks. For example, the notion that our skin is thicker. Nowhere in medical schools is that taught but that notion was there among, like I said, a surprising number of physicians and medical students. That’s also the nature of structural problems. They are baked into the society, and most people are unaware that they’re even there. They just are considered part of the normal universe and so those things are still with us and they’re still a major concern.

Q: Right. And so how are these myths most detrimental to Black patients?

Murray: Well, they’re most detrimental for Black people because we die younger and from diseases that can be prevented, I mean that’s the very nature, that’s the very definition of health inequity, and here I want to bring back other people who are not white, in terms of that hierarchy. So, for example, Native Americans, our Indigenous groups in North America, have mortality rates and often health outcomes that are equal to or worse than Blacks depending on which disease entity you look at so there’s no question that racism kills people, to put it bluntly.

It doesn’t just mean it kills people when police shoot you. It kills people with everyday things, whether you don’t get your blood pressure treated, whether you don’t have access to cancer screening, whether you’re just stressed out by the fact that you’re unemployed, and you don’t have good nutrition and all of these activities of life, all of these things in our society imprint themselves on our bodies, and when you have societies that are unequal, where oppression is going on, where people are under stress, then those show up. So it’s not an accident for example with COVID, people who had to go to work, who did not have the privilege of working remotely, are the people who got COVID more frequently, and if you didn’t have spacious living quarters with nutrition, good transportation, all of the things that we know put you at higher risk, then you got COVID and you’re more likely to get sick from it and be hospitalized and die.

Q: Okay, thank you so much. Social and structural racism in health care obviously differ from personal racism. How do you think the three work together to negatively impact Black Americans’ experience with health care?

Murray: I think we try to make too much of an artificial separation between these things and let me just say that, personally mediated racism at the personal level changes. So, you know, 100 years ago, the use of the N word might be considered normal and not even in certain parts of the country, just a normal descriptor. Today, what the young people call microaggressions, which I think is a euphemism, it’s still racism, the level of which these things are expressed in polite society changes. So again, things that might be said about women when I was a young woman would not be acceptable to say today in a public setting, that doesn’t mean they’re still not said. It doesn’t mean those ideas still aren’t there. We as individuals live in a societal setting. And so, all of those levels of which racism operates reinforce each other, they’re not separate, and so it doesn’t do any good to have people be polite, if in fact you are not allowing Black people to vote. It doesn’t matter if you’re polite, if educational opportunities are different, or where you can live are different. So those structural conditions haven’t changed, I think, in any measurable way so we still are being impacted.

It’s almost like climate change, you know, you might have people talking more intelligently about climate change today but as we’ve just seen from our recent report, the climate is still getting warmer and we’re still changing at a more and more rapid rate so we have to address not only structural racism, we also have to address class biases, and gender biases in our society and unless we do them all together and really, really reject the basis on which our country operates, which is an individualistic profit-driven perspective, then we’re going to be killing lots of people. These things also kill lots of white Americans. They are just unaware of it or choose to ignore it. It’s not an accident that the life expectancy for example for white Americans has been dropping, and it’s part of those same structural problems that are going on.

Thank you Dr Linda Rae Murray. 

Find more Code WACK! episodes on ProgressiveVoices.com and on the PV App. You can also subscribe to Code WACK! wherever you find your podcasts. This podcast is powered by HEAL California, uplifting the voices of those fighting for health care reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

The Financial & Health Hazards of Medicare Advantage

Medicare Advantage Boom Times, Axios, August 11, 2021, by Bob Herman

“Medicare Advantage continued to grow during the pandemic, and it’s increasingly likely a majority of all Medicare enrollees will be in private plans in a few years despite Medicare Advantage’s deep, longstanding problems…

The federal government paid almost $350 billion to MA insurers for this year, a 10% increase from 2020. Every year since 2015, annual spending growth on MA plans has outpaced annual enrollment growth…

Medicare Advantage is consuming more membership and more of the Medicare trust fund, but many enrollees are not sticking with their plans until the end.”

Comment:

By Isabel Ostrer, M.D.

Enrollment in Medicare Advantage (MA) is soaring. Why is this a problem? For starters, the program is costly (for both patients and the government). But perhaps more importantly, access to care is severely restricted.

Upfront, it appears that MA plans offer a better financial deal to seniors than traditional Medicare does. Because there are no limits on out-of-pocket spending in traditional Medicare, beneficiaries often buy Medigap policies to the tune of about $2000 per year to buffer against unforeseen costs. MA plans appear to offer a financially viable alternative with low monthly fees and annual limits. But the reality is quite different. The out-of-pocket maximum in 2021 is a whopping $7550. And, according to a recent KFF report, over half of MA enrollees would be on the hook for more money than their traditional Medicare counterparts for a 6-day hospital stay. As we pointed out recently in HJM, this means sick enrollees face major financial barriers.

It’s not just patients who pay big prices for MA – the federal government does too. As Herman points out in his Axios piece, the federal government is seeing large year over year increases in the amount they owe MA insurers. This is a lucrative business for insurers. With annual gross margins that are nearly double the margins in individual and group markets, it’s no wonder new MA insurers are popping up left and right.

But Medicare Advantage isn’t just costly, it’s also deadly. A recent Government Accountability Office report found that MA beneficiaries in the last year of life disproportionately disenrolled to join traditional Medicare. As Eagan Kemp wrote in a recent HJM piece, “Medicare Advantage plans — as they also do with other high-cost patients in poor health — are finding ways to avoid paying the high costs of end-of-life care. They often do this through limiting access to specialized care through narrow networks or other unscrupulous means.”

Private insurers should not exist in Medicare, plain and simple.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

The other pandemic is underinsurance

By Marvin Malek, M.D., M.P.H.
VTDigger, August 15, 2021

A study published in the July 21 issue of the Journal of the American Medical Association reported that 17.8% of Americans had medical-related debt that had been sent to debt collections agencies.

Since there is nearly always a lag of three months or more before unpaid debt is sent to collections, this statistic would reflect care provided prior to the Covid pandemic.

This represents a striking increase in America’s medical debt burden — nearly twice as large as the percentage reported in 2009. Millions of Americans lost their incomes and health coverage as a result of the pandemic, so the situation is likely worse now.

Since the number of uninsured Americans was actually a little lower in early 2020 than in 2009, this increase in unpayable debt reflects underinsurance: Coverage that is so poor that families cannot afford their deductibles and copays when someone in the family actually gets sick.

Note that this 17.8% reflects only a fraction of Americans burdened by medical costs. Many others pay off high medical bills by skipping sending their kids to summer camp, aborting plans for a vacation or foreclosing on their mortgages. Many others work out burdensome payment arrangements with hospitals, and will remain underwater for years to come as additional medical bills accumulate.

But these are numbers. It is up to us to use our imaginations to translate them into the day-to-day lives of American families. How many potential business enterprises won’t be happening because medical debt prevents access to credit? How many couples will experience marital stress and even divorce due to these debt burdens?

Numerous studies have demonstrated that families with medical debt typically skimp on paying for food, clothing and other basic necessities, and that half of bankruptcies are filed because of unaffordable medical bills.

How many Americans will avoid needed medical care to avoid incurring further debt? At least 25,000 excess deaths occur each year among the uninsured, Uninsured Americans who are experiencing a heart attack are 37% more likely to delay care, placing themselves at risk of an immediately fatal outcome.

But we don’t yet have accurate data that reflects how many deaths occur due to underinsurance. At the very moment in one’s life when one is contending with major illness, Americans find themselves deluged with medical bills. Ours is the only developed country where we kick people when they’re down in this manner. It violates one’s sense of decency.

But now let’s try to push our imaginations in a different direction: Let’s imagine living in a country where every single citizen has health coverage and there is literally no one in the entire country with unaffordable medical debt — a reality in England, France, Spain, Scandinavia, Taiwan, and many other countries.

July 31 was the 56th anniversary of the implementation of our Medicare program. Now let’s imagine a Medicare program without copays, and which enrolls every single American.

This is not a dream. Legislation that would implement a Medicare for All program is in the docket in both houses of the U.S. Congress. These bills should be passed and implemented as soon as possible. Every American should work to clear away the political obstacles that have been placed in the way of this legislation by the health insurance companies, big pharma, and other lobbies.

There has never been a logical policy reason why Americans wait until age 65 to enroll in Medicare, neither in 1965 nor currently. But the price tag both in financial distress of American families and foregone care has risen dramatically since 1965. Last week’s JAMA article provided evidence of this distress.

Let’s all work toward a future in which a subsequent study published in 2030 will reveal that no American family has collection agencies harassing them just because they were seeking needed medical care. We can do better — if we mobilize our imaginations, our sense of basic decency and our voices.

This commentary is by Dr. Marvin Malek, a general internist practicing hospital medicine in Springfield, Vt.

https://vtdigger.org…

Medicare for All Explained Podcast: Episode 62

Interview with Dr. Ashley Duhon

August 14, 2021

Bronx-based OB/GYN resident Dr. Ashley Duhon shares the Sister Song definition of reproductive justice as “the human right to maintain personal bodily autonomy, have children, not have children, and parent the children we have in safe and sustainable communities.”

She adds that “we are failing our patients in every aspect of [reproductive justice], and a lot of that has to do with access to health care.”

Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Private Equity Is Buying Up Health Care: Patients (and Doctors) Beware

REPORT TO THE CONGRESS: Medicare and the Health Care Delivery System; Chapter 3 – Congressional request: Private equity and Medicare, MedPAC, June 21, 2021

We examined PE business models in three key sectors: hospitals, nursing homes, and physician practices. PE firms have made investments in each sector but have a limited presence: We found that PE firms own about 4 percent of hospitals and 11 percent of nursing homes. We do not have a comparable figure for physician practices. At least 2 percent of practices were acquired by PE firms from 2013 to 2016, but that figure does not account for previous PE acquisitions and appears to have grown since then.

Because there is no single comprehensive source of ownership information, researchers compile data about PE ownership from proprietary datasets and public announcements. As a result, the estimated numbers of health care providers with PE backing are likely too low.

Global Healthcare Private Equity & M&A Report 2021, Bain & Co., 2021

At a Glance:

  • Healthcare private equity deal volume increased by 21% to a total of 380 deals in 2020, compared with 313 the year earlier, despite a 14% decline in total global PE activity.
  • The healthcare provider and biopharma sectors were the most active, despite Covid-19’s damage to patient volumes and provider margins, with nearly 150 deals in each sector.

Comment:

By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.

Private equity firms pool outside investors’ funds and a small amount of their own money to buy assets (e.g. hospitals, nursing homes, doctors’ practices or Toys“R”Us), which they hold “privately”, i.e. their stock is not for sale to the public. That private ownership excuses them from the disclosure requirements applicable to publicly-traded firms.

Private equity purchases are usually funded mostly by loans that amplify the investors’ money, with the acquired asset – not the private equity firm or investors – liable for the debt. So when a private equity firm buys a nursing home, the nursing home is on the hook for repayment, not the investors. The private equity firm usually collects large annual “management fees”, assuring that it takes home profits, and aims to sell off the asset in 3-5 years. In the meantime it seeks to gin up profitability in order to drive up the eventual sale price.

The COVID-19 pandemic has apparently fueled an increase in private equity purchases of physician practices that were struggling because of decreased patient volumes. But exactly how many doctors they own is a mystery, because private equity operates behind a veil of secrecy. Indeed, even MedPAC, Congress’ official Medicare advisory body, couldn’t penetrate that veil.

What is clear is that private equity owns tens of thousands of emergency physicians, a major chunk of dermatologists, and an increasing number of primary care doctors.

The galloping private equity takeover of medical assets should ring alarm bells. These corporate raiders’ only interest is in short term profits. Dentists they own have been pressured to drill healthy teeth in children, dermatologists have been pushed to amp up lucrative procedures, and private equity-owned ED staffing firms are largely responsible for “surprise bills” for ED care. The private equity firm that purchased Hahnemann Hospital – a vital safety net provider in inner city Philadelphia – ran the hospital into the ground, but made a killing by selling off the hospital’s real estate before it crashed into bankruptcy.

In the short term, Congress should lift the veil of secrecy around private equity ownership of medical assets, e.g. by requiring full disclosure of the ownership structure of firms that bill Medicare. (California already requires pharmacies to publicly report the names of individuals and  organizations with any share of ownership, as well as the property owner, management company, and administrator). In the longer term, investor ownership of health care facilities and practices should be banned.

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Dr. Adam Gaffney on “All In”

PNHP immediate past president Dr. Adam Gaffney appeared on “All In” on MSNBC on August 12, 2021. Dr. Gaffney pushed back against a proposal to charge unvaccinated Americans higher health insurance premiums. He argued that more expansive access to vaccines (and access to medical care in general, under Medicare for All), coupled with occupational mandates, would be more effective.