Summary: An excellent study using a sophisticated research design (geeks: instrumental variable) finds that Veteran’s Affairs care lowers mortality by nearly half and costs by one-fifth after an emergency visit. Government care beats private care, reminding us of the advantages of a committed and well-run health care system.

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Is There a VA Advantage? Evidence from Dually Eligible Veterans, Working Paper 29765, National Bureau of Economic Research, February 2022, by David C. Chan Jr et al.

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Abstract: We study public vs. private provision of health care for veterans aged 65 and older who may receive care provided by the US Department of Veterans Affairs (VA) and in private hospitals financed by Medicare. Utilizing the ambulance design of Doyle et al. (2015), we find that the VA reduces 28-day mortality by 46% (4.5 percentage points) and that these survival gains are persistent. The VA also reduces 28-day spending by 21% and delivers strikingly different reported services relative to private hospitals. We find suggestive evidence of complementarities between continuity of care, health IT, and integrated care.

From the Conclusion: The structure of health care delivery to US veterans provides a distinctive research opportunity, allowing us to study fundamentally different systems of health care that coexist for a large patient population. Specifically, millions of older veterans (those at least age 65) are dually eligible for care in a public system operated by the Veterans Health Administration or in private-sector hospitals financed by Medicare. Our work has current policy relevance, as the Department of Veterans Affairs is now considering whether to bolster its existing public delivery system or to replace it, either partially or entirely, with a system of financing private care.

We find a significant VA advantage. The VA outperforms the non-VA alternative in a wide variety of locations and for all types of patients that we consider. Importantly, the VA also reduces total spending by 21% relative to non-VA providers, which points to higher productivity in the VA than in the private sector. We demonstrate striking differences in the procedures reportedly performed at the VA vs. those reportedly performed by non-VA providers. These differences relate to the underlying arrangements in which public vs. private providers are funded in the US (and other developed countries). For example, veterans with prior VA care (and those who are more likely to use the VA) have larger survival gains from VA assignment.

Our results contribute more broadly to two streams of literature on the efficiency of production. First, we contribute to the descriptive analysis that compares the performance of the US health care system to systems in other developed countries (Blank, Burau, and Kuhlmann 2017). By almost all accounts, comparisons of US health outcomes and health care spending are unfavorable with those of other developed countries (Garber and Skinner 2008; Rice et al. 2013). Our analysis points to a potentially significant source of inefficiency in the US context: its version of private provision of health care. This arrangement rewards costly but not necessarily efficient care. Although several developed countries that outperform the US also feature private provision of care, the US system arguably has the most complex configuration of financing and delivery, with high levels of uninsurance, administrative costs, and fragmentation (Cebul et al. 2008). These well-known information and coordination gaps may be fatal, at least for veterans in emergencies.

Second, we provide empirical support in the context of health care for the general idea of production complementarities among three innovations in production: workplace reorganization, products and services, and information technology (IT). Hospitals without a broad network of clinics and a clear mandate for a population’s health may find it difficult to reorganize and redefine their services to optimize patient health. Complementarities in health care production may pose barriers for replicating the VA advantage in the fragmented private landscape of US health care.

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Comment:

By Don McCanne, M.D.

With the high costs and gross inefficiencies in how we pay for health care that have left so many without care and with financial hardship, we have been working for decades on reforming the system. Rather than converting health care to a predominantly government owned and operated system, we have left the delivery system owned largely by private non-profit and for-profit entities, while professing to support public financing of care. Yet we are in the process of turning over the administration of Medicare and Medicaid to private entities, with well documented adverse consequences. Private equity firms have moved into health care en masse with the expected dire consequences for health care justice.

Contrast that with the government health care program that lies before our very eyes: the US Department of Veterans Affairs (VA). The government-owned and operated system (i.e., designed and operated coherently) saves lives and reduces costs! Lest one be tempted to challenge the qualifications of the authors, one of them, David Card, was a co-recipient of the 2021 Nobel Prize in Economic Sciences.

We have the money to provide high quality, comprehensive care to everyone. We obviously do not have the correct policies in play. It is time that we take a step back and see where we have gone wrong, and then correct our policies. We are long past due for providing health care justice for all.

http://healthjusticemonitor.org…

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Editor’s note: Although Medicare-paid services fared worse in this comparison, let’s not blame the funding. Public financing won’t yield top results if private insurers meddle and providers are profit-driven. We need a commitment to access and quality from coverage through care. – JGK

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Summary: Today we take a step back to consider a pivotal issue that arises in discussions of health reform generally and single payer specifically: Which is the better way to pay providers – FFS or capitation? The answer is: Both. That is, done right, both can work very well. And, sometimes, neither …

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Comment:

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

Fee-for-service (FFS) means that providers bill and are paid for each medical service delivered – physician visit, test or intervention, hospital day.

Capitation means that providers are paid a monthly amount per beneficiary for all services or just some (e.g., primary care).

Let’s start with the claim that capitation is better than fee-for-service, full stop. Less costly and with excellent quality of care. This can be true in narrow circumstances. A very experienced provider organization that likes to be paid via capitation, with similar administrative and profit structures as the fee-for-service alternative, can often save money (offer a cheaper alternative) while maintaining quality of and satisfaction with care. Some early HMO history suggests that. It makes sense since some providers will raise their income in a FFS system by increasing the quantity of services.

However, the “similar administrative and profit structure” caveat often distinctly fails in the US. The most important example is Medicare. Traditional Medicare is FFS, and has very low overhead for the funder, CMS. In contrast, Medicare Advantage, the capitated option, uses insurance company intermediaries, with substantial administrative overhead and profits. Medical care costs are lower in Medicare Advantage, but total costs (including the overhead and profits) are substantially higher than FFS Medicare, by one estimate more than $100 billion higher. Quality of care is comparable. Financial barriers to care are higher in Medicare Advantage for individuals in poor or fair health. Perhaps related, sicker patients often shift to FFS. So, in Medicare, FFS is a better option. (Unfortunately, there is currently a process to shift FFS Medicare to fully or semi-capitated direct contracting, see HJM posts starting here.)

In Medicaid, capitation via private insurers has resulted in significant access to care problems.

Relative ease of oversight is a factor favoring FFS. A single payer FFS system facilitates strong rate regulation and use of comprehensive claims / payment data to identify and reduce fraud and waste.

Another consideration is how to pay for capital investments, such as a new hospital. Under both capitation and FFS it matters how operating margins (profits) are used. In our system, net income often feeds expansion. US single payer plans would eliminate this dynamic, removing the funding and/or approval of capital spending from the payment for care. This facilitates investment decisions based on system need rather than provider financial gain. It improves both FFS and capitation.

Looking to other wealthy countries, both FFS and capitation work well. Nearly two thirds of countries in the OECD use FFS payment, solely or in combination with capitation and salaries. Their costs, quality, satisfaction, and outcomes are all much better than in the US. See, for example, specific performance measures and global outcomes.

Of note, capitation in other countries is a different entity than here. For example, in the Netherlands, which relies on capitation, typically < 5% of premium payments go to overhead and profits (here, p.49), and those minimal profits are not retained by owners, instead they’re passed forward to pay for care in subsequent years. (Their “risk adjustment” system is also better, which we’ll discuss another day.)

In three-quarters of other OECD countries, capital spending is regulated by the government.

A key issue in contemplating FFS for single payer: the history of universal coverage suggests that provider supply constraints distinctly limit the jump in utilization from providing everyone very comprehensive insurance. If supply is limited (which it is), it’s impossible to increase services to make more money. So FFS payment does not (can not) result in huge cost increases. See our article. Further, US single payer proposals include system-wide global budgets, as done in other countries, providing a formal mechanism to slow cost growth if necessary.

So, you can see why the main answer is “both” – FFS and capitation both can work well with appropriate structure and regulation.

Finally, the “neither” part. For hospitals, one of the most common and successful payment methods is global budgeting. Each hospital receives a fixed annual allocation based on past services provided, with allowances for growth in utilization and costs. This removes the administrative burden of billing, and allows hospitals to focus on providing services. We’ve written an article on this, available soon.

The other “neither” — as noted above, salaries are also a fine way to pay providers.

The essential features of successful universal coverage are insuring everyone with the same comprehensive coverage, with minimal financial burden, using simple and fair payment systems, and removing profit as a driving force in the system. With the right structure and regulation, any reasonable payment modality can work.

http://healthjusticemonitor.org…

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Summary: As the COVID Omicron variant subsides, and schools cautiously reopen, a tiny but vocal group of doctors is arguing to end all precautions, including masking. Their arguments distort public health evidence. Under-vaccinated and under-resourced communities are the most likely to suffer from such a strategy.

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Why Is This Group of Doctors So Intent on Unmasking Kids? The New Republic, February 22, 2022, by Melody Schreiber

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There is stark disagreement on the best path to a new normal. While the pandemic still rages, with 25 percent of children 5 to 11 and a little more than half of 12- to 17-year-olds vaccinated, a vocal minority of physicians and scientists has called for the end of precautions. Some of them, organized in a movement they call “the Urgency of Normal,” are finding an eager audience in those who have largely been spared the worst of the pandemic. The group says the precautions, more than the pandemic itself, are causing mental strain and potential harms to children. If the precautions are lifted, kids can return to normal.

Public health experts, meanwhile, point to what they say is a huge flaw in this reasoning: Removing precautions before meeting various vaccination, treatment, and caseload benchmarks could let the virus spread unchecked, develop more dangerous variants, and put “normal” out of reach for much, much longer.

There is, to be clear, little scientific disagreement about what helps quell the pandemic. Vaccinations, masks, ventilation, tests, staying home while sick—these layers of protection, when employed, are highly effective at keeping the virus from spreading, which is especially urgent with 109,000 daily cases, 2,000 daily deaths, and many hospitals still at capacity.

The science is strong. But this movement to drop pandemic precautions is about something else entirely—a potent mix of pandemic fatigue, politics, individualistic thinking, and, if both polling and pandemic statistics are to be believed, a persistent divide based on class and race.

… In the past two weeks, governors have begun rolling back the few state-level mask mandates that existed. …

But the Urgency of Normal group wants to go a step further: ending all precautions for children, permanently.

“… what they did with the mental health science. It’s a true perversion of what science communication is supposed to be,” Black said. “They had mis-cited the CDC…” The Centers for Disease Control and Prevention study found that there was no significant increase in child suicide, yet the group used that study to claim the opposite—an increase in suicide.

Given that the research on masking is pretty favorable to mandates, especially during times of high transmission, the downsides of masking increasingly look political. But even when it comes to politics, anti-maskers run into data problems: Polls show overwhelming support for mask mandates.

The places that could actually attain a sense of normalcy are overwhelmingly high-income, white communities that have long been insulated from the worst effects of the pandemic. And these are the locations with the most support for lifting precautions.

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Comment:

By Gregg Gonsalves, Ph.D.

This article in The New Republic describes a movement to remove all COVID-19 pandemic mitigation strategies in schools, starting with masking of students, under the tagline of the #urgencyofnormal.

The author describes the leadership of the group as composed of people with limited public health expertise, including Dr. Lucy McBride, a concierge internist in DC; Dr. Scott Balsitis a virologist at the drug company Gilead Sciences, and; a hematologist-oncologist at UCSF, Dr. Vinay Prasad. Despite this, the group has been able to get heavy mainstream media attention, including on CNN and other major cable news outlets.

The #urgencyofnormal movement has largely been targeted at white, wealthy, liberal parents and “particularly focused toward highly vaccinated communities” with a toolkit of advice for parents on how to argue against pandemic mitigation measures.

The problem the article exposes is that the leaders and creators of the toolkit have relied on dubious interpretations and cherry-picking of the science, on masks, the mental health impact of COVID mitigation strategies, and the clinical impact of the disease on children. In addition, with its focus on highly vaccinated communities, the #urgencyofnormal creators have ignored the disparities in vaccination and resources to protect students, teachers and staff in schools outside of wealthy, white urban and suburban enclaves.

http://healthjusticemonitor.org…

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Summary: CMS apparently took to heart concerns about the privatization of traditional Medicare with DCEs, pivoting to a new program ACO REACH focused on equity and disparities. Except that the new program is really no different than DCEs. Re-branding while continuing the march to corporate control of Medicare won’t cut it.

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ACO REACH, CMS, February 2022

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The Centers for Medicare & Medicaid Services (CMS) has redesigned the Global and Professional Direct Contracting Model (GPDC) Model in response to Administration priorities, including our commitment to advancing health equity, stakeholder feedback, and participant experience. CMS is renaming the model the ACO REACH Model to better align the name with the purpose of the model: to improve the quality of care for people with Medicare through better care coordination, reaching and connecting health care providers and beneficiaries, including those beneficiaries who are underserved, a priority of the Biden-Harris Administration.

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Comparing GPDC to the ACO REACH Model, CMS, February 2022

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A very detailed side-by-side table.

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‘Band-Aid on a Tumor’: Critics Blast Biden Rebrand of Trump’s Medicare Privatization Scheme, February 25, 2022, by Jake Johnson

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PNHP—which has implored the Department of Health and Human Services (HHS) to fully halt the program—outlined how the revamped pilot “perpetuates the dangerous flaws” of the Trump administration’s Direct Contracting experiment:

• Like the DC model, ACO REACH will pay middlemen a flat fee to “manage” seniors’ health, allowing them to keep 40% of what they don’t spend on care as profit and overhead.
• Traditional Medicare beneficiaries will still be automatically enrolled into ACO REACH entities without their full understanding or consent, and once enrolled cannot opt out of an ACO REACH entity unless they change primary care providers.
• Like DCEs, the ACO REACH program has virtually no limits on what type of company can participate; entities can be owned by commercial insurers, private equity investors, and other profit-seeking firms, including current Direct Contracting entities.
• The new program increases provider governance from 25% to 75% (with loopholes built into the application process), but ACO REACH entities are ultimately accountable to investors.

“Changing the name doesn’t change the fact that the Direct Contracting program is backdoor privatization of Medicare,” Alex Lawson, executive director of Social Security Works, said in a statement. “This dangerous experiment must be stopped before it further harms the health of vulnerable seniors, eats into the Medicare Trust Fund, and destroys traditional Medicare.”

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Comment:

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

CMS responded to pressure from progressive organizations and lawmakers by offering a kinder, gentler version of DCEs – the ACO REACH model, focused on improving health care equity. Don’t believe it. Even in new clothing, the new DCE incarnation assures the same profits for corporations.

It’s all very similar to Medicare Advantage. See HJM’s earlier posts on DCEs: How Corporate Investors Deplete Medicare and CMS Direct Contracting Scheme Will Privatize Medicare.

Here are a few key problems with this re-branding:

Profiting from reduced care: As PNHP points out, both DCEs and REACH ACOs potentially retain 40% of medical care costs not incurred. But it’s actually worse than that – they retain 100% of the first 25% drop in spending. If they reduce care costs for a Medicare beneficiary from $10,000 to $7,500, they keep the entire savings of $2,500. (There’s a small “discount” to these savings for part of the program, to let CMS keep a tiny portion … and that’s being trimmed, to the benefit of corporate participants.)

Less focus on care quality: The “quality withhold” for failing to meet quality criteria is dropping from 5% to 2%. Less incentive to provide quality.

Risk Adjustment Manipulation: While there are some limits on upcoding of clinical severity, there are also exemptions and workarounds to permit the DCEs/ACOs to continue to game the system by bumping up apparent clinical severity and thus payments from CMS.

Ineffective Oversight: The REACH ACOs mandate provider and beneficiary roles in oversight, but with such loose definitions (eg of “provider”) and minimal participation (eg, one beneficiary on an oversight board) that control will remain with corporate investors and executives. Likewise, monitoring requirements (eg access to care) are vague and prone to manipulation and disregards given the history of CMS corporate favoritism.

Why, oh why, does CMS believe that shifting fee-for-service Traditional Medicare to something like Medicare Advantage will save money for Medicare and protect beneficiaries, when Medicare Advantage never has? (nor have ACOs)

Why, oh why, is CMS so influenced even in a Democratic administration by the perspectives of profit-making corporations?

Could it be the political donations and revolving door professional opportunities?

This is important. Read the Common Dreams article, and others that will follow. Track this issue.

http://healthjusticemonitor.org…

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Summary: The Congressional Budget Office just released a powerful report, highlighting multiple ways in which single payer would strengthen the economy. That’s right, not just health, but also general economic productivity and well-being. Efficiently financed universal health care improves health and reduces financial burdens, boosting economic performance.

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Economic Effects of Five Illustrative Single-Payer Health Care Systems, Congressional Budget Office, February 2022, by Jaeger Nelson, with assistance of CBO Staff

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This paper builds on previous studies published by the Congressional Budget Office about single-payer health care systems.

We analyze six channels through which a single-payer system would affect the economy:

• The composition of workers’ labor compensation would change because employers would no longer provide health care benefits and would pass along the savings to employees, increasing their taxable wages.
• Households’ health insurance premiums would be eliminated, and their out-of-pocket (OOP) health care costs would decline.
• Administrative expenses in the health care sector would decline, freeing up productive resources for other sectors and ultimately increasing economywide productivity.
• Reduced payment rates to providers would increase productivity and efficiency in providing health care; however, some of the reduction in payment rates would be passed through to workers’ wages in the health care sector and throughout the supply chain.
• Longevity and labor productivity would increase as people’s health outcomes improved.
• [Long-term care] benefits would further reduce OOP spending, provide payments for care that is currently unpaid, increase wages among workers providing care, and allow some unpaid caregivers to increase their hours worked at their primary occupation.

[W]orkers would choose to work fewer hours, on average, despite higher wages because the reduction in health insurance premiums and OOP expenses would generate a positive wealth effect that allowed households to spend their time on activities other than paid work and maintain the same standard of living.

Moreover, that wealth effect would boost households’ disposable income … Although hours worked per capita would decline, … under most policy specifications [there would be] an increase in economywide productivity, an increase in the size of the labor force, an increase in the average worker’s labor productivity, and a rise in the capital stock. … nonhealth consumption per capita would rise by about 11.5 percent by 2030.

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Pigs fly! CBO admits Medicare for All will aid people, businesses, economy, Medium, February 25, 2022, by Ira Dember

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• BIGGER PAYCHECKS. “…employers would no longer provide health care benefits and would pass along the savings to employees, increasing their taxable wages.”
• NO PREMIUMS. “…health insurance premiums would be eliminated, and [families’ out-of-pocket] health care costs would decline.”
• LESS WASTE. “Administrative expenses in the health care sector would decline, freeing up productive resources for other sectors and ultimately increasing economywide productivity.”
• LOWER COST. “Reduced payment rates to providers would increase productivity and efficiency in providing health care…”
• LIVE LONGER. “Longevity and [economywide] labor productivity would increase as people’s health outcomes improved.”

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The Government Just Admitted An Inconvenient Truth, The Daily Poster, February 25, 2022, by David Sirota and Aditi Ramaswami

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Every now and then, federal officials admit some truths that are inconvenient to the corporations that own the government — and this latest admission is pretty explicit: Scrapping corporate health care and creating a government-sponsored medical system would boost the economy, help workers, and increase longevity.

Those are just some of the findings from the Republican-led Congressional Budget Office (CBO) in a new report that implicitly tells lawmakers just how the existing corporate-run health care system is immiserating millions of Americans — and how a Medicare for All-style system could quickly fix the catastrophe.

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Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

It is consistently stunning to us that political forces in our country do not coalesce around single payer, since it would provide equitable, comprehensive health care for all of us while saving money. Congress and the President apparently do not believe that it is their responsibility to ensure our health.

So, just what purpose do these politicians believe they serve? We frequently hear them advocate for helping the economy. Well, now they can read this report from Congress’s own economic advisory body, the Congressional Budget Office, to see that ensuring health will also help the economy.

The CBO says that a single payer system will reduce the economic burden of health care on families and employers; eliminate administrative waste and put those funds to productive use; increase disposable income, elective consumption, and savings; and raise productivity through better health, among other benefits. All that while fixing our broken health care system.

We link to two excellent op-eds about this powerful new analysis. This is very important news.

Congress has the report in hand, and they should use it. The President can jump on the bandwagon.

Better health, better economy. A twofer.

http://healthjusticemonitor.org…

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Summary: The world is roiling, with a Russian invasion of Ukraine. This appears to be the largest post-Cold War crisis in Europe, with huge risks. This is indeed a health issue, and a justice issue.

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Vladimir Pozner: How the United States Created Vladimir Putin, 2018 talk at Yale, YouTube, October 2, 2018

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[no excerpt – video]

Pozner, a prominent French-American-Russian television journalist for many decades, argues that the US and NATO made a major diplomatic error after the Cold War, treating Russia as a small and marginal state, and making promises of NATO expansion restraint that were not honored. This punitive approach, he says, injured Russian pride and raised legitimate security concerns, thus stoking nationalism and creating political dynamics leading to Ukraine tensions and conflict. He’s a not a Putin fan, he says, just providing critical historical context.

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Vladimir Putin’s Revisionist History of Russia and Ukraine, The New Yorker, February 23, 2022, by Isaac Chotiner

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The historian Serhii Plokhy discusses the Russian President’s “very imperial idea” of his country, and the potential for Ukrainian resistance.

How far back do you trace a type of Ukrainian identity that we would recognize today?

It depends on what element of that identity you are speaking of. If you are talking about language, that would be pretty much primordial. In terms of an identity with religious components, that would be more than a thousand years old. But the first modern Ukrainian political project started in the mid-nineteenth century, as with many other groups. [V]ery early, the Russian Empire recognized the threat posed by a separate and particularly literary Ukrainian language to the unity of the empire. So, starting in the eighteen-sixties, there was a more than forty-year period of prohibition on the publication of Ukrainian, basically arresting the development of the literary language. …

Why was Russia so threatened by Ukrainian identity and, specifically, language? Was it just typical imperial distrust and dislike of minority groups or languages?

The Russians were looking at what was happening in Europe at that time… What is specific and certainly resonates today is the idea that there is this one big Russian or Slavic nation, with maybe different tribes, but, basically, they are the same nation. That is the model, from the nineteenth and beginning of the twentieth century, which Vladimir Putin now subscribes to when he says Ukraine has no legitimacy as a nation.

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Letters from an American, Substack, February 23, 2022, by Heather Cox Richardson

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[Putin] promised to provide for the ”denazification” of Ukraine, a harking back to the period after World War II when Nazis and those who had worked with them were purged from society. Putin has repeatedly referred to Ukrainian leaders as Nazis, a charge Zelensky, who is of Jewish heritage, has pleaded with Russians to reject, citing Ukraine’s losses in World War II and his own grandfather’s service in that war. Putin’s chilling word here suggests that he intends to purge from Ukraine all those who worked with the Zelensky government.

He warned: “Anyone who tries to interfere with us, or even more so, to create threats for our country and our people, must know that Russia’s response will be immediate and will lead you to such consequences as you have never before experienced in your history.” This sweeping and vague threat seems to encompass everything from massive cyber attacks to nuclear war, but at this point it seems mostly to be an effort to deter resistance.

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Comment:

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

Russia’s invasion of Ukraine is a global crisis, evoking decades-old Cold War tensions between the USSR and NATO, as well as issues of ethnic identity and national sovereignty. While not a typical HJM topic, these events threaten the health of millions of people – in the region and, with nuclear weapons available in abundance, throughout Europe and even the US.

Who is to blame? In my view, in the short term, Putin is culpable. As the New Yorker article discusses, the history of Ukraine’s treatment by Russia and then the Soviet Union reads like cultural oppression interdigitated with political gamesmanship. This article paints the Russians as power-hungry oppressors, with periods of cultural genocide.

The YouTube video of Vladimir Pozner’s 2018 Yale talk is fascinating, worth the long listen. Pozner presents a compelling argument that the aggressive & dismissive US/NATO post-Cold War stance toward Russia led to today’s problems. This dynamic was anticipated by many when in 1992 the US articulated an aggressive policy toward the new Russia, including by George Kennan, author of the lauded US Cold War containment policy. Pozner’s historical insights don’t negate the fact that the current Russia is abysmally about authoritarianism and kleptocracy, but does suggest a counterfactual history in which those developments could have been staved off with an approach like the Marshall Plan after WWII.

Heather Cox Richardson’s reflections suggest that Ukrainian-Russian history and NATO post-Cold War political blunders aside, Putin has morphed into quite a heinous figure. The Ukraine invasion unequivocally fosters authoritarianism and militarism, and damages democracy. Hitler too was provoked by an unwise and unfair treaty ending WWI, but we don’t excuse his actions on that basis.

Let’s hope that calm minds prevail, Russia and NATO will compromise, and the crisis will dissipate. Then we can return to relatively mundane issues like removing financial barriers to health care in the US.

http://healthjusticemonitor.org…

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