The Lancet Commission on Public Policy and Health in the Trump Era unveiled its key findings and recommendations during on online forum hosted by the Roosevelt House Public Policy Institute at Hunter College on February 11, 2021.
Panelists included PNHP co-founders Drs. David Himmelstein and Steffie Woolhandler, form NYC health commissioner Dr. Mary T. Bassett, and Dr. Kevin Grumbach of the University of California, San Francisco.
PNHP immediate past president Dr. Adam Gaffney appeared on Waking Up With Cheddar on February 11, 2021. He spoke about the just-released report of the Lancet Commission on Public Policy and Health in the Trump Era, which provided important context for U.S. health injustices dating back 4 years (the Trump presidency), 40 years (the end of the New Deal era), and 400 years (the deep roots of racism and white supremacy).
By Steffie Woolhandler and David Himmelstein, Co-chairs, with 31 other authors
The Lancet Commissions, February 11, 2021
Executive Summary (Short Version)
Convened shortly after President Trump’s inauguration in 2017, the Lancet Commission on public policy and health in the Trump era offers the first comprehensive assessment of the detrimental legislation and executive actions during Trump’s presidency with devastating effects on every aspect of health in the USA. The Lancet Commission traces the decades of policy failures that preceded and fueled Trump’s ascent and left the USA lagging behind other high-income nations on life expectancy. The report warns that a return to pre-Trump era policies is not enough to protect health. Instead, sweeping reforms are needed to redress long-standing racism, weakened social and health safety nets that have deepened inequality, and calls on the important role of health professionals in advocating for health care reform in the USA.
From the Conclusion
A new politics is needed, whose appeal rests on a vision of shared prosperity and a kind society. Health-care workers have much to contribute in formulating and advancing that vision, and our patients, communities, and planet have much to gain from it.
PDF version:
https://www.thelancet.com…
By Don McCanne, M.D.
This 49 page report and its supporting documents are too much to summarize here. Simply stated, the report describes what has gone wrong with public policy and health in the United States, with suggestions on how we can fix it. You will want to set aside adequate time to read and study this report.
You are invited to the global launch event of the Lancet Commission on public policy and health in the Trump era: February 11, 12:00-1:00 Eastern, 9:00 am Pacific
The Lancet Commission on public policy and health in the Trump era is the first comprehensive assessment of the health effects of President Trump’s policies. Led by 33 leading experts from the US, UK and Canada, the Commission was tasked with chronicling the repercussions of the administration’s actions and charting policies for a healthy future.
At the launch, the authors will present key findings and recommendations from the Commission. The presentations will be followed by a question and answer session chaired by Richard Horton, Editor-in-Chief, The Lancet.
Register here: https://community.hunter.cuny.edu…
Presenters and speakers include:
This event is hosted by Roosevelt House Public Policy Institute at Hunter College.
Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.
By Abdul El-Sayed, M.D. and Micah Johnson, M.D.
CNN Business Perspectives, February 11, 2021
While the pandemic has put immense stress on nearly every country’s health care system, no country — and certainly no other high-income country — has suffered the way the United States has. Americans make up less than 5% of the global population, but account for nearly one in five of the world’s 2.3 million deaths. All the more astounding is that as the richest, most powerful country in the world, its overwhelming resources did nothing to help absorb the shock of an event like this.
There are, of course, many reasons why America suffered Covid-19 worse than any other country in the world, including failed political leadership, a concurrent epidemic of disinformation and flagging public trust. But the way the United States approaches health care is high on the list.
President Joe Biden was elected on a platform that focuses on improving the Affordable Care Act, but the ACA left tens of millions of Americans uninsured in the middle of a pandemic and millions more afraid to get care if they got sick. If the nation is serious about learning the lessons from this pandemic, it should reconsider implementing a universal health care plan like Medicare for All.
America’s health care system is the most expensive in the world, accounting for nearly 18% of overall gross domestic product. It is also a business, which means that hospitals have to remain profitable to remain open, always conscious of the bottom line. Elective procedures offered to privately insured patients are one of the most important revenue streams in American health care. When hospitals were forced to cancel these elective procedures early in the pandemic, they were left without that revenue, battling Covid-19 and bankruptcy at the same time.
Had a universal health care plan been in place, hospitals wouldn’t have been so financially ruined because they’d be getting paid fairly for treating all patients. They wouldn’t have had to rely so heavily on privately insured patients getting pricey elective procedures. President Biden’s plan to expand the ACA would not solve this problem because it would keep some Americans on private insurance and other Americans on Medicare and Medicaid, meaning that doctors and hospitals would continue to get paid more for treating privately insured patients and therefore keeping the incentive for healthcare providers to cater to them disproportionately.
On the other side of the health care industry sits health insurance. With many patients avoiding care during the pandemic — elective or otherwise — insurance companies haven’t had to fork over as many reimbursements, and as a result their profits appear to have increased in 2020.
And because about 150 million Americans are insured through their employers, an economic downturn that spikes job losses (like the one that hit last spring) usually leads to millions of people being kicked off their health insurance. That is exactly what happened at the beginning of the pandemic: Millions of Americans lost their private insurance. Because the ACA maintained the central place of job-based health insurance, millions of Americans were left exposed during the coronavirus recession. With a universal health care program like Medicare for All, health insurance would be a right instead of a job perk, and no one would have lost their insurance in the middle of the pandemic.
While the United States spends heavily on lucrative industries like insurance, hospitals and pharma, only a tiny fraction of our health spending goes toward improving public health. The problem of chronic underinvestment in public health and prevention has become clear in the midst of this pandemic, as the nation’s anemic public health infrastructure is tasked with deploying millions of doses of vaccine in record time, leading to the failures we’re witnessing now. Worse, because there are hundreds of health insurers in the United States and plenty of people jump between insurers, no one insurer has an incentive to invest in preventing disease. The savings of investing in preventing diseases early (when people don’t develop those diseases) usually accrue years later after a given beneficiary has moved on to a different insurer.
But under Medicare for All, the federal government would insure Americans yesterday, today and tomorrow, so there is plenty of incentive for government to invest in public health and prevention infrastructure — the kind of infrastructure so critical in executing mass vaccination campaigns. These long-term incentives simply aren’t there under the ACA, with hundreds of competing insurance companies jockeying for enrollees and profits.
Politicians and pundits will offer piecemeal solutions. But there is no doubt that the best way to have addressed each of our system’s deficiencies in one reform would have been through a universal national health insurance program such as Medicare for All.
Dr. Abdul El-Sayed is a physician, epidemiologist and former health director for the City of Detroit. Dr. Micah Johnson is a resident physician at Brigham & Women’s Hospital in Boston, Massachusetts. They are co-authors of “Medicare for All: A Citizen’s Guide.”
By Reed Abelson
The New York Times, February 10, 2021
In an unusual display of unity, groups representing nearly all the major players in the American health care system — hospitals, doctors, insurance companies and employers — are joining forces to urge Congress to embrace President Biden’s broad vision of building on the Affordable Care Act to reach the long elusive goal of universal coverage.
It released a detailed set of proposals on Wednesday morning, including an increase in the federal subsidies available to help people afford coverage and a three-year re-establishment of the generous match in federal funding to states to entice more of them to expand their Medicaid programs. The coalition also urged the government to spend more money on enrolling people in plans offered by the insurance markets established under the law, efforts that were slashed by the previous administration.
The recommendations signal a strong show of support for the beleaguered health care law, which had been under fierce attack not only from Republicans under the Trump administration but from progressive Democrats who have urged replacing it altogether with a government-run “Medicare for all” system.
Affordable Coverage Coalition, February 2021
We represent the nation’s doctors, hospitals, employers and health insurance providers. Collectively, our organizations include hundreds of thousands of individual physicians, thousands of hospitals, and hundreds of employers and health insurance providers that serve hundreds of millions of American patients, consumers and employers every day across the United States.
With the key objectives of improving all Americans’ access to care, stopping the COVID-19 pandemic and advancing health equity, we support the following steps to make coverage more available and affordable (for details, read the report at the link):
Sincerely,
America’s Health Insurance Plans
American Academy of Family Physicians
American Benefits Council
American Hospital Association
American Medical Association
Blue Cross Blue Shield Association
Federation of American Hospitals
U.S. Chamber of Commerce
Press release:
https://s3.amazonaws.com…
By Don McCanne, M.D.
It looks like America’s formidable medical-industrial complex is about to lock in the Affordable Care Act for the indefinite future, as they lock out any consideration of single payer Medicare for All.
This approach does not save money but rather pours more money into the most expensive system in the world. The administrative excesses are to blame for much of the high costs, yet this only adds more administrative services to benefit the industry itself. Innumerable studies have shown that we need to restructure the financing system by removing the private insurers, saving billions of dollars that can be used for health care.
The steamroller is on its way. Can we redirect it to where it is needed?
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On February 10, 2021, less than one month removed from the final days of the Trump administration, the Lancet Commission on Public Policy and Health in the Trump Era published its report detailing the last four years of detrimental health policies, the last 40 years of corporate-friendly conservatism, and the last 400 years of structural racism and white supremacy.
The Commission was co-chaired by PNHP co-founders Drs. Steffie Woolhandler and David Himmelstein, and the full 33-member body included additional PNHP leaders, public health luminaries, and single-payer champions.
Full report:
https://www.thelancet.com…
Comment:
https://www.thelancet.com…
News release:
https://www.eurekalert.org…
This report by the Lancet Commission on Public Policy and Health in the Trump Era assesses the repercussions of President Donald Trump’s health-related policies and examines the failures and social schisms that enabled his election. Trump exploited low and middle-income white people’s anger over their deteriorating life prospects to mobilise racial animus and xenophobia and enlist their support for policies that benefit high-income people and corporations and threaten health. His signature legislative achievement, a trillion-dollar tax cut for corporations and high-income individuals, opened a budget hole that he used to justify cutting food subsidies and health care. His appeals to racism, nativism, and religious bigotry have emboldened white nationalists and vigilantes, and encouraged police violence and, at the end of his term in office, insurrection. He chose judges for U.S. courts who are dismissive of affirmative action and reproductive, labour, civil, and voting rights; ordered the mass detention of immigrants in hazardous conditions; and promulgated regulations that reduce access to abortion and contraception in the USA and globally. Although his effort to repeal the Affordable Care Act failed, he weakened its coverage and increased the number of uninsured people by 2.3 million, even before the mass dislocation of the COVID-19 pandemic, and has accelerated the privatisation of government health programmes. Trump’s hostility to environmental regulations has already worsened pollution—resulting in more than 22,000 extra deaths in 2019 alone—hastened global warming, and despoiled national monuments and lands sacred to Native people. Disdain for science and cuts to global health programmes and public health agencies have impeded the response to the COVID-19 pandemic, causing tens of thousands of unnecessary deaths, and imperil advances against HIV and other diseases. And Trump’s bellicose trade, defence, and foreign policies have led to economic disruption and threaten an upswing in armed conflict.
Interview with Dr. Mary Bassett, Democracy Now!, Feb. 15, 2021
Interview with Dr. Adam Gaffney, Cheddar News, Feb. 11, 2021
Interview with Dr. Steffie Woolhandler, Civic Rx, Feb. 19, 2021
Interview with Dr. Mary Bassett, In Conversation With…, Feb. 11, 2021
By Robert P. Kocher, M.D.
JAMA, February 2, 2021
The US health care system is famous for its expense and its waste.
The US health care system is administratively complex by design. Inherently, a multipayer system offering many variations of benefits, paying for care in a fragmented delivery system, and using a multitude of different payment models is administratively complex. Each health plan incurs cost to build sales and marketing function, deliver customer service, possess actuarial and benefit design functions, form a health care network, credential physicians and other health care practitioners, develop payment rules, set up payment operations, and ensure regulatory compliance.
Medicare achieves lower administrative expenses because it has no sales and marketing expenses, no network expenses, standardized benefit design, and simpler payment processes.
Essentially, administrators for payers and health care centers are trying to accomplish a relatively straightforward goal: ensure that a patient is eligible for care based on their insurance and benefit design, the patient receives care from qualified clinicians, the care is appropriate and of high quality, and the correct amount is collected from the patient and paid to the clinicians. Completing this process requires an extraordinary amount of labor. Hospitals employ up to 1 full-time person per bed to support billing. In total, nearly 4 full-time employees per physician work on administrative tasks, and this ratio is increasing.
Both payers and health care organizations have incentive to keep adding more people and creating new processes to gain temporary economic advantage. Payers add more prior authorization steps, increase first-pass claims denials, and use payments as a tool to collect additional data points on claims for short-term medical loss ratio gains. Health care organizations work with electronic health records to add decision support to guide clinicians to more highly paid diagnosis codes; hire scribes, coders, and chart reviewers to find more items to bill; and work with third parties to get more procedures authorized and denials overturned for short-term revenue gains.
Because the US health care system is so fragmented, there is not a clearly dominant entity to set administrative standards and force adoption. The federal government is the largest payer, but its market power is not concentrated because its payments flow through hundreds of different programs, including 50 unique Medicaid programs, Medicare, hundreds of Medicare Advantage plans, ACA insurance exchanges, federal employee health benefits, the military health system, Veterans Affairs, and the Indian Health Service. Each of these programs has governance over its administrative rules. Some programs, such as Covered California, use their local market power to force standardization of administrative elements, such as benefit design. The private sector alternatives lack either geographic reach or local market scale. The largest private sector entities are the payers United Healthcare and Anthem. However, neither of these companies are positioned to be administrative standard setters. United Healthcare lacks local market scale because it usually only accounts for 10% to 20% of patients for clinicians. Anthem lacks geographic scale because it only operates in 23 states. Only the Medicare system operates in all states and is accepted by nearly all health care organizations, which means changes to Medicare’s administrative rules are adopted nearly universally. Medicare is also a large payer, through the Medicare Advantage program, to the largest commercial payers, which could enhance Medicare’s ability to serve as an administrative standard setter. This makes Medicare the only participant with the market power to set administrative standards.
The federal government can use regulatory authority to reduce administrative costs. The opportunity today is both larger than in 2010 when the ACA targeted administrative simplification and more readily capturable as a result of improvements in information technology. The authority derived from the ACA should be used to implement the third wave of administrative simplification regulations, which requires autoadjudication of claims and prior authorizations and, as a by-product, creates long-awaited payment system and electronic health record interoperability. The Trump administration launched the Patients Over Paperwork program to reduce administrative burden. This program has simplified documentation for office visits and reduced reporting burden for many programs, and claims to have saved health care organizations an estimated $6.6 billion and 42 million hours of labor through 2021. More opportunity likely exists to rationalize the more than 1700 metrics that Medicare collects, which is estimated to incur $15.4 billion in annual data collection and reporting costs. There are additional opportunities that technology such as artificial intelligence may be capable of addressing, including a national clinician credentialing system; risk adjustment relying on data science models instead of physicians coding hierarchical condition categories; and identifying fraud, waste, and abuse.
Dr Kocher reported being a partner at the venture capital firm Venrock, where he invests in health care technology and services business, serving as a board member for Premera and Devoted Health.
By Don McCanne, M.D.
This article acknowledges the tremendous administrative waste in the U.S. health system and concedes that it is administratively complex by design, employing a multipayer system, each with its separate, complex administrative functions, serving a fragmented delivery system.
The author concedes the efficiency of the Medicare system, but then proposes to apply Medicare functions to the private insurance industry, leaving the source of the administrative complexity intact.
This compulsion to search for private sector solutions to what should be a government function, in this case health care financing, has perpetuated our costly but inefficient health care financing system. The author, Dr. Robert Kocher, is a partner in Venrock, a venture capital firm, which states on its website, “Our collaboration – engagement, network, passion and experience – gives entrepreneurs the unfair advantage needed to win, and win big.” Does this translate into giving the private insurance sector an unfair advantage so that it can win big?
We do need to do something about the profound administrative waste, and Medicare does have some lessons to offer, but considering that the system is complex by design, that means that we need to change the design. What we need is a single payer, improved Medicare for All. Providing the private insurance sector some Medicare tweaks simply will not do.
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By Amitabh Chandra, Evan Flack, and Ziad Obermeyer
National Bureau of Economic Research, February 2021
Abstract
We use the design of Medicare’s prescription drug benefit program to demonstrate three facts about the health consequences of cost-sharing. First, we show that an as-if-random increase of 33.6% in out-of-pocket price (11.0 percentage points (p.p.) change in coinsurance, or $10.40 per drug) causes a 22.6% drop in total drug consumption ($61.20), and a 32.7% increase in monthly mortality (0.048 p.p.). Second, we trace this mortality effect to cutbacks in life-saving medicines like statins and antihypertensives, for which clinical trials show large mortality benefits. We find no indication that these reductions in demand affect only ‘low-value’ drugs; on the contrary, those at the highest risk of heart attack and stroke, who would benefit the most from statins and antihypertensives, cut back more on these drugs than lower risk patients. Similar patterns exist for other drug–disease pairs, and irrespective of socioeconomic circumstance. Finally, we document that when faced with complex, high-dimensional choice problems, patients respond in simple, perverse ways. Specifically, price increases cause 18.0% more patients (2.8 p.p.) to fill no drugs, regardless of how many drugs they had been on previously, or their health risks. This decision mechanically results in larger absolute reductions in utilization for those on many drugs. We conclude that cost-sharing schemes should be evaluated based on their overall impact on welfare, which can be very different from the price elasticity of demand.
From the Conclusions
We find that small increases in cost cause patients to cut back on drugs with large benefits, ultimately causing their death. Cutbacks are widespread, but most striking are those seen in patients with the greatest treatable health risks, in whom they are likely to be particularly destructive. It is difficult to affirmatively establish that we have identified behavioral hazard, in the precise sense of a systematic failure to balance the cost with the benefit of care. But we emphasize that the size of the mortality increase cannot be reconciled with any current understanding of the value patients place on life.
We emphasize that our results do not capture the total impact of cost-sharing on health. We estimate only mortality, not morbidity, and only how December price changes affect 65-year-olds’ December mortality: a very specific setting, and a very short time period. But patients face cost- sharing throughout the year, and the life-span. If they respond with cutbacks similar to the ones we observe here, they would experience similar increases in mortality in many other settings and over longer time periods. While these effects are as-yet undetected, there is no reason to think that they are not present and equally large.
One conclusion remains clear: patient cost-sharing introduces large and deadly distortions into the cost-benefit calculus. Payers should evaluate the merits of these policies in light of their impact on health, not just on health care costs.
By Don McCanne, M.D.
The health policy literature is replete with studies that confirm that cost-sharing, including deductibles, copayments, and coinsurance, can cause individuals to forgo health care that they should have. This study expands on that concept to confirm that this “behavioral hazard” can result in death.
What is the purpose of cost-sharing? It is simply to save money by reducing the amount of health care that a person receives. Ideally it would cause patients to forgo only that care that is not beneficial, but it doesn’t work that way. The financial barrier of cost-sharing also causes patients to forgo beneficial care, and, as this study shows, they will cut back on life-saving medicines like statins and antihypertensives, with resultant premature death. That cries out for a change in policy.
We should eliminate cost-sharing in order to eliminate not only lethality but also other consequences such as potential financial hardship. We should remove all barriers to beneficial services, even though they may be of low value, as long as they have some potential value. The patients can always decline care they do not want. If services have no value, we simply do not include them under covered benefits. At the same time, prices should be government-administered so that we, collectively, pay only legitimate costs plus fair margins.
Cost-sharing is a business tool. What we want are patient care tools. When we finally enact and implement a single payer system of an improved Medicare for All, let’s be sure that it is the patient care community that dictates policy priorities, as long as they are on behalf of the patients. Good business also is fine if patient care is always placed first. Cost-sharing places the businessman first and not the patient, so that has to be changed. Death should not be an unintended consequence of health policy.
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By David J. Meyers, Ph.D., M.P.H.; Amal N. Trivedi, M.D., M.P.H.
Medical Care, Official Journal of the Medical Care Section, American Public Health Association, February 2021
Abstract
Background: In the Medicare Advantage (MA) program, private plans receive capitated payments that are adjusted based on their enrollees’ number and type of clinical conditions. Plans have the ability to review charts to identify additional conditions that are not present in claims data, thereby increasing risk-adjusted payments. Recently the Government Accountability Office released a report raising concerns about the use of these chart reviews as a potential tool for upcoding.
Objectives: To measure the extent to which plans receive additional payments for chart reviews, and the variation in chart reviews across plans.
Research Design: In this cross-sectional study we use 2015 MA Encounter data to calculate how many additional diagnoses codes were added for each enrollee using chart reviews. We then calculate how these additional diagnosis codes translate to additional reimbursements across plans.
Subjects: A total of 14,021,692 beneficiaries enrolled in 510 MA contracts in 2015.
Measures: Individual and contract level hierarchical condition category codes, total plan reimbursement.
Results: Chart reviews were associated with a $2.3 billion increase in payments to plans, a 3.7% increase in Medicare spending to MA plans. Just 10% of plans accounted for 42% of the $2.3 billion in additional spending attributed to chart review. Among these plans, the relative increase in risk score from chart review was 17.2%. For-profit plans engaged in chart reviews substantially more frequently than nonprofit plans.
Conclusions: Given the substantial and highly variable increase in payments attributable to chart review, further investigation of the validity of this practice and its implications for Medicare spending is needed.
https://pubmed.ncbi.nlm.nih.gov…
U.S. Department of Health and Human Services, Office of Inspector General, December 2019
Our findings highlight potential issues about the extent to which chart reviews are leveraged by MAOs (Medicare Advantage Organizations) and overseen by CMS. Based on our analysis of MA encounter data, we found that:
Covered in a previous Quote of the Day:
https://pnhp.org…
MedPAC, March 2020
Encounter data
The Commission has long been interested in using MA encounter data to gather information about MA plan practices and utilization that can then be used to inform Medicare policies, by improving MA payment policy, providing a useful comparator with the FFS Medicare program, or generating new policy ideas that could be applied across the entire Medicare program. However, we previously found that the encounter data submitted for 2014 and 2015 (preliminary) lacked completeness and accuracy, making them insufficient for these purposes.
Risk adjustment and coding intensity
Most claims in FFS Medicare are paid using procedure codes, which offer little incentive for providers to record more diagnosis codes than necessary to justify ordering a procedure. In contrast, MA plans have had a financial incentive, since the current risk adjustment model was introduced, to ensure that their providers record all possible diagnoses: Higher enrollee risk scores result in higher payments to the plan.
Our updated analysis for 2018 shows that higher diagnosis coding intensity resulted in MA risk scores that were more than 8 percent higher than scores for similar FFS beneficiaries.
In 2018, the adjustment reduced MA risk scores by 5.91 percent, leaving MA risk scores and payments about 2 percent to 3 percent higher than they would have been if MA enrollees had been treated in FFS Medicare. In 2019 and subsequent years, the minimum adjustment for coding intensity will be 5.9 percent.
Sidley, August 2019
On August 6, 2019, the United States District Court for the Western District of Texas granted a motion to dismiss filed by Baylor Scott & White Health (“Baylor”), a network of inpatient short-term acute care hospitals, in a False Claims Act suit alleging that Baylor submitted “more than $61.8 million in false claims” by upcoding certain diagnosis codes.
In finding that the allegations did not satisfy the FCA’s pleading requirements, the Court reasoned that the alleged “scheme” to identify and code MCCs was “not in and of itself one to submit false claims” and was “equally consistent with a scheme to improve hospital revenue through accurate coding of patient diagnoses.” The Court noted that CMS has encouraged hospitals to code diagnoses accurately and completely and has acknowledged that taking advantage of coding opportunities to maximize payments supported by the medical record is not inappropriate.
The Court’s decision represents another significant victory for Medicare Advantage providers.
By Don McCanne, M.D.
We’ve been reporting for years on the upcoding of diagnoses which has allowed the private Medicare Advantage plans to cheat taxpayers out of billions of dollars. MedPAC has also been following this, but insufficient action seems to have been taken so far. There has been some success at obtaining partial refunds, but, as the Sidley report indicates, the courts seem to think that it is fine to add additional diagnosis gleaned from charts though not specific to the services billed for, since they state that “taking advantage of coding opportunities to maximize payments supported by the medical record is not inappropriate.”
Rather than continuing to pay the private Medicare Advantage plans billions of dollars extra, it seems more logical to dismiss them and move on with an improved, single payer version of the traditional Medicare program instead. As taxpayers we would certainly do better.
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By David Cutler, Ph.D.
JAMA Health Forum, January 28, 2021
(Excerpts)
From 2007 to 2019, the 2 most recent business cycle peaks, the growth of inflation-adjusted GDP per person averaged only 1.0% annually. That is down from 2.2% per year in the 1990s. An enormous share of this economic growth was taken by health care, about 32% of increased GDP between 2007 and 2019.
In addition, the richest US individuals received the vast bulk of the benefit from the income growth that was not taken by medical care. Income of wealthy individuals has increased, whereas income in the lower and middle income parts of the distribution has stagnated.
If President Biden wants to improve the economic fortunes of people with low or middle incomes, he will have to address the cost of medical care—and doing so is not easy.
Areas to Save
There are 3 areas that the Biden administration could focus on for health care savings that could improve health even as they save money. These are administrative expenses, excessively high prices, and overuse of health care services.
Administrative expenses command about one-quarter of total health care spending in the US; in other countries, even those with multipayer systems, administrative expenses comprise less than one-eighth of their total health care spending. Advocates of a single-payer system note that their plans would reduce administrative costs. Those who are opposed to single-payer health care need to demonstrate that health care can be made administratively more efficient or the chorus for a single-payer approach will continue to grow.
The second area the Biden administration should look to for curbing spending is the excessively high prices related to health care in the US. The cost of brand-name pharmaceuticals, hospitals, and physicians are all higher than elsewhere.
The third area where savings may be found is reducing unnecessary medical care.
Helping the Less Fortunate First
Tackling these issues will take time. No industry as big as health care changes rapidly, but that does not mean that short-term savings are impossible. One concrete step that can be taken in the interim is to link payments for pharmaceuticals with income. The idea is that US residents with low incomes should be charged no more than people in lower-income European countries, and US residents who have middle incomes should be charged no more than people in the richer European countries.
The Biden administration is putting all resources possible into the fight against COVID-19, something everyone hopes is successful. But that is not the only health care challenge that the administration will need to tackle. It should devote just as many resources to lowering unnecessary spending on medical care. Doing so is among the most important steps the new administration can take to promote widespread economic prosperity.
David Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and holds secondary appointments at the Kennedy School of Government and the School of Public Health at Harvard University.
By Don McCanne, M.D., Physicians for a National Health Program
February 1, 2021
The three sources of potential savings mentioned by Dr. Cutler are very real but differ significantly in magnitude.
The overuse of health care services can be trimmed slightly, but it is very difficult to eliminate low value care, such as imaging procedures or elective surgeries if the patient finds those to be of personal value. Though people keep looking, the savings here will be small.
Prices have been confirmed to be high in the United States and can be reduced by government-administered pricing, much like the VA, saving hundreds of millions of dollars.
Administrative costs of the private insurers and the administrative burden placed on the health care delivery system are massive, and the recoverable amount by eliminating this industry is underestimated in most studies of single payer. The savings are potentially in the hundreds of billions of dollars (1).
Because of large income and wealth inequality funding does have to be progressive, but not through an administratively complex and expensive method such as setting drug prices based on income, as Dr. Cutler suggests. It is much more efficient to do it through progressive taxes instead.
That is why, as Dr. Cutler suggests, “the chorus for a single payer approach will continue to grow.”
1. Himmelstein, Campbell, and Woolhandler https://doi.org/10.7326/M19-2818
CONFLICT OF INTEREST: Unpaid volunteer for PNHP
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By Steven Chen, Paul R. Shafer, Stacie B. Dusetzina, and Michal Horný
Health Affairs, February 2021
Abstract
The distribution of out-of-pocket spending throughout the year is an important determinant of health care affordability that has received little attention. We used 2017 data from a large database of US commercial insurance claims to study the distribution of patient-level out-of-pocket spending throughout the year, highlighting potential hardship due to temporal clustering of spending. We found that although most commercially insured people had several health care encounters throughout the year, their out-of-pocket spending was mostly concentrated within short time intervals. Nearly one-third of people with above-the-median total annual health care spending (plan plus out-of-pocket spending) incurred half of their annual out-of-pocket spending in just one day. Policy makers working to improve the affordability of care should focus on innovative approaches to cost sharing that prevent dramatic financial shocks to household budgets due to medical bills.
From the Discussion
Our study examined the intrayear dynamics in out-of-pocket spending among people with commercial insurance. We found that a substantial percentage incurred large dollar amounts and large percentages of their annual out-of-pocket spending within short time spans. This pattern could reflect low demand for care among generally healthy enrollees needing limited services, where spending is naturally clustered. Alternatively, this pattern could reflect limited health care use by patients with high demand for care who either delay or forgo care because of costs. Finally, this pattern could also reflect high demand for care among patients who meet their deductibles or out-of-pocket maximums with a single encounter and subsequently face little or no cost sharing for the remainder of the year.
The distribution of out-of-pocket spending throughout the year is an important determinant of health care affordability. Many Americans have less than $2,000 in liquid assets and report facing challenges with affording an unexpected expense of $400 or larger. As a consequence, a large health care expense at a given moment may be unaffordable, particularly for households at the lower end of the socioeconomic ladder. Previous work documented that the financial burden of sudden out-of-pocket health care expenses was higher among low-income families and persisted even after potential anticipatory savings or payment delays that may reduce the burden were accounted for.
Temporal clustering of considerable out-of-pocket spending pertains especially to high-deductible health plan enrollees as deductibles expose them, at least initially, to the full up-front cost of health services each plan year. Commercial plans feature deductibles for several reasons. First, by shifting health care expenses to consumers, deductibles decrease plan premiums, which may lead to greater take-up by people whose expected health care spending is low. Second, increased patient cost sharing through high deductibles is designed to reduce moral hazard, although the evidence shows that high-deductible health plan enrollees reduce the use of both needed and potentially wasteful care. Last, increased patient cost sharing may also steer patients toward lower-cost providers. Because of generally high health care prices, however, our findings suggest that many people reach or come close to reaching their deductibles or other cost-sharing limits within just a few health care encounters that are often clustered in time. As a consequence, the desired incentive for patients to reduce moral hazard or price-shop is undermined.
Hospitalizations are costly, and patients admitted for an inpatient stay have a high chance of reaching their deductible during the hospitalization. Although moral hazard may increase the use of inpatient care, most patients are admitted because of their complex health care needs—a situation in which health insurance, in its core purpose, should shield beneficiaries from large expenditures.
Conclusion
Many people with employer-sponsored insurance incur substantial out-of-pocket spending within a short time span, leading to potential challenges to affording health care. Policy makers working to improve the affordability of care should focus not only on curbing the growth of health care prices but also on innovative approaches to cost sharing that prevent dramatic financial shocks to household budgets as a result of medical bills. For example, instituting monthly rather than the current annual out-of-pocket spending limits could improve access to care and financial security while encouraging judicious use of health care services by patients.
https://www.healthaffairs.org…
By Don McCanne, M.D.
Cost sharing with high deductibles, coinsurance, and copayments not only exposes patients to potentially unaffordable costs, the clustering of the required cost sharing payments may also create financial hardship for the patients.
The authors suggest various tweaks that might reduce the clustering of the payments, but it does not reduce the affordability of health care for those with limited means.
We have to have a health care financing system since health care must be paid for, but the financing of the system can be achieved through equitable, affordable, progressive taxes. We want people to have the care that they should have, but we do not have to design systems that prevent that care in order to reduce spending.
Medicine is a science and an art. We simply should not offer care that is not beneficial. If outliers are working the system to increase profits, we can take care of them through appropriate disciplinary actions, but let’s not take it out on the patients. Let’s do all we can to see that everyone gets the health care that they should have.
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By Robert Funke, M.D.
Kingsport (Tenn.) Times News, February 3, 2021
Interest in Medicare for All during the primary campaigns last spring was typically met with the wrong question: “How can we afford it?” The better, more urgent question is “How can we afford our current system?”
In 2019, the U.S. spent over $3.7 trillion on health care. That’s 18% of the gross domestic product of the world’s largest economy, over $12,000 for every man, woman and child — and rising. Much of that is spent on the very sick and the elderly, but even the average healthy family of four today spends $28,653 annually on health insurance.
It was not an efficient use of $3.7 trillion. Thirty percent went to overhead and administration, more than double the percentage of any other country in the world. That’s over a trillion health care dollars that did not go to a hospital, doctor, pharmacy or any other health care provider but instead to a huge and largely private bureaucracy that comprises 22% of our health care work force.
In my first decade of practice, the number of physicians in the U.S. grew by 50%, while the number of health care administrators grew by 2,000%.
Here’s what that looked like on the ground: 30 years ago my solo medical practice ran smoothly and efficiently with two employees, a nurse and a secretary. As the insurance system grew in complexity, my expenses rose so I joined a group to share those expenses.
Subsequently, we hired more employees, not to heal the sick, but to review complicated insurance contracts, handle copays, denials, prior authorizations and to track differing compliance rules and ever-changing medication formularies from each insurance plan.
By my retirement last year, each physician in the group had seven employees and was hiring more — for paperwork. Similarly, many hospitals openly acknowledge they employ more billing staff than nurses.
Prior to the Affordable Care Act, private health insurance companies had 30% overhead, so only roughly 70 cents of every dollar collected paid a medical bill. The ACA is supposed to cap their overhead at a still generous 20% with the surplus being refunded (though it’s unclear to whom).
The public/private partnership of Part C Medicare Advantage plans has done nothing to reduce waste. Quite the contrary. These private Advantage plans cost U.S. taxpayers approximately 10% more per beneficiary than traditional government-run Medicare. Yet traditional recipients are generally sicker.
Currently, these plans can only be administered by a private insurance company and are extremely profitable, as the dollars they put into marketing and advertising illustrate. Thus they pay shareholders and reward CEOs with salaries in the tens of millions annually. Traditional Medicare does not pay shareholders and has an overhead of just 4%. For that remarkable achievement the Medicare director earns just $250,000 annually.
Another reason for high costs is simply high prices. U.S. prices are higher than necessary for a normal profit, and are driven by the market power of providers and by the difficulty we have assessing prices and quality.
Hospital care consumes the largest portion (33%). Mergers and consolidation have helped the hospital bottom lines, but no savings are passed along to patients. And again, administrative costs in U.S. hospitals are double those of other countries.
Drug prices — famously higher in the U.S. — account for about $400 billion annually. Tests and procedure costs are higher too: The average price of an angioplasty in the U.S. is $28,400 compared with $7,500 in Israel. Our angioplasties are no more effective than theirs, and their facilities are state-of-the-art. A patient seriously injured while in Israel told me he’d gladly return there for all his future care.
As for physician fees, U.S. doctors are well paid. However, most specialties are equally well paid in Canada. Today more doctors move to Canada to practice than leave Canada.
Another cause of our high costs is our inadequate investment in public health — never more apparent than the past year. As the saying goes, an ounce of prevention is worth a pound of cure, so other countries achieve value by spending 6% of their health care budgets on public health. U.S. public health spending has fallen over the past 20 years to below 3%. We task our frontline doctors with addressing smoking and obesity whereas public health campaigns would be more effective and less expensive.
Responsible governance means taking a hard look at wasteful spending and making the changes necessary for our economic well-being. We don’t have to accept an overpriced system that does not meet our needs. How can we pay for a better system? We already do.
Dr. Robert Funke is a retired Kingsport family physician and member of Physicians for a National Health Program.
