McKinsey & Company, August 19, 2020

This article is a collaboration by Nikhil R. Sahni, a partner in McKinsey’s Boston office; Rachel Groh, a consultant in the Boston office; David Nuzum, a senior partner in the New York office; and Michael Chernew, a professor at Harvard Medical School and the Chair of Medicare Payment Advisory Commission (MedPAC).

From the Introduction

Broad consensus has long existed among public- and private-sector leaders in US healthcare that improvements in healthcare affordability will require, among other changes, a shift away from fee-for-service (FFS) payments to alternative payment models that reward quality and efficiency. The alternative payment model that has gained broadest adoption over the past ten years is the accountable care organization (ACO), in which physicians and/or hospitals assume responsibility for the total cost of care for a population of patients.

On the whole, ACOs in the Medicare Shared Savings Program (MSSP) have delivered high-quality care, with an average composite score of 93.4 percent for quality metrics. However, cost savings achieved by the program have been limited: ACOs that entered MSSP during the period from January 1, 2012 to December 31, 2014, were estimated to have reduced cumulative Medicare FFS spending by $704M by 2015; after bonuses were accounted for, net savings to the Medicare program were estimated to be $144M. Put another way, in aggregate, savings from Medicare ACOs in 2015 represented only 0.02 percent of total Medicare spending. The savings achieved were largely concentrated among physician-led ACOs (rather than hospital-led ACOs). In fact, after accounting for bonuses, hospital-led ACOs actually had higher total Medicare spending by $112M on average over three years.

While savings from MSSP have been relatively limited, in aggregate, numerous examples exist of ACOs that have achieved meaningful savings—in some cases in excess of 5 percent of total cost of care—with significant rewards to both themselves as well as sponsoring payers (for example, Millennium, Palm Beach, BCBSMA AQC). The wide disparity of performance among ACOs (and across Medicare, Medicaid, and Commercial ACO programs) raises the question of whether certain provider organizations are better suited than others to succeed under total cost of care arrangements, and whether success is dictated more by ACO model design or by structural characteristics of participating providers.

Conclusion

Based on ACO results published to date, physician-led ACOs generally do better and are more profitable than their hospital counterparts. Thus, the real question we aimed to unpack is how can hospital-led ACOs adapt to be more profitable? We created a series of scenarios in an attempt to represent most hospitals in the United States and found four common themes:

• Know the implications of your structure: As our results show, hospitals that commit to ACOs—high savings rate from taking on two-sided risk and a large number of lives—will find it easier for the math to work. But making the commitment itself is not enough: A hard look needs to be taken at the internal and external structure, both of the hospital and affiliated network, as well as the local market, to understand the probability of success. A hospital can take certain broad actions, such as having the right organizational structure or owning the right assets, to increase the probability of success. However, certain factors are unchangeable but important to account for, such as geographic isolation.
• Take a multi-year view: When a hospital fully commits to becoming an ACO, it is essential to take a multi-year view. This view applies to major contract terms, such as aligning on the re-baselining methodology, as well as investments in programs to manage the concepts of “demand destruction” and to improve physician satisfaction.
• Operationalize locally: As hospitals develop new programs, they must avoid using “blunt” instruments and instead take a nuanced and personalized approach. While vendors of population health programs may offer off-the-shelf solutions, those capabilities need to be tailored to manage the profile of the covered lives under the ACO. Furthermore, pulling the same levers (for example, post-acute care) may be common place for all ACOs, but how it is done (for example, network optimization, owning assets) may differ based on the local market. Accounting for the local market will be important to effectively manage spillover effects, which our results show can be a critical difference between profitability and unprofitability.
• Be smart about economies of scale when building infrastructure: No one doubts the additional operating expenses involved in becoming an ACO. Yet it is important to be strategic about what to build versus what to buy. Many of the needed capabilities, such as analytics, have been developed and can be leveraged off-the-shelf through partnerships, vendor arrangements, and the like. Accessing these services can lessen the burden of high fixed costs to aid hospitals when they first decide to participate in an ACO.

The above themes help determine why it is important to “know who you are.” Without access to all of these value levers and the ability to adjust each variable in the math equation, the success rate for a hospital-led ACO narrows significantly. Thus, not all hospitals are set up for success as an ACO, given the way ACOs currently operate. Completing a checklist of readiness that also contemplates timing of implementation is important to assess impact and the likelihood of success.

Likewise, for private and public payers, these findings should help identify potential modifications in ACO designs that will likely both increase the number of hospitals that could be successful and decrease the margin of error for a participating hospital to make programs more attractive. ACOs are important vehicles that can help the United States realize its healthcare spending goals, but they require further refinement to increase adoption and success.

https://www.mckinsey.com…

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Comment:

By Don McCanne, M.D.

Although this paper was produced by McKinsey & Company, consultants to the health care industry, it provides an important overview of the math of accountable care organizations because a principal co-author is Michael Chernew, a noted professor at Harvard Medical School and the Chair of Medicare Payment Advisory Commission (MedPAC). Acknowledging the bias in favor of ACOs, the reservations about the ACO model expressed in this report should command our strict attention.

Supposedly ACOs and other alternative payment models improve quality and reduce costs by shifting away from fee-for-service payments to payments based on value. Although that has become gospel, there is very little evidence supporting that dogma.

To determine quality, only a few parameters are measured, and the ACOs are informed in advance what will be measured – a form of teaching to the test. Of all of the great multitude of factors that go into the quality of health care that is being provided, only a minuscule fraction is measured. Under this system, all organizations should have high quality scores, and so their quality ratings are worthless. Well over 99 percent of quality factors are ignored.

Regarding producing savings, many comments that appear in this report indicate that the net savings are almost negligible. If there are any savings, they are often offset by the additional costs of complying with the administrative requirements of the ACO, not to mention the offset of any bonuses that might be paid out.

What this paper adds to our understanding is that there are many features that vary between the different organizations that can have a significant impact on the success or failure in cost savings, and many of these features are unchangeable no matter how efficient management is. Operating costs can be fixed or variable, but both are subtracted in the ACO math equation. Particularly relevant is “demand destruction” which is “loss of revenue due to reduced utilization from ACO population and spillover effects from non-ACO patients.” (Read the report to understand this.) Other factors include baseline costs, trend rates, benchmark for total cost of care, system leakage, shared savings rate, minimum savings/loss rates, risk corridors, frequency of rebasing, benchmark haircuts, and the like.

So how successful have the ACOs been? Repeating the quote from this report, “In aggregate, savings from Medicare ACOs in 2015 represented only 0.02 percent of total Medicare spending. The savings achieved were largely concentrated among physician-led ACOs (rather than hospital-led ACOs). In fact, after accounting for bonuses, hospital-led ACOs actually had higher total Medicare spending by $112M on average over three years.”

Tweaking won’t fix the math. The ACO experiment has failed. Yet the wish that ACOs would work has served as a distraction that has prevented us from moving to a model that really would work, as already proven in other nations: single payer Medicare for All.

Why do we keep playing this game when people are suffering and dying?

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By Sara R. Collins, Munira Z. Gunja, and Gabriella N. Aboulafia
The Commonwealth Fund, August 19, 2020

The survey began on January 14, 2020 — just before the outbreak of the coronavirus pandemic in the United States. We interviewed a nationally representative sample of 4,272 adults ages 19 to 64 about their health insurance coverage through June 5. Despite the severity of the pandemic and the abrupt disruption in economic activity beginning in March, the survey did not find statistically significant changes in coverage from the last time it was conducted in 2018. But it does show a persistent vulnerability among working-age adults in their ability to afford coverage and health care that could worsen if the economic downturn continues.

Survey Highlights

• In the first half of 2020, 43.4 percent of U.S. adults ages 19 to 64 were inadequately insured. This is statistically unchanged from the last time we fielded the survey in 2018.
• The adult uninsured rate was 12.5 percent. In addition, 9.5 percent of adults were insured but had a gap in coverage in the past year and 21.3 percent were underinsured. These findings are also statistically unchanged from 2018.
• There was no statistically significant change in coverage inadequacy between the months leading up to the pandemic and the months that followed, but this may change as the pandemic continues.
• Half of adults who spent any time uninsured or who were underinsured reported problems paying medical bills or said they were paying off medical debt over time. A quarter of those who were continuously insured and did not meet the threshold for underinsurance also reported problems paying bills.
• People who reported problems paying medical bills experienced lingering financial problems including damage to their credit ratings and depleted savings.

Conclusion and Policy Implications

The United States entered the pandemic with 30 million uninsured people and more than 40 million underinsured. These numbers are certain to climb this year. The Congressional Budget Office projects that the U.S. economy will contract by more than 5 percent in 2020 and 25 million fewer people will be working in the third quarter of 2020 compared to the end of 2019. The Urban Institute estimates that this employment disruption will leave 3.5 million more people uninsured by the end of the year. And millions more will suffer income loss through furloughs, wage cuts, and declining business revenue. Unless there is a significant drop in premiums and deductibles in private coverage, many households will face health care costs that take up a growing share of shrinking budgets.

Coverage insecurity will leave people with mounting medical debt, as well as significant financial barriers to getting the health care they need to survive the pandemic and lead healthy and productive lives. Several policy options at the federal and state levels could move the nation toward universal, comprehensive coverage and provide relief to U.S. families. These include:

• Expanding Medicaid in the 12 states that have yet to do so or providing a federal fallback option for people eligible in those states;
• Enhancing and extending the ACA marketplace subsidies both for premiums and cost-sharing;
• Allowing more people with unaffordable employer plans to purchase subsidized coverage through the marketplaces, possibly through a public plan;
• Increasing outreach and enrollment efforts to inform people of their coverage options, particularly those who lose employer coverage;
• Banning non-ACA-compliant plans like short-term policies that leave people exposed to catastrophic health care costs;
• Developing an autoenrollment mechanism that will enable people to enroll and stay enrolled in comprehensive coverage.

There are other paths to universal coverage and improved affordability, like a single payer or “Medicare for All” approach. The reforms outlined here don’t preclude such a path but could be a practical first step toward a more regulated insurance system that includes more public financing. But ongoing policy inaction on insurance coverage combined with the raging pandemic is certain to tip the nation’s health care affordability problems into crisis for U.S. households.

https://www.commonwealthfund.org…

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Comment:

By Don McCanne, M.D.

It looks like we’re stuck in that time machine: tens of millions uninsured, tens of millions more underinsured, and pervasive personal financial hardship.

The authors do propose a set of incremental patches that would expand coverage, though the system would still fall far short of covering everyone, plus the proposed measures would lessen financial hardship for some but by no means for all. The authors note that these reforms would not preclude single payer Medicare for All, but these steps would significantly increase our national health expenditures while falling far short of our goals for reform. Notably, they would further increase the administrative complexity which is the largest source of wasteful health care spending in the U.S. Also such reforms would allow our public stewards to walk away once again for another decade or two without enacting and implementing the reform we desperately need – single payer Medicare for All. This would perpetuate the financial hardship, physical suffering and even death from our uniquely American health care financing system that is so highly dysfunctional.

What are we going to do? Continue to receive these disconcerting reports, tsk tsk them, and put them in the files? Aren’t our files full enough already?

Incidentally, we have some files over at PNHP that we can pull out. Affordable, equitable, efficient, comprehensive care, for everyone, automatically, for life, without all of the administrative waste and without personal financial hardship. Might require a touch of social solidarity, but what on earth would be wrong with that?

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The ideology that Republicans love to hate is woven through the fabric of the country.

By Bruce Bartlett
The New Republic, August 17, 2020

The essence of the Republican attack is to lie about the nature of socialism, grossly exaggerating its negative excesses while completely ignoring its positive effects. When they are forced to concede that some socialistic government programs–such as disease prevention or temporarily higher unemployment benefits–may be valuable, they will nevertheless insist that it must be resisted because it’s the first step on the slippery slope to totalitarianism.

Republicans assert, endlessly, that the Austrian economist F.A. Hayek proved that the welfare state leads inevitably to socialism and tyranny in his 1944 book, The Road to Serfdom. While Hayek’s theory may have been plausible in the midst of World War II, all the evidence since then thoroughly contradicts it. There is no evidence whatsoever that welfare states morph into total state control of the economy and produce a concomitant loss of freedom and prosperity. There is not a single case of this happening anywhere. Nor is there anything in Hayek’s theory to explain why socialism collapsed in the Soviet Union or why privatization rolled it back in places like Britain.

One myth that permeates the right-wing attack on socialism is that America was founded as a sort of libertarian paradise based on the free market ideas of Adam Smith. However, this perspective is very much at odds with the actual views of Smith and the Founding Fathers.

Thomas Paine, whose pamphlet Common Sense underpinned the ideology of the American Revolution, was a virtual socialist. His most radical work, Agrarian Justice, proposed the revolutionary idea of a wealth tax to fund payments to citizens reaching maturity, a precursor to today’s idea of a basic income.

James Madison, principal author of the Constitution, agreed that providing income to the indigent was a core government function.

Of course, Alexander Hamilton was definitely a big government kind of guy, advocating direct government aid to industry, extensive public works, and a strong central government.

Even the sainted Thomas Jefferson, the most libertarian of the Founding Fathers, expanded government far beyond its constitutional limits when he made the Louisiana Purchase.

Since they’re unable to run against the actual expansion of the American welfare state, GOP propagandists retreat into fantasy. Always missing from the Republican critique is any clear definition of socialism. This is intentional. Republicans know that the term “socialism” is unpopular with many Americans—although a growing percentage embrace it. Republicans also know that numerous programs they view as socialistic are nevertheless very popular with voters. President Harry Truman often made this point in his speeches. He said in 1952: “Socialism is a scare word [Republicans] have hurled at every advance the people have made in the last 20 years. Socialism is what they called public power. Socialism is what they called social security. Socialism is what they called farm price supports. Socialism is what they called bank deposit insurance. Socialism is what they called the growth of free and independent labor organizations. Socialism is their name for almost anything that helps all the people.”

In truth, Republicans aren’t opposed to socialism per se but only socialism that benefits poor people and minorities. Socialism for farmers and industrialists is just fine as far as they are concerned.

According to the dictionary, socialism means that the government owns all the means of production, and Republicans are right that this system doesn’t work very well. But absolutely no one is advocating that. Today’s advocates of “socialism” merely want a somewhat expanded welfare state or even just a government that actually works. Republicans are running against a strawman, though history tells us that has never stopped them before.

https://newrepublic.com…

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Comment:

By Don McCanne, M.D.

One thing is certain, just because someone labels a public program that would ensure that everyone would have affordable access to all essential health care services “socialism” is clearly no reason to dismiss it. That would be about as stupid as trying to impair the function of the postal service because it represents socialism. Maybe there are people who think like that, but we can’t let them think and act for the majority of us. Socialism is a perfectly good word that has a very positive meaning in that it refers to all of us joining together for the common good. Why would anyone be opposed to that?

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By Tsung-Mei Cheng
New York Daily News, August 14, 2020

U.S. Health and Human Services Secretary Alex Azar was in Taiwan this week for what was the highest-level meeting between the U.S. and Taiwan in decades. A focus of his trip was to highlight Taiwan’s success in combating COVID-19 and “cooperate with the U.S. to prevent, detect, and respond to health threats.” Azar’s praise for Taiwan’s success in health is significant, especially given that he’s a member of a Republican administration.

Much of Taiwan’s success is due to its government-run, single-payer health system, established 25 years ago on the recommendation of the late Princeton economist Uwe Reinhardt, then a high-level adviser to Taiwan’s government. Reinhardt believed that a single-payer system can best achieve equity and cost savings. It’s also cheap to run, and the public can easily understand it. He was right.

Today, Taiwan’s health system covers everyone with generous benefits for about a third of the cost of American health care. This is a sharp contrast to America, where “nearly 1 in 10 adults say cost would keep them from seeking help if they thought they were infected.” Because everyone is insured and access to care is easy and cheap, there are no barriers, financial or otherwise, to receive care in Taiwan.

Second, Taiwan owes its impressive success in combatting COVID-19 to having a national plan, which is science and evidence-based and IT-driven. They implemented this plan almost immediately upon learning of the first cases of the novel coronavirus in Wuhan in December 2019.

Having learned from the 2003 SARS crisis, Taiwan’s government classified the new coronavirus as a statutory infectious disease before the World Health Organization confirmed the human-to-human transmission of the new coronavirus. This enabled the government to activate a whole series of infectious disease prevention measures put in place since 2003.

Equally important, Taiwan’s government established a central command, or CentCom, in early January to oversee and implement the national plan, with Health Minister Shih-Chung Chen serving as commander-in-chief. The performance of Taiwan’s COVID-19 CentCom is a study of the power of a timely national response by leadership from the top in a national crisis.

Taiwan’s approach to COVID-19 was two-pronged: prevent and contain. Effective Jan. 1, 2020, travel restrictions, initially applied to travels to and from Wuhan and other parts of China and later expanded to include other high-risk nations, went into effect to prevent the new coronavirus from entering Taiwan.

To contain the spread, the government began quarantine and contact tracing, strictly enforced through a powerful IT system that links a person’s recent travel history, visits to clinics and hospitals and persons contacted. Violators are fined.

Taiwan’s public, to its credit, also played a crucial role.

Universal health coverage, timely actions by government, and public trust and cooperation allowed Taiwan to escape large scale testing or lockdown. People do wear masks. Life has been otherwise mostly normal. Schools and businesses are open. Travels (domestic) are extremely popular. Taiwan’s economy enjoys near full employment and is projected to grow by 1.77% in 2020.

Has Azar brought back these lessons from his visit to Taiwan? Or is it simply too late as we are a full six months into the COVID-19 crisis? I believe it’s not too late — if America acts now.

We need interventions that are specific to the American situation. To start, we must step up testing. As coronavirus has spread into communities nationwide, it is impossible to do quarantine and contact tracing. We must use tests that give results in minutes rather than days. This will quickly identify infected individuals regardless of symptoms, even if they are asymptomatic.

A timely private sector initiative to scale up testing is the Rockefeller Foundation’s initiative involving six state governments. The initiative aims to increase testing from the current 5 million to 30 million per week over the next six months. It will use tests that give results in minutes. This is the largest public health testing program in American history, and indeed a fine example of public-private partnership.

There are things individual Americans can do starting immediately, if they are not already doing them: wear a mask, keep social distancing, wash hands often and avoid crowded places. Equally important, respect and follow science and evidence.

COVID-19 can be controlled and contained, as we have seen in Taiwan and many European and Asian nations. It is said that Americans will always do the right thing after exhausting all alternatives. Now is time that we, as a nation, come together and start doing the right things to help save lives.

Cheng is a health policy research analyst at the Princeton School of Public and International Affairs.

https://www.nydailynews.com…

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HHS Secretary Azar’s Remarks at National Taiwan University

By Alex M. Azar II
HHS.gov, August 11, 2020

I am so pleased to be here today, to thank Taiwan for setting a positive example and for choosing, enthusiastically, to be a part of the global health community.

Your contributions have never been more appreciated than they are today.

In these trying times, the United States knows that we will always have a friend in Taiwan, and we will not shy away from telling the rest of the world that they can rely on Taiwan too.

https://www.hhs.gov…

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Comment:

By Don McCanne, M.D.

There is some irony in our HHS Secretary, Alex Azar, praising Taiwan for setting a positive example as part of the global health community when the United States has failed so miserably in its response to the COVID-19 pandemic. Taiwan’s response to the pandemic has been spectacularly successful whereas the United States remains the leader in deaths and other disastrous consequences of the pandemic. What explains the difference?

Tsung-Mei Cheng describes the efforts that Taiwan has made in establishing public health policies and infrastructure so that it is ready for expected and unanticipated demands on its health system, plus they are responsive when the need arises.

One of the differences is that Taiwan has a single payer financing system that ensures that their people have access to the health care system when needed. In contrast, our government leaders, including Alex Azar, have been outspoken against our proposed single payer Medicare for All program, leaving tens of millions of our citizens without affordable access to our health care system and thus prime for spreading this highly contagious disorder. Also the Taiwanese government provided leadership in implementing basic public health policies that would help stem the spread of the coronavirus. In the United States, our government failed in providing this leadership and further often compounded the problems by ridiculing citizen and local government efforts to reduce the spread of this disease.

Taiwan’s efforts should be emulated, and, as Cheng states, we can still reduce the severity of the consequences of our inept national response. Sadly, although we are seeing some modest efforts finally being made, they remain grossly inadequate. It is difficult to see how we can achieve a more dramatic shift towards the necessary interventions we need without a change in leadership. The election is still months away and the time required for a new government to implement the essential changes needed will still require more months – delays during a pandemic that will certainly compound the tragic results that we are experiencing. What is even worse is that the likely replacement government has already promised us that we will not have the single payer Medicare for All system that we desperately need. What kind of leadership is that?

Now that we know the lessons from Taiwan, can’t we do a better job in applying them here? Not only would it help repair our economy, but, much more importantly, it would improve our health and likely prevent the premature loss of hundreds of thousands of lives. Do we really value life that much less than the Taiwanese?

Tsung-Mei Cheng, aka May Reinhardt, has been a special friend of PNHP, and we really appreciate her continuing efforts to make the United States and other parts of the world a healthier place for all of us.

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Society of General Internal Medicine recommends U.S. implement universal health coverage, a sign of the medical profession’s growing support for Medicare-for-All reform

Physicians for a National Health Program (PNHP) today applauded the Society of General Internal Medicine’s (SGIM) endorsement of Medicare-for-All reform. SGIM is an internal medical association representing more than 3,300 of the world’s leading academic general internists, including educators, researchers, and clinicians. It announced today that it has endorsed the policy position of the American College of Physicians (ACP), which recommended that “the United States transition to a system that achieves universal coverage with essential benefits and lower administrative costs …”

Dr. Oliver Fein, Professor of Clinical Medicine at Weill Cornell Medicine, pointed out that SGIM members in the organization’s Social Responsibility and Single-Payer Interest Groups have pushed for the organization to back single-payer reform for more than two decades. SGIM’s endorsement follows a year of rapid movement among physicians towards Medicare for All. In August 2019 — after months of pressure from single-payer supporters, including a march and rally at their annual meeting — the American Medical Association resigned from the “Partnership for America’s Health Care Future,” an industry front group formed to fight coverage expansions like Medicare for All and even lesser reforms like a public option. A few months later, the American College of Radiology, a medical society representing nearly 40,000 radiologists, oncologists, and nuclear medicine physicians, also cut ties with the “Partnership.”

In January 2020, the American College of Physicians (ACP) announced its endorsement of Medicare for All, along with a “universal public choice” reform model. The ACP represents 159,000 internists, making it the largest medical specialty society and second-largest physician group in the U.S. after the American Medical Association. Immediately following the ACP endorsement, more than 2,000 physicians signed an open letter “prescribing” Medicare for All, which ran as a full-page advertisement in the New York Times. Among the “prescribers” were prominent figures in American medicine, including Dr. Marcia Angell, former editor-in-chief of the New England Journal of Medicine; Dr. Bernard Lown, developer of the defibrillator; Dr. Paul Farmer, infectious disease expert and founder of Partners in Health; and Dr. Mary Bassett, former New York City Health Commissioner.

Drs. Steffie Woolhandler and David Himmelstein, who in the late 1980s founded the nation’s leading single-payer physicians group, Physicians for a National Health Program, called the recent policy endorsements a “sea change for the medical profession,” noting that recent surveys found half of all doctors now favor national health insurance.

Dr. Fein, who is a member of SGIM as well as a board member and past-president of PNHP, noted that the COVID-19 pandemic has made the need for Medicare for All even more urgent, as millions of Americans lose both their jobs and their health coverage. “Health care providers can no longer stand in silence while our health system puts profits ahead of patients and public health,” he said. “Single-payer Medicare for All is the only way to guarantee lifelong health coverage, eliminate financial barriers to care, and finally allow health care professionals to focus on what matters most — caring for patients.”

PNHP is a nonprofit research and education organization whose more than 23,000 members support single-payer Medicare for All reform.

https://pnhp.org…

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Comment:

By Don McCanne, M.D.

The prestigious Society of General Internal Medicine has joined the American College of Physicians and a majority of the nation’s physicians in recommending that “the United States transition to a system that achieves universal coverage with essential benefits and lower administrative costs …” The predominant model that would achieve that is single payer Medicare for All, though ACP would consider a “public choice” model that meets these same requirements. The important point is that there is broad agreement that it really is time to fix our system.

With the crises we are facing, not just the physicians but the entire nation should be ready to support an affordable, more efficient health care system that provides essential health care benefits for absolutely everyone. Yes, there are those who say they reject proposals that involve the government, but they do nevertheless accept Medicare and Social Security benefits, so their objections are merely irrational memes without substance. If they already had Medicare for All, they would be just as protective of it as they are of their current Medicare and Social Security.

It’s time. Let’s do it.

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Committee on Energy and Commerce, Chairman Frank Pallone, Jr.
Subcommittee on Health, Chairwoman Anna G. Eshoo
Subcommittee on Oversight and Investigations, Chair Diana DeGette

U.S. House of Representatives, Democratic Staff Report, June 2020

Executive Summary (excerpts)

• The Committee’s investigation finds that the Trump Administration’s policy of expanding these dangerous, unregulated plans presents a threat to the health and financial well-being of American families, particularly in light of the current public health emergency.
• The Committee’s investigation finds that STLDI plans systematically discriminate against individuals with pre-existing conditions, and against women.
• These plans offer bare bones coverage, including major coverage limitations that are not always clear in marketing materials, making it difficult for consumers to know what they are buying.
• STLDI plans offer wholly inadequate protection against catastrophic medical costs.
• Some STLDI plans impose draconian coverage limitations even for illnesses, injuries, and conditions arising after a consumer purchases a policy.
• The Committee’s investigation finds that on average, less than half of the premium dollars collected from consumers are spent on medical care.
• STLDI plans engage in heavy-handed back end tactics to avoid paying medical claims that do arise.
• The Committee’s investigation concludes that these plans are simply a bad deal for consumers.

Conclusion

The Committee concludes that STLDI plans present a significant threat to the health and financial well-being of American families. STLDI plans include limited protection for both catastrophic medical costs and routine medical care, and it is unclear what kind of value consumers are getting for their premium dollars, other than a false sense of security. The Committee staff recommend federal legislation subject STLDI plans to the all of the ACA’s interlocking consumer protections, including guaranteed issue and renewability, the ban on pre-existing condition exclusions, coverage of the essential health benefits, the medical loss ratio, and the prohibition on rescissions. Subjecting STLDI plans to all of the ACA’s consumer protections at a federal level will ensure adequate protection for consumers.

In the absence of federal legislation, the Committee recommends that states significantly restrict STLDI plans. Additionally, states should limit STLDI plan duration to 90 days and prohibit renewability, including prohibiting the purchase of multiple STLDI plans in one plan year. Individuals who purchase consecutive policies may not fully understand the policies limitations and exclusions, including the pre-existing conditions exclusions. STLDI plans that are available for the entire plan year are also being marketed as an alternative to comprehensive, major medical insurance and are causing confusion for consumers who may be unaware that they are purchasing plans that do not provide comprehensive coverage.

The Committee staff recommend that states prohibit the sale of STLDI plans during ACA’s open enrollment. The increase in enrollment in STLDI plans by brokers and agents in December and January suggests that these plans are benefiting from and possibly capitalizing on the marketing and advertising around the ACA’s open enrollment season. Additionally, states should require STLDI plans to be sold only in-person. This may help prevent some of the aggressive marketing tactics that brokers are engaging in such as pushing consumers to purchase plans over the phone without reviewing any written information or coverage documents. Lastly, states should subject STLDI plans to the ACA’s consumer protection provisions, including the requirement that they provide coverage for all essential health benefits, and cover pre-existing conditions.

Full report (197 pages):
https://degette.house.gov…

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Comment:

By Don McCanne, M.D.

The Trump administration’s expansion of the use of short-term health insurance plans (junk insurance) is absolutely criminal. This Congressional report explains why. The Committee staff recommend that the plans be required to comply with the ACA’s consumer protections, and that states significantly restrict these plans.

A far better solution would be to enact and implement single payer Medicare for All since obviously this would preclude the need for short-term plans, not to mention providing affordable, comprehensive coverage for everyone forever.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Bernie Sanders
The Guardian, August 11, 2020

We are in the middle of an extraordinary moment in American history: a public health crisis, the worst economic downturn since the Great Depression, the existential threat of climate change and a president who is moving our country in an authoritarian direction.

In the midst of all these crises, there is another issue of major concern that is receiving very little attention. And that is the obscene level of income and wealth inequality which exists in our country and the fact that, during the pandemic, that inequality is becoming much worse.

While tens of millions of Americans are now facing economic desperation – unemployment, loss of healthcare, evictions, hunger – the very rich are becoming much richer. Here are three figures that should come as a shock to everyone in America:

$13,000,000,000. That’s how much Jeff Bezos, the wealthiest man alive, made in one day while the companies he owns denies paid sick leave, hazard pay and a safe workplace to hundreds of thousands of his workers.

$21,000,000,000. That’s how much the Walton family, the richest family in America, made over the past 20 weeks while US taxpayers continue to subsidize the starvation wages at Walmart, the largest private employer in America.

$731,000,000,000. That’s how much the wealth of 467 billionaires increased since the Federal Reserve started taking emergency actions to prop up the stock market in March.

Incredibly, thanks to President Trump’s tax giveaway to the rich signed into law a few years ago, billionaires now pay a lower effective tax rate than teachers, nurses, firefighters or truck drivers.

The extraordinary wealth gains that billionaires have made during the pandemic come at a time when 92 million Americans are uninsured or underinsured and tens of millions of Americans are facing evictions or foreclosures.

At a time when so many of our people are struggling economically, it is morally obscene that a tiny handful of billionaires – the top 0.0001% – are using a global pandemic as an opportunity to make outrageous profits after receiving a de facto bailout by the Federal Reserve.

It is time to change our national priorities. Instead of allowing multibillionaires to become much richer, Congress needs to stand up for working families. A good place to start would be to tax the enormous gains billionaires have made during the pandemic and use that money to guarantee healthcare as a right for the duration of the public health emergency.

According to Americans for Tax Fairness, imposing a 60% tax on the wealth gains made by just 467 billionaires in America would raise over $420bn. That’s enough money to empower Medicare to pay all of the out-of-pocket healthcare expenses of every American in this country, including prescription drugs, for an entire year.

Think about that for a moment. By imposing a 60% tax on the wealth gains made by just 467 billionaires, healthcare would be extended to everyone in America through Medicare and no one, regardless of their coverage, would have to pay any out-of-pocket medical bills over the next 12 months. That’s exactly what the Make Billionaires Pay Act I recently introduced with Senators Ed Markey and Kirsten Gillibrand would accomplish.

Under this legislation, no one who is diagnosed with cancer would have to beg for money from strangers on GoFundMe. No one with diabetes would die because they could not afford their insulin. No one with coronavirus symptoms would be afraid to go to a doctor because of the cost, and risk infecting their neighbors, colleagues, family or friends.

While the fight for Medicare for All continues, for at least the next 12 months, every American would be able to get the healthcare that they need during this public health crisis. And it could all be paid for by a 60% tax on the outsized fortunes the wealthiest people in America accumulated during this horrific pandemic.

Now, I understand that there are some people out there who may believe that a 60% tax sounds like a pretty steep tax increase. Well, let me ease those concerns. Even after paying this tax, these 467 billionaires will still come out ahead by $310bn. Trust me. Their families will survive.

As a nation, the time is long overdue for us to finally address the grotesque level of income and wealth inequality that exists. In my view, we can no longer tolerate the three wealthiest people in America owning more wealth than the bottom 50%, the top 1% owning more wealth than the bottom 92% and 45% of all new income going to the 1%.

At a time of enormous economic pain and suffering, we have a choice to make. We can continue to allow the very rich to get much richer while most everyone else gets poorer. Or we can tax the winnings a handful of billionaires made during the pandemic to improve the health and wellbeing of tens of millions of Americans.

The time has come for the Congress to act on behalf of the working class who are hurting like they have never hurt before, not the billionaire class who are doing phenomenally well and have never had it so good.

Making billionaires pay to expand Medicare to all during a public health emergency is a good place to start.

https://www.theguardian.com…

Make Billionaires Pay Act:
https://www.sanders.senate.gov…

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Comment:

By Don McCanne, M.D.

Most people are now aware of the profound income and wealth inequality that has been increasing in the United States, but they may not be aware of the degree of the massive wealth accumulation by the billionaires that is taking place during this joint pandemic and economic crisis.

Bernie Sanders shows us the numbers: “According to Americans for Tax Fairness, imposing a 60% tax on the wealth gains made by just 467 billionaires in America would raise over $420bn. That’s enough money to empower Medicare to pay all of the out-of-pocket healthcare expenses of every American in this country, including prescription drugs, for an entire year.” Further, “Even after paying this tax, these 467 billionaires will still come out ahead by $310bn. Trust me. Their families will survive.”

But what about longer term financing of single payer Medicare for All? Numerous analyses have been done that show that, with fairly modest progressive taxes, health care can be made easily affordable for everyone. Billionaires would pay more but not enough to have any impact on their lifestyles. As one very successful vintner once told me during a conversation about why he didn’t want to further expand his vineyards, “How much bread, cheese and wine does a person need?”

Besides, where do the billionaires get their money? They don’t print it. It comes from the economy where most of the productivity derives from the efforts of the people. Why should such a large percentage of the gains of that productivity end up in the coffers of the billionaires? We do have a remedy for that. As mentioned, that is progressive taxes. If the billionaires get nervous about that, maybe we could offer them another splash of wine, along with a relaxing, soporific read of Thomas Piketty’s “Capital and Ideology.”

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