By Nathan J. Robinson
Current Affairs, November 21, 2020

Everyone has health, everyone needs healthcare. It is in all of our interest to have as good of healthcare as possible, delivered as inexpensively as feasible. We should all want it to be easy to get the care we need, and for nobody to fret about money when they go to the doctor.

I want to explain as clearly and simply as possible, then, why having for-profit private health insurance companies is fundamentally irrational and harmful.

(The author describes, with diagrams, how money flows in health care now, and how it would eventually flow in a single payer Medicare for All system.)

We have made sure in this model that the pool of money collected from the people who need healthcare is the same as the pool used to buy healthcare, by routing these funds through a different kind of artificial legal construct called a government, which operates by different rules and has a mandate of securing the common good of all the little dot-people on the left rather than a particular subset of wealthy people. Even better, because there is only one government, instead of many insurance companies, the monopoly on health financing gives greater power to bargain with the providers for better rates. The government is essentially a “corporation” comprised of everybody that can exercise the collective will of the people on the left as determined through a democratic process.

From your perspective as one of the magenta dots, what you care about is not whether the flow of funds is called a “tax” or a “premium,” but what the size of the green arrow going from you to the healthcare financing institution is (i.e. how much you pay) and what the size of the arrow coming back from the providers is (i.e. what you get in return). If you get a better deal under the single-payer system, it doesn’t matter how much it raises your taxes, because that amount is more than canceled out by the savings you get through not paying premiums and copays anymore.

Under no sensible theory do we want private, for-profit institutions diverting money that should be spent keeping you well. (I should note, too, that government spending already constitutes a huge part of American healthcare. We are simply talking about eliminating the part of national healthcare spending that is not conducted in the public interest, by switching it from being routed through a badly-designed institution to being routed through a well-designed one.)

I have presented my explanation here in a very simple way, and you may think this is all a thunderingly obvious point that does not need little graphics with dots in order to grasp. But there are plenty of people in the country who either do not understand it or are lying about it. Consider Pete Buttigieg, one of the main Democratic candidates for president this year. Pete Buttigieg criticized a single-payer health plan on the grounds that it would raise taxes and cost trillions of dollars. As you can see, while Buttigieg’s criticisms sound real, they are actually irrelevant. We are talking about which type of institution our healthcare dollars should flow through. Should they be called “premiums” and skimmed by insurance companies with no institutional mandate to care about everyone, or should they be called “taxes” and routed through a democratic, collectively-owned institution that has a mandate to serve universal needs?

Try to think less about words like “taxes” and “trillions of dollars” and more about what is actually going on and what it means for you.

Let’s have some clarity and ask the questions that matter, the most important of which is: how does a for-profit health insurance industry make any rational sense at all? The answer to which is clear from thinking about the basics of how it works. It doesn’t make sense. It doesn’t.

https://www.currentaffairs.org…

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Comment:

By Don McCanne, M.D.

How often have you heard people say that we can’t afford the taxes to pay for single payer Medicare for All? Even President-elect Joe Biden said during the campaign, “How are you going to pay for it?”

Regular readers here understand the efficiencies of funding our entire health delivery system through equitable taxes, but it is sometimes difficult to explain that to individuals who are hung up on the concept that taxes are bad. Although the full article is somewhat long, it is very useful to explain to those willing to read it why paying for health care through the tax system is a vastly superior method to our current inefficient and inequitable method of financing health care.

The full article should be shared with those who still think that private insurance is a better way to fund health care when clearly public financing is the right way to go.

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Momentum is gathering for telemedicine, which could alleviate a longstanding problem: wait times.

By Austin Frakt
The New York Times, November 23, 2020

The pandemic may present an opportunity to reshape the future of emergency medicine.

The coronavirus has already prompted health care leaders to rethink how to deliver care to make the most of available resources, both physical and digital. If the shift to greater use of telemedicine continues after the pandemic, it could reduce reliance on the emergency room, where crowding has long been a problem.

This could happen if telemedicine increases the ability for doctors to see more patients more quickly.

Of course, telemedicine isn’t a solution for every health problem. And patients with limited digital fluency and access may get left behind as reliance on telemedicine grows. But the potential payoff is large: A review of medical records of older patients found that 27 percent of emergency room visits could have been replaced with telemedicine.

On average, a patient visiting an emergency room will wait about 40 minutes. Although that’s down from about an hour a decade ago, 17 percent of patients visiting an emergency department in 2017 waited over an hour. About 2.5 percent waited more than two and a half hours.

As many studies have documented, longer wait times can be harmful. Longer waits can also increase costs.

Additionally, many people end up waiting in the emergency department on the advice of other medical providers, though they may not need to. Their problems could be handled elsewhere.

Once the pandemic fades, the momentum from telemedicine may continue, with the possibility of making progress on a problem that shouldn’t wait.

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NYT Reader Comment:

By Don McCanne, M.D.

How should an acute problem be managed? By telephone? By telemedicine? By an urgent primary care office visit? By an urgent care center? By an emergency department? Should a private insurance company be dictating the approach? Should a less appropriate approach be dictated by the source of payment whether due to a lack of insurance or through very high deductibles, or due to restrictions of provider networks established by private insurers?

Sorting these approaches through triage based on clinical circumstances can improve the efficiency of our health care system, but it would be far more effective if we remove one important stumbling block: disrupting entrance into the health care system based on our dysfunctional, fragmented system of financing health care.

If we had a well designed, single payer improved Medicare for All system that removed the dictates of private insurance bureaucrats, with their provider networks and prior authorization requirements, then we could improve the flow within our health care delivery system, obtaining the appropriate care at the appropriate place at the appropriate time for the appropriate patient. Addition of the option of telemedicine can only improve this flow when it is appropriate for the clinical circumstances.

https://www.nytimes.com…

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The AMA and its House of Delegates overwhelmingly voted for the first time to adopt policies that name and act on racism as a public health threat.

By Aletha Maybank
Essence, November 18, 2020

Betsey, Lucy, and Anarcha. The names of three enslaved women were memorialized on screen during the third episode of the first season of HBO’s Lovecraft Country. These names symbolize three women who were stripped further of any sense of human dignity during their time held captive and surgically experimented on without anesthesia for years by a prominent, white physician, J Marion Sims, to preserve one of the earliest engines of capitalism: the Black woman’s womb.

Dr. Sims has been considered the ‘father of gynecology’ — he invented the vaginal speculum still used today, and in 1875, he was elected President of the American Medical Association (AMA), the oldest, largest, and considered the most powerful organized body of medicine in the country. In reality, Sims’ presidency despite his gross use of power and disturbing legacy is not an isolated moment of racist norms within the AMA. This troubling history of medical experimentation is deeply connected to the health inequities Black women still experience to this day — a heartbreaking reminder of how systemic racism and health care have been intertwined for centuries.

In recent years, AMA has begun to reckon with not only its own racist past, but also the racist past of the larger field of medicine, in which it has been highly influential.

And this past Monday marked an historic day for the entire of community of medicine and the broader society at large: the American Medical Association and its House of Delegates for the first time in its history passed and adopted policy that sheds light on the harms and tragedies of racism for all of society and medicine to see. The 600+ delegates from across the nation voted overwhelming to adopt policies that name and act on racism as a threat to the public’s health, rid our healthcare system of racial essentialism, and support the elimination of race as a proxy for ancestry, genetics, and biology in medical education, research, and clinical practice.

It is racism, not race that produces higher death rates among Black women during childbirth, and of the babies that they bear. Years of institutional and structural racism has produced the highest rates of heart disease and high blood pressure for Blacks. Racism has produced the highest rates of getting and dying from COVID-19. How powerful it is that one of this nation’s founding tenets is now a recognized threat to its existence and the existence of the most targeted and harmed by the profession whose code of ethics demands that we “do no harm.” But we know that racism in medicine has created and perpetuated generations of harm.

While not exactly known, a confluence of events pushed the AMA to this critical juncture in history – the presidency of the first Black AMA President, the leadership of the Black Lives Matter movement, resurgence of white supremacist action and terror, previous efforts of AMA’s Commission to End Health Disparities, recent AMA policy for the establishment of the AMA’s Center for Health Equity, the exposure of long-standing inequities by COVID-19, and the countless public murders of Black women and men at the hands of police, to name a few.

As a matter of time, most would say AMA’s recent actions are long overdue. We cannot go back. However, we can and must now better understand the harms of racism and work to dismantle and redesign injustice out of our culture and systems.

A core strategy to ensure justice in our systems is centering the voices of those most marginalized. Many of our brave leaders of the reproductive justice movement have long said, “listen to Black women.” Black women bring their minds and their hearts, as well as their lived experiences to justice work – it is personal in every way. The toll racism takes upon Black women, whether advocating inside or outside of organizations, is often underappreciated.

This Tuesday, as the deliberations of the AMA’s House of Delegates ensued, Black women physicians shared their stories experiencing and witnessing discrimination and racism at the hands of medicine and of police. Their stories, along with other AMA voices of student and physicians, changed hearts and minds and moved the house of medicine toward a brighter day.

As Black women leading justice work – formally and in our everyday lives, exhaustion permeates our minds and hearts. Black women have fought in body and voice, in silence and with great stir. And the cost to our health has been great and unjust exemplified by the extraordinary lives of Betsey, Lucy, and Anarcha – our ‘mothers of modern gynecology.’

The way forward for the AMA and other historically white institutions in our nation necessitates meaningful and deliberate action from many more accomplices, not only those of us most marginalized historically, operating in coalition and with great urgency.

Our collective freedom demands it.

Aletha Maybank, MD, MPH, recently joined the American Medical Association (AMA) in April 2019 as their inaugural chief health equity officer and vice president. Her role is to embed health equity in all the work of the AMA and to launch a Health Equity Center.

https://www.essence.com…

AMA: Racism is a threat to public health:
https://www.ama-assn.org…

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Comment:

By Don McCanne, M.D.

With all of the bad things happening recently, one good that has come out of this is the awakening of those of us who have long recognized that racism is still with us and that is a bad thing, but who have been insensitive to the prevalence and intensity of structural racism. By our passivity and sometimes blindness to subtle and even frank racism, we have been unintentional accomplices to the perpetuation of structural racism. Our awakening allows us to first recognize our role and then to do something about it (which won’t be addressed here because of the complexity of the subject).

Although Physicians for a National Health Program (PNHP) has long supported primarily single payer health care reform, we also support other policies of health care justice, including addressing the racial inequities and injustices that can result in adverse health outcomes. In our reawakening we are currently revising our mission statement which should more clearly express this goal.

The American Medical Association (AMA) has, through the decades, supported the interests of physicians. They have not been very big on issues of health care justice, although they have not been totally blind to the topic. On average, their membership has been more politically conservative than the membership of PNHP, though there is overlap in both organizations, but that has caused the AMA to continue to reject comprehensive, universal, equitable health care coverage for everyone. However, especially with the input of students in medicine and the other health professions, that resistance has been subsiding.

This week the AMA House of Delegates has taken a giant leap forward by approving “policy that sheds light on the harms and tragedies of racism for all of society and medicine to see.”

It is hoped that this introduces a new era for the AMA in which they join with organizations such as PNHP in strongly supporting health care justice for all. Since their current policies on health care financing fall far short and would perpetuate most of the current injustices, we would urge them to finally come on board and support single payer improved Medicare for All. At least, considering the HOD resolution they adopted this week, we know that they do have their compass pointed in the right direction.

(Don McCanne is a member of both PNHP and the AMA.)

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The story behind the Obama Administration’s most enduring—and most contested—legacy: Reforming American health care

By Barack Obama
The New Yorker, October 26, 2020, Published November 2, 2020

When I think back to those early conversations, it’s hard to deny my overconfidence. I was convinced that the logic of health-care reform was so obvious that even in the face of well-organized opposition I could rally the American people’s support.

As for the political hazards that Axe and Rahm worried about, the recession virtually guaranteed that my poll numbers were going to take a hit anyway. Being timid wouldn’t change that reality. Even if it did, passing up a chance to help millions of people just because it might hurt my reëlection prospects—well, that was exactly the kind of myopic, self-preserving behavior I’d vowed to reject.

The question was whether we could get it done. Any major health-care bill meant rejiggering a sixth of the American economy. Legislation of this scope was guaranteed to involve hundreds of pages of endlessly fussed-over amendments and regulations.

There was also the question of how to pay for the changes. To cover more people, I argued, America didn’t need to spend more money on health care; we just needed to use that money more wisely.

In other words, both the politics and the substance of health care were mind-numbingly complicated. I was going to have to explain to the American people, including those with high-quality health insurance, why and how reform could work. For this reason, I thought we’d use as open and transparent a process as possible.

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Among many progressives, the need to replace private insurance and for-profit health care with a single-payer system like Canada’s was an article of faith. Had we been starting from scratch, I would have agreed with them; the evidence from other countries showed that a single, national system—basically, Medicare for All—was a cost-effective way to deliver health care. But neither Massachusetts nor the United States was starting from scratch. Teddy, who despite his reputation as a wide-eyed liberal was ever practical, understood that trying to dismantle the existing system and replace it with an entirely new one would be both a nonstarter politically and hugely disruptive to the economy. Instead, he’d embraced the Romney proposal and helped the Governor line up the Democratic votes in the state legislature required to get it passed into law.

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The slow march toward health-care reform consumed much of the summer. As the legislation lumbered through Congress, we looked for any opportunity to help keep the process on track. The good news was that the key Democratic chairs—especially Baucus and Waxman—were working hard to craft bills that they could pass out of their respective committees before the traditional August recess. The bad news was that the more everyone dug into the details of reform, the more differences in substance and strategy emerged—not just between Democrats and Republicans but between House and Senate Democrats, between the White House and congressional Democrats, and even between members of my own team.

Politically and emotionally, I would have found it a lot more satisfying to just go after the drug and insurance companies and see if we could beat them into submission. They were wildly unpopular with voters, and for good reason. But, as a practical matter, it was hard to argue with Baucus’s more conciliatory approach. We had no way to get to sixty votes in the Senate for a major health-care bill without at least the tacit agreement of the big industry players.

By the end of June, they’d hashed out a deal, securing hundreds of billions of dollars in givebacks and broader drug discounts for seniors using Medicare. Just as important, they’d gotten a commitment from the hospitals, insurers, and drug companies to support—or at least not oppose—the emerging bill.

It was a big hurdle to clear, a case of politics as the art of the possible. But for some of the more liberal Democrats in the House, where no one had to worry about a filibuster, and among progressive advocacy groups that were still hoping to lay the groundwork for a single-payer health-care system, our compromises smacked of capitulation, a deal with the devil. More than a few constituents wrote in to ask whether I’d gone over to the dark side.

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A preliminary report by the Congressional Budget Office, the independent, professionally staffed operation charged with scoring the cost of all federal legislation, priced the initial House version of the health-care bill at an eye-popping one trillion dollars. Although the C.B.O. score would eventually come down as the bill was revised and clarified, the headlines gave opponents a handy stick with which to beat us over the head. Democrats from swing districts were now running scared, convinced that pushing forward with the bill amounted to a suicide mission. Republicans abandoned all pretense of wanting to negotiate, with members of Congress regularly echoing the Tea Party’s claim that I wanted to put Grandma to sleep.

The only upside to all this was that it helped me cure Max Baucus of his obsession with trying to placate Chuck Grassley. In a last-stab Oval Office meeting with the two of them in early September, I listened patiently as Grassley ticked off five new reasons that he still had problems with the latest version of the bill.

“Let me ask you a question, Chuck,” I said finally. “If Max took every one of your latest suggestions, could you support the bill?”

“Well . . .”

“Are there any changes—any at all—that would get us your vote?”

There was an awkward silence before Grassley looked up and met my gaze. “I guess not, Mr. President.”

I guess not.

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To overcome the possibility of a filibuster, Harry couldn’t afford to lose a single member of his sixty-person caucus. And, as had been true with the Recovery Act, this fact gave each one of those members enormous leverage to demand changes to the bill, regardless of how parochial or ill-considered their requests might be.

This wouldn’t be a situation conducive to high-minded policy considerations, which was just fine with Harry, who could maneuver, cut deals, and apply pressure like nobody else. For the next six weeks, as the consolidated bill was introduced on the Senate floor and lengthy debates commenced on procedural matters, the only action that really mattered took place behind closed doors in Harry’s office, where he met with the holdouts one by one to find out what it would take to get them to yes. Some wanted funding for well-intentioned but marginally useful pet projects. Several of the Senate’s most liberal members, who liked to rail against the outsized profits of Big Pharma and private insurers, suddenly had no problem at all with the outsized profits of medical-device manufacturers with facilities in their home states and were pushing Harry to scale back a proposed tax on the industry.

Whatever it took, Harry was game. Sometimes too game. Occasionally, he’d dig his heels in on some deal he wanted to cut, and I’d have to intervene with a call.

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For us, the slog through the Senate was a P.R. nightmare. Each time Harry’s bill was altered to mollify another senator, reporters cranked out a new round of stories about “backroom deals.” And things got markedly worse when Harry decided, with my blessing, to strip the bill of something called the “public option.”

From the very start of the health-care debate, policy wonks on the left had pushed us to modify the Massachusetts model by giving consumers the choice to buy coverage on the online “exchange,” not just from the likes of Aetna and Blue Cross Blue Shield but also from a newly formed insurer owned and operated by the government. Unsurprisingly, insurance companies had balked at the idea of a public option, arguing that they would not be able to compete against a government insurance plan that could operate without the pressures of making a profit. Of course, for public-option proponents, that was exactly the point. By highlighting the cost-effectiveness of government insurance and exposing the bloated waste and immorality of the private-insurance market, they hoped the public option would pave the way for a single-payer system.

It was a clever idea, and one with enough traction that Nancy Pelosi had included it in the House bill. But, on the Senate side, we were nowhere close to having sixty votes for a public option. There was a watered-down version in the Senate Health and Education Committee bill, requiring any government-run insurer to charge the same rates as private insurers, but, of course, that would have defeated the whole purpose of a public option. My team and I thought a possible compromise might involve offering a public option only in those parts of the country where there were too few insurers to provide real competition and a public entity could help drive down premium prices over all. But even that was too much for the more conservative members of the Democratic caucus to swallow, including Joe Lieberman, of Connecticut, who announced shortly before Thanksgiving that under no circumstances would he vote for a package containing a public option.

When word got out that the public option had been removed from the Senate bill, activists on the left went ballistic.

I found the whole brouhaha exasperating. “What is it about sixty votes these folks don’t understand?” I groused to my staff. “Should I tell the thirty million people who can’t get covered that they’re going to have to wait another ten years because we can’t get them a public option?”

It wasn’t just that criticism from friends always stung the most. The carping carried immediate political consequences for Democrats. It confused our base (which, generally speaking, had no idea what the hell a public option was) and divided our caucus.

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Olympia Snowe braved a blizzard to stop by the Oval and tell us in person that she’d be voting no. But it didn’t matter. On Christmas Eve, after twenty-four days of debate, with Washington blanketed in snow and the streets all but empty, the Senate passed its health-care bill, titled the Patient Protection and Affordable Care Act—the A.C.A.—with exactly sixty votes.

We weren’t docked yet—not even close, it would turn out—but thanks to my team, thanks to Nancy, Harry, and a whole bunch of congressional Democrats who’d taken tough votes, we finally had land within our sights.

This piece is adapted from “A Promised Land,” which was published on November 17th by Crown.

https://www.newyorker.com…

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Comment:

By Don McCanne, M.D.

Perhaps it’s the order of things? First we define optimal health policy, and then we enact and implement it. Or do we?

It is certainly logical to specify policy in advance and then design legislation to meet those goals. Include everyone by making it universal. Make the system more affordable and more efficient by eliminating administrative waste and introducing administered pricing through negotiation. Make participation affordable for each individual by funding the system with equitable, progressive taxes. Improve access through central planning and separate allocation of capital improvements. Also improve access by eliminating financial barriers to care and eliminating restrictive provider networks. Ensure portability of care by placing the entire health care delivery system in a single, universal financing system. Of course, that model is a single payer improved Medicare for All program that has been well described by Physicians for a National Health Program and by others.

Then you follow the rule that you don’t compromise on any policy before you sit down at the negotiating tables. But what really happens? President Obama abandoned single payer because we were not “starting from scratch.” But that is not a valid reason. The original Medicare program did not start from scratch (even though it was limited to a specific sector of our population – a policy compromise).

Obama writes that Ted Kennedy, a long-time advocate of a universal health care system, supported Massachusetts Governor Romney’s more limited reform proposal because “trying to dismantle the existing system and replace it with an entirely new one would be both a nonstarter politically and hugely disruptive to the economy.” But disrupting a health care economy that is not working and replacing it with one that would is precisely what we should want to do. But then, there is the politics.

Policy we can get right, but it is the politics that screws things up. If, at the beginning, you modify policies in order to fix the politics, you will end up with a mediocre result, or worse. On the other hand, if you begin with perfect policies, the politics often will result in serious damage to the policy product, but it does not necessarily have to. Some of the programs of the New Deal and the Great Society were passed without having to make major political compromises that would have impaired much of their effectiveness.

So where do we stand now? Donald Trump’s “beautiful” health program likely never existed and anyway has been eliminated from consideration by his loss in the election. Bernie Sanders single payer Medicare for All proposal would certainly have begun the process with policy first, but he lost the nomination to Joe Biden who has stated up front that he will not support Medicare for All.

So what is Biden recommending? Basically tweaks to the current highly dysfunctional system. He does not propose meeting any of the policies listed above, thus violating the rule that you should begin with uncompromised policies. He does have one proposal previously supported by others and that is the public option. But Obama explains that the political barriers erected by the private insurance industry were too great to get it approved as part of the Affordable Care Act. So Biden is beginning with grossly inadequate policy proposals that are so weak that several of them may be able to clear the political process, except the public option (which is undesirable for other reasons).

Basically Biden is modifying policy to comply with the politics. He has it backwards. We need to start with solid policy proposals and then modify the politics to accomplish the goals. Admittedly that is not easy, but it is possible. If you begin with inadequate policy proposals, it is impossible to achieve the goals.

If we want efficient, affordable, equitable, comprehensive health care for all, then we are going to have to change the politics. The election is over, but now is when the real politics begin. Get with it.

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

By Tal Gross, Timothy Layton & Daniel Prinz
National Bureau of Economic Research, October 2020

Abstract

Some consumers lack the cash needed to pay for medical care. As a result, they either delay care until they can pay for it or they forgo the care altogether. To test for such a possibility, we study the distribution of monthly Social Security checks among Medicare Part D enrollees. When Social Security checks are distributed, prescription fills increase by 6-12 percent. In that sense, drug consumption of low-income Medicare recipients is “liquidity sensitive.” We then study recipients who transition onto a program that eliminates copayments. When those recipients do not face copayments, their drug consumption becomes less liquidity sensitive. That finding implies that, beyond risk protection, generous insurance also provides recipients with the ability to consume healthcare when they need it rather than when they have cash. Further, we find that recipients whose drug consumption is most liquidity sensitive exhibit price elasticities of demand that are twice the size of the average elasticity, suggesting that more-generous insurance causes recipients both to re-time prescription filling and also to start filling prescriptions that they otherwise would not fill. We present a stylized model that uses this finding to call into question the conventional interpretation of demand-response to price as solely inefficient moral hazard.

From the Introduction

There exists broad agreement among economists that health insurance ought to involve some form of cost sharing: copayments, coinsurance rates, or deductibles. Theory suggests that cost sharing can limit moral hazard (Zeckhauser, 1970), and empirical evidence confirms that cost sharing reduces spending (Manning et al., 1987; Aron-Dine et al., 2013; Shigeoka, 2014; Brot-Goldberg et al., 2017). Indeed, motivated by that evidence, high-deductible health insurance plans have become increasingly common in the United States.

Those cost-sharing mechanisms may introduce a particular challenge for low-income consumers. A large literature suggests that many low-income households wait to consume until their income arrives. Olafsson and Pagel (2018), for instance, find that low-income consumers purchase 70 percent more goods on days when they receive their paychecks. That finding is consistent with many other studies: consumption responds to both predictable and unanticipated changes in income. One might call such a pattern “liquidity sensitivity:” consumers often delay many of their purchases until their income arrives.

From the Conclusion

The results above suggest that Medicare Part D recipients delay the purchase of prescription drugs until their Social Security checks arrive. We estimate a 10–12-percent increase in prescription fills among low-income recipients facing subsidized copayments on the day that their checks arrive. Even among the general Part-D population that receives no subsidies, prescription fills increase by roughly 6 percent on Social Security paydays.

Those increases in prescription fills upon payday diminish when recipients’ copayments are reduced. In addition, we use the transition to lower copayments to estimate a price-elasticity of demand. Recipients who tend to fill their prescriptions on their Social Security paydays exhibit a much higher elasticity of demand.

The results thus suggest that discussions over cost-sharing mechanisms need to go beyond the traditional trade-off between moral hazard and risk protection. Some low-income consumers exhibit healthcare consumption that is “liquidity sensitive,” and so cost sharing leads to additional complications for them.

More generally, this paper emphasizes an additional benefit of full insurance. Full insurance not only reduces the uncertainty faced by consumers. It also allows low-income recipients’ consumption to be less sensitive to their liquidity. Liquidity sensitivity may be even more of an issue for other populations beyond Medicare recipients. For instance, consider adults who lack stable employment and thus face volatile incomes. That population does not have to wait a few weeks for a Social Security check—they may wait months for work. For them, full insurance allows the smoothing of healthcare consumption between employed and unemployed states. But for any population, the timeliness of healthcare consumption can have medical consequences. And so making healthcare consumption less liquidity sensitive ought to be a worthwhile policy goal.

https://www.nber.org…

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Comment:

By Don McCanne, M.D.

This emphasis on consumerism in health care – making patients sensitive to the costs of health care by requiring out-of-pocket payment of deductibles, copayments, or coinsurance – is based on the concept that it is a “moral hazard” to use insurance to pay health care costs in full when that “hazard” can be avoided by requiring patients to pay a portion of the costs out-of-pocket so then they will accept only the care that they really need and are willing to pay for.

This study shows that low-income patients will delay or avoid care – in this case prescription drugs – when they do not have the funds needed for cost-sharing, though they will often obtain that care once they receive their Social Security checks. This suggests that we should redefine “moral hazard.” Rather than defining it as health care that might be declined if patients had to pay for it, we should define moral hazard as a barrier – a hazard – that policy wonks erect that is designed to save costs by preventing patients from receiving care that they should have since it was recommended by their physicians. That’s not a moral compromise; that’s a moral failure.

So now the policy community is dishing out policies based on “liquidity sensitivity.” Liquidity sensitivity comes into play when out-of-pocket health care costs exceed an individual’s discretionary income – an event much more likely to occur with lower-income individuals – though larger deductibles can also exceed the discretionary income of middle-income individuals.

Most individuals who support health care reform support reform that is equitable – fair for everyone. It would be far more equitable to eliminate cost-sharing and thus avoid liquidity sensitivity for those without higher incomes, while, at the same time, fund the entire health care system with equitable, progressive taxes. Now that’s fair.

Consumer-directed health care, moral hazard, liquidity sensitivity – let’s dump those in the trash bin of health policy concepts representing moral failure. Regular readers already know that we can fix this with a well designed, single payer, improved Medicare for All. Let’s do it!

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

Willis Towers Watson, November 16, 2020

Individual coverage health reimbursement arrangements (ICHRAs), a new employer-sponsored health care benefit program for active employees that became available this year, are drawing the attention of U.S. employers, particularly wholesale and retail employers and those in education and the public sector. This is according to new research by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

An IRS rule issued in 2019 opened the door for employers to begin offering ICHRAs this year. With an ICHRA, employees choose where their medical benefit dollars are spent by purchasing individual insurance coverage and then receiving a reimbursement through an employer-sponsored health reimbursement arrangement. The survey found growing interest in this new benefit as a way for employers to keep their costs fixed by giving employees the opportunity to manage their own health care benefit choices and spend.

According to the Willis Towers Watson 2020 Health Care Delivery Survey, about one in six employers (15%) is planning to offer or considering offering ICHRAs to at least some portion of its employees in 2022 or later. The survey results showed similar levels of interest regardless of employer size, with 20% of large employers planning to offer or considering offering ICHRAs to at least some portion of their active employees. In a further sign of support for ICHRAs, a forthcoming Willis Towers Watson survey of chief financial officers found one-third are considering ICHRAs for some portion of their active employees.

“Not surprisingly, relatively few employers adopted ICHRAs this year, as the pandemic diverted much of their attention to other critical benefit matters,” said John Barkett, senior director of policy affairs, Benefits Delivery and Administration, Willis Towers Watson. “However, we expect to see interest grow as companies learn more about ICHRAs and the market for individual health plans continues to grow more robust each year. ICHRAs may be a preferred option for companies considering offering health care benefits through a defined contribution approach personalized to each employee.”

The survey found nearly one in three (29%) public sector and education employers and almost a quarter (22%) of wholesale and retail employers are planning to offer or considering offering ICHRAs in 2022 or later. These sectors may be among the early adopters of this new benefit option, which affords employers greater ability to control costs and provides employees with more health benefit options than their employers offer today.

“ICHRAs may align well with employers rethinking their overall approach to benefits, especially in certain industries that have struggled with the challenge of providing competitive benefits that meet the diverse needs of their workforces under ever-increasing budget pressures. And as more employers adopt the ICHRA approach, employees could find relief from the burden of having to change plans whenever they change jobs,” said Barkett.

https://www.willistowerswatson.com…

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The Demise of the Defined-Benefit Plan

Investopedia, November 16, 2020

Key Takeaways

• Once common, defined-benefit plans in the private sector are rare and have been replaced by defined-contribution plans, such as a 401(k).
• Companies choose defined-contribution plans instead because they are less expensive and complex to manage than pension plans.
• The shift to defined-contribution plans has placed the burden of saving and investing for retirement on employees.

https://www.investopedia.com…

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Comment:

By Don McCanne, M.D.

That swooshing sound is that of our income and wealth rapidly shifting up to the top of the wealth ladder. It takes many forms, but one that has snuck in there is the demise of the defined benefit retirement plan – those plans that guaranteed a reasonable income throughout the retirement years. They have been replaced by defined contribution plans such as 401(k) plans, IRAs, or no plans at all. These plans shift much of the responsibility for funding retirement to the individual employees. Most of these plans do not have enough funds for a secure retirement, and if they are converted to an annuity to cover the full years of retirement, the amounts are almost never enough to live on, even with a Social Security check.

Switching from defined benefit to defined contribution has greatly reduced the employers’ costs of pension plans, but at a significant cost to their employees. The employers’ contributions are fixed whereas the employees must find ways to cover the higher balances of their retirement costs, including costs they may face merely because they live to their full life expectancy or beyond.

The defined contribution approach has worked so well for employers that they are now planning to expand that concept to individual coverage health reimbursement arrangements (ICHRAs). Under this scheme, courtesy of the Trump administration, the employers no longer contribute their full share of the costs of the employees’ health benefits (defined benefit), but, instead, they contribute a fixed defined contribution to the health reimbursement arrangement which is then used by the employee to purchase a plan from the private health insurance market. As if the employees’ current contributions weren’t already a financial burden, the amounts they would have to contribute for full service health plans would be much greater and would increase more rapidly since health care inflation would be passed on to the employees. They could purchase less expensive plans with spartan benefits, but then they would face financial hardship in the event of medical need, defeating the purpose of insurance.

(Incidentally, economists contend that the employers’ portion of the payment for health benefits is actually paid by the employees in the form of forgone wage increases. This reduction to a smaller defined contribution would give the employers the opportunity to prove this by providing the balance to employees in the form of wage increases. Don’t hold your breath waiting for it.)

This Willis Towers Watson report indicates that ICHRAs will be here in 2022. One-fifth of large employers intend to introduce them, and one-third of chief financial officers are considering them. Just as we saw the demise of employer-sponsored defined benefit retirement plans, we will soon see the demise of generous, defined benefit, employer-sponsored health plans, perhaps except for a modest 401(k)-type token defined contribution to the plans.

One of the strategies of the Affordable Care Act was to protect and perpetuate employer-sponsored health plans, but they are now on their way out. Do we really have to wait until tens of millions more face financial ruin because of the ever-increasing personal responsibility for health care costs? Is that swooshing sound going to be enough to placate us? Likely the bankruptcy attorneys may find it soothing.

By refusing to enact and implement single payer Medicare for All, who are we protecting? Those guys at the top who would have to pay more taxes, even though not enough to be able to feel the difference? It seems we should be protecting those who would be exposed to financial hardship should they need health care. Potentially, that’s most of us. The system is working for some, but it needs to work for all of us. We need to tell those at the top to take their defined contributions and shove them. Congress, working with the IRS, can let them and the rest of us know how much we really need.

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GAO, November 2020

What GAO Found

Enrollment in private health insurance plans in the individual (coverage sold directly to individuals), small group (coverage offered by small employers), and large group (coverage offered by large employers) markets has historically been highly concentrated among a small number of issuers. GAO found that this pattern continued in 2017 and 2018. For example:

• For each market in 2018, at least 43 states (including the District of Columbia) were highly concentrated.
• Overall individual and small group markets have become more concentrated in recent years. The national median market share of the top three issuers increased by approximately 8 and 5 percentage points, respectively, from 2015 through 2018. With these increases, the median concentration was at least 94 percent in both markets in 2018.

GAO found similar patterns of high concentration across the 39 states in 2018 that used federal infrastructure to operate individual market exchanges— marketplaces where consumers can compare and select among insurance plans sold by participating issuers—established in 2014 by the Patient Protection and Affordable Care Act (PPACA) and known as federally facilitated exchanges. From 2015 through 2018, states that were already highly concentrated became even more concentrated, often because the number of issuers decreased or the existing issuers accrued the entirety of the market share within a state. In 2017 and 2018 all 39 states were highly concentrated.

https://www.gao.gov…

Full report (59 pages):
https://www.gao.gov…

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GAO: Private health coverage remains concentrated among largest insurers

American Hospital Association, November 13, 2020

Enrollment in private health insurance plans remained concentrated among a small number of issuers in 2017 and 2018, according to a report released today by the Government Accountability Office. The three largest issuers continued to hold 80% or more of the large group, small group and individual market in at least 43 states, with 10 states seeing an increase in concentration in the individual and small group markets since 2011, GAO found. The Affordable Care Act requires GAO to report on changes in the concentration of enrollment among issuers in overall individual, small group and large group markets, and individual and small group exchanges.

“The GAO’s findings underscore concerns expressed by hospitals and health systems: highly concentrated insurance markets reduce patient choice, endanger patient care and increase their costs,” said Molly Smith, AHA’s vice president for coverage and state issues. “This allows health plans to adopt policies that benefit them financially and not patients. Such lack of competition encourages plans to pull a bait-and-switch on patients: delaying and denying medically necessary care that patients paid for through their premiums and changing coverage rules mid-year.”

https://www.aha.org…

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Fact Check: Does Joe Biden Want To Eliminate Private Health Insurance?

By Jocelyn Grzeszczak
Newsweek, October 23, 2020

“We have 180 million people out there that have great private health care, far more than we’re talking about with Obamacare,” Trump said. “Joe Biden is going to terminate all of those policies.”

Biden immediately shot down Trump’s claim, asserting that the reason he secured the Democratic Party’s nomination was because “I support private insurance.”

“Not one single person with private insurance would lose their insurance under my plan, nor did they under Obamacare,” Biden said. “They did not lose their insurance, unless they chose they wanted to go to something else.”

https://www.newsweek.com…

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Comment:

By Don McCanne, M.D.

In rejecting Medicare for All, President-elect Joe Biden says, “I support private insurance.” This GAO report is just one more factor that should make us question his wisdom on this topic.

The private insurance market is heavily concentrated and that concentration has increased with the implementation of the Affordable Care Act. As a representative of the American Hospital Association states, “highly concentrated insurance markets reduce patient choice, endanger patient care and increase their costs.” Further, “This allows health plans to adopt policies that benefit them financially and not patients. Such lack of competition encourages plans to pull a bait-and-switch on patients: delaying and denying medically necessary care that patients paid for through their premiums.”

Of course, single payer improved Medicare for All would ultimately concentrate health care financing into one single payer, but the difference would be that it would be our own payer, owned by the people, while returning to us the free choice that we want, the choice of health care professionals and hospitals that the private insurers take away from us.

The American Hospital Association understands the evil of concentrated health insurance markets, but they don’t seem to have much to say about the increasing market concentration of the hospital industry which we see has increased hospital prices.

Under single payer Medicare for All hospitals would be placed on global budgets, just like we do for fire departments. For those in the hospital industry who express concerns over global budgeting, maybe we should offer to nationalize the hospitals, creating our own national health service.

Regardless, we do have to get rid of the private insurance industry because they are out of control, and that harms too many of us.

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