By David J. Meyers, Amal N. Trivedi, and Vincent Mor
Health Affairs, May 2019

In all but eight states, Medicare supplemental coverage (or Medigap) plans may deny coverage or charge higher premiums on the basis of preexisting health conditions. This may particularly affect chronically ill or high-need Medicare Advantage enrollees who switch to traditional Medicare and subsequently discover that they are unable to purchase affordable Medigap coverage. We found that in states with no Medigap consumer protections, high-need Medicare Advantage enrollees had a 16.9-percentage-point higher reenrollment rate in Medicare Advantage in the year after switching to traditional Medicare, compared to high-need enrollees in states with strong Medigap consumer protections—namely, guaranteed issue and community rating (charging all enrollees the same premium regardless of health condition). Expanding protections in the Medigap market may increase consumers’ access to this type of supplemental coverage.

From the Discussion

MA enrollees might not realize that in most states, if they switch to traditional Medicare, they might not be able to get Medigap coverage. Enrollees with higher health care needs are both more likely to leave MA and more likely to be denied access to Medigap coverage. These enrollees may then face out-of-pocket payments in traditional Medicare without any limits, causing financial burden and prompting reenrollment in MA.

Medicare beneficiaries with complex care needs often face a higher burden of costs and may benefit from a greater continuity of care. In most states these enrollees may face significant barriers to enrollment in Medigap that may increase their exposure to high out-of-pocket spending and lead to disruptions in the continuity of care if they need to switch between MA and traditional Medicare.

Additionally, in most states, even if an enrollee with a preexisting condition such as cancer does enroll in Medigap, they might not be able to receive any benefits to cover this condition during the first six months of enrollment. It is important to note that even if an enrollee has access to a Medigap plan, premiums are substantially higher in Medigap than in MA, which may place further limits on Medicare choices for lower-income enrollees.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

This is one more example of where Congress is neglecting the traditional Medicare program, in this case by allowing states to limit the effectiveness of Medigap plans which are required to ensure adequate catastrophic coverage in traditional Medicare. Those with complex problems who are enrolled in the private Medicare Advantage plans often become dissatisfied with their care, turning to traditional Medicare with Medigap backup. As this study reports, in most states affordable Medigap coverage is not guaranteed (if not selected when first becoming eligible for Medicare).

When we speak of an improved Medicare for All, that improvement includes benefits provided by the more generous Medigap plans (plus other uncovered benefits such as vision, hearing and long-term care).

Rather than fight two political battles – on to improve the benefits of the traditional Medicare program and a second to expand the improved Medicare to covering everyone – it would be better to enact and implement a single payer Medicare for All program in one step. The current path of incrementalism is leaving too many broke, sick, and sometimes dead. We have to end that.

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By Stephanie Goldberg
Modern Healthcare, May 21, 2019

If you can’t beat ’em, buy ’em: It’s a mantra health insurance giants like UnitedHealth Group and Humana have embraced for years as they’ve snapped up doctors practices to curb the cost of medical care. Now the parent of Blue Cross & Blue Shield of Illinois is getting into the game.

Health Care Service Corp., which owns Blue Cross plans in five states, is following its rivals’ lead, opening 10 primary care clinics in Texas next year and, in Pullman, launching a neighborhood center that offers everything from workshops on managing heart disease to yoga and meditation classes. As with its rivals’ earlier forays into physician practice acquisition, HCSC’s latest moves are made with several goals in mind, some that immediately redound to the bottom line—more tightly controlling where members seek care, for one—and others, like addressing social conditions from housing to food insecurity, that may improve results over the long haul.

A decade ago, the notion of insurers owning physicians groups was fairly unusual. There was a hope that payers and providers would be able to stay in different lanes and still bring costs down, says Carl McDonald, divisional senior vice president of treasury and business development at HCSC. “It just hasn’t quite worked out like that.”

In value-based payment models, which are slowly being adopted in many U.S. markets, insurers pay doctors a set amount per patient rather than reimbursing for each medical service. The arrangement aims to reward doctors who offer high-quality care at lower costs, but not all providers are open to the possibility of a financial loss.

Owning and operating medical practices, it turns out, is proving to be a more efficient way for insurers to trim hefty price tags for everything from lab tests to specialist visits. Getting closer to patients enables insurers to direct care, getting the cost outcomes they crave while controlling quality.

The 10 Dallas and Houston clinics are part of a joint venture between HCSC’s venture-capital arm and medical center operator Sanitas USA. The clinics are expected to control costs by referring patients to reasonably priced, quality specialists, and by educating patients about services that are covered, such as telemedicine or diabetes management.

“Everybody is basically playing catch-up to Optum,” the consulting and services unit of UnitedHealth, Akers says. Optum’s fast-growing medical care arm has been aggressively buying doctors groups. It’s acquiring DaVita Medical Group, which has 300 clinics in six states, for $4.3 billion.

America’s Health Insurance Plans, a lobbying group, says about 25 percent of its members are so-called integrated delivery systems, or organizations that include both payers and providers.

The new clinics from HCSC-owned Blue Cross & Blue Shield of Texas will be open to all Blue Cross members, as well as self-pay and Medicare patients. Sanitas is no stranger to the Blues. It already operates clinics with Florida Blue and Horizon Blue Cross & Blue Shield of New Jersey.

HCSC isn’t the only group looking to replicate such gains in Texas. In addition to traditional physicians groups, HCSC will be competing with Humana’s Partners in Primary Care unit, which plans to open five Houston clinics for patients with Medicare and Medicare Advantage, in which private companies contract with the government to offer Medicare beneficiaries additional benefits, such as dental care and wellness programs. Walgreens and VillageMD are also opening primary care clinics next to five Houston-area drugstores.

Blue Cross dominates the Illinois market, but that’s not the case in Texas. The Sanitas deal could help the insurer attract more members in the area, enabling it to more quickly grow its Medicare Advantage business.

Blue Cross of Illinois’ experiment in Pullman differs from a traditional clinic. The Blue Door Neighborhood Center, which opened late last month, works to address social determinants of health, including homelessness and food insecurity, by connecting residents—regardless of insurance carrier—with community resources. It also offers seminars on nutrition, behavioral health, diabetes and other conditions, as well as exercise classes.

Blue Door is a sign of the times, says Lyndean Brick, CEO of Advis Group, a healthcare consultancy in Chicago. “There is clear recognition, finally, that when we address (social determinants), overall healthcare improves,” she says. “All these other issues are really what cost the system incredible amounts of money. So while insurance companies are being good citizens when they do this, they’re also looking at the need to continue to drive financial profits.”

https://www.modernhealthcare.com…

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Comment:

By Don McCanne, M.D.

We dream of a single payer Medicare for All system in which the highly inefficient, fragmented system of a multitude of private and public health insurers is replaced by a single efficient public payer, which would free up close to half a trillion dollars currently going to administrative waste – funds that could be directed to the health care delivery system that will fill the voids we have in health care today. But what happens to our dream when, right under our noses, the current payers become the health care delivery system?

One-fourth of the members of America’s Health Insurance Plans – the health insurance lobby organization – are already integrated delivery systems, and that transformation is accelerating. The insurers are rapidly becoming the health care delivery system. And to further solidify this transformation, they are now adding services to address the social determinants of health such as food and housing, as the insurers are “looking at the need to continue to drive financial profits.”

Go ahead and enact a single payer Medicare for All, but then how are you going to shut down the private insurers when they are the health care delivery system? If you try to break them up, what do you think our current Supreme Court would have to say about that?

We think that we’re in a battle with the private insurers, but now with the grasp they have of the medical industrial complex, it seems they may have already won. We can’t give up, but there is great urgency in doing all we can to save the system by reestablishing the primacy of the patient. Right now that profit thing is working pretty well for the insurers, and the patients are just pawns and the providers are the insurers’ tools.

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If you think the fight with insurance companies is tough, just wait until single-payer advocates have to go head-to-head with doctors.

By Mike Konczal
The Nation, May 13, 2019

The debate over expanding Medicare is at the center of the fight for the Democratic presidential nomination. Yet for such a crucial topic, there are still two questions that advocates—especially those championing Medicare for All—have yet to properly answer.

The first is how to take on the medical establishment and pay doctors less. Medicare for All would eliminate greedy and needless insurance companies, which will fight to the bitter end to keep making their fat profits. But even that battle pales in comparison with taking on the doctors, hospitals, and providers who charge private insurance higher prices for medical services. To understand this, consider where Medicare for All would get its savings. Proponents argue that Medicare for All would increase government spending but reduce overall spending on health care. That’s true; over the course of 10 years, Medicare for All could save $2 trillion. But only about 20 percent of those savings would come from eliminating insurance companies, while another 10 percent would come from cost controls on prescription drugs. The remaining 70 percent would come from cutting rates for medical providers. Without those cuts, health-care spending could increase more than $3 trillion under Medicare for All. That’s a $5 trillion swing, all determined by the question of how to tackle the medical establishment.

During a campaign, there’s good reason to focus on the insurance industry first; it’s the thing that most people absolutely hate about our broken health-care system. But if the campaign fails to make the case that the prices charged by medical providers are too high, then the politics could shift against Medicare for All once the doctors start complaining. The medical establishment will insist that hospitals will close, especially in poorer areas, and without a set of responses in place, that argument could imperil the push for health-care reform.

The political instinct will be to buy off the medical establishment, even as that increases the cost of the proposal. When Aneurin Bevan, the architect of Britain’s National Health Service, was asked how he overcame the initial resistance of doctors, he replied that he “stuffed their mouths with gold.” Today, that would involve maintaining the current high rates seen in private-insurance payments. And even then, when President Harry Truman tried to emphasize how much better off American doctors would be under his universal plan in 1945, they waged what was then the most expensive lobbying campaign in history to defeat it.

(The second question – who will bear the taxes – will not be addressed in this Quote of the Day, though the correct answer is that the taxes would be progressive and thus equitable for all. – DMc)

Mike Konczal is a contributor to The Nation and a fellow at the Roosevelt Institute.

https://www.thenation.com…

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A Priceless Answer

The Nation, Letters, May 17, 2019

To justify sounding a false alarm that doctors’ opposition will torpedo single-payer health-care reform, Mike Konczal turns to a Koch-brothers-funded analysis that claims Medicare for All would either slash doctors’ income and hospital funding or break the bank [“The Score: $5 Trillion Questions,” May 13].

Konczal credulously adopts the Koch study’s underestimate of single-payer savings on insurance overhead. But more important, he (like that study) ignores overwhelming evidence that single-payer would save doctors and hospitals vast amounts on billing, insurance paperwork, and other wasteful tasks that are required by the current byzantine payment system but would be eliminated under single-payer. For instance, a recent Harvard Business School and Duke University study published in the Journal of the American Medical Association found that the average primary-care doctor at an efficient group practice spent $99,581 (and 243 hours) annually on billing. That’s four times what Canadian doctors spend interacting with insurers.

The $75,000 savings in per-doctor billing costs means doctors’ take-home pay could be stable even if their per-patient revenue goes down. It also means they could use the time they currently spend jousting with insurers to deliver (and bill for) more care.

A similar calculus applies to hospitals. At a six-hospital system in Toronto, the equivalent of just 5.5 full-time employees handle all insurance billing and patient collections. A comparable hospital system in the US employs more than 200 people for those tasks. US hospitals spend one-quarter of their budgets on administration, versus 12 percent in Canada. Streamlining hospital administration by paying hospitals global budgets (the way we currently pay fire departments and Canada pays hospitals) would produce major savings, freeing up vast resources for care. Indiscriminately slashing hospital budgets, by contrast, would be neither necessary nor desirable under Medicare for All reform—and the House and Senate bills propose no such thing.

All told, single-payer could save doctors and hospitals about $225 billion annually on billing and bureaucratic costs (in addition to about $220 billion saved on insurance overhead and tens of billions more from streamlining the billing for nursing homes, home-care agencies, etc., and by lowering drug prices), offsetting the costs of providing first-dollar comprehensive coverage to everyone in the nation. Even though Konczal doesn’t understand that, most doctors do. That (and altruism) explains why single-payer is now doctors’ favorite health-care-reform option and 23,000 have joined Physicians for a National Health Program.

David U. Himmelstein, MD
Co-Founder
Physicians for a National Health Program
New York City

Steffie Woolhandler, MD, MPH
Co-Founder
Physicians for a National Health Program
New York City

Adam Gaffney, MD, MPH
President
Physicians for a National Health Program
Boston

https://www.thenation.com…

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Comment:

By Don McCanne, M.D.

Since prices have played an outsized role in driving up health care spending, it is widely assumed that price reductions under a single payer Medicare for All system would first have to come from the take-home income of physicians, thus likely provoking a rebellion by physicians against single payer reform. Having not completed his homework, Mike Konczal seems to have accepted this invalid conclusion, as have many others, including the media.

What is left out is that the single payer model would result in a tremendous reduction of administrative costs within the physicians’ practices. The overhead savings could very well be more than enough to offset potential fee reductions, thereby avoiding any reduction in take-home pay. Also physicians would be paid for care that is now provided as charity and for unavoidable care that the uninsured and underinsured currently may be unable to cover and thus is written off as bad debt. Plus they would no longer have to absorb the losses with Medicaid patients since they would transferred into the universal single payer program. There could also be some increase in the volume of services, increasing marginal income, because those who currently forgo care because of financial barriers would no longer have to since they would have access to guaranteed, prepaid health care.

Under this scenario, it is possible that physicians could see increases in net income, though we would assume that our public stewards would negotiate rates that are both fair for the health care delivery system and fair for the taxpayers. This goal is certainly achievable if we had our own public monopsony negotiating prices and global budgets for health care products and services serving the greater public good. That would be in sharp contrast to the dysfunctional health care market that we now have. Physicians could dump much of their administrative burden and devote more of their efforts to their altruistic pursuit of taking care of patients, and isn’t that what it’s all about?

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By Susan L. Hayes, Sara R. Collins, and David C. Radley
The Commonwealth Fund, May 23, 2019

In this brief, we use findings from the Current Population Survey (CPS), a federal survey of households, to report on the amounts that workers under age 65 and their dependents spent on premium contributions for their employer coverage and on out-of-pocket costs for health care.

This brief complements an earlier Commonwealth Fund state-level analysis of the size of employee premium contributions and deductibles reported by employers. The previous report looked at what workers were at risk of spending out of pocket to meet their deductibles when they used their insurance. This brief examines what workers report actually spending on care for themselves and their families.

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Highlights

Premium Contributions

• The median, or midpoint, of annual household spending on employer insurance premium contributions ranged from $500 (Hawaii) to $3,400 (South Dakota) in 2016–2017. In 11 states, households in the top 10 percent of spending on premium contributions paid $9,000 or more.
• Across states, 6 percent to 17 percent of people with employer coverage had household premium contributions that were high relative to their income. High premium contributions relative to income were common across the South.

Out-of-Pocket Costs

• Median annual out-of-pocket spending on medical care ranged from $360 (Hawaii) to $1,500 (Nebraska). In four states, households in the top 10 percent of out-of-pocket expenses spent $7,000 or more on these items.
• Across states, 4 percent to 11 percent of people with employer coverage had high out-of-pocket costs relative to household income.

High Cost Burdens

• An estimated 23.6 million Americans with employer coverage had high premium contributions or high out-of-pocket costs relative to income, or both.

Total Household Spending

• The median amount spent on both premiums and out-of-pocket costs ranged from $1,500 (Hawaii) to $5,540 (South Dakota).

There is growing evidence that the primary driver of per capita costs in private insurance are prices paid to providers. These prices vary across states and even within the same markets since they are the consequence of private negotiations between providers and insurers. Hospitals with more leverage in their markets are able to negotiate higher prices with insurers and employers. To arrest the growth in premiums and deductibles, more attention needs to be paid to what we pay hospitals and physicians.

https://www.commonwealthfund.org…

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Comment:

By Don McCanne, M.D.

We hear repeatedly that support for single payer Medicare for All declines significantly when individuals are told that under single payer they would lose their option of enrolling in a private health plan. They certainly can’t be referring to plans in the individual market since complaints about about high premiums and unaffordable deductibles are so prevalent. So they must be referring to plans obtained through work. Yet this report shows that high premiums and high out-of-pocket costs are now creating financial burdens for workers in employer-sponsored plans as well. Over 23 million American workers faced high costs relative to their incomes.

Nancy Pelosi, Donna Shalala and others keep telling us that individuals want to keep these plans. Really? They want unaffordable premiums? They want high deductibles that create barriers to care? They want the plans to take away their choices of their health care professionals by requiring use of the insurers’ provider networks? They enjoy the surprise bills for services that they thought were covered? They don’t mind at all the instability of employer-sponsored plans considering that 66 million people leave their jobs each year? And no mention is made in this report of the forgone wage increases that pay for the employers’ contributions to these plans. Do workers really want to continue with the flat wages that they have been putting up with?

Who might these people be who want to keep these plans? Some might be healthy individuals who need very little health care and figure that these plans will be there for them should the need for major health care arise. Many of them are likely unaware that they may be vulnerable to unexpected costs, and that they may be limited by restrictions in their choices in health care. It is likely that many others simply do not understand that a well designed, single payer Medicare for all program would eliminate premiums and deductibles, replacing them with equitable taxes that everyone could afford, while granting them the right to have complete free choice of their health care professionals and institutions. They could have the health care they want, and it would be prepaid.

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An Open Letter to the Congress and People of the United States
May 21, 2019

As economists, we understand that a single-payer “Medicare for All” health insurance system for the U.S. can finance good-quality care for all U.S. residents as a basic right while still significantly reducing overall health care spending relative to the current exorbitant and wasteful system. Health care is not a service that follows standard market rules. It should therefore be provided as a public good.

Evidence from around the world demonstrates that publicly financed health care systems result in improved health outcomes, lower costs, and greater equity. As of 2017, the U.S. spent $3.3 trillion annually on health care. This equaled 17 percent of U.S. GDP, with average spending at about $10,000 per person. By contrast, Germany, France, Japan, Canada, the U.K., Australia, Spain and Italy spent between 9 – 11 percent of GDP on health care, averaging $3,400 to $5,700 per person. Yet average health outcomes in all of these countries are superior to those in the United States. In all of these countries, the public sector is predominant in financing heath care.

For these reasons the time is now to create a universal, single-payer, Medicare for All health care system in the United States.

Public financing for health is not a matter of raising new money for healthcare, but of reducing total healthcare outlays and distributing payments more equitably and efficiently. Implementing a unified single-payer system would reduce administrative costs and eliminate individuals’ and employers’ insurance premiums and out-of-pocket costs. If combined with public control of drug prices and a dramatically simplified global budgeting system, a sensible Medicare financing system would reduce healthcare costs while guaranteeing access to comprehensive care and financial security to all.

As such, we support publicly and equitably financed health care through a Medicare for All system at the Federal level, as described in H.R. 1384 and S. 1129. We encourage Congress to move forward with implementing a public financed Medicare for All plan to achieve the equitable and affordable universal health care system that the American people need.

Signed,

219 Economists (Use following link for list)

https://www.nesri.org…

Release – National Economic and Social Rights Initiative:
https://www.nesri.org…

House Budget Committee hearing: Key Design Components and Considerations for Establishing a Single-Payer Health Care System; Wednesday, May 22, 2019 – 10:00am EDT:
https://budget.house.gov…

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Comment:

By Don McCanne, M.D.

This open letter signed by 219 economists was sent to Members of Congress ahead of the House Budget Committee’s hearing on Medicare for All to be held today, May 22. Of major significance is that it calls specifically for the single payer model of Medicare for All, citing single payer bills that have been introduced in the House (H.R. 1384 – Jayapal) and Senate (S. 1129 – Sanders).

The letter does not endorse public option models mislabeled as Medicare for All, nor does it endorse mere patches to the Affordable Care Act. It states, “the time is now to create a universal, single-payer, Medicare for All health care system in the United States.”

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By Ricardo Alonso-Zaldivar
Associated Press, May 21, 2019

Generous benefits. No copays. No need for private policies. The “Medicare for All” plan advocated by leading 2020 Democrats appears more lavish than what’s offered in other advanced countries, compounding the cost but also potentially broadening its popular appeal.

While other countries do provide coverage for all, benefits vary. Canada’s plan, often cited as a model, does not cover outpatient prescription drugs and many Canadians have private insurance for medications. Many countries don’t cover long-term care.

But the Medicare for All plan from Vermont Sen. Bernie Sanders would charge no copays or deductibles for medical care, allowing only limited cost-sharing for certain prescription drugs. Sanders would cover long-term care home and community-based services. Dental, vision and hearing coverage would be included. The House version of the legislation is along similar lines.

“Medicare for All proposals would leapfrog other countries in terms of essentially eliminating private insurance and out-of-pocket costs, and providing very expansive benefits,” said Larry Levitt, a health policy expert with the nonpartisan Kaiser Family Foundation. “It raises questions about how realistic the proposals are.”

Economist Sherry Glied, dean of New York University’s Wagner school of public policy, says the offer of generous benefits may be needed to persuade Americans satisfied with employer coverage that they would be better off in a new government plan.

“You are going to have to be very generous if you want this to be politically appealing to lots of people,” said Glied, who was a senior health care adviser in the Obama administration.

https://apnews.com…

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Comment:

By Don McCanne, M.D.

In dismissing Medicare for All, politicians such as Nancy Pelosi and Donna Shalala note that Medicare’s benefits are not very good, thereby seeming to suggest that Medicare is not a good model for a universal health care financing system. What they do not acknowledge is that that the single payer Medicare for All proposals describe the most comprehensive health care benefit packages available anywhere – far better than the employer-sponsored plans that they keep touting.

Single payer Medicare for All is not the traditional Medicare program that has been neglected for decades by Congress and by Republican and Democratic administrations, as they continue to enhance the private Medicare Advantage programs. But even Medicare Advantage plans do not begin to match the blockbuster benefits of a well designed single payer Medicare for All model.

The public has to understand that the single payer model of Medicare for All would be the most comprehensive health care program of all nations. It is not our current traditional Medicare program – a program that requires supplemental plans to provide adequate protection. Do not let Pelosi, Shalala and others get away with their efforts to defeat single payer by their false implications that the traditional, neglected Medicare program is the same as comprehensive, single payer Medicare for All.

And scaring seniors into thinking that they would lose their current Medicare? That is dishonest unless the seniors are told that they would be receiving far more comprehensive benefits, without deductibles and other cost sharing, and without the restricted provider networks that the private Medicare Advantage plans use.

And the union members with retiree health benefits they don’t want to give up? No union health benefit program is as comprehensive as single payer Medicare for All. And what about those payroll deductions they made all those years? Go back to the negotiating tables and maybe those reserves could be used for more generous pensions, or whatever else is fair.

But there is no legitimate argument that should cause people to want to reject the most comprehensive health care financing system possible, providing affordable health care for all. If they say they don’t want it, then find out why, because it is clear that they don’t understand what they would be missing out on.

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By Shelby Livingston
Modern Healthcare, May 17, 2019

The health insurance inflation rate hit a five-year peak in April, possibly because managed care is rising.

The Consumer Price Index for health insurance in April spiked 10.7% over the previous 12 months—the largest increase since at least April 2014, according to a Modern Healthcare analysis of the U.S. Bureau of Labor Statistics’ unadjusted monthly Consumer Price Index data.

In contrast, the other categories that make up the medical care services index—professional services and hospital and related services—rose 0.4% and 1.4% in April, respectively. The CPI for medical care services in April rose 2.3%, while overall inflation increased 2% year over year.

Because of the way the BLS calculates the health insurance index, the change year over year does not reflect premiums paid by customers, but “retained earnings” after paying out claims. These earnings are used to cover administrative costs or are kept as profit.

The likely reason health insurance inflation is rising is because of growth in managed care, including Medicare Advantage, Medicaid managed care and commercial insurance, according to Paul Hughes-Cromwick, an economist at Altarum. He noted that added administrative costs increase insurance price growth.

Hughes-Cromwick said the increase in the health insurance index could also be driven by the fact that insurers’ medical loss ratios may be decreasing as high premiums, particular in the individual health insurance exchanges, exceeded anticipated claims.

The eight largest publicly traded insurers posted net income of $9.3 billion in the first quarter of 2019, an increase of 29.9%. They made a combined $21.9 billion in profits over the course of 2018.

https://www.modernhealthcare.com…

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Comment:

By Don McCanne, M.D.

For a dramatic representation of the point made in this article, click on the link and look at the graph depicting a very sharp rise in health insurance prices compared to prices for health care services. As the author explains, this does not reflect the premiums paid, but rather it reflects the retained earnings, i.e., administrative costs and profits.

This waste is what the single payer Medicare for All model is designed to get rid of. It looks like the insurers are making a run for egregious profits while they still can (even though they will have to pay rebates because they couldn’t hide all of their their excesses in the medical loss ratio).

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Reform has a cost. But the point of a health care system is to treat patients, not to buttress the economy.

By Elisabeth Rosenthal
The New York Times, May 16, 2019

As calls for radical health reform grow louder, many on the right, in the center and in the health care industry are arguing that proposals like “Medicare for all” would cause economic ruin, decimating a sector that represents nearly 20 percent of our economy.

It’s true: Any significant reform would require major realignment of the health care sector, which is now the biggest employer in at least a dozen states. Most hospitals and specialists would probably lose money. Some, like the middlemen who negotiate drug prices, could be eliminated. That would mean job losses in the millions.

Though it will be economically painful, the point is to streamline for patients a Kafka-esque health care system that makes money for industry through irrational practices. After all, shouldn’t the primary goal of a health care system be delivering efficient care at a reasonable price, not rewarding shareholders or buttressing the economy?

It’s not surprising that those involved in the business of medicine have joined forces in a lobbying and media campaign, the Partnership for America’s Health Care Future, to ward off transformational reform, particularly Medicare for all. But fed-up voters seem ready to upend an industry that saps their finances, wastes their time and doesn’t deliver particularly good care. Few people would mourn the end of $35 million annual compensation packages for insurance executives or the downsizing of companies that have raised insulin prices to 10 times what they are in Canada.

The first casualties of a Medicare for all plan, said Kevin Schulman, a physician-economist at Stanford, would be the “intermediaries that add to cost, not quality.” For example, the armies of administrators, coders, billers and claims negotiators who make good middle-class salaries and have often spent years in school learning these skills. There would be far less need for drug and device sales representatives who ply their trade office to office and hospital to hospital in a single-payer system, or one in which prices are set at a national level.

“Yes, these are painful transitions,” said Dr. (Katherine) Baicker, who is now the dean of the University of Chicago’s Harris School of Public Policy. “But the answer is not to freeze the sectors where we are for all time. When agriculture improved and became more productive, no one said everyone had to stay farmers.”

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Jobs. Jobs for the sake of jobs.

Why don’t we assign a tally taker to each household throughout the nation. You know, tallying things like number of showers taken, washing machine loads, toilet flushes, or number of electronic devices with average hours of usage or duration lights are left on, or hours that natural gas is used for the furnaces or the water heaters. You could create an industry that does that and relieve the utility companies of the need to maintain the automated devices that currently record usage of utilities. Think of all the jobs that could be created, along with the for-profit service corporations that manage them. Furthermore, that industry, through merger and acquisition, could create great opportunities on Wall Street to enrich passive investors and enhance the income and wealth of the corporate executives and the hedge fund managers. Of course creating a trillion dollar plus industry like that would have to be paid for, and, no matter how you do that, it would ultimately come out of the budgets of the households. But talk about creating a job market.

Of course, this is utterly ridiculous. This would be a middleman industry that provides none of the utilities being measured and would be providing virtually no value for whatever services it would be performing. But isn’t this much like the health insurance industry that is breaking down the health care “utility” into discrete services and products that they tally while providing no health care services and no value. In fact both concepts – middlemen utility tally takers and middlemen insurance tally takers are or would be providing a negative value because of their very high costs while delivering neither utilities nor health care.

Yet those opposed to health care reform that would greatly reduce this profound administrative waste plead that we cannot make that transformation because we need to preserve these jobs. Sorry. As the title of Elisabeth Rosenthal’s article states, “Medicare for All could kill two million jobs, and that’s O.K.” Single payer proposals do include the costs of job transitions, but that is only a one-time expense. From that point on, the cost curve is reduced to a lower trajectory, making health care affordable for all of us forevermore. We can’t afford not to do it.

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