Think about how much your income would go up if you didn’t have to pay for healthcare at all. That would begin to close the gap between productivity and wages for the first time in a generation.

By Les Leopold
Common Dreams, April 23, 2019

Pundits and politicians repeatedly warn us that the country cannot afford costly social services. They caution about the perils of a rising national debt, the supposed near bankruptcy of Medicare and Social Security, and the need to sell public services to the highest bidder in order to save them. We must tighten our belts sooner or later, they tell us, rather than spend on social goods like universal health care, free higher education and badly needed infrastructure.

To many Americans this sounds all too true because they are having an incredibly tough time making ends meet. According to the Federal Reserve, “Four in 10 adults in 2017 would either borrow, sell something, or not be able pay if faced with a $400 emergency expense.” To those who are so highly stressed financially, the idea of paying for a costly program like Medicare for All sounds impossible.

We are the richest country in the history of the world, however, and certainly could afford vastly expanded and improved vital public services if we had the will. What stands in the way is runaway inequality. Our nation’s wealth has been hijacked by the super-rich, with plenty of aid from their paid-for politicians.

Over the past 40 years the top fraction of the top one percent have systematically denied working people the fruits of their enormous productivity. The results of this wage theft can be seen clearly in the chart below which tracks productivity (output per hour of labor) and average weekly wages (after accounting for inflation) of non-supervisory and production workers (about 85 percent of the workforce).

The red line shows the rise of American productivity since WWII. While not a perfect measurement of the power of our economy, it does capture our overall level of knowledge, technical skills, worker effort, management systems, and technology. Ever-rising productivity is the key to the wealth of nations.

As we can see clearly, the productivity trend has been ever upward. Today the average worker is nearly three times as productive per hour of labor as he or she was at the end of WWII. And the workforce is more than three times as large. That means we are a colossal economic powerhouse. But unless you are an economic elite, it doesn’t feel that way.

To understand why we need to look at the blue line – average real worker wages. From WWII to the late 1970s or so, as productivity rose so did the average real wage of nearly all American workers. Year by year most working people saw their standard of living rise. For every one percent increase in productivity, about two-thirds went to labor, and the remaining one-third went to capital investment and profits.

After the late 1970s, however, the story changes dramatically. Real wages stall for more than 40 years, while productivity continues to climb. Had wages and productivity continued to rise in tandem, the average weekly earnings of the American worker would be almost double what it is today, rising from today’s average of $746 per week to $1,377 per week.

What happened? Where did all the money go that once went to working people?

The fatalistic story sold to us by elite-funded think tanks is that the rise of international competition and the introduction of advanced technology crushed the wages of those without the highest skill levels. The typical worker, it is claimed, is now competing with cheap labor from around the world and hence sees his or her wages stall and even decline. And since there really isn’t much anyone can do about globalization or automation, there’s nothing we can do about the stalling wages. Such a convenient story to justify runaway inequality!

The real story is far more complex and troubling. Yes, globalization and automation contribute to stagnant wages. But as the International Labor Organization shows in their remarkable 2012 study, only about 30 percent of this wage stagnation can be attributed to technology and globalization. The main cause is the neo-liberal policy agenda of deregulation of finance, cuts in social spending and attacks on labor unions. And within that mix the biggest driver of wage stagnation can be attributed to financialization – the deregulation of Wall Street which permitted — for the first time since the Great Depression — the rapacious financial strip-mining of workers, students, families and communities. Put simply, the neo-liberal model ushered in by Thatcher and Reagan, and then intensified by Clinton and Blair, moved the wealth that once flowed to working people to financial and corporate elites.

How much money are we losing?

More than we can imagine. Here’s a back-of-the-envelope estimate for just the most recent year on the chart, 2017: The gap between the productivity wage and the current average wage is $631 per week. That is, if the average weekly wage continued to rise with productivity, it would be $631 higher than the current average wage. In 2017, there are 103 million of these workers. So the total amount of “lost” wages that flowed to economic elites is a whopping $3.4 trillion! (103 million x $631 x 52 weeks) And that’s just for one year.

Here’s how to pay for Medicare for All

Current estimates for a single payer system come in at about $3 trillion per year. Americans already are paying $1.9 trillion in payroll and income taxes that go to Medicare, Medicaid and other government health programs. So, we would need to raise another $1.1 trillion to provide universal healthcare and prescription drugs with no co-pays, no deductibles and no premiums.

In the name of fairness, that additional $1.1 trillion to pay for Medicare for All should be raised by taxing back a portion of the $3.4 trillion in wealth that has flowed to the super rich instead of to working people. After all, working people have not had a real wage increase in more than forty years as economic elites have siphoned away tens of trillions of dollars of income that once went to working people, (the gap between the two lines). Wouldn’t it be more than fair to ask the superrich to pay the $1.1 trillion needed for Medicare for All?

There are numerous ways for these economic elites pay their fair share:

• Financial transaction tax on stock, bond and derivative transactions;
• Wealth tax on those with over $50 million in wealth;
• Minimum corporate tax of 35 percent on all corporations with over $100 million in profits who now pay little or nothing like Amazon did this past year;
• Raise the marginal tax bracket to 70% on all income over $10 million per year;
• Increase the inheritance tax on the super-rich to prevent the creation of a permanent oligarchy…and so on.

The point is to give Americans what they have been long denied – high quality universal healthcare AND a real wage increase by providing Medicare for All with no co-pays, no deductibles and no premiums.

Think about how much your income would go up if you didn’t have to pay for healthcare at all. That would begin to close the gap between productivity and wages for the first time in a generation.

Wait! Shouldn’t working people pay something for health care coverage?

We already are. We pay payroll taxes for Medicare and a portion of our regular taxes go to fund Medicaid and other public health programs for veterans, Native Americans and public health-related research and regulation.

So next time you hear someone say we can’t afford a public good, that we need to tighten our belts and get used to austerity, think about all that wealth that has flowed to the very top. Think about that big fat gap between productivity and real wages. Think about how runaway inequality has allowed the wealth of the richest nation in history to be hijacked by the super-rich.

It’s time the American people got a real wage increase and Medicare for All would deliver just that.

Les Leopold is the director of the Labor Institute in New York.

https://www.commondreams.org…

---

Bernie Sanders and the Myth of the 1 Percent; The very rich are richer than people imagine.

By Paul Krugman
The New York Times, April 18, 2019

Even now, most Americans don’t seem to realize just how rich today’s rich are.

One survey found that Americans, on average, think that corporate C.E.O.s are paid about 30 times as much as ordinary workers, which hasn’t been true since the 1970s. These days the ratio is more like 300 to 1.

Why should we care about the very rich? It’s not about envy, it’s about oligarchy.

But we should be able to understand both that the affluent in general should be paying more in taxes, and that the very rich are different from you and me ­— and Bernie Sanders. The class divide that lies at the root of our political polarization is much starker, much more extreme than most people seem to realize.

---

NYT Reader Comment:

By Don McCanne, M.D.

Although Prof. Krugman has drifted away from the single payer model of Medicare for All, today’s commentary provides the basis for why it is an imperative.

At nearly one-fifth of our economy, with much of the money at the top, the majority cannot afford to pay the per capita costs of health care. Progressive financing is required if we are to include everyone. The current system is fragmented and inadequately progressive. With the various models that assign premiums and cost sharing to individuals, rather than equitable taxes, and with unstable employment (66 million leave their jobs each year), we can never get the financing right. Millions will remain uninsured or underinsured.

With single payer Medicare for All, financing is automatic through the tax system, and everyone is automatically covered. The higher (but fair) taxes that would be paid by the very wealthy would make this possible.

https://www.nytimes.com…

---

Comment:

By Don McCanne, M.D.

It’s really simple. The money to pay for single payer Medicare for All is already there. It’s just that it is maldistributed with much of it at the top of the income and wealth ladder.

Our current method of funding health care is heavily dependent on individual workers: insurance premiums, insurance deductibles and other cost sharing, out-of-pocket spending for other health services and products, payroll taxes, income taxes, employee health care costs that are built into the prices of products and services that we purchase, and so on. Although a portion of this represents moderately progressive financing (more taxes as taxable income increases), because there is so much money at the top that represents an infinitesimally small health care contribution as a percentage of income or wealth, our health care financing is actually highly regressive, i.e., highly unfair to the workers and their families. Workers pay double digit percentages of their income for health care whereas the very rich pay a small fraction of one percent.

Our national health expenditures are now so high that the disproportionately high share that the workers pay creates financial hardships, especially for those with health care needs. We desperately need to recover some of massive funds that go to the top to reduce the unfair burden on workers. We can easily do that by establishing a single universal risk pool and funding it equitably – based on ability to pay – through progressive tax policies. That way financing of the system is automatic, and everyone is automatically included. Of course, that’s exactly what a single payer Medicare for All system does.

For those who say that creates too great of a burden on the wealthy, it is difficult to have sympathy for those individuals who will have to figure out how they will get by on the hundreds of millions or billions of dollars they have left after they pay their taxes. Besides, where did their money come from? It ultimately came from the workers who are largely responsible for the nation’s productivity. They certainly deserve affordable health care.

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

House of Representatives, Committee on Rules, April 23, 2019

Rules Committee Chairman James P. McGovern (D-MA), Congresswoman Pramila Jayapal (D-WA), and Congresswoman Debbie Dingell (D-MI) announced today that the House Rules Committee will hold an original jurisdiction hearing on the Medicare for All Act of 2019 on Tuesday, April 30th at 10am ET in H-313, The Capitol. It marks the first time Congress has ever held a hearing on Medicare for All. Witnesses will be announced later this week.

“I want to thank Chairman McGovern for holding this historic hearing. Even with passage of the Affordable Care Act, there are more than 70 million people either without coverage or have coverage that leaves them still unable to access medical care due to prohibitively high out-of-pocket costs. There is no other developed country on the face of the Earth that has a health care system that is as fragmented and costly as ours. The health outcomes and barriers to care in America are the worst of any industrialized nation. Health care is a human right and I’m proud the Rules Committee will be holding this hearing on the Medicare for All Act as this Majority discusses ways to strengthen our health care system for everyone,” said Congresswoman Jayapal.

More than 100 members have already cosponsored the Medicare for All Act of 2019, which would improve and expand the overwhelmingly successful and popular Medicare program so that every person living in the United States has guaranteed access to healthcare with comprehensive benefits.

• What: Rules Committee Original Jurisdiction Hearing on the Medicare for All Act of 2019
• When: Tuesday, April 30th at 10am ET
• Where: H-313, The Capitol

Note that seating in the hearing room will be available as normal on a first come, first serve basis with preference given to members of Congress and members of the media. The hearing will also be streamed online at Rules.House.gov.

https://rules.house.gov…

To be live-streamed at: https://rules.house.gov

---

Comment:

By Don McCanne, M.D.

To show how far single-payer Medical for All has come, it will finally receive a formal Congressional hearing next week in the House Rules Committee. It will be an “original jurisdiction hearing” (first introduction) of the of the Jayapal/Dingell Medicare for All Act of 2019 (H.R. 1384).

Witnesses will be announced later this week, It will be live-streamed at the link above (and below) and available later in the archive of the Rules Committee (same link).

Again,

Tuesday, April 30th at 10am Eastern, 7 am Pacific

Live-streamed at https://rules.house.gov.

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

CMS.gov, April 22, 2019

Today, U.S. Department of Health and Human Services (HHS) Secretary Alex Azar and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma are announcing the CMS Primary Cares Initiative, a new set of payment models that will transform primary care to deliver better value for patients throughout the healthcare system. Building on the lessons learned from and experiences of the previous models, the CMS Primary Cares Initiative will reduce administrative burdens and empower primary care providers to spend more time caring for patients while reducing overall health care costs. The models were developed by the Innovation Center under the leadership of Adam Boehler and are part of Secretary Azar’s value-based transformation initiative.

Administered through the CMS Innovation Center, the CMS Primary Cares Initiative will provide primary care practices and other providers with five new payment model options under two paths: Primary Care First and Direct Contracting.

The five payment model options are:

• Primary Care First (PCF)
• Primary Care First – High Need Populations
• Direct Contracting – Global
• Direct Contracting – Professional
• Direct Contracting – Geographic

The Primary Care First (PCF) payment model options will test whether financial risk and performance based payments that reward primary care practitioners and other clinicians for easily understood, actionable outcomes will reduce total Medicare expenditures, preserve or enhance quality of care, and improve patient health outcomes. PCF will provide payment to practices through a simplified total monthly payment that allows clinicians to focus on caring for patients rather than their revenue cycle. PCF also includes a payment model option that provides higher payments to practices that specialize in care for high need patients, including those with complex, chronic needs and seriously ill populations (SIP).

Like the PCF payment model options, the Direct Contracting (DC) payment model options are also focused on transforming primary care, allowing health care providers to take greater control of managing the costs of care for an aligned population of Medicare fee-for-service (FFS) beneficiaries. While the PCF models are focused on individual primary care practice sites, the DC payment model options aim to engage a wider variety of organizations that have experience taking on financial risk and serving larger patient populations, such as Accountable Care Organizations (ACOs), Medicare Advantage (MA) plans, and Medicaid managed care organizations (MCOs). The DC payment model options are designed to create a competitive delivery system environment where organizations offering greater efficiencies and better quality of care will be financially rewarded. The payment model options include a focus on care for patients with complex, chronic needs and SIPs, as well as a voluntary alignment option that allows beneficiaries to align with the health care provider of their choosing.

Depending on the DC payment model option in which an organization is participating, the model participant will receive a fixed monthly payment that can range from a portion of anticipated primary care costs to the total cost of care. Participants in the global payment model option will ultimately bear full financial risk, while those in the professional payment model option will share risk with CMS. This will provide prospective model participants a range of financial risk arrangements from which to choose while providing a more predictable revenue stream and reducing health care provider burden commensurate with level of financial risk.

Together, CMS anticipates these five payment model options administered under the Primary Cares Initiative could:

• Provide better alignment for over 25 percent of all Medicare FFS beneficiaries – nearly 11 million Medicare beneficiaries would potentially be included (a collective 5 million beneficiaries in the DC payment model options and a collective 6.4 million in PCF payment model options);
• Offer new participation and payment options and opportunities for an estimated one in four (25 percent) primary care practitioners as well as other health care providers; and
• Create new coordinated care opportunities for a large portion of the 11-12 million beneficiaries dually eligible for Medicare and Medicaid, specifically those in Medicaid managed care and Medicare FFS.

For a fact sheet on the CMS Primary Care First payment model options, please visit https://www.cms.gov/newsroom/fact-sheets/primary-care-first-foster-independence-reward-outcomes.

More information on CMS Primary Care payment model options is at: https://innovation.cms.gov/initiatives/primary-care-first-model-options/.

For a fact sheet on the Direct Contracting payment model options, please visit https://www.cms.gov/newsroom/fact-sheets/direct-contracting.

More information on the Direct Contracting model options is at: https://innovation.cms.gov/initiatives/direct-contracting-model-options/.

To view a fact sheet on the CMS Primary Cares Initiative, please visit: https://innovation.cms.gov/Files/x/primary-cares-initiative-onepager.pdf.

To review the Direct Contracting—Geographic Request for Information, please visit: https://innovation.cms.gov/Files/x/dc-geographicpbp-rfi.pdf.

CMS is also releasing the first annual evaluation report for the Comprehensive Primary Care Plus (CPC+) Model, which details the implementation experience and impact on beneficiary outcomes over the first year for practices that started participating in the CPC+ model in January 2017. To view the findings-at-a-glance, please visit: https://innovation.cms.gov/Files/reports/cpcplus-fg-firstannrpt.pdf. To see the report, please visit: https://downloads.cms.gov/files/cmmi/cpcplus-first-ann-rpt.pdf.

https://www.cms.gov…

---

Direct Contracting

CMS.gov, April 22, 2019

Direct Contracting (DC) is a set of voluntary payment model options aimed at reducing expenditures and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service (FFS).

How are the new payment model options expected to transform the health care system?

The payment model options available under DC seek to reduce program expenditures and improve quality of care and health outcomes for Medicare beneficiaries through alignment of financial incentives and an emphasis on beneficiary choice and care delivery while maintaining access to care for beneficiaries, including patients with complex, chronic conditions and seriously ill populations. Specifically, to help ensure that care quality is improved and beneficiary choice and access are protected, we will tie a meaningful percentage of the benchmark to performance on quality of care, while also monitoring to ensure that beneficiaries’ access to care is not adversely affected as a result of the model. The new payment model options also present an opportunity to test novel methods for organizations to manage Medicare FFS expenditures and better integrate care delivery for those dually eligible for Medicaid and Medicare, including through coordinated efforts with Medicaid Managed Care Organizations (MCOs). Further, through refinements in our benchmarking methodology and risk adjustment, we are aligning financial incentives to attract organizations that manage the complex chronic, and seriously ill beneficiary populations.

What are the payment model options’ goals?

The payment model options available under DC aim to reduce expenditures while preserving or enhancing quality of care for beneficiaries. By aligning financial incentives, providing a prospectively determined and predictable revenue stream for participants, and putting a greater emphasis on beneficiary choice, the payment model options aim to:

• Transform risk-sharing arrangements in Medicare FFS by offering both capitated and partially capitated population-based payments that move away from traditional FFS.
• Broaden participation in CMS Innovation Center models by allowing model participation by organizations new to Medicare FFS, such as physician managed organizations that currently operate exclusively in the MA program, Medicaid MCOs that provide Medicaid benefits for full-benefit dually eligible beneficiaries, and innovative, new organizations that seek to assume responsibility for Medicare FFS beneficiaries in a geographic target region.
• Empower beneficiaries to engage in their care delivery through voluntary alignment and potential benefit enhancements.
• Reduce provider burden to meet health care needs effectively, through for example, a smaller set of core quality measures and waivers to facilitate care delivery.

How do the payment model options available under DC differ from other Medicare ACO initiatives?

Unlike prior Medicare ACO initiatives, the payment model options available under DC seek to engage a broader variety of organizations than have previously participated in CMS models and programs. While CMS expects that current NGACO and MSSP participants will be interested in the payment model options available under DC, CMS also seeks to attract organizations that are new to Medicare FFS, such as health care providers and organizations who are currently only in MA, and Medicaid MCOs that are ready to take on accountability for Medicare FFS spending for their dually eligible members. If the CMS proceeds with the Geographic PBP option, DC may also attract innovative organizations that are interested in both entering into formal arrangements with health care providers and being accountable for an entire population in a target region.

DC’s current design seeks to create a competitive delivery system environment based on regional payment neutrality, in which organizations bear appropriate risk, and population-based benchmarks are applied equitably across all model participants in the same market (i.e., accounting for risk adjustment factors). We expect competition to flourish in such environments, as organizations offering efficiencies, better quality, and better service are financially rewarded and attract greater numbers of beneficiaries, while being held to a standard of continuous improvement.

How will participants be paid under the payment model options?

For the participants in the Professional PBP option, CMS will offer primary care capitation equal to 7 percent of the total cost of care for enhanced primary care services, along with 50 percent shared savings/shared losses with CMS. For participants in the Global PBP option, CMS will offer the choice of Primary Care Capitation or Total Care Capitation, in addition to 100 percent shared savings/losses.

https://www.cms.gov…

---

Evaluation of the Comprehensive Primary Care Plus Initiative (CPC+)

CMS.gov, First Annual Report

CPC+ is the largest and most ambitious primary care payment and delivery reform ever tested in the United States.

Takeaways

In the first year, CPC+ provided primary care practices with substantial supports and the practices began the hard work of transforming care delivery. However, as expected, there were few effects on cost, service use, and quality for Medicare FFS beneficiaries in the first year. Effects on patient outcomes may emerge with more time as CPC+ practices deepen and expand care delivery changes.

https://innovation.cms.gov…

---

Comment:

By Don McCanne, M.D.

This topic cannot possibly be covered in a Quote of the Day comment. Primary Care First and Direct Contracting are complex topics, but they will impact significantly the Medicare program so it will be important to have at least a superficial understanding of these concepts. To learn what this is all about, there are several links to various documents in the CMS press release above.

A few observations:

Primary Care First and Direct Contracting are part of Secretary Azar’s value-based transformation initiative – a series of bureaucratic intrusions that supposedly start paying for health care based on value rather than volume. Little does it matter that this experimentation has been profoundly disappointing to date.

Health insurance works by pooling risk – the larger the risk pool the better. These CMS programs transfer risk to the providers, perversely dividing the risk pool into the smallest of segments. Not only does this expose the providers to risk (as deliberately designed), this also transfers some of the insurance function to the providers while keeping the private insurers in place (selling us more non-risk-bearing administrative services).

These programs move into the traditional fee-for-service Medicare program which advances the administration’s goal of further privatizing Medicare (though we may need a new word to describe privatizing). A stated goal of this program is “to create a competitive delivery system environment in which organizations bear appropriate risk.”

Since these programs are designed to be especially suitable for individuals with complex, chronic needs and for seriously ill populations (SIP) while transferring risk to the providers, it is inevitable that gaming the system will be rampant.

The administrative complexity of this program promises to “reduce administrative burdens and empower primary care providers to spend more time caring for patients while reducing overall health care costs.” This seems to be one more example in which this administration presents fiction as the absolute truth.

It is ironic that many physicians are trying to escape the administrative hassles of private insurers and government bureaucracies by going into “Direct Care” practices in which they directly contract with the patients, yet CMS has usurped the concept and converted into the near opposite of what was intended.

Also released by CMS is the first annual report of the Comprehensive Primary Care Plus Initiative (CPC+) – a precursor in this continuum of value-based transformation. The report states, “as expected, there were few effects on cost, service use, and quality for Medicare FFS beneficiaries.” Yet we march on.

In several of the documents it is stated repeatedly that these proposals are designed to reduce overall health care costs. In actuality, they are designed to reduce the federal government’s contribution to health care spending. In doing so, they are creating a quagmire that will serve neither the patients nor their health care professionals well.

It seems obvious that we should abandon these dysfunctional policies and move forward with a financing system that will serve us all well: single payer, improved Medicare for All. Now that would be a genuine value-based transformation.

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

By Kevin A. Schulman, M.D. and Arnold Milstein, M.D.
JAMA, April 4, 2019

Health care has already emerged as a major 2020 campaign topic for the Democrats, with some candidates advancing the concept of “Medicare for all.”

Operating at a much higher cost proved feasible for hospitals because most were able to negotiate increasingly higher payment rates with private payers to offset their mounting losses on publicly funded care.

The cumulative effect of this hospital management strategy, as well as Medicare payment policy enacted in the Affordable Care Act that mandates annual productivity gains, is that Medicare and Medicaid now pay hospitals significantly less than their estimated average costs (86.8% and 88.1% of costs, respectively; Medicaid and Medicare payments include Disproportionate Share Hospital payments in this calculation), whereas private payers pay hospitals more than their average costs (144.8% of costs on average).

A Medicare-for-all plan that extends the current Medicare fee schedule to all patients would therefore lead to a marked decline in revenue from formerly privately insured patients and a small decrease in revenue from formerly Medicaid-covered patients.

Developing a political coalition for the most expansive visions of Medicare for all would be extremely challenging under any circumstance. In the absence of exceptional public-mindedness among hospital leaders, supporters of Medicare for all should anticipate strong hospital political opposition, especially from leaders who have pursued strategies less focused on efficiency than on extracting ever-increasing payment rates from private payers.

https://jamanetwork.com…

---

Hospitals Stand to Lose Billions Under ‘Medicare for All’

By Reed Abelson
The New York Times, April 21, 2019

The yawning gap between payments to hospitals by Medicare and by private health insurers for the same medical services may prove the biggest obstacle for advocates of “Medicare for all,” a government-run system.

If Medicare for all abolished private insurance and reduced rates to Medicare levels — at least 40 percent lower, by one estimate — there would most likely be significant changes throughout the health care industry, which makes up 18 percent of the nation’s economy and is one of the nation’s largest employers.

Dr. Adam Gaffney, the president of Physicians for a National Health Program, warned advocates of a single-payer system like Medicare for all not to seize this opportunity to extract huge savings from hospitals. “The line here can’t be and shouldn’t be soak the hospitals,” he said.

“You don’t need insurance companies for Medicare for all,” Dr. Gaffney added. “You need hospitals.”

But those in favor of the most far-reaching changes, including Senator Bernie Sanders, who unveiled his latest Medicare for all plan as part of his presidential campaign, have remained largely silent on the question of how the nation’s 5,300 hospitals would be paid for patient care.

While both the Medicare-for-all bill introduced by Representative Pramila Jayapal, Democrat of Washington, and the Sanders bill call for a government-run insurance program, the Jayapal proposal would replace existing Medicare payments with a whole new system of regional budgets.

“We need to change not just who pays the bill but how we pay the bill,” said Dr. Gaffney, who advised Ms. Jayapal on her proposal.

Hospitals would be able to achieve substantial savings by scaling back administrative costs, the byproduct of a system that deals with multiple insurance carriers, Dr. Gaffney said. Under the Jayapal bill, hospitals would no longer be paid above their costs, and the money for new equipment and other investments would come from a separate pool of money.

https://www.nytimes.com…

---

This Is The Part Of ‘Medicare For All’ That You Never Hear About

By Jonathan Cohn
HUFFPOST, April 20, 2019

Sanders and his allies rarely mention that Medicare for All would also restrict the flow of money into the rest of the health care industry, including the parts that aren’t as easy to demonize in speeches.

At the top of that list are hospitals, which alone account for roughly one-third of the nation’s health care spending. No other sector, not even pharmaceuticals, rivals it. Under the Medicare for All proposals from Sanders as well as some other potential reforms getting attention these days, the federal government would limit payments to hospitals, quite possibly reducing their incomes significantly.

The case for squeezing hospitals is strong, given the available research on what they charge and why. Even some experts historically wary of government regulation are warming to the concept.

But for now, at least, hospitals have shown no interest in discussing further cuts. On the contrary, they are part of an industry-wide lobbying effort to defeat any expansion of government-run health insurance, even relatively modest ones that wouldn’t do much to affect their revenue.

Besides, the status quo rations care too ― by making it so inaccessible for people with skimpy coverage or no insurance at all. All over the U.S., every single day, people are delaying or simply skipping procedures because they can’t afford them and high hospital prices are one reason why.

https://www.huffpost.com…

---

Hospitals Will Do Fine Under Medicare for All

By Matt Bruenig
People’s Policy Project, April 22, 2019

The New York Times had coverage (above) of a JAMA article (above) about hospital provider payments under Medicare for All. The headline is that Medicare for All would cost hospitals billions of dollars. But this headline and the story under it are misleading insofar as they do not discuss the offsetting savings that hospitals would achieve from a lower administrative burden.

To understand whether this cut would be problematic, it is necessary to look at how much hospitals will be able to save from the streamlined administration of a Medicare for All system. According to a study published in 2014 (below), around 25 percent of hospital revenue is spent on hospital administration. By comparison, hospitals operating in the Canadian single-payer system spend only 12 percent of their revenue on administration.

What this means is that the administrative efficiencies available under a Medicare for All system allow hospitals to offset 13 points of the 16-point revenue cut without digging into the actual cost of care. The remaining 3 points could come out of hospital profit margin (bringing the margin from 7 percent to 4 percent).

https://www.peoplespolicyproject.org…

---

A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far

By David U. Himmelstein, Miraya Jun, Reinhard Busse, Karine Chevreul, Alexander Geissler, Patrick Jeurissen, Sarah Thomson, Marie-Amelie Vinet, and Steffie Woolhandler
Health Affairs, September 2014

Abstract

A few studies have noted the outsize administrative costs of US hospitals, but no research has compared these costs across multiple nations with various types of health care systems. We assembled a team of international health policy experts to conduct just such a challenging analysis of hospital administrative costs across eight nations: Canada, England, Scotland, Wales, France, Germany, the Netherlands, and the United States. We found that administrative costs accounted for 25.3 percent of total US hospital expenditures—a percentage that is increasing. Next highest were the Netherlands (19.8 percent) and England (15.5 percent), both of which are transitioning to market-oriented payment systems. Scotland and Canada, whose single-payer systems pay hospitals global operating budgets, with separate grants for capital, had the lowest administrative costs. Costs were intermediate in France and Germany (which bill per patient but pay separately for capital projects) and in Wales. Reducing US per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion in 2011. This study suggests that the reduction of US administrative costs would best be accomplished through the use of a simpler and less market-oriented payment scheme.

Overall, there is no evidence that the high administrative costs in the United States translate into superior care.

From the Policy Implications

In the United States, administration consumes an increasing share of hospital budgets—a share that is far higher than in nations with simpler and less market-oriented payment schemes. Reducing US spending to Canada’s or Scotland’s level on a per capita basis would have saved $158 billion or $156 billion, respectively—equivalent to 1 percent of the US GDP. Reforming the US health care system so that it operated on a single-payer basis could result in large savings on administration.

https://www.healthaffairs.org…

---

Comment:

By Don McCanne, M.D.

Based on current media reports, it seems as if the nation has just discovered that hospital prices are very high, and for that reason we will not be able to enact a single payer Medicare for All system because hospitals will not be able to survive on the lower rates that Medicare pays compared to private insurers. But there is a fundamental problem with this deceptive framing.

First is that there is a tremendous amount of administrative waste in our hospitals, much of which is recoverable by switching to a well designed single payer system. Second, although the reform proposal is labeled “Medicare for All,” it will not involve simply changing to current Medicare payment rates. Third, operating costs will be covered by global budgets, much as we cover fire departments. Fourth, facilities and major equipment acquisitions will be funded through separate capital budgets with local need determined through regional planning.

Right now the two major hospital associations are partnering with other members of the medical-industrial complex to publicize the fact that hospitals will have to shut down if we enact and implement a single payer Medicare for All program. Not true! You should be prepared with your response when this comes up:

“Single Payer Medicare for All not only recovers a tremendous amount of administrative waste, but it also uses regional planning, global hospital budgets – like fire departments have – and separate budgeting of capital improvements to ensure that we will always have adequate capacity in our hospital system.”

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

By Charleen Hsuan, JD, PhD; Renee Y. Hsia, MD, MSc; Jill R. Horwitz, PhD, JD, MPP; Ninez A. Ponce, MPP, PhD; Thomas Rice, PhD; Jack Needleman, PhD, FAAN
HSR – Health Services Research, April 2, 2019

Abstract

Objective

To examine whether hospitals are more likely to temporarily close their emergency departments (EDs) to ambulances (through ambulance diversions) if neighboring diverting hospitals are public vs private.

Data Sources/Study Setting

Ambulance diversion logs for California hospitals, discharge data, and hospital characteristics data from California’s Office of Statewide Health Planning and Development and the American Hospital Association (2007).

Study Design

We match public and private (nonprofit or for‐profit) hospitals by distance and size. We use random‐effects models examining diversion probability and timing of private hospitals following diversions by neighboring public vs matched private hospitals.

Principal Findings

Hospitals are 3.6 percent more likely to declare diversions if neighboring diverting hospitals are public vs private (P < 0.001). Hospitals declaring diversions have lower ED occupancy (P < 0.001) after neighboring public (vs private) hospitals divert. Hospitals have 4.2 percent shorter diversions if neighboring diverting hospitals are public vs private (P < 0.001). When the neighboring hospital ends its diversion first, hospitals terminate diversions 4.2 percent sooner if the neighboring hospital is public vs private (P = 0.022).

Conclusions

Sample hospitals respond differently to diversions by neighboring public (vs private) hospitals, suggesting that these hospitals might be strategically declaring ambulance diversions to avoid treating low‐paying patients served by public hospitals.

https://onlinelibrary.wiley.com…

---

Comment:

By Don McCanne, M.D.

When a neighboring hospital places its Emergency Department (ED) on ambulance diversion (presumably because it is exceeding capacity), the hospital to which the ambulances are diverted is more likely to place its own ED on ambulance diversion if the neighboring hospital is a public hospital than if it is a private hospital. That is true even if they have lower ED occupancy (suggesting that ambulance diversion is declared for reasons other than exceeding capacity). Further, the diversions are shorter and are ended sooner if the neighboring hospital is public and ends its diversion first (both suggesting that there was no occupancy crisis in the hospital to which the ambulances were diverted).

Private hospital patients are more likely to be insured, paying patients, whereas public hospital patients are more likely to be uninsured or medically indigent patients, or enrolled in the underfunded Medicaid program. This study, which reaches a high degree of statistical significance, demonstrates that hospitals close their EDs when it may not be necessary if a neighboring public hospital with indigent patients has placed their ED on ambulance diversion thus potentially resulting in an influx of non-paying patients.

This suggests that hospitals give a higher priority to business success than they do to patient service in a system in which there is great variability in the patients’ ability to pay for services. But what if every patient was fully covered for health care services? Obviously, a single payer Medicare for All program would eliminate the concern over whether or not the patient has adequate insurance coverage.

If there is truly inadequate capacity in the system, that could be adjusted through regional planning, hospital budgeting with capacity adjustments, and applying the science of queue management. If sloth is the reason for ambulance diversion then, at worst, that might warrant disciplinary action. But getting rid of sorting patients based on ability to pay would be an important step towards moving us closer to a high performance health care system that takes good care of all of us.

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

By Sam Baker
Axios, April 17, 2019

Red states are getting creative as they look for new ways to limit the growth of Medicaid. But in the process those states are taking legal, political and practical risks that could ultimately leave them paying far more, to cover far fewer people.

Why it matters: Medicaid and the Children’s Health Insurance Program cover more than 72 million Americans, thanks in part to the Affordable Care Act’s Medicaid expansion. Rolling back the program is a high priority for the Trump administration, and it needs states’ help to get there.

The big picture: The Centers for Medicare & Medicaid Services, under the leadership of Administrator Seema Verma, has made clear that it wants to say “yes” to new limits on Medicaid eligibility, and has invited states to ask for those limits.

• But CMS hasn’t actually said “yes” yet to some of the most significant limits states have asked for.
• In the meantime, states are left either with vague ambitions they’re not sure how to implement, or with risky plans that put their own budgets on the line.

What we’re watching: State-level Republicans are waiting for CMS to resolve two related issues: how much federal funding their versions of Medicaid can receive, and the extent to which they’re able to cap enrollment in the program.

• “These issues are going to continue to be intertwined,” said Joan Alker, the executive director of Georgetown University’s Center for Children and Families.

Verma has reportedly told state officials that she wants to use her regulatory power to convert Medicaid funding into a system of block grants — which would be an enormous rightward shift and probably a big cut in total funding.

• CMS probably cannot do that on its own, experts said, but it could achieve something similar by approving caps on either enrollment or spending.

Where it stands: GOP lawmakers in a handful of states are looking to Utah, which has bet big on Verma’s authority, for signals about what’s possible.

• Utah voters approved the full ACA expansion last year, but the state legislature overruled them to pass a more limited version.
• By foregoing the full expansion, Utah passed up enhanced federal funding. It’s still asking for that extra money — a request CMS has never previously approved.
• Utah will also ask CMS to impose a per-person cap on Medicaid spending — a steep cut that was part of congressional Republicans’ failed repeal-and-replace bill, and which may strain CMS’ legal authority.
• If Utah doesn’t get those two requests, its backup plan is simply to adopt the full expansion.

What’s next: Utah is not the only red state leaning into Verma’s agenda, but it’s further out on a limb than any other.

• Idaho, like Utah, overruled its voters to pass a narrower Medicaid bill. But it preserved an option for people to buy into the ACA’s expansion.
• Alaska Gov. Mike Dunleavy has said he wants to take Verma up on her offer of block grants; so have legislators in Tennessee and Georgia. But in the absence of any detail about what that means, or what CMS will approve, that’s all pretty vague right now.

If CMS does move forward on any of this, it could face the same threat of lawsuits that have stymied its first big Medicaid overhaul — work requirements.

• Those rules are on ice in two states because a judge said they contravene Medicaid’s statutory structure and goals. The same argument could await a partial expansion or tough spending caps.

“There’s a clear agenda here to get a handful of states to take up these waivers, which fundamentally undermine the central tenets of the Medicaid program — which [are] that it is a guarantee of coverage, and a guarantee of federal funding,” Alker said.

https://www.axios.com…

---

Comment:

By Don McCanne, M.D.

Conservatives in Congress have longed for a conversion of the federal contribution for state Medicaid programs into block grants – a mechanism by which federal spending on Medicaid could be reduced. The states would either have to fund the difference, or, as the conservative states prefer, they would reduce spending on health care for the vulnerable, low-income beneficiaries served by Medicaid. But the resistance to this change has been great. Even with the Republicans in control of both Congress and the White House, they have not been able to enact these changes.

It appears that CMS Administrator Seema Verma is plotting to bypass Congress by using the Medicaid waiver process to allow states to place lower caps on Medicaid spending and on Medicaid enrollment. This would have essentially the same impact as block grants – reducing federal spending while giving the states greater control over their own programs. For a program that is already severely underfunded, this could have a very negative impact on the health care providers who are already struggling to try to make this program work for their indigent patients.

If we had a well designed, single payer Medicare for All program, there would be no need to maintain a separate health care financing program for low-income individuals and families. But since a single payer program could not possibly be enacted in the current session of Congress, it is imperative that we pull all stops to temporarily protect the Medicaid program until we can transition to single payer Medicare for All.

One noted conservative columnist recently condemned some of the progressives for calling the conservative Republicans cruel because of their policies that attempt to take health care away from the people. Well, they could probably escape the label of cruel if only they would quit being cruel.

Speaking of being cruel, what about those Democrats who say that we should reject single payer Medicare for All just so we can protect the employer-sponsored plans for which the 66 million people who leave their jobs each year are not eligible, and for which millions of others lose their continuity of care because of changes in employer plans, and for which tens of millions are potentially exposed to financial hardship because of excessive out-of-pocket spending requirements? That’s not cruel? Democrats and Republicans, shape up!

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

By Zirui Song, M.D., Ph.D. and Katherine Baicker, Ph.D.
JAMA, April 16, 2019

Key Points

Question: What is the effect of a multicomponent workplace wellness program on health and economic outcomes?

Findings: In this cluster randomized trial involving 32,974 employees at a large US warehouse retail company, worksites with the wellness program had an 8.3-percentage point higher rate of employees who reported engaging in regular exercise and a 13.6-percentage point higher rate of employees who reported actively managing their weight, but there were no significant differences in other self-reported health and behaviors; clinical markers of health; health care spending or utilization; or absenteeism, tenure, or job performance after 18 months.

Meaning: Employees exposed to a workplace wellness program reported significantly greater rates of some positive health behaviors compared with those who were not exposed, but there were no significant effects on clinical measures of health, health care spending and utilization, or employment outcomes after 18 months.

From the Introduction

Workplace wellness programs have become increasingly popular as employers have aimed to lower health care costs and improve employee health and productivity. In 2018, 82% of large firms and 53% of small employers in the United States offered a wellness program, amounting to an $8 billion industry. This growth has been aided by public investments such as the Affordable Care Act, which included funds to promote the development of workplace wellness programs.

Conclusions

Among employees of a large US warehouse retail company, a workplace wellness program resulted in significantly greater rates of some positive self-reported health behaviors among those exposed compared with employees who were not exposed, but there were no significant differences in clinical measures of health, health care spending and utilization, and employment outcomes after 18 months. Although limited by incomplete data on some outcomes, these findings may temper expectations about the financial return on investment that wellness programs can deliver in the short term.

https://jamanetwork.com…

---

Comment:

By Don McCanne, M.D.

With the very high costs of health care in the United States, it is no wonder that businesses latched onto products offered by the purveyors of wellness programs that promised lower costs for their employer-sponsored health plans, not to mention the benefit of having a healthier workforce. Great concept, so how is it working out?

Roughly a tenth of the employees in this meticulous study of a wellness program reported that they were more attentive to their personal exercise and weight management programs, “but there were no significant differences in clinical measures of health, health care spending and utilization, and employment outcomes after 18 months.” It did not produce the outcomes the employer was promised.

Employers have tremendous problems with their health benefit programs. The costs continue to increase. Employment is unstable with 66 million leaving their jobs each year. Continual changes in insurers, provider networks and benefits covered increase the instability of health care for the workers and their families. And now this desperate attempt to create “wellness” is failing them.

Quite a few years ago, I co-authored a paper with the chairman and CEO of a Fortune 100 company who was also the chair of the Health Committee of the Business Roundtable. The topic was Medicare for All. The intent was to show that an icon of the business world and a health care justice activist could come together to support health care reform that would work well for all of us. Although the article was encouraged by the editor of the leading health policy journal, a junior editor was assigned to send us the rejection notice. The medical-industrial complex was simply not ready for a single payer model of reform.

But look at the wealth of health policy knowledge that has continued to spring up. By any objective criteria, the single payer Medicare for All model is vastly superior in that it achieves all essential goals of reform while using a financing system that is equitable and affordable for each of us. About that last point, none of the other models come close on affordability for all individuals and families, yet, with our three and a half trillion dollar health care bill, we absolutely have to get that one right. Besides, enacting and implementing a health care financing system that works for all of us sounds to me like a pretty good start to a universal wellness program.

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