PNHP

Malleability of single payer support

Malleability of single payer support

Californians & Their Government

By Mark Baldassare, Dean Bonner, Alyssa Dykman
Public Policy Institute of California, May 2018

Health Care Policy

A single-payer state health insurance program is now under discussion. Senate Bill 562, which would establish such a program, passed in the senate last year and is currently held in the state assembly. How do Californians feel about this idea today? A majority of adults (64%) and likely voters (53%) favor a single-payer state plan. However, if this plan requires raising taxes, support declines (41% adults still favor, 41% likely voters still favor). Similar shares of adults and likely voters held this view last May. An overwhelming majority of Democrats (78%) favor a single-payer state system—including 62 percent even if it means raising taxes—while a strong majority of Republicans (67%) are opposed. A majority of independents (55%) are in favor, while 36 percent are opposed. Majorities across demographic groups favor a single-payer system, but if raising taxes is required, support falls below 50 percent for all groups—with the exception of college graduates (51%).

Q: “Do you favor or oppose having guaranteed health insurance coverage in which all Californians would get their insurance through a single state government health plan? (If favor: Do you favor it even if it means raising taxes?)”

64% – Favor
41% – Favor, even if it means raising taxes
23% – Favor, not if it means raising taxes
29% – Oppose
7% – Don’t know

http://www.ppic.org…

Full report:
http://www.ppic.org…

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Comment:

By Don McCanne, M.D.

A single payer, improved Medicare for all program would be vastly superior to our current method of financing health care (even with the Affordable Care Act), and 64 percent of California adults favor “a single state government health plan.” However, significant partisan opposition persists, and even support is malleable, dropping to 41 percent when those favoring are asked “even if it means raising taxes.”

The malleability of support is important. Since no state government has been successful in both enacting and implementing a state single payer system, it has been suggested repeatedly that it should be submitted to the voters as a ballot measure. However that has already been tried in California, Oregon, and Colorado where the measures were defeated by overwhelming margins (3 to 1 or 4 to 1) since the voters proved to be very sensitive to the anti-government, anti-tax rhetoric of the opponents.

The Vermont legislature did enact what began as a single payer proposal but which was later modified because of conflicts with existing federal programs, but even the modified version was abandoned when implementation proved to be too difficult.

Many say that we should continue to push for a state single payer system to serve as an example for the nation, just as Saskatchewan served as an example for Canada that eventually led to single payer systems in all provinces. A major hurdle to that approach is that federal programs are already in place in the United States that would require comprehensive federal legislation to modify regulations and free up federal funds for use by the states. Of course there are valiant efforts in states such as New York (Gottfried) and Minnesota (Marty) to work around these federal limitations and restrictions, so we do not need to give up entirely on state efforts as transitional programs that can provide relief until we can achieve the goal of a national program for all.

What lessons can our Medicare and Canada’s Medicare provide for us? Both were accomplished through federal congressional or parliamentary acts. The people elected representatives who were supportive of Medicare (though the political process limited ours to those with the greatest needs – Medicare for seniors and Medicaid for the poor), and then the representatives enacted the programs.

We can do that again. We do need to increase our efforts at educating the public. When people hear “more taxes for health care” they need to immediately think “but a much fairer way of paying for health care for all of us.” When they hear that the government can’t do anything right, they need to remind themselves how relieved they were when they finally qualified for the government Medicare program.

If the people lead, the politicians will follow. This poll shows 64 percent support for single payer, and other polls have shown that the support is especially great when Medicare is invoked (again, malleability). We are getting there. We just need to step up our efforts to educate and activate as we head up this path toward health care justice for all.

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Gaming of Part D generic drugs passes more costs on to seniors

Seniors Pay More For Generics in Medicare Prescription Drug Plans Despite Stable Prices

By Clara Son
Avalere, May 22, 2018

New research from Avalere finds that seniors with Medicare prescription drug plans (Part D) pay more for generic drugs even as the market price of these drugs stays stable.

Avalere experts note that seniors are paying more because generic drugs are being placed on higher formulary tiers where patients pay more out of pocket for drugs. The number of generic prescription drugs placed on the lowest tier, where patients pay less for their drugs, declined 53 percentage points between 2011 and 2015. This shift resulted in a 93% increase in total patient cost sharing for these drugs, or a total of $6.2 billion.

This higher cost sharing and movement of generics to higher tiers did not correspond with an increase in the underlying price of generic drugs over that same time period, according to an analysis by Avalere experts of the average volume-weighted price of generics that were included on plan formularies in both 2011 and 2015.

In 2011, 71% of generic drugs were placed on tier 1, the lowest tier in the formulary. By 2015, 19% of covered generics were placed on tier 1, while 46% were placed on tier 2 and 35% were placed on tier 3 or higher. This shift represents a 53 percentage point decrease in the number of generics being placed on the lowest tier between 2011 and 2015.

The use of generic drugs has saved the Medicare Part D program billions of dollars. However, higher tier placement of generic drugs is leading to higher out-of-pocket costs for patients and may reduce savings.

http://avalere.com…

In response, the Pharmaceutical Care Management Association (PCMA) released the following statement which still does not refute the fact that the industry moved more expensive generics into non preferred tiers in order to keep Part D premiums competitive:

https://www.prnewswire.com…

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Comment:

By Don McCanne, M.D.

This report confirms that the industry shifted over half of generic drugs out of the lowest tier into higher tiers wherein patient cost sharing is higher. This benefits the pharmacy benefit managers because the shift in costs to the patients allows them to keep the Part D premiums more competitive, but it certainly has an adverse impact on seniors who are dependent on generic medications that are supposed to be cheaper than the brand names.

In fact, it has been reported that the cost sharing of generic drugs is sometimes greater than the full price of the generic if it were purchased without using the insurance, and the pharmacy benefit managers may have gag clauses prohibiting the pharmacist from telling the patient that it would cost less if they didn’t use their insurance. Would you call this nefarious?

This is one more example of how the private sector takes good care of the industry itself while using the patients as pawns. Not only are prices high, insurance premiums are unaffordable for many, and they also shift more costs to patients’ pockets as they take away their choices in health care, whether through narrow provider networks or through unaffordable deductibles and other cost sharing. To add to the insult, we pay more because of the high costs of administering these shenanigans.

Through a well designed, single payer, improved Medicare for all we would have the full range of choices in health care with no need for the patient to share costs of the health care services and products at the point of service. When people need care, they simply get the care they need. And, of course, everyone is included for life, and we can do that without spending any more than we already do by using equitable public financing.

Now explain again the basis of those disingenuous arguments that are going around that this approach is not feasible. It is the only approach that is feasible if we want everyone to have affordable health care.

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Cost of health care for a typical family of four now over $28,000

2018 Milliman Medical Index

By Christopher S. Girod, Susan K. Hart, Scott A. Weltz
Milliman Research Report, May 21, 2018

In 2018, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $28,166, according to the Milliman Medical Index (MMI).

2018 MMI Components of Spending

31% ($8,631) – Inpatient

19% ($5,395) – Outpatient

29% ($8,275) – Professional services

17% ($4,888) – Pharmacy

4% ($995) – Other (Home health, ambulance, DME, prosthetics)

Employers pay more; employees pay a lot more

The MMI’s healthcare expenditures are funded by employer contributions to health plans and by employees through their payroll deductions and out-of-pocket expenses incurred when care is received. Over the long-term, we have seen employees footing an increasingly higher percentage of the total. That trend continues in 2018, with employee expenses increasing by 5.9% while employer expenses increased by only 3.5%.

Employees’ share of healthcare costs

The total cost of healthcare for the MMI family of four is shared by employers and employees. To clearly define each payment source, we use three main categories:

1) Employer subsidy. Employers that sponsor health plans subsidize the cost of healthcare for their employees by allocating compensation dollars to pay a large share of the cost.

2) Employee contribution. Employees who choose to participate in the employer’s health benefit plan typically also pay a substantial portion of costs, usually through payroll deduction.

3) Employee out-of-pocket cost at time of service. When employees receive care, they also often pay for a portion of these services via health plan deductibles and/or point-of-service copays.

Relative Proportions of 2018 Medical Costs

56% ($15,788) – Employer contribution

27% ($7,674) – Employee contribution

17% ($4,704) – Employee out-of-pocket

The Milliman Medical Index is an actuarial analysis of the projected total cost of healthcare for a hypothetical family of four covered by an employer-sponsored preferred provider organization (PPO) plan. Unlike many other healthcare cost reports, the MMI measures the total cost of healthcare benefits, not just the employer’s share of the costs, and not just premiums. The MMI only includes healthcare costs. It does not include health plan administrative expenses or insurance company profit loads.

http://us.milliman.com…

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Real Median Household Income in the United States

Federal Reserve Bank of St. Louis; FRED – Economic Data

$59,039 (2016)

https://fred.stlouisfed.org…

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Historical Income Tables: Families

United States Census Bureau

Table F-8. Size of Family – Families by Median and Mean Income

Families with four people:
Median income $90,746 (2016)

https://www.census.gov…

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Comment:

By Don McCanne, M.D.

The Affordable Care Act was supposed to make health care affordable for all Americans while protecting the segment of health care coverage that seemed to be working well – employer-sponsored health plans. So the typical working family of four now pays through premiums, cost sharing and forgone wage increases (for the employer contribution) an average of $28,166.

For this select population – employed families of four with insurance through work with a median income for a family of four ($90,746) – the average payment is 31 percent of income. Of course, this is a family that is doing well. If a family with a median household income ($59,039) spent the same amount on health care it would be 48 percent of income.

One more significant point. That $28,166 is what is actually spent on health care. It does not include health plan administrative expenses nor insurance company profits, and we know what that means.

People want to know what they would be paying under a single payer Medicare for all system. When they ask, they should be reminded that they first need to understand what they are paying now. They understand the premium that is deducted from their paychecks, but they need to find out how much the employer is paying because that represents a reduction in their wages. They also should look at what they pay out of pocket for deductibles and other cost sharing while keeping in mind that they need to maintain reserves should they receive a major hit in their health. They should also realize that over half of health care in the United States is paid through our taxes, and most of that health care spending is relatively opaque for the average individual. Taxpayer-funded health care spending includes Medicare, Medicaid, CHIP, VA Health, military medicine, Indian Health Service, Public Health Service, much of the cost of health insurance purchased for federal, state, and local government employees, and the tax expenditures from the exclusion of employer contributions for medical insurance premiums and medical care (tax exclusion of $236 billion in 2018!). So that $28,166 represents only the most direct spending on health care for that individual family; they are paying much more through the tax system.

People want to know what the tax for a single payer system would be that would be deducted from their paychecks. Then they want to compare that with the current deduction for their employer-sponsored plan, not considering that that is only a very small fraction of the total amount they are actually paying. Because each person’s situation is different, it is impossible to give a precise dollar amount that they would be paying under an improved Medicare for all, but we can say that the amount will be equitable – fair – based on progressive taxes, and that, for all but the wealthiest, will be less than they are paying now (not to mention that they are assured coverage for life). And for the very wealthy, it would be painless anyway. They wouldn’t even know what are paying for health care through their taxes unless their accountant told them.

So remember the Milliman Medical Index – the typical working family of four is already paying on average over $28,000 for employer-sponsored health care, but also don’t forget how much we are already paying in addition through the tax system. We can’t just walk away. We need to enact an equitable financing system that ensures that everyone receives health care that is affordable. That would be a well-designed, single payer, improved Medicare for all.

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Trump’s plan won’t lower prescription drug prices. Ours would.

The White House is pushing half-measures. We need more.

By Adam Gaffney, M.D.
Washington Post, May 23, 2018

The drug price reforms that President Trump recently proposed are as potent as a placebo, but not as harmless.

Trump once blustered that drug firms were “getting away with murder,” but his real-life plan caused pharmaceutical stocks to surge as investors foresaw even higher prices and profits ahead. The president stepped away from his earlier promises to allow Medicare to negotiate prices, while vowing to fight for higher drug prices abroad — a gold mine for the industry that would do nothing to reduce drug prices at home.

With Fortune 500 drug firms raking in $67.7 billion in profits in 2016, more revenue is the last thing the industry deserves. But a failure to contain drug costs isn’t the only shortcoming of Trump’s proposal. The whole pharmaceutical system — from the way medicines are developed to how they are tested, regulated, promoted, priced and provided — is broken, bent to the interests of the pharmaceutical industry. It cries out for reform.

Enter the comprehensive reform proposal drafted by a group of U.S. and Canadian physicians and drug policy experts (led by me and Joel Lexchin of Toronto), published May 17 in the British Medical Journal. Our proposal outlines a pharmaceutical vision that, unlike Trump’s, would both reduce costs and improve health.

Bringing down the price of brand-name drugs isn’t brain surgery: High-income nations throughout the globe get prices roughly half of ours by relying on a central payer to use its leverage in negotiations with drug firms — an approach we estimate could save about $154 billion annually if implemented in the United States. Negotiations by Medicare, once supported by Trump, might produce a chunk of those savings.

But the problem is bigger than prices. A recent analyst’s report from Goldman Sachs illustrates the pitfalls of letting the profit motive determine research priorities. As reported by CNBC, the report asked a disturbing question: “Is curing patients a sustainable business model”? As the report noted, curing many patients of an infectious disease like hepatitis could stop transmission and eliminate new cases, causing profits to plummet. That firms would even ponder such factors may seem nefarious, but it’s the inevitable consequence of a profit-obsessed R&D agenda. One noxious side effect of that agenda is the proliferation of drugs that offer no advance over existing agents: The majority of new agents are “me-too” drugs — trivial modifications of older medications — whose sales are pumped up by aggressive advertising campaigns but do nothing to improve health.

The public — mostly through the National Institutes of Health — ­already contributes richly to the research that underlies basically all modern drugs. But once a breakthrough looks imminent, the research is often turned over to pharmaceutical firms to carry out the last stages of developing a drug and profiting from it. Why not go all the way, and set up a public program parallel to compete with the private firms in developing and testing new drugs, and keep those publicly developed drugs outside the patent system, as the economist Dean Baker and others have described? These new drugs could immediately be manufactured cheaply as generics. Research could be directed toward the drugs that are most needed, not the most profitable, while testing would be performed by scientists without conflicts of interest.

That kind of reform would save money (and give us better drugs) in the long run, but relief is needed now. While drug price negotiations — as Trump once recognized — can help, they may not always suffice. For instance, if only one drug is available to treat a particular disease, the firm that owns the patent holds all the cards in negotiations, and it can walk from the bargaining table. In those situations, we need additional tools to lower prices while ensuring that patients have access to all necessary medications.

So our working group endorsed “compulsory licensing,” or allowing government to greenlight the generic production of expensive branded medicines in cases of medical necessity. Public drug manufacturing (which already happens in Sweden) should also be an option, as a last resort to combat price gouging — and to deal with shortages that have left hospitals scrounging for basic essentials like IV fluids and post-op pain medications as commercial manufacturers have faltered.

But regardless of who funds drug development, we also need to raise the standards for evaluating and approving drugs, which neither this administration nor its predecessors have shown an interest in doing. In recent years, expedited drug development pathways and downgraded standards of evidence have left us in the dark about how well many new drugs work — or even if they really work at all. Rushing new drugs to market based on shoddy research serves the industry, not patients. A study of recently approved cancer drugs in JAMA Internal Medicine found a majority of these drugs won approval on the basis of “surrogate endpoints,” like imaging findings, that frequently don’t translate into better health. Disturbingly, on follow-up, more than half of the drugs were never shown to improve survival.

That problem won’t get better unless we upgrade the FDA’s standards for approving new drugs. Drugmakers should be required to prove that new medicines improve the length or quality of life over and above existing treatments. Industry funding of the FDA — which began in 1993 and appears to have led to an increase in the approval of unsafe drugs — should end, and the agency should be fully publicly funded.

Even if reforms like these bring us lower prices and higher quality drugs, it won’t mean much for patients who can’t access them. For the more than 28 million uninsured Americans, medicines are often entirely out of reach — a problem that would be exacerbated by Trump’s Obamacare repeal efforts. And even for those who are insured, drug co-pays and deductibles force difficult — and unnecessary — choices between filling prescriptions and paying for other necessities.

Fortunately, there’s a simple solution: universal single-payer coverage without drug co-pays or deductibles. It’s how things work in Wales, Scotland and Northern Ireland (where it has proved entirely financially feasible), and it’s the only way to ensure nobody has to make a decision between their money and their life.

Our proposals for reform are ambitious. But the deep-seated problems in our pharmaceutical system demand a vigorous response, not the paltry half-measures Trump has proposed. Lives are at stake.

Dr. Adam Gaffney is an instructor in medicine at Harvard Medical School and a pulmonary and critical care physician at the Cambridge Health Alliance and serves on the board of directors of Physicians for a National Health Program.

https://www.washingtonpost.com…

Dr. Paul Song: The Great Debate

PNHP-CA president Dr. Paul Song participated in a single-payer debate at the Commonwealth Club of California on May 23, 2018. He was joined by Micah Weinberg (Bay Area Council Economic Institute) and Mark Zitter (Zetema Project) to discuss SB 562 and the virtues of single-payer vs. multi-payer systems.

California’s success still leaves over 1 million eligible uninsured

Older Californians Struggle to Afford Lowest-Cost Plans on Covered California

California Health Care Foundation, May 14, 2018

Under the Affordable Care Act (ACA) California has now covered 93% of our adult population — a record high. Federal ACA subsidies through Covered California have made coverage more affordable for hundreds of thousands of Californians. The ACA further protected consumers’ finances by requiring insurers to pay a minimum level of medical expenses and by outlawing annual and lifetime caps on what insurers pay for care. However, 1.2 million Californians are eligible to purchase coverage on Covered California but remain uninsured, mainly because of cost.

Older Californians who aren’t covered by an employer or by Medi-Cal or Medicare, and who earn just above the maximum income to qualify for federal ACA subsidies (400% of the federal poverty level [FPL] — approximately $48,000 for an individual, $65,000 for a couple), may find it especially challenging to find affordable plans. For example, to purchase the lowest-cost bronze plan on Covered California:

* A 55-year-old single consumer earning $48,361 (401% FPL) would spend between 10% and 15% of her income on premiums, depending on where she lived.

* A 55-year-old married couple earning $65, 122 (401% FPL for a family of two) would pay between 15% and 22% of their income on premiums.

As consumers age, premiums increase:

* A 64-year-old earning $48,361 would pay between 13% and 20% of his income on premiums.

* A 64-year-old married couple earning $65,122 would pay between 20% and 30% of their income on premiums.

In addition, bronze plans come with a $6,300 deductible for individual policies and a $12,600 deductible for family policies.

https://www.chcf.org…

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Comment:

By Don McCanne, M.D.

California has done a phenomenal job in implementing the Affordable Care Act and has gone beyond the federal requirements in an effort to further expand coverage. Yet 1.2 million Californians who are eligible to purchase coverage on Covered California remain uninsured, mainly because of cost.

Look at the numbers above. Not only are the premiums unaffordable for many of those who earn too much to qualify for subsidies – requiring up to 30 percent of income – but those premiums purchase only low actuarial bronze plans (60% AV) which require additional payments of an average of 40 percent of the costs of care received.

It is not California’s fault nor the fault of any other state that is trying to make the system work. It is the fault of Congress and the administration for refusing to enact a health financing infrastructure that would work well for everyone, not just in California but in the entire nation. But sadly, not only is there inertia on reform that would work, the President and many members of Congress would actually pare back further the inadequate coverage we do have, leaving even more uninsured or underinsured.

We could provide everyone with all essential health care services with no cost sharing barriers without increasing our national health expenditures above their current level merely by enacting a well designed, single payer improved Medicare for all. We are already paying for it; we should have it. But to get there we will have to replace Congress and the administration with competent, caring public stewards.

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Providers representing patients as proxy consumers – What?

Beyond Utilization: Reimagining Providers As Consumers To Promote Hospital Price Competition

By Dhruv Khullar, Amitabh Chandra, Rahul Rajkumar
Health Affairs Blog, May 18, 2018

Spending on hospital care accounts for one-third of US health care expenditures, or $1.1 trillion—a sum that exceeds total medical spending for all health care goods and services in some other high-income countries.

While total spending on health care services is a product of how many services we use and how much we pay for each, most efforts to limit cost growth have focused primarily on reducing the delivery of unnecessary or low-value care; there has been relatively little attention given to reducing the level of prices. But higher prices—not necessarily higher rates of utilization—drive excess spending in the United States.

Accountable care organizations (ACOs) have been a major focus of delivery system reform, proposed as a way to promote high-value care and reduce costs. ACOs may encourage integration of care, shift spending toward important non-clinical services (for example, care management), and discourage delivery of unnecessary services. But they have yet to produce substantial cost savings and are unlikely to directly confront the fundamental problem of high prices.

One reason ACOs have thus far generated limited savings may be that they attempt to organize and provide all care within their network of providers. This may allow for better care integration and coordination, but it prevents them from taking advantage of providers outside the ACO who may be able to deliver lower-price, high-quality care because of their greater specialization. We can address this problem if we reimagine ACOs—along with other delivery system innovations such as medical homes—as consumers, with more sophistication, incentive, and bargaining power than patients. Conceptualized this way, ACOs can encourage competition among bundlers of hospital care and help lower prices.

Barriers To Hospital Price Competition And The Limits Of Patient Consumerism

In most industries, consumers apply competitive pressure on vendors to reduce the price and improve the quality of available products. But in health care, the ability of patients to shop effectively and create meaningful competition among providers is limited. This is particularly true for hospital care, for which prices vary widely across the country with little relation to outcomes. Can consumerism work when it comes to hospital care? And can ACOs be part of the solution?

Two principal factors prevent patients from functioning as traditional consumers. First, hospital care is not organized into well-defined, easily understood, clinically meaningful units. Instead, each service is billed for separately, and a complex menu of “charges” for thousands of individual billing codes—entirely divorced from outcomes—makes it difficult to shop for episodes such as childbirth, joint replacement, or treatment of coronary artery disease.

Second, health insurance largely insulates patients from costs, so they are not well-positioned to apply competitive pressure on hospitals for expensive care. Because most hospital spending occurs above out-of-pocket maximums, high-deductible plans are unlikely to help. Even below the deductible, it is not clear that patients shop effectively for health care services.

These two forces—opaque pricing and poorly incented patients—constrain the ability of markets to take on a growing challenge: Prices for hospital services are often not the result of competition among providers. Public payers generally use regulated prices, which offer similar prices to high- and low-quality hospitals. For private payers, prices are largely determined by hospitals’ bargaining leverage, which is problematic in rural areas, in markets where hospitals have considerable brand identity and clout, and in regions with substantial hospital consolidation.

Bundled Payments As A Path To Greater Pricing Competition

What Is The Product Being Delivered?

Bundles include care for the full cycle of a well-defined medical condition and offer several advantages over traditional ways of organizing care: They capture the receipt of care for the duration of a medical episode; they put delivery of effective care largely within the control of providers; and they mimic how consumers generally purchase goods and services in other industries.

How Are Prices Determined?

Bundling services allows for more competitive pricing than ACOs and similar approaches through two channels. First, more providers can compete on a given bundle than can compete to assume responsibility for a large population. Smaller hospitals and ambulatory surgical centers, for example, can offer bundles to compete with larger, incumbent hospitals on specific services but are unlikely to have the capital and scale to compete on all services.

Second, if bundles are standardized by private or public payers—and price and outcomes data are publicly reported—insurers, ACOs, and patients can more effectively compare service delivery cost and quality across providers.

Who Is The Consumer?

Bundled payments allow ACOs and medical homes to function as consumers. ACO providers, usually primary care physicians, often engage other providers to deliver specialized care and must evaluate the price and quality of the services they offer patients. ACOs are in a better position to identify high-value services than are individual patients and could facilitate price competition among contracting providers.

Current iterations of bundled payments take steps toward achieving these goals, but there is more to be done. Medicare bundles are mostly administered retrospectively, so physicians still report fee-for-service claims, which does little to disrupt existing practice patterns.

Future iterations of bundled payments may allow for greater use of complementary pricing initiatives, such as reference pricing, by which payers agree to pay a set price for a bundle and additional costs are borne by consumers.

Bundled services could also allow for expanding Medicare’s competitive bidding program, which currently only includes certain medical equipment and supplies, to include Medicare Part B services offered by providers competing on bundles.

Combining bundles with ACOs and medical homes also allows for progress on some traditional challenges with bundles. For example, it is not clear how bundles should be structured for preventive and primary care services, or for comorbid chronic disease management. Moreover, while bundles encourage care efficiency within the bundle, they do not limit the total number of bundles. However, a payment structure that funds difficult-to-bundle care through capitated payments to physician-led ACOs and medical homes—and gives them the option to shop for and purchase hospital care using bundles—may mitigate these problems and lower the cost of care.

Bundles still need refinement. As with other payment models, risk adjustment and outcomes measurement are challenges. Dividing a single bundled payment among several providers can be difficult, and bundling hospital and postacute care, physician and nursing care, and drugs and devices will require large organizational changes within hospitals and investments in cost accounting. Nevertheless, expanded use of bundled payments is a potential path toward greater price competition for hospital services. Bundles have often been thought of as a mechanism to integrate care, but their greatest impact may be increasing the number of providers in the health care markets, and redefining and strengthening the role of the consumer.

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Published Comment:

By Stephen Kemble, M.D.

Two problems with this proposal:

1. Bundles incentivize delivering more bundles of care for low risk patients, which can mean more unnecessary care.

2. The majority of health care is not in the form of discrete episodes of care for acute conditions or specific procedures. It is for care of chronic conditions for which there are no clear end-points for starting and ending a bundle.

I believe the whole idea of trying to control prices via competition is not likely to work. For one thing, in many markets, including rural and poverty areas with a high percentage of Medicaid and uninsured patients, hospitals are already losing money and can’t afford to reduce prices. We should be focusing on reducing administrative cost and burdens combined with price controls, instead of competition, if we want to reduce prices without destroying care for large segments of the population, including those who are poor, chronically ill, or elderly, and who need care the most.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

The policy community remains obsessed with the concept of using competition to harness the power of the consumer in order to bring under control our high health care prices in the United States. The record to date demonstrates the utter failure of this approach, but that does not keep them from trying, no matter how lame their various proposed innovations.

Today’s proposal acknowledges that patients do not function well as consumers in the health care environment, But to save the concept of consumerism, they suggest that the health care providers consolidate, bundle together what can be bundled, while clumping together difficult-to-bundle care as ACOs or medical homes, and then delegating themselves as consumers of their own bundled services, serving as proxies for their patient-consumers. Egad!

Our colleague, Stephen Kemble, in his posted comment, sees through this policy smokescreen. In spite of all the talk about bundling care, most care does not package into neat bundles. Second, the providers that do have bundles to sell want to sell more of them when it is not only prices but also quantity that determines the total health care spending.

Kemble’s most important point is that, instead of relying on competition, “we should be focusing on reducing administrative cost and burdens combined with price controls.” Administrative waste and high prices have been proven to be the two greatest sources of recoverable waste in our runaway health care spending. Competition has not controlled them; in fact, the markets have only made them worse.

It is astonishing that these market ideologues do not acknowledge the beneficial health financing policies that are just outside their box – automatic lifetime coverage for everyone prepaid through equitable, public financing, in a system that is publicly administered far more efficiently than with our fragmented, multi-payer system. Maybe someone should attach a door knocker onto their box so we can get their attention.

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Richard Painter on single payer Medicare for all

'I've been a pain in the rear for the Republican Party': A conversation with Richard Painter

By David M. Perry
Pacific Standard, May 17, 2018

Excerpts

A few weeks ago, Richard Painter shocked the Minnesota political establishment by declaring that he would run for the United States Senate as a Democrat. Painter was the White House ethics lawyer under President George W. Bush and has become widely known as a centrist Republican commentator, in his own writing and on media outlets such as MSNBC. He’s now a professor of corporate law at the University of Minnesota. It was no surprise when he announced an exploratory committee to compete for the Senate seat vacated by Al Franken earlier this year, but no one seems to have guessed that he’d switch parties.

Right now, in addition to his long-running criticisms of President Donald Trump, Painter is challenging Minnesota Senator Tina Smith from the left on health care, the environment, and corporate partnerships, especially over the new NFL stadium in Minneapolis. Smith was lieutenant governor of Minnesota before Governor Mark Dayton appointed her to replace Al Franken after the latter’s resignation last December.

I recently sat down with Painter in a suburban coffee shop in Eagan, Minnesota.

David Perry: I’d like to start by asking you to tell me the story of how you decided to run as a Democrat.

Richard Painter: I have a paper trail that goes back to at least 1994. I’ve been writing, and that’s what professors do. I challenge people to find an issue that I’ve really made a substantial change on. I recognize new evidence, for example, of even worse behavior in the banking sector than what I talked about in 1994. But because I worked for President Bush as the ethics lawyer, people assume that somehow everything else that was going on [then] was things that I would agree with.

DP: So you haven’t always been in lockstep with everything in the Republican Party platform?

RP: There are quite a lot of differences. I have tended to speak out on the issues that are in the purview of my professional expertise—business ethics, corporate ethics, and government ethics. Until recently, I didn’t get into what I think is the best health-care system, weighing in on abortion or something. In the past year or two, I started to weigh in on a lot of issues. People assume that, because the Republican president that I worked for had a different position on those issues, that back then I had a different position. That’s just not the case. The whole paper trail is there.

DP: I’d love to hear more about your recent decision to run as a Democrat for the Senate, especially when everyone else was assuming you’d run as a Never-Trump Republican. Can you take me into that decision?

RP: When I actually go to take public positions on issues, and you go down the issues, the Republican Party has moved dramatically from where they were in earlier times. On environmental issues, on women’s reproductive health, on a military spending, we can go through issue after issue after issue where the Republican Party—and it’s a trend that started in 1980 with [President Ronald] Reagan, but it’s accelerated even it it weren’t for Trump—I’m running on a platform that’s very different.

DP: Let’s talk a little about those issues. You’ve come out for single-payer health care, and even used the issue as a way to attack Senator Smith from her left. What does single payer mean to you? If you had the power to create a health-care system, what would you do?

RP: I think it’s in the interest of the consumer and also the small business owner to ask the question: How do we get the highest-quality health care for the best price? And also [how to] not have health-care issues interfere with the ability to start businesses? Right now, when you connect the employment relationship with health care, that means the big business has an enormous advantage over the small business. It makes no sense to connect those two. Why should health care be linked to your job?

DP: So what’s the better solution?

RP: The advantage of having a single-payer system is that there’s negotiating power vis-Ă -vis providers, drug companies, medical device companies. So I’m looking at it from an efficiency vantage point. I want best quality for best price.

DP: Debates around the best kind of single-payer usually identify one of three models. There’s Medicare for All. There’s the public option model. And there’s the Obamacare exchanges plus subsidies model.

RP: I like Medicare for All. The advantage of Medicare for All, and we might not be able to do it right away, [but in] the ideal system, your employer would have nothing to do with your health care, just like your employer has nothing to do with your kids’ education. Your employer doesn’t send your kids to school. Your kids’ health care shouldn’t depend on your employer. So we separate that relationship.

And of course that may relieve the employer of a lot of expense, so we may have to raise taxes to do it, OK! You gotta find the money somewhere, but employers then would not have to pay this extra amount of money [on health care]. We would separate out the employment relationship from health care and use tax revenue, but does it matter whether I pay higher taxes or I have to pay an insurance company?

That’s issue No. 1. Two is negotiating power to cut costs. You remove all those insurance company execs who are making a lot of money. Granted, this single-payer [system] is gonna have to pay people, but I don’t think you’d pay them as much as the big insurance companies.

DP: It’s not a stock option-based system.

RP: You don’t have the stock and the stock options and the advertising and the legal costs and everything. A lot of the costs that are in the current system are the insurance companies competing against the other. The time it takes for consumers to compare all these different options—you say competition is good, but it’s time comparing insurance options. What you should be doing is comparing doctors.

Now let’s talk about the drug companies and medical device companies.

DP: You’ve been critical of Senator Smith on her support for repealing the Obamacare medical device tax and her support from the chief executive officer of the medical device company Medtronic.

RP: We’ve made enormous advances, but at a certain point, Americans are paying for most of it. The rest of the world gets the medical devices and the drugs for maybe a third of the prices we do. A lot of the money is going to stock options and the investors and the executives, not going to research and development.

DP: So what’s the solution?

RP: I think the single payer negotiates with the drug companies. It’s negotiating power, it’s the ability to get those prices down. To say, for this medical device, this is the price that’s being paid; for this drug, this is the price we’re gonna pay. Which is exactly what Canada is doing and every other country is doing, all the industrialized countries. In the United States, we’re paying two or three times as much.

DP: Let’s talk about connections between health care and other issues of workers and work. What are your thoughts around these more fundamental issues of labor, economic well-being, the Supplemental Nutrition Assistance Program, and food security? Where do you fall on these positions?

RP: First of all you take health care out of the equation [by instituting single payer], so people don’t have to worry about that. That’s going to help a lot. Then we talk about what’s left. Certainly childhood nutrition, that’s the kind of thing the government ought to be spending on. I am very much focused on government doing what government should do and do it well. So: Nutrition for children [is] absolutely critical. We ought to be doing a lot more than we currently do with SNAP, like school lunches and breakfasts and other meals for children. That’s a useful role for government.

DP: So philosophically, it sounds like you’re pretty aggressive in terms of using the power of government to set tax policy, to set minimum wages, to create subsidies, and otherwise to intervene pretty strongly to bring everyone up to a basic level.

RP: I would tend to have more spending on education and health care and food assistance—critical functions of government. I’m going to be exercising a lot of scrutiny over both defense spending and large-scale infrastructure projects. I wanna see roads repaired. I wanna see bridges repaired. I wanna see more mass transportation, particularly electric busses. I’m gonna be looking very carefully at very large-scale rail projects.

DP: Last question: You’re running now as a Democrat. You’re running to get a nomination of a party that you haven’t been a part of. You’re running against a lieutenant governor who by all accounts has done a good job helping Governor Dayton shepherd Minnesota to a much better place than where it was eight years ago. What happens if you lose, or if you don’t get the nomination? Are you going to continue to be a Democrat? To vote for Democrats and support Democrats?

RP: I don’t see Republicans on the ballot for federal office, this year, in any state, who should get support. They have all fallen in line behind President Trump. I think it’s critical to our democracy. This isn’t about being a Democrat; I’m an American before party. I’ve been a pain in the rear for the Republican Party, and if I were to continue to be involved in the Democratic Party, I will continue to be a pain in the rear on campaign finance, health care, the environment. I’m not interested in party loyalty issues. I’m interested in policy, in issues, and the right thing to do.

https://psmag.com…

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Comment:

By Don McCanne, M.D.

Richard Painter’s lesson for us? It’s not about party. It’s about policy and ethics. It’s about the right thing to do.

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

Healing an ailing pharmaceutical system: prescription for reform for U.S. and Canada

Our pharmaceutical systems are broken, and only fundamental reform can ensure universal access to safer, more innovative, and more affordable drugs

By Adam Gaffney, instructor in medicine, Harvard; Joel Lexchin, professor emeritus, York; US, Canadian Pharmaceutical Policy Reform Working Group
BMJ, May 17, 2018

Key messages

The US and Canadian pharmaceutical systems are dysfunctional

Costs are exorbitant, commercial goals distort drug development, misleading promotion fosters misuse, and medications are too often unaffordable for patients

We propose reforms that would provide universal drug coverage without fees at the point of use while reducing prices through negotiations with drug firms and, when needed, compulsory generic manufacture

Innovation would be enhanced through patent reform and by establishing new public agencies to fund drug development and clinical trials

Drug safety, efficacy, and prescribing quality would be improved by raising standards for approval and safety monitoring

While the proposals face formidable political obstacles, a popular mandate exists for pharmaceutical reform in both nations

Drugs are among medicine’s most powerful tools. Yet the pharmaceutical systems of the United States and Canada are mired in dysfunction. The industry’s pricing practices—charging whatever the market will bear, especially in the US—strain budgets and put vital medicines out of reach for many patients. Despite some notable advances, the industry’s overall rate of real innovation remains incommensurate with our vast drug spending; many new drugs are marketed each year but few represent substantial clinical improvements. And commercial imperatives distort drug trials, research priorities, and drug regulation.

While many recognize the need for change, proposed remedies vary and would fall short of achieving the fundamental reform that these deficiencies call for. The advocacy organization Physicians for a National Health Program therefore encouraged a working group of US and Canadian doctors, scholars, and advocates (the US/Canadian Pharmaceutical Policy Reform Working Group) to come together to craft a wide ranging reform proposal for both nations.

Although some of our recommendations could be implemented within the existing US healthcare financing framework, full implementation would require a universal single payer system. Canada already has a single payer system but it would still require reforms because the system fully covers hospital and doctors’ services but not drugs out of hospital.

Our proposal rests on six principles

• Medical needs, not financial means, should determine access to medications

• Drugs must be affordable to society

• Drug development should be geared toward real innovation that maximizes population health

• The human right to health must take precedence over intellectual property rights (patents)

• The safety and effectiveness of medications must be independently and rigorously evaluated

• Comprehensive and unbiased information on drugs should be available to prescribers and patients.

Achieving change

Jonas Salk, inventor of the polio vaccine, eschewed patenting, declaring: “Could you patent the sun?” Today, in contrast, profiteering too often reigns, to the detriment of population health.

Our proposal calls for a fundamental reorientation of drug policy: it would make drugs more affordable for patients and society, promote innovation, strengthen efforts to assure the safety and effectiveness of medications, and upgrade the evidence available to prescribers and the public. Because drugs developed through the proposed new public pathways would remain in the public domain, they could be produced generically throughout the world, benefiting many nations.

The reforms we advocate face formidable political opposition, especially from drug firms, which made total profits of $67.7bn in 2016. However, most Americans—both Democrats and Republicans—now favor government action to lower drug prices, and 91% of Canadians support a universal pharmaceutical benefit. These are unmistakable popular mandates for change. The trail from sentiment to policy will doubtless be arduous. Yet history is replete with examples of sweeping reforms—often enabled by unpredictable shifts in political circumstances—that overcame entrenched interests. We aim with this proposal to provide a blueprint for reform that anticipates—and may kindle—transformative changes in our nations’ pharmaceutical systems.

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For the full proposal as published in BMJ:
PNHP: https://pnhp.org/pharma
or BMJ: https://www.bmj.com…

For PNHP’s press release (identifies the seven critical areas for reform):
https://pnhp.org…

For an economic analysis and supplemental materials:
https://pnhp.org/pharmatables

For a 2 minute video introduction and media coverage of the proposal:
https://pnhp.org/pharmamedia

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Comment:

By Don McCanne, M.D.

Physicians for a National Health Program (PNHP) and Canadian Doctors for Medicare have produced a comprehensive reform proposal for pharmaceuticals which would make essential drugs accessible and affordable for everyone.

This proposal could not be more timely. Last week President Trump delivered his long-awaited speech on his proposal to supposedly control price gouging of drugs. Pharmaceutical stock prices immediately spiked – a response confirming that Trump supports Big Pharma while neglecting patients desperately in need of therapeutic drugs.

Let’s let the people of the United States and Canada know that there is a way that we can fix this problem. Share this great news with others.

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

Doctors in U.S. and Canada launch sweeping pharmaceutical reform proposal

Plan published today in the British Medical Journal outlines seven steps to slash costs, improve access, and increase safety of prescription medications in both nations

FOR IMMEDIATE RELEASE, May 17, 2018

Contact: Clare Fauke, Physicians for a National Health Program, clare@pnhp.org or 312-782-6006

WASHINGTON, D.C. — The skyrocketing cost of prescription medications is one of the biggest concerns for American voters. However, in his proposal last Friday, President Donald Trump failed to offer any new policies that would expand access, reduce costs, or increase the safety and efficacy of prescriptions.

Today, a group of 21 prominent experts published a comprehensive proposal to ensure universal access to safe, innovative, and affordable medications. “Healing an ailing pharmaceutical system: prescription for reform for the U.S. and Canada,” identifies seven critical areas for reform, along with both short- and long-term solutions to improve the development, approval process, affordability, and marketing of medications:

1. Access: Even insured patients face high out-of-pocket costs, leaving them unable to fill prescriptions. To achieve universal access, the proposal calls on the U.S. and Canada to establish national formularies of the safest, most effective, and least expensive medications, and provide all residents with full coverage of formulary drugs without copays or deductibles.

2. Affordability: The industry’s pricing strategy is to charge whatever the market will bear, regardless of the actual cost of development. As a result, the U.S. spends about twice as much per-capita on prescriptions than any other nation. Under this proposal, public agencies would negotiate with manufacturers to make branded medications more affordable, and if negotiations fail, issue a “compulsory license” to allow generic manufacturing. The U.S. and Canadian governments also would create a publicly owned manufacturing capacity to produce needed products, along with an increase in public funding for the development of non-patented medications.

3. Preclinical development and patent protection: The current patent system encourages the development of “me-too” products that offer only trivial modifications and higher costs. Under this proposal, patents would be limited to medications that provide real innovation. While current law allows publicly funded researchers to patent and sell their discoveries to private firms, this proposal would keep publicly funded research in the public domain. The plan also calls for health agencies to fund a new public research program to develop and test new treatments outside of the patent system, prioritizing medications with high clinical value, and for conditions deemed unprofitable and ignored by the industry. Such treatments could be sold cheaply as generics as soon as they are brought to market.

4. Clinical testing: Most clinical trials are conducted by private firms, often using unsound methods and selective reporting, calling into question the objectivity of research and the usefulness and safety of new therapies. Corporate ownership of trial data can hide safety problems and obstruct further research. The proposal calls on approval agencies to increase standards for clinical trials and increase transparency by making all trial data publicly available. Experts believe that most clinical trials should be funded and supervised by public health agencies to maintain safety standards and to facilitate innovation for needed treatments.

5. Approval reform: Regulatory agencies are funded primarily by industry fees, creating conflicts of interest. Too many unsafe products are approved, and the increased use of “expedited reviews” and weaker standards of evidence threatens to bring more unsafe or ineffective products to market. This proposal would strengthen regulators’ independence by funding them exclusively with public funds. Approval agencies would strictly limit expedited reviews and the use of surrogate endpoints only to treatments likely to offer genuine clinical advances.

6. Postmarketing surveillance: Due to weakening of the approval process, postmarket studies are critical to confirm the efficacy and safety of medications already in use. However, regulators fail to penalize firms that don’t complete them. The proposal would require that companies promptly perform and submit safety studies after their products are on the market, increase regulators’ funding for postmarketing surveillance, and give regulators the power to order safety warnings and remove unsafe therapies from the market.

7. Promotion: Pharmaceutical corporations spend more on marketing than on research and development, and promotional materials often include inaccurate or misleading claims. This proposal would improve monitoring and stiffen sanctions for misleading or off-label promotions. Companies would be prohibited from funding continuing medical education programs for providers.

“Our pharmaceutical system prioritizes industry profits over public health, but it doesn’t have to be this way,” said Dr. Adam Gaffney, a critical care physician and faculty member at Harvard Medical School, and co-chair of the Pharmaceutical Reform Working Group. “Through a series of commonsense reforms, we can increase the affordability, safety, and effectiveness of medicine for our patients.”

Dr. Gaffney warned that combating the power of major pharmaceutical firms won’t be easy, noting that the industry spent a combined $171 million on lobbying last year. “Every year we wait for reform means another spike in medication prices,” he said.

“The pharmaceutical industry directly funds the regulating arm of the FDA, and paid more than $800 million in user fees in 2017,” said Dr. Sidney Wolfe, founder of Public Citizen’s Health Research Group. “The FDA’s independence is too important to expose to the influence and money of the industry.”

Dr. Wolfe added that increasing affordability of lifesaving therapies should be a national priority. “Lack of access to medicines results in preventable deaths and serious illness to hundreds of thousands of patients a year,” he said.

Rep. Keith Ellison (D-Minn.) encouraged his colleagues in Congress to take action. ”The outrageous cost of prescription drugs in this country is a crisis that the American people feel every day,” he said. “There are real solutions we can implement that we know will lower drug prices and save lives, but what we lack right now, and what we need, is the political will from those in Congress and other elected officials to do the right thing and stand up to the greed of Big Pharma.”

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“Healing an ailing pharmaceutical system: prescription for reform for U.S. and Canada,” by Adam Gaffney, M.D., and Joel Lexchin, M.S., M.D., British Medical Journal, went online today (May 17, 2018). The writing committee includes Marcia Angell, M.D., Michael Carome, M.D., Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D., Gordon Schiff, M.D., and Sidney Wolfe, M.D.

The full proposal and supplemental materials can be found at www.pnhp.org/pharma.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 22,000 members support single-payer national health insurance.