PNHP

U.S. hospitals burdened by high administrative costs

U.S. hospitals burdened by high administrative costs

By Dr. Steffie Woolhandler
Modern Healthcare, September 13, 2014

When I was a kid in Shreveport, La., my father was chief of radiology at the local hospital. He also ran the hospital and supervised the cafeteria. Today he’d be the COO.

Now hospital administration takes a village. And that’s not a good thing.

Hospital administration cost the U.S. $215 billion in 2011. Other nations administer modern, first-class hospitals for far less. 

A study by our international team just published in Health Affairs found that administration consumed 25.3% of U.S. hospital budgets—1.43% of GDP (up from 0.98% in 2000), or $667 per capita. Canada spent $158, Scotland $164, England $225 and The Netherlands $325. If U.S. hospitals ran as efficiently as Canada’s or Scotland’s, the average family of four would save $2,000 annually on health costs. 

Not surprisingly, administrative costs were highest where hospitals must cope with a multitude of insurers, with varying copayments, rates and regulations. Canada and Scotland—where costs are lowest—have single-payer systems that pay hospitals a lump-sum budget, the way we fund fire stations. And like fire departments, their hospitals don’t collect from each victim of misfortune.

But payment complexity isn’t the only cost driver. Canadian and Scottish hospital administrators don’t have to play financial games that generate profits. Government grants, rather than capital markets or accumulated surpluses, fund new buildings and equipment. Even in Germany and France—which have multi-payer systems—administrative costs remain modest because government grants fund most hospital capital.

In contrast, as England has forced hospitals to seek profits in an increasingly market-oriented system, administrative costs have soared. And administrative costs in the Netherlands, which is implementing radical market-based reforms, are second only to ours.

Our findings challenge conventional wisdom that market discipline leads to hospital efficiency. Within the U.S., for-profit hospitals spend less than not-for-profits on clinical personnel like nurses, yet have higher total and administrative costs. Internationally, hospital efficiency is best in nations shunning market forces.

Accountable care organizations that force hospitals to behave like insurance companies won’t streamline administration. But a single-payer reform could realize vast savings on administration and redirect them to improved coverage and care. 

Dr. Steffie Woolhandler is a co-founder of Physicians for a National Health Program and a professor at the City University of New York’s School of Public Health at Hunter College.

Obamacare not enough, so some in labor want single-payer system; forum Sept. 13

By Olivera Perkins
The Plain Dealer (Cleveland), Sept. 12, 2014

CLEVELAND, Ohio – When many in the labor movement speak about health care reform they are not talking about Obamacare, but a single-payer system.

“It has been a historic goal of the labor movement to establish a Medicare for all, single-payer system in the U.S., just like almost every industrialized country in the world,” said Mark Dudzic, national coordinator for the Labor Campaign for Single Payer. “The labor movement, we believe, has to be in the forefront of the fight, if we are going to win that.”

Dudzic is one of the speakers in a forum tomorrow (Sept. 13) being sponsored by his Washington, D.C.-based group and the Single Payer Action Network of Ohio, or SPAN, which is lobbying for instituting such a health care system in Ohio. The event is scheduled for 2 to 4 p.m. at the North Shore AFL-CIO Federation of Labor, 3250 Euclid Ave., in Cleveland.

Those supporting single payer emphasize that they are not seeking a publicly funded system run by the government, in which health care workers would be public employees. Instead, they want one more like Medicare, in which users would go to private doctors, using public money to pay the bills. Supporters say one of the reasons such a system would cost less to operate is that administrative costs associated with a private insurance system would be gone.

Dudzic said single-payer advocates lobbied for the system’s adoption as Congress was considering the Affordable Care Act, also known as Obamacare. He believes the passage of ACA, has left more people open to single payer.

“It is a mass of contradictions,” he said of ACA.” On one hand, the Affordable Care Act expands health insurance coverage to millions more Americans, but it doesn’t control costs.

“In some ways, it models the dysfunctionality of the for-profit health care system,” Dudzic said. “It makes health care more of an individual responsibility than a social right that is inherent. It makes the individual responsible for paying for health insurance. It provides access to health insurance, but not access to affordable health care. That is a big difference between it and single payer.”

It is not that he doesn’t like the ACA, Dudzic believes it just doesn’t go far enough.

“Let me make it very clear,” he said. “No one we work with is calling for the repeal of the Affordable Care Act. We ought to finish the job by getting single payer.”

Many disagree single payer will be cheaper and allow better access to health care than a private insurance system. Ryan Thorn, president of the National Association of Health Underwriters, said health care costs need to be brought under control, but there are better options for doing this than a single-payer system.

He said if health care providers were required to tell consumers the cost of services and procedures before they were rendered, competition would lower medical costs. Thorn said, things being equal, most consumers would opt for providers with the most affordable prices.

“One important way to control costs is through transparency,” he said. “Health care is one of the only commodities in America in which nobody has a clue as to what it is gong to cost until you get the bill.

“We believe competition is a good thing,” he said. “Competition, in most cases, will help keep control of costs. Competition keeps technology sharp.”

Thorn said when single-payer advocates say they want the U.S. to have a health care system similar to that of other industrial nations, they are seeking to replace what has historically existed here with a lesser system.

“In most countries that have single payer, you will find a rationing of care,” Thorn said. “It works great as long as you’re healthy, but when you become sick, then you are going to be thinking twice about single payer.”

Debbie Silverstein, state director of SPAN, which is trying to get single payer in Ohio, said such efforts so far haven’t gained traction. A bill in the Ohio House and another in the state Senate, remain in committee — not evening having received hearings, she said.

“They are not taking these bills seriously,” Silverstein said of state legislators. “They are pretty much ignoring us.”

She said SPAN wants a universal health care system in Ohio, which could be publicly funded through such taxes as a payroll tax, a financial tax on investments and/or a sales tax. Beginning in 2017 – waivers — such as those associated with the ACA health insurance exchanges – could also help fund state single-payer systems, Silverstein said.

Thorn doubts if single payer would lower costs, but he is sure the system would raise taxes.

“As soon as the taxes are depleted, your health care is done until new taxes come in the door,” he said.

Like Silverstein, Dudzic believes interest in single payer will increase once waivers become available. So far, they say Vermont is the only state that has approved a single-payer system. While both advocates support single payer, they differ on whether ACA has become a vehicle for moving the country closer to single payer. Silverstein doesn’t see the connection. Dudzic does.

“There is buyers’ remorse,” he said of ACA.

For example, Dudzic said silver tier plans on the ACA exchanges have become the gold standard for coverage. He said unions who have negotiated coverage equivalent to gold or platinum tier plans, could risk facing a hefty tax because they offer more expensive coverage. Dudzic said this has made contract negotiations for many unions contentious.

Despite what he sees as an increasing desire for single payer, Dudzic said he doesn’t believe the fight to win it will be easy.

“We’re dealing with a gigantic, for-profit health care system that is a huge massive corporate power,” he said. “Anytime there is any attempt to change the health care system, so that it impacts their profits, that corporate power just mobilizes all of its resources.

“For every congressperson and senator, there are at least four people whose job it is — from the moment they get up everyday to the moment they go to bed — to ensure that no substantial change happens to the health care system,” Dudzic said.

Olivera Perkins is a staff writer at The Plain Dealer.

http://www.cleveland.com/business/index.ssf/2014/09/obamacare_not_enough_so_some_i.html

Some Covered California patients involuntary transferred to Medi-Cal

Income checks throw Californians off health plans

KCRA.com/AP,September 9, 2014

Some Californians who purchased individual health coverage through the state’s insurance exchange are suddenly being dropped or transferred to Medi-Cal, the program for the poor that fewer doctors and providers accept.

The changes are occurring as incomes are checked to verify the policyholders can purchase insurance through the exchange.

Officials at Covered California acknowledged that a number of people are being shifted around during income checks and eligibility updates.

“It will happen continually,” spokesman Dana Howard said.

This year, he said, the exchange adjusted its income eligibility scale when the federal government updated the poverty scale. As a result, Howard said, people near the thresholds are sometimes moved between private health plans and Medi-Cal. The checks might also determine that some people make too much money to receive a subsidy.

Evette Tsang, a Sacramento insurance agent, said some of her clients unexpectedly received Medi-Cal cards even though they were content with the plan they purchased through the exchange.

“There’s a lot of people who have never been on Medi-Cal, and they don’t want to. You hear the service is not as good, providers are not easy to find,” Tsang said.

http://www.kcra.com/news/income-checks-throw-californians-off-health-plans/27962242

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A California solution for a Medicaid quirk

Editorial, Los Angeles Times, September 9, 2014

The 2010 federal healthcare reform law required virtually all adult Americans to carry insurance, starting this year. And to help make policies affordable, it offered subsidies to lower-income households while expanding the Medicaid insurance program to more of the poorest residents. But there’s a key difference between those two groups: Only those in the Medicaid program may find their estates billed after they die to pay back some of the aid.

Most troubling, the new requirement to obtain coverage is prompting millions of Californians to sign up for Medi-Cal, where they are put in Medi-Cal’s version of an HMO. Only after they enrolled are they told that, if they are 55 or older, the state will seek to recover the value of the coverage from their estates. They could be in perfect health, receiving no medical care at all, but still be running up a bill that their estate will have to pay.

The California Legislature responded by passing a bill (SB 1124) that would stop Medi-Cal, the state’s version of Medicaid, from trying to collect repayment for routine medical care and insurance premiums. The measure now awaits action by Gov. Jerry Brown, whose Department of Finance opposes the bill because it would cost Medi-Cal an estimated $30 million a year.

http://www.latimes.com/opinion/editorials/la-ed-medi-cal-20140910-story.html

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What can be done about Covered California’s doctor gap?

Editorial, Los Angeles Times, September 8, 2014

A separate study of three rural counties by the California Health Report found that more than half of the doctors listed by Medi-Cal in those counties either were turning away new patients or couldn’t be reached by phone.

A related issue is whether the networks offered by health plans can actually deliver the coverage the plans promise.

Insurers say they’re taking the problem seriously, which should help both those who shop for individual policies and the growing ranks enrolled in managed-care plans through Medi-Cal.

http://www.latimes.com/opinion/editorials/la-ed-health-insurance-networks-20140908-story.html

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Comment:

By Don McCanne, MD

At the beginning of the health care reform process, we complained that the various factors in the proposed multi-payer model that would determine what health care coverage a person would have would be highly variable and would result in instability of health care coverage. The current experience in California provides an inkling of the extent of this problem.

Some who purchased plans through California’s ACA insurance exchange – Covered California – are losing that coverage when auditing demonstrates that income levels were not confirmed, income levels changed, or income eligibility levels changed because of updates in the federal poverty thresholds. Regardless, people were losing the coverage which they had selected, and became uninsured or moved to other private plans, or, in some cases, were involuntarily enrolled in Medi-Cal – California’s Medicaid program.

The latter is a particular problem. First, many of these people pride themselves on their self-sufficiency, even though they need to accept government subsidies so that they could afford the exchange plans. They understand that these subsidies are necessary, not for their own personal failings but simply because health care has become so expensive that the average worker can no longer bear the full costs. For these people, being forced into a welfare program – Medi-Cal – can be humiliating.

But what is even worse, the Medi-Cal ticket doesn’t automatically grant them admission to the health care system. Although there was already a shortage of physicians who would accept Medi-Cal patients, the lists of providers currently contain names of many physicians who are now turning away new Medi-Cal patients. Also, most of the newly eligible are being enrolled in Medi-Cal managed care plans when preliminary reports indicate that these plans do not have the capacity to carry the load.

Just to add further insult, those moved into Medi-Cal may have their estates billed to recover Medi-Cal costs, when there is no recovery process for subsidies provided for the Covered California exchange plans.

There are thousands of other reasons that coverage is unstable under the Affordable Care Act. In contrast, a single payer system provides the same comprehensive national health program for life. You can’t get much better stability than that.

The Havoc of the Unrestrained Drug Industry

By Ralph Nader
The Nader Page, Sept. 12, 2014

It is remarkable what very profitable drug companies—as they merge into fewer giant multinationals—continue to get away with by way of crony capitalism. Despite frequent exposure of misdeeds, the army of drug company lobbyists in Washington continues to gain political influence and rake in corporate welfare at the expense of taxpayers. The drug industry goes beyond crony capitalism when it then charges Americans the highest drug prices in the world.

Here is a short list of the honey pot produced by the lobbying muscle of the $300 billion a year pharmaceutical industry. It receives billions of dollars in tax credits for doing research and development that it should be doing anyway. Some companies reaped billions of dollars in revenues when they were granted exclusive rights to market a drug, such as Taxol, developed by the government’s National Institutes of Health (NIH). These corporations turn around and gouge patients without any price controls or royalties to NIH. (See http://keionline.org/ for more information.)

The pharmaceutical industry spends far more on marketing and advertising to physicians and patients than what it spends on research and development. More drug industry funds go to influencing politicians to prevent the implementation of price restraints on its staggering markups.

As Dr. Marcia Angell, the former editor of the New England Journal of Medicine wrote in her book, “The Truth About the Drug Companies,” “only a small fraction of its drugs are truly new; most are simply ‘me too’ variations on older drugs.” Dr. Angell charges that the industry is “primarily a marketing machine to sell drugs of dubious benefits, using its wealth and power to co-opt every institution that might stand in its way, including the U.S. Congress, the Food and Drug Administration, academic medical centers and the medical profession itself.” By the way, the drug industry is required by law to fund a large portion of the FDA’s drug review budget, which contributes to this weak regulatory oversight.

Katharine Greider points out in her book “The Big Fix: How the Pharmaceutical Industry Rips off American Consumers” that “Other countries move to control prices and sharply limit advertising.” This does not happen in the U.S. where many patients confront a “pay or die” system.

In recent years this stark choice has made headlines. New drugs, like Sovaldi for treating Hepatitis C, are costing consumers or taxpayers $84,000 for a full course of treatment or $1,000 a pill per day! The same drug treatment, according to the Washington Post, costs “$57,000 in Britain and just $900 in Egypt.” Other so-called “break-through” drugs are costing patients over $100,000 each a year and driving frantic health insurers and Medicaid managers up the wall.

Will competition bring prices down? Wall Street pharmaceutical analyst, Tim Anderson at Sanford C. Bernstein & Company, explains that this is not the case in a recent New York Times article. “He said that drug companies, while not colluding, ‘have all looked at each other and said, ‘None of us needs to compete on price if we just hold the line.’” The cause of competition was not helped when the drug company lobbyists used their campaign contributions and influence on Congress in 2003 to brazenly prohibit Uncle Sam from negotiating prices for the gigantic Medicare drug benefit program.

The financial rip-offs aren’t the only problems with the out-of-control drug industry. Federal law requires all approved drugs to be both “safe and effective.” The actual record has been shocking. The Public Citizen Health Research Group published three books – “Pills That Don’t Work” (1981), “Over The Counter Pills That Don’t Work” (1983), and “Worst Pills, Best Pills: A Consumer’s Guide to Avoiding Drug-Induced Death or Illness” (2005) – documenting hundreds of prescription and over-the-counter drugs that were not effective for their advertised purposes or had harmful side effects. Wide exposure to these findings, especially on the “Phil Donahue Show,” helped get many of these so-called medicines off the market.

Over the years, the government has fined drug companies billions of dollars for pushing unapproved uses of drugs. More perilously, drugs get approved prematurely and result in mass sickness and fatalities. This human toll takes an estimated 100,000 deaths a year in the U.S. from adverse effects of such drugs. For example, the drug Vioxx, sold by Merck & Co., Inc., as an anti-inflammatory drug, stayed on the market from 1999 to 2004 despite documented cardiovascular risks. According to the well-regarded medical journal Lancet, an estimated 88,000 Americans had heart attacks from taking Vioxx and 38,000 of them died.

Bextra, sold by Pfizer, Inc., another anti-inflammatory analgesic drug was approved by the FDA in 2001, and was then removed in 2005 because of concerns about increased risk of heart attacks and strokes, as well as serious, sometimes fatal skin reactions.

Rezulin, made by Parke-Davis/Warner Lambert, was approved by the FDA in 1997 and withdrawn in 2000 because the drug caused liver toxicity, having been linked to 63 liver-failure deaths.

Meridia, a weight-loss drug sold by Abbott Laboratories, was withdrawn by the company after thirteen years of sales because studies demonstrated that it increased the risk of adverse cardiovascular episodes, such as heart attacks, strokes and cardiac arrest.

These illustrations come from Public Citizen’s Health Research Group whose newsletter “Worst Pills, Best Pills News” has been reliably reporting these avoidable tragedies for many years.

There are other human and economic costs of the drug industry’s relentless sales pressure. Antibiotic resistance has been building up for half a century due to massive overuse of antibiotics both in humans and in edible farm animals. As a result, there are now lethal infections for which existing antibiotics are ineffective. And, inadequate warning labels have led to the misprescription of drugs and the use of drug combinations that have dangerous interactions.

Congress used to regularly investigate the drug companies when Senators like Estes Kefauver (D-Tenn.) and Gaylord Nelson (D-Wis.) were on Capitol Hill. Silence is now the norm. Even the drug company practice – to seek even more profits – of importing about eighty percent of the ingredients in our medicines from China and India, where public inspection regulations can be weak and the FDA has few inspectors, does not command the attention of our congressional representatives. About 100 Americans died in 2008 from a contaminated blood thinner called heparin imported from China.

So, next time you hear the talking heads from corporatist think tanks such as the American Enterprise Institute or the Heritage Foundation or their corporate allies demand “de-regulation,” consider what an inadequately regulated drug industry has already inflicted on millions of Americans.

https://blog.nader.org/2014/09/12/the-havoc-of-the-unrestrained-drug-industry/

Federal Reserve report on consumer finances

Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances

Federal Reserve Bulletin, September 2014

The Federal Reserve Board’s triennial Survey of Consumer Finances (SCF) collects information about family incomes, net worth, balance sheet components, credit use, and other financial outcomes. The 2013 SCF reveals substantial disparities in the evolution of income and net worth since the previous time the survey was conducted, in 2010.

Family incomes

  • Between 2010 and 2013, mean (overall average) family income rose 4 percent in real terms, but median income fell 5 percent, consistent with increasing income concentration during this period.
  • Families at the bottom of the income distribution saw continued substantial declines in average real incomes between 2010 and 2013, continuing the trend observed between the 2007 and 2010 surveys.
  • Families in the middle to upper-middle parts (between the 40th and 90th percentiles) of the income distribution saw little change in average real incomes between 2010 and 2013 and thus have failed to recover the losses experienced between 2007 and 2010.
  • Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013.
  • The differentials in average income growth between 2010 and 2013 are also observed for other family groupings in which large differences in income levels are observed, notably across education groups, by race and ethnicity, homeownership status, and levels of net worth.

Net worth

  • Consistent with income trends and differential holdings of housing and corporate equities, families at the bottom of the income distribution saw continued substantial declines in real net worth between 2010 and 2013, while those in the top half saw, on average, modest gains.
  • Ownership rates of housing and businesses fell substantially between 2010 and 2013.
  • Retirement plan participation in 2013 continued on the downward trajectory observed between the 2007 and 2010 surveys for families in the bottom half of the income distribution.
  • The decrease in stock ownership rates was most pronounced for the bottom half of the income distribution.

http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf

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Comment:

By Don McCanne, MD

The recovery of the economy has left behind everyone except the wealthy. Most individuals and families are less able to afford housing, education, retirement, vacations, college expenses, and, of especial concern to us, health care. Many economists believe that this may represent the new normal.

The public policies that we need to bring us all back on a solid footing are straightforward. But politics has resulted in the erection of almost impenetrable barriers. Just today the Senate reconfirmed the fact that billionaires are still free to buy our elections (and the billionaires have fared very well as the rest of us have been left behind). 

If we could improve just the financing of health care so that it is affordable for everyone, we would have taken one major step towards implementing the public policies that we need to more equitably share the gains in our economy. The Affordable Care Act falls far too short of the level of equitable health care financing that we need. The progressive financing that characterizes a single payer system would move us more dramatically in the right direction. Not only would everyone have health care, but we would be improving family incomes and net worth as well.

Policy is easy. But we really have to work on the politics. The billionaires can buy the souls of the politicians for only so long. Start sharpening your pitchforks (Hanauer).

Health dollars wasted

By William Babson Jr., M.D.
Bangor (Maine) Daily News, Letters, Sept. 11, 2014

A recent study of the hospital costs in eight different nations published in the September issue of Health Affairs has determined that hospital costs in the U.S. in 2011 were much greater than those in all of the nations studied. Lead author Dr. David Himmelstein, a professor at the CUNY/Hunter College School of Public Health and a lecturer at Harvard Medical School, stated, “We are squandering $150 billion each year on hospital bureaucracy and $300 billion is wasted every year on insurance companies’ overhead and the paperwork they inflict on doctors.” And our length of life and other parameters of the U.S. health care system are not as good as the seven other countries and many millions of Americans still have no or very limited insurance.

The evidence for a single payer health care system is getting stronger every day. We Americans simply have to become educated about why and how a single payer system works. Imagine that 450 billion of our “health care” dollars are spent needlessly and not on health care.

Dr. William Babson Jr. resides in Sinclair.

Thursday, Sept. 11, 2014: Hunger, health care, bears, domestic violence

Surprise In Mass. Primary: 21 Percent For Single-Payer Candidate Berwick

By Carey Goldberg
WBUR’s CommonHealth blog, Sept. 10, 2014

Note to politicians: Backing “Medicare for all” is looking less and less like electoral poison. If, deep in your heart, you believe American health care would be better off with a Canadian-style, single-payer system, you might now consider coming out of the closet. (In Democratic primaries in blue states, at least.)

That’s my suggested takeaway from the striking Massachusetts Democratic primary showing of Dr. Donald Berwick, who rocketed from near-zero name recognition among general voters to 21 percent at the polls. Catch him saying forcefully in this video: “Let’s take the step in health care that the rest of the country hasn’t had the guts to take: single payer. Medicare for all.”

Now, Vermont not only has a mainstream politician who backed a single-payer system — Gov. Peter Shumlin — it’s actually translating the idea into practice as we speak. But let’s put it this way: This seems to be the first time that a candidate in a mainstream political party in a state that is not a verdant utopian duchy has run on a single-payer platform. And though he did not defeat the longtime familiar faces, he did surprisingly well.

Of course, we knew that Massachusetts voters tend to like the idea of single payer. As recently as 2010, 14 fairly middle-of-the-road districts voted in favor of a non-binding ballot measurecalling for “creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts.”

Analysts projected that the results meant a statewide majority in support of a single-payer system. The single-payer idea had polled well in non-binding ballot measures before, as well. But now we’ve seen that sentiment translated into support for a candidate.

Other politicians, including President Obama, have backed the general idea of a single-payer system, but they always add a “but,” said Dr. Steffie Woolhandler, who helped found Physicians for a National Health Program.

“And the ‘but’ usually has to do with the political situation,” she said. “But it’s actually important to say what’s the right thing to do and to really work toward the right solution, and that’s what Don [Berwick] has been willing to do, to say, ‘We need single payer and skip the ‘but,’ let’s just say we need single payer and that we need to start working toward it.’”

Will Dr. Berwick’s strong showing change the playing field for other candidates? Dr. Woolhandler says yes: “Politicians understand votes. Unfortunately, they also understand money. But they do understand votes, and I think other politicians will see that voters are behind the idea of single payer.”

I asked Dr. Berwick about the reaction to his single-payer position in his many campaign-season travels, and he said the biggest surprise was how positive the response had been from voters who would likely not call themselves progressives. They either already agreed with the idea, he said, or responded instantly after one sentence of explanation with, “That sounds right to me. Let me tell you my story.”

“I remember a carpenter in Hingham,” he said. “I don’t think he would have said he was a progressive — he was a somewhat older carpenter struggling to make ends meet, sitting on a sofa at a gathering, a meet-and-greet, and I started talking about this, and I guess — embarrassingly, to me — I was expecting some pushback. But he immediately said, ‘I’ve got to tell you a story.’ And he told me about his struggle to get health insurance.

“He very carefully went through the policy options, he had picked one that had a maximum deductible that was pretty stiff, and he was ready to swallow it. And he did, he signed up for that plan. And then, the problem was that he had three major illnesses the following year. And he discovered — to his dismay — that the deductible did not apply to the year, it applied to each separate episode. So this guy, who’s working with his hands and trying to just get through and have his family’s ends meet, suddenly found himself tens of thousands of dollars in debt, because of the complexity [of health insurance.] And he said, ‘Enough of this!’ He immediately understood and was fully on board, and that kind of experience has been pretty constant for me.”

Overall, Dr. Berwick said, “The response has been extremely positive beyond anything I would have anticipated.  When I took the position, I had no polling information. I did it because I was looking at the state budget and seeing the erosive impact of rising health care costs on everything else we need to do. The numbers were stunning to me. I got briefed by the Mass. Budget Policy Center and they said — as I remember the numbers and have been quoting them — Parks and Recreation were down 25 percent, local aid was down 40 percent, higher education was down 30 percent.

You really can’t find a line item on the state budget that hasn’t been down in real terms in the last decade. Except health care is up 59 percent. That was the number that stuck in my mind when they briefed me. And as I went around the state and began to see what we need to do for schools, for transportation, for affordable housing — the term I’ve used, and it’s a bold term but it’s confiscation. It’s with benign intent, but health care is essentially taking away opportunities from public investment.”

“And then you meet with businesses and you get the same story. Businesses talk about how the continuing increase in health care costs is cutting opportunities for them to grow and develop their businesses. And then when you talk to labor — I remember meeting with the painters’ union, and I asked the person who was hosting me to show me their paychecks, and the union wage scales over the past few years — you can see it right there in black letters — the take-home pay per hour has not been going up. What is going up is contributions to health care. So the logic was strong.

“And the reactions have been consonant with those data. People are very frustrated. They don’t understand their health insurance. They can’t read their policy. They know it’s not transparent. And they are suffering from vastly increased costs.”

No anti-Canada, anti-England backlash against what could be seen as an attempt to “nationalize” or “socialize” health care?

Not really, Dr. Berwick said. “Initially, you have to explain it, like, ‘What exactly do you mean? Medicare is a federal program.’ If you say it’s Medicare for all, that doesn’t quite do it. But as I explain it to people, you take all the funds, put them in a single pool, make that pool publicly accountable, constantly subject to scrutiny and redefinition, stop the paperwork, stop the complexity, that could save 10 percent of the total bill over the first couple of years.”

“People do have questions, like, ‘Is this a government takeover of health care?’ And you explain, ‘No, no, no. It’s the same delivery system, your doctors and hospitals, this is not nationalization or the state taking over care, but it is a single payment system. So I would say, the reaction to this has been stunningly positive. Could this be catalytic? I certainly hope so. I’d hate to see Vermont lap Massachusetts on being the first to show what a rational payment system looks like.”

Neither of the Massachusetts primary winners — Democrat Martha Coakley and Republican Charlie Baker — backs a single-payer system, so it’s actually pretty well guaranteed that Vermont is going to lap Massachusetts in the single-payer realm.

But perhaps the question is whether Vermont and Massachusetts will follow the pattern of gay marriage: The Vermont Supreme Court broke the ice in late 1999 with its decision on “civil unions,” but it was — arguably — the 2003 decision by the highest court of Massachusetts that set gay marriage on the road to the big-time.

Readers, what do you see happening next with single-payer politics? WBUR’s Martha Bebinger reports that Dr. Berwick did not say in his concession speech what he plans to do next. We’ll keep you posted on that.

http://commonhealth.wbur.org/2014/09/single-payer-don-berwick

Putting ‘Medicare for All’ on the Agenda

By John Nichols
The Nation, Sept. 5, 2014

Don Berwick is making a vital point about the need for progressives to expand the discussion about healthcare reform.

Democratic and Republican strategists, and the candidates who let campaign consultants frame their range of opinion, are still engaging in picayune debates about the strengths and weaknesses of the Affordable Care Act.

But Berwick, who for seventeen months headed the Medicare and Medicaid programs under President Obama, isn’t getting lost in the political weeds. He’s blazing a trail in the direction of what ultimately must be done—pushing at the constraints of the conversation and offering an illustration of why it is so important for progressives to get specific about the need for a “Medicare for All” fix.

Mounting an admittedly uphill campaign for the Democratic nomination for governor of Massachusetts, Berwick says, “I want us to be the first state in the nation to adopt single-payer health care—Medicare for All. With that one change, we can improve care and reduce costs for families and businesses. We can free up resources that will add tens of thousands of jobs all over Massachusetts. Single-payer health care— let’s lead.”

Berwick does not raise this issue casually. A Harvard Medical School graduate who practiced medicine serving low-income families before founding the nonprofit Institute for Healthcare Improvement, advised the World Health Organization and was so well regarded for his advice and counsel on improving Britain’s healthcare system that he was knighted by Queen Elizabeth II.

But being one of the best thinkers and doers in the area of healthcare reform does not always bring rewards. During his tenure as administrator of the Centers for Medicare and Medicaid Services, Berwick was a key player in implementing some of the best components of the Affordable Care Act, including initiatives “ensuring that young people can stay on their parents’ health plans until the age of 26, kids with preexisting conditions can no longer be denied the care they need, and insurance companies are subjected to new levels of transparency.”

Yet, as Berwick’s campaign now notes, “The toxic politics of Washington cut short Don’s time there. Right-wing pundits attacked his commitment to equality and health care for all. Glenn Beck labeled him the ‘second most dangerous man in America.’ Senate Republicans vowed to filibuster his confirmation. In the face of the same Republicans who blocked Elizabeth Warren’s confirmation to head the Consumer Financial Protection Bureau, Don was forced to step aside after only seventeen months leading Medicaid and Medicare.”

The experience did not sour Berwick on the fight for healthcare reform.

But it did cause him to refocus his considerable energies.

The physician returned to his home state of Massachusetts and began preparing for a gubernatorial run in which he has argued that the states can and must lead on real healthcare reform.

To that end, he says, he wants to build on the leadership role Massachusetts has taken on reform to make Medicare for All a reality.

“I know from my first-hand experience in Washington guiding the early implementation of the Affordable Care Act that all eyes in the nation are on Massachusetts. Champions of real health care reform are crossing their fingers for us to succeed; opponents are hoping for us to fail. It is crucial that we lead, and show the rest of the nation that treating health care as a right, not a privilege, is sensible and successful public policy,” explains Berwick in a statement on his website.

“It is time to find a way to get to yes on a single payer system in Massachusetts. The complexity of our health care payment system adds costs, uncertainties, and hassles for everyone—patients, families, doctors, and employers. On day one, I will appoint a multi-stakeholder Single Payer Advisory Panel to investigate and report back within six months on how Massachusetts moves to a single payer health insurance system like Medicare for all.”

Massachusetts is not the only state where single-payer healthcare reform is being placed in the agenda. In Vermont, Governor Peter Shumlin and his legislative allies have made significant progress on the issue. And they are not alone.

Last month’s “Organizing for Healthcare Justice in the Age of Obamacare” strategy conference in Oakland, California, brought together Labor Campaign for Single Payer, Healthcare NOW! and the One Payer States group, as well as members of Physicians for a National Health Program and leading figures in National Nurses United, the California Nurses Association, the International Longshore and Warehouse Union and other labor groups. At the conference, much of the discussion was about state-based initiatives in Vermont, California, Minnesota, Oregon, Washington and other regions of the country.

In Massachusetts, Berwick says the work that has already been done in the state to extend access to health care creates an circumstance for developing a single-payer system. His arguments are strong in this regard. But it will take leadership to take the next step, which is why Berwick entered the gubernatorial race.

As next week’s primary approaches, he’s trailing two primary foes, Massachusetts Attorney General Martha Coakley and Massachusetts Treasurer Steven Grossman, both of whom have more resources and party connections. While his poll numbers have improved some as the September 9 primary approaches, Berwick is behind. Yet, if the measure of a campaign is the extent to which it shifts the discourse, Berwick’s run has already been a success: He’s at the table, as a candidate who is getting a serious hearing, participating in debates and in many senses framing the discourse.

After a June debate, an analysis for WBUR radio noted that Berwick “seems to be shifting the conversation, at least at this early stage, further to the left.”

In particular, explained the WBUR report, “Berwick seems to be adjusting the conversation… on the issue of a single-payer health care system.”

The other candidates are still more cautious on the issue. But Grossman is now saying that he wants to lead a “conversation” on single-payer—arguing, “You’ve got to build a consensus in our society around any dramatic societal change.” And while Coakley says “We’re not ready to go to single-payer yet,” she adds, “I don’t rule it out ever.”

But as the Massachusetts race steers toward a close, Boston Globe columnist Alan Wirzbicki writes: “This lackluster Democratic primary wouldn’t have been the same without [Berwick]. The only doctor in the race has added some needed fiber to the Democratic diet during this year’s gubernatorial campaign. His single-payer health proposal has forced his opponents to engage in a substantive discussion of health care costs…”

http://www.thenation.com/blog/181488/putting-medicare-all-agenda#

PNHP note: For the record, Physicians for a National Health Program is a nonpartisan educational and research organization that neither supports nor opposes any candidate for public office.

Narrow networks reduce specialized care for the sickest patients

Controlling Health Care Costs Through Limited Network Insurance Plans: Evidence from Massachusetts State Employees

By Jonathan Gruber, Robin McKnight
The National Bureau of Economic Research, NBER Working Paper No. 20462, September 2014

Abstract

Recent years have seen enormous growth in limited network plans that restrict patient choice of provider, particularly through state exchanges under the ACA. Opposition to such plans is based on concerns that restrictions on provider choice will harm patient care. We explore this issue in the context of the Massachusetts GIC, the insurance plan for state employees, which recently introduced a major financial incentive to choose limited network plans for one group of enrollees and not another. We use a quasi-experimental analysis based on the universe of claims data over a three-year period for GIC enrollees. We find that enrollees are very price sensitive in their decision to enroll in limited network plans, with the state’s three month “premium holiday” for limited network plans leading 10% of eligible employees to switch to such plans. We find that those who switched spent considerably less on medical care; spending fell by almost 40% for the marginal complier. This reflects both reductions in quantity of services used and prices paid per service. But spending on primary care actually rose for switchers; the reduction in spending came entirely from spending on specialists and on hospital care, including emergency rooms. We find that distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients. The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending. We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.

Full paper available at this link: http://www.nber.org/papers/w20462

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Narrow Health Networks: Maybe They’re Not So Bad

By Margot Sanger-Katz
The New York Times, September 9, 2014

Lots of people shopping in the new health care marketplaces this year picked health plans that limited their choice of doctors and hospitals. The plans were popular because they tended to cost less than more conventional plans that covered nearly every health care provider in a region.

The proliferation of these more limited plans, called narrow networks, has worried consumer advocates and insurance regulators. The concern is that people will struggle to find the care they need if their choices are limited.

Maybe we don’t have to worry so much. A new study suggests that, done right, a narrow network can succeed in saving money and helping certain patients get appropriate health care. The study, published as a working paper with the National Bureau of Economic Research, looked at a program that used financial incentives to steer workers into narrow plans. Those that chose the plans saved their employer money, saw their primary care doctors more and used the emergency room less.

Mr. Gruber says this study should not be the final word on narrow networks, but he said he hoped it would change the tenor of the debate about them. Instead of automatically seeing a narrow network as a sinister plan feature, he said, he hopes market watchers will now see them as a tool that can, in some cases, help save money without hurting patients.

“Nobody is talking about forcing people into these plans,” he said. “We’re talking about offering people a choice with price incentives.”

**

NYT Reader Comments:

Don McCanne 
San Juan Capistrano, CA

Quoting from the Gruber and McKnight paper:

“We first find that patients are very price sensitive in their decisions to switch to limited network plans…”

“…those who are most healthy are the most price sensitive.”

“for the chronically ill… we find a strong shift in spending from specialists to primary care physicians…”

“…we conclude that the real savings from limited network plans arises from restrictions downstream from the primary care provider.”

Healthy individuals buy the cheapest plans not worrying about the choices in specialized care that they believe they will not need anyway. But for chronically ill patients who are responsible for most of our health care spending, they are losing specialized services when they are enrolled in these narrow network plans.

This study was too short to be able to measure adverse outcomes due to lack of specialized services. Shouldn’t we find that out before most of us are shoved into narrow networks?

Or better, shouldn’t we take a closer look at proven systems that use public policies to control spending without restricting patient choice – models such as single payer or a national health service?

**

Kate 
Portland OR

One thing that really concerns me about this is people with rare or complex conditions that need specialty care. Waits, for example, for endocrinology in my city are a minimum of 3 months for new patients and diabetes is one of the nations’ biggest health problems. It is also very difficult now for new patients to find a new primary care MD depending their insurance. Narrow networks prevent people from accessing care. I am a nurse case manager, so arranging transitional care is what I do for a living. I’m surprised to see this article. It’s a little myopic.

**

sfdphd
San Francisco

Let’s be honest. Narrow networks are fine for people who are not sick now and are willing to take the chance that they will not get sick in the coming year. If you are already ill or worry that you may become ill, narrow networks are not good. Don’t lie to us…

****

Further comment:

By Don McCanne

The most important finding in this study is that enrollment of chronically ill patients in narrow networks results in a strong shift in care from specialists to primary care physicians. That reduces costs, but does it change outcomes? According to the authors, “we are unable to demonstrate health effects with any certainty.”

The work of Barbara Starfield and others has previously demonstrated that a strong primary care infrastructure does provide greater value in health care. But people with serious chronic disorders – where a disproportionate share of our health care spending is directed – may very well benefit from specialized care.

This study shows that narrow networks are used to block access to that specialized care, simply by excluding coverage of much of the specialized services offered within the community. As this study shows, the care defaults to the generalist regardless of the patient’s specific needs.

A well functioning system would provide liberal access to primary care services, which would then provide a portal to an appropriate level of specialized services. A singe payer national health program would do precisely that – primary care not serving as a gatekeeper but rather serving as a resource to improve integration of health care services.

Narrow networks are a tool of private insurers used to reduce spending by impairing access to care no matter how appropriate it might be. Jonathan Gruber indirectly acknowledges the concerns people have about narrow networks when he states, “Nobody is talking about forcing people into these plans.” But patients are backing into these plans simply because they cannot afford other plans with more comprehensive networks.

Under single payer, the network is the entire health care delivery system. That’s the network that we need – for all of us.

More costly doesn’t mean better

By Bev Jordan
The News & Advance (Lynchburg, Va.), Letters, Sept. 9, 2014

A study of hospital administrative costs in eight nations published Sept. 8 in Health Affairs finds that hospital bureaucracy consumed 25.3 percent of hospital budgets in the United States in 2011, twice as much as any other nation. The study is the first across multiple nations with widely varying health systems. It was carried out by teams from the U.S., the U.K., France, Germany and the Netherlands. Costs were lowest (about 12 percent) in Scotland and Canada, both of which have single-payer systems. Data covered virtually all hospitals in each nation. Administrative spending totaled $667 per capita in the U.S., $158 in Canada, $164 in Scotland, $211 in Wales, $225 in England and $325 in the Netherlands. French and German costs were about 40 percent lower than in the U.S.

The study found no evidence that high U.S. costs translated into better care or yielded any other benefits.

High costs can be attributed to (1) complexity of billing a multiplicity of insurers with varying pay rates, rules, documentations and (2) the entrepreneurial imperative of hospitals to amass profits (or, for nonprofits, surpluses) in order to fund modernization and essential upgrades. This has reduced hospitals efficiency, driving them to divert personnel and dollars to marketing, cherry-picking profitable patients and services, and to expensive computer systems and consultants to “game” the payment system.

“We’re squandering $150 billion a year on hospital bureaucracy,” said lead author Dr. David Himmelstein, a professor at the CUNY/Hunter College of Public Health and lecturer at Harvard Medical School. “And $300 billion more is wasted each year on insurance companies’ overhead and the paperwork they inflict on doctors.”

He added: “Only a single-payer reform can squeeze out the bureaucratic waste and use the money to give patients the care they need. Another senior author said, “For three decades our policy makers have pushed market-oriented strategies that have turned health care into a business. As a result, Americans have the world’s costliest health care, and our life expectancy is years shorter than in most wealthy nations.”

Quality health care is a right that no one should be denied. The Affordable Health Care Act is a small step in that direction and our Republican Virginia lawmakers need to realize this and side with the people and the medical professionals, rather than the bureaucrats.

This information may be accessed through the website of Physicians for a National Health Program, www.pnhp.org.

Bev Jordan resides in Lynchburg.

http://www.newsadvance.com/opinion/letters_to_editor/letters-to-the-editor-for-tuesday-september/article_a6776262-3791-11e4-8d52-001a4bcf6878.html

‘Market forces’ create bloated hospital bureaucracies: international study

By Markus Mannheim
The Canberra Times (Australia), Sept. 9, 2014

United States hospitals spend a quarter of their budgets on administration, more than twice as much as some other countries, an international study has found.

Meanwhile, separate data suggests Australian public hospitals may be only marginally more efficient than American hospitals.

The latest issue of Health Affairs journal reported on the eight-nation study, which found “bureaucracy” – e.g. central administration, IT and marketing – took up 25.3 per cent of US hospital budgets in 2011.

By comparison, administrative costs were only about 12 per cent in Scotland and Canada, countries with simpler, publicly funded health systems.

Hospitals in nations with some elements of private funding, such as Germany and France, had intermediate administrative expenses, while those shifting to “market-oriented payment systems”, such as the Netherlands (19.8 per cent), faced costs closer to the US’s.

The study attributed the high costs of the mostly private US system to the complexity of billing, given the need to deal with a wide range of health insurers and payments.

However, it also said the “entrepreneurial imperative” to make a profit undermined efficiency, by encouraging hospitals to “divert personnel and dollars to marketing, to cherry-picking profitable patients and services (and avoiding unprofitable ones), and to expensive computer systems and consultants to game the payment system”.

Lead author Professor David Himmelstein, of Hunter College’s school of urban public health, said US hospitals wasted $US300 billion a year on insurance companies’ overheads “and the paperwork they inflict on doctors”.

Another author, Steffie Woolhandler, said the result of America’s market-oriented healthcare policies had created “the world’s costliest healthcare, and our life expectancy is years shorter than in most other wealthy nations”.

“It’s time to admit that, when it comes to caring for sick people, markets don’t work.”

Australian hospitals were not included in the international study.

However, Independent Hospital Pricing Authority data published this year shows overheads made up 22.7 per cent of the costs faced by Australian public hospitals in 2011-12.

A spokeswoman for the authority said this amount was “not the same as administrative costs as described in the study by Himmelstein et al, and direct comparison should not be made to the figures quoted in the study”.

The national commission of audit warned earlier this year that hospital expenses were “one of the fastest-growing areas of government spending“, with budgets expected to grow by 10.4 per cent a year over the next decade.

Markus Mannheim is public service editor at The Canberra Times.

http://www.canberratimes.com.au/national/health/market-forces-create-bloated-hospital-bureaucracies-international-study-20140909-10ee1w.html#ixzz3CpRdgB6E

Fix Mental Health with Universal Medicare

PNHP note: The following article was updated in an article with the same title in Social Justice Solutions in December 2016. You can view the updated article here.

By F. Douglas Stephenson
Health News Florida, Sept. 8, 2014

One reliable indicator of health care quality in any nation is life expectancy. Unfortunately, life expectancy in the United States ranks in the bottom quartile of a list of 229 industrialized nations, according to the Organization for Economic Cooperation and Development.

Many of these same 29 nations also increased their investment in mental health services while, during the same period, the U.S. slashed its expenditures for psychiatric and mental health services.

Mentally ill patients have been dumped into our communities poorly prepared for them. Thousands of the mentally ill have joined the street people in many of our cities, and, reminiscent of Elizabethan England, the county jail has become the primary community facility for housing most mentally ill people in the United States.

Over 45 million U.S. citizens now lack any kind of health insurance, and millions more have very inadequate coverage in the policies they now carry. Among these with incomes below the federal poverty line, a third had no health insurance. Statistics show that among Americans who are inadequately insured, a significant number are sicker and die younger than those who have insurance.

It is no mystery why this is happening in this country. Because the insurance industry so thoroughly dominates our health care system, the basic concept, purpose and system of health insurance is defined by them. The U.S. subscribes to a business model of health insurance that defines insurers as commercial entities. Private insurers maximize profits by mainly limiting benefits or by not covering people with health problems. Like all businesses, their goal is to make money.

Under the business model, the greed of casual inhumanity is built in and the common good of the citizens and nation is ignored; excluding the poor, the aged, the disabled and the mentally ill is sound business policy, since it maximizes profit.

In most other developed countries, however, the aim of health insurance is simply to promote a social service for universal access to affordable health care for all citizens, and not to generate profits for stockholders, CEOs and other private business entities. The U.S. is the only advanced country in the world with a health care system based on avoiding sick people.

Mental health treatment services in general and talk therapy in particular have been negatively affected by insurance and drug company domination of the U.S. health care system. Talk therapy includes psychotherapy, psychoanalysis, counseling, marriage therapy, family therapy, group therapy, psycho-educational groups, addiction treatment groups and programs, parent training groups, anger management programs and many others.

There are dozens of effective means to deal with human distress that involve talk between qualified professionals and people seeking help. Talk therapy is not one-size-fits-all. It is focused on emotional problems in relationship with oneself or others.

Insurers, with their focus on profit, seek to spend as little as possible on your mental health care. Talk therapy sessions have been drastically cut by insurers. Privacy has been invaded and is no longer assured. Your choice of therapist is no longer under your control.

Likewise, drug companies with profit motive want to sell you drugs. Drugs and insurance companies with profit motive want to sell you drugs. Drug and insurance companies often view talk therapy and qualified practitioners as a threat to their control over the health care system. These companies insist that mental health problems are due to “biological imbalances” which require only expensive medications.

A systematic campaign to discredit the value and competence of talk therapists exists when drug and insurance companies assert, for example, that most types of long-term therapies are not “evidence based.” Insurance coverage for talk therapy has in fact steeply declined since the mid-1980s, from 6 percent to 2 percent of all insurance payments. People seeking talk therapy increasingly must pay for those services out of pocket.

Many people with emotional and psychological problems make good progress with talk therapy or with a combination of talk therapy and medication. While drugs can indeed by helpful, they alone do not “cure” emotional distress and sometimes have uncomfortable side effects. Certainly, there are biological aspects to many emotional and psychological problems, but biology is not the only cause (or cure) for these conditions.

Consumers of health care services do not have to be intimidated into accepting inadequate mental health treatment. Citizens have a right to demand effective clinical service. Tell your health care plan that you want adequate access to qualified talk therapists if you have emotional, addiction or marriage and family problems. Let your employer or human resource department know that you want a solid mental health benefit that includes comprehensive talk therapy services.

We now have over two decades of experience with the conversion of mental health care into a business. Our health care is being rationed, its care guidelines determined by profitability and secrecy decided in private corporate boardrooms.

To realize large profits demanded by Wall Street investors, our health system must attract the healthy and turn away the sick, disabled, the poor, many of the old, and the mentally ill. A 1997 study by the New England Journal of Medicine showed that a large number of Medicare HMOs engaged in favorable selection by “cherry picking” healthier individuals. Since 1987, the number of uninsured in the U.S. has grown by a million each year.

Our mental health care system needs to get private health insurance out of it. Little of value is offered by private insurance when 15 percent to 25 percent of the health care dollar is skimmed off for profit and overhead. If, for example, the existing Medicare program is now extended to all citizens (and not only to those 65 years and older) universal coverage or “Medicare for all,” for both mental and physical health is possible while strongly containing costs.

The transition to full enrollment in Medicare, for example, could be achieved by gradually dropping the eligibility age over five to ten years. Any losses in phasing out private health insurance industry jobs could be will offset by job gains in other American industries, especially since they would no longer by saddled with such high health insurance costs, as is now the case.

Medicare is much more efficient than private insurance, with overhead now less than 4 percent. More importantly, it cannot deny care to those who need it the most, and administration by a single-payer public entity makes controlling costs more possible.

Nobel Prize recipient Bernard Lown, M.D., of the Harvard School of Public Health sums it up nicely: “One may only hope that Winston Churchill’s quip will soon be realized: ‘You can always count on Americans to do the right thing, after they have tried everything else.’ The United States has tried any number of bad solutions for providing its people with health care. Long overdue is the recognition that medicine is a necessary social service that should be accessible to all citizens.”

F. Douglas Stephenson, LCSW, LMFT, BCD, is a graduate of The University of Chicago and was a faculty member in the Department of Psychiatry, University of Florida. He is a retired psychotherapist who practiced in Alachua and Citrus Counties.

(Editor’s note: This column first appeared in the Citrus County Chronicle; its author has asked that it also be published in Health News Florida.)

http://health.wusf.usf.edu/post/fix-mental-health-universal-medicare