Working for the Few

Oxfam, January 20, 2014

In November 2013, the World Economic Forum released its ‘Outlook on the Global Agenda 2014’, in which it ranked widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months. Oxfam shares its analysis, and wants to see the 2014 World Economic Forum make the commitments needed to counter the growing tide of inequality.

Given the scale of rising wealth concentrations, opportunity capture and unequal political representation are a serious and worrying trend. For instance:

• Almost half of the world’s wealth is now owned by just one percent of the population.

• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

• The bottom half of the world’s population owns the same as the richest 85 people in the world.

• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

Recommendations

Those gathered at Davos for the World Economic Forum have the power to turn around the rapid increase in inequality. Oxfam is calling on them to pledge that they will:

• Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;

• Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;

• Make public all the investments in companies and trusts for which they are the ultimate beneficial owners;

• Support progressive taxation on wealth and income;

• Challenge governments to use their tax revenue to provide universal healthcare,

education and social protection for citizens;

• Demand a living wage in all the companies they own or control;

• Challenge other economic elites to join them in these pledges.

Oxfam Briefing Paper – Summary: http://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-political-capture-economic-inequality-200114-summ-en.pdf

World Economic Forum – Outlook on the Global Agenda 2014: http://www3.weforum.org/docs/WEF_GAC_GlobalAgendaOutlook_2014.pdf

****

Oxfam: 85 richest people as wealthy as poorest half of the world

By Graeme Wearden

The Guardian, January 20, 2014

As World Economic Forum starts in Davos, development charity claims growing inequality has been driven by ‘power grab’

Winnie Byanyima, the Oxfam executive director who will attend the Davos meetings, said: “It is staggering that in the 21st Century, half of the world’s population – that’s three and a half billion people – own no more than a tiny elite whose numbers could all fit comfortably on a double-decker bus.”

Working for the Few – Oxfam report

http://www.theguardian.com/business/2014/jan/20/oxfam-85-richest-people-half-of-the-world

Comment:

By Don McCanne, M.D.

Although Martin Luther King Jr is no longer here in body, he did leave with us his moral guidance, reinforcing our ability to recognize social injustice when we see it. It is left to us to seek an end to these injustices.

Of industrialized nations, the United States is the world leader in expanding the injustices of inequality – a first for us that matches our first place in health care spending in a nation that is in last place amongst wealthier nations in meting the goal of universality.

From the perspective of those of us who are morally outraged over health care injustice, we need to “challenge governments to use their tax revenue to provide universal health care.” We cannot possibly do this without adopting policies that would “counter the growing tide of inequality.”

If Martin Luther King could speak to us today, he would certainly challenge us to demand the opportunity for everyone to have an adequate education which would help them understand better the injustices inflicted upon us by, yes, the wealthy who control our plutocracy, and to understand what our remedies should be. He would challenge us to demand not only the right but also the opportunity for everyone to vote for the government we need, especially a government that would create a health care system that serves the health care needs of the people first rather than the business goals of the insurers and the rest of the medical-industrial complex. As he famously said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

Listen. You can hear him now. Let’s march.

Working for the Few

Oxfam, January 20, 2014

In November 2013, the World Economic Forum released its ‘Outlook on the Global Agenda 2014’, in which it ranked widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months. Oxfam shares its analysis, and wants to see the 2014 World Economic Forum make the commitments needed to counter the growing tide of inequality.

Given the scale of rising wealth concentrations, opportunity capture and unequal political representation are a serious and worrying trend. For instance:

• Almost half of the world’s wealth is now owned by just one percent of the population.

• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

• The bottom half of the world’s population owns the same as the richest 85 people in the world.

• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

Recommendations

Those gathered at Davos for the World Economic Forum have the power to turn around the rapid increase in inequality. Oxfam is calling on them to pledge that they will:

• Not dodge taxes in their own countries or in countries where they invest and operate, by using tax havens;

• Not use their economic wealth to seek political favors that undermine the democratic will of their fellow citizens;

• Make public all the investments in companies and trusts for which they are the ultimate beneficial owners;

• Support progressive taxation on wealth and income;

• Challenge governments to use their tax revenue to provide universal healthcare,

education and social protection for citizens;

• Demand a living wage in all the companies they own or control;

• Challenge other economic elites to join them in these pledges.

Oxfam Briefing Paper – Summary: https://templatelab.com/working-for-the-few-research/

World Economic Forum – Outlook on the Global Agenda 2014:http://www3.weforum.org/docs/WEF_GAC_GlobalAgendaOutlook_2014.pdf

****

Oxfam: 85 richest people as wealthy as poorest half of the world

By Graeme Wearden

The Guardian, January 20, 2014

As World Economic Forum starts in Davos, development charity claims growing inequality has been driven by ‘power grab’

Winnie Byanyima, the Oxfam executive director who will attend the Davos meetings, said: “It is staggering that in the 21st Century, half of the world’s population – that’s three and a half billion people – own no more than a tiny elite whose numbers could all fit comfortably on a double-decker bus.”

Working for the Few – Oxfam report

http://www.theguardian.com/business/2014/jan/20/oxfam-85-richest-people-…

Although Martin Luther King Jr is no longer here in body, he did leave with us his moral guidance, reinforcing our ability to recognize social injustice when we see it. It is left to us to seek an end to these injustices.

Of industrialized nations, the United States is the world leader in expanding the injustices of inequality – a first for us that matches our first place in health care spending in a nation that is in last place amongst wealthier nations in meting the goal of universality.

From the perspective of those of us who are morally outraged over health care injustice, we need to “challenge governments to use their tax revenue to provide universal health care.” We cannot possibly do this without adopting policies that would “counter the growing tide of inequality.”

If Martin Luther King could speak to us today, he would certainly challenge us to demand the opportunity for everyone to have an adequate education which would help them understand better the injustices inflicted upon us by, yes, the wealthy who control our plutocracy, and to understand what our remedies should be. He would challenge us to demand not only the right but also the opportunity for everyone to vote for the government we need, especially a government that would create a health care system that serves the health care needs of the people first rather than the business goals of the insurers and the rest of the medical-industrial complex. As he famously said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

Listen. You can hear him now. Let’s march.

Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications

By Juliette Cubanski, Tricia Neuman, Gretchen Jacobson, and Karen E. Smith

Kaiser Family Foundation, January 2014

As policymakers consider ways to slow the growth in Medicare spending as part of broader efforts to reduce the federal debt or offset the cost of other spending priorities, some have proposed to increase beneficiary contributions through higher Medicare premiums.

Modifications to Medicare’s current income-related premiums have been proposed recently by several policymakers and groups, including the Obama Administration as part of the President’s Fiscal Year (FY) 2013 and FY 2014 budgets, the Bipartisan Policy Center (BPC), the Center for American Progress (CAP), and the Moment of Truth Project (headed by Erskine Bowles and Alan Simpson, co-chairs of the National Commission on Fiscal Responsibility and Reform).

Conclusion

Some recent proposals to address concerns about federal spending have included recommendations to reduce the growth in Medicare spending by increasing beneficiaries’ contributions towards their health care costs. These include proposals to increase the share of beneficiaries who would pay Medicare’s Part B and Part D income-related premiums and increase the portion of program costs they would pay.

Part of the appeal of requiring higher-income beneficiaries to pay a greater share of Medicare costs is that these higher costs would only be imposed on those beneficiaries who arguably have greater financial means to bear the additional expenses. In the context of current federal budget discussions, some consider an approach that includes this type of progressive financing to be preferable to one that imposes higher premiums or cost sharing across the board, without regard to beneficiaries’ incomes. There is some concern, however, that the income thresholds used to trigger the imposition of higher premiums for higher-income Medicare beneficiaries ($85,000/individual, $170,000/couple) are substantially lower than the thresholds often used to define higher-income individuals in other policy discussions. For example, the ACA imposed higher Medicare Part A payroll taxes on individuals with income of $200,000 and couples with income of $250,000.

For many higher-income beneficiaries, the proposed increase in Medicare premiums might not be a financial hardship. However, if the income thresholds are frozen over a longer period of time relative to current law, then a growing share of elderly and disabled people who would not be considered high income by today’s standards would face higher premiums, and as the income-related premium amounts increase over time, they would consume a larger share of income. In addition, there is some possibility that such changes could lead some higher-income beneficiaries to drop out of Medicare Part B and instead self-insure, which could result in higher premiums for all others who remain on Medicare if the dropout group is large and relatively healthy.

Amid ongoing concerns about the nation’s debt and the future financial stability of Medicare, policymakers are likely to continue their discussion of alternative Medicare savings proposals. In light of the financial vulnerability of many people on Medicare and the difficulty they may have paying for rising health care costs on limited budgets, the proposal to require higher-income beneficiaries to pay more in Medicare premiums, rather than raise premiums for all beneficiaries, would protect those with relatively modest incomes. Yet, given the relatively low incomes of most people on Medicare, a significant amount of savings from this proposal is only possible by going relatively far down the income scale to reach a sizeable share of beneficiaries—at which point the affordability of these additional costs could be called into question.

http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8276-02-raising-medicare-premiums-for-higher-income-beneficiaries.pdf

Comment:

By Don McCanne, M.D.

We already require higher-income individuals to pay larger premiums for Medicare Part B (physician services) and Part D (drugs), and now there are serious proposals to increase those amounts in order to reduce federal spending on Medicare. Is this wise?

In order to have more than a negligible impact on the federal budget both the numbers of individuals paying higher premiums and the increase in the premiums would have to be significant.

This report shows that lowering the income threshold at which higher premiums would be assessed would include individuals who would find paying the premium to be a hardship, simply because there are not enough seniors with very high incomes.

So suppose instead we increase even more the premiums that higher-income individuals would pay. Since there are so few of them, the premium increases would have to have to be significant to have any real impact on the federal budget. What would happen then? It is likely that many of those who are financially secure and relatively healthy would drop out of the Medicare B and D programs and simply self-insure. The premiums that these healthier individuals would have paid will instead be paid by higher premiums for those staying in the program and by a greater contribution from general tax revenues.

Some have suggested that deductibles also be increased for higher-income individuals. This would surely anger our wealthy citizens – those who have the greatest political influence – and undermine support for Medicare. That would risk us eventually ending up with an underfunded, austere Medicare program, while the wealthy could continue to buy all the care that they would want.

No. We need to have the full support of the wealthy for a high quality system that would serve them well, while serving all of us well. We need to eliminate premiums, deductibles and other cost sharing so that the system provides us all with equal access based on medical need rather than ability to pay. The wealthy could still have access to luxurious suites and other amenities that they might prefer and be willing to pay for.

We still need progressive financing, but we can do that easily by using equitable taxes to fund Medicare – Improved Medicare for All, that is.

Raising Medicare Premiums for Higher-Income Beneficiaries: Assessing the Implications

By Juliette Cubanski, Tricia Neuman, Gretchen Jacobson, and Karen E. Smith

Kaiser Family Foundation, January 2014

As policymakers consider ways to slow the growth in Medicare spending as part of broader efforts to reduce the federal debt or offset the cost of other spending priorities, some have proposed to increase beneficiary contributions through higher Medicare premiums.

Modifications to Medicare’s current income-related premiums have been proposed recently by several policymakers and groups, including the Obama Administration as part of the President’s Fiscal Year (FY) 2013 and FY 2014 budgets, the Bipartisan Policy Center (BPC), the Center for American Progress (CAP), and the Moment of Truth Project (headed by Erskine Bowles and Alan Simpson, co-chairs of the National Commission on Fiscal Responsibility and Reform).

Conclusion

Some recent proposals to address concerns about federal spending have included recommendations to reduce the growth in Medicare spending by increasing beneficiaries’ contributions towards their health care costs. These include proposals to increase the share of beneficiaries who would pay Medicare’s Part B and Part D income-related premiums and increase the portion of program costs they would pay.

Part of the appeal of requiring higher-income beneficiaries to pay a greater share of Medicare costs is that these higher costs would only be imposed on those beneficiaries who arguably have greater financial means to bear the additional expenses. In the context of current federal budget discussions, some consider an approach that includes this type of progressive financing to be preferable to one that imposes higher premiums or cost sharing across the board, without regard to beneficiaries’ incomes. There is some concern, however, that the income thresholds used to trigger the imposition of higher premiums for higher-income Medicare beneficiaries ($85,000/individual, $170,000/couple) are substantially lower than the thresholds often used to define higher-income individuals in other policy discussions. For example, the ACA imposed higher Medicare Part A payroll taxes on individuals with income of $200,000 and couples with income of $250,000.

For many higher-income beneficiaries, the proposed increase in Medicare premiums might not be a financial hardship. However, if the income thresholds are frozen over a longer period of time relative to current law, then a growing share of elderly and disabled people who would not be considered high income by today’s standards would face higher premiums, and as the income-related premium amounts increase over time, they would consume a larger share of income. In addition, there is some possibility that such changes could lead some higher-income beneficiaries to drop out of Medicare Part B and instead self-insure, which could result in higher premiums for all others who remain on Medicare if the dropout group is large and relatively healthy.

Amid ongoing concerns about the nation’s debt and the future financial stability of Medicare, policymakers are likely to continue their discussion of alternative Medicare savings proposals. In light of the financial vulnerability of many people on Medicare and the difficulty they may have paying for rising health care costs on limited budgets, the proposal to require higher-income beneficiaries to pay more in Medicare premiums, rather than raise premiums for all beneficiaries, would protect those with relatively modest incomes. Yet, given the relatively low incomes of most people on Medicare, a significant amount of savings from this proposal is only possible by going relatively far down the income scale to reach a sizeable share of beneficiaries—at which point the affordability of these additional costs could be called into question.

http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8276-02-raisin…

We already require higher-income individuals to pay larger premiums for Medicare Part B (physician services) and Part D (drugs), and now there are serious proposals to increase those amounts in order to reduce federal spending on Medicare. Is this wise?

In order to have more than a negligible impact on the federal budget both the numbers of individuals paying higher premiums and the increase in the premiums would have to be significant.

This report shows that lowering the income threshold at which higher premiums would be assessed would include individuals who would find paying the premium to be a hardship, simply because there are not enough seniors with very high incomes.

So suppose instead we increase even more the premiums that higher-income individuals would pay. Since there are so few of them, the premium increases would have to have to be significant to have any real impact on the federal budget. What would happen then? It is likely that many of those who are financially secure and relatively healthy would drop out of the Medicare B and D programs and simply self-insure. The premiums that these healthier individuals would have paid will instead be paid by higher premiums for those staying in the program and by a greater contribution from general tax revenues.

Some have suggested that deductibles also be increased for higher-income individuals. This would surely anger our wealthy citizens – those who have the greatest political influence – and undermine support for Medicare. That would risk us eventually ending up with an underfunded, austere Medicare program, while the wealthy could continue to buy all the care that they would want.

No. We need to have the full support of the wealthy for a high quality system that would serve them well, while serving all of us well. We need to eliminate premiums, deductibles and other cost sharing so that the system provides us all with equal access based on medical need rather than ability to pay. The wealthy could still have access to luxurious suites and other amenities that they might prefer and be willing to pay for.

We still need progressive financing, but we can do that easily by using equitable taxes to fund Medicare – Improved Medicare for All, that is.

Bare-Bones Health Plans Survive Through Quirk in Law

By Theo Francis
The Wall Street Journal, January 16, 2014

The health-care overhaul was supposed to eliminate insurance plans that offer skimpy coverage at cut rates. But a quirk in the law stands to help some companies keep them going for years to come.

AlliedBarton Security Services, a closely held firm that employs more than 63,000 people nationwide, has offered a modestly updated version of its so-called mini-med plan to employees this year and it intends to do so in 2015 as well, even though the cheap coverage fails to meet requirements of the Affordable Care Act.

What makes the no-frills plan attractive is that it will save money for AlliedBarton and for its security-guard employees who don’t incur substantial medical bills, many of whom want a low-cost option, according to the company.

What makes it possible under the health law: As long as companies offer at least one plan that complies with the law’s requirements, they are free to keep offering ones that don’t.

That has enabled companies to find ways to comply with the law while minimizing increases in their health-care costs. The result has been an increase in lean insurance offerings such as “fixed-indemnity” plans.

Such plans, which might cost an employee just $80 a month in premiums, generally pay a set amount for specific medical services—$70 for a doctor’s visit, for example, or $20 for a prescription—without regard to the underlying cost. They limit the amount of payments or care available in a year, and can exclude entire areas of coverage, such as mental-health care. When catastrophic injury or illness strikes, they often pay little.

AlliedBarton intends to offer its employees two low-cost insurance options—one that meets the law’s requirements for both scope of coverage and affordability, and a cheaper plan that falls short. Offering the compliant plan heads off the law’s penalties. And offering the cheaper plan—which the company thinks most of its security guards will pick—keeps costs down.

Employees who pick the cheaper plan could have to pay the individual penalty—though that could still cost them less than signing up for the more expensive plan.

Fixed-indemnity coverage “violates the spirit of the law,” said Jay Angoff, a Washington lawyer who previously headed the federal insurance-oversight office and served as Missouri’s insurance commissioner. “There’s a strong argument that it is inherently misleading, and it provides so little coverage that it shouldn’t be sold at all.” Such plans, he adds, “were never intended to survive past 2014.”

AlliedBarton’s Mr. Buckman countered that workers are good at weighing medical and financial trade-offs. “To a lot of people for a lot of good reasons, fixed-indemnity plans may be a better choice, and we think it’s appropriate for people to be able to make choices,” he said.

http://online.wsj.com/news/articles/SB10001424052702303754404579312760133827256

Comment:

By Don McCanne, M.D.

What kind of rule is this? As long as employers offer to their employees a plan that complies with the requirements of the Affordable Care Act (ACA), but a plan that the employees cannot afford to purchase, then the employers are relieved of their penalties for providing them with almost worthless “fixed indemnity” plans, even though that means that the employees may have to pay a penalty for failing to be insured with a qualified plan.

ACA was designed to interfere as little as possible with employer-sponsored plans since supposedly that large sector of the health insurance market was working so well. But it wasn’t for far too many. Employers offering mini-med style fixed indemnity plans is only one of the potential deficiencies of employer-sponsored coverage, others being high deductibles, narrow provider networks, and forgone wage increases to pay for the coverage.

Right now, several respected journalists are criticizing single payer advocates for being critical of the health care gains under the Affordable Care Act. They have it all wrong. We are not critical of the gains; we are critical of the failure to correct the major deficiencies in our system that cause so much suffering and financial hardship. Instead of tweaking a mediocre system, we should fix it. We could do that with a single payer national health program – an improved Medicare that covers all of us.

Bare-Bones Health Plans Survive Through Quirk in Law

By Theo Francis
The Wall Street Journal, January 16, 2014

The health-care overhaul was supposed to eliminate insurance plans that offer skimpy coverage at cut rates. But a quirk in the law stands to help some companies keep them going for years to come.

AlliedBarton Security Services, a closely held firm that employs more than 63,000 people nationwide, has offered a modestly updated version of its so-called mini-med plan to employees this year and it intends to do so in 2015 as well, even though the cheap coverage fails to meet requirements of the Affordable Care Act.

What makes the no-frills plan attractive is that it will save money for AlliedBarton and for its security-guard employees who don’t incur substantial medical bills, many of whom want a low-cost option, according to the company.

What makes it possible under the health law: As long as companies offer at least one plan that complies with the law’s requirements, they are free to keep offering ones that don’t.

That has enabled companies to find ways to comply with the law while minimizing increases in their health-care costs. The result has been an increase in lean insurance offerings such as “fixed-indemnity” plans.

Such plans, which might cost an employee just $80 a month in premiums, generally pay a set amount for specific medical services—$70 for a doctor’s visit, for example, or $20 for a prescription—without regard to the underlying cost. They limit the amount of payments or care available in a year, and can exclude entire areas of coverage, such as mental-health care. When catastrophic injury or illness strikes, they often pay little.

AlliedBarton intends to offer its employees two low-cost insurance options—one that meets the law’s requirements for both scope of coverage and affordability, and a cheaper plan that falls short. Offering the compliant plan heads off the law’s penalties. And offering the cheaper plan—which the company thinks most of its security guards will pick—keeps costs down.

Employees who pick the cheaper plan could have to pay the individual penalty—though that could still cost them less than signing up for the more expensive plan.

Fixed-indemnity coverage “violates the spirit of the law,” said Jay Angoff, a Washington lawyer who previously headed the federal insurance-oversight office and served as Missouri’s insurance commissioner. “There’s a strong argument that it is inherently misleading, and it provides so little coverage that it shouldn’t be sold at all.” Such plans, he adds, “were never intended to survive past 2014.”

AlliedBarton’s Mr. Buckman countered that workers are good at weighing medical and financial trade-offs. “To a lot of people for a lot of good reasons, fixed-indemnity plans may be a better choice, and we think it’s appropriate for people to be able to make choices,” he said.

http://online.wsj.com/news/articles/SB1000142405270230375440457931276013…

What kind of rule is this? As long as employers offer to their employees a plan that complies with the requirements of the Affordable Care Act (ACA), but a plan that the employees cannot afford to purchase, then the employers are relieved of their penalties for providing them with almost worthless “fixed indemnity” plans, even though that means that the employees may have to pay a penalty for failing to be insured with a qualified plan.

ACA was designed to interfere as little as possible with employer-sponsored plans since supposedly that large sector of the health insurance market was working so well. But it wasn’t for far too many. Employers offering mini-med style fixed indemnity plans is only one of the potential deficiencies of employer-sponsored coverage, others being high deductibles, narrow provider networks, and forgone wage increases to pay for the coverage.

Right now, several respected journalists are criticizing single payer advocates for being critical of the health care gains under the Affordable Care Act. They have it all wrong. We are not critical of the gains; we are critical of the failure to correct the major deficiencies in our system that cause so much suffering and financial hardship. Instead of tweaking a mediocre system, we should fix it. We could do that with a single payer national health program – an improved Medicare that covers all of us.

Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

Comment:

By Don McCanne, M.D.

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.

Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.