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Even the rich suffer from America’s wack healthcare system

Even the rich suffer from America’s wack healthcare system

By Brenda Gazzar
Code Wack Podcast, September 12, 2022

Why are nearly half of all U.S. residents burdened with medical debt? Does medical debt simply result from people making poor personal choices, or is it a symptom of a deeper, systemic problem with our healthcare system? What are the scary implications of this and what can we do about it?

To find out, we spoke to James G. Kahn, MD/MPH, a professor emeritus of health policy, epidemiology, and global health at the University of California, San Francisco. An expert in health policy and economics, he’s an advisor for Code WACK! as well as editor and primary blogger for Health Justice Monitor.

Transcript

Dispatcher: 911, what’s your emergency?

Caller: America’s healthcare system is broken and people are dying!

(ambulance siren)

Welcome to Code WACK!, where we shine a light on America’s callous healthcare system, how it hurts us and what we can do about it. I’m your host, Brenda Gazzar.

This time on Code WACK! Why do nearly half of U.S. residents have some form of healthcare debt? What are the scary implications of this and what can we do about it? To find out, we spoke to Dr. James G. Kahn, a professor emeritus of health policy, epidemiology, and global health at the University of California, San Francisco. An expert in health policy and economics, he is a health policy advisor for Code WACK! as well as editor and primary blogger for Health Justice Monitor, a health policy blog focused on a progressive agenda.

Welcome back to Code WACK! Dr. Kahn.

Kahn: Thanks for having me on.

Q: So a recent survey by the Kaiser Family Foundation found that 4 in 10 adults in America have some form of healthcare debt. That’s nearly half of all Americans. Why do you think this is?

Kahn: Well it’s because of the huge holes in health insurance. Over the past 10 years or so, our health insurance has gone from moderate cost sharing, things like deductibles and copays, to extensive cost sharing and in particular, the prevalence and size of deductibles is much higher. Deductibles are the money that the beneficiary is responsible for before the health insurance kicks in and this is often in the range of $2,000- $5,000. That’s not a trivial amount. So in the beginning of the calendar year, typically the insurance doesn’t pay anything until people have paid down the deductible and the problem is when people pay the deductible that’s coming out of their financial reserves, which may be quite limited and they may have to take on medical debt. So that’s the single biggest cause of the medical debt. There are other reasons too, such as care that is out of network and therefore not covered or care that is denied.

Or of course there are many people who are simply uninsured all together. All of those things contribute, but taken together the astounding number that four in 10 adults has medical debt, half of them debt is more than $2,500, it’s really scary and should open some eyes. The other thing that Kaiser did really well is they asked respondents how this medical debt affects other spending and what they found is a wide variety of important household spending was affected by the medical debt. So for example, people had trouble paying rent. They may have decided to double up on living together, cuz they couldn’t afford the rent. Some people reported that they postponed or gave up on higher education because they couldn’t afford it because of the medical debt. So these medical debts are not only anxiety provoking, but they have real damaging consequences for how people live their lives.

You know, I like to say that understanding the healthcare system in its details is really hard because the system is extraordinarily complex. Indeed, I think the complexity is a feature, not a bug. It’s a way for people who thrive on the system financially to hide what’s really going on. Both Kaiser and the Commonwealth Fund have done important research over the years documenting the problem that people will skip or delay medical care because of financial barriers so they have you whichever way you go.If you get the care, then you’re medically indebted. And if you don’t get the care, well, then you might well get sicker. There’s no other wealthy country that imposes this kind of terrible choice on its people.

Q: A terrible choice. Indeed. The survey also noted that uninsured adults, women, Black and Hispanic adults, and those with lower incomes are disproportionately impacted. How does it affect people when they can’t get a fair shake when it comes to health care?

Kahn: Well, our way of paying for health care is a huge contributor to inequity in our society. Again, both financial and health. We know as, as the Kaiser Family Foundation, you know, reconfirmed that the people who suffer most with these problems are poor, people of color and other disadvantaged groups and this is structurally a predictable consequence. For example, Medicaid is health insurance for the poor. Why should we have separate health insurance for the poor? Other countries don’t. They just have health insurance or health coverage and I think it’s time for us to recognize that we can provide equal healthcare – equally comprehensive, equally high quality to everyone and in the process actually save money. You know, there’s an expression in economics that there’s no such thing as a free lunch. That’s supposed to mean that you don’t get anything without paying for it somehow. But I actually argue that real health insurance reform like single payer is a free lunch because you do better at covering everyone and by simplifying the system, you actually save money. That was a long roundabout answer to your question.

Q: It seems like the poor are already impacted negatively because they’re more likely to have chronic health conditions and it’s a double whammy when they have medical debt, because it’s further setting them back financially.

Kahn: Right, it’s sort of a vicious cycle as you point out. The poor are more likely to be sick. They’re less likely to be able to get care. That exacerbates their illness and in the process, depending on their insurance situation, they may become more indebted, which adds to their stress, which worsens their illness. It is unsurprising when you look at the terrible mortality numbers in the United States, how many years fewer poor populations live than rich populations. There’s a huge longevity gap. It’s absolutely something that we can and should address. But there’s another interesting fact here and that is if you compare the longevity of people who live in wealthy U.S. geographic areas and compare that to the longevity of people who live in other wealthy countries, even in wealthy areas in the United States, we do worse than the overall average longevity in the other countries. So the people who are suffering most are absolutely the poor and there are huge inequities there, but even the wealthy are suffering from the failings of our system and I’m hoping that that will help us unite around a real solution – single payer.

Q: Right. Good point. Most adults with healthcare debt say the bills that led them into debt were from unexpected medical expenses and about half of them would be unable to pay a $500 unexpected medical bill without borrowing money.

Kahn: Well, I think it’s important to recognize that wealth differences, that is how much money people have in the bank, are far greater than income differences. So when we talk about the poor, the working poor, you know, someone maybe making $25,000 or $30,000 a year, it’s impossible to support a family on that. Maybe they’re up to $40,000 a year. Someone who’s doing well, a computer programmer or a lawyer may be making $150,000 or $200,000. So that’s a big difference. That’s a difference of fivefold. But if you look at wealth differences, they’re much, much greater and that is a variety of things. First of all, the people who are making less, just don’t have the opportunity to save and then there’s a long history of racist decisions which have exacerbated wealth differences. For example, Black Americans were not able to participate in post World War II mortgage insurance programs offered by the federal government.

So they were much less likely to buy homes. Well, homes are the basis for building family wealth and so now you have people of color, poor, no financial reserves and yes, a health expenditure comes along that’s unexpected. I must say, you know, how often do we expect health expenditures? Aren’t health expenditures mostly about dealing with medical problems as they arise. I don’t plan to get an infection or plan to get an asthma exacerbation. I may know that there’s some risk or I may not. It may be completely out of the blue. So I’m not at all surprised that there are a lot of people who don’t have the financial reserves and who are surprised by turns in their health and the need for care. That’s just the way life works. It doesn’t need to be this way. Again, free lunch. I’m just going to use that as my shorthand, we have a free lunch.

We have a buffet that’s laid out in front of us that we could have all of the health care we need and still save money and why are we not doing that? Well, it’s because of all of the organizations and people who profit hugely by this complex system, which is completely nonfunctional, the insurance companies, many provider groups, the drug companies. They make massive amounts of money and if I may just talk about COVID for one second.

In Health Justice Monitor, we recently covered this phenomenon, which is just stunning. In 2020, when the pandemic hit, healthcare utilization actually dropped. There was some more COVID care, but many people delayed non-urgent care because they didn’t want to go to a doctor’s office or hospital and get sick from people with COVID. Makes sense. So the claims that were submitted to insurance companies, including in Medicare Advantage, the private insurer part of Medicare, they went down, the claims went down. So the insurance companies didn’t have to pay out as much so the profits went way up, but the providers in order to survive needed federal government help to cover those services that weren’t required and so the federal government paid the insurance companies to administer Medicare Advantage and the insurance companies kept all of these excess profits and the federal government also paid the providers to keep them financially solvent. So we, the taxpayers, paid twice for health care that no one received because they were avoiding hospitals and doctor’s offices. How insane is that?

Q: That is insane. And I understand that some are even denied medical care because of their debt. Welcome to America’s for-profit healthcare system. So how would things be different, Dr. Kahn, if we had Medicare for All. Would people just not get medical bills at all anymore?

Kahn: Thank you for putting it so simply, but that’s exactly right. So basically the government, it could be the federal government, it could be a state-level government agency, would pay for all care. There might be very small income adjusted copays for certain kinds of care, or there might not be. There would be no deductibles. People wouldn’t face a cliff of $2,000 to $5,000 that they have to pay before they can even get care and the providers would have one insurer to deal with – that’s the single government payer. So their life in the doctor’s office to arrange for payment would be far simpler. Right now doctors spend about 13% of revenue just to get paid and that would drop to 2% to 3% so they would instantly have a 10% savings. That’s the secret to this free lunch. That is you reduce that complexity in the provider offices.

You similarly get rid of private insurance intermediaries who are taking – depending which part of the system you’re looking at – at least 10% and maybe 15% in profits and administrative bloat and you get rid of all of that waste and now you can afford to pay every medical bill. You can eliminate financial barriers to care, and everyone is covered again – efficient, generous, equitable. In medicine, there’s been a movement for a couple of decades called evidence-based medicine, where we do our very best in clinical medicine to conduct and then rely on the results of clinical trials. The idea is to learn from careful study how to best treat patients. Well, in the world of health policy, we were really bad at that. We make a lot of efforts to improve things where we really don’t have evidence. For me, one example of that is value-based care or ACOs, accountable care organizations.

It’s a real favorite of some people in health policy because it doesn’t disturb the dynamics of the current health insurance system, which benefits so many people. They claim that it will lead to cheaper and better care. It doesn’t. It’s not evidence based. What would be evidence based is learning from more than three dozen countries around the world, wealthy countries, who all have the same kind of arrangement. They universally cover everyone with a standardized health insurance benefit package. That means that doctors have to deal with only one.payer, doctors only have to deal with one formulary, which is the list of medicines that they can prescribe. Drug prices can be negotiated. But the fundamental thing is that everyone’s covered with exactly the same package. Now, some countries use a single government payer, some countries use private insurers, but they’re nothing like private insurers here. They are not for profit, highly regulated insurers who all sell exactly the same product.

It would be kind of like if everyone in the neighborhood drove a blue Prius and that standardization in simplicity is what has been proven to work time and time again. So my plea is that we do our health policy based on the extensive evidence there is in the world. Our system not only is failing on health and financial measures, but is getting worse. We do worse today in 2022 than we did in 2012. So Obamacare resolved a few problems. There are more people insured than there were before Obamacare, a lower rate of uninsurance, but the insurance is now much less helpful because of the rapid rise in deductibles.

(5-second music stinger)

Thank you, Dr. James G. Kahn. Stay tuned for our next episode with Dr. Kahn as we talk about avoidable deaths and the COVID pandemic.

Do you have a personal story you’d like to share about our ‘wack’ healthcare system? Contact us through our website at heal-ca.org.

Find more Code WACK! episodes on ProgressiveVoices.com and on Nurse Talk Media. You can also subscribe to Code WACK! wherever you find your podcasts.

This podcast is powered by HEAL California, uplifting the voices of those fighting for healthcare reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

Letter to Feds: How to Fix Broken Medicare Advantage

Summary: Recently three leading progressive organizations (Just Care USA, Social Security Works, and Center for Health and Democracy) wrote to two federal health agency leads, offering an incisive litany of major flaws with Medicare Advantage. They proposed a 10-point reform plan, which would remove insurer profiteering, assure access, and improve quality of care. The plan would make Medicare a lot like its inevitable successor, single payer.

Letter to HHS & CMS on Reforming Medicare Advantage, August 31, 2022, by Diane Archer, Alex Lawson, and Wendell Potter

Dear Secretary Becerra and Administrator Brooks-LaSure:

… We agree with the HHS Office of the Inspector General, Government Accountability Office and MedPac that Medicare Advantage is in need of major reform to ensure the health and well-being of enrollees, promote health equity, and minimize legal violations, Including overpayments. As GAO reported: “The Medicare program, which includes MA, is on GAO’s High Risk List, because of its size, complexity, and susceptibility to mismanagement and improper payments. …

People from racial and ethnic minority groups, people with disabilities and serious health conditions, people of disadvantaged socioeconomic status, people with limited English proficiency, and people from rural communities disproportionately choose Medicare Advantage because of its low upfront cost. They are, however, at greater risk in Medicare Advantage than in traditional Medicare for two key reasons:

Fundamental problems with the current Medicare Advantage model drive health inequities and poor health outcomes for people with complex conditions. The biggest problem is the risk-adjusted capitated payment model. Medicare Advantage plans that: 1. Attract a disproportionate number of enrollees in relatively good health and/or 2. Delay and deny care inappropriately and/or 3. Do not include high quality specialists and specialty hospitals in their networks, can be sure to profit handsomely. …

We propose a suite of ten changes to improve health equity, reduce Medicare Advantage threats, enable appropriate CMS oversight, and minimize health insurer violations in Medicare Advantage.

1. Change the way the government pays Medicare Advantage plans.

The government should pay MA plans so that they do not have a financial disincentive to cover care for people with costly and complex conditions. Prospective payments, unrelated to actual medical claims, create a powerful financial incentive for MA plans to impede access to high-value care for enrollees with complex conditions in order to maximize profits.

2. Base payments to MA plans on the cost of services MA plans cover plus a reasonable fee for administration and a global cap.

3. Require Medicare Advantage plans that pay providers on a fee-for-service basis to use traditional Medicare’s fee schedule.

4. Require MA plans to include all centers of excellence in their networks and disclose out-of-pocket costs for people with complex conditions.

5. Standardize MA coverage rules and cost-sharing design.

6. Ensure appropriate oversight of MA.

The GAO has found that CMS has not validated MA patient encounter data as needed and recommended. In a recent House Ways and Means Subcommittee on Oversight and Investigations hearing, MedPAC reported that “After a decade, MA plans are “not producing complete and accurate enough records needed for MedPAC to conduct oversight activities

7. Do not assume value in MA, since it cannot be measured.

MedPAC has said repeatedly that MA quality cannot be measured.

8. Rethink Medicare Advantage networks.

CMS should stop allowing Medicare Advantage plans, except those that are fully integrated health systems, to design their own provider networks and require them to cover care from all Medicare providers.

9. Rethink key consumer information regarding Medicare Advantage and overhaul MA marketing to minimize deception.

10. Level the playing field with traditional Medicare and ensure health equity in MA.

We urge the government to put an out-of-pocket cap in traditional Medicare so that traditional Medicare is a meaningful choice for everyone with Medicare, including people with low incomes, people in rural communities, people from racial and ethnic minority groups, and people with complex conditions. Without that out-of-pocket cap, the hundreds of thousands of people who face inappropriate delays and denials of care in Medicare Advantage too often are deprived a meaningful choice of traditional Medicare.

Comment:

By Jim Kahn, M.D., M.P.H.

This impressive letter assembles key evidence on the failings of Medicare Advantage – how it costs too much, imposes barriers to care access, and fails to assure quality. The problems are structural and thus require aggressive reforms, such as changing how plans are paid.

The proposed changes would move Medicare Advantage (and Medicare) much close to single payer, by removing excessive profit-taking by insurers, standardizing coverage and provider payments, and collecting clinical data to measure and improve quality. The major difference is that even an improved Medicare for seniors and the long-term disabled would not create the fairness, efficiency, and simplicity of an improved Medicare *for all*. That’s single payer.

For those interested in the numbers on Medicare finances, see HJM pieces on how Medicare Advantage plans plunder government funds here and here, and on the financial barriers faced by sick beneficiaries here.

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Jane Fonda has Insurance & Quality Care. How about those who don’t?

Jane Fonda Lymphoma Care, Instagram, September 2, 2022, @janefonda

So, my dear friends, I have something personal I want to share. I’ve been diagnosed with non-Hodgkin’s Lymphoma and have started chemo treatments.

This is a very treatable cancer. 80% of people survive, so I feel very lucky.

I’m also lucky because I have health insurance and access to the best doctors and treatments. I realize, and it’s painful, that I am privileged in this. Almost every family in America has had to deal with cancer at one time or another and far too many don’t have access to the quality health care I am receiving and this is not right.

Comment:

By Don McCanne, M.D.

We’ve been saying this just isn’t right, yet inertia persists. Does Jane Fonda’s voice, representing the lay public, make a difference?

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Union Support Rises, While Corporations Lower Pharmacist Pay

Summary: Decreased pay for hard-working pharmacists, and growing support for unions. Maybe there’s a connection.

U.S. Approval of Labor Unions at Highest Point Since 1965, Gallup, August 30, 2022, by Justin McCarthy

Seventy-one percent of Americans now approve of labor unions. Although statistically similar to last year’s 68%, it is up from 64% before the pandemic and is the highest Gallup has recorded on this measure since 1965. [The nadir was 48% in 2010.]

How Pharmacy Work Stopped Being So Great, New York Times, August 20, 2022, by Noam Scheiber

If any group of workers might have expected their pay to rise last year, it would arguably have been pharmacists. With many drugstores dispensing coronavirus tests and vaccines while filling hundreds of prescriptions each day, working as a pharmacist became a sleep-deprived, lunch-skipping frenzy — one in which ornery customers did not hesitate to vent their frustrations over the inevitable backups and bottlenecks.

“I was stressed all day long about giving immunizations,” said Amanda Poole, who left her job as a pharmacist at a CVS in Tuscaloosa, Ala., in June. “I’d look at patients and say to them, ‘I’d love to fill your prescriptions today, but there’s no way I can.’”

Yet pay for pharmacists, who typically spend six or seven years after high school working toward their professional degree, fell nearly 5 percent last year after adjusting for inflation. Dr. Poole said her pay, about $65 per hour, did not increase in more than four years — first at an independent pharmacy, then at CVS. …

[Pharmacy] consolidation generated large fees for workers at the top of the income ladder — financiers and corporate lawyers — but slowed the growth of retail outlets where pharmacists could find employment. After striking a deal in 2017 to acquire roughly 2,000 Rite Aid stores, Walgreens shut down more than 500 locations. It closed a few hundred more over the next three years.

Automation has further reduced demand for workers — many pharmacists now spend far less time processing insurance claims because software does it for them.

Pharmacies also faced external challenges. To hold down the cost of prescription drugs, insurance companies and employers rely on so-called pharmacy benefit managers to negotiate discounts with drugmakers and pharmacies. Consolidation among benefit managers gave them more leverage over pharmacies to drive prices lower. (CVS merged with a large benefits manager in 2007.)

Big drugstore chains often responded by trying to rein in labor costs, according to William Doucette, a professor of pharmacy practice at the University of Iowa. Several pharmacists who worked at Walgreens and CVS said the formulas their companies used to allocate labor resulted in low levels of staffing that were extremely difficult to increase.

Comment:

By Jim Kahn, M.D., M.P.H.

On this Labor Day, we see two conflicting trends. For labor advocates, the good news is that support for labor unions is at a 50-year high. The bad news is that corporations are lowering pay for pharmacists, despite the work burdens of COVID, a robust economy, and generally rising wages.

Corporate machinations that led to pharmacist pay cuts include buyouts and mergers, retail outlet reductions, and the invention of a new corporate intermediary, the pharmacy benefit manager. Corporate executives and shareholders gain; over-burdened front line providers lose.

Maybe these trends aren’t conflicting! Maybe growing support for unions reflects a rising awareness of vulnerability to the cost-cutting profit-maximizing actions of private equity and corporations more generally.

Single payer would incorporate collective bargaining for payment rates to professionals.

Single payer would remove the financial burdens of health care from workers (and everyone). Wages would rise with the end to employer premium payments.

Let’s keep up the struggle for better health care, better wages, and delinking of the two!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Battle for the Soul of the Nation … and of Health Care

Summary: President Biden yesterday gave a critically important speech on the need to fight MAGA Republican efforts to destroy US democracy. Our health care system is similarly in need of improved alignment with democratic principles, achievable by adopting single payer.

Video of President Biden’s Speech on Preserving Democracy

Full Transcript of President Biden’s Speech in Philadelphia

“Donald Trump and the MAGA Republicans represent an extremism that threatens the very foundations of our republic.”

“The Republican Party today is dominated, driven, and intimidated by Donald Trump and the MAGA Republicans, and that is a threat to this country.”

“The soul of America is defined by the sacred proposition that all are created equal in the image of God. That all are entitled to be treated with decency, dignity, and respect. That all deserve justice and a shot at lives of prosperity and consequence. And that democracy…must be defended, for democracy makes all these things possible. Folks, it’s up to us.”

Comment:

By Jim Kahn, M.D., M.P.H.

Last night, President Biden delivered a powerful and much-needed speech about preserving US democracy. Standing in front of Philadelphia’s Independence Hall, arguably the birthplace of modern democracy, he forcefully called out MAGA Republicans for their attempts to replace loyalty to our republic and its rules of fair play with lies, manipulations, and violence in pursuit of absolute power, outside of the historic to-and-fro of our political parties. He publicly emphasized, for the first time, that his hopes of bipartisan cooperation have been dashed by the new Republican party’s “semi-fascism” (a term he used recently, not in the speech). We should be deeply grateful for his (finally) saying in this high-profile way what many historians and observers have long noted: Trump and his followers threaten to destroy our democracy. A functioning democracy is essential as we strive in the US for greater humanity and equity.

However, as I listened, I did wonder how the same words would apply to achieving an admirable, highly democracy-compatible US health care system. Here’s my adaptation:

“Our reliance on private insurers and price-gauging drug companies represents an extremism that threatens the very foundations of our health system.”

“The health sector today is dominated, driven, and intimidated by profiteers, and that is a threat to our medical care and our well-being.”

“The soul of America’s health care is defined by the sacred proposition that all deserve quality health care without financial burden. That all patients are entitled to be treated promptly, respectfully, and with clinical focus, undistracted by burdensome insurance rules or lack of insurance. That all deserve a shot at lives of excellent health and long duration. And that universal health system … must be defended, for covering everyone and removing excess profits make all these things possible. Folks, it’s up to us.”

Universal single payer health insurance, favoring people over profits, is well-aligned with the laudable democracy-preserving exhortations of President Biden. Let’s adopt it to enhance our personal and democratic well-being!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Medicare for All Explained Podcast: Episode 84

Interview with Carlo Bosques

September 1, 2022

Medical student Carlo Bosques describes the under-appreciated history of health care in Puerto Rico, which enjoyed a 26-year increase in life expectancy from the 1940s to the 1970s, when a robust public health infrastructure was firmly in place.

“The vast majority of health care services were delivered under [an integrated, single-payer like] system,” he says. “It was very successful.”

Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Falling U.S. Longevity Largely Due to Health Insurance Failings

Summary: In a sad echo of 2020, US longevity again fell in 2021 – from 77 to 76 years. Two proximate causes – COVID and chronic disease – have everything to do with insurance gaps. And rising fatal accidents and overdoses reflect a sense of desperation driven substantially by medical care inaccessibility and debt. Single payer would make a huge difference.

U.S. Life Expectancy Falls Again in ‘Historic’ Setback, New York Times, August 31, 2022, by Roni Caryn Rabin

While the pandemic has driven most of the decline in life expectancy, a rise in accidental deaths and drug overdoses also contributed, as did deaths from heart disease, chronic liver disease and cirrhosis, the new report found.

Comment:

By Jim Kahn, M.D., M.P.H.

Once again, life expectancy In the US fell, by a year in a year. Stunning, unprecedented. This horrendous backsliding continues an on-and-off declining trend since 2014, and follows a sharp dip in 2020. The huge two-year drop has never been seen before.

See below a graphic representation. Longevity is now far below where it was in 1999, indeed takes us back to 1995. No other nation has experienced this drastic decline. The fall is greatest among Native Americans, and longevity for Black Americans remains the lowest of any group.

What’s the role of health insurance? The NYT doesn’t say. But insurance is a prime culprit. As HJM discussed recently, at least 1/4 of COVID deaths are attributable to uninsurance. Many chronic disease deaths are due to un- and under-insurance. Our lax gun laws and opioid regulation contribute to the accidental deaths and drug overdoses, but also reflect a sense of desperation in part driven by impaired access to health care, along with rising medical bills and medical bankruptcies.

Our insurance system is failing us. Single payer would break this fall.

Figure by Charlie Swanson, except 2021 blue arrow by Jim Kahn (real health spending may have dropped due to lower elective care, hence the backward lean).

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Private Equity Hollowing Out Nursing Home Care

Summary: Private equity sees large financial returns in the nursing home business, and is willing to maximize that profit by cutting services at the expense of resident well-being. The result is a leaner and riskier existence, with higher death rates. Private equity is degrading care for our aged and infirm.

When Private Equity Takes Over a Nursing Home, The Daily Newsletter of The New Yorker, August 25, 2022, by Jessie Li

After an investment firm bought St. Joseph’s Home for the Aged, in Richmond, Virginia, the company reduced staff, removed amenities, and set the stage for a deadly outbreak of COVID-19.

St. Joseph’s Home for the Aged was once a beloved nursing home with a family-oriented ambiance, where nuns lived with residents and the waiting list for a room was three years long. There were manicured gardens, a lively aviary and an aquarium, and warm common areas with “a china cabinet here, an upright piano there,” as Yasmin Rafiei writes. Then, in June last year, the home was sold to a private-equity firm called the Portopiccolo Group. The situation is not uncommon: since the turn of the millennium, there’s been a trend toward private-equity investment in nursing homes. Researchers at the University of Pennsylvania found that, “when private-equity firms acquired nursing homes, deaths among residents increased by an average of ten per cent,” as Rafiei writes. At St. Joseph’s, which was renamed Karolwood Gardens, residents began eating meals alone in their rooms, nursing staff plummeted, and the home experienced a string of COVID-19 infections and deaths. Rafiei delves into the question of why deaths skyrocket in private-equity-owned homes, and tells a deeply reported story of St. Joseph’s devastating transformation.

Financial and Quality Metrics of A Large, Publicly Traded U.S. Nursing Home Chain in the Age of Covid-19, International Journal of Health Services, February 4, 2022, by David E. Kingsley and Charlene Harrington

This descriptive case study examined the structure, operations, strategies, care outcomes, and owners of the Ensign Group Inc. the second largest U.S. for-profit chain, between 2007 and 2021. Ensign, as a holding company, has a complex organizational structure that uses more than 430 corporate entities to manage its 228 nursing homes and senior living facilities. Ensign’s small board, executives, and institutional investors protected and enhanced shareholders interests rather than ensuring that its nursing homes met professional standards and regulatory requirements.

The financial power that institutional investors bring to corporate governance reinforces the agency theory of management and a philosophy that shareholder interests are the sole mission of corporations, while their nursing homes provide mediocre care at best and deadly care at worst. By protecting and enhancing shareholder interests as the summum bonum of management, excess capital is accumulating and driving governance to benefit investors rather than ensuring that NHs meet professional standards and regulatory requirements.

Comment:

By Don McCanne, M.D.

What are the two words that communicate this despicable transformation that is taking place throughout our health care system? Private equity!

What could exemplify this more than a beloved nursing home where patients are cared for as if they are family members being taken over by an entity that changes its mission to enhancing its profits by reducing as much as possible the services rendered to its patients, regardless of the deterioration in the quality of care that the patients receive? The full New Yorker article by Yasmin Rafiei provides detail on Portopiccolo Group’s takeover of St. Joseph’s Home for the Aged and related research.

The Kingsley and Harrington study provides an academic description of corporate strategies in the nursing home industry, strategies that clearly favor investors over patients.

Private equity. Whatever happened to patient service? Everywhere you turn now, it’s private equity. And it’s not as if it’s filling some unmet need. Much of our health care dollars are now being directed to shareholders, including millionaires and billionaires, when tens of millions of people remain without adequate care because of being uninsured or underinsured.

We really need to dump private equity in health care and replace those two words with the two words that we know will work for all of us: Single payer!

http://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

How Big Pharma makes a killing on patients’ suffering

By Brenda Gazzar
Code Wack Podcast, August 29, 2022

What happens when the cost of surviving an illness is so high, it’s simply out of reach? How does Big Pharma enjoy such outsized profits from cancer and other treatments? And what about patients who are stuck between a pharmaceutical company and their health insurer?

To find out, we spoke to Dr. David Leibowitz, hematologist-oncologist and incoming chair of Physicians for a National Health Program – California, a non-partisan voluntary organization that supports equitable access to high quality health care as a right to all people. What’s on his agenda for the California state chapter?

Transcript

Dispatcher: 911, what’s your emergency?

Caller: America’s healthcare system is broken and people are dying!

(ambulance siren)

Welcome to Code WACK!, where we shine a light on America’s callous healthcare system, how it hurts us and what we can do about it. I’m your host, Brenda Gazzar.

This time on Code WACK! Why are some cancer drugs so incredibly expensive? How do some drug companies and health insurance companies choose profit over patients? To find out, we spoke to Dr. David Leibowitz, who conducted lab research for about 20 years before spending another 20 as a hematologist oncologist helping cancer patients. (Hematology is the study of blood.)

Now retired, Leibowitz fights for improved Medicare for All and is the incoming chairman of Physicians for a National Health Program-California, a non-partisan voluntary organization that supports equitable access to high quality health care as a right to all people.

Welcome to Code WACK!, Dr. Leibowtiz.

Leibowitz: Thank you. It’s a pleasure to be here.

Q: It’s a pleasure to have you. So tell us a bit about yourself. Why did you decide to go into medicine and why oncology specifically?

Leibowitz: So I decided to go into medicine because it was a way to do science that I enjoyed, and it was also something that I thought would help mankind, help make the world a little better place. So I came to hematology or oncology and the way that happened, it was through the lab because when I was in medical school, I started working in a lab that was doing hematology related research, and I enjoyed that so I just kept doing it and so when it came time to do a fellowship, I did it in hematology oncology again, cuz I could continue that kind of lab work and I did lab work for kind of the first half of my career and then I decided I was tired of supervising a lab and I wanted to work more with people so I went into practice and my practice was mainly hematology, benign and malignant, but also some kind of more straightforward oncology.

Q: So after 20 years in research, you began seeing patients? That must have been quite a change.

Leibowitz: So I was seeing patients all the time that I was in the lab also, but not as often, but I had clinics during that time.

Q: Got it. So did seeing patients more often affect your understanding of the challenges they face as they cope with cancer?

Leibowitz: Absolutely. Because even having a clinic, you don’t quite get the exposure to the problems people have paying for things and that’s a big problem for a lot of people.

Q: Yeah. Can you tell us more about that? Do you have any stories of patients, for example, that you can share?

Leibowitz: One was a man who was actually a retired doctor and he had an illness called multiple myeloma. This was like about 15 years ago and there was a new medicine that was available, an oral pill, but it was very expensive. And in spite of the fact that he was a retired physician – so you might think that he should have been able to afford it – he could not afford it. It angered me because it turns out that that medicine makes people live long and relieves a lot of symptoms, so that bothered me.

Q: So what happened to this gentleman?

Leibowitz: Well, eventually he passed away from his illness. There was no way at the time that I could get the medication for him. It was just starting to be used for myeloma at the time and so it was very, very expensive.

Q: Wow. Do you remember how expensive it was?

Leibowitz: Oh, it was one to $2,000 a month. Yes. a lot of the medicines when they’re new are very expensive and for quite a long time, Medicare would not pay for oral medications. That’s changed to some extent, but for many years they wouldn’t pay for oral medications and so people were really stuck.

Wow.

Leibowitz: Cause on the one hand, we’re delighted to have an oral medicine because it means people don’t have to travel to an infusion center and they don’t have to sit for hours and get IV medications but at least at that time it also meant they had to pay for it themselves.

Q: So this patient, did he just go without medicine?

Leibowitz: He went without that particular medicine, there were other medicines we could treat him with that we did treat him with, but he probably would’ve lived longer and more comfortably if we could’ve used the expensive medicine.

Q: How did that make you feel?

Leibowitz: Well, it made me angry and sad – both of those things.

Q: Thank you for sharing that. And you mentioned another case?

Leibowitz: It’s frighteningly similar. This was a man who had prostate cancer and we’ve been very lucky in that prostate cancer in the last 10 years or so has had a bunch of new medicines come on the market, which make quite a bit of difference for patients….Chemotherapy for prostate cancer is still not terribly effective by itself, but these new medicines again were not chemotherapy. They were a brand new way of affecting the hormonal control of the cancer and they were really great, but in the same way that happened with the first person, it was an oral medicine and it was enormously expensive. It was also over a thousand dollars a month and I actually had a number of patients who could not afford it when it first came out. Again, that really is infuriating cuz I mean we are a very rich country and there are a lot of very successful companies in the world of health care and you would think that we should be able to take care of people.

Q: It’s so true. So the second patient who couldn’t afford the medicine for prostate cancer, what happened to him?

Leibowitz: You know, so we would treat him with all the other options and there are other options. They cause more side effects than the new group of medicines does and today we know also about combinations of medicines that work more effectively. But the problem is that, you know, when a medicine is new, there’s no generic equivalent and basically it’s whatever the market will bear in terms of the price that’s set.

Q: Got it. I can imagine that drug companies just wouldn’t want there to be a generic version because once there is, they’ll miss out on a great deal of money, right?

Leibowitz: Well, yeah, there are a number of great stories about how the pharmaceutical companies handle that. It’s not that uncommon that they buy the company that is making the generic and then one of two things can happen. They may continue making the generic with the company they bought or in some cases they shut down the company and so there is no generic available.

Q: And that’s legal in America?

Leibowitz: It is legal.

Whoa, that’s insane.

Leibowitz: Yes. that’s a good word for it. <Laugh> And unfortunately, you know, insulin is a great example, I mean that’s not a new medicine. That’s been around for a very long time, but suddenly the price has gone up so much that a lot of diabetics are having problems affording it so it’s not just the new medicines. And I guess the other catch is that when a medication is starting to approach the time that it would come off patent, it’s not uncommon that a company will try to make some little chemical change in the medication so that they can patent it again. There are a lot of clever ways to kind of cheat in the system.

Q: So interesting. What about your patient struggles with health insurance? Do you have any stories you can share about that?

Leibowitz: The prostate cancer story is really about that because a lot of times the insurance could cover the medication if it chose to and that gets into the whole story about authorization and preauthorization and the ways in which health insurance companies control what doctors are allowed to do in their practice, and that actually is becoming a major issue because today 60% to 70% of physicians are employed. They no longer have their own little independent practice.

They’re now employed by hospitals or healthcare corporations and the really sad part is that many of those healthcare companies are being purchased by private equity firms. So before they were purchased, they were for-profit companies. After they’re purchased by private equity, there’s really no kind of pretense that they have a benevolent motivation cuz private equity is strictly dedicated to taking as much money out of a company as possible.

But even without considering private equity, if the company is for profit, the way you make a profit in insurance is by not paying anything out and in medical insurance, that means you don’t pay for medical care. So companies try to avoid paying for expensive medications. They try to avoid paying for expensive treatments. One of the newest types of treatments for a few different kinds of cancer is a kind of specialized kind of bone marrow transplant – stem cell transplant. And you know, of course that’s just starting up and is very expensive because it requires hospitalization, which is enormously expensive in the United States and insurance companies have been doing their best to avoid letting patients have that treatment. Luckily to some extent they get forced into it if it’s very clear that that’s the best treatment for the patient.

Q: So it sounds like in some cases they don’t get forced into it?

Leibowitz: Exactly.

Q: So what happens then?

Leibowitz: The patient doesn’t get that particular treatment. They’ll get some other treatment. It may not be as good. That’s the problem with the way our healthcare system has developed. It wasn’t always quite this dramatic, but over the last 20 to 30 years, the motivation to pull money out of the system as profit has gone up dramatically. If you look at graphs, comparing a variety of different things, comparing the United States to similarly developed countries until 20 or 30 years ago, there wasn’t that much difference between the United States and all those other countries. But since then there has developed a dramatic difference in how much we spend on health care, on how long we live and how many mothers and babies die. And it’s not going in the right direction.

That’s so sad and scary to think about.

Leibowitz: Absolutely.

Q: So how would single payer Medicare for All help remedy these challenges?

Leibowitz: Well, that’s a great question. One immediate thing is that you’d eliminate the for-profit dollars and that would probably amount to about one third of what we are now paying and that money would almost pay for the single-payer system, not completely, but it’s clear that single payer would save quite a lot of money, the total expenditure and you know, it varies from one estimate to another. Some estimates say that the savings would start in the first three years. Some estimates say, you’d have to be at 10 years before you start seeing the dramatic savings, but it would absolutely stop the incredible rise in costs in our system because you get rid of profit and you also eliminate administrative waste because the administrative costs in the U.S. system, since you have a whole variety of different insurers, each of which has their own set of criteria for what they’ll pay for and how they want the claim submitted, doctors have to pay for a team of people, billing and talking to the insurance companies. Care gets delayed, sometimes with terrible consequences and that takes up about 20% of our healthcare dollars. And in most of the other comparable countries, that figure is 9% to 10%. The Medicare system in the United States, the administrative costs are only two to 3%. The estimates are that if you had a single-payer system, it would probably be around 5%. So it would not be quite as low as Medicare right now, but it would be dramatically lower than what we’re spending and it would probably be lower than most of the other advanced countries.

Q: So how would saving money and getting rid of the administrative and cost burden help patients?

Leibowitz: Ah, yes, that’s the most important part of it. So it would mean that lots more things would be covered by insurance — vision care, hearing, dental care, long term care, which is an enormous item, particularly in the United States.

Q: Like nursing home care?

Leibowitz: Exactly and also there wouldn’t be any insurance premiums. There wouldn’t be any deductibles. There wouldn’t be any copays and there wouldn’t be any costs for medication. So it would be a whole new ballgame and one of the things that this is one thing that irritates me in terms of the debate about this. Sometimes you’ll hear people say that putting together Medicare for All or a single-payer system would increase everyone’s taxes and that’s very deceptive because taxes might go up, but the actual costs for families would go way down.

Q: For health care?

Leibowitz: Exactly, exactly. Well, yes. Right. Most families would end up saving money.

Q: Good to know you were recently named chairman of Physicians for a National Health Program – California, which advocates for Medicare for All. Congratulations. What’s your vision for the chapter and what are your goals?

Leibowitz: Well, the goals of course, would be to have a single-payer national healthcare system. There is debate within the group about, you know, how happy would we be if we had a single-payer system in one state. Some people feel like we ought to just focus on a national system. I think everybody would agree that a national system is the goal, but other people would argue that that is the goal, but maybe we need to start in one state or a group of single states at a time because Canada actually started in a single province and then the system got generalized. So my goal would be that PNHP has a large enough group of doctors who feel strongly and are committed to advocating for a single-payer system. The sense is that even though doctors are not by number an enormous voting block, people do still feel that doctors know something about how health care should be delivered and so we’d like to have a large enough group of doctors advocating for single payer so that the general public believed them and came to support single payer.

Thank you, Dr. David Leibowitz.

Do you have a personal story you’d like to share about our ‘wack’ healthcare system? Contact us through our website at heal-ca.org.

Find more Code WACK! episodes on ProgressiveVoices.com and on Nurse Talk Media. You can also subscribe to Code WACK! wherever you find your podcasts.

This podcast is powered by HEAL California, uplifting the voices of those fighting for healthcare reform around the country. I’m Brenda Gazzar.

https://heal-ca.org…

Resolution in Support of Medicaid Expansion in Georgia and Medicare for All Nationally 

Adopted by delegates to the Democratic Party of Georgia’s State Convention on August 27, 2022

WHEREAS every person in the state of Georgia and the USA deserves high quality health care; and

WHEREAS the number of Americans without health insurance before the COVID-19 pandemic was still nearly 30 million, with more than 40 million Americans underinsured, despite important gains made since the implementation of the Affordable Care Act; and

WHEREAS Georgia has a lower health system performance score than 37 other states; and

WHEREAS Georgia is among the worst performing states regarding mortality amenable to healthcare; and

WHEREAS Georgia is failing to get its fair share of ACA money and 700,000 more Georgians would be covered if Georgia fully expanded its Medicaid program; and

WHEREAS expansion of Medicaid under the ACA would create 50,000 new jobs for Georgians, and

WHEREAS ​many people delay seeking needed health care due to an inability to pay​, leading to a sicker and poorer population in the long run; and

WHEREAS the ever-increasing costs of health care, which are further elevated due to the on-going pandemic, may challenge our already strapped state and municipal budgets​​; and

WHEREAS long term ​COVID-19 related treatment could cost uninsured patients tens of thousands of dollars​; and

WHEREAS​ in order to equitably and effectively address the health care burden, we must urge the expansion of health insurance coverage to provide comprehensive coverage to every resident of the United States without any cost sharing; and

WHEREAS Medicare for All would provide national health insurance for every person in the United States for all necessary medical care including prescription drugs; hospital, surgical and outpatient services; primary and preventive care; emergency services; reproductive care; dental and vision care; and long-term care; and

WHEREAS Medicare for All would provide coverage without copays, deductibles or other out-of-pocket costs, and would slash bureaucracy, protect the doctor-patient relationship and assure patients a free choice of doctors; and

WHEREAS polls show that a majority of Americans support Medicare for All and expansion of Medicaid; and

WHEREAS Medicare for All will guarantee that all residents of Georgia will be fully covered for health care without copays, deductibles or other out-of-pocket costs, and would save millions in taxpayer dollars now spent on premiums that provide often inadequate health insurance coverage for government employees; and

WHEREAS the quality of life for the residents of Georgia will vastly improve because they would be able to get the ongoing care they need, instead of waiting until they have a medical emergency that could upend their lives as well as further burden local resources;

NOW THEREFORE BE IT RESOLVED, that the Georgia Democratic Party expresses its enthusiastic support for immediate full expansion of Medicaid in our state and urges the Georgia General Assembly to fully expand Medicaid under the Affordable Care Act with no waivers and calls upon each of our state legislators to work toward its immediate expansion.

BE IT FURTHER RESOLVED, that the Georgia Democratic Party asks Congress to enact legislation to provide universal, comprehensive health coverage with zero cost-sharing for patients and enthusiastically supports Medicare for All  as referenced in the Medicare for All  Act of 2021 (H.R. 1976 and S. 4204) and calls on our federal legislators to work toward its immediate enactment, assuring appropriate and efficient health care for all residents of the United States.

PDF version:
https://pnhp.org…

The Financial Fallout of Chronic Illness

Summary: A new study finds that privately-insured individuals with chronic illness are far more likely to have medical debt that is delinquent or in collections, and credit problems. And the debt is larger. Our insurance system is punishing people for being ill.

Association of Chronic Disease with Patient Financial Outcomes Among Commercially Insured Adults, JAMA Internal Medicine, August 22, 2022, by Nora V. Becker et al.

From Abstract: Among individuals with 0 vs 7 to 13 chronic conditions, the predicted probabilities of having any medical debt in collections (7.6% vs 32%), any nonmedical debt in collections (7.2% vs 24%), any delinquent debt (14% vs 43%), a low credit score (17% vs 47%) or recent bankruptcy (0.4% vs 1.7%) were all considerably higher for individuals with more chronic conditions and increased with each added chronic condition. Among individuals with medical debt in collections, the estimated amount increased with the number of chronic conditions ($784 for individuals with 0 conditions vs $1252 for individuals with 7-13 conditions) (all P < .001). In secondary analyses, results showed significant variation in the likelihood and amount of medical debt in collections across specific chronic conditions.

From Discussion: Further research in this area is needed to determine the relative importance of these pathways, as the policy implications of each are different. If poor financial well-being leads to additional chronic disease, policy makers should consider new social safety-net policies to reduce poverty rates and should explicitly incorporate improvements in physical health—and correspondingly reduced health care spending—as a benefit of antipoverty programs. If, in contrast, chronic disease diagnoses are directly leading to adverse financial outcomes, then improving commercial insurance benefit design [JGK – For a different solution, see below.] would be warranted to provide additional protection from out-of-pocket medical expenses, particularly for conditions identified as being costly for patients. In addition, policy makers should consider expanding access to disability benefits and implementing other social safety net policies to help patients recoup income loss after illness.

Comment:

By Jim Kahn, M.D., M.P.H.

These findings come as no surprise – in our health insurance system with very high patient cost-sharing (deductibles, copays, and uncovered services), individuals with greater ongoing medical needs inevitably have more medical expenses, more debt, more low credit scores, and more bankruptcies.

The cost-sharing doesn’t control healthcare costs. So why do we design a health insurance system this way, to financially punish the ill?

You know the answer: it’s profitable for insurers. Costs shift from shareholders to patients. It’s also profitable for drug makers and providers who charge high prices and garner out-sized profits.

When will we adopt an insurance system that is humane – that serves and protects the ill? And that is, in the process, efficient, saving money for the healthcare system.

It sounds magical. It is. It’s called single payer.

(We also need far better income protection for individuals who are disabled by chronic illness.)

http://healthjusticemonitor.org…

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CMS Should terminate the Medicare Advantage Program

PNHP Comments on CMS file code CMS-4203-NC: “Medicare Program; Request for Information on Medicare Advantage”

By Physicians for a National Health Program
August 25, 2022

Medicare Advantage is a program offering private health insurance plans as options to replace traditional Medicare. Medicare Advantage plans differ from traditional Medicare in that they are paid with capitation (per member), they are required to limit enrollees’ out-of-pocket spending and can offer extra benefits (e.g. gym membership, dental benefits), they almost always offer prescription drug coverage, they use a defined and often restricted network of providers and can require enrollees to pay more for out-of-network care, they can use utilization management techniques such as prior authorization, and they can fund special programs such as rewards for beneficiaries to encourage healthy behaviors. The hope is that these differences will lead to improved care at lower cost compared to traditional Medicare.

However, capitation has serious drawbacks and introduces perverse incentives to skimp on care, game risk pools, and upcode. Payment with unadjusted capitation based on average cost would grossly overpay for the healthy and even more grossly under-pay for the sick. Capitation therefore requires risk adjustment and quality incentives to mitigate its inherent incentives to worsen disparities in care. Risk adjustment and quality incentives in turn require detailed data on diagnoses and treatment, adding administrative costs and burdens that exceed those required by fee-for-service (FFS).1,2

Capitation is justified by the common assertion that FFS incentivizes excessive “volume” (over-use) of care and that this can be corrected by shifting insurance risk onto providers of care. However, the four key assumptions – that there is widespread overuse of care due to FFS, that capitation carries improved incentives compared to FFS, that risk adjustment can be done accurately, and that the overhead cost of capitation is worth it to achieve more cost-sensitive care – are all contradicted by the evidence. There is very little evidence for the claim that “volume” of services with FFS payment, as opposed to their price, explains the high cost of health care in the US.3,4,5 It appears demonization of FFS in health policy is mainly a rationale promoted by the insurance industry to justify a central role for themselves in health care, because unlike FFS, capitation requires their capacity to handle the data demands of risk management. But the overhead required for capitation far exceeds savings from the incentive to reduce care, so patients get less care, Medicare pays more, and intermediary insurers take home large profits.

And risk adjustment cannot be done anywhere near accurately enough to avoid over-paying for the healthy and under-paying for the sick. Gaming of risk pools means capturing a population of members or beneficiaries (risk pool) with lower-than-average health risk while getting paid for an average risk pool, so as to profit from the difference. MA plans use marketing tactics6 (including variations in coverage and contracting with employers to directly enroll newly Medicare eligible retirees) that attract healthier beneficiaries, and they employ multiple tactics to deny care to the sick, including narrow networks, formulary restrictions, and prior authorization. Sicker enrollees, such as in the last year of life, who have been frustrated by denial or delay of services tend to disenroll and return to the traditional Medicare program.7 The effect of both marketing tactics (“cherry-picking”) and disenrollment of sicker beneficiaries (“lemon-dropping”) is to create for Medicare Advantage plans a healthier and less costly than average risk pool.8,9 

CMS added diagnostic categories to the HCC risk adjustment formula in 2004. This improved its predictive accuracy from 1% to only 12%,10 but linked payment to diagnosis and introduced a major new opportunity for gaming: up-coding. Up-coding means choosing more specific or severe (and more highly paid) diagnosis codes than would be required for purely patient care purposes, and fraudulently adding irrelevant or non-existent diagnoses. Up-coding has been extensively exploited by Medicare Advantage plans since soon after diagnoses were added to the HCC, apparently often to the point of fraud11,12. According to one expert estimate, the cost to Medicare of aggressive diagnostic coding by Medicare Advantage plans and the failure of CMS to correct for it will reach several hundred billion dollars in coming years.13

Medicare Advantage plans have achieved profitability largely by gaming their risk pools, up-coding, and blunt restrictions on care including issuing millions of inappropriate denials for care that met Medicare coverage rules,14 and minimally if at all by improving care. 15,16 Typical administrative costs for Medicare Advantage plans, including profits, have been in the 15-20% range1,17, compared to around 2% for Traditional Medicare prior to the Affordable Care Act.2

It would be far more cost-effective for CMS to improve traditional Medicare by capping out-of-pocket costs and adding improved benefits within the Medicare fee-for-service system than to try to indirectly offer these improvements through private plans that require much higher overhead and introduce profiteers and perverse incentives into Medicare, enabling corporate fraud and abuse, raising cost to the Medicare Trust Fund, and worsening disparities in care. 

These problems are not correctable within the competitive insurance business model, and the Medicare Advantage program should be terminated.

References:

  1. McDermott D, Stolyar, L, Hinton E, et. al., Health Insurer Financial Performance in 2020. Kaiser Family Foundation, May 3, 2021. https://www.kff.org…
  2. 2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. April 23, 2012. 
  3. Health at a Glance 2019. OECD Indicators: Number of doctor consultations per person. Hospital discharge rates, 2000 and 2017. 
  4. Deborah Korenstein, et al., Overuse of health care services in the United States: an understudied problem, Archives of Internal Med, 2012. doi:10.1001/archinternmed.2011.772. 
  5. Katz MH. Overuse of health care: Where are the data? 2012;172:178. doi:10.1001/archinternmed.2011.1253.
  6. Gilfillan R, Berwick DM. Medicare Advantage, Direct Contracting, and The Medicare ‘Money Machine,’ Part 1: The Risk-Score Game. Health Affairs Blog. Sept. 29, 2021. 10.1377/forefront.20210927.6239.
  7. Meyers DJ, Belanger E, Joyce N, McHugh J, Rahman M, Mor V, Analysis of drivers of disenrollment and plan switching among Medicare Advantage beneficiaries, JAMA Intern Med. 2019;179(4):524–532. doi:10.1001/jamainternmed.2018.7639.
  8. Brown, J., M. Duggan, I. Kuziemko, et al., 2011. How does risk selection respond to risk adjustment? Evidence from the Medicare Advantage program. NBER working paper 16977. Cambridge, MA: National Bureau of Economic Research. doi:10.3386/w16977.
  9. Neuman P, Jacobson GA, Medicare Advantage Checkup, N Engl J Med 2018; 379:2163-2172. doi:10.1056/NEJMhpr1804089.
  10. June 2014 Report to the Congress: Medicare and the Health Care Delivery System. MedPAC, June 13, 2014.
  11. Schulte F. Researcher: Medicare Advantage Plans Costing Billions More Than They Should. Kaiser Health News, Nov. 11, 2021. 
  12. Hiltzik M. The government lawsuit against Kaiser points to a massive fraud problem in Medicare. Los Angeles Times, August 4, 2021.
  13. Kronick R. Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years. Health Affairs 36, no.2 (2017):320-327. doi: 10.1377/hlthaff.2016.0768.
  14. Grimm, Christi A, Inspector General. Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care. OIG Report OEI-09-18-00260. https://oig.hhs.gov…
  15. Park S, Jung J. Burke RE et al. Trends in Use of Low-Value Care in Traditional Fee-for-Service Medicare and Medicare Advantage. JAMA Network Open. 2021;4(3):e211762. doi:10.1001/jamanetworkopen.2021.1762.
  16. Figueroa JF, Wadhera RK, Frakt AB, et al., Quality of Care and Outcomes Among Medicare Advantage vs Fee-for-Service Medicare Patients Hospitalized With Heart Failure. JAMA Cardiol. Published online September 2, 2020. doi:10.1001/jamacardio.2020.3638.
  17. Day B, Himmelstein DU, Broder M, Woolhandler S. The Affordable Care Act and Medical Loss Ratios: No Impact in First Three Years. Int J Health Svcs, 2015:45(1);127-131. http://org.salsalabs.com…

pdf version:
https://pnhp.org…