PNHP

HHS/CMS proposed rule for accountable care organizations

HHS/CMS proposed rule for accountable care organizations

Department of Health and Human Services
Centers for Medicare and Medicaid Services

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR Chapter IV by adding part 425 to read as follows:

SUBCHAPTER B–MEDICARE PROGRAM

PART 425–MEDICARE SHARED SAVINGS PROGRAM

Subpart A–General Provisions

§425.2 Basis and scope.

(a) Basis. This part implements section 1899 of the Act by establishing a shared savings program that promotes accountability for a patient population, coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient services. Under this program, groups of providers of services and suppliers meeting criteria specified by the Secretary may work to together to manage and coordinate care for Medicare fee-for-service beneficiaries through an accountable care organization (ACO). ACOs that meet quality performance standards established by the Secretary are eligible to receive payments for shared savings. During years in which the ACO is participating in a two-sided model, the ACO may be required to share losses.

(b) Scope. This part sets forth the following:
(1) The eligibility requirements for an ACO to participate in the Medicare Shared Savings Program (Shared Savings Program).
(2) Program requirements, including quality and other reporting requirements.
(3) The method for assigning Medicare fee-for-service beneficiaries to ACOs.
(4) Payment criteria and methodologies (one-sided model and two-sided model).
(5) Compliance monitoring and sanctions for noncompliance.
(6) Reconsideration of adverse determinations.

Proposed rule (429 pages):
http://www.ofr.gov/OFRUpload/OFRData/2011-07880_PI.pdf

Accountable care organization (ACO) is a concept that grew out of concerns over excessive levels of spending for health care that is often only mediocre. It was thought that health care professionals and facilities could organize themselves into integrated organizations through which they would become accountable for both the cost and the quality of health care.

The Affordable Care Act established the Medicare Shared Savings Program which would use ACOs to achieve savings in the Medicare fee-for-service program, and the savings would be split between the ACOs and the government. The proposed rule for ACOs has now been released. I’ll try to reduce the 429 pages down into a few salient comments.

* The ACO would be composed of professionals arranged in networks or in group practices, and may partner with or be employed by hospitals.

* The ACO is accountable for the quality, cost, and overall care of the Medicare fee-for-service (FFS) beneficiaries assigned to it.

* The ACO shall include primary care ACO professionals that are sufficient for the Medicare FFS beneficiaries assigned to the ACO (minimum 5000 beneficiaries).

* The ACO shall have in place a leadership and management structure that includes clinical and administrative systems.

* The ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies.

* A benchmark will be established based on recent spending in the fee-for-service Medicare program.

* If spending for patients assigned to the ACO falls below the benchmark, the ACO will be rewarded with a portion of the amount saved, and the government keeps the rest.

* If spending for patients assigned to the ACO is more than the benchmark, then the ACO must pay a penalty of a portion of the excess (with a maximum two-year exemption for ACOs participating as a “one-sided” model with lower rewards but no penalty).

* The ACO must meet detailed quality requirements to qualify for the shared savings, but also may be terminated for failure to meet minimum standards.

* Patients will have free choice of any physician at all times, but will be assigned to an ACO based on plurality use of primary care services, for the purpose of assigning accountability for savings and quality. The ACO, which theoretically controls cost and quality for the patient assigned to it and will be rewarded or punished for the results, will have no control of the cost and quality of care delivered outside of the ACO.

* And over 400 pages of etc., etc.

Under the proposed rules, ACOs are not simple organizations formed on just a handshake. They require a formal legal structure with management, a specified governance board, a medical director, a quality assurance program, and more. They must implement evidence-based clinical guidelines.  The required documentation of quality is particularly onerous. They must have an infrastructure, such as information technology, to collect and evaluate data, and provide feedback. They must comply with extensive legal, business, and clinical documentation requirements. Since ACOs often involve consolidation within the health care delivery system, they must coordinate with antitrust agencies.

Obviously, considerable time, effort and expense is involved, so the reward must be worthwhile. And what is that reward? If they can improve their productivity while meeting quality standards, the financial benefit accrues to the government, but the reward is that the government lets them have a fraction of their productivity gains, providing that they are compliant with the complex set of rules. Since it’s almost impossible to continue to improve productivity in health care year after year, the reward would dry up soon.

With the trend of increasing frequency and intensity of services, there is a risk that the ACO may exceed the benchmark and have to pay back to the government a portion of the higher spending as a penalty.

What would happen if a group of professionals who were considering forming an ACO decided not to? First, they wouldn’t have all of the extra expenses and effort that establishing an ACO would require. They certainly would not have an incentive to reduce Medicare’s spending (i.e., reduce their income) since they would keep all revenues and not have to share them with the government. And if their spending for Medicare exceeded the benchmark? They would still keep it all, and wouldn’t have to pay a penalty.

Since most people with any business sense would never participate in such a scheme, why is it that there seems to be such a rush to form ACOs? In my opinion, they are not looking for the Medicare fee-for-service business. They are forming commercial ACOs in the private sector, looking for the private insurance business that will expand greatly in the new insurance exchanges. They are taking advantage of the prevailing attitude that we must back off on enforcing antitrust regulations in order to provide flexibility for the ACOs. They are consolidating to gain greater market control. Many are using “accountable care organization” as a deceptive label for expanded managed care oligopolies and monopolies.

The notion of accountable care organization was originated as a well meaning, altruistic, aspirational concept by individuals who really care about the health care that all of us receive. To be successful in improving quality and reducing costs the concept would have to be dependent on patients and health care professionals and administrators who were determined to do the right thing regardless of pecuniary or other self-interests. Yet health care, as the business that it is – like it or not – cannot afford to embrace altruism, for it would fail in its business responsibilities to maximize market opportunities.

Does it have to be this way? Do we really need to depend upon private stewards devoted to the amoral business ethic to administer the financing of health care? Well, when you think about it, a single payer system is an automated system of financing health care that does not depend on the altruism of its players. That’s because the single payer model is structured as an altruistic, aspirational system that, quite automatically, actually does, in itself, improve quality and control costs. It just works.

Wisconsin doctors' group: 'Save SeniorCare!'

Single-payer advocates call on U.S. health secretary to block changes that would hurt seniors

FOR IMMEDIATE RELEASE
April 1, 2011

Contact:
Melissa Stiles, M.D., wisconsin.pnhp@gmail.com
Laurel Mark, M.D., wisconsin.pnhp@gmail.com

This morning the Wisconsin chapter of Physicians for a National Health Program joined many other Wisconsin organizations in opposing changes to SeniorCare and called upon Kathleen Sebelius, U.S. secretary for health and human services, to block any federal waivers that would undermine the program. The group’s statement follows:

Wisconsin has been a national leader in providing affordable prescription medications to our senior citizens at a lower cost and with better coverage than Medicare Part D.

SeniorCare was established in 2002 under Gov. Tommy Thompson and extended in 2007 and 2009 with bipartisan support from our congressional delegation. It is a very popular part of the Medicaid program, a joint federal and state program that requires federal approval for changes.

With an enrollment of 91,000 Wisconsin seniors, a $30 annual enrollment fee, co-payments ranging from $5 to $15, and no gaps in coverage, SeniorCare is a proven program that works. In addition to providing exceptional drug coverage, the program also saves taxpayers tens of millions of dollars by negotiating for discounts from drug companies.

Now this program is at risk. Gov. Scott Walker’s proposed budget would change and effectively dismantle SeniorCare so that it would only fill in gaps in private insurance coverage, at a higher cost to seniors and with continued gaps in coverage. If this change is allowed to take place, many seniors will not be able to afford needed medications, leading to more illness, suffering and death.

SeniorCare is financially solvent. It currently runs a $20 million surplus and saved $50 million in drug costs in 2009 alone. There is no need to dismantle this program except for political ideology.

As physicians and health care professionals caring for Wisconsin seniors every day, we emphatically oppose changes to SeniorCare and call on Secretary of Health and Human Services Kathleen Sebelius to reject any plan that would weaken or dismantle the program. We applaud Sen. Herb Kohl for his leadership on this issue and thank all our elected officials who have supported SeniorCare in the past and present.

Until such time as our nation adopts a single-payer health plan that provides universal and comprehensive coverage to everyone, the 350 physician-members of PNHP Wisconsin stand together with Wisconsin seniors in supporting SeniorCare in its current form.

*****

Physicians for a National Health Program (www.pnhp.org) is an organization of 18,000 doctors who advocate for single-payer national health insurance, an improved Medicare for all. To speak with a physician near you, visit www.pnhp.org/stateactions, or call (312)782-6006.

'Health care is a civil rights issue': Black caucus leader

Congresswoman addresses ‘stubborn disparity’ in health care between whites and blacks

By Ginny Lee
Illinois Times (Springfield), March 31, 2011

“Health care is the civil rights issue of the 21st century,” Donna Christensen, a member of Congress, stated Monday evening at the Southern Illinois University School of Medicine in Springfield. The congresswoman from the U.S. Virgin Islands spoke on “Ethics, Race and Class” to members of the medical community and others.
 
Christensen is a former practicing family physician and current vice chair of the Congressional Black Caucus. She reminded the audience that the U.S. is the only industrialized country in the world that does not provide health care for its citizens.
 
Though the Congressional Black Caucus has existed for 40 years, Christensen said, progress on issues has been minimal.
 
“In 2000, minorities received fewer tests and less sophisticated treatment for a panoply of ailments,” Christensen said, “including heart disease, cancer, diabetes and HIV/AIDS.” African Americans have the highest death rate from breast cancer in this country, she said, and African Americans are 3 1/2 times more likely than white diabetics to have a lower limb amputation.
 
African Americans without health insurance have a 78 percent greater chance of dying than insured white Americans, Christensen said. “If you are poor and of color, there is a double whammy,” she added.
 
Christensen noted the 1985 Heckler Report, which documented the continuing disparity in the deaths and illnesses experienced by blacks and other minority Americans. The report shows that the “stubborn disparity” that civil rights pioneer W.E.B. Du Bois spoke of at the turn of the century persists today.
 
“We could have had a much better, stronger health care bill if it were based on ethics,” Christensen said. “What ethical standards leave 47 million people without health care? Without ethical implementation, the whole health care program will fail. It will take stronger intervention from the White House to maintain the health care bill.”
 
The National Institutes of Health in Atlanta has created the National Center on Minority Health and Health Disparities, Christensen said, but it is an organization in name only.
 
Christensen, who has served in Congress for 14 years, called for ethics, race and class to be at the forefront of health care in this country. A single-payer plan, or Medicare for All, will be introduced in Congress again, she said. She quoted Martin Luther King Jr., who said, “Of all forms of discrimination and inequalities, injustice in health care is the most shocking and inhumane.”
 
Jane Treadwell, university librarian at the University of Illinois Springfield, is credited for inviting Christensen to speak in Springfield. “Some of us (in the group Friends of Brookens Library) were reading The Immortal Life of Henrietta Lacks,” Treadwell said. Treadwell knew of Congresswoman Christensen’s commitment to minority health care, and with the large medical community in Springfield, she suggested her as a speaker.
 
Henrietta Lacks was a mother of five in Baltimore who died at age 30 in 1951 from an aggressive cancer. Doctors saved some of her tissue to use for research without telling her family. Years later when family members learned what had happened, they felt deceived by the medical community. Author Rebecca Skloot researched the history of Henrietta’s cells for 10 years before publishing her book.
 
http://www.illinoistimes.com/Springfield/article-8504-lshealth-care-is-a-civil-rights-issuers.html

N.H. mental health cuts will hurt people, families

Letters
Seacoastonline.com, March 30, 2011

The cuts in mental health services proposed in the New Hampshire Legislature will have a devastating effect on people with mental illness, their families and all who care about them. Seacoast Mental Health Center stands to have its budget cut by $1.9 million (out of $9.3 million) and will be forced to stop serving more than 1,000 people who have no where else to turn. The cuts will weaken the infrastructure, impair emergency care, interfere with treatment of current clients, delay or eliminate treatment with new clients and make it much harder to retain personnel. As a psychiatrist who has worked in the public mental health system for more than 30 years, I see first-hand the consequences of indifference to the poor, sick and vulnerable. These cuts will result in an increase in despair and suicides, hospitalizations, increased numbers of people being unable to work due to their symptoms, and more people getting unnecessarily entwined in the (much more costly) legal system.

These huge cuts are part of a national effort to roll back protections for our citizens and preserve more money for the wealthy. Their strategy is to pick away at the weakest among us, step by step, and hope that the rest of us won’t fight back. We see it in Congress, who gave tax cuts to the wealthy in order to get true tax relief and job promotions for the working class. We see it when leaders in Congress try to cut Social Security and Medicare. We see it in Wisconsin, Ohio, Indiana, Maine and New Hampshire, where collective bargaining rights are being attacked. We see it in Maine, where Gov. Paul LePage wants to cut taxes for the wealthiest 10 percent and pay public employees less.

And we see it in New Hampshire House, where Martin Harty stated, “I wish we had a Siberia so we could ship them all off to freeze to death and die and clean up the population.” While Harty only said it, the people who support these cuts will be taking a step in his direction. They’ll say it’s not, that these cuts are necessary for “shared sacrifice.” They think like Martin Harty; they are just better at hiding it.

In 1980, Ronald Reagan asked people, “Are you better off now than you were four years ago?,” replacing Kennedy’s admonition to “ask not what your country can do for you, ask what you can do for your country.” Selfishness became our core value, and taxes came to be the ultimate evil. Since Reagan uttered those words, 94 percent of the new wealth created in this country went to the top 20 percent of the wealthy. Forty-two percent went to the top 1 percent. The ratio of pay for CEOs of major corporations to the average worker went from 42:1 in 1980 to 344:1 in 2007. Chief executive officers’ pay at these corporations increased by 300 percent during this time span, while the average worker gained only 3.4 percent (adjusted for inflation).

The people at the top of the economic ladder seem to believe that they should benefit from the U.S. system of free enterprise and that they owe nothing to anyone else who helps make that system work. But where would rich people be without soldiers to fight the wars, without police to protect them from crime, without firefighters to save them in the middle of the night, without workers to perform the physical tasks that their fortunes are made from, without people who build and maintain the roads that their products travel on and without nurses when they get sick?

Don’t people deserve a decent wage, health care and a good education? There is no God-given right to selfish behavior and there is nothing in the U.S. Constitution that prevents us from determining how the fruits of our incredible country and amazing political system will be shared. Our well-being is what we decide together as a nation. Right now, the forces of selfishness have the upper hand. It doesn’t have to be this way.

On a national level, eliminating the Bush tax cuts for people who make over $250,000 a year and shifting our health care system away from one that is profit-driven toward a model centered on health (e.g. Medicare-for-all) would improve our health and pocketbook. Here in New Hampshire, we weathered the recent economic downturn better than many places. Slight adjustments to our current tax structure could easily pay for the cuts some say are “necessary.”

Today in New Hampshire, it’s the mentally ill, their families and those who care about them who are under attack. But if we let them get away with it this time, we’ll see that this is just a start.

There are many things you can do to help, but they will win if you do nothing! Come to the Rally for New Hampshire at the State Capitol building in Concord from noon to 1 p.m. Thursday, March 31. Write your senator and representatives. Make your voice heard — that New Hampshire should support all its citizens!

Ted Drummond, MD
Associate medical director
Seacoast Mental Health Center

Solution to a Busted VEBA: Single Payer Health Care, HR 676

By Kay Tillow
FireDogLake, April 1, 2010

Detroit Diesel has been around since April 1937, a few months after the Flint sit down strike that won union recognition. 

This year, 1,100 retired auto workers at Detroit Diesel suffered a giant cut in company provision of health benefits because their Voluntary Employees Benefits Association, VEBA, went belly up.  Workers who retired between 1993 and 2004 will have to pick up an increasing share of the premiums that were once fully covered by the company.  Some retirees will have to pay as much as $4,000 per year, or even higher, just to keep their health coverage.

VEBAs are spreading.  Many companies seek to shift their liability for future health costs to the workers or the union through establishment of a VEBA.

So how do unions and workers, who are in danger of losing health benefits for which they worked for decades, fight back?  Educate and organize for national single payer health care, HR 676, an improved Medicare for all.  Build a movement that demands it.  Spread the word.  March for it. 

With HR 676 what happens to locked out workers?  Health coverage continues.  To workers on strike?  Coverage continues.  To early retirees?  Coverage continues.  To laid off workers?  Coverage continues.   

“Our struggle is not for more or better VEBAs.  That was the condition we faced in the last decade.  In this decade, we only have one choice, National Health Care (HR 676),” says Al Gladyck of the UAW Local 7 Retirees Chapter and former Chief Steward at Chrysler’s Jefferson Assembly Plant.

“HR 676 would make this situation a thing of the past” Gladyck said, referring to the Detroit Diesel retirees’ loss.

Gladyck is one of the leaders of Retirees for Single Payer Health Care which meets regularly at UAW Local 22, 4300 Michigan Avenue in Detroit.  He has written three articles on Detroit Diesel, VEBAs, and the solution.  They are well worth reading.

Detroit Diesel:  The Death of a VEBA and the Cost to Retirees

Part I 

Part II

Part III

To find the ongoing activities of Retirees for Single Payer Health Care in Detroit, click here.

http://my.firedoglake.com/kaytillow/2011/03/30/solution-to-a-busted-veba-single-payer-health-care-hr-676/

Important RWJF report on cost-sharing

The Synthesis Project, Policy Brief No.20

Robert Wood Johnson Foundation
December 2010

Cost-sharing: Effects on spending and outcomes
By Sarah Goodell, M.A. and Katherine Swartz, Ph.D., based on a research synthesis by Swartz

This brief examines how cost-sharing affects the use of services, whether some patients are more sensitive to cost-sharing than others, and whether reduced use of services as a result of cost-sharing has an effect on health outcomes. All of these issues factor into whether and how cost-sharing could be used to reduce the rate of growth of health care spending.

Policy Implications

Recent studies of patient cost-sharing confirm the primary conclusion of the HIE — demand for most health care services is price sensitive. When people have to pay more, they reduce their use of health care. The HIE’s exclusion of the elderly, the increase in the prevalence of chronic conditions, and changes to medical care and insurance design since the 1970s, however, make it important to re-examine the role of cost-sharing. Findings from more recent research highlight important implications for policy-makers, including:

*  Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending. Most people are healthy and cost-sharing would only modestly affect their health care spending. People who are very sick or who have serious chronic health conditions are typically deferring to their physicians rather than making choices about medical care based on cost-sharing. Moreover, by itself, cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.

*  Cost-sharing is not well-targeted on low-value services. Patient cost-sharing generally has been organized in broad categories (e.g., outpatient care, inpatient care, emergency department care). These broad categorizations do not help people distinguish between essential and nonessential services. Comparative effectiveness research could help insurers and government programs better target cost-sharing to improve value.

*  Caution should be used when increasing cost-sharing for low-income populations or the chronically ill. Not only are low-income populations disproportionately affected by increased cost-sharing, but they also are more price sensitive than other income groups. Unless the cost-sharing increases are concentrated on services that are ineffective or unnecessary, low-income groups may avoid necessary medical care as a result. Increased cost-sharing for people with chronic conditions may result in higher expenditures for hospitalizations and other adverse outcomes if necessary care is reduced.

Policy Brief:
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.brief.pdf

Full Research Synthesis Report by Katherine Swartz, Ph.D. (40 pages):
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.rpt.pdf

Comment: 

By Don McCanne, MD

This is a very important report. Let me tell you why.

Conservatives have framed the problem of our very high health care costs as being due to a lack of sensitivity of health care prices by patient-consumers who are simply demanding too much care. This is been repeated so many times that moderates and liberals are now parroting the same message. They profess that patients must face large deductibles, co-payments and coinsurance if we are ever going to get our health care costs under control.

It is true that these forms of cost-sharing do reduce health care spending, but is the savings significant? And is there any downside, any unintended consequences, to applying these price sensitizers to health care shopping?

Too much care?

When is the last time that you went to your health care professional and demanded too much care? If it isn’t you who is guilty of this transgression, then who is? I didn’t see these people in my very busy practice. Sure, you can find a few anecdotes, but most people simply are not motivated to use their time and money to seek out care that they don’t need.

Reduction in spending

The healthier one-half of our population uses only three percent of health care. They may be price sensitive shoppers when they have significant cost-sharing, but even if they reduced spending by ten percent, the savings of three-tenths of one-percent would represent only a negligible decline in our national health expenditures.

Twenty percent of us use eighty percent of the nation’s health care. These are people with very significant problems who are preoccupied with accessing the health care that they need, and are no longer concerned about the deductibles that they’ve already gone through. Cost-sharing is not intended to apply to individuals with significant illnesses or injuries anyway. So cost-sharing has very little impact on eighty percent of our national health expenditures.

The remaining thirty percent of us use about sixteen percent of health care. Some of this is urgent care, over which we have little choice, so price shopping isn’t an issue. But suppose that we could actually reduce spending in this group by about ten percent; that would still be only about 1.6 percent of our national spending. Combined with the 0.3 percent above, that’s still under two percent.

If you read the report, you will find that it is common for people to make unwise decisions as to which care they decline because of the out-of-pocket costs involved. These studies show that the net costs are sometimes higher because forgoing treatment can result in a greater incidence of emergency department visits and hospitalizations, and can sometimes intensify their chronic problems, making them more expensive to manage. Much of the relatively paltry savings from creating price sensitivity is lost due to the offset of the higher costs of deferred medical management.

As this report states, “cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.” We need to consider more effective options than cost-sharing if we want to tame health care costs.

Unintended consequences

Cost-sharing has been demonstrated to result in adverse outcomes in two particularly vulnerable groups: low-income individuals and families, and individuals with chronic disease.

Although Medicaid selectively covers the low-income sector with more generous benefits and usually without significant cost-sharing, as a chronically underfunded welfare program, access is often impaired because of a lack of willing providers. Also, as states struggle with their budgets, some are introducing more cost-sharing into their Medicaid programs in order to reduce spending.

For those with incomes just above the level at which they would qualify for Medicaid, the standard plan in the exchanges will have an actuarial value of only 70 percent, which can be achieved only by including cost-sharing in the plan design.

Creating financial barriers to care for this vulnerable sector clearly reduces their access to beneficial health care services – the opposite of what a well functioning health care system should be doing.

The same applies to the chronically ill. The health care financing system should be designed to help them get the care that they need. Cost-sharing does the opposite. Also it is in this sector that cost sharing has often been shown to result in the opposite of its intent. Instead of reducing health care spending, the financial barriers of cost sharing have often resulted
in higher costs because of more expensive emergency department and in-hospital care that must be rendered due to the financial barriers that result in inadequate chronic disease management.

Prevention of financial hardship

A prevalent concept is that the purpose of insurance is to protect against catastrophic loss, but individuals should be personally responsible for routine medical expenses. That has been repeated so often that it is widely accepted. Yet many studies have confirmed that so-called routine expenses can be very burdensome financially. When medical debt contributes to personal bankruptcy, the routine expenses of cost-sharing have defeated this purpose of preventing catastrophic loss since the necessity of filing bankruptcy is, in itself, catastrophic.

We need to abandon the glib definition of insurance as being only for the purpose of covering catastrophic loss, and replace it with the definition that a health care financing system is for the purpose of removing financial barriers to the care that a patient should have. Cost-sharing does the opposite by creating financial barriers that should be removed.

Solidarity

Another prevalent attitude is that the government should stay out of our lives, and we should each tend to our own needs. As an abstraction, that concept has a certain appeal, and, consequently, a wide following. But there are very few of us who are not offended when we hear real-life stories of people who suffer when they fail to receive the medical care that they should have. We are particularly offended when we hear that the individuals’ insurance failed them in their times of need.

Insurance should be designed to help people get the care they need. Yet, as we all know, it is frequently designed to reduce spending on health care for the business purposes of keeping insurance premiums competitive and enhancing profits. One of the most important tools used by the insurers is cost-sharing. At times it seems as if they are a business set up more for the purpose reducing health care spending than helping us get health care.

Traditional private insurance has represented a form of social solidarity in which we join together to pool our risks so that none of us would have to suffer financial hardship in the face of medical need. But the interests of private insurers are very different from the interests of patients. The tool of cost-sharing serves the interests of the private insurers very well, but it fractures the solidarity that was intended to bring those with needs the health care that they need.

Other nations have expressed solidarity in a more effective manner. The people join together, through their governments, to finance their universal pools to serve as a resource for funds to pay for health care that people need. Many of those nations have rejected the concept of cost-sharing because of its perversities. They provide first dollar coverage for health care.

Those nations that do eliminate the barriers of cost-sharing still provide comprehensive benefits for everyone at a cost much lower than what we spend here in the United States. That’s the kind of solidarity that we need and that we would have if people weren’t confused by prevailing misperceptions that our goal should be to stop people from demanding too much care, and that we can do that by assessing the penalties of cost-sharing on people who attempt to access the care that they need.

You should consider downloading the RWJF brief for future use. We need to change the national discourse from that of using the consumer-directed tools of cost-sharing – tools that save very little money and impair outcomes – that are being used to address the alleged but fictional excess patient demand for care. Instead we need to have a national dialogue on how we can improve access to the care that patients need, and do it in an affordable manner (i.e., single payer).

Important RWJF report on cost-sharing

The Synthesis Project, Policy Brief No.20

Robert Wood Johnson Foundation
December 2010

Cost-sharing: Effects on spending and outcomes
By Sarah Goodell, M.A. and Katherine Swartz, Ph.D., based on a research synthesis by Swartz

This brief examines how cost-sharing affects the use of services, whether some patients are more sensitive to cost-sharing than others, and whether reduced use of services as a result of cost-sharing has an effect on health outcomes. All of these issues factor into whether and how cost-sharing could be used to reduce the rate of growth of health care spending.

Policy Implications

Recent studies of patient cost-sharing confirm the primary conclusion of the HIE — demand for most health care services is price sensitive. When people have to pay more, they reduce their use of health care. The HIE’s exclusion of the elderly, the increase in the prevalence of chronic conditions, and changes to medical care and insurance design since the 1970s, however, make it important to re-examine the role of cost-sharing. Findings from more recent research highlight important implications for policy-makers, including:

*  Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending. Most people are healthy and cost-sharing would only modestly affect their health care spending. People who are very sick or who have serious chronic health conditions are typically deferring to their physicians rather than making choices about medical care based on cost-sharing. Moreover, by itself, cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.

*  Cost-sharing is not well-targeted on low-value services. Patient cost-sharing generally has been organized in broad categories (e.g., outpatient care, inpatient care, emergency department care). These broad categorizations do not help people distinguish between essential and nonessential services. Comparative effectiveness research could help insurers and government programs better target cost-sharing to improve value.

*  Caution should be used when increasing cost-sharing for low-income populations or the chronically ill. Not only are low-income populations disproportionately affected by increased cost-sharing, but they also are more price sensitive than other income groups. Unless the cost-sharing increases are concentrated on services that are ineffective or unnecessary, low-income groups may avoid necessary medical care as a result. Increased cost-sharing for people with chronic conditions may result in higher expenditures for hospitalizations and other adverse outcomes if necessary care is reduced.

Policy Brief:
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.brief.pdf

Full Research Synthesis Report by Katherine Swartz, Ph.D. (40 pages):
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.rpt.pdf

This is a very important report. Let me tell you why.

Conservatives have framed the problem of our very high health care costs as being due to a lack of sensitivity of health care prices by patient-consumers who are simply demanding too much care. This is been repeated so many times that moderates and liberals are now parroting the same message. They profess that patients must face large deductibles, co-payments and coinsurance if we are ever going to get our health care costs under control.

It is true that these forms of cost-sharing do reduce health care spending, but is the savings significant? And is there any downside, any unintended consequences, to applying these price sensitizers to health care shopping?

Too much care?

When is the last time that you went to your health care professional and demanded too much care? If it isn’t you who is guilty of this transgression, then who is? I didn’t see these people in my very busy practice. Sure, you can find a few anecdotes, but most people simply are not motivated to use their time and money to seek out care that they don’t need.

Reduction in spending

The healthier one-half of our population uses only three percent of health care. They may be price sensitive shoppers when they have significant cost-sharing, but even if they reduced spending by ten percent, the savings of three-tenths of one-percent would represent only a negligible decline in our national health expenditures.

Twenty percent of us use eighty percent of the nation’s health care. These are people with very significant problems who are preoccupied with accessing the health care that they need, and are no longer concerned about the deductibles that they’ve already gone through. Cost-sharing is not intended to apply to individuals with significant illnesses or injuries anyway. So cost-sharing has very little impact on eighty percent of our national health expenditures.

The remaining thirty percent of us use about sixteen percent of health care. Some of this is urgent care, over which we have little choice, so price shopping isn’t an issue. But suppose that we could actually reduce spending in this group by about ten percent; that would still be only about 1.6 percent of our national spending. Combined with the 0.3 percent above, that’s still under two percent.

If you read the report, you will find that it is common for people to make unwise decisions as to which care they decline because of the out-of-pocket costs involved. These studies show that the net costs are sometimes higher because forgoing treatment can result in a greater incidence of emergency department visits and hospitalizations, and can sometimes intensify their chronic problems, making them more expensive to manage. Much of the relatively paltry savings from creating price sensitivity is lost due to the offset of the higher costs of deferred medical management.

As this report states, “cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.” We need to consider more effective options than cost-sharing if we want to tame health care costs.

Unintended consequences

Cost-sharing has been demonstrated to result in adverse outcomes in two particularly vulnerable groups: low-income individuals and families, and individuals with chronic disease.

Although Medicaid selectively covers the low-income sector with more generous benefits and usually without significant cost-sharing, as a chronically underfunded welfare program, access is often impaired because of a lack of willing providers. Also, as states struggle with their budgets, some are introducing more cost-sharing into their Medicaid programs in order to reduce spending.

For those with incomes just above the level at which they would qualify for Medicaid, the standard plan in the exchanges will have an actuarial value of only 70 percent, which can be achieved only by including cost-sharing in the plan design.

Creating financial barriers to care for this vulnerable sector clearly reduces their access to beneficial health care services – the opposite of what a well functioning health care system should be doing.

The same applies to the chronically ill. The health care financing system should be designed to help them get the care that they need. Cost-sharing does the opposite. Also it is in this sector that cost sharing has often been shown to result in the opposite of its intent. Instead of reducing health care spending, the financial barriers of cost sharing have often resulted in higher costs because of more expensive emergency department and in-hospital care that must be rendered due to the financial barriers that result in inadequate chronic disease management.

Prevention of financial hardship

A prevalent concept is that the purpose of insurance is to protect against catastrophic loss, but individuals should be personally responsible for routine medical expenses. That has been repeated so often that it is widely accepted. Yet many studies have confirmed that so-called routine expenses can be very burdensome financially. When medical debt contributes to personal bankruptcy, the routine expenses of cost-sharing have defeated this purpose of preventing catastrophic loss since the necessity of filing bankruptcy is, in itself, catastrophic.

We need to abandon the glib definition of insurance as being only for the purpose of covering catastrophic loss, and replace it with the definition that a health care financing system is for the purpose of removing financial barriers to the care that a patient should have. Cost-sharing does the opposite by creating financial barriers that should be removed.

Solidarity

Another prevalent attitude is that the government should stay out of our lives, and we should each tend to our own needs. As an abstraction, that concept has a certain appeal, and, consequently, a wide following. But there are very few of us who are not offended when we hear real-life stories of people who suffer when they fail to receive the medical care that they should have. We are particularly offended when we hear that the individuals’ insurance failed them in their times of need.

Insurance should be designed to help people get the care they need. Yet, as we all know, it is frequently designed to reduce spending on health care for the business purposes of keeping insurance premiums competitive and enhancing profits. One of the most important tools used by the insurers is cost-sharing. At times it seems as if they are a business set up more for the purpose reducing health care spending than helping us get health care.

Traditional private insurance has represented a form of social solidarity in which we join together to pool our risks so that none of us would have to suffer financial hardship in the face of medical need. But the interests of private insurers are very different from the interests of patients. The tool of cost-sharing serves the interests of the private insurers very well, but it fractures the solidarity that was intended to bring those with needs the health care that they need.

Other nations have expressed solidarity in a more effective manner. The people join together, through their governments, to finance their universal pools to serve as a resource for funds to pay for health care that people need. Many of those nations have rejected the concept of cost-sharing because of its perversities. They provide first dollar coverage for health care.

Those nations that do eliminate the barriers of cost-sharing still provide comprehensive benefits for everyone at a cost much lower than what we spend here in the United States. That’s the kind of solidarity that we need and that we would have if people weren’t confused by prevailing misperceptions that our goal should be to stop people from demanding too much care, and that we can do that by assessing the penalties of cost-sharing on people who attempt to access the care that they need.

You should consider downloading the RWJF brief for future use. We need to change the national discourse from that of using the consumer-directed tools of cost-sharing – tools that save very little money and impair outcomes – that are being used to address the alleged but fictional excess patient demand for care. Instead we need to have a national dialogue on how we can improve access to the care that patients need, and do it in an affordable manner (i.e., single payer).

Vt. student rally a huge success, activism up nationwide

March 30, 2011

Dear PNHP colleagues and friends,

We have some important news from Vermont and elsewhere in the nation. In this message:

  1. Health-professional student rally in Vermont is a huge success
  2. Over 200 doctors say they’d relocate to Vermont if it implemented a single-payer system
  3. Vermonters face challenges as health reform bill is weakened in legislative process
  4. Wisconsin members active in battle to protect health care safety net
  5. Doctors around country have their letters, op-eds published in newspapers
  6. Opportunity: Invite PNHP President Dr. Garrett Adams to speak in your area

1. More than 200 medical students, other health-professional students, physicians, nurses and health reform advocates rallied at the Vermont Statehouse in Montpelier last Saturday in a stunning show of support for a single-payer health care system. 

 Vermont Student Rally

Watch an exciting 5-minute video about it here.

Attired in white coats and scrubs, and accompanied by a boisterous brass band and drums, the participants – who hailed from Vermont, the Northeast and in some cases from states as far away as Oregon and New Mexico – marched from a nearby high school to the steps of the Statehouse chanting slogans like “Single Payer Now!” and “Health care is a right!” and “Everybody in! Nobody out!”

Minutes later, Sen. Bernie Sanders, I-Vt., addressed the crowd in a packed meeting room inside. “What is unique and important about your presence here today,” he said, “is that you are saying, ‘I want to be the best doctor or the best healer that I can be, but I can’t be that unless we change the system.’”

In addition to Sanders, Vermont Gov. Peter Shumlin also spoke, as did about eight health-professional students. Each of the students described a key feature of a single-payer system – truly universal, comprehensive coverage; a single, publicly financed insurance plan, administered by a public or quasi-public authority; free choice of provider; and so on – to the applause of the crowd. The program was emceed by Danielle Alexander, a second-year medical student from Albany Medical College in New York.

Vermont Student Rally

The March 26 rally, which was organized and led by PNHP student activists and co-sponsored by the American Medical Student Association, was the top story on the region’s evening television news. Some of the media coverage can be found here, and some of the lead-up coverage here.

Ali Thebert, PNHP’s national organizer, provided substantial support for the effort from beginning to end, with aid, of course, from PNHP members in Vermont and the Northeast. For example, PNHP med student activists such as Sim Kimmel, Kirsten Austad and Brandon Green in the Boston area filled two busloads with students; their efforts were supported by members of the Boston chapter.

Several PNHP leaders on the scene said they thought the event marked a new high-water mark in student activism for single payer. To support additional initiatives like this one, please make a tax-deductible donation to PNHP.

2. The student rally followed on the heels of an announcement by Vermont PNHP’s interim chair, Dr. Peggy Carey, a few days before that more than 200 physicians and over 50 medical students would seriously consider relocating to Vermont if it were to implement a single-payer system. About half of the physicians who said they’d consider switching to Vermont are in primary care, a category of doctors the state badly needs.

This story helped counter the arguments of single payer’s opponents in the state, who claimed that the creation of a single-payer system would cause physicians to flee Vermont. The news about the willingness of doctors to relocate was brought to the attention of the state’s lawmakers by PNHP’s Dr. Deb Richter and others, and it also received significant media coverage.

3. The situation in Vermont has grown more complex. The Shumlin administration’s bill, H.202, which was never a full-fledged single-payer bill, was severely weakened in the House before it was approved by that body on March 24. It currently stresses the implementation of the national health law, PPACA, and specifically the creation of a health insurance exchange in Vermont. The bill would keep private insurers in the system, and the very phrase “single payer” was stripped almost completely from the legislation, including from its title. It’s now called “A Road Map to a Universal and Unified Health System.” Here’s a useful analysis by Vtdigger.org, a Vermont publication.

It’s a very challenging situation, but single-payer supporters in Vermont haven’t given up and are working to strengthen the bill on the Senate side. Characteristically, the insurance industry, directly or through proxies, is stepping up its campaign to discredit the single-payer idea, using scare tactics and misinformation.

PNHP is pointing out the superiority of the single-payer solution to policy makers with projects like the student rally, the announcement about the 200 physicians willing to relocate, our members’ opinion pieces and other efforts. You can help support these measures by making a donation here.

Meanwhile, Harvard economist William Hsiao, Ph.D., had an article in the New England Journal of Medicine this month about state-based single-payer plans that you may find of interest. You can read it by clicking here.

4. Our Wisconsin members have been deeply involved in the battle to preserve their state’s health care safety net and to fend off their governor’s assault on the collective bargaining rights of public workers, including health care workers. See Dr. Chuck Benedict’s speech here, which includes links to the Wisconsin and national PNHP statements on these developments. Dr. Andy Coates has written a blog posting about similar developments in New York.

5. PNHP members have continued to advocate for single-payer national health insurance, an improved Medicare for all, in their letters to the editor and opinion pieces in newspapers from coast to coast. Since our last major round-up in late January, at least 23 op-eds or letters to the editors by our members have been published. These include one by PNHP President Garrett Adams in the Lexington Herald-Leader on medical bankruptcy and another by Dr. Margaret Flowers in Truthout on state-based single-payer efforts. (Both are appended.)

Drs. Deb Richter, Marvin Malek and Susan Deppe of Vermont have each had pieces printed in their state’s newspapers as part of the reform debate there. Drs. James Mitchiner of Michigan and Pippa Abston of Alabama have written about the dangers posed to Medicare and Medicaid by privatization and government cuts. Dr. Claudia Fegan of Illinois had articles published about the impact of PPACA on employees of large and small businesses. And Drs. Richard Weiskopf (N.Y.), Philip Caper and Julie Pease (Maine), Ralph Bovard (Minn.), James Fiesher (N.H.), Susanne King (Mass.), Jerry Frankel (Texas), Julian Gonzalez (Alaska), Bruce Trigg (N.M.), Arthur Sutherland (Tenn.), Samuel Metz (Ore.), Margaret Flowers (Md.), and med student Carl Berdahl (Conn.) all had recent op-eds or letters published in regional or national papers. (All of these and more are accessible at “Articles of Interest” on PNHP’s website.)

Please keep writing; it’s a crucial way of getting our message out. If you need help editing something you’ve written, don’t hesitate to contact Mark Almberg at mark@pnhp.org or call him (312) 782-6006.

6. Finally, we encourage you to invite PNHP President Dr. Garrett Adams of Louisville, Ky., to speak at a grand rounds or other event in your area, especially if you are located in the South. A short biography of Dr. Adams appears here. Contact Ali Thebert at ali@pnhp.org or call her at the same number given above; she’ll be happy to assist with the arrangements.

Cordially,

Quentin Young signature Mark Almberg signature
Quentin D. Young, M.D.
National Coordinator		 Mark Almberg
Communications Director

P.S. If you haven’t renewed your membership, or if you’d like to give PNHP an extra boost by making a tax-deductible donation, please do so today.

P.P.S. Save the date of Saturday, Oct. 29, for our Annual Meeting in Washington, D.C.

We need single-payer, nonprofit health insurance
 
By Garrett Adams
Lexington Herald-Leader, March 27, 2011
 
Since the passage of its landmark health reform law of 2006, the people of Massachusetts have been living like a canary in a coal mine. National health policy experts have been watching them, closely studying how they’re faring under the reform.
 
That watch intensified after enactment of the new federal health law, which is patterned after the Massachusetts plan. Both laws contain an individual mandate requiring people to buy private insurance, for example. The theory is that as the Bay State goes, so goes the nation.
 
The first reports were glowing. The number of uninsured went down. Massachusetts now boasts the lowest percentage of uninsured residents in the nation, 4.4 percent.
 
But with the passage of time, and despite generous dollops of supplementary federal aid to help keep the Massachusetts plan afloat, the canary isn’t looking too chipper these days.
 
Insurance premiums and out-of-pocket health costs keep rising. These skyrocketing costs prompted Gov. Deval Patrick to call for the program’s “overhaul” just last week.
 
Now comes a Harvard research study showing that despite the increase in the number of people covered, the Massachusetts reform hasn’t made a significant dent in the medical bankruptcy rate. Families still are being ruined by unpayable medical bills.
 
The researchers discovered that between early 2007 and mid-2009 — before and after the reform took effect — the share of medical bankruptcies in Massachusetts changed very little, from 59.3 percent to 52.9 percent. The absolute number of medical bankruptcies actually climbed from 7,504 to 10,093.
 
Lest you think only low-income families are being financially clobbered by medical debt, think again. Two-thirds of the bankruptcy filers were college-educated and 89 percent had health insurance when they filed their court papers.
 
In explanation, the authors of the study, which appears in the American Journal of Medicine, write: “Health costs in the state have risen sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts — as in other states — afflicted middle-class families with health insurance. High premium costs and gaps in coverage — co-payments, deductibles and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.”
 
Lead author Dr. David Himmelstein elaborates: “Massachusetts’ health reform, like the national law modeled after it, takes many of the uninsured and makes them under-insured, typically giving them a skimpy, defective private policy that’s like an umbrella that melts in the rain: The protection’s not there when you need it.”
 
Needless to say, these findings don’t bode well for the look-alike federal law’s ability to end the scandalous blight of medical bankruptcies in the U.S. And behind these statistics are tragic, heart-rending stories.
 
The crux of the
problem is this: Both the Massachusetts law and the new federal law are based on the crumbling foundation of for-profit, employer-based health insurance, a financing model that has outlived its usefulness.
 
Our present setup is a crazy-quilt patchwork of plans that results in huge inefficiencies and mountains of wasteful paperwork — just ask your doctor! And our current arrangements contain a deeply embedded incentive for private insurers to enlarge their profits by enrolling the healthy, screening out the sick and denying claims.
 
In Canada, which has a truly universal, non-profit single-payer system of financing care called medicare (bearing resemblance to our own much more limited Medicare program), medical bankruptcies are virtually unknown.
 
Sure, you’ll hear the occasional exaggerated story about wait times in Canada. But if you want to hear real horror stories, you need look no further than our own community. And if you ask Canadians if they’d prefer a U.S.-style health system, 9 out of 10 will say no.
 
It’s never too late to do the right thing. Congress should move beyond patchwork solutions and implement a streamlined single-payer system, an improved Medicare for all.
 
The savings in bureaucracy alone would be enough to cover everyone, and the threat of medical bankruptcy would vanish overnight. Significantly a single-payer system’s bargaining power would control costs.
 
We can’t wait for the canary to keel over.
 
Dr. Garrett Adams is a pediatric infectious diseases specialist in Louisville. He is a co-founder of Physicians for a National Health Program-Kentucky and president of Physicians for a National Health Program.

State Health Law Waivers: Where Will They Take Us?

By Margaret Flowers
t r u t h o u t | News Analysis, March 8, 2011
 
The president supports state innovation in health care, but vigilance is required to ensure state reforms improve health as we continue to call for national reform.
 
President Obama announced at the National Governors Association on Monday that he supports an amendment to the health law that would allow states some flexibility to innovate with their own models of health reform beginning in 2014, rather than waiting until 2017, as is currently required by law. The president’s concession comes as the current federal health law is deteriorating and states are complaining that the financial burden of complying with the law are too onerous in the face of serious budget deficits.
 
The president’s endorsement of the Wyden-Brown amendment, known as the “Empowering States to Innovate Act” or S.248, allows states to apply for waivers from the health insurance exchange beginning in 2014 and would give them some federal dollars to experiment with alternative ways of providing health coverage. The federal health bill requires that any state seeking a waiver from the health insurance exchange must, at a minimum, provide coverage comparable to that specified by the federal bill (Section 1332). It is left to the discretion of the secretary of health and human services to determine if a state meets this requirement.
 
States that put in place a single-payer health system will surpass the coverage of federal law. A single-payer health system, improved Medicare for all, would be universal and would provide the necessary cost controls and savings that would fund comprehensive coverage, including much-needed mental health, dental and vision care.

States such as Vermont and California, which appear to be closer than any others to enacting a state single-payer health system, welcomed the president’s support for the Wyden-Brown amendment because it would remove one of the many barriers they face. The amendment will still need to be passed by Congress before it arrives at the president’s desk, which may, in itself, be a formidable feat in the current political climate.
 
In addition, for states that want to take the path of single payer, even with the amendment, there will still be many hurdles before they can implement such a plan. The amendment only moves up the date when waivers can be applied for. It does not guarantee federal approval of the many waivers a state single-payer system would need, such as being allowed to roll their Medicaid and Medicare populations into their single-payer system.
 
Of concern is that the president is signaling a greater willingness to allow states to opt out of the health reform bill, not because states want to provide better coverage, but because governors in some states are opposed to the federal health law altogether. Beginning shortly after passage of the law last year, there has been an effort to undermine it through court challenges to its constitutionality and, more recently, through efforts to repeal it entirely or in part by the House. Additionally, hundreds of waivers have been issued excusing businesses, union health plans and health insurers from having to comply with parts of the law. The Department of Health and Human Services now has a 24-hour turnaround time on such waivers.
 
Vigilance will be required to ensure that some states do not use the amendment, if it is passed, to gut important public health programs such as Medicaid and the State Children’s Health Insurance Program and further privatize health care, which would be harmful to patients. According to a White House fact sheet released around the time of the president’s statement, “The law also allows states to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in [health insurance] exchange plans.” A change such as this would undermine Medicaid and shift more people into more expensive and less protective private insurance plans.
 
Efforts are already underway in Wisconsin to take control of the state’s Medicaid programs away from the state Legislature and end the public’s ability to have a voice in the process and, instead, give full authority over the program to the governor’s office. Gov. Scott Walker appointed Dennis Smith, a former Heritage Foundation fellow who has written about moving people out of Medicaid and raising co-pa
ys for those still in Medicaid, as his secretary of health.
 
Wisconsin is not alone in challenging Medicaid. According to The Wall Street Journal, more than half the states want permission to remove hundreds of thousands of people from Medicaid. Other states like New York and Arizona are cutting benefits of health programs that already provide insufficient coverage.
 
Decades of experience in the United States shows that the market model fails when it comes to financing health care. Health is a necessity, not a commodity. A system based on the purchase of private insurance results in higher costs and poorer outcomes. Patients who cannot afford necessary care get sick, defer treatment and develop preventable complications, sometimes fatal ones. Families experience personal bankruptcy when a serious illness or accident occurs. With increased political pressure and Secretary Sebelius already issuing hundreds of waivers, can further privatization of health care be prevented?
 
While some welcome the president’s support for the amendment and hope that, if it passes, a state will be able to demonstrate the benefits of a single-payer system, as happened in Saskatchewan (and which led to Canada’s national Medicare system), it is possible that the actual outcome of such an amendment will be a further attack on our necessary public health programs. For this reason, it is imperative that we continue to push for a national health program, improved Medicare for all in the US.
 
“It would require fewer waivers and be simpler to enact improved Medicare for all at the national level,” says Dr. Garrett Adams, president of Physicians for a National Health Program. “Not only is it simpler, but it would save lives and end personal bankruptcy caused by medical illness. We would like to see a national Medicare-for-all system enacted sooner rather than later. Every day that we wait, hundreds of Americans die of preventable causes.”
 
Physicians for a National Health Program advocates for a national, publicly financed and privately delivered health system: an improved Medicare for All as embodied in H.R. 676, the “Expanded and Improved Medicare for All Act.” Among the benefits of such a program are that it is a simpler system for patients and health professionals, recaptures about $400 billion annually in unnecessary paperwork and bureaucracy and directs that money into care, allows freedom to choose one’s health provider and more control over one’s treatment, is universal and provides comprehensive health benefits while at the same time effectively controlling our soaring health care costs. In this time of fiscal and health crises, national Medicare for all is more important than ever.
 
Margaret Flowers, M.D., is congressional fellow for Physicians for a National Health Program.

A single-payer health care system would work for Oregon

By Samuel Metz
The Oregonian, March 29, 2011

Am I crazy, a physician embracing legislative efforts to create a single-payer health care system in Oregon? You be the judge.

It would create thousands of jobs. It would provide health care to people whether they work full time, part time or are retired, disabled, sick or unemployed. It would stimulate Oregon business. It would reduce our state deficit. And it would provide comprehensive care to every Oregonian without spending more than we do now.

Where would the money come from? Oregon businesses and families already spend this money. But Oregon wastes $4 billion annually in private insurance administration. That’s premium money that never goes toward health care. Half is the insurance company overhead. The rest is what hospitals and providers like me waste collecting payments from insurance companies. Princeton economics professor Uwe Reinhardt, speaking recently before the Senate Finance Committee, said of Duke University’s 900-bed hospital: “We have 900 billing clerks at Duke. I’m not sure we have a nurse per bed, but we have a billing clerk per bed. It’s obscene.”

For physicians, it’s no easier. A Chicago doctor faces as many as 17,000 different sets of benefits for her patients. Your physician in Oregon might deal with only 300. But that’s still a lot of paperwork that doesn’t provide health care.

Single payer would eliminate these administrative losses. Diverting $4 billion to real health care is more than enough to enable comprehensive, no-deductible, no-co-pay, all-medications-included health care to every Oregonian, young and old.

So why doesn’t everybody embrace single-payer financing? It’s a stark answer: The money is re-labeled as “taxes.” And unfortunately many voters who unknowingly pay thousands of dollars in premiums and out-of-pocket payments refuse to pay a penny of it as a tax, even when this tax would buy them more health care at less cost and protect their families from medical bankruptcy.

Other objections are mere distractions. Single payer will destroy jobs? No evidence. Single-payer studies in 14 other states suggest 35,000 new jobs in Oregon. That’s 12,000 more than the entire Oregon insurance industry. And because these new jobs are highly paid medical personnel, they generate $500 million in new tax revenues.

Will businesses flee Oregon? Single payer would eliminate labor disputes over health care benefits. It would halve the cost of human resource departments (no health benefit management). Entrepreneurs would be free to create new businesses without fear of losing health care. Business would flourish.

Worried about our state deficit? Single payer would reduce government costs to provide comprehensive benefits to state employees. Couple this with increased tax revenue and the budget deficit would go down.

A new single-payer health care bill — House Bill 3510 and Senate Billl 888 — would be a win for all Oregon. Families finally would get the health care they need. Workers would enjoy thousands of new jobs. Employer costs would go down. And so would our state government’s deficit.

Single-payer health care: It’s not crazy. It’s good for Oregon, good for you and good for your legislators. Tell them now.

Samuel Metz is a Portland physician.

http://www.oregonlive.com/opinion/index.ssf/2011/03/a_single-payer_health_care_sys.html

Market or government for hospital pricing?

Blue Cross investigation is expanded

The Baltimore Sun
March 29, 2011

A probe of alleged anti-competitive agreements between Blue Cross Blue Shield companies and hospitals has been expanded by the U.S. Justice Department beyond Michigan, where an antitrust lawsuit that alleged the agreements raised hospital prices was filed last year.

CareFirst BlueCross BlueShield, Maryland’s largest insurer, confirmed to the Wall Street Journal that it received a civil investigative demand from the Justice Department but declined to comment further.

Federal and state investigators also have sent civil subpoenas to Blue Cross Blue Shield units in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia, a person familiar with the matter said.

The expansion of the Blue Cross Blue Shield investigation is important because “they’re using exclusionary practices to hold competitors at bay,” said David Balto, an antitrust attorney and senior fellow at the Center for American Progress, a Washington-based policy group that generally favors Democratic initiatives.

The department’s Michigan complaint said Blue Cross negotiated contracts with 70 of the state’s 131 general acute- care hospitals that led to higher prices for the insurer’s competitors. In some cases, the hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the department said at the time.

http://www.baltimoresun.com/business/bs-bz-carefirst-justice-20110329,0,7272326.story

And…

One state’s hospital cost solution: regulated prices

By Christine Vestal
The Pew Center on the States
March 29, 2011

The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.

In one state, however, monopoly pricing won’t be a problem. The state sets the prices.

For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals.  And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.

Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500.  The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.

Whether other states will emulate Maryland’s system is an open question.  Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, (Maryland’s chief regulator Robert) Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

http://www.stateline.org/live/details/story?contentId=562689

Comment: 

By Don McCanne, MD

Because of market dominance, Blue Cross Blue Shield plans have been able to negotiate lower hospital prices in many regions throughout the nation. Hospitals, in turn, have been able to negotiate higher prices for insurers that do not dominate the markets, resulting in higher premiums and consequently less ability for the smaller insurers to penetrate these markets. The U.S. Justice Department quite appropriately is investigating these agreements.

The Blue Cross Blue Shield plans competing unfairly in the private market have proven once again that private insurers are not capable of providing equitable financing of our health care.

If instead of using market dynamics to price hospital services, what would happen if the government regulated the rates? We have an example of that in Maryland which uses an “all-payer” system. The state sets the prices. All insurers, including Medicare and Medicaid, pay the same.

How well has that worked? Maryland’s hospital prices are the lowest in the nation – only 40 percent of the national average. That has resulted in insurance premiums that also are amongst the lowest in the nation.

Although the all-payer system has had a very favorable impact on pricing, there are still many other inefficiencies and inequities in a financing system that depends on private insurers. A single payer system would eliminate the private insurers and establish global budgets for hospitals – funding them just as you would police, fire, libraries, and other public or quasi-public institutions.

As Maryland’s chief regulator stated, “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

Given that we have a finite though generous amount of funds available to pay for health care, we can get the best value if we do that within a government budget, administered efficiently through a single payer system.