PNHP

Action needed on systemic racism, health care

Action needed on systemic racism, health care

By Kay Tillow
Louisville Courier-Journal, Letters, December 28, 2020

In November, the Vermont Medical Society passed a resolution expressing its support for universal access to high quality health care through a single-payer national health program. On Dec. 10, the Congressional Budget Office reported that a single-payer health care system could cover everyone yet cost $650 billion less per year.

The Courier Journal reported on the impact of systemic racism on the health of African Americans. The 12 years of life lost to residents in the West End points to the dire need for quick and effective action. The solutions explored omit the most decisive one — the need for every person to have physicians of their choice and all necessary health care, free at the point of service.

Until age 65, Black people are 50% more likely to be uninsured than white people. Life expectancy at birth is 3.5 years shorter for Black people. And 86% of the difference in life expectancy is due to conditions that respond to medical treatment and prevention. Mortality rates quickly match across races after age 65 when everyone is covered by Medicare.

Getting everyone covered is vital — not a complete solution but a necessary foundation to tackle the problem.

The passage of Medicare in 1965 eliminated segregation in hospitals and helped end racial disparities for seniors. A universal, not-for-profit, single-payer system — an improved Medicare for all — will save millions of lives.

http://kyhealthcare.org…

The Unmasked Truth with Dr. Rob Davidson

By Brenda Gazzar
Code Wack Podcast, December 28, 2020

Featuring Dr. Rob Davidson, practicing emergency room doctor and head of Committee to Protect Medicare. Why is it that an advanced nation like the U.S. has experienced over 2 million COVID-19 infections?  How have factors like the lack of a coordinated federal response and an inadequate health insurance system contributed to our national health tragedy? Host Brenda Gazzar and Dr. Rob Davidson discuss how wearing masks and getting vaccinated would save countless American lives.

Transcript

(10-second music) 

Welcome to Code WACK!, your podcast on America’s broken healthcare system and how Medicare for All could help. I’m your host, Brenda Gazzar. 

What will it take to stop this unparalleled coronavirus surge in America in 2021? I recently spoke with Dr. Rob Davidson, an ER physician and head of the Committee to Protect Medicare, to get his take on the matter.

So, thank you Dr. Rob Davidson for joining us today on Code WACK! You volunteer as the executive director of the Committee to Protect Medicare, and you also work as an emergency room doctor in rural West Michigan. What are you seeing and experiencing in the ER amid this unprecedented coronavirus pandemic?

Dr. Rob: Well, over the last six to eight weeks I would say, we’ve just seen – like a lot of places in this country – significant numbers of patients with symptoms of COVID-19, significant numbers of sick patients, particularly on their second or third visit after about a week or so, and particularly those people in high risk groups, older people, people with pre-existing conditions are getting hospitalized at unprecedented numbers. And we’re a small rural hospital, a critical access hospital, essentially a minimal number of inpatient beds, ICU beds, and we are frequently running close to capacity, you know, maybe for a day or two at a time here and there a couple times a month. This has just been six straight weeks of every single day of being either at capacity or sometimes beyond capacity — holding people in the ER for multiple hours on end waiting for beds.

And then also end up transferring people around west Michigan to other similar hospitals who might happen to have a bed or to larger tertiary care hospitals who are also experiencing these massive surges. Yeah, I mean it’s just been very sustained,  unprecedented and at some point, the system might not make it. We need a break.

U.S. coronavirus cases and deaths per million people are among the highest in the world. Why do you think this is?

Dr. Rob: Well,  I think it’s certainly multifactorial. I think a lack of a coordinated federal response and in fact, a sort of disinformation campaign from the federal government,  particularly from the (U.S.) president has contributed greatly. I think, particularly in areas where I live. We’re in a very heavy, Republican Trump area. A lot of people still don’t wear masks. People try to tell me that masks cause harm. People have tried to tell me “this is just the flu, that this is no big deal.”

I had a patient who came in the other day who told me she believed that until a neighbor on either side of her at her senior apartment complex died of COVID-19, and she came in sort of as a convert, saying “ okay I get it. This thing is a lot bigger deal than we thought.”

I think that’s part of it. I certainly think that our system in this country of administering health care has contributed to it. I think the many tens of millions without insurance, the 100 million or so who are underinsured, who perhaps at early phases of illness could get treatment now that we have some treatments available, or even people who are getting extremely sick, but waiting it out at home because they don’t want to come in and incur a huge deductible. Or even people with quote-on-quote “good insurance” incur a copay of $250 or $500 just to come to the hospital, only to be told they’re okay, and there’s nothing we could do for them, except cautiously waiting.

I think that all together has contributed to the crazy numbers that we’re seeing here, and will continue to do so unfortunately, until we hopefully get some leadership that can steer us a little better and then hopefully this vaccine has a significant impact over the next six to eight months.

We’re in the midst of an explosive surge right now, as we know. More than 315,000 Americans have died after contracting the virus. What do you think will be essential in stopping its spread?

Dr. Rob: Listen, I think the basics are the most important thing still so if we can somehow convince that third to 40% of the population who doesn’t think masks are important that they are, I think that would be huge. I think if people would simply wear masks when they’re around people not in their direct household or when they’re anywhere indoors with anyone that isn’t in their immediate household, that can help. I think people limiting activity.

I think continuing, unfortunately in some places, in my state this is the case, to keep indoor dining closed but then provide support from the state and/or federal government so that these restaurants and the employees of these restaurants can remain whole, can do their part to help fight the pandemic. I think all of that will have a significant impact and then of course I think widespread delivery of the multiple, coronavirus vaccines that are now coming to market that are now being distributed and injected. I think that will, hopefully, in 6-8 months time get us to that point. Unfortunately we still have 6 to 8 months until most people in this country will have access to the vaccine. So, we still have a lot of the basic public health work to do.

Tell me briefly about the Committee to Protect (Medicare), which you lead. What is it about and what drew you to the organization?

Dr. Rob: So, we’re an organization of doctors across the country.  I believe now in 42 states, we have people actively participating.  Essentially, our overall goal is, as physicians, to elevate voices of other physicians, as advocates for our patients, for affordable health care. It’s as simple as that. Now, the name Committee to Protect Medicare — absolutely,  we believe Medicare is essential, and certainly, there are forces out there that are trying to privatize Medicare through Medicare Advantage plans. But we really want to defend the health care people have currently and expand on that, and expand into more means of affordable health care, including our ultimate goal of a Medicare for All system.

Thank you, Dr. Rob.

Find more Code WACK! episodes on ProgressiveVoices.com and on the PV app. Catch all our episodes by subscribing 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.

https://heal-ca.org…

Medicare-for-all would end surprise medical billing

By Ken Lefkowitz
The Washington Post, Letters, December 25, 2020

Regarding the Dec. 22 news article “Congress cuts deal to prevent unexpected medical bills”:

Banning surprise medical billing is praiseworthy. However, it’s much like patching a hole in a worn-out tire that’s leaking in many other places.

The ban makes surprise bills illegal. Instead, health-care providers must negotiate payment with insurers or use arbitration to settle the amount. This relieves the consumer from the burden of payment, but it will increase administrative costs for doctors, hospitals and insurance companies. Because health care operates within the broken free-market framework, these costs will be passed on to the consumer through higher premiums, deductibles and/or co-pays.

Medicare-for-all can solve this, as well as many other health coverage issues, because all residents’ health care would be covered with no co-pays and deductibles. This surely would address the surprise billing issue.

Equally important, overall Medicare-for-all would save money and control costs in the future. Three major studies, one by the University of Massachusetts, another published in the Lancet and another appearing in the Annals of Internal Medicine, have estimated annual savings on health-care spending of about $500 billion.

The writer is a former director of compensation and benefits for major corporations and a member of Physicians for a National Health Program.

https://www.washingtonpost.com…

Congress bashes private insurers’ antitrust exemption

Senate Approves Repeal of Health Insurers' Antitrust Exemption

By Allison Bell
ThinkAdvisor, December 22, 2020

Members of the U.S. Senate approved H.R. 1418, a bill that would repeal a partial antitrust exemption for health insurers, and for dental insurers, by a voice vote Tuesday.

The House approved an identical version of the “Competitive Health Insurance Reform Act of 2020″ bill by a voice vote Sept. 21.

Congress is now sending the bill to the desk of President Donald Trump.

H.R. 1418 would change part of the McCarran-Ferguson Act of 1945, a law that establishes the framework for how the federal government shares oversight of insurance with state insurance regulators. One section exempts insurers from federal antitrust oversight under the Sherman Act.

H.R. 1418 would add a section that states that, “Nothing contained in this act shall modify, impair, or supersede the operation of any of the antitrust laws with respect to the business of health insurance (including the business of dental insurance and limited-scope dental benefits).”

Sen. Patrick Leahy, D-Vt., introduced the bill in the Senate together with Sen. Matt Daines, R-Mont. Reps. Peter DeFazio, D-Ore., and Paul Gosar, R-Ariz., introduced the bill in the House.

Health insurers, the National Association of Insurance Commissioners and the National Council of Insurance Legislators have been defending health insurers’ exemption from federal antitrust regulation for decades.

Matt Eyles, president of America’s Health Insurance Plans (AHIP), said in a statement about passage of H.R. 1418 that implementation of the bill would add layers of bureaucracy to health insurers and destabilize markets.

“Removal of this exemption adds tremendous administrative costs while delivering absolutely no value for patients and consumers,” Eyles said.

Consumer Reports put out a commentary welcoming passage of H.R. 1418.

“The antitrust exemption has essentially allowed health insurers to act as a monopoly, making demands in lockstep on the terms they will offer consumers and health care providers,” the advocacy organization said in a comment on bill passage. “The resulting squeeze puts pressure on providers to cut corners on service in order to increase the profits the health insurers can extract.”

https://www.thinkadvisor.com…

H.R. 1418 – Competitive Health Insurance Reform Act of 2020:
https://www.congress.gov…

Comment:

By Don McCanne, M.D.

This little discussed measure passed the Senate by unanimous consent in the wee hours of the morning of December 22 and has been forwarded to President Trump for his signature. It may have historical significance.

In the 1940s, when health insurance was rapidly expanding as an employee benefit, Congress temporarily exempted health insurers from the federal McCarran-Ferguson antitrust laws, except that temporary exemption was never reversed. Efforts to do so have not met with success likely due to Congress’ very cozy relationship with the private insurance industry (check campaign donations for confirmation).

AHIP’s Matt Eyles, who represents the industry that has been responsible for hundreds of billions of dollars in their own administrative waste plus the administrative burden they have placed on the health care delivery system, seems to have suddenly become enlightened to the fact that administrative costs deliver “absolutely no value for patients and consumers.” He said that implementation of this bill would add layers of bureaucracy to health insurers and destabilize markets.

But there is a reason for antitrust laws and that is to prevent abusive monopolistic practices – practices that help explain why health insurance premiums are so high when their innovative products are designed to impair access to health care (high deductibles, narrow networks, benefit exclusions, etc.). The COVID pandemic is demonstrating how well the monopolies are working for the insurance industry considering their record profits while patients are being deprived of health care that they need.

Let’s hope that this bipartisan unanimous consent action in the wee hours of the morning represents the future relationship between the private insurers and Congress. Now that Congress acknowledges the industry for what it is, maybe they will be ready to take the next step. Throw out the private insurers and enact and implement our own single payer improved Medicare for All.

If nothing else, those supporting state efforts for single payer should jump at this opportunity to work with Congress to free up federal barriers to state single payer legislation. It seems like members of Congress may be ready to show the private insurers the door.

Hopefully this is a new day for health care justice in America.

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

Lower socioeconomic status results in poorer quality insurance choices

The Social Determinants of Choice Quality: Evidence from Health Insurance in the Netherlands; NBER Working Paper No. 27785

By Benjamin R. Handel, Jonathan T. Kolstad, Thomas Minten, and Johannes Spinnewijn
National Bureau of Economic Research, September 2020

Abstract

Market provision of impure public goods such as insurance retirement savings and education is common and growing as policy makers seek to offer more choice and gain efficiencies. This approach induces an important trade-off between improved surplus from matching individuals to products and misallocation due to well documented choice errors in these markets. We study this trade-off in the health insurance market in the Netherlands, with a specific focus on misallocation and inequality. We characterize choice quality as a function of predicted health risk and leverage rich administrative data to study how it depends on individual human capital, socioeconomic status and social and information networks. We find that choice quality is low on average, with many people foregoing options that deliver substantive value. We also find a strong choice quality gradient with respect to key socioeconomic variables. Individuals with higher education levels and more analytic degrees or professions make markedly better decisions. Social influence on choices further increases inequality in decision making. Using panel variation in exposure to peers we find strong within firm, location and family impacts on choice quality. Finally, we use our estimates to model the consumer surplus effects of different counterfactual scenarios. While smart default policies could improve welfare substantially, including the choice of a high-deductible option delivers little welfare gain, especially for low-income individuals who make lower quality choices and are in worse health.

https://www.nber.org…

Comment:

By Don McCanne, M.D.

Advocates of consumer-directed health care often cite the Netherlands as having a model that we should consider for the United States. They have a regulated private insurance managed competition model with a mandate for all individuals to purchase coverage. Insurers compete in the marketplace for consumers on premiums, provider choice, and supplementary insurance. A minimum compulsory deductible is required with an option of varying higher levels of voluntary deductibles.

Although this study is quite complex, important conclusions are: 1) low-income individuals are in poorer health and make lower quality choices in their insurance products, 2) individuals with higher education and socioeconomic status make better choices, and 3) offering a high-deductible option provides little welfare gain, especially for low-income individuals.

Regarding deductibles, many studies have shown that, for lower-income individuals, they create financial barriers to beneficial health care services and they often cause financial hardship for those who must access health care. Higher income individuals who are in good health and can reasonably be expected to remain so, can benefit financially by selecting higher-deductible plans, but that does not benefit society since their premium contributions to the collective insurance risk pools is regressive – the wealthy pay lower premiums than the poor (though if funded through the tax system instead of individual premiums payments can be made progressive by design).

Although market enthusiasts may contend that the welfare benefit of choosing plans from the private marketplace benefits the purchaser, this study shows that only those of higher socioeconomic status are benefited whereas it is detrimental for both the finances and the health of those with a lower socioeconomic status. Enthoven’s managed competition, as they have in the Netherlands, is a terrible model for a universal health care financing system.

Besides, what is this American obsession with marketing different plan designs? What we need is one plan design that offers all essential services to everyone. We can fund that equitably through progressive taxes that would be affordable for each individual. We can and should eliminate insurance gimmicks that define different plans in the marketplace – gimmicks such as taking away choices of physicians and hospitals by limiting coverage to networks, impairing access by financial barriers including deductibles, copays, and coinsurance, or by stripping coverage of beneficial services thus creating bare bones plans. None of those benefit the patient, only the insurer.

The bottom line? As always, we need to enact and implement a well designed, single payer improved Medicare for All – quality, comprehensive, affordable care for everyone.

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

PNHP’s Dr. Susan Rogers: Stop blaming patients and start asking questions

By Brenda Gazzar
Code Wack Podcast, December 21, 2020

Featuring Dr. Susan Rogers, new president of Physicians for a National Health Program. Dr. Rogers is recently retired from Stroger Hospital of Cook County, Illinois, but continues as a volunteer attending hospitalist and internist there. She is an Assistant Professor of Medicine at Rush University, where she is an active member of the Committee of Admissions. She is a Fellow of the American College of Physicians and a member of the National Medical Association.

Why did a man in his 20s die from a totally treatable disease?  How do social determinants affect patients’ ability to get to doctors appointments or buy prescribed medicines? Host Brenda Gazzar and Dr. Susan Rogers, new president of Physicians for a National Health Program, discuss how essential it is to acknowledge the role inequities play in health care and to stop blaming patients.

Transcript

(10-second Talk back music)

Welcome to Code WACK!, your podcast on America’s broken healthcare system and how Medicare for All could help. I’m your host, Brenda Gazzar. 

Dr. Susan Rogers is the new president of Physicians for a National Health Program. She spent much of her career at public hospitals in Chicago in order to treat African American patients, many of whom faced economic hardships and systemic racism. Her experiences solidified her view that Medicare for All is an important step in the battle for healthcare equity in America. 

(5-second stinger music)

Some of Dr Susan Rogers’ most rewarding relationships have been with her patients at a primary care clinic at Cook County Hospital, a public hospital in Chicago. That hospital was later replaced by the John H. Stroger, Jr. (pronounced Stro-jer)  Hospital of Cook County. One of her most memorable patients was a Tuskegee Airman, among the first African American military aviators in the U.S. Armed Forces.

(sound of airplane flying overhead)

Rogers: He kind of reminded me of my father… and he was a remarkable man and what he had gone through after, you know, the war. He had a difficult time because the GI Bill did not reward Black GIs at all. They could not get the mortgages. They could not get the training programs. He was a Tuskegee Airman, but none of those airmen were allowed to get into the commercial aviation system at the time so his struggle, after that. …Even after I left the clinic, he would still call me every Christmas.

(sound of telephone ring)

It was sad because I knew that one day he wasn’t going to call me because he was close to 90 at that point. And one day, I didn’t get the call and I called his wife and so she told me. That’s why I did that, I knew I was making a difference. I wasn’t just treating hypertension because the books said give this medicine. It was a very personal journey.

Dr. Rogers treated another patient whom she vividly remembers today because of what she learned from her story. The patient was a young woman who had diabetes and was overweight.

Rogers: She drank probably two or three liters of pop a day. That was of Coke.

(sound of soda pop fizzing)

So it was the caffeine, it was the sugar, it was all that. Of course, her diabetes was not controlled. And it was very frustrating, trying to take care of her, because she always came in with high blood sugars. And she would say, “I know I have to stop drinking all that pop and this and that but what else can I do?”

And I became just very frustrated and I didn’t know how to deal with that because I felt like I wasn’t the right doctor for her because I couldn’t figure this out. I couldn’t get her to change. And then it took me a while to understand that this was probably the only enjoyment in life she got — was from drinking this Coke. And when you think about it, that’s very sad that her life was such that this was, you know, how she survived. This is what helped her survive…Sometimes it’s drugs, it’s drug abuse and alcohol that help people survive. Sometimes, it’s something that looks so benign like a 2-liter bottle of Coke.

It became clear to Dr. Rogers that our healthcare system often doesn’t accommodate patients’ individual needs. She once heard from a chief resident about the case of a young man who had inflammatory bowel disease, which can be incapacitating but is treatable with intensive treatment and follow-up.

Rogers: He ended up not following up with appointments and not coming in for medications. And some of the medicines were IV, and all this, and he ended up dying before he was 25 from a totally, totally treatable disease. And he had access to that at county, but because of the life that he was living…What she found out, the chief resident as she looked into this because he had missed appointments, it turned out that his sister had died and he became the guardian of a 3-year-old. So this is a young man in his early 20s, who isn’t really working, who now has a 3-year-old, with a medical problem that requires intensive treatment that he wasn’t able to access because of this other part of his life.

To me, that was so incredibly sad and nobody knew about it because everybody just (thought) “well, he just misses appointments. He doesn’t care. He doesn’t take his medicine because he doesn’t care.” And I’ve always said patients do care. It just might not be a priority because of what’s happening in their life and other things and if you don’t ask about that, you’ll never know.

But that was a tragic story that never, ever should have happened…Everything that could go wrong went wrong. You know, there’s millions of stories like that and yet he was blamed for not making appointments and for not taking his medicine. I saw those stories and that’s what kept me there.

While clerkship director for medical students on rotation, she worked to educate students about how the conditions of patients’ environments affected their medical outcomes.

Rogers: Many white students have no idea. You know, their frame of reference is totally different. Why aren’t they taking their medicine? Well, you know, I’ve yet to find a patient who chose to be short of breath rather than take their medicine. So there’s reasons why people don’t… so teaching them about the social determinants of health, and for them to see firsthand how this impacts health outcomes. People aren’t able to pay the copay for their medicine, they’re not able to get to the pharmacy to get their medicine for whatever reason, there are a variety of reasons,  diabetics can’t eat right because there’s no grocery store in their neighborhood. You know. What is labeled fast food swamps, that’s what’s there. It’s a grocery desert but a fast-food swamp.

And so, to see these impacts firsthand, you see the inequities that are there. And again, it goes back to life. Many people have no choices in their lives.

Another issue is that pain is often undertreated in Black patients. They’re not given prescriptions for opioids to control their pain at the same rate as white patients. As a result, Black patients weren’t affected by the Opioid crisis like white patients — and many pharmacies in Black neighborhoods didn’t stock morphine or other painkillers.

Rogers: So if you ran out, you may not be able to get it that day, and cancer pain is incapacitating. So there are a lot of those other issues that people in other neighborhoods don’t even think about.

Helping such patients is largely why Dr. Rogers is involved today in the fight for single payer healthcare in America. In fact, when she started her training at Cook County in 1979, the hospital functioned almost like a single-payer, Medicare for All system, she said. 

Rogers: We never asked about money. I don’t even know if you came in with a million dollars in your pocket for you to be able to pay for anything, because there wasn’t a cashier. We were funded by the county but when you saw somebody, you decided what they needed, what medicine they needed. The medicine was free. There weren’t even copays when I started there. If you needed your gallbladder out, you got your gallbladder out. It wasn’t a question of whether your insurance would cover it.

There were some downsides to it because It was underfunded and we were overwhelmed with volume but we had phenomenal physicians there and being in the department of medicine, there were a lot of like-minded physicians, who were there for similar reasons. They wanted to take care of this patient population. That’s where I first heard about single payer and the PNHP.

But with time, the county hospital’s financing changed, complicating patient access and care. Dr. Rogers retired from Stroger Hospital of Cook County in 2014 but continues as a volunteer attending hospitalist and internist there.

Rogers: We have now started with Medicaid and managed Medicaid, which has networks, and there are barriers to getting care because of those networks….Before, if a doctor took Medicaid you could go, but now you have to have a doctor that not just takes Medicaid, but also is in your network. And then there’s a lot of specialists who will not see Medicaid because the reimbursement is so low. So a lot of the patients that we see now are not able to get some of the care that they needed.

Dr. Rogers believes that Medicare for All would improve healthcare access for all. But she notes it will take more than that to tackle socio-economic inequities.

Rogers: It’s not a panacea. It’s not going to solve the problem but at least it can help address the problem of access. But the stewards of the system have to make sure that the structure does not succumb to the mechanisms that contribute to continuing structural racism.

So right now we have a system (whereby)  no one wants to treat poor people because you don’t make any money, and that’s the whole point of health insurance to make money. And it’s not just health insurance. You’ve got these hospital corporations. Here in Chicago, there’s a hospital, Mercy Hospital, on the south side that is part of a huge hospital group that is sitting on billions of dollars in endowment. But this hospital’s going to close because their payer mix is mostly Medicare and Medicaid. It’s not a lot of private insurance, so they’re not bringing in enough money. And so that’s going to leave this area as a hospital desert. Where are people going to go? There’s no obstetrical or prenatal care in this area if that hospital closes. Going 15 miles for a routine visit may not be a problem but if you’re in labor, that’s a big problem.

That is a big problem. Thank you Dr. Susan Rogers, president of Physicians for a National Health Program.

Find more Code WACK! episodes on ProgressiveVoices.com and on the PV app. 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.

https://heal-ca.org…

Let’s eliminate the actual cause of surprise medical bills

Surprise Medical Bills Cost Americans Millions. Congress Is Finally Set to Ban Most of Them.

By Sarah Kliff and Margot Sanger-Katz
The New York Times, December 20, 2020

After years of being stymied by well-funded interests, Congress has agreed to ban one of the most costly and exasperating practices in medicine: surprise medical bills.

Surprise bills happen when an out-of-network provider is unexpectedly involved in a patient’s care. Patients go to a hospital that accepts their insurance, for example, but get treated there by an emergency room physician who doesn’t. Such doctors often bill those patients for large fees, far higher than what health plans typically pay.

Language included in the $900 billion spending deal reached Sunday night and headed for final passage on Monday will make those bills illegal. Instead of charging patients, health providers will now have to work with insurers to settle on a fair price. The new changes will take effect in 2022, and will apply to doctors, hospitals and air ambulances, though not ground ambulances.

Some private-equity firms have turned this kind of billing into a robust business model, buying emergency room doctor groups and moving the providers out of network so they could bill larger fees.

https://www.nytimes.com…

Unpacking The No Surprises Act: An Opportunity To Protect Millions

By Jack Hoadley, Katie Keith, Kevin Lucia
Health Affairs Blog, December 18, 2020

The No Surprises Act includes several changes from prior compromise bills. These changes largely center on the mechanism to determine how much out-of-network providers will be paid by insurers. Unlike many prior bills, the No Surprise Act would not establish a benchmark payment standard for insurers to pay out-of-network providers. Instead, insurers and providers would try to resolve payment disputes on their own. If that failed, these stakeholders could turn to arbitration. This change (arbitration with no benchmark payment standard) is more favorable to health care providers like hospitals and physicians than prior bills. But the bill also includes several important guardrails to help ensure that the arbitration process—which critics have argued can be inflationary—is not abused.

House Speaker Nancy Pelosi (D-CA) has voiced her support, as has Senate Minority Leader Chuck Schumer (D-NY). The White House has confirmed that President Trump would sign the bill.

The bill adopts “baseball-style” arbitration rules: each party would offer a payment amount, and the arbitrator would select one amount or the other with no ability to split the difference. The decision would then be binding on the parties, although the parties could continue to negotiate or settle.

The losing party would be responsible for paying the administrative costs of arbitration.

https://www.healthaffairs.org…

Proposed “No Surprises Act” favors commercial health plans

AMA, December 18, 2020

The most recently circulated “No Surprises Act” before Congress is an improvement over previous iterations of the bill that seeks a legislative remedy to the issue of surprise billing, but—in its current form—the measure still puts financially stressed physician practices at a disadvantage while favoring commercial health plans.

https://www.ama-assn.org…

Comment:

By Don McCanne, M.D.

When looking for solutions to a problem it would be wise to first look at the cause of the problem.

Surprise medical bills are bills that patients receive, sometimes quite large, that should normally have been paid by their insurers but were denied because the provider of services was not in the insurer’s provider network. When a person has obtained insurance in good faith, most agree that it is very unfair to deny payment for legitimate medical services.

So what’s the reason for this problem? Rather than having government administered pricing for health care insured by the private sector, our legislators and regulators have decided to turn the problem of high health care prices over to the private insurers who then use markets to control prices. (Government programs such as Medicare and Medicaid are a different matter.)

The private insurance innovation that gave the insurers tremendous control over prices was to establish provider networks in which the approved providers signed contracts with the insurers, controlling their payment rates. Under threat of being excluded from coverage, providers agreed to reduced payment rates. This actually benefited patients since it slowed down escalation of insurance premiums which were becoming unaffordable. The trade-off for the patient was that they no longer had free choice of their physicians and hospitals, but patients were willing to make that compromise in exchange for supposedly putting a lid on health care spending. What went wrong is that it turned out that there are many circumstances wherein the patient inadvertently received services from providers who were not in the insurers’ networks. Since those providers did not have a contract with the insurers, bills were generated at the full, non-discounted prices, and the patients were responsible for them whenever the insurance policy excluded out-of-network coverage.

The patients do have some blame since they purchased plans with provider network restrictions. The providers may have some blame if they had had the opportunity to contract but declined to do so to avoid restrictions on their fees.

But what about the private insurers? They take away provider choice from the patients, and they take away the payment source from the providers whom they often excluded from contracts by granting exclusivity and a higher volume of patients to those who agreed to accept lower payments. This arrangement provides a disservice to patients and to a portion of the health care provider community. So who benefits? The private insurers! As they tend to dominate the local market, they can run roughshod over everyone else, while blaming the providers with whom they did not contract for causing surprise bills that their own mercenary scheme created.

Compare this to a nation that has government administered pricing for all health care through a single payment source – a social insurance program. The government will not pay exorbitant prices but it will pay fair prices that ensures that there is adequate capacity in the health care delivery system. Patients have their choices of their health care providers, and the providers don’t have to deal with private intermediaries since payment is automatic. They just take care of the patients.

So is this legislation a fair resolution of the problem, leaving it in control of the private sector? What is fair about allowing the insurers to selectively contract with whom they wish, depriving patients of their choices, but also granting the insurers the right to demand contracted rates from providers with whom they have no contracts? Besides, with a system already overburdened with administrative excesses created by the private insurers, why should we be adding the additional administrative burden of compulsory arbitration?

So let’s go back to Congress and define for them the problem. Well, it’s the insurers, stupid. We need to dump the private insurers and establish our own single payer improved Medicare for All. Yet Pelosi and Schumer and the Republicans and the neoliberals who all understand the clear superiority of the Medicare for All model have continued to exclude it from consideration. Affordable, equitable health care for everyone. Why do they keep rejecting that?

By the way, for you doctors who refused to join the networks because you wanted your full extortionate fees seem to be the same doctors who pushed for mandatory arbitration in this legislation. If you think you are going to get your full fees, you should realize that this is baseball arbitration. Under those rules the arbitrators will not cut a compromise but rather will decide on behalf of one party. Will they decide on behalf of the insurer who will pay standard contracted rates in the community, or will they decide for you and your outrageously high prices? Guess what, doctor, you lose, and you also get to pay the arbitration costs. Medicare for all really would be a better deal for you – a system in which the patient is your friend rather than your enemy.

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

Rutledge further demonstrates need for ERISA reform

U.S. Department of Labor

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

https://www.dol.gov…

Restoring The Preemption Status Quo: Rutledge, ERISA, And State Health Policy Efforts

By Carmel Shachar, I. Glenn Cohen
Health Affairs Blog, December 17, 2020

On Dec 10, 2020, the Supreme Court issued its opinion in Rutledge v. Pharmaceutical Care Management. While this case was perhaps overshadowed by recent election litigation, it is an important development in the ongoing tug of war between state health care policy initiatives and the federal Employment Retirement Income Security Act (ERISA) of 1974. ERISA’s very broad preemption clause has been used to block state efforts to regulate certain types of health insurance plans on several occasions. Before Rutledge, the last major ERISA health care case, Gobeille v. Liberty Mutual Insurance, allowed these health plans to use ERISA as a shield against state health care policy initiatives.

Rutledge represents a step back from the expansive application of ERISA preemption found in Gobeille. That is very welcome news to states looking to control pharmaceutical pricing in health insurance plans and (likely to a lesser extent) to states considering other major health policy initiatives. Nevertheless, Rutledge represents a return to ERISA preemption status quo rather than a new path forward in balancing ERISA and state health care reforms. There is still a significant need for Congress to reconsider the broad preemption mandate it created in ERISA, especially in the context of health care policy.

ERISA, Preemption, And State Health Care Reform Efforts

ERISA is a federal statute designed to set minimum standards for voluntarily established pensions and other employee benefit plans. ERISA is perhaps mostly notable because it includes one of the broadest preemption clauses of any federal statute. This clause blocks any state regulation of the administration of these employee benefit plans in favor of federal regulation. The purpose of this clause was to allow multistate employers to offer a single, consistent plan to all of their workers, reducing administrative and regulatory burdens while keeping administrative costs low.

While it was never intended to be a health care statute, ERISA does govern employer-sponsored health care plans, or insurance plans in which an employer covers the full financial risk of its employees’ claims for health care benefits, because they are a type of employee benefit plan. These types of health insurance plans represent a significant portion of the health insurance market. In 2018, 61 percent of workers who got their health insurance through their employer were enrolled in plans that were at least partially self-funded and fell into this category.

Setting The Stage For Rutledge

In 2016, the Supreme Court expanded the application of ERISA preemption to health care laws in Gobeille v. Liberty Mutual Insurance. The Court concluded that ERISA preempted a Vermont state law mandating that all health care plans report claims data to the Vermont all-payer claim database.

Gobeille was an expansion of ERISA’s preemptory reach, striking down the Vermont state law because it could result in wasteful administrative costs, thereby frustrating ERISA’s purpose.

There was significant concern that Rutledge would follow Gobeille in extending the reach of ERISA into state health care reform efforts. In this case, the potentially preempted state statue was Arkansas Act 900, which sought to regulate drug pricing by imposing requirements on pharmacy benefit managers (PBMs) such as Caremark. The purpose behind Arkansas Act 900 was to ensure that PBMs do not undermine pharmacies by reimbursing them less than what it costs pharmacies to procure drugs from wholesalers.

A Return To The Preemption Status Quo

Fortunately, the Court, in a short and unanimous opinion (Justice Barrett did not participate), rejected the argument that ERISA blocks the application of Arkansas Act 900 to employer-sponsored health insurance plans. To arrive at this conclusion, Justice Sonia Sotomayor used an ERISA analysis that drew heavily on the cases from the 1990s, such as Travelers Insurance. In fact, she drew significant parallels between Rutledge and Travelers, which concluded that a New York State law imposing a 13 percent surcharge on hospitals that used non-Blue Cross/Blue Shield insurers did not violate ERISA.

Justice Sotomayor stated that “[t]he logic of Travelers decides this case.” Sotomayor argued that, “[l]ike the New York surcharge law in Travelers, . . . [Arkansas Act 900] is merely a form of cost regulation” and not “primarily concerned with pre-empting laws that require providers to structure benefit plans in particular ways.”

What Next?

It is clear that the Justices were unhappy with the reading of Gobeille offered by the challengers to Arkansas Act 900. State regulators and policymakers no doubt breathed a sigh of relief that the Court suggested more of a return to its 1990’s ERISA preemption jurisprudence, case law that is more favorable to health care reform efforts. But it is far too soon to declare victory – while today Gobeille may not be extended, it has not been interred in whole or in part. It remains murky how far a state can go in health reform without foundering on the shoals of ERISA preemption.

In an ideal world Congress could step in with ERISA-reforming legislation that articulates better boundaries for preemption’s reach, acknowledging explicitly or implicitly that ERISA was never intended to regulate health care. But even if, unfortunately, Congressional reform of ERISA preemption is unlikely, the latest Supreme Court decision signals to health care reformers that the ERISA obstacles may not prove as formidable as they did before.

https://www.healthaffairs.org…

The Implications Of Rutledge v. PCMA For State Health Care Cost Regulation

By Erin C. Fuse Brown, Elizabeth Y. McCuskey
Health Affairs Blog, December 17, 2020

On December 10, 2020, the Supreme Court handed a significant win to states and broadened the path forward for state health care cost control efforts. In Rutledge v. Pharmaceutical Care Management Association, the Court ruled 8-0 that the Employee Retirement Income Security Act (ERISA) did not preempt Arkansas’s law regulating pharmacy benefit managers (PBMs), the intermediaries that administer prescription drug benefits for health plans.

In Rutledge, Justice Sonia Sotomayor spoke for the unanimous Court in holding that a state law requiring PBMs to pay pharmacies no less than their acquisition costs for prescription drugs was not preempted by ERISA, the federal statute governing employee benefits. The Court concluded, “ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage.”

The Implications For State Health Care Regulation

Most immediately, Rutledge puts PBM regulations passed by more than 45 states on much firmer footing. These laws do different things, but they are all aimed at reigning in prescription drug costs.

Applying the logic of Rutledge, PBM laws are a form of health care cost regulation, and PBMs are not health plans but rather their administrative contractors, so ERISA should not preempt states’ PBM regulations.

Moreover, the Rutledge decision extends beyond PBMs to all state health care rate regulation. The Travelers case previously established that states can regulate the rates paid to health care providers, and the Rutledge Court extended the logic of Travelers to state regulation of prescription drug reimbursement rates. Health care rate regulation—whether for services or therapeutics—is clearly fair game for states, including when the state dictates how much payers must reimburse providers and suppliers.

In sum, Rutledge narrows the range of state regulations preempted by ERISA, while broadening those that are not. Justice Sotomayor’s opinion helpfully lists the types of state health care laws that ERISA does preempt: (1) laws that require plans to cover specific benefits; (2) laws that bind plan administrators to specific rules for determining beneficiary status; and (3) laws that create acute, indirect, economic effects that force a plan to adopt a certain scheme of coverage. State rate regulation avoids ERISA preemption because it does not tell plans what they must cover or whom, but merely regulates the cost of the items and services covered. This category of cost regulation leaves a lot of running room for states to pursue policies to control health care costs and improve affordability for consumers—the primary objects of most current health policy.

Congress Still Needs To Fix ERISA

While Rutledge represents an unequivocal win for state health reform, the case does not get the ERISA monkey off the backs of states. The courts have made a mess of ERISA jurisprudence, owing in part to the statute’s inscrutable language preempting all state laws that “relate to” employee benefits. ERISA cases are unpredictable and often difficult to reconcile.

While Rutledge’s measured application of ERISA’s broad preemption offers some meaningful and welcome running room for state health care cost regulation, it does not alter the fundamental obstacle that ERISA preemption poses to state health reform. Removing this obstacle requires Congressional intervention, either by altering the statute’s preemption language, adding a waiver mechanism, or both. At the very least, reforming ERISA by adding a federal waiver provision has a growing and bipartisan chorus of support.

Left untouched by Congress, ERISA preemption will continue to fuel relentless industry litigation challenging state reforms and deprive states of the health care regulation tools they urgently need. ERISA reform is health reform.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

This ERISA development is technical, but it’s important.

According to the U.S. Department of Labor, ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. When plans are provided in the private sector they need government oversight to ensure that individuals covered by these plans are protected.

We already have a problem here. Government plans that are not privatized, such as the traditional Medicare program, do not need special protection for the participants. Yet in the private sector, they do. Not only is there a public vs. private divide, there is also a federal vs. state divide. ERISA has been used to limit the state role in providing health plan oversight, yet decisions, such as Rutledge, have created confusion as to the proper roles of the federal government, the states, and the private sector in providing oversight for benefit plans. But it is not the federal government, nor the state, nor the private sector that needs the assurance of oversight, it is the plan beneficiaries themselves. As well meaning as ERISA is, it is often the monkey wrench that screws up the plan oversight to the detriment of the plan beneficiaries.

Efforts to enact comprehensive single payer plans on a state level have often been stymied to some extent by ERISA. The Rutledge decision slightly loosens the restrictions, but it falls far short of what is needed to allow policymakers and politicians to design, enact and implement a program that has the sole purpose of making health care accessible and affordable for everyone. Let’s end ERISA preemption and enact single payer improved Medicare for All, preferably on the federal level, but perhaps transitionally on a state level until barriers to federal enactment can be removed. Don’t let the opponents halt much needed reform by injecting into the process the ERISA boogeyman.

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

So how much do you really spend on health care?

Steady Growth For The Fourth Consecutive Year

By Anne B. Martin, Micah Hartman, David Lassman, Aaron Catlin
Health Affairs, December 16, 2020

Abstract

US health care spending increased 4.6 percent to reach $3.8 trillion in 2019, similar to the rate of growth of 4.7 percent in 2018. The share of the economy devoted to health care spending was 17.7 percent in 2019 compared with 17.6 percent in 2018. In 2019 faster growth in spending for hospital care, physician and clinical services, and retail purchases of prescription drugs—which together accounted for 61 percent of total national health spending—was offset mainly by expenditures for the net cost of health insurance, which were lower because of the suspension of the health insurance tax in 2019.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

In the earlier years of introducing the single payer model of health care financing to the public through various speeches, forums and the like, it was very common to receive a question from the audience demanding to know what they would have to pay in taxes for government health care because they wanted to compare that with what they were already paying, and, after all, their insurance seemed like a good plan.

When asked what they were currently paying, most either didn’t want to say or weren’t really sure. Those who did answer the question often reported the amount of the insurance premium that was taken from the paycheck of the family’s income source, plus the portion that they would have to pay in deductibles and copayments (or coinsurance if they knew what that was). Some of the more sophisticated audience members added Medicare payroll taxes, even though they were for deferred health care in their retirement years. If you add those up, it might seem like health care costs are more reasonable than a comprehensive government program would cost.

But what were the audience members leaving out? What are some of the relatively hidden expenses of health care?

  • Most are not aware of the exact amount of the employer’s contribution to the employer-sponsored health plans – an amount that is usually much larger than the employee’s payroll deduction for the plan. Also, of great importance, most economists agree that the employer’s contribution is actually paid by the employee in the form of forgone wage or salary increases, though many do not realize that.
  • The funding of Medicare is complex. The Medicare Hospital Insurance Trust Fund is funded not only through payroll taxes but also through income taxes paid on Social Security benefits, interest earned on the trust fund investments (the people’s money), and Medicare Part A premiums from people who aren’t eligible for premium-free Part A. The Supplementary Medical Insurance Trust Fund is funded by general funds authorized by Congress (our taxes), premiums for Medicare Part B (medical insurance) and premiums for Medicare Part D (drug coverage), and other sources such as interest on the trust fund investments. Those receiving Medicare services also have to pay deductibles and coinsurance, although that might be covered by another plan for which premiums must be paid either directly or indirectly. The option of private Medicare Advantage plans adds further complexity to the calculations. So it is difficult for each person to determine exactly what they are paying for Medicare.
  • Without going into detail, Medicaid is funded by both federal and state taxes, which we pay even though the benefits go only to low-income individuals.
  • One of the larger funding sources is the tax expenditure that we pay for the deductions received by employers (actually, by extension, the employees) for the employer contribution to employer-sponsored health plans. Actually this is a relatively cruel policy in that these taxpayer subsidies to employer-sponsored plans are inversely related to income – higher-income individuals receive much higher taxpayer support than do lower-income individuals.
  • Government employees on the federal, state, and local levels tend to have a major portion of their health plan premiums paid by the government, which, of course, means paid by us the taxpayers.
  • Whenever you purchase products or services, included in the price is overhead expenses and that includes employer-sponsored health plans. That is not only for the original producer of the products or services, but it is also for all of the intermediaries such as shippers, retailers, employees of business insurers and endless other employees that support the production and distribution of products and services that we receive. Of course, some of this is double-counting health spending already listed, but it is important to understand the flow of money into our health care system.
  • The complexity of health care costs creates a tremendous amount of expensive administrative excesses for which we all end up paying. Again, some of this may be double-counted, but it is particularly important to understand that much of this waste would be recoverable with the enactment and implementation of a single payer Medicare for All.
  • You can likely think of other sources of health care spending that should be included here.

The Milliman Medical Index is an estimate of the health care costs for a hypothetical family of four covered by an average employer-sponsored preferred provider organization (PPO) plan. For 2020, that amount is $28,653. Keep in mind that America’s workforce and their young families are a relatively healthy sector of the U.S. population. For other sectors, the cost may be significantly greater.

So how much do we really pay for health care? According to the current release from the CMS Office of the Actuary, our national health expenditures for 2019 were $3.8 trillion. With a 2019 U.S. population of 328.2 million, that is an average expenditure of $11,578 per person.

For a family of four that would be about $46,000, considerably more than the $28,000 estimate by the Milliman Medical Index. But that shows how difficult it is to break down the cost for each individual or family who would want to compare what they believe they are spending with the cost for each individual in a Medicare for All program.

Many studies have been done of what the cost of a single payer would be and how that would compare to what we are currently spending. Very roughly the average cost for most of us would be about 5 percent less than what we are spending (median 3.5 percent by the Cai et al study). Only the very wealthy would pay more but not near enough to be detectable by a change in their lifestyles.

So how much are you, as an individual, spending on health care now? As you can see it is so complex that it would be almost impossible to estimate. So we have to settle with averages. So how much will you spend in taxes to pay for single payer Medicare for All? That also will vary for each individual, but we can say that it will be equitable and affordable since the financing will be through progressive taxes based on each individual’s ability to pay.

People worry about the taxes but if they just focus on the fact that the taxes will be fair and affordable, then they can celebrate knowing that they will have quality health care of their own choosing whenever and wherever they need it, for life! Nothing else on the horizon promises that.

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

“Funding HR 676: The Expanded and Improved Medicare for All Act”

University of Massachusetts at Amherst 2013

Title: Funding HR 676: The Expanded and Improved Medicare for All Act
Year: 2013
Author: Gerald Friedman
Institution: University of Massachusetts at Amherst
Plan Analyzed: H.R. 676
Percent Change in National Health Expenditure under M4A (1-year): -6.2% (2014)

Read Study:

Funding HR 676: The Expanded and Improved Medicare for All Act 

Abstract:

The Expanded and Improved Medicare for All Act, HR 676, introduced into the 113th Congress by Rep. John Conyers Jr. and 37 initial co-sponsors, would establish a single authority responsible for paying for medically necessary health care for all residents of the United States. Under the single-payer system created by HR 676, the U.S. could save an estimated $592 billion annually by slashing the administrative waste associated with the private insurance industry ($476 billion) and reducing pharmaceutical prices to European levels ($116 billion). In 2014, the savings would be enough to cover all 44 million uninsured and upgrade benefits for everyone else. No other plan can achieve this magnitude of savings on health care. Specifically, the savings from a single-payer plan would be more than enough to fund $343 billion in improvements to the health system such as expanded coverage, improved benefits, enhanced reimbursement of providers serving indigent patients, and the elimination of co-payments and deductibles in 2014. The savings would also fund $51 billion in transition costs such as retraining displaced workers and phasing out investor owned, for-profit delivery systems. Health care financing in the U.S. is regressive, weighing heaviest on the poor, the working class, and the sick. With the progressive financing plan outlined for HR 676 (below), 95% of all U.S. households would save money. HR 676 would also establish a system for future cost control using proven-effective methods such as negotiated fees, global budgets, and capital planning. Over time, reduced health cost inflation over the next decade (“bending the cost curve”) would save $1.8 trillion, making comprehensive health benefits sustainable for future generations.

Overview:

Dr. Friedman conducts an easy-to-follow cost analysis of H.R. 676 using a projection model. Dr. Friedman also discusses financing this program through both existing funding sources and “progressive taxation.”

  • Section I: Financing needs for single payer
    • Current regressive and obsolete funding sources to be replaced by progressive taxation
    • Estimated costs of system improvements and transition costs
  • Section II: Single-payer system savings as a source of financing
    • Savings on provider administrative overhead and drug prices
    • Savings on the administrative overhead of private insurers, Medicaid, and employers
  • Section III: A progressive financing plan for HR 676 for 2014
  • Conclusion: Single payer covers more, costs less for 95 percent of Americans

Further Reading:

Gordon Mosser Critical Review and comment by Dr. Don McCanne

“The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending”

The Urban Institute 2016

Title: The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending
Year: 2016
Author: John Holahan, Lisa Clemans-Cope, Matthew Buettgens, Melissa Favreault, Linda J. Blumberg, and Siyabonga Ndwandwe
Institution: Urban Institute
Funding Source: N/A
Plan Analyzed: Bernie Sanders’ 2016 campaign proposal (eventually became S. 1804 Medicare for All Act of 2017)
Percent Change in National Health Expenditure under M4A (1-year): 16.9% (2017)
Percent Change in National Health Expenditure under M4A (10-year): 16.6% (2017-26)
Increases in federal health expenditures: $456.9 billion (2017)

Read Study:

The Sanders Single-Payer Health Care Plan

Abstract:

Presidential candidate Bernie Sanders proposed a single-payer system to replace all current health coverage. His system would cover all medically necessary care, including long-term care, without cost-sharing. We estimate that the approach would decrease the uninsured by 28.3 million people in 2017. National health expenditures would increase by $6.6 trillion between 2017 and 2026, while federal expenditures would increase by $32.0 trillion over that period. Sanders’s revenue proposals, intended to finance all health and nonhealth spending he proposed, would raise $15.3 trillion from 2017 to 2026—thus, the proposed taxes are much too low to fully finance his health plan.

Overview:

  • 2016 study done by the Urban Institute utilizing a microsimulation approach to conduct a cost analysis of the Sanders Medicare for All proposal from the 2016 presidential primary in contrast to projection studies that had been done up to that point.
  • This study considers how cost would be affected by:
    • Acute healthcare spending increases by non-elderly individuals who would not otherwise be enrolled in Medicare
    • Acute healthcare spending increases by those who would otherwise be enrolled in medicare under currently law
    • Increase in utilization costs for long term services and supports
  • This study discusses
    • Assumptions that tend to over/underestimate costs when considering M4A.

Further Reading:

“An Analysis of Senator Sanders’ Single-Payer Plan”

Emory University 2016

Title: An Analysis of Senator Sanders Single Payer Plan
Year: 2019
Author: Kenneth Thorpe
Institution: Emory University
Plan Analyzed: S. 1129
Increases in federal health expenditures: $1.9 trillion (2017) and $24.6 trillion (2017-26)

Read Study:

An Analysis of Senator Sanders’s Single Payer Plan

Abstract:

Senator Sanders has proposed eliminating private health insurance and the exchanges created through the Affordable Care Act and replacing it with a universal Medicare program with no cost sharing. The plan would shift virtually all health care spending from private and public sources today onto the federal budget. The campaign estimates his plan would cost an average of $1.38 trillion per year over the next decade. They outline a variety of payroll and income tax increases, higher taxes for capital gains and dividends, taxes on estates of high income households and eliminate tax breaks that subsidize health insurance. Collectively he claims these taxes fully pay for the costs of the single payer plan. The analysis presented below however estimates that the average annual cost of the plan would be approximately $2.5 trillion per year creating an average of over a $1 trillion per year financing shortfall. To fund the program, payroll and income taxes would have to increase from a combined 8.4 percent in the Sanders plan to 20 percent while also retaining all remaining tax increases on capital gains, increased marginal tax rates, the estate tax and eliminating tax expenditures. The plan would create enormous winners and losers even with the more generous benefits with respect to what households and businesses pay today compared to what they would pay under a single payer plan. Overall, over 70 percent of working privately insured households would pay more under a fully funded single payer plan than they do for health insurance today.

Overview:

This study is unique because it primarily focuses on the increase in federal health care spending and how this increase might be financed.

This study considers:

  • The impact of increased payment rates for current Medicare/Medicaid beneficiaries.
  • Financing mechanisms for increased federal spending.
  • Populations that would be “at-risk” based on proposed financing mechanisms.

Further Reading:

Gordon Mosser Critical Review and comment by Dr. Don McCanne