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Updated: 1 hour 48 min ago

A Canadian physician responds to Gov. Pence’s Medicaid program

7 hours 1 min ago

Yesterday’s Quote of the Day (“Government supports rotten teeth for patients in poverty”) discussed the Medicaid waivers obtained by Indiana Governor Mike Pence. Today’s post continues on that topic.

The Goal Was Simplicity; Instead, There’s a Many-Headed Medicaid

By Margot Sanger-Katz
The New York Times, January 28, 2015

Indiana has become the latest Republican-led state to expand its Medicaid program as part of the Affordable Care Act. As has become the pattern, it was done with a series of waivers from particular federal requirements.

When the state’s governor, Mike Pence, announced the news on Tuesday, the focus of his speech was less about his state’s decision to embrace this part of Obamacare than about the special concessions he’d been able to extract from the Obama administration.

Newly eligible Medicaid recipients will have to pay monthly premiums or be locked out of certain services, he announced, and higher-earning beneficiaries who fail to pay will be shut out of the program for six months. People who use the emergency room frequently will need to pay higher co-payments than the federal government has ever allowed.

The provisions, designed to encourage residents to take more responsibility for the costs of their health care, break new ground in what the Obama administration will allow in exchange for expansion.

NYT Readers’ Comments:

By Bob Solomon, MD
Edmonton, Canada

You live in “Cloud-Cuckoo Land” in the fantasy you have the best medical care system on earth. Baloney. Check it out.

Canada is right next door. Come see how a sane federal health plan works, covering all and ensuring that (1) we live longer, (2) we have fewer chronic ills, (3) we have lower cost drugs, (4) we have lower cost hospitals, (5) we have lower cost operations, (6) we have lower accounting costs for all parties, and (7) we have no medical bankruptcies and impoverishment anywhere, for any income, for the unemployed, for the elderly. Long waits for ER? I waited 4 minutes for an asthma attack to be dealt with, 2.4 hours for a minor ear problem — wax. In Philly, I waited 2.4 for a back injury. Twice. So no difference.

We get free (tax-paid) care in Alberta. No out of pocket, no minimum, no exclusions, no co-pays, no nothin’.

Premiums exist in certain provinces: $35 a month per person or about that, and some people purchase extended coverage. I also pay approx. $1200 a year for added features: free or nearly free drugs, and a large subsidy for glasses, hearing aids, private rooms, canes, and things like that.

Americans live in a “exceptional” med world — a medical services madhouse. It was not created by ACA, of course. And because of the med and drug and hospital corporations, I mean “people”, and the know-little-or-nothing GOP, it was ensured to endure after ACA. Medical madness is still a disease you need to cure.

Denying poor people dental care simply because they cannot pay the premium, as Pence’s program does, defies logic. Does sentencing poor people to rotten teeth truly motivate them to find money that they don’t have in order to provide them with the “dignity to pay for their own health insurance”?

Does Pence propose that we change the rhetoric from “skin in the game” to “rotten teeth in the mouth”?…

Government supports rotten teeth for patients in poverty

Wed, 2015-01-28 15:27
Indiana Will Allow Entry to Medicaid for a Price

By Abby Goodnough
The New York Times, January 27, 2015

After a lengthy back-and-forth, the Obama administration has agreed to let Gov. Mike Pence of Indiana, a Republican, expand Medicaid on his own terms, including some that have not been allowed before under federal rules.

The plan will extend coverage to an additional 350,000 Indiana residents with incomes of up to 138 percent of the federal poverty level — about $16,100 for a single person and $27,310 for a family of three — starting next month.

Mr. Pence, like several Republican governors before him, insisted on adding a conservative twist to the expansion, mostly by requiring beneficiaries to pay something toward their coverage. Under his plan, most people will have to pay monthly premiums equaling 2 percent of their household income — between about $3 and $25 a month for a single childless adult — for coverage that includes dental and vision benefits.

At the Obama administration’s insistence, people who earn less than the poverty level will not have to pay premiums. But if they do not, their coverage will be downgraded to exclude dental and vision benefits. And they will owe co-payments for medical care, including $4 for a doctor’s visit and $75 for a hospitalization.

In another unusual concession, the Obama administration will let Indiana lock some people out of coverage for six months if they stop paying monthly premiums.

Joan Alker, executive director of the Georgetown University Center for Children and Families, called the Indiana plan “enormously complicated” and questioned the fairness of withholding dental and vision coverage from those who cannot come up with premium payments.

“It’s just common sense that when people take greater ownership of their health care,” Mr. Pence said, “they make better choices.”…


Gov. Pence gets federal OK for Medicaid alternative

By Shari Rudavsky and Maureen Groppe
Indystar, January 27, 2015

Those who are eligible for the plan already live at the poverty level, said Timothy Jost, a law professor at Washington and Lee University and a healthcare reform expert. People who by definition are already having trouble covering basic costs such as food and rent will struggle to make an addition payment. Instead, they may opt not to participate in the program or avoid getting care.

“The question is how far is CMS willing to go in accommodating governors or states that want to work their own policy agenda into the Medicaid program,” Jost said. “This is pretty much pushing the limits of how far they should go if it’s not beyond it.”

Throughout the months of back and forth with federal health officials, Pence had said he was not willing to compromise on the personal responsibility piece.…

This is insane! In an age when we are supposed to be a society that cares enough to see that all of us receive the health care that we need, we still have amongst us those who insist that people with no assets, often homeless, frequently missing meals, are supposed to exercise “personal responsibility” by paying funds that they don’t have as a condition for receiving much needed medical care.

And, oh, if they don’t come up with those funds, let their teeth rot out. That will show them! And sentence some of them to six months without any medical care at all.

We have covered extensively the irrationality and inhumanity of the consumer-directed, moral hazard-based policies that erect financial barriers to care for the four-fifths of us with minimal or modest resources. But this exposes the colors of these “skin in the game “ advocates. What kind go people are we that we elect individuals like this to take charge of our federal and state governments. What is government all about? This!? It can’t be. Tell me it isn’t.

HHS creating policy out of rhetoric devoid of science

Tue, 2015-01-27 14:55
Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care

By Sylvia M. Burwell, U.S. Secretary of Health and Human Services
The New England Journal of Medicine, January 26, 2015

Now that the Affordable Care Act (ACA) has expanded health care coverage and made it affordable to many more Americans, we have the opportunity to shape the way care is delivered and improve the quality of care systemwide, while helping to reduce the growth of health care costs. Many efforts have already been initiated on these fronts, leveraging the ACA’s new tools. The Department of Health and Human Services (HHS) now intends to focus its energies on augmenting reform in three important and interdependent ways: using incentives to motivate higher-value care, by increasingly tying payment to value through alternative payment models; changing the way care is delivered through greater teamwork and integration, more effective coordination of providers across settings, and greater attention by providers to population health; and harnessing the power of information to improve care for patients.

As we work to build a health care system that delivers better care, that is smarter about how dollars are spent, and that makes people healthier, we are identifying metrics for managing and tracking our progress. A majority of Medicare fee-for-service payments already have a link to quality or value. Our goal is to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by 2018. Perhaps even more important, our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of 2018. Alternative payment models include accountable care organizations (ACOs) and bundled-payment arrangements under which health care providers are accountable for the quality and cost of the care they deliver to patients. This is the first time in the history of the program that explicit goals for alternative payment models and value-based payments have been set for Medicare. Changes assessed by these metrics will mark our progress in the near term, and we are engaging state Medicaid programs and private payers in efforts to make further progress toward value-based payment throughout the health care system.

Although we have much to celebrate regarding increased access and quality and reduced cost growth, much of the hard work of improving our health care system lies ahead of us.


Early Evidence On Medicare ACOs And Next Steps For The Medicare ACO Program (Updated)

By Mark McClellan, S. Lawrence Kocot, and Ross White
Health Affairs Blog, January 22, 2015

On December 1, CMS released a Notice of Proposed Rulemaking (NPRM) for the Medicare Shared Savings Program (MSSP), which requests feedback for changes CMS is considering for the Medicare accountable care organization (ACO) programs in 2016 and beyond. The proposal suggests significant potential alterations to the program, many of which we recently reviewed, that would address major issues that ACOs and others have raised: uncertainty and inexperience at transitioning to increasing levels of risk, lack of timely and accurate data, changes in attributed patient populations from year-to-year, and financial benchmarks that fail to account for regional variations and continue to reward high ACO performance over time.

Ideally, big changes in key features in a major program like the MSSP would be based on extensive empirical evidence on what determines success in the program. Unfortunately, only limited evidence, including case studies and some comparative data, is available on the determinants of success for Medicare ACOs, and thus on the MSSP.…


Unpacking The Medicare Shared Savings Proposed Rule: Geography And Policy

By Scott Heiser, Carrie Colla, and Elliott Fisher
Health Affairs Blog, January 22, 2015

The Centers for Medicare and Medicaid Services (CMS) recently announced a Notice of Proposed Rulemaking (NPRM) for Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs).

Of the 220 ACOs in the program that participated in the first performance year, 53 earned shared savings, 52 saved money but not enough to meet the required “minimum savings rates,” and the other 115 did not accrue savings (spending on patients assigned to the ACO was greater than projected).

Depending on one’s perspective, the early results of the MSSP are either promising or disappointing. On the one hand, nearly a quarter of qualifying ACOs achieved shared savings in the first year of performance; on the other, three-quarters either did not lower spending or did so but failed to exceed the minimum savings rate.

Improvements in the benchmarking formula, the risk adjustment methodology, and perhaps additional incentives to sustain high performance over a longer period are worth exploring.…


Measuring Success in Health Care Value-Based Purchasing Programs

By Cheryl L. Damberg, Melony E. Sorbero, Susan L. Lovejoy Grant Martsolf, Laura Raaen, Daniel Mandel
RAND Corporation

Value-based purchasing (VBP) refers to a broad set of performance-based payment strategies that link financial incentives to providers’ performance on a set of defined measures in an effort to achieve better value by driving improvements in quality and slowing the growth in health care spending. Policymakers are grappling with many policy decisions about how best to design and implement VBP programs so that they are successful in achieving stated goals.

Although the past decade has witnessed a fair amount of experimentation with performance- based payment models, primarily P4P programs, we still know very little about how best to design and implement VBP programs to achieve stated goals and what constitutes a successful program.…


Medicare’s payment reform push draws praise and fears

By Melanie Evans and Paul Demko
Modern Healthcare, January 26, 2015

“I think we can all agree that moving away from fee-for-service and moving toward more value-based payment is a really good idea,” said Dr. Ashish Jha, a health policy professor at Harvard University who studies healthcare quality. “The challenge is, how do you measure value? If you don’t do that well, then these models can end up being not only not all that helpful, but even hurtful.”

With weak incentives, Medicare’s shift to alternative contracts could amount to little actual change, said Mark Pauly, an economist and health policy professor at the University of Pennsylvania. “It’s not a sledgehammer. If the penalty or reward is relatively modest, then a cynic could say what’s the big deal?”…

Since the beginning of the reform process we have been inundated with rhetoric about how health reform is going to improve quality and slow spending, but the mechanisms proposed were more “wish lists” than being proven mechanisms based on sound policy science. Now we have an announcement from HHS Secretary Sylvia Burwell that, even though we have not progressed much beyond the rhetoric, these mechanisms will be put into place by the end of 2018.

An extensive RAND report confirms that we still don’t know how to do this. Advocates such as Elliott Fisher and Mark McClellan report that, although we need extensive empirical evidence, only limited evidence is available. Harvard policy professor Ashish Jha says that “these models can end up being not only not all that helpful, but even hurtful.” And University of Pennsylvania policy professor Mark Pauly, of “moral hazard” fame, even says “what’s the big deal?”

Primum non nocere…

… and, second, let’s put into place policies that really would benefit everyone – a single payer national health program, aka an improved Medicare for all.

‘Medical homes’ raised costs for post-Katrina Medicaid

Tue, 2015-01-27 13:15
Patient-centered medical homes in Louisiana had minimal impact on Medicaid population’s use of acute care and costs

By Evan S. Cole et al.
Health Affairs 2015;34:87-94

We sought to evaluate the effect of patient-centered medical home certification of Louisiana primary care clinics on the quality and cost of care over time for a Medicaid population. … We found no impact on acute care use and modest support for reduced costs and primary care use among medical homes serving higher proportions of chronically ill patients.

Primary care use was lower in patient-centered medical homes compared to control clinics, but both ED use and ambulatory care-sensitive inpatient and ED use were higher.

This analysis provides some evidence that cost per patient is reduced only when a large proportion of the Medicaid patients served by the patient-centered medical home are chronically ill. However, the evidence is not robust. (p. 1729)

Yet another study finds that “medical homes” don’t save money and have little impact on quality. This study examined 27 clinics in the New Orleans area that received certification as “medical homes” during 2008 and 2009. What makes this study particularly interesting is that “homes” were promoted with great fanfare by the Bush administration and Louisiana’s health policy establishment just nine years ago as an essential piece of the solution to the devastation inflicted on New Orleans’ primary care system by Hurricane Katrina. Michael Leavitt, secretary of health and human services (HHS), and Louisiana “home” advocates left a paper trail that records the groupthink that created and sustained their unrealistic expectations of “homes.” Now, nine years later, we can look back and compare reality with groupthink.

In my last comment on this blog, I said the “medical home” fad is muddling the debate about how to solve the health care crisis because it pretends the problem afflicting the primary care sector is improper “design” or “structure” when the real problem is inadequate resources.

What’s true in medicine is true in health policy: If you don’t diagnose correctly, you can’t prescribe correctly. If you think the primary care sector needs “redesign,” you will prescribe “medical homes” and “breaking down silos” and other nostrums with labels connoting a change in structure. If, on the other hand, you conclude the proper diagnosis is too few resources, then you recommend more resources.

You might think post-Katrina New Orleans would be one of those situations where it would be impossible to screw up the diagnosis. You might think inadequate resources would be the obvious diagnosis of the injury suffered by that city’s primary care system. The hurricane left New Orleans with a severe shortage of physicians, and of hospital and nursing home beds. In the face of such devastation, you might think defective “structure” or “design” would be an obviously inaccurate diagnosis.

You would be wrong. You underestimated the power of managed-care groupthink.

The Bush administration diagnosed New Orleans’ problem as a “design” problem, and Louisiana’s health policy elite enthusiastically agreed. Federal and Louisiana policy makers (“prescient local leaders,” according to Rittenhouse et al., p. 1730) proposed inflicting the “medical home” experiment on New Orleans’ beleaguered primary care work force as the solution to the alleged “design” problem.

Katrina hit in August 2005, just as the “medical home” fad was germinating within the American health policy establishment. In February 2007 the fad burst into view with the publication of the “Joint Principles of the Patient-Centered Medical Home” by the American Academy of Family Physicians and three other primary-care associations. By 2008, despite the complete lack of evidence for the claim that “homes” could cut costs and only weak evidence for the claim that “homes” could improve quality, the “patient-centered medical home” (PCMH) had won the endorsement of virtually the entire health policy establishment, including the Medicare Payment Advisory Commission, many federal and state legislators, and great swaths of academia.

The influence of the PCMH fad is evident in a “concept paper” published in October 2006 by a group that called itself the Louisiana Health Care Redesign Collaborative. The purpose of the paper was to explain to HHS Secretary Levitt how the collaborative proposed to “rebuild … the health care system in the Greater New Orleans area.” The very fact that the collaborative put the word “redesign” in its name tells you it had already adopted the “defective design” diagnosis. The collaborative listed the PCMH solution as the number one “reform” it intended to endorse if HHS would send some money (see p. 1).

The idea of inflicting the PCMH experiment on New Orleans in its time of crisis was apparently hatched within HHS. Secretary Leavitt sent “explicit instructions” to Louisiana that state policy makers would have to propose a “redesigned health care system” if they wanted HHS assistance (see p. 3 here).

The collaborative, a group of Louisiana health policy leaders, happily obliged. They put “redesign” in their name. And in their concept paper, they enthusiastically embraced the “defective structure” diagnosis and the unproven claims for PCMHs. In the excerpts from the concept paper presented below, note the use of “redesign” and “transformation,” words that in 2006 were just beginning to become the buzzwords that signified one’s allegiance to managed care theology in general and the “defective structure” diagnosis in particular.

As the area slowly recovers from Katrina, an opportunity to redesign the health care system … presents itself. [HHS] Secretary, Michael Leavitt, has recognized the opportunity and has challenged Louisiana to propose a redesigned health care system. [p. 2]

The medical home model … will reduce the high costs associated with the current reliance on emergency departments for the care of urgent, ambulatory-sensitive conditions. The evidence shows that such a model will improve health.

The medical home model forms the foundation for … the ultimate transformation of the way care is provided in the current Medicaid program. … This should result in better quality and lower costs. [p. 6]

None of these claims were evidence-based in 2006, and none are today.

Having extracted from Louisiana the necessary pledge of allegiance to conventional managed care wisdom, Leavitt awarded a $100 million grant (called the Primary Care Access and Stabilization Grant) to the Louisiana Department of Health and Hospitals (LDHH) in July 2007. LDHH offered even more money to clinics that applied to the National Committee for Quality Assurance (NCQA) to receive certification as a PCMH during 2008 and 2009.

Now the first rigorous analysis of those clinics that received NCQA certification – the paper by Cole et al. quoted above – has shown that none of the expectations for PCMHs articulated in the Redesign Collaborative’s concept paper were realistic. Contrary to the claims made in 2006 by Louisiana’s “prescient local leaders,” Cole et al. found that New Orleans PCMHs failed to cut costs for Louisiana’s Medicaid program, and that patients of PCMHs used fewer primary care services, were more likely to be treated in an emergency department, and were more likely to be treated in an inpatient or emergency department setting for ambulatory-care sensitive conditions than patients in non-PCMHs.

Because the 27 PCMHs studied by Cole et al. received more resources than the non-PCMH controls (they received money both from the HHS grant and PCMH “bonuses” from LDHH), we may infer that when those extra resources are tacked onto the cost of treating PCMH patients, the PCMH experiment substantially raised total Medicaid spending and presumably total spending for the entire New Orleans area. What proportion of the higher costs incurred by PCMHs was wasted on busywork and what proportion improved the lives of New Orleans residents is impossible to say because the amount and disposition of the additional money allocated to the PCMH clinics was of no interest to Cole et al.

There can be little doubt that at least some of the extra resources, notably those used to hire more doctors and nurses and to retain health care professionals currently on staff, benefited patients. A 2012 examination by Rittenhouse et al. of the effect of the PCMH experiment on the adoption of PCMH “processes” (as opposed to cost and quality outcomes of those processes) reported that the PCMH clinics “increased the number of patients served” (p. 1734).

But that analysis also showed that as the federal and LDHH subsidies came to an end, PCMH clinics began to abandon “PCMH processes” in order to focus on avoiding bankruptcy. “Implementing new models of care became a second-tier priority, after simply keeping the clinic doors open,” Rittenhouse et al. reported (p. 1736). This is precisely what you would have expected if your diagnosis of post-Katrina New Orleans had been insufficient resources, not “defective design.” The observation by Rittenhouse et al. is consistent with other evidence that the financial cost of meeting NCQA’s “gold-plated” PCMH criteria places severe stress on PCMHs that do not receive sufficient compensation for those costs.

The contrast between the omnipresent happy talk about “homes” and the conclusions reached by Cole et al. is stark. Some readers may be wondering whether the Cole paper is out of line with other research. The answer is no, it is not. This is true whether we restrict our analysis to Medicaid-related research or broaden our scope to include all research on “homes.” Here I’ll comment only on the Medicaid-related research.

Cole et al. stated that their paper “constitutes the only external evaluation to date of New Orleans’ communitywide implementation of medical home capability and processes in the region’s safety net” (p. 1730). In fact, their paper appears to be the first and, to date, the only rigorous analysis of PCMH Medicaid programs in any state (half the states have implemented PCMH Medicaid programs). Cole et al. noted, “Few studies have specifically evaluated the effect of care provided by patient-centered medical homes on a Medicaid population,” and of those “none appear to have been peer reviewed.” (pp. 87-88). This is consistent with this statement by Mary Takach in her review, published in 2012, of research on Medicaid PCMHs: “Notably absent from this review of state patient-centered medical home initiatives are rigorous evaluations of whether or not these initiatives and their payment models work” (p. 2438). At this date, then, it appears that the study by Cole et al. is the definitive study on the impact of PCMHs not just on Medicaid spending on New Orleans PCMHs but on all existing PCMH Medicaid programs.

A decade has gone by since “prescient” health policy entrepreneurs endorsed the “home” fad. The fad has had its day in the sun. It is time to junk it along with the “defective design” diagnosis and acknowledge that what the primary care sector needs is more resources. Those who yearn to believe that costs can be reduced by improving quality should shift their focus from “homes” serving everyone in a “population” to specific services targeted at relatively tiny, select groups of people who are very sick. A few studies suggest that medical costs can be reduced by amounts that exceed the cost of the quality-improving intervention when the intervention is directed at carefully selected, chronically ill patients, such as children with debilitating illness or elderly patients with hypertension and congestive heart failure.

But these studies are few and far between. The idea that we can “quality improve” our way to lower costs with “homes” and other managed care fads contradicts research and common sense. If we are serious about lowering health care costs, we must focus on reducing administrative waste and high prices. We could achieve reductions in some prices with “all-payer” systems in which state or federal agencies set limits on fees and prices. But to achieve a substantial reduction in prices and administrative waste, we must abandon the unending managed care experiment and the multiple-payer system that are together driving up prices and administrative costs and rely instead on a single-payer system.

Kip Sullivan is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.

Prescribing an epiphany for Ron Pollack and Henry Aaron

Mon, 2015-01-26 16:18
Costs derail Vermont’s dream of a single-payer health plan

By Jay Fitzgerald
The Boston Globe, January 25, 2015

For decades, liberal activists yearned for a European-style, single-payer health system that they argued would lead to more affordable, efficient, and comprehensive medical coverage for all citizens. When Vermont four years ago enacted a landmark bill to establish the nation’s first single-payer health care system, they saw their long-sought dream about to be fulfilled.

But reality hit last month.

(Henry Aaron)

“The idea of single-payer, or a Medicare-for-all type program, has always been a cherished dream for many in the Democratic Party,” said Henry J. Aaron, a senior fellow at the Brookings Institution, a liberal-leaning Washington think tank. “In truth, there had never been a hard, developed plan to implement such a dream. In Vermont, they finally developed a plan, and look what happened.”

In Europe, many countries built their universal health care systems from scratch, with some starting early last century when most citizens had no medical coverage and any services provided by governments were welcome, the Brooking Institution’s Aaron said. That allowed those countries to slowly build and expand health care systems over decades.

But in the United States private insurance arrangements between employees and employers have expanded and matured over the decades, with many people with insurance expecting a high level of medical service. So, switching to a single-payer system would need to meet those higher expectations — and higher costs — all at once, Aaron said.

“It’s easier to build from scratch than when a system is already up and running,” he said. “We could have maybe created a single-payer system 60 or so years ago, when insurance wasn’t as complete and widespread. But it would be very disruptive and costly today.”

(Ron Pollack)

Ron Pollack, executive director of Families USA, a national organization representing health care consumers, said he has long believed in the benefits of a single-payer system. But he also remembered his talks with Kennedy. The late senator, Pollack said, expressed regrets he didn’t earlier embrace insurance-based universal care, rather than holding out for a single-payer system that never materialized.

Pollack said activists might be better off pushing to improve provisions of the Affordable Care Act. “It may change in time and single-payer might become reality,” Pollack said. “But the political reality and the fiscal realities make it a very tough sell.”…

I have greatly admired Ron Pollack and Henry Aaron through the decades. They share with us our desire to expand health care justice to all. So why do I feel tormented when I hear comments from them?

Perhaps it’s because we chose different paths at the intersection of policy and politics. Ron Pollack says that he has long believed in the benefits of a single-payer system. Henry Aaron says that we could have created a single payer system sixty or so years ago. Yet Pollack says, “the political reality and the fiscal realities make it a very tough sell.” And Aaron says, “it would be very disruptive and costly today.”

Early on, Pollack decided to join forces with the neoliberal Democrats in supporting reform that would gain the support of the insurance and pharmaceutical industries – a political path with realistic potential. Aaron’s views have been more perplexing, such as when he attempted to refute a meticulous landmark study on the profound administrative waste in health care by using back-of-the-envelope numbers. We were not alone in our amazement when another very prominent health care economist said that he didn’t understand why Aaron did that.

At any rate, they both clearly understand the policy superiority of single payer. More importantly, they understand what that means when it comes to reducing suffering and financial hardship – fundamental principles in health care justice.

It wasn’t the policies that needed to be changed. It was the politics. Maybe someday Aaron and Pollack, and the multitude of others who bailed on single payer, will have an epiphany and join the effort to change the politics. How much more suffering and hardship do they have to witness before they are ready? We cannot change the errors of the past, but we can do the right thing going forward.

Gallup – Health care remains a top financial burden for American families

Fri, 2015-01-23 11:40
Americans See Healthcare, Low Wages as Top Financial Problems

By Art Swift
Gallup, January 21, 2015

Healthcare costs and lack of money or low wages rank as the most important financial problems facing American families, each mentioned by 14% of U.S. adults.

Gallup has been asking Americans about the most important financial problem facing their family in an open-ended format for the past 10 years. Healthcare this year has returned to the top of the list for the first time since early 2010, when the Affordable Care Act, or “Obamacare,” was signed into law. Still, Americans viewed it as an even bigger financial problem in 2007, when a range of 16% to 19% said it was most important.

For Americans earning $75,000 or more a year, retirement savings, college expenses and healthcare costs rank as the most important financial problems. Among lower-income Americans, retirement savings and college expenses are less important. Healthcare costs, however, have double-digit-percentage support across the board.

Bottom Line

The American economy continues to recover. With Gallup’s Economic Confidence Index in positive territory for the first time since the Great Recession, and with President Barack Obama stating that the U.S. last year had its best year for job growth since 1999, certain financial problems have receded from the nation’s memory, while others have persisted in the forefront. Americans have consistently cited healthcare, a topic of fierce debate this decade, as one of the most important financial problems, and it remains so.…

The recent slowing in the rate of increases in health care costs has been good news for those supervising budgets of government health programs and for employers providing employee health benefits, but how has it impacted patients? This new Gallup poll shows that health care costs remain one of the most important financial problems facing American families. The Affordable Care Act has not provided the level of financial relief from medical bills that Americans want and need.

Under the current financing model, there is virtually no prospect for future relief. In fact, the trend of placing an ever greater financial burden on “health care consumers” will likely compound medical debt problems for patients. We need a new model. We need a single payer national health program.

New poll on single payer and a Medicare buy-in

Thu, 2015-01-22 16:48

Poll of Likely 2016 Voters
Progressive Change Institute, Conducted by GBA Strategies, January 9-15, 2015


“Enact a national health plan in which all Americans would get their insurance through an expanded, universal form of Medicare.”

51%  Support
36%  Oppose
12%  Neutral

Percent supporting by party

79%  Democrat
23%  Republican
45%  Independent


“Give all Americans the choice of buying health insurance through Medicare or private insurers, which would provide competition for insurance companies and more options for consumers.”

71%  Support
13%  Oppose
14%  Neutral

Percent supporting by party

77%  Democrat
63%  Republican
71%  Independent…

This poll shows that the nation’s attitude towards single payer remains essentially unchanged. About four-fifths of Democrats support single payer, three-fifths of Republicans are opposed, and Independents remain evenly split. But what about the attitude towards the “public option” – allowing all Americans the choice of purchasing Medicare instead of private insurance?

Support for the option of a Medicare buy-in is strong across the political spectrum. What can we make of this?

The debate in Congress during the reform process was highly partisan, the public option having been defeated by the defection of just one senator – Joseph Lieberman. The support that we now see amongst Republican voters is probably genuine. The opposition of the Republican members of Congress at that time was probably more related to the decision to defeat the Affordable Care Act (ACA) regardless of any benefits in it, just to “make Obama a one-term president.”

If the Republicans in Congress can forget about their prior opposition and decide that they want to move forward with constructive policies, those who want changes in Medicare may decide that placing it in competition with private insurance plans may bring market concepts to the traditional Medicare program. They can conveniently ignore the fact that the current market experiment with private Medicare Advantage plans has been unsuccessful in providing comparable benefits at a lower cost.

The Democrats in Congress are likely to support a renewed effort to enact a public option, especially since many still regret that it was not included in ACA.

We have to keep in mind that the insurance industry was successful in changing the public option from a Medicare plan to a public plan that had most of the unfavorable features of private health plans along with restrictions on how it could compete with private plans. This was to prevent it from having an “unfair advantage” in the marketplace – by giving the private plans an unfair advantage over the public option.

During the implementation of ACA we have seen that the private insurers still control the puppet strings. Should the political environment become more favorable for a public option, we can be sure that the insurance industry will once again write the legislation, creating a flawed public option that will surely invoke the wrath of those enrolling in the program, “proving” once again the meme that “the government can’t do anything right.”

These comments bring back memories of how the reform debate was hijacked by histrionics over the public option, which played into the hands of the insurance industry. The debate should have been over single payer, but remember we were emphatically and ungraciously denied a seat at the table from very early on in the process (back when the Democratic strategists in control wanted us to sell “CHOICE” to the public – choice of private health plans – and single payer was banned from the strategy sessions).

Little attention was given to the fact that adding another option – the public option – would still leave in place our inefficient, costly and highly dysfunctional system. We would have gained virtually none of the other benefits of single payer. And that would still be true if we abandon our quest for single payer and head off towards the Medicare buy-in. We would still have an outrageously expensive system with profound administrative waste, and intolerable inequities in affordability and access.

At least more Democrats favor single payer (79%) than favor the Medicare buy-in (71%). We need to start tailoring our message to appeal to the Republicans and Independents as well.

The April surprise for not being insured

Wed, 2015-01-21 17:52
Tax Preparers Brace To Be Bearers Of Bad Health Law News

By April Dembosky, KQED and Jeff Cohen, WNPR
Kaiser Health News, January 21, 2015

IRS Commissioner John Koskinen declared this tax season one of the most complicated ever, and tax preparers from coast to coast are trying to get ready for the first year that the Affordable Care Act will show up on your tax form.

The penalty for being uninsured in 2014 is $95 or 1 percent of income, whichever is greater. Next year, it’s 2 percent. (Sue Ellen Smith of H&R Block in San Francisco) says the smartest move for people to avoid those penalties is to sign up for insurance before Feb. 15, the end of the health law’s open enrollment period.

But a lot of people may not think about this until they file their taxes in April. For them, it will be too late to sign up for health insurance and too late to do anything about next year’s penalty too, says Mark Steber, chief tax officer for Jackson Hewitt Tax Services.… Fees and Exemptions:

Many of those who decided to pay the $95 penalty instead of being insured in 2014 may be surprised to learn at tax time that the penalty at their income level is 1 percent of income over the tax filing threshold – roughly $300 for an individual with a $40,000 income. If they wait until April to file their taxes and still don’t have insurance, open enrollment for 2015 will have already ended and their penalty increases to 2 percent. A double surprise.

Actually it is much more complex than this. The link for “Fees and Exemptions,” above, describes other considerations such as what constitutes minimum essential coverage, numerous exemptions from the requirement to pay the penalty, specific hardship exemptions, the various application processes for exemptions, instructions on paying the “shared responsibility” penalty, and so forth.

This is only one of the multitude of unnecessary administrative complexities introduced by the Affordable Care Act, layered on top of the most administratively complex system in the world. Had we enacted a single payer national health program, we would have had a dramatic reduction in this administrative waste, with a recent study demonstrating that we could save about $375 billion simply by addressing our excessive billing and insurance-related functions. This doesn’t include the savings that we would realize by eliminating much of the other administrative excesses such as the one described here.

It’s never too late. We can still make the change to single payer.

Insurers slam patients with underwriting cycle

Tue, 2015-01-20 15:48
In Colorado, Disparity in Health Plan Prices Underscores Ambitions, and Limits, of Affordable Care Act

By Reed Abelson and Agustin Armendariz
The New York Times, January 19, 2015

An analysis by The New York Times shows that the cost of one midlevel silver plan in Colorado rose 36 percent west of the Rocky Mountains this year, while another dropped nearly 40 percent in the northeastern plains.

The law was intended to drive prices lower and broaden coverage through competition. While 10 insurers offer plans to individuals in Colorado through the state’s online marketplace, the law does not require insurers to offer all plans in all regions of a state.

The wild disparity in prices results from many insurers trying to attract more customers by pricing plans as low as they can. But it is not at all clear that the low prices will be sustainable, so prices may well swing sharply upward as time goes on.

The variations in premium prices are also a direct result of what the insurer-friendly health care law permits. Insurers can target territories, choosing areas within a given market where they can attract enough members and put together provider networks that will negotiate on price. In addition, insurers were given some protection by the federal government to reduce possible losses in the early years, so some are experimenting with very low prices that may not be sustainable over the long term.

And no one expects premium costs to stabilize anytime soon. Because buyers are so sensitive to price, the markets may experience cycles in which insurers alternately offer low premiums to attract customers and sharply raise them in later years to cover costs, experts said.…

Although medical underwriting for preexisting disorders supposedly has been eliminated, the insurers apparently are still taking advantage of the “underwriting cycle” – capturing the market by selling plans at a loss and then jacking up rates after the competition has been thinned out. This volatility results in uncertainties for patients in both their insurance costs and in the composition of the networks of covered providers.

And under single payer? Costs would be stable and fair since they are based on ability to pay, and provider choice would be assured. So do we leave the system under the control of the cutthroat insurers, or do we finally place our own public stewards in charge?

What would Martin Luther King, Jr. say about the Oxfam brief?

Mon, 2015-01-19 11:32

Second Convention of the Medical Committee for Human Rights, March 25, 1966

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.” — Dr. Martin Luther King, Jr.…


Oxfam, Issue Brief, January 19, 2015

Global wealth is increasingly being concentrated in the hands of a small wealthy elite. These wealthy individuals have generated and sustained their vast riches through their interests and activities in a few important economic sectors, including finance and pharmaceuticals/healthcare. Companies from these sectors spend millions of dollars every year on lobbying to create a policy environment that protects and enhances their interests further.

*  In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet.1 Almost all of that 52% is owned by those included in the richest 20%, leaving just 5.5% for the remaining 80% of people in the world.

*  The very richest of the top 1%, the billionaires on the Forbes list, have seen their wealth accumulate even faster over this period. In 2010, the richest 80 people in the world had a net wealth of $1.3tn. By 2014, the 80 people who top the Forbes rich list had a collective wealth of $1.9tn; an increase of $600bn in just 4 years, or 50% in nominal terms. The wealth of these 80 individuals is now the same as that owned by the bottom 50% of the global population, such that 3.5 billion people share between them the same amount of wealth as that of these extremely wealthy 80 people. In 2010, it took 388 billionaires to equal the wealth of the bottom half of the world?s population; by 2014, the figure had fallen to just 80 billionaires.

*  In 2014 there were 1,645 people listed by Forbes as being billionaires. This group of people is far from being globally representative. Almost 30% of them (492 people) are citizens of the USA.

*  Between 2013 and 2014 billionaires listed as having interests and activities in the pharmaceutical and healthcare sectors saw the biggest increase in their collective wealth. Twenty-nine individuals joined the ranks of the billionaires between March 2013 and March 2014 (five dropped off the list), increasing the total number from 66 billionaires to 90, in 2014 making up 5% of the total billionaires on the list. The collective wealth of billionaires with interests in this sector increased from $170bn to $250bn, a 47% increase and the largest percentage increase in wealth of the different sectors on the Forbes list.

*  During 2013, the pharmaceutical and healthcare sectors spent more than $487m on lobbying in the USA alone. This was more than was spent by any other sector in the US, representing 15% of $3.2bn total lobbying expenditures in 2013. In addition, during the election cycle of 2012, $260m was spent by this sector on campaign contributions. Twenty-two of the 90 pharmaceutical and healthcare billionaires are US citizens.…

In 1966, Martin Luther King, Jr. famously noted that injustice in health care was the most shocking and inhumane form of inequality. The Oxfam brief issued today – Martin Luther King, Jr. Day – gives some insight as to how well we are fulfilling his dream of social justice for all. We are seeing exponential increases in wealth inequality and the fastest expansion of that inequality is in the pharmaceutical and health care sectors.

Are we still learning from him, or have we given up?

Why do we need to improve Medicare?

Fri, 2015-01-16 16:27
Medicare at 50 — Origins and Evolution

By David Blumenthal, M.D., M.P.P., Karen Davis, Ph.D., and Stuart Guterman, M.A.
The New England Journal of Medicine, January 14, 2015

Many Americans have never known a world without Medicare. For 50 years, it has been a reliable guarantor of the health and welfare of older and disabled Americans by paying their medical bills, ensuring their access to needed health care services, and protecting them from potentially crushing health expenses. However, as popular as Medicare has become, Congress created the program only after a long and deeply ideological struggle that still reverberates in continuing debates about its future.

Future Challenges

Medicare is a much larger, more comprehensive, and more complex program than it was in 1965. In its response to cost and quality concerns, it has also become much more assertive in trying to improve the performance of the national health care system. For much of its history, Medicare just paid bills. Now, it has joined private-sector insurers in the effort to manage care as well.

Despite these changes, however, Medicare continues to face major challenges, which will be discussed in more detail in part two of this series. Perhaps the most important of these challenges is its cost. Growth in Medicare spending per beneficiary has slowed sharply in recent years, and although that slowdown is projected to continue over the next few years, the growth in total program spending is projected to outpace that in the overall economy as the retiring baby-boom generation increases the number of beneficiaries. This will put more pressure not only on Medicare finances but also on the federal budget, with Medicare spending projected to rise as a share of federal revenues from 17% in 2014 to 27% in 2050 and to approach 40% by the end of the century.

The current structure of Medicare is anachronistic and unnecessarily complex. Most employers offer their employees a comprehensive benefit package that includes hospital care, physician services, and prescription drugs. Medicare, in contrast, offers its beneficiaries fragmented coverage, with separate parts for each of these services. As a result of its substantial deductibles and the lack of a ceiling on out-of-pocket costs, most beneficiaries purchase supplemental private insurance to cover gaps in Medicare. Low-income beneficiaries, unable to afford care provided through substantial cost sharing in Medicare, can enroll in Medicaid to obtain help in paying Medicare premiums and out-of-pocket costs, but each state has its own income and asset rules. As a result, the complexity of the current insurance system for the elderly becomes truly startling. This complexity frustrates efforts to coordinate care for the sickest and frailest patients and to create an understandable and consistent set of incentives for providers.

Despite the importance of Medicare in improving its beneficiaries’ access to care, the program does have substantial limitations in coverage. These limitations result in large out-of-pocket payments for the most vulnerable beneficiaries. Although Medicare covers some rehabilitation services and limited home care, it does not pay for extended long-term services and supports, a gap that surprises many elderly persons and their families when they need such care. Medicaid does cover these benefits but only for the poorest elderly. The role of Medicare in addressing growing societal needs for long-term services remains uncertain.

These and other issues suggest that preserving and strengthening Medicare over the next 50 years will continue to require active, wise, and humane policy development. Such a task would be a challenge for the federal government under any circumstances but particularly if the current intense partisan divisions persist.

Although Medicare is the most popular health insurance program in the nation, it still has some serious deficiencies. As an example, 27 percent of Medicare beneficiaries spend more than 20 percent of their income for out-of-pocket health care expenses.

There are two pressing reasons why efforts should be made to strengthen Medicare. The most obvious is that current Medicare beneficiaries should have at least the level of financial security and health security that citizens of other nations receive through their health care financing systems.

The other reason is that Medicare is thought by many to be a natural model for a national health program that covers everyone. It is important that the model be improved so that we can do away with wasteful and inefficient supplementary programs such as Medigap coverage, retiree health benefits, Medicare Advantage plans, and Part D drug plans, and, while we are at it, eliminate the financial barriers of cost sharing that impair access to care. Once we have an improved Medicare we can combine it with the other important features of a single payer national health program, finally realizing our dream of an expanded and improved Medicare for all.

For those who wish to be reminded of the key features of single payer that should be combined with an improved Medicare, a brief list is at this link:

Over 60 million still face medical-related financial difficulties

Thu, 2015-01-15 15:56
The Rise in Health Care Coverage and Affordability Since Health Reform Took Effect

By Sara R. Collins, Petra W. Rasmussen, Michelle M. Doty, and Sophie Beutel
The Commonwealth Fund, January 15, 2015


New results from the Commonwealth Fund Biennial Health Insurance Survey, 2014, indicate that the Affordable Care Act’s subsidized insurance options and consumer protections reduced the number of uninsured working-age adults from an estimated 37 million people, or 20 percent of the population, in 2010 to 29 million, or 16 percent, by the second half of 2014. Conducted from July to December 2014, for the first time since it began in 2001, the survey finds declines in the number of people who report cost-related access problems and medical-related financial difficulties. The number of adults who did not get needed health care because of cost declined from 80 million people, or 43 percent, in 2012 to 66 million, or 36 percent, in 2014. The number of adults who reported problems paying their medical bills declined from an estimated 75 million people in 2012 to 64 million people in 2014.


For the first time since it was launched in 2001, the Commonwealth Fund Biennial Health Insurance Survey has found significant declines in the number and share of U.S. adults who lack health insurance. The survey also finds evidence to suggest that the coverage gains are allowing working-age adults to get the health care they need while reducing their level of financial burden because of medical bills and debt.

But, while there were minor improvements reported by insured adults in cost-related access and medical bill problems, rates of these problems remain high, especially among adults with low incomes. Prior Commonwealth Fund survey results have found that the increasing size and prevalence of high deductibles and copayments in private health plans, including employer-based plans, is leading many people with low and moderate incomes to avoid or delay needed health care. Excessive cost-sharing for Americans across all insurance types could jeopardize improvements in access to care and medical bill burdens documented in the survey.

States’ decisions to reject the Medicaid expansion have left large numbers of the poorest Americans in the country without health insurance. Since the survey was fielded in July, one additional state has expanded its program, seven others are in discussions to move to forward, and still others may follow their lead this year.…

The media reports on the new Commonwealth Fund study are celebrating the reduction in the numbers who remain uninsured and the reductions in the financial consequences of being uninsured, supposedly proving that the Affordable Care Act is working. What is difficult to celebrate is confirmation that there are still 66 million people who did not get needed health care because of cost, and there are 64 million people who still reported problems paying their medical bills.

Rather than celebrating a modest improvement in the statistics we should be be using this report to condemn the gross inadequacies of the Affordable Care Act that leave in place the financial barriers that have negatively impacted over 60 million people, and have the potential to have the same negative impact on tens of millions more should they incur a need to access the health care system.

For those who say, “But this is working,” it is not working for the vast majority for whom our prior system fell cruelly short. Continuing this highly flawed experiment constitutes unethical experimentation when we know that a single payer system with full prepaid financing will remove the financial barriers and hardships that are perpetuated by the Affordable Care Act.

When you have a forest fire, you don’t pull out the candle snuffers; you call in the tankers. Likewise, when our health care financing system is leaving tens of millions broke and without adequate care, you don’t tweak what we have; you mobilize a powerful system that actually would work – an improved and expanded Medicare for all.

Co-ops reflect the callous deception of Congress

Wed, 2015-01-14 14:41
CO-OP (Consumer Operated and Oriented Plan) Health Plans under the Affordable Care Act

PNHP, Quote of the Day, July 18, 2011

From the comment by Don McCanne:

The proposed rule has now been released for the establishment of CO-OPs under the Affordable Care Act. The CO-OPs are private, nonprofit organizations that sell insurance, like HMOs and PPOs, under the same rules as the other private insurers. The most important difference is that a CO-OP is controlled by a board of directors that is elected by the individuals enrolled in the CO-OP.

These are new organizations, and, as such, require a new infusion of capital to meet the reserve requirements for future claims. These are the same requirements that have been established by the states for other private insurers already competing in the marketplace.

Private, for-profit insurers have the capability of establishing start-up costs and solvency reserves by selling shares of stock. Since the CO-OPs are nonprofit, they don’t have this resource to tap. Recognizing this, the Affordable Care Act included provisions for government loans for start-up costs and other loans for solvency (reserve funds for future claims). It is important to understand that these are not grants but are loans that must be repaid, with interest, within five years for start-up loans and fifteen years for solvency loans.

Think about that. The CO-OPs are required to compete with the private insurers under the same terms, while having the additional requirement of paying back these loans. Since their only revenue source is premiums for the insurance they are selling, these loan costs that their competitors don’t have will have to be recovered through higher premiums. Under these terms, how could they possibly compete with the private insurers?

There are many other issues. How long would it take to establish a critical threshold of enrolling enough members to create a viable entity? Since it is likely that the CO-OPs would be subject to adverse selection (enrolling a larger share of patients with greater health care needs), there would be further upward pressure on their premiums (death spiral) since current risk adjustment tools do not recover the full excess losses (as if health care is a “loss”).

It’s too bad. CO-OPs should have offered us the opportunity to establish altruistic health care organizations. Instead, the politicians bent over backwards not only to keep the government out of these programs, but also to protect the private insurers’ marketplace by being sure that the CO-OPs were not allowed a fair playing field by saddling them with insurmountable debt.

We needed a seat at the table.…


Health Insurance Startup Collapses In Iowa

By Clay Masters, Iowa Public Radio
NPR/Kaiser Health News, January 14, 2015

CoOportunity Health has failed. The Affordable Care Act set aside funding for health care co-ops, to enable the organizations to compete in places where there aren’t many insurers. CoOportunity Health was the second largest co-op in the country in terms of membership, and one of the largest in terms of the federal funding it received.

But then CoOportunity hit a kind of perfect storm, says Peter Damiano, director of the University of Iowa’s public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.

“CoOportunity Health’s pool of people was larger than expected, was sicker than expected,” Damiano says. “So their risk became much greater than the funds that were available,”

When the Obama administration in late 2013 allowed people to keep the insurance plan they already had, many customers happy with Wellmark stayed put. Damiano says this meant many of the customers who flocked to CoOportunity tended to be… people with expensive health problems who’d had trouble paying for insurance before, in the market Wellmark dominated.

“It was always going to be a challenging market to try to reach,” says Damiano, “and on top of that, the whole idea of co-ops was relatively new and experimental. But it was to try to create competition, on that private sector approach,” says Damiano.

According to Nick Gerhart, Iowa’s insurance commissioner… the co-op thought it was going to get more federal money. “On December 16 around 4 o’clock we were informed they weren’t going to get any further funding,” he says. “Nothing was pulled — it just wasn’t extended further.”

“Ours was the second largest in the country, so you’ve got to look at it that way.” Gerhart says. “If the second largest can’t make it, how viable are the other ones? I don’t know. But at the end of the day they didn’t have enough capital to support 120,000 members.”…

Those of us who watched closely as the health care reform process unfolded were outraged by many of the decisions made by the members of Congress. As single payer supporters we were denied a seat at the table. Regardless, we still tried to inform the process but we were routinely ignored. “What you guys want is just not politically feasible.”

Look what I wrote July 18, 2011: “It’s too bad. CO-OPs should have offered us the opportunity to establish altruistic health care organizations. Instead, the politicians bent over backwards not only to keep the government out of these programs, but also to protect the private insurers’ marketplace by being sure that the CO-OPs were not allowed a fair playing field by saddling them with insurmountable debt.”

Now look at what happened to CoOportunity – the second largest co-op in the country. Not only did they enroll patients with greater health care needs, as we predicted, but the government loans were inadequate to maintain its viability. The success in enrolling large numbers of members accelerated the demise of this co-op, but what about the others? With the premiums they receive, how will they be able to pay for the health care services of a higher risk population plus service their loans at the same time – loans that competing private insurers do not have to face?

It isn’t that we didn’t know how to design a proper health care financing program. We clearly did – single payer. What is tragic is that the Affordable Care Act was designed to take special care of the private insurance industry while supposedly showing some vague, deceptive semblance of improving access and affordability for the patients served, though caring for patients was certainly a lower priority than catering to the private insurers.

With 30 million people being left uninsured, and with the establishment of a new insurance standard of unaffordable under-insurance, our members of Congress sure did a crappy job – not just crappy but far worse – it was callous and inhumane.

Controlling prices – Government administration, or private sector kneecapping?

Tue, 2015-01-13 16:50
High Health-Care Prices: More Talk Than Action

By Drew Altman
The Wall Street Journal, January 12, 2015

People in the U.S. go to the doctor less frequently and have much shorter hospital stays than people in other countries that spend far less per capita on health care. But health services are consistently more expensive here than in comparably wealthy countries.

Price is the major factor that distinguishes the cost of our system from those in other developed nations. The sticker shock of some medical services and drugs is also the dimension of the health-cost problem most visible to the public. So it’s interesting that most efforts in this country to address health-care costs don’t focus on price much at all. Instead, they focus on reforming the delivery of health care and provider reimbursement to reduce the volume of health care Americans use and to weed out unnecessary procedures and hospitals days.

To be sure, high medical prices are talked about a lot. One reason there is more talk than action is the anti-government environment, which would inhibit regulatory action to constrain prices. Taking on price also means taking on health care’s powerful industry interests. More effective competition between providers would help reduce prices, but the health-care industry appears to be consolidating more than competing, as is the health insurance industry.

It would be a mistake to make price the only focus of a cost-reduction strategy. But it’s striking that while price is such an important reason our system appears to cost so much more than others, efforts to reduce the high prices of medical care are not a meaningful part of current cost-reduction efforts.

Drew Altman is president and chief executive officer of the Kaiser Family Foundation.…


U.S. hedge fund plans to take on big pharma over patents

Reuters, January 7, 2015

U.S. hedge fund manager Kyle Bass, who won fame for predicting the subprime mortgage crisis in 2008, plans to take on some of the world’s biggest drug producers by challenging the patents of their top brands, he said on Wednesday.

Bass, the founder of Dallas-based Hayman Capital Management, L.P., said some drug firms were hanging onto patents in questionable ways and he planned to take around 15 firms into a so called Inter Partes Review (IPR) process created by the America Invents Act. in 2012.

“We are going to challenge and invalidate patents through the IPR process … (and) we are not going to settle,” Bass said in a presentation in Oslo, Norway’s capital.

“The companies that are expanding patents by simply changing the dosage or the way they are packaging something are going to get knee capped,” he said.

Bass said the firms he planned to challenge had a combined market capitalisation of $450 billion and if he succeeded that could halve, benefitting his investments and reducing medicine prices in the United States.

“This is going to lower drug prices for Medicare and for everyone,” he said.

Bass did not name any targets and also declined to elaborate on how he planned to make a financial gain from the challenges. He also declined to give details on his investment position.…

Health care prices are much higher in the United States than in other nations. The difference seems to be that other nations rely much more on government administration of pricing whereas we depend more on the marketplace, especially on the private insurance industry that has a relatively weak negotiating power over our medical-industrial complex, worsened by ongoing consolidation within the industry.

That is not to say that the government does not play any role. The administered pricing of our Medicare program has been more effective than the private insurers in slowing the increases in the costs of health care. The private insurers have slowed the increase in insurance premiums but at the terrible cost of transferring risk and payment responsibilities to patients.

That said, government administered health care pricing in the United States is still too weak. We even prohibit the government from negotiating drug prices in the Medicare Part D program. Drug pricing is not only obscene, it is criminal, or at least it should be a crime when companies can price their drugs at tens of thousands of dollars only because our dysfunctional market will bear those prices.

Since we have not allowed our government to take a more active role, we should ask if the private sector can be capable of providing greater value. Up to this point it has not been so, as is verified by the fact that we have far higher prices than other nations.

But suppose the private sector did move in using their unique tools to control markets. Consider the approach of hedge fund manager Kyle Bass. He is famous for creating large fortunes by betting against the market with tools such as credit default swaps in the subprime mortgage crisis and credit default swaps on government bonds in Greece.

Based on this Reuters article, apparently now Bass wants to bet against drug firms that seem to be abusing the patent laws to drive up drug prices. He is quoted as saying that these companies are “going to get kneecapped.” Wow! When he is finished, he says, “This is going to lower drug prices for Medicare and for everyone.” Although he has not revealed his strategy, it does not take too much imagination to come to the conclusion that he may well use credit default swaps to make another fortune once he is effective in disabusing the industry of their belief that these innovative patents are valid.

Which is better? Is it better to allow the private sector to use innovations such as credit default swaps to bring about fairer pricing of drugs, even though considerable funds are redirected upwards, further increasing income and wealth inequality? Or is it better to have government administered pricing wherein there is no opportunity to create new fortunes by using Wall Street tools to divert health care dollars to the wealthy? If for no other reason, you would think that government administered pricing should be preferred simply because it is more effective.

Since we do not seem to be inclined on relying on our government to serve our needs, maybe we should think more about private sector opportunities. For starters, someone might want to secure a patent on kneecap replacements. Our friends on Wall Street would no doubt recognize the investment potential, and the venture capitalists would be lined up at your door.

$375 billion wasted on billing and insurance paperwork

Mon, 2015-01-12 12:23
Billing and insurance-related administrative costs in United States’ health care: synthesis of micro-costing evidence

By Aliya Jiwani, David Himmelstein, Steffie Woolhandler and James G Kahn
BMC Health Services Research, Online November 13, 2014


Background: The United States’ multiple-payer health care system requires substantial effort and costs for administration, with billing and insurance-related (BIR) activities comprising a large but incompletely characterized proportion. A number of studies have quantified BIR costs for specific health care sectors, using micro-costing techniques. However, variation in the types of payers, providers, and BIR activities across studies complicates estimation of system-wide costs. Using a consistent and comprehensive definition of BIR (including both public and private payers, all providers, and all types of BIR activities), we synthesized and updated available micro-costing evidence in order to estimate total and added BIR costs for the U.S. health care system in 2012.

Methods: We reviewed BIR micro-costing studies across healthcare sectors. For physician practices, hospitals, and insurers, we estimated the % BIR using existing research and publicly reported data, re-calculated to a standard and comprehensive definition of BIR where necessary. We found no data on % BIR in other health services or supplies settings, so extrapolated from known sectors. We calculated total BIR costs in each sector as the product of 2012 U.S. national health expenditures and the percentage of revenue used for BIR. We estimated “added” BIR costs by comparing total BIR costs in each sector to those observed in existing, simplified financing systems (Canada’s single payer system for providers, and U.S. Medicare for insurers). Due to uncertainty in inputs, we performed sensitivity analyses.

Results: BIR costs in the U.S. health care system totaled approximately $471 ($330 – $597) billion in 2012. This includes $70 ($54 – $76) billion in physician practices, $74 ($58 – $94) billion in hospitals, an estimated $94 ($47 – $141) billion in settings providing other health services and supplies, $198 ($154 – $233) billion in private insurers, and $35 ($17 – $52) billion in public insurers. Compared to simplified financing, $375 ($254 – $507) billion, or 80%, represents the added BIR costs of the current multi-payer system.

Conclusions: A simplified financing system in the U.S. could result in cost savings exceeding $350 billion annually, nearly 15% of health care spending.

From the Discussion

Eliminating added BIR costs of $375 billion per year (14.7% of US health care spending) would provide resources to extend and improve insurance coverage, within current expenditure levels. Since uninsured individuals have utilization of about 50% of insured individuals, the current 15% uninsured could be covered with roughly half of the $375 billion. Remaining savings could be applied to improved coverage for those already insured.

PNHP release:  $375 billion wasted on billing and health insurance-related paperwork annually: study

Previous studies have demonstrated the waste of billing and insurance-related functions in health care in United States. This study refines and unifies the estimates of these costs and shows how much could be recovered if we were to switch to a simplified financing system such as Canada’s single payer system for providers, and U.S. Medicare for insurers. The $375 billion recovered would be enough to cover the uninsured and bring the coverage for the underinsured up to standard.

The PDF of the full study is available through open access at the biomedcentral link above. It should be filed under landmark articles in every health policy library.

Woolhandler and Himmelstein on what happened in Vt. and what now

Mon, 2015-01-12 12:04
What Happened in Vermont: Implications of the Pullback from Single Payer

By Steffie Woolhandler, M.D., M.P.H., and David U. Himmelstein, M.D.
Jan. 10, 2015

Gov. Peter Shumlin’s Dec. 17, 2014, announcement that he would not press forward with Vermont’s Green Mountain Care (GMC) reform arose from political calculus rather than fiscal necessity. GMC had veered away from a true single payer design over the past three years, forfeiting some potential cost savings. Yet even the diluted plan on the table before Shumlin’s announcement would probably have lowered total health spending in Vermont, while covering all of the state’s uninsured.


Decades of exemplary grassroots organizing (and strong labor union support) in Vermont put single payer on the agenda. During Shumlin’s 2010 gubernatorial campaign, he promised to implement a single payer reform, which was a factor in the Progressive Party’s decision not to field a candidate. But the details of Shumlin’s plan weren’t fleshed out during the campaign.

After his victory, Shumlin and the legislature commissioned economist William Hsiao to study options for health reform in Vermont, including single payer. Rejecting a fully public single-payer plan, Hsiao instead proposed a “public-private hybrid” model and projected $580 million in savings, including large administrative cost savings, in the program’s first year.

Spurred by Hsiao’s positive projections, in 2011 the legislature passed a health reform law that laid out plans for implementing the Affordable Care Act in the short term, and called for a later transition to a single payer GMC plan. But while the law gave a detailed prescription for implementing the ACA (including construction of an exchange whose final cost was about $250 million), the sections on single payer were vague, and punted decisions on critical issues to the GMC Board to be appointed by the governor. That board would determine whether critical services like long-term care would be covered; the amount of copayments; how hospitals and doctors would be paid; and whether capital funds would be folded into operating budgets or allocated through separate capital grant (the sine qua non of effective health planning). Critically, the bill included no plan for funding the single payer program.

An early signal of trouble was Shumlin’s appointment of Anya Rader Wallack to chair the new GMC board. Wallack had deep ties to the private insurance industry, having held key positions (including the presidency) at the Blue Cross Blue Shield of Massachusetts Foundation. That foundation played a central role in designing and pushing for Massachusetts’ 2006 Romneycare reform, and subsequently issued a series of glowing evaluations of Romneycare that helped buttress the case for replicating its structure in the ACA.

From the outset, Shumlin’s team embraced an Accountable Care Organization payment strategy that would enroll most Vermonters in large hospital-based, HMO-like organizations that would be overseen by a “designated entity” – presumably Blue Cross. To-date, ACOs have shown little or no overall cost savings, have increased administrative costs, and have driven hospitals to merge and gobble up physician practices. The consolidation of ownership triggered by ACO incentives has raised concern that regionally dominant ACOs will use their market power to drive up costs. In Vermont, Dartmouth Hitchcock and the University of Vermont’s Fletcher Allen system dominate the market, and have initiated a for-profit, joint venture ACO.

The design for GMC incorporated several other features that increased the administrative complexity, and hence administrative costs of the proposed reform. The plan never envisioned including all Vermonters in a single plan, instead retaining multiple payers. Hence, hospitals, physicians’ offices, and nursing homes would still have had to contend with multiple payers, forcing them to maintain the complex cost-tracking and billing apparatus that drives up providers’ administrative costs. It proposed continuing to pay hospitals and other institutional providers on a per-patient basis, rather than through global budgets, similarly perpetuating the expensive billing apparatus that siphons funds from care. And hospitals would have continued to rely on surpluses from day-to-day operations as their main source of capital funds for modernization and expansion. This undermines health planning and raises bureaucratic costs by forcing hospital administrators to undertake the additional work needed to identify and pursue profit opportunities.

Some of this complexity was forced on Vermont by federal statutes that may preclude folding Medicare and the military’s Tricare program into a state single payer plan, and restrict states’ ability to outlaw private employer-provided coverage that duplicates the public plan. But the decisions to abandon lump-sum hospital payment, and separate grants for capital came from the governor and his advisers.

The End Game of Vermont’s Reform

Vermont’s November 2014 gubernatorial election had very low voter turnout, a circumstance that generally favors the right. Gov. Shumlin – who had hedged on health reform during the campaign – eked out a narrow plurality, leaving the state legislature to decide between him and the Republican candidate and greatly weakening Shumlin’s position. A month later, while awaiting the legislature’s decision (they elected him to a third term on January 9), Shumlin announced his pullback from reform.

Shortly thereafter, he released the detailed cost projections which he said had convinced him not to go ahead. The report by his staff estimated zero administrative savings from its proposed plan. It also projected zero savings on drugs and medical devices, tacitly acknowledging that GMC wouldn’t use bargaining clout to rein in prices, and ignoring the fact that Quebec, its neighbor to the North, has gotten big discounts.

The Shumlin administration’s cost estimates also incorporated an old (too high) estimate of the number of uninsured Vermonters, inflating the projected increase in utilization and cost. Finally, it assumed that doctors would expand their work hours (and incomes) to care for the newly insured, rather than maintaining their current work hours by seeing their other patients a little less frequently – as happened with the implementation of single payer coverage in Quebec.

But even the administration’s inflated cost estimates indicate that universal coverage under its quasi-single payer plan would cost somewhat less overall than the current system. The voluminous report includes detailed tabulations of new costs to the state treasury under the proposed reform. But the report scrupulously avoids providing any figures for the impact of reform on the total cost of health care (public and private) in the state. Economist Gerald Friedman has estimated these overall impacts using the report’s data, previous estimates of health expenditures in Vermont, and CMS figures on Medicare spending and expected health care inflation under the ACA. He estimates that even the diluted reform proposed by the governor’s team would cut overall health spending in Vermont by about $500 million annually.

So why did Gov. Shumlin declare the reform unaffordable? Many have noted that the $2.5 billion in new state expenditures required under the reform would nearly double the state’s previous budget. But these numbers are meaningless absent an accounting of the savings Vermont households would realize by avoiding private insurance premiums and out-of-pocket costs. As detailed above, these savings would more than offset the new taxes.

But although the total costs of care would have fallen even under the GMC plan, some – mostly higher-income, healthy Vermonters whose taxes would go up the most – would have paid more. Although the GMC tax plan was far from progressive, it was far less regressive than the current pattern of health care funding in the state. The GMC Board estimated that most of the 340,214 families earning less than $150,000 annually would have gained, while most of the 24,102 families above that income level would have lost. Overall, employers’ costs would have risen by $109 million – with many small businesses experiencing cost increases, a political sore point.


It’s a misnomer to label Vermont’s Green Mountain Care plan “single payer.” It was hemmed in by federal restrictions that precluded including 100 percent of Vermonters in one plan, and its designers further compromised on features needed to maximize administrative savings and bargaining clout with drug firms, and improve health planning.

But even the watered-down plan that emerged could have covered the uninsured, improved coverage for many who currently face high out-of-pocket costs, and actually reduced total health spending in the state – albeit far less than under a true single payer plan. A true single payer plan would have made covering long-term care affordable, and allowed the elimination of all copayments and deductibles.

Vermont’s experience holds important lessons for single payer advocates.

1. Effective grassroots organizing makes a difference. It got real health care reform on the political radar screen in Vermont, and can get it back on the radar there and elsewhere. Indeed, single payer forces in Vermont are already rallying to reverse Shumlin’s decision. The virtues, value, and simplicity of a single payer approach have broad popular appeal.

2. Federal restrictions impose significant compromises on state-level single payer plans. For this, as well as other reasons, organizing for single-payer state plans and organizing for national legislation are not competing strategies, but complementary ones. The ultimate goal for both is a single, inclusive program for the entire nation.

3. As single payer work advances, we need to anticipate that corporate opposition will mobilize – often behind the scenes. The only effective antidote is continued grassroots mobilization. Delayed implementation and punting key decision to the future opens the door for corporate influence and smear campaigns.

4. Beware of “experts” with a track record unsympathetic to single payer. Economic projections are always based on assumptions, which are often highly political.

5. Even when we don’t get the whole pie, demanding it often yields a significant piece. Although a major single payer effort was stymied in Vermont, it achieved substantial progress. It’s no accident that Vermont’s uninsurance rate has come down to 3 percent; that virtually all children in that state are covered; that its Medicaid program is among the best; that its hospitals have come under tighter fiscal regulation; and that single payer remains in the limelight there. Even as he backed off from single payer for now, the governor promised to press for future health reform.

Dr. Steffie Woolhandler and Dr. David U. Himmelstein are internists, professors at the City University of New York’s School of Public Health at Hunter College, and lecturers at Harvard Medical School. They co-founded Physicians for a National Health Program.

The special weekend release of this commentary is designed for widespread distribution to help bring together members of the single payer community, not only within PNHP but also including all individuals and organizations that have been and will continue to be dedicated to the cause of health care justice for all.

The value of this commentary by Steffie Woolhandler and David Himmelstein is that it provides a general perspective on what actually did happen, and leaves us with a positive sendoff on the path forward.

Their description of the events that actually took place allows us to dismiss the tangle of minutiae that has not only been disruptive within the single payer camp but has also allowed the conservatives and libertarians to falsely label the single payer concept as an abject failure. Much more importantly, this commentary provides lessons that can help reunite all of us, on both the state and national levels, in our common quest for single payer reform.

Please share the commentary or the link to it with your single payer colleagues and organizations.

Onward together!