Thursday, February 28, 2013

Fwd: qotd: Census report on employment-based health insurance

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Census report on employment-based health insurance
Date: Thu, 28 Feb 2013 10:25:33 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

United States Census Bureau
February 2012
Employment-Based Health Insurance: 2010
By Hubert Janicki
• The likelihood of employment-based coverage declined from 64.4 percent
(± 0.5) in 1997 to 56.5 percent (± 0.5) in 2010.
• In 2010, 71.1 percent (± 0.5) of employed individuals aged 15 and
older worked for an employer that offered health insurance benefits to
any of its employees.

• 42.9 percent (± 1.8) of individuals who did not complete high school
worked for an employer that offered health insurance to any of its
employees, compared with 78.9 (± 0.5) percent for individuals with a
college degree.
• Of workers aged 45 to 64, 75.7 percent (± 0.7) worked for an employer
that offered health insurance benefits, compared with 60.0 percent (±
1.4) for workers aged 19 to 25.
• Among married couples with only one member employed in a firm that
offers health insurance benefits, 68.7 (± 1.7) percent provided coverage
for the spouse.

Comment: The Affordable Care Act was designed to avoid disruption of
employer-sponsored health plans since employer plans covered the largest
number of individuals and employer contributions to their health plans
provided the largest source of health care funding in the United States.

Taking advantage of these funds that were already in place was a natural
for those writing the legislation, especially since the expansion of
Medicaid and the introduction of health exchange plans would require
additional federal funds at a time when considerable concern is being
expressed over our current government expenditures (even if the concern
should be primarily about inadequate revenues instead).

This Census Bureau report adds to the data which show that employer
offers of health care coverage continue to decline. It is uncertain what
impact the Affordable Care Act will have on this trend since employers
will face conflicting incentives for continuing coverage. It certainly
will be tempting for them to discontinue their coverage, enabling their
employees to enroll in the government subsidized exchange plans or Medicaid.

The impact of these subsidies will have to be weighed against the loss
of deductibility for employer-sponsored plans, though that theoretically
should be neutral to the employer as forgone wages for health benefits
are then paid to the employees, and it would be the employees who would
have a higher tax obligation. (Do you believe that the behavior of
employers actually would follow the common wisdom of the economists in
this matter?) Also, larger employers would have to weigh the impact of
the assessment (penalty, tax, or whatever) for not providing coverage to
their qualified employees.

There is a wide range of opinions on this matter, but it is likely that
there will be little tendency to increase the numbers of individuals
with employer-sponsored coverage. In contrast, it is more likely that
other employers will follow the lead of those who early on decide
against providing coverage as they play games with the rules that
determine whether there would be penalties or how much they would be.

Also employers will likely continue with the current trends to shift
more health care costs to their employees, with the alleged premise that
it would make them better health care shoppers. They really don't care
about their employees' shopping habits. Employers are adopting these
plans for one reason only. High deductibles and other innovations reduce
their costs - the employers' costs - for these plans, with the trade off
of increasing costs for employees who actually need health care.

It seems clear that more people will either be pushed into the
underfunded Medicaid program or the underinsurance plans of the
exchanges, or they simply will go uninsured.

The Affordable Care Act isn't fixing our system, and employers
understandably are losing their enthusiasm for filling the gaping void
in the adequacy and allocation of our inefficient private health plans.
You would think that employers would be ready to get on board with an
improved Medicare that covers everyone. It would certainly get rid of
one big headache for them.

Wednesday, February 27, 2013

Fwd: qotd: Woolhandler, Himmelstein and Relman on the right path for Medicare

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Woolhandler, Himmelstein and Relman on the right path
for Medicare
Date: Wed, 27 Feb 2013 05:22:57 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
February 23, 2013
Sunday Dialogue: The Future of Medicare

Readers weigh in on problems with the health care program:

Canada's Medicare program — phased in at the same time as the American
version — shows how we can make Medicare simpler and thriftier, while
simultaneously upgrading its coverage. Canada's program covers all
Canadians (not just the elderly) under a single public program in each
province, and bans co-payments and deductibles.

Patients can choose any doctor and hospital. Cutting out private
insurers and the complexity and fragmentation they impose has simplified
paperwork for patients, doctors and hospitals. Administrative costs are
roughly half United States levels, saving more than $1,000 per capita.

Over all, Medicare spending on the elderly has grown three times faster
in the United States than in Canada since 1980, while life expectancy
(for the elderly, as for all age groups) has grown faster in Canada. If
American Medicare costs had risen at Canadian rates, we'd have saved
more than $2 trillion by now, and Medicare's trust fund would show a
healthy surplus.

New York, Feb. 20, 2013

The writers, internists and professors at the CUNY School of Public
Health at Hunter College, co-founded Physicians for a National Health


Medicare is headed for bankruptcy because it depends largely on
open-ended fee-for-service payment of almost any services providers
choose to deliver, at prices mainly determined by the providers.
Compounding the problem, most providers act like independent businesses
seeking to increase their income, regardless of whether they are
for-profit or investor-owned.

An effective Medicare fix would require a new payment system that
prospectively pays providers for comprehensive care at a rate set by a
single public payer. It would also need a not-for-profit medical care
system based on multispecialty doctor groups that pay physicians by
salary, thus minimizing incentives to deliver duplicative or unnecessary

The new system would have to be mandatory for all citizens, including
legislators, and it would have to be financed by a progressive,
earmarked health care tax.

Obviously, such reform would be slow and difficult, but so would any
other change that threatened vested interests. All reform will depend on
an aroused public opinion.

Tucson, Feb. 21, 2013

The writer is professor emeritus of medicine and social medicine at
Harvard Medical School and a former editor in chief of The New England
Journal of Medicine.

Comment: At a time when Congress and the Obama administration are
contemplating a reduction in Medicare spending as a means of paring down
our national budget deficit, it is important to remind the nation of the
beneficial changes that we could be making to the Medicare program that
would bring affordable, high quality care to everyone under a single
payer Medicare budget that we could afford. The messages of Steffie
Woolhandler, David Himmelstein and Arnold Relman need to drown out the
messages of those who would send Medicare down the wrong path.

Tuesday, February 26, 2013

Fwd: qotd: Impending access crisis for low-income patients

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Impending access crisis for low-income patients
Date: Tue, 26 Feb 2013 09:52:39 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The New York Times
February 25, 2013
States Can Cut Back on Medicaid Payments, Administration Says
By Robert Pear

The Obama administration said Monday that states could cut Medicaid
payments to many doctors and other health care providers to hold down
costs in the program, which insures 60 million low-income people and
will soon cover many more under the new health care law.

The administration's position, set forth in a federal appeals court in
California, has broad national implications as it comes as the White
House is trying to persuade states to expand Medicaid as part of the new

In a brief filed with the United States Court of Appeals for the Ninth
Circuit, in San Francisco, federal officials defended a decision by
California to cut Medicaid payments to many providers by 10 percent.

Kathleen Sebelius, the secretary of health and human services, approved
the cuts in October 2011 after finding that beneficiaries would still
have "adequate access" to the wide range of services covered by Medicaid.

The Obama administration urged judges to uphold those cuts, which are
being challenged by patients, doctors, dentists, hospitals, pharmacists
and other health care providers in California.

Health care providers said California's payment rates were inadequate
even before the cuts. They pointed to a federal study that said,
"California stands out because of its very low Medicaid payment levels."

In an interview, Gov. Jerry Brown of California, a Democrat, said the
Medicaid cuts were essential to his efforts to dig the state out of a
budget hole.

Federal law says Medicaid rates must be "sufficient to enlist enough
providers" so that Medicaid beneficiaries have access to care at least
to the same extent as the general population in the same geographic area.

Moreover, the administration said, Congress gave states "wide
discretion" to set Medicaid rates, and courts should not second-guess
decisions by Secretary Sebelius on the adequacy of rates.

"There is no general mandate under Medicaid to reimburse providers for
all or substantially all of their costs," the administration said.


Los Angeles Times
February 25, 2013
Healthcare overhaul may threaten California's safety net
By Anna Gorman

An estimated 3 million to 4 million Californians — about 10% of the
state's population — could remain uninsured even after the healthcare
overhaul law takes full effect. The burden of their care will fall to
public hospitals, county health centers and community clinics. And those
institutions may be in jeopardy.

County health leaders and others say the national health law has had the
unintended consequence of threatening the financial stability of the
state's safety net.

And under the federal law, some of the funding that goes to safety-net
hospitals is also set to decrease.

Now, as the state scrambles to create the new healthcare infrastructure,
Gov. Jerry Brown is proposing to take back another crucial pot of money
that counties have depended on for more than two decades to care for the

Comment: California has been a leader in setting national trends in
health care financing. Two developments should have low-income patients
very concerned. California's Medicaid program is critically underfunded,
and the state is reducing payment rates by another ten percent. Also,
the state is reducing funding for local safety-net institutions which
provide critical access for low-income populations.

Perhaps the most alarming of all is the official response of the Obama
administration (in an appeals court filing): "There is no general
mandate under Medicaid to reimburse providers for all or substantially
all of their costs."

We have said over and over again that Medicaid, as a welfare program,
will never have the political support to fund it adequately. The burden
of the additional load of Medicaid patients will surely find the health
care resources strained beyond the capacity of willing providers,
especially when you consider that California already is not meeting the
costs of providing care to this vulnerable population. And the 3 to 4
million Californians who will remain uninsured will need to rely on the
safety-net institutions, though those institutions also are in jeopardy
- again because of the lack of political support for welfare programs.

If California is successful with its cruel budget trimming, it can be
anticipated that many more states will follow.

Here's an amazing fact: Low income patients do not have the money to pay
for health care. (What an intuitive stroke of genius!) What they need is
an affordable system that removes financial barriers to care while
ensuring adequate financing of our entire health care delivery system,
thereby removing health system disincentives to providing essential care
for this vulnerable population. Make that for all of us.

Monday, February 25, 2013

Fwd: qotd: TIME: Steven Brill's "bitter pill" should wake us up

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-------- Original Message --------
Subject: qotd: TIME: Steven Brill's "bitter pill" should wake us up
Date: Mon, 25 Feb 2013 08:56:52 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

February 20, 2013
Bitter Pill: Why Medical Bills Are Killing Us
By Steven Brill

The Way Out Of the Sinkhole

"I was driving through central Florida a year or two ago," says
Medicare's (Jonathan) Blum. "And it seemed like every billboard I saw
advertised some hospital with these big shiny buildings or showed some
new wing of a hospital being constructed … So when you tell me that the
hospitals say they are losing money on Medicare and shifting costs from
Medicare patients to other patients, my reaction is that Central Florida
is overflowing with Medicare patients and all those hospitals are
expanding and advertising for Medicare patients. So you can't tell me
they're losing money … Hospitals don't lose money when they serve
Medicare patients."

If that's the case, I asked, why not just extend the program to everyone
and pay for it all by charging people under 65 the kinds of premiums
they would pay to private insurance companies? "That's not for me to
say," Blum replied.

In the debate over controlling Medicare costs, politicians from both
parties continue to suggest that Congress raise the age of eligibility
for Medicare from 65 to 67. Doing so, they argue, would save the
government tens of billions of dollars a year. So it's worth noting
another detail about the case of Janice S., which we examined earlier.
Had she felt those chest pains and gone to the Stamford Hospital
emergency room a month later, she would have been on Medicare, because
she would have just celebrated her 65th birthday.

If covered by Medicare, Janice S.'s $21,000 bill would have been deeply
discounted and, as is standard, Medicare would have picked up 80% of the
reduced cost. The bottom line is that Janice S. would probably have
ended up paying $500 to $600 for her 20% share of her heart-attack
scare. And she would have paid only a fraction of that — maybe $100 —
if, like most Medicare beneficiaries, she had paid for supplemental
insurance to cover most of that 20%.

In fact, those numbers would seem to argue for lowering the Medicare
age, not raising it — and not just from Janice S.'s standpoint but also
from the taxpayers' side of the equation. That's not a liberal argument
for protecting entitlements while the deficit balloons. It's just a
matter of hardheaded arithmetic.

As currently constituted, Obamacare is going to require people like
Janice S. to get private insurance coverage and will subsidize those who
can't afford it. But the cost of that private insurance — and therefore
those subsidies — will be much higher than if the same people were
enrolled in Medicare at an earlier age. That's because Medicare buys
health care services at much lower rates than any insurance company.
Thus the best way both to lower the deficit and to help save money for
people like Janice S. would seem to be to bring her and other near
seniors into the Medicare system before they reach 65.

Meanwhile, adding younger people like Janice S. would lower the overall
cost per beneficiary to Medicare and help cut its deficit still more,
because younger members are likelier to be healthier.

If that logic applies to 64-year-olds, then it would seem to apply even
more readily to healthier 40-year-olds or 18-year-olds. This is the
single-payer approach favored by liberals and used by most developed


Yet while Medicare may not be a realistic systemwide model for reform,
the way Medicare works does demonstrate, by comparison, how the overall
health care market doesn't work.

Unless you are protected by Medicare, the health care market is not a
market at all. It's a crapshoot. People fare differently according to
circumstances they can neither control nor predict. They may have no
insurance. They may have insurance, but their employer chooses their
insurance plan and it may have a payout limit or not cover a drug or
treatment they need. They may or may not be old enough to be on Medicare
or, given the different standards of the 50 states, be poor enough to be
on Medicaid. If they're not protected by Medicare or they're protected
only partly by private insurance with high co-pays, they have little
visibility into pricing, let alone control of it. They have little
choice of hospitals or the services they are billed for, even if they
somehow know the prices before they get billed for the services. They
have no idea what their bills mean, and those who maintain the
chargemasters couldn't explain them if they wanted to. How much of the
bills they end up paying may depend on the generosity of the hospital or
on whether they happen to get the help of a billing advocate. They have
no choice of the drugs that they have to buy or the lab tests or CT
scans that they have to get, and they would not know what to do if they
did have a choice. They are powerless buyers in a seller's market where
the only sure thing is the profit of the sellers.

Indeed, the only player in the system that seems to have to balance
countervailing interests the way market players in a real market usually
do is Medicare. It has to answer to Congress and the taxpayers for
wasting money, and it has to answer to portions of the same groups for
trying to hold on to money it shouldn't. Hospitals, drug companies and
other suppliers, even the insurance companies, don't have those worries.

Comment: Steven Brill's TIME article, "Bitter Pill: Why Medical Bills
Are Killing Us," seems to be awakening those who have, until now,
accepted the very high prices of health care as an inevitability for
having a technologically advanced health care system here in the United

In his 36 page article - which will surely be required reading in many
health policy courses - Brill makes it clear that we no longer need to
take the "bitter pill" of medical bills that are killing us. Clearly,
Medicare already has several tools to control costs and has the
potential for further improving value in the nation's health care

At the end of his article, Brill seems to be advancing a non sequitur
when he writes, "The real issue isn't whether we have a single payer or
multiple payers. It's whether whoever pays has a fair chance in a fair
market... We don't have to scrap our system and aren't likely to." This
certainly does not follow from what he had to say as the central theme
of his article.

He then recommends some tired or inadequate remedies that would have
very little impact on the problems that we face in health care. What is
ironic is that he has built a tremendous case for the logical solution -
an improved Medicare for all - and then he seems to dismiss it. You
cannot read his article and escape the conclusion that a single payer
national health program is an absolute imperative, that is, if we really
do want affordable care for everyone.

Download this article (the full 36 pages is available for free at the
link above), and share it with others. But put a Post-it note on it that
states: WARNING! For the health of our nation, ignore the section at the
end titled "Changing Our Choices" (that's the tired remedies section),
but concentrate on what an improved Medicare system could do for all of us.

Friday, February 22, 2013

Fwd: qotd: CMS limits innovative designs to multi-payer models

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: CMS limits innovative designs to multi-payer models
Date: Fri, 22 Feb 2013 11:37:55 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Centers for Medicare and Medicaid Services
Center for Medicare and Medicaid Innovation
February 2013
State Innovation Models Initiative: General Information

The State Innovation Models Initiative is providing up to $300 million
to support the development and testing of state-based models for
multi-payer payment and health care delivery system transformation with
the aim of improving health system performance for residents of
participating states. The projects will be broad based and focus on
people enrolled in Medicare, Medicaid and the Children's Health
Insurance Program (CHIP).


The Innovation Center created the State Innovation Models initiative for
states that are prepared for or committed to planning, designing,
testing, and supporting evaluation of new payment and service delivery
models in the context of larger health system transformation. The
Innovation Center is interested in testing innovative payment and
service delivery models that have the potential to lower costs for
Medicare, Medicaid, and the Children's Health Insurance Program (CHIP),
while maintaining or improving quality of care for program
beneficiaries. The goal is to create multi-payer models with a broad
mission to raise community health status and reduce long term health
risks for beneficiaries of Medicare, Medicaid, and the Children's Health
Insurance Program (CHIP).

For more information, click on "Fact Sheet: State Innovation Models
Initiative" at this link:


State of Hawaii
February 21, 2013
State Receives $937,691 Grant to Continue Healthcare Transformation Efforts

The State of Hawaii once again has an opportunity to demonstrate its
leadership in healthcare transformation. The Centers for Medicare and
Medicaid Services (CMS) today announced that Hawaii was awarded a
planning grant worth $937,691 as part of the agency's State Innovations
Model (SIM) initiative.

Beginning April 1, the state will have six months to design and submit a
State Healthcare Innovation Plan, built around multipayer payment and
healthcare delivery system transformation.

"Transforming our state's healthcare system continues to be a focus of
my New Day plan, and under the leadership of Beth Giesting, the state's
healthcare transformation coordinator, we've made great strides over the
last year," said Gov. Neil Abercrombie.

Comment: Section 3021 of the Affordable Care Act establishes the Center
for Medicare and Medicaid Innovation. Its purpose is "to test innovative
payment and service delivery models to reduce program expenditures under
the applicable titles (Medicare and Medicaid) while preserving or
enhancing the quality of care furnished to individuals under such titles."

The law lists "opportunities" for models to be tested, including
"allowing states to test and evaluate systems of all-payer payment
reform for the medical care of residents of the state." Of note, nowhere
does section 3021 limit the innovative testing to "multi-payer models."
Yet CMS now states that "the goal is to create multi-payer models."

To show how important this administrative decision is, look at Hawaii.
Gov. Neil Abercrombie has been a single payer supporter. He was a
cosponsor of H.R. 676, John Conyers' single payer bill, when he was a
member of Congress. Efforts have recently been underway to move Hawaii
towards becoming a single payer state. But now with this grant, Hawaii
is going to "design and submit a State Healthcare Innovation Plan, built
around multipayer payment and healthcare delivery system transformation."

The CMS fact sheet (link above) list other states receiving funds under
this program, including states that were thought to be in a position to
lead the way on single payer reform, such as Vermont and California.

According to the fact sheet, Vermont has been awarded a $45 million
grant to establish "three models: a shared-savings ACO model that
involves integration of payment and services across an entire delivery
system; a bundled payment model that involve integration of payment and
services across multiple independent providers; and a
pay-for-performance model aimed at improving the quality, performance,
and efficiency of individual providers." That doesn't exactly have a
single payer ring to it.

Although the law did not limit the innovations to be developed and
tested to multi-payer models, the Obama administration has. Once again,
single payer advocates have been denied a seat at the table. What are we
going to do about it?

Thursday, February 21, 2013

Fwd: qotd: Intensity bias in risk adjustment

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Intensity bias in risk adjustment
Date: Thu, 21 Feb 2013 12:38:56 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

February 21, 2013
Observational intensity bias associated with illness adjustment: cross
sectional analysis of insurance claims
By John E Wennberg, Douglas O Staiger, Sandra M Sharp, Daniel J
Gottlieb, Gwyn Bevan, Klim McPherson, H Gilbert Welch


We have shown that a method of risk adjustment that used data on
diagnoses and controlled for the effects of supply, by using data on the
frequency of visits by physicians in the year prior to a patient's
death, was more efficient than the standard method; but that still
accounted for less than 25% of geographic variation in age, sex, and
race adjusted mortality among fee for service Medicare beneficiaries.
Thus, our study points to the importance of developing risk adjustment
methods that better explain variation in age, sex, and race mortality
rates and suggests that these will be found by using data that are
clearly independent of the effects of supply.


Kaiser Health News
February 21, 2013
Dartmouth Study Questions Widely Used Risk-Adjustment Methods
By Jordan Rau

In evaluating a hospital and health plan in the increasingly expensive
U.S. health care system, federal officials and researchers often first
factor in an assessment of how sick their patients are. A new study,
however, challenges the validity of several widely used
"risk-adjustment" efforts and suggests that Medicare is overpaying some
plans and facilities while underpaying others.

Without these risk adjustments to level the comparisons, a hospital with
more frail and very ill patients—who are more likely to die — might
incorrectly appear to be doing a worse job than a hospital with
healthier patients — who are more likely to survive.

Medicare risk-adjusts when determining how much to pay private Medicare
Advantage insurance plans. It also used risk adjustments when deciding
that 2,217 hospitals should be penalized for having high rates of
patient readmissions. Risk adjustment is also a key component in new
models of delivering care, such as the accountable care organizations.

The new study by the Dartmouth Atlas Project, published today in the
health journal BMJ, faults the practice of trying to assess how sick
patients are by looking at records to see patient diagnoses. The authors
argue that the more times patients see doctors or get tests, the more
new diagnoses they are given. "The more one looks, the more one finds,"
the authors wrote. The Atlas researchers have asserted in three decades
of research that areas of the country with gluts of hospital beds,
specialists and other providers tend to deliver more care, whether it's
needed or not.

"You would think sicker places would have higher visit rates, but they
don't," said Dr. John Wennberg, the lead author and the founder of the

Here's how their latest study worked: The researchers examined Medicare
records for more than 5 million beneficiaries in 306 different regions
of the country. They looked at three different formulas commonly used to
assess how sick patients are, each based on the number and nature of
diagnoses for patients as well their age, race and sex. Medicare uses
one of those methods, known as "hierarchical condition categories" (HCC)
to adjust for risk.

The researchers also analyzed the death rates of patient populations in
each of the 306 regions. They found that the sickness of the patients
explained between 10 and 12 percent of the discrepancy between places
with high mortality rates and those with low mortality rates. But there
was still a wide spread between regions of the country. For instance,
under the HCC method, the death rate in the Salt Lake City region was
59.3 patients per 1,000—much higher than around Miami, where the death
rate was 32.6 patients per 1,000. If that difference were accurate, then
it would appear that patients in Salt Lake City were getting
astoundingly worse care than in Miami—something that the researchers
considered implausible.

Next, the researchers looked at the number of physician visits the
patients had in the previous year. They then used statistical methods to
"correct" the sickness rates, essentially reclassifying those patients
with lots of excess physician visits as less sick than they would appear
based by their diagnoses alone.

When the researchers used this revised metric to look at regional death
rates, they now found it explained between 21 percent and 24 percent of
the differences between high-mortality and low-mortality areas—twice as
much as the standard risk-adjustment methods explained. Once visits were
factored into the equation, Salt Lake City's death rate dropped to 51.8
patients per 1,000 and Miami's rate rose to 47.3 percent. That was much
closer than before, although there remained an unexplained variation.

In a phone interview, Wennberg said the paper showed that the government
and others need to refine the methods of adjusting for risk. "The way
we're doing it now has a lot of problems," he said.

Comment: Private insurers pride themselves on market innovation. They
will always find ways to reduce the amount that they spend on patients.
They use devious methods to selectively enroll healthier individuals
while receiving payments that are more appropriate for a mixture of both
the sick and the healthy. When efforts are made by means of risk
adjustment to modify payments to compensate for this injustice, insurers
will use data manipulations to make their patients appear to be even
sicker than they are in order to receive extra payments for their care.

This study by John Wennberg and his colleagues demonstrates that the
differing regional rates of visits by physicians introduces a bias that
makes it appear that regions with lower visits by physicians have higher
costs and higher mortality rates, and vice versa. They conclude that
correcting for such variations in intensity of patient observation
(physician visit rates) would improve current risk adjustment
methodologies, but that this would still account for "less than 25% of
geographic variation in age, sex, and race adjusted mortality among fee
for service Medicare beneficiaries."

We already know that the private Medicare Advantage plans play games
with risk adjustment. The Affordable Care Act will require risk
adjustment between the private plans offered by the state insurance
exchanges, and we can anticipate that they, too, will game the system.

Will this latest study finally bring us a risk adjustment process that
the insurers cannot game? Unlikely. As more data are added, such as the
intensity of patient observation suggested by this study, the
administrative complexity increases, while the insurers find ever more
not-yet-patched holes in the risk adjustment infrastructure.

As long as individual patients are linked to individual private plans,
there will always be intermediaries - the private insurers - who will
manipulate the system to their own benefit. We should remove these
superfluous, administratively inefficient middlemen and replace them
with our own public administrators. The task of negotiating appropriate
payments with health care professionals and institutions would be much
simpler if we got the private intermediaries out of the way.

Wednesday, February 20, 2013

Fwd: qotd: Wow - I need an editor.

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Wow - I need an editor.
Date: Wed, 20 Feb 2013 15:07:35 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Thanks to those of you who immediately pointed out that my "correction"
was wrong.

Whoever. Whomever. Whatever. I don't know. I need help!



Fwd: qotd: Young immigrants excluded from ACA benefits

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Young immigrants excluded from ACA benefits
Date: Wed, 20 Feb 2013 14:35:50 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

San Francisco Chronicle
February 19, 2013
Young immigrants shut out of health reform
By Drew Joseph

California's young immigrants who have been granted reprieves to stay in
the country stand to gain little from the federal health reform law that
the state Legislature is working to implement.

The Affordable Care Act excludes illegal immigrants from accessing the
law's benefits, but some immigrant and health advocates are angry that
the young people known as Dreamers have been left out, saying the policy
contradicts the law's intent of expanding coverage to more people.

"It really defeats what the goals of the ACA were to begin with," said
Sonal Ambegaokar, health policy attorney at the National Immigration Law

The Deferred Action for Childhood Arrivals program (DACA), which was
announced in June, allows people who were brought into the United States
when they were young to stay for two years if they pursue education or
military service. The young people eligible for the program are known as
Dreamers, in reference to the proposed Dream Act - legislation that
would give them a path to citizenship.

More than a quarter of the 1.76 million people who are or will be
eligible to apply for DACA - about 460,000 immigrants - live in
California, according to an August 2012 Migration Policy Institute report.

After the DACA program was announced, the Obama administration clarified
the policy, specifying that people to whom DACA applies will not qualify
for Medicaid now or as the health law is implemented. And while many
Americans will receive subsidies to buy insurance through their state's
exchanges - the insurance marketplaces established by the Affordable
Care Act - people granted DACA approval will not be able to purchase
coverage through those exchanges even with their own money.

Critics say the rule does not make sense. They argue that people
approved for the program are lawfully present in the country, but when
it comes to health care, they are treated as undocumented immigrants and
will face a harder time finding coverage.


National Immigration Law Center
January 2013
Health Care for DACA Grantees

What health insurance options are available to DACA grantees under ACA?

Until recently, like other individuals granted deferred action, DACA
grantees would have had access to all the new health insurance options
under ACA as "lawfully present" individuals. Due to a rule change by the
Obama administration in August 2012, DACA grantees were specifically
excluded from the ACA as well as nonemergency Medicaid and CHIP, and
have the same access to health insurance as do undocumented individuals
despite being granted deferred action by the U.S. Department of Homeland
Security. As a result of the rule change, DACA grantees who have valid
work permits and valid Social Security numbers (SSNs) and who are
otherwise eligible:

* Cannot enroll today in affordable coverage through Medicaid or CHIP
unless their state provides coverage to a broader group of lawfully
present individuals.

* Do not have access today to prenatal care through Medicaid or CHIP
unless their state provides coverage for pregnant women regardless of
the woman's immigration status.

* Cannot apply today for private health insurance under Pre-Existing
Condition Insurance Plan (PCIP) unless their state has a similar health
insurance program that is available regardless of status.

* Will not be able to buy affordable private health insurance, even at
full cost, in the new insurance marketplaces created by ACA after 2014.

* Will not be eligible for federal tax credits (or subsidies) to help
make private health insurance affordable after 2014, even if they are
paying federal taxes.

* Will not be eligible for the Basic Health Plan if their state has this

* Likely will not be required to have health insurance after 2014.

What health care options do DACA grantees and undocumented individuals
have today?

* Emergency-room care.

* Community health centers and free clinics.

* Public and safety-net hospitals.

* Public health services (immunizations, treatment of communicable
diseases such as tuberculosis, HIV, or sexually transmitted diseases).

* Emergency treatment under the emergency Medicaid program, including
labor and delivery for pregnancy.

* Hospital and community health centers' financial assistance programs
(also known as "charity care").

* Private health insurance.

Comment: Young immigrant children who were brought to this country and
remained here without proper documentation have been raised here and are
as much a part of our culture as are legal citizens. The Dream Act has
been proposed to grant these individuals legal status to match the
reality that this is their country.

Because of the failure of Congress to pass the Dream Act, President
Obama has established the Deferred Action for Childhood Arrivals program
(DACA). This is not a replacement of the Dream Act, but it is aimed at
the same demographic, and it does provide temporary, potentially
renewable legal status.

It seems that these individuals under DACA should have the same access
to health care as other documented immigrants. However, it was decided
that they would specifically be excluded from the provisions of the
Affordable Care Act. They are not totally excluded from all health care
since they have the same access as undocumented immigrants - those
services and facilities listed above.

Although some might say that these services are adequate for this
population, most of us want not want these limitations placed on our
health care (with the exception of being able to purchase insurance
outside of the exchanges and without subsidies - a problem for this

Immigration policy and health policy are two different topics. They
should be dealt with separately. Right now, Congress is engaged in a
process to reform immigration, and hopefully our lawmakers will
demonstrate wisdom and benevolence in their decisions.

Health care is another matter. Everyone should have whatever health care
is necessary. Period. Our laws and regulations and their implementation
should have a goal of making certain that people get the care that they
need. The Obama administration's interpretation of their own DACA
program falls short.

Under an optimally designed single payer program, whoever you are, if
you need care, you get care. That's the way it should be.

Fwd: qotd: minor correction in today's qotd

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: minor correction in today's qotd
Date: Wed, 20 Feb 2013 14:41:57 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

I can't believe I blew my closing comment. "Whomever," not "whoever."

Under an optimally designed single payer program, whomever you are, if
you need care, you get care. That's the way it should be.

Tuesday, February 19, 2013

Fwd: qotd: Important: What are Medicare's true administrative costs?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Important: What are Medicare's true administrative costs?
Date: Tue, 19 Feb 2013 14:31:36 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Journal of Health Politics, Policy and Law
February 15, 2013
How to Think Clearly about Medicare Administrative Costs: Data Sources
and Measurement
By Kip Sullivan


The Centers for Medicare and Medicaid Services (CMS) annually publishes
two measures of Medicare's administrative expenditures. One of these
appears in the reports of the Medicare Boards of Trustees and the other
in the National Health Expenditure Accounts (NHEA). The latest trustees'
report indicates Medicare's administrative expenditures are 1 percent of
total Medicare spending, while the latest NHEA indicates the figure is 6
percent. The debate about Medicare's administrative expenditures, which
emerged several years ago, reflects widespread confusion about these
data. Critics of Medicare argue that the official reports on Medicare's
overhead ignore or hide numerous types of administrative spending, such
as the cost of collecting taxes and Part B premiums. Defenders of
Medicare claim the official statistics are accurate. But participants on
both sides of this debate fail to cite the official documents and do not
analyze CMS's methodology. This article examines controversy over the
methodology CMS uses to calculate the trustees' and NHEA's measures and
the sources of confusion and ignorance about them. It concludes with a
discussion of how the two measures should be used.

Two Official Yardsticks
Medicare's administrative costs were $8 billion in 2011, or 1.4 percent
of total Medicare spending of $549 billion that year. Those figures come
from the latest annual report of the Medicare trustees, prepared by OACT
(Office of the Actuary within the Centers for Medicare and Medicaid
Services). As I document below, the $8 billion includes costs incurred
directly by CMS (notably, the salaries of CMS staff and payments to
insurance companies to process claims) as well as costs incurred by
other federal agencies on Medicare's behalf (e.g., tax collection
services provided by the Internal Revenue Service, Part B premium
collection services provided by the Social Security Administration and
the Railroad Retirement Board, and fraud prevention services provided by
the Federal Bureau of Investigation).

The latest NHEA, also prepared by OACT, is for 2010. According to it,
Medicare's overhead totaled $31 billion that year, far more than the $7
billion reported by the trustees for 2010. That $31 billion constituted
6 percent of total Medicare spending in 20102 — much higher than the 1
percent rate reported for that year by the trustees. The difference
between the trustees' measure of overhead and the NHEA measure is due
almost entirely to the fact that the NHEA defines Medicare's overhead to
include not only the $7 billion in administrative expenditures reported
by the trustees for 2010 but also the $24 billion in administrative
expenditures incurred by the insurance companies that participate in
Parts C and D.

Selecting the Right Yardstick

The NHEA measure tracked the trustees' measure quite closely for the
first twenty years of Medicare's existence. But since the mid- 1980s,
which is when the percentage of Medicare beneficiaries insured by
insurance companies began to rise beyond the negligible levels of the
1970s, the NHEA measure of Medicare's overhead has risen dramatically
while the trustees' measure has continued to decline. As of 2010, the
latest year for which data from both measures are available, the NHEA
measure was 4.5 times larger than the trustees' measure — 5.9 versus
1.3. This enormous disparity between two measures that used to be almost
identical should long ago have triggered inquiries within Congress and
the US health policy community as to whether the higher administrative
costs associated with the growing privatization of Medicare are justified.

Comment: In his article, Kip Sullivan has finally laid to rest the
distortions and obfuscations of those who contend that Medicare's
administrative costs are much higher than commonly cited percentages -
1.4 percent in 2011. Not only has he shown that the other government
costs that allegedly were left out are actually included, but he has
also shown that the other official measure of Medicare's administrative
costs shows how much more it is costing us to fund the administrative
excesses of the private Medicare Advantage and Part D drug programs - an
egregiously wasteful use of our Medicare funds.

Quoting Sullivan, "This enormous disparity between two measures that
used to be almost identical should long ago have triggered inquiries
within Congress and the US health policy community as to whether the
higher administrative costs associated with the growing privatization of
Medicare are justified."

It should also have triggered the question: Why haven't we yet enacted
an improved Medicare for everyone?

Monday, February 18, 2013

Fwd: qotd: OECD report on waiting times

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: OECD report on waiting times
Date: Mon, 18 Feb 2013 12:18:52 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Organisation for Economic Development and Co-operation (OECD)
February 2013
OECD Health Policy Studies
Waiting Times in the Health Sector
What Works?
By Luigi Siciliani, Michael Borowitz and Valerie Moran

The book first provides a framework to understand the role of waiting
times in health systems in Chapter 1. It then discusses variation and
best practice in defining and measuring waiting times across OECD
countries in Chapter 2. The book summarises and discusses the
effectiveness of the most common policies to address long waiting times
in 13 OECD countries in Chapter 3. Chapters 4-16 provide detailed
country case studies respectively in Australia, Canada, Denmark,
Finland, Ireland, Italy, Netherlands, New Zealand, Norway, Portugal,
Spain, Sweden, and the United Kingdom. They describe current policy
developments and assess the effectiveness of policies in the last ten years.

Table 3.1 - (Policies and their potential effect on waiting times)

Supply-side policies

1. Increased production in the public sector by funding extra activity -
2. Contracting with private sector - WEAK
3. Sending patients abroad - WEAK
4. Increased productivity by introducing activity-based financing (DRGs)
5. Increased choice of providers - MEDIUM
6. Improved management of waiting lists - MEDIUM

Demand-side policies

1. Explicit guidelines to prioritise patients - MEDIUM
2. Subsidise private insurance - WEAK

Combined policies

1. Waiting-time guarantees - WEAK
2. With sanctions - STRONG
3. With choice and competition - STRONG

Chapter 5 - Canada

This chapter outlines the main characteristics of the Canadian health
care delivery system, traces the development of unacceptably long
patient waiting times for care and examines public concern about the
viability of Canadian Medicare. While individual jurisdictions addressed
the problem of waiting times with limited success, federal provincial
and territorial leaders collaborated in the development of a
pan-Canadian approach to reduce waiting times in the context of the 2004
10-Year Plan to Strengthen Health Care. Reductions in waiting times are
presented as are the results of statutory parliamentary reviews of progress.

In response to their 2004 commitment and given the funding to support
it, Canadian jurisdictions have delivered measurable improvement in
patient waiting times in the priority clinical areas. There has been
improvement in the infrastructure required to collect data and to
compare and report on performance. This improvement, across the country,
would not have been possible without the federal, provincial and
territorial collaboration and commitment set out in the 10-Year Plan to
Strengthen Health Care. Nor could it have been documented without
similar collaboration on data, definitions and reporting methodologies.

The accomplishments of the past eight years were necessary and have been
beneficial but not sufficient according to the most recent Parliamentary
Review. It calls for investment in dealing with the root causes of
waiting and investment in better management practices along the
continuum of care.

The full 328 page report can be read online at this link:

Comment: A well designed single payer national health program uses
equitable public financing to ensure that health care is universal,
administratively efficient, and reasonably comprehensive. The opponents
of single payer cannot deny these well documented benefits, so they
usually resort to the claim that single payer systems cause rationing.
Does this allegation have any basis in fact?

The term "rationing" traditionally has referred to the equitable
allocation of a commodity that is in short supply. In health care, the
term is more limited. In OECD nations any person experiencing a medical
emergency receives essential care. There is no rationing of emergency

On the other hand, in many but not all nations a backlog in the
scheduling of elective services may develop. Theoretically, everyone
would still receive appropriate care, but they might have to wait for
it. Rather than labeling this phenomenon "rationing," we should call it
what it is - "waiting times" or "queues."

This new OECD report is important because it demonstrates that, with
good government stewardship, queues can be reduced to acceptable levels.
(Totally eliminating queues by providing instant access to all services,
no matter how specialized, is not practical nor desirable.)

The United States was not included in this report. Queues are not as
much of a problem for individuals who are well insured, though some
excessive delays do occur. Rather, some experts claim that we do
"ration" care for those without the ability to pay for that care, with
the exception of emergency services provided in an Emergency Department.
Yet "ration" may not be the appropriate term since these individuals do
not receive an equitable allocation of a limited resource; they are
denied care in a system to which others are granted access.

Let's suppose that we enacted a single payer national health program in
the United States. It is true that if we later elected leaders who were
opposed to government programs, their inattentiveness to needs could
result in the development of excessive queues. That is why it is
important to understand what does and what does not work.

In the list in Table 3.1 (above), you can see that measures that are not
particularly effective are those such as sending patients abroad,
contracting public patients with the private sector, or subsidizing
private insurance plans (like ACA does).

Moderately effective measures include increasing choice of providers
(not locking patients into networks), using activity-based financing
(DRGs), and improved queue management, with better systems of
prioritizing patients.

The strongest measures, according to this report, include establishing
waiting time guarantees with sanctions for failing to comply (sanctions
combat sloth), and providing more choice and competition. Here choice
refers to choice of health care professionals and institutions, selected
based on competition on perceived quality and service. Another important
measure that was left off of this list is fine-tuning system capacity.

Since Canada's single payer system is the closest to the PNHP model of
reform, it is important to understand what is happening there. We still
hear that "single payer would cause rationing like they have in Canada."
But, with federal and provincial collaboration, they have made
considerable progress in reducing their queues, and are continuing with
efforts toward further improvement.

All we would need to avoid "rationing" under a single payer system is
responsible public stewardship. If the people in charge insist that we
can't have single payer because of rationing, then we, in turn, need to
insist that they be discharged as our public stewards. There are plenty
of well qualified individuals who do care about the health of our people.

Friday, February 15, 2013

Fwd: qotd: "Expanded & Improved Medicare For All Act" provides renewal for the movement

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: "Expanded & Improved Medicare For All Act" provides
renewal for the movement
Date: Fri, 15 Feb 2013 08:21:05 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

113th Congress
H.R. 676
"Expanded & Improved Medicare For All Act"
Sponsor: Rep. John Conyers, Jr., plus 40 Cosponsors (2/14/13)

To provide for comprehensive health insurance coverage for all United
States residents, improved health care delivery, and for other purposes.

The Library of Congress
Thomas (Select "Bill Number" and enter H.R. 676)

As of 2/15/13 the text of the legislation has not been received from the
Government Printing Office, but a draft is available at this link:

Comment: Congressman John Conyers has reintroduced his bill for a
single payer national health program: H.R. 676, "Expanded & Improved
Medicare For All Act." Some perspective is warranted.

Our government stewards are intensely involved in implementation of the
Affordable Care Act (ACA), and thus tend to dismiss any consideration of
single payer reform as being irrelevant in today's political climate.
Such an attitude is decidedly unwise.

We know that a decade from now 30 million people will still be without
any health insurance, and tens of millions more may be exposed to
excessive medical debt because of the inadequate coverage of the health
plans - the standard silver plan having an actuarial value of only 70
percent. We also know that the ACA model of reform will not be capable
of adequately controlling costs and will fail to provide much needed
reform such as the reduction or elimination of profound administrative

Many understandably do not want to wait the years it will take to see
that ACA is a failure. They are turning to their states to try to
achieve single payer reform. But state efforts not only face the
"political feasibility" hurdle, they also face the federal gridlock of
existing programs, laws and regulations that place barriers in the way
of state reform.

For example, Vermont's highly touted single payer legislation has not
enabled adequate federal flexibility with Medicare, Medicaid, and
employer self-insured (ERISA) funds. Although state activists talk about
obtaining federal waivers to free up these funds, without comprehensive
federal legislation, the existing waiver programs cannot possibly open
the gates for state-level single payer. Considering the complexity of
existing federal laws and regulations, the federal legislation required
to enable state single payer systems likely would be as complex, if not
more so, than enacting a national single payer program. The latter
simply would displace our dysfunctional financing system, whereas the
former would have to negotiate the the extremely complex maze that has
been constructed over many decades, most recently compounded by ACA.

The California legislature has twice passed a bill that they labeled
"single payer," but only with the promise of the Republican governor
that it would be vetoed. Now that California has a Democratic governor
and a two-thirds super-majority in each house of the state legislature,
with only one week left to file bills for the current two year session,
no state legislator has been willing to sponsor the single payer bill.
They insist that all attention must now be devoted to implementation of ACA.

This is why H.R. 676 is so important. Even if Congressional barriers
succeed in blocking the legislation, the Expanded and Improved Medicare
for All Act serves as a very important vehicle for education and
advocacy. The bill was introduced two days ago with 37 cosponsors, and
yesterday, 3 more were added. That is more than they began with in the
last session of Congress. We should build on this.

State efforts should be encouraged, but with a dose of reality. We need
to be working on a national movement - all of us, including the state
activists. We can support each other in our state efforts, but all of us
must pull all stops in support of the national efforts.

Perhaps around 2017 the picture will finally emerge that the fragmented
and dysfunctional model of a multitude of private plans and public
programs cannot be repaired, and that a public program such as single
payer or a national health service will be essential. Until then, we
must continue to spread the message that there is a model that will
work. People need to know that, when ACA fails, there is a place to
where we can turn.

Thursday, February 14, 2013

Fwd: qotd: Bain's for-profit methadone clinics

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Bain's for-profit methadone clinics
Date: Thu, 14 Feb 2013 07:09:06 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

February 7, 2013
Drug Users Turn Death Dealers as Methadone From Bain Hits Street
By Sydney P. Freedberg

After Jennifer Vanlieu turned to methadone treatment to beat an
addiction to heroin and pain pills, she morphed from drug user to
convicted drug dealer.

Vanlieu said she got a carryout methadone dose at a clinic operated by
CRC Health Corp. in Richmond, Indiana, in March, 2010, and then gave
about 15 milligrams to her friend Carissa Plemons. Plemons died hours
later, after ingesting a lethal mix of methadone and other drugs,
according to police reports.

CRC is owned by Boston-based Bain Capital Partners LLC and is the
largest U.S. provider of methadone treatment.

Liquid methadone, used for decades to help addicts abate withdrawal
symptoms as they quit heroin or other opiates, is leaking into illegal
street sales via take-home doses, according to law-enforcement officials
in Indiana, Kentucky, Virginia and West Virginia. Investigators in each
of those states have linked such "diverted" doses to clinics operated by

Some former employees say the company, which operated 57 clinics in 15
states last year, works to maintain high enrollments despite chronic
understaffing, increasing both CRC's profitability and the chance that
its take-home methadone doses will be abused.

In the small towns where CRC has clinics, its methadone has surfaced in
criminal cases, police and prosecutors say. Dearborn County, Indiana,
officials are planning a $10 million expansion to the local jail, needed
partly because of crimes tied to CRC's clinic in Lawrenceburg, said
prosecutor F. Aaron Negangard.

Since Jan. 1, 2009, CRC's clinics haven't met staffing standards more
than 50 times, regulatory records from 15 states show. Clinics were
cited 80 times for failing to document that they gave patients enough

Until recently, there was little difference between the operations of
for-profit and non-profit methadone clinics, said Thomas D'Aunno, a
professor of health policy and management at Columbia University who has
tracked the treatment centers for years. That changed in 2011 survey
data, which showed "significant differences," he said: For-profit
clinics had fewer staffers than public clinics.

By 2010, for-profit providers controlled 52.8 percent of the 1,200 U.S.

Over the past seven years, private equity firms have invested more than
$2.2 billion in substance-abuse treatment and behavioral health
companies in 62 deals, according to PitchBook Data Inc., a Seattle-based
research firm.

Addiction-treatment companies are "some of the most sought-after -- and
valuable -- acquisition candidates in health care," partly because of
profit margins that can top 20 percent, according to the Braff Group, a
Pittsburgh-based mergers and acquisitions advisory firm.

Bain Capital, the private equity firm co-founded by former Republican
presidential candidate Mitt Romney, paid $723 million for CRC in 2006,
corporate filings show. Romney, who left Bain in 1999, had no input in
its investments or management of companies after that, he has said.
Still, Romney reported last year that he owned more than $1 million
worth of a Bain fund that holds most of CRC's shares. He reported
receiving between $100,000 and $1 million in dividends, interest and
capital gains from that holding, as well as income from two other Bain
funds with interests in CRC, according to the financial disclosure he
filed with the U.S. Office of Government Ethics in June.

Once they've helped addicts quit other drugs, for-profit clinics have a
built-in incentive that may hurt their patients' chances of ending their
dependence on methadone, said Rod Bragg, assistant commissioner of
Tennessee's Department of Mental Health and Substance Abuse Services.

"With a nonprofit, the incentive is to get people to treatment and wean
them off," Bragg said. "When you have a for-profit and cash-only
business, there is no incentive to detox them. In fact, there's an
incentive not to detox them because of the continual cash flow."

In 2010, 4,577 people died of overdoses involving methadone.

Comment: Most enlightened observers of the health care scene understand
that a single payer system would bring much greater equity and
efficiency to the financing of our health care system - controlling
costs while ensuring adequate health care for everyone. Yet frequently
at demonstrations we also see placards that state, "PATIENTS, NOT
PROFITS." What does that mean?

There is no problem with "profits" that represent reasonable incomes of
health care professionals after other expenses are met, or that
represent operational margins of nonprofit institutions that are really
not much more than an accounting entry.

The problem with profits in health care arises when the interests of
for-profit corporate executives and their passive investors are placed
before those of the patients served by the enterprise - a priority
founded in our nation's laws.

Innumerable studies have demonstrated that, in health care, the profit
motive increases costs while impairing processes and outcomes. We pay
more for worse care. That is why Physicians for a National Health
Program includes in their single payer model of reform the removal of
for-profit enterprises from our health care system.

Bain Capital's acquisition of a chain of methadone clinics represents
not only the evils of for-profit health care, but also the greater
societal issue of an economy in which we place the highest priority on
moving wealth from the workers to the very rich. Bain's methadone
clinics are not only making Mitt Romney and his ilk much wealthier,
their profit-oriented business decisions are killing people. Romney may
be able to claim that the decisions to purchase the methadone clinics
were made by his successors, but he remains a principal in the ownership
and is receiving profits that represent funds shifted from these
unfortunate working-class souls to Romney and his rich friends.

The next time you see one of those PATIENTS-NOT-PROFITS placards, think
of Mitt Romney and his wife's Cadillacs and what that means for patients
who need help with their chemical dependencies but who are instead
sacrificed for the benefit of the bottom line.


Wednesday, February 13, 2013

Fwd: qotd: Where is WellPoint headed?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Where is WellPoint headed?
Date: Wed, 13 Feb 2013 07:11:55 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The Wall Street Journal
February 12, 2013
WellPoint Names New Chief Executive
By Anna Wilde Mathews and Jon Kamp

WellPoint Inc. named Joseph R. Swedish as its new chief executive,
unexpectedly turning to a hospital-industry veteran to lead the
second-largest U.S. health insurer through the challenging
implementation of the health-care overhaul.

Mr. Swedish, 61 years old, will take over as CEO on March 25, the
company said. Since 2004, he has been president and CEO of Trinity
Health, a Catholic operator of 47 hospitals with revenue of around $9
billion last year.

The choice is likely to surprise investors, whose displeasure with
previous WellPoint CEO Angela Braly helped lead to her resignation last
August. Mr. Swedish's career has been spent on the provider side of
health care, and recently at nonprofit institutions, so he isn't a
familiar face for managed-care investors.

Mr. Swedish's hospital experience could be viewed as helpful, but
investors were generally predicting WellPoint would pick a managed-care
veteran, said Thomas Carroll, an analyst at Stifel Nicolaus. "This
individual is completely out of the blue from an investor-expectation
standpoint," he said.

In general, lines between insurers and health-care providers have been
increasingly blurring, and Mr. Swedish said both sides are facing
similar "strategic bets" as the industry changes. Indianapolis-based
WellPoint is already working on collaborations with providers, and he
wants to "accelerate that at a very rapid pace," he said. WellPoint is
expanding the operations of CareMore Health Group, a Medicare plan it
bought that also operates its own care centers, and it has launched an
initiative aimed at paying primary-care doctors more to coordinate
patients' care.

Trinity is a "well-managed health system," with stable operations and a
strong balance sheet, said Kay Sifferman, a vice president at Moody's.
Both Moody's and Standard & Poor's rate Trinity's bonds highly. Before
his announced departure, Mr. Swedish was moving toward consummating a
major combination, with Catholic Health East, that would create the
fifth-largest U.S. hospital system.

WellPoint has said it is planning and investing heavily to ensure it
will have a strong presence on the new health exchanges, as well as
doing extensive consumer research to ensure it crafts products that will
resonate with buyers. "We will continue to progress with what they have
already initiated," Mr. Swedish said. "Quite frankly, I like our chances."

WellPoint includes 14 Blue Cross and Blue Shield plans and has a major
presence in California, often seen as a tough market for health
insurers. The company has "to execute to win," Mr. Swedish said. "We are
all very attentive to that."

Comment: According to The Wall Street Journal, "lines between insurers
and health-care providers have been increasingly blurring," a fact we
already knew. The appointment of a hospital CEO, who is currently
involved in major consolidation efforts, as the new CEO of WellPoint -
the nation's second largest insurer - seems to blur even further the
line between insurers and health care providers.

Health care providers take care of patients. Insurers take care of
business. With consolidation on all fronts, insurers are blending into
the providers. With this new model, the insurer/health care provider is
becoming well positioned to take care of... well... business. And the
patients? As the incoming WellPoint CEO says, the company has "to
execute to win." Isn't there something Freudian about "execute"?

Tuesday, February 12, 2013

Fwd: qotd: Important: Who needs to know what a hip replacement costs?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Important: Who needs to know what a hip replacement costs?
Date: Tue, 12 Feb 2013 11:15:19 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

JAMA Internal Medicine
February 11, 2013
Availability of Consumer Prices From US Hospitals for a Common Surgical
By Jaime A. Rosenthal; Xin Lu, MS; Peter Cram, MD, MBA

Objective - To examine whether we could obtain pricing data for a common
elective surgical procedure, total hip arthroplasty (THA).

We found it difficult to obtain price information for THA and observed
wide variation in the prices that were quoted. Many health care
providers cannot provide reasonable price estimates.

Comment (excerpts):

The results of this study provide insight into the availability of
pricing information for a common elective medical procedure, THA. We
found that only 16% of a randomly selected group of US hospitals were
able to provide a complete bundled price, though an additional 47% of
hospitals could provide a complete price when hospitals and health care
providers were contacted separately.

First and foremost, understanding our results requires an understanding
of the rationale behind calls for greater pricing transparency. The
desire for pricing transparency is based in fundamental principles of
economics; the assumption that if patients know the prices of medical
services, they will make rational decisions by avoiding high-cost health
care providers ceteris paribus.

Our results are somewhat remarkable considering the support expressed by
virtually all stakeholders for pricing transparency.

Irrespective of the reason for the variation we encountered, we would
actually view our results with a modicum of optimism. The nearly $100
000 range in pricing that we encountered suggests that a savvy and
determined customer may find opportunities for significant savings with
comparison shopping. Alternatively, it is equally possible to argue that
our results suggest that less-educated or less-savvy patients could pay
exorbitantly high prices.


JAMA Internal Medicine
February 11, 2013
What Does a Hip Replacement Cost?
Comment on "Availability of Consumer Prices From US Hospitals for a
Common Surgical Procedure"
By Andrew Steinmetz, BA; Ezekiel J. Emanuel, MD, PhD

As Rosenthal and colleagues write, there are many potential solutions
for reining in costs and improving quality in American health care, but
they require access to reliable information on price and quality for
patients to make informed decisions. Free markets need price and quality
transparency to function properly.

The history of the automobile industry shows that information asymmetry
is treatable. Health care will need to travel down a similar path. It is
time we stop forcing people to buy health care services blindfolded —
and then blame them for not seeing. The transparency imperative is here,
and one way or another the public will soon be empowered to choose their
health care based on reliable data on price and quality.

Comment: There is a terrible epidemic of a mental derangement that has
befouled the minds of not only those in the political, policy and
academic communities, but also the minds of the public at large. This
mass hysteria is exemplified by this statement extracted from the
Rosenthal et al article: "Our results are somewhat remarkable
considering the support expressed by virtually all stakeholders for
pricing transparency."

Almost everyone seems to be fixated on the concept that if we make
health care pricing transparent, we will be able to place every
individual in charge of getting the health care that they need while
eliminating excessive prices and unnecessary care. The massive shift
taking place to higher deductibles and other consumer-driven cost
sharing is based on this principle.

Implementation of the Affordable Care Act is pushing us towards
innovative changes in the way we pay for health care, such as this
article which implicitly supports "bundling" as a means of obtaining a
single price for complex services - to be used to shop around for
cheaper providers.

With our current budgetary problems on the state and local levels, let's
look how this might play out if we expand the concept from health care
to other social services.

Imagine creating price sensitivity for community fire services. Suppose
we bundle the payment for putting out a house fire. Not only would we
need competing fire services, but we would also need access, through a
911 call, for the various bundled prices. Or a car fire? You can be
transferred to the 911 car fire operator who has the car fire bundled
prices. Or a preventive fire safety inspection of your home - mandated
by the Affordable Fire Act? Instead of 911, you can access
eFireInspection providers for competitive fire inspection bundles, which
provide basic inspection services, with options such as purchasing a
place at the front of the queue in the event of multiple fires.

The police? Easy. Competing bundled prices on home invasion robberies.
Murder? No problem - bundled packages with or without conviction and
imprisonment of the murderer. Maintaining the peace? Are you kidding?
With price transparency who would waste their money on that unnecessary

Education bundles? Park and recreation bundles? Public street and
highway bundles? City sanitation bundles? How about bundles for
politicians? You could buy only the politicians that you need.

Of course all of this is totally ridiculous. So why have we separated
out our health care social services to be placed under the control of
price shoppers? Isn't there a better way?

Everyone recognizes the silliness of the examples above because we all
understand that such social services are financed through global budgets
established by the stewards of our taxes. With minor exceptions, the
services are provided automatically without the necessity of
establishing price sensitivity on accessing those services. Any
additional funding requirements are addressed through the budget process.

Likewise, as in Canada, our hospitals should be globally budgeted. To do
so would introduce administrative simplicity and lower costs due to
greater efficiency. Physicians' rates can be kept fair and reasonable
through negotiation with the single public payer. Most other nations
have shown that you can provide comprehensive care at much lower costs
without requiring price transparency for health care shoppers.

Look again at the authors' statement: "Our results are somewhat
remarkable considering the support expressed by virtually all
stakeholders for pricing transparency." Price transparency as a solution
for our outrageous health care costs? It's time to bury this terribly
unsound idea and move on with a system that works - a single payer
national health program.

Monday, February 11, 2013

Fwd: qotd: Strength through integration?

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: Strength through integration?
Date: Mon, 11 Feb 2013 08:43:48 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

American Medical News
February 11, 2013
Moody's: Doctor integration vital to stronger hospital finances
By Sue Ter Maat

For the sixth year in a row, Moody's Investors Service is issuing a
"negative outlook" to nonprofit hospital finances. Yet the bond-rating
agency notes that the facilities have collectively improved their bottom
lines in recent years.

In part, Moody's said, the unexpected gains have come because of
physicians. Closer relationships with physician practices, including
outright acquisitions, have helped hospitals stabilize their market
shares and find ways to cut costs, Moody's said. "The theme is for
tighter and closer alignment and integration [of doctors] with
hospitals," said Lisa Martin, senior vice president of Moody's
Healthcare Team.

Nonprofit hospitals' three-year compound annual growth rate of revenue
fell from 7.3% in 2008 to 5.4% in 2011, Moody's said. The measure looks
at changes over the previous three years and assigns an average annual
value to them.

But hospitals have taken positive steps that have prevented an even
greater negative impact, Martin said. Among them are mergers and
acquisitions of other hospitals, long-term care facilities and physician
practices. These forces have meant that doctors are being drawn more
closely into hospital operations and decision-making through joint
ventures and hospital board memberships, especially as more doctors are
employed instead of working in their own practices, she said.

Mergers and acquisitions are expected to continue through 2013 and 2014,
as hospitals prepare for full implementation of the ACA. Moody's
analysts consider this activity positive, because it has led to
consolidation of services and reduced expenses.

But Moody's warned that mergers and acquisitions could be difficult in
the short term because of turnaround challenges at takeover targets,
merging cultures and difficulty closing services after mergers.

Comment: Consolidation. Mergers. Acquisitions. Between hospitals.
Between physicians. Between hospitals and physicians. Between physicians
and insurers. Within a framework of integrated affordable care

Our political leaders' decision to choose a market model of health care
reform led by private insurers is resulting in the shutting down of
whatever minimal semblance there was of a free market between competing
health plans, as we convert to health care delivery oligopolies and

Does anyone really believe that the private insurers are going to be
able to drive costs lower and quality higher by their market skills in
leveraging the forces of competition between health care delivery
systems? The insurers already understand that this model is fading
rapidly. That is why they are involved in designing managed care
products that shift the insurance risk to others while greatly expanding
their market in administrative services. Plus they are gaining control
of sectors of the actual health care delivery system.

Our policy experts say, "Yes, but by establishing accountable care
organizations, this is the way that we can start to pay for quality
instead of volume." Accountable to whom? Not the patients nor the taxpayers.

Friday, February 8, 2013

Fwd: qotd: ACA health insurance tax

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: ACA health insurance tax
Date: Fri, 8 Feb 2013 13:44:15 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

The Hill
February 7, 2013
Tax hikes you may have forgotten about
By Alex Brill, research fellow, American Enterprise Institute

One of the next ACA taxes scheduled to take effect is a health insurance
tax that will hit small businesses and their employees particularly
hard. The tax is officially imposed on health insurance companies, but
the greatest effect will be felt by their customers because the
insurance companies will pass most of the burden on through higher
premiums. An analysis by the nonpartisan Joint Committee on Taxation
found that the tax will raise insurance premiums on average by $350–$400
per affected family in 2016.

The higher premiums caused by the new tax will also prompt some
employers to self-insure rather than purchase true insurance for their
workers. The tax exempts employers who self-insure, as well as certain
nonprofit insurers who provide more than 80 percent of their services to
Medicare, Medicaid, CHIP, or dual-eligible plans.

Normally, when some taxpayers change their behavior and avoid a tax, the
tax raises less revenue than might otherwise be expected. Oddly, the
insurance tax is designed in a way that prevents any revenue decline.
The ACA presets the insurance tax's total revenue yield at $8 billion
next year, rising to $14.3 billion by 2018. To make this possible, each
year's tax is calculated in the following year, with the preset total
tax burden allocated among insurance companies based on each company's
share of the market.

If insurance companies raise premiums to cover the tax and some
employers respond by self-insuring, the result will be a bigger tax on
the employers that remain in the insurance market. Of course, the bigger
tax would fuel another round of premium hikes, causing more employers to
self-insure, further premium increases, and so on.

According to the Kaiser Family Foundation's 2012 Survey of Employer
Health Benefits, 15 percent of the smallest employers self-insure,
roughly half of employers with 200–999 workers self-insure, and 93
percent of firms with more than 5,000 workers do so. Because the
smallest employers almost never self-insure, they will end up bearing
the brunt of the tax. Midsized firms will be most likely to shift to
self-insuring their workers.

Congress and the public may not view insurance companies as sympathetic
figures. But it's the insurance companies' customers who will be most
penalized by this new tax, whether through $400 premium increases or by
being forced to run the risks of self-insuring.

Comment: When we are talking about financing our health care system -
17 percent of our GDP - we have to get tax policy right. One tax being
imposed by the Affordable Care Act - a tax on health insurers - will
surely be passed on to purchasers of health plans in the form of higher
premiums. When health health insurance premiums are already unbearable
for many, it doesn't seem wise to adopt a tax policy that pushes
premiums even higher.

Another peculiarity about this tax is that self-insured employers are
exempt. We have already written about the serious problems with the
current trend of small businesses self-insuring - less regulatory
oversight, exemption from some of the provisions of the Affordable Care
Act, and the vagaries of stop-loss insurance for the self-insured. Yet
the insurance tax will increase this unfortunate trend.

Since the global amount of the tax is set in law and it is assessed
proportionately amongst the insurers, as many employers convert to
self-insurance, the tax payment required of those continuing to be
insured through private plans will rise disproportionately. Although
this might not reach the level of a death spiral, the distribution would
certainly be inequitable.

One of the most important features of a single payer national health
program is that it would be funded through equitable tax policies.
Everyone pays their fair share, based on ability. Not only could we fix
our health care system through single payer reform, but we would have
the additional advantage of moving us much closer to an equitable system
of taxation.