Friday, February 27, 2015

More healthcare providers drop out of Medicaid

February 26, 2015
Medicaid Acceptance by Healthcare Providers Drops to 1-out-of-3
By Kev Coleman

When HealthPocket first investigated Medicaid acceptance in 2013, it
found that only 43% of the healthcare providers examined were formally
listed as accepting Medicaid. Since the original 2013 study, Medicaid
enrollment has continued to rise as the Affordable Care Act has led many
states to increase the income eligibility range for the program.
Medicaid, along with the Child Health Insurance Program (CHIP),
currently covers approximately 1-in-5 people in the United States. This
year, the temporary increase in Medicaid payments to primary care
physicians discontinues with only 15 states indicating that they intend
to maintain the payment increase (fully or partially). The reduction in
Medicaid reimbursement to primary care physicians has brought with it a
concern that Medicaid acceptance, already low among healthcare
providers, will drop further.

HealthPocket found that in 2015 only 34% of the healthcare providers
examined were listed as accepting Medicaid insurance. This represents a
21% decrease from the listings of Medicaid acceptance found in the 2013
data for the same categories of healthcare providers.

Since both the 2013 analysis and 2015 analysis relied upon the same
government data source and provider record parameters, the marked
decline in Medicaid acceptance is significant. In particular, the data
calls into question whether the temporary increase in Medicaid payments
to primary care physicians effected any lasting improvements to Medicaid

Why Do Some Healthcare Providers Avoid Medicaid?

A common explanation given for Medicaid lower acceptance is the
program's reimbursement rate to healthcare providers. Medicaid typically
pays 61% of what Medicare pays for the same outpatient physician
services. To make matters worse, the Medicare payment benchmark is
already lower than payments for the same services from private insurers.
It is estimated that Medicare typically pays 80% of what commercial
health insurers pay. Consequently, in comparison to commercial health
insurance from private insurance companies, Medicaid payments represent
a reduction on a reduction.

One of state governments' responses to the problem is the use of managed
care organizations to serve some portion of a state's Medicaid
population. However, as a 2014 Health & Human Services study noted,
state standards regarding the ratio of primary care physicians to
Medicaid managed care enrollees can vary widely (1-to-100 to 1-to-2,500)
as do their methods for determining compliance with these standards.
Consequently, Medicaid enrollees can face the prospect of long distances
and/or long waits to access care under the program.

From the Conclusion

HealthPocket's comparison of Medicaid acceptance listings from 2013 to
2015 illuminates an alarming trend for those dependent on Medicaid for
their healthcare: a reduction in Medicaid acceptance occurring during a
period of Medicaid enrollee expansion. How federal and state governments
will reverse this trend remains to be seen. The temporary increase in
Medicaid payments to primary care physicians from 2013 to 2014 does not
appear to have produced a lasting increase in Medicaid acceptance and
the expiration of this increase may contribute to further healthcare
provider attrition from the Medicaid program.


Guest Comment by Richard Gottfried, Chair, Committee on Health, New York
State Assembly, and sponsor of A05062 (S03525), "The New York Health Act":

"If the Medicaid recipient's doctor were paid the same as my doctor,
this wouldn't be a problem. And if we were all in the same health plan,
the wealthy and well-connected would see to it that their doctors were
paid fairly, and the rest of us (and our doctors) would share the
benefit. If we're all in the same boat, we'll all do better."

Thursday, February 26, 2015

The soaring complexity of administrative processing systems

("Gartner is the world's leading information technology research and
advisory company.")
January 28, 2015
Market Guide for Healthcare Payers' Core Administrative Processing Systems
Analyst: Constance Sjoquist

View Summary

Payer CIOs need to enhance, append or replace their existing core
administrative systems to more effectively compete in an increasingly
complex healthcare environment. Vendors are developing newer or
re-engineering existing solutions to meet this demand.

Market Direction

Historically, the vendor options for core claims administrative systems
have been somewhat limited. A handful of legacy solutions have dominated
the payer space for years. Often highly customized to a payer's unique
business environment or utilized only for a specific line of business
(LOB), core administration systems have been expensive and difficult to
replace, upgrade, enhance or consolidate without incurring significant
risk or downtime.

In the last several years, an enormous amount of change has occurred in
the healthcare market and is impacting payers' requirements of their
core administrative solutions. New demands include the need to comply
with an increased number of regulatory requirements, manage a growing
number of contractual arrangements and support new distribution
channels. Payers are finding it necessary to make the shift from a
historical group to a largely individual membership base and are seeking
new and differentiated capabilities that will help ensure they can
remain relevant and competitive.

In response, vendors in the healthcare core administrative space have
begun to significantly shift their product strategy or market focus to
address new payer challenges. While this has brought about innovation
and choice, it has also led to a disparate market, causing confusion
over what exactly the essential elements of a core administrative system
are. Vendors that once dominated the market have recently merged or have
been acquired, causing uncertainty around their future product road
maps. Some vendors have completely dropped their product offerings for a
particular LOB or have shifted their technology strategy to offer only
nonlicensed software solutions.

Gartner receives a steady volume of inquiries and requests for
information on core administrative vendors, as these run the business
applications that necessitate an enormous amount of a payer's IT
resources and budget. Healthcare payers are looking to modernize their
application portfolios, comply with government regulations and lower
their cost of doing business. Payers are also seeking functionality that
will allow them to support new health models, such as accountable care
organizations (ACOs), pay for performance (PFP) and value-based networks
(VBNs). Inquiries focus on who can provide new technology approaches to
the development, deployment and management of existing core
administrative applications, as well as which vendors offer solutions to
support future payer needs.

Core administrative vendors are challenged to adapt and develop their
solutions to address these disruptive changes in the healthcare
industry, as well as to adapt to rapid advancements in technology.

Industry disruptions include:

* The shift from a wholesale (group) to a retail (consumer) decision
maker requiring greater support for user-specific preferences

* Demand for transparency tools to support member enrollment, care and
payment decisions

* Providers becoming risk-bearing entities requiring real-time
information on payment and reconciliation in their provider applications
that parallels payers' application status

* Establishment of payer/provider contractual arrangements requiring
increased coordination of information and workflows and greater
accountability of services and payments

* Ongoing regulation and compliance changes requiring timely updates,
audits and reports

* The expanding number of distribution channels requiring increased
support for enrollment and related services

The healthcare market is expected to continue along a path of rapid
change and innovation. There is great uncertainty as to where the market
is headed and what technologies will be necessary to adapt and succeed.
Core administrative vendors are aggressively vying for position and are
competing to manage current expectations and address future client demands.


Comment by Don McCanne

This report from Gartner is instructive in that it demonstrates the
profound increase in administrative complexity in health care, much of
which is directly attributable to a dependency on markets as opposed
what we would have under a publicly administered single payer system.
Administrative functions in health care are essential, but it is the
private sector that has created a bureaucratic quagmire. Gartner is just
trying to help the private sector make sense of it.

This does not let the government off the hook. By supporting the current
fragmented, dysfunctional model of health care financing, the government
is placing a greater burden on the private sector. We are all paying the
price in higher costs and in bearing the the burden of systemic
inefficiencies. By design, a single payer system would reduce this
administrative complexity.

Wednesday, February 25, 2015

Majority must refund a portion of their ACA premium tax credit

H&R Block
February 24, 2015
H&R Block: Taxpayers Following ACA Rules, Refunds Take a Hit

So far in the 2015 tax season, H&R Block (NYSE: HRB), the world's
largest consumer tax services provider, is seeing a majority (52
percent) who enrolled in insurance via the state or federal Marketplaces
paying back a portion of the Advance Premium Tax Credit (APTC). The
average amount paid back is $530, decreasing the tax refund on average
by 17 percent, according to analysis almost six weeks into the 2015 tax

The average tax penalty for not having insurance was $172, an indication
that most taxpayers are paying more than the flat-fee of $95 per
uncovered adult penalty many consumers anticipated.

"The level of payback of the Advance Premium Tax Credit is significant
in that it's costing taxpayers a large percentage of their refund – a
refund many of them count on to pay household expenses," said Mark
Ciaramitaro, vice president of H&R Block health care and tax services.

For next tax filing season, it is important to note that the base
penalty will increase to the greater of $325 or 2 percent of household
income for 2015.


Comment by Don McCanne

So far, 52 percent of those receiving a tax credit last year to help pay
their premiums for the ACA exchange plans are having to pay back an
average of $530 - certainly an unpleasant surprise for individuals
subsisting on modest budgets.

Fortunately, for most individuals that repayment will be through a
reduction in their tax refunds rather than an additional payment to be
made from funds on hand. Nevertheless, many people look forward to
receiving their tax refunds in order to be able to meet other important

Under a single payer system, there is no premium to be paid and thus no
need for subsidies based on income. It is much simpler and even more
equitable to fund the entire system through progressive taxes.

Monday, February 23, 2015

Government endorses Medicare Advantage upcoding fraud

Modern Healthcare
February 20, 2015
CMS pitches 1.1% boost to Medicare Advantage payments
By Bob Herman

The CMS has proposed increasing health insurers' Medicare Advantage
payment rates by 1.05% for 2016, a move that kicks off a 45-day dogfight
in Washington before the rates are cemented.

The base rate was an 0.95% average decrease, but "when combined with
expected growth in plan risk scores due to coding," Advantage plans will
actually receive the 1.05% hike in revenue next year, according to a
release from the CMS posted late Friday afternoon. Risk scores relate to
how Medicare pays for the health status of beneficiaries. CMS pays more
for patients who have more health conditions and less for those who are

Like last year, Advantage plans that earn at least four stars out of
five will receive a 5% bonus payment in 2016, the CMS said. Any plans
with 3.5 stars or fewer will continue to get no additional payments.

Breaking from proposals in the previous two years, the CMS said it will
not propose any adjustments to the use of home visits for patient risk
assessments. Many Advantage plans diagnose the severity of patients'
illnesses at home instead of in a physician's office. But this has
raised concerns that many plans are falsely inflating the diagnoses in a
bid to warrant higher payments for sicker members, a process called

Medicare Advantage's risk-assessment process has been under fire from
policymakers and consumer advocates who argue private insurers are
purposefully bilking money from the program, which covers 17.3 million
people as of this month. The Medicare Payment Advisory Commission has
said the risk scores of Advantage patients have grown more rapidly than
those of regular fee-for-service beneficiaries, and the current
risk-score payment reductions mandated by the Affordable Care Act may
not be enough.

Humana, one of the largest Advantage insurers in the country, disclosed
this week that it is facing increased scrutiny from the U.S. Justice
Department for its risk-adjustment practices.

Health insurers have already begun their Medicare Advantage lobbying
campaign in the hope of extracting higher rates come April. The
Coalition for Medicare Choices, part of America's Health Insurance
Plans, has aired several ads featuring seniors advocating for the
private plans.

Many members of Congress have also weighed in on the process. A
bipartisan group of 53 senators, led by Chuck Schumer (D-N.Y.) and Mike
Crapo (R-Idaho), sent their own letter to Tavenner this week urging the
agency to "minimize disruptions for beneficiaries enrolled in the MA
program by maintaining payment levels and providing a stable policy
environment for 2016."

The health insurance industry also happens to be one of the top
financial backers of Schumer and Crapo. Since 2009, health insurers have
given more than $493,000 to Schumer's campaigns and more than $234,000
to Crapo's, according to


CMS Press Release
February 20, 2015
CMS proposes 2016 payment and policy updates for Medicare Health and
Drug Plans

The Centers for Medicare and Medicaid Services (CMS) today released
proposed changes for the coming year for the Medicare Advantage (MA) and
Part D Prescription Drug Programs that will advance Health and Human
Services Secretary Sylvia M. Burwell's vision of building a better,
smarter health care system and moving the Medicare program, and the
health care system at large, toward paying providers based on the
quality, rather than the quantity of care they give patients.

The proposed changes reflect the commitment to a Medicare program that
delivers better care, spends health care dollars more wisely and results
in healthier people.


February 20, 2015
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan
Sponsors, and Other Interested Parties
SUBJECT: Advance Notice of Methodological Changes for Calendar Year (CY)
2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D
Payment Policies and 2016 Call Letter

Section H. Medicare Advantage Coding Pattern Adjustment

Below we offer three analyses that strongly suggest that the health
status of MA enrollees is no worse, and more likely is better, than the
health status of FFS beneficiaries of similar age, gender, Medicaid, and
institutional status. These include analyses of self-reported health
status and mortality rates, as well as Part D drug information.

Self-Reported Health Status. Analysis of self-reported data on health
status and on whether the respondent has ever been diagnosed with one of
a variety of conditions from the 2006-2011 Medicare Current Beneficiary
Survey (MCBS) suggests that the average risk for MA enrollees is
approximately 96% of the average risk for FFS beneficiaries.

Mortality Rates. Mortality rates for MA beneficiaries are significantly
lower than mortality rates for FFS enrollees. For example, in 2012, the
mortality rate in MA was 81% of the mortality rate in FFS. (It is
possible that lower mortality rates result from better quality of care
in MA, but it seems more likely, given the size of the difference, that
this reflects, at least in part, relative health status.)

Part D Drug Information. MA enrollees are significantly less likely than
FFS beneficiaries to be prescribed drugs that are predictive of high
expenditures. HHS has used information from Part D data to construct
risk scores for MA and FFS enrollees, and has found that MA enrollees
are at significantly lower risk than demographically similar FFS

Of the three sources of information that are independent of the
diagnoses reported by MA plans, each suggests that MA enrollees are at
similar or lower risk than demographically similar FFS beneficiaries.

CMS Advance Notice (172 pages):


Letter from U.S. Senate members to Marilyn Tavenner, CMS Administrator:


The Coalition for Medicare Choices - 1.8 million voices protecting
Medicare Advantage

The Coalition for Medicare Choices
601 Pennsylvania Avenue, Suite 500
Washington, DC 20004


America's Health Insurance Plans (AHIP)

America's Health Insurance Plans
601 Pennsylvania Avenue, NW, Suite 500
Washington, DC 20004


Comment by Don McCanne

The 2016 base rate for private Medicare Advantage (MA) plan payments was
to have decreased by 0.95%, phasing in a correction of the overpayments
that have been made to the MA plans. Instead, CMS will increase the
payment rates by 1.05%, a full 2.0% increase over the projected base
rate. This is the fourth year in a row that CMS has violated the intent
of ACA and other legislation to bring MA rates down to the equivalent of
payments made in the traditional fee-for-service Medicare program.

CMS's Advance Notice provides three sources of evidence demonstrating
that the MA patients are a healthier subset of patients than those in
the traditional Medicare program. Since this results in adverse
selection in the traditional Medicare program, the rates paid to MA
plans should be even lower than payments made in the traditional
program, not higher.

The record is now clear that the MA plans have been using various
methods of upcoding the severity of illness of their customers (known to
us as patients) thus qualifying for higher risk adjustment payments. One
of the latest schemes is to make home visits, not to provide more care
but merely to try to find more diagnoses to be used in inflating risk
adjustments - diagnoses that do not appear in the billing documents from
physicians and hospitals! Although this abuse is widely recognized, CMS
said "it will not propose any adjustments to the use of home visits for
patient risk assessments." This is at a time that the Justice Department
has increased its scrutiny of these likely criminal acts.

As if we didn't have enough reason to be disgusted with our government,
over 50 Senators have sent a letter to CMS Administrator Marilyn
Tavenner requesting preservation of the overpayments made to the MA
plans. The rhetoric of the letter is clearly that of America's Health
Insurance Plans (AHIP) - the lobby organization for the health insurance
industry. To no surprise the lead signers of the letter, Senators Mike
Crapo and Charles Schumer, between them have received from the insurance
industry close to three-quarters of a million dollars.

The Coalition for Medicare Choices has already begun its intense
campaign to drum up public support for MA overpayments, of course
disguised as protecting Medicare. It surely surprises no one that this
organization is headquartered not only in the same building as AHIP, but
it even shares the same suite.

Perhaps even more ominous is the statement in the CMS press release that
states that the proposed changes "will advance Health and Human Services
Secretary Sylvia M. Burwell's vision of building a better, smarter
health care system and moving the Medicare program, and the health care
system at large, toward paying providers based on the quality, rather
than the quantity of care they give patients." And the the Senators'
letter that states, "At the time of broad agreement on the need to shift
U.S. health care to focus on care coordination, quality, and value-based
payments, it would be counterproductive to jeopardize a program that is
already driven by and aligned toward those goals." This political
support of MA plans clearly advances the agenda of privatizing Medicare
- only one step away from converting to a defined contribution premium
support (voucher) program - the dream of the private insurance industry.

So who is paying the higher costs of these private MA plans? We, the
taxpayers, and the beneficiaries in the traditional Medicare program who
are paying higher Part B premiums to help fund this gift to the private

If there were even a thread of moral fiber left in D.C., instead of
shamelessly supporting overpayments to the private insurance industry,
our representatives would be advocating for using those funds to improve
benefits for all Medicare beneficiaries. Under that scenario, the
private insurers who are keeping three-fourths of the overpayments,
would be dismissed. But then Crapo and Schumer would likely decide that
three-quarters of a million dollars is too dear of a price to pay for a
strand of moral fiber.

Friday, February 20, 2015

Why high-risk pools won’t work

The Commonwealth Fund
February 13, 2015
Why High Risk Pools (Still) Won't Work
By Jean P. Hall

As the new Congress convenes and the Supreme Court prepares to hear
arguments in the King v. Burwell case challenging tax subsidies for
insurance purchased through the federally facilitated marketplaces,
proposals to repeal and replace the Affordable Care Act (ACA) are
resurfacing. Many of these rely on high-risk health insurance pools to
cover people with preexisting health conditions.

In fact, the risk pools are suggested as a viable alternative to the
ACA's ban on preexisting condition exclusions in the individual market
and the marketplaces. My recent analysis of high-risk pools, however,
explains why these entities simply are not a realistic alternative to
coverage requirements under the ACA. In a nutshell, high-risk pools:

1. are prohibitively expensive to administer,

2. are prohibitively expensive for consumers to purchase, and

3. offer much less than optimal coverage, often with annual and lifetime
limits, coverage gaps, and very high premiums and deductibles.

Recent proposals to replace ACA reforms with high-risk pools focus on
using state-based programs, but historical experience with 35
state-based high-risk pools and more recent experience with the national
Pre-Existing Condition Insurance Plan (PCIP) illustrate the problems
with this approach. Even though state-based high-risk pools charged
premiums of up to 250 percent of those charged to healthy beneficiaries
in the individual insurance market, premium revenues paid just 53
percent, on average, of program costs. In addition to these high
premiums, enrollees in state-based high-risk pools faced annual
deductibles as high as $25,000 and annual coverage limits as low as
$75,000. Past research indicated that high costs and limited benefits
associated with high-risk pool coverage resulted in delayed or forgone
care and adverse outcomes for enrollees. Many also accrued medical debt
despite having insurance.

For these reasons, use of high-risk pools in lieu of marketplace and
Medicaid expansion coverage would result in greater state and federal
costs, fewer people with preexisting conditions able to obtain coverage,
and coverage that fails to meet the often greater needs of people with
chronic conditions.

Brief: Why a National High-Risk Insurance Pool Is Not a Workable
Alternative to the Marketplace


Comment by Don McCanne

Those who wish to repeal or at least drastically reduce the provisions
of the Affordable Care Act realize that they must come up with a

Most of the proposals would grant much greater flexibility to insurance
products while reducing regulatory oversight. The problem that creates
is that individuals with high medical expenses tend to be shut out of
the insurance market. To ensure coverage for these individuals,
high-risk insurance pools have been proposed.

This article and the brief that it is based on explain why high-risk
pools are not a satisfactory solution. The premiums are unaffordable,
and the pared-down benefits are unsatisfactory. These over-priced plans
do not provide the financial protection that patients with chronic
disorders need.

Even with the Affordable Care Act, enrollment in the temporary high-risk
pools had to be closed early because they proved to be too expensive,
threatening depletion of the allotted funds. They provide poor coverage
at a very high cost.

With a single payer system this problem disappears. Funding is based on
ability to pay, through the tax system, and not on the basis of
anticipated medical expenses. Everyone receives the care they need,
regardless of their health status. The fragmented plans supported by the
repeal and replace people cannot do that.

Thursday, February 19, 2015

Student activism for single payer

Physicians for a National Health Program (PNHP)

Report Back from the 4th Annual Students for a National Health Program
(SNaHP) Summit

The 4th annual SNaHP summit took place on Saturday, February 14, 2015,
on the medical campus of the University of Illinois-Chicago. More than
170 medical and health professional students from over 50 schools
gathered to discuss single payer, develop their activism and advocacy
skills, and create a national strategy for achieving Medicare for All.
There were students from states that had never been represented before
including, among others, Alabama, Florida, Tennessee, and North
Carolina. The fact that so many students, more than double the number
that attended the prior year, flocked to Chicago on Valentine's Day is a
testament to the growing commitment of health professional students to
achieving equitable and universal access to health care. Click on the
link below to view presentations and photos from the conference.


Guest Comment:

By Scott Goldberg, MS3

I had the honor of delivering the opening address – entitled "Where
We've Been and Why We'll Win – at the 4th annual SNaHP summit. The talk
focused on the century-long struggle for national health insurance, what
we can learn from these efforts, and why students are well-positioned to
spark a broad, social movement for single payer. Here is an excerpt from
the speech:

"Now, I'm not disillusioned by the 100-plus year history of failing to
achieve national health insurance. In fact, there are important lessons
that can inform our efforts and that give me hope that we will be
successful where those before us were not.
First, the AMA has opposed single payer since 1917. But while the AMA
could honestly say it represented the voice of doctors, it no longer
can. Only about 20 percent of physicians are members. This provides an
opening, for another physician organization to step into the void that
speaks on behalf of what is just and right for patients. You may see
where I'm going with this – but this is where Physicians for a National
Health Program comes in. PNHP is the only physician organization
dedicated to the sole purpose of transforming American health care by
passing NHI. And the organization can only grow. If there are 800,000
active doctors in this country, then about 2.5% of them are members of
PNHP. This means we, as students and future doctors, have a lot of work
to do to get our colleagues to sign up. We should be doing this on a
daily basis. Think about all the time you spend with fellow students,
residents and even attendings. Think about how many times the issue of
insurance comes up and you want to scream out: "If we had single payer,
this would not be an issue!" Now, every time that thought comes to mind,
do something about it. Mention single payer and encourage those around
you to sign up for PNHP. These conversations are not, at the core,
political. They are essential to the foundations of our profession, and
we must normalize them. I want you to recruit at least one new colleague
to PNHP each month. It's a modest ask, but if everyone here does it
we'll have nearly 2,000 new members in a year. Then, we can start to
envision a future where PNHP will usurp the AMA as the organization that
speaks on behalf of doctors.

While the AMA might have been a major barrier to NHI in the 20th
century, our biggest barriers now are private health insurance companies
and Big Pharma. You all know that we are facing one of the most
well-financed and formidable opponents in American history. Both have
fought tooth and nail against single payer with their army of lobbyists
and have contributed heavily to candidates for public office to protect
their position and maximize their profits. It is no secret that they
spent $173 million to defeat the public option, which amounted to about
a million dollars a day during the debate over health reform. So when we
talk about single payer, we must talk about the massive profits reaped
at the expense of patient care. The neoliberal corporate agenda has
infiltrated health care and we must vigilantly fight back against the
idea that health care is a commodity and, instead, declare that health
care is a public good that all Americans, regardless of race or class,
should have access to.

But I am not discouraged by our well-resourced foes for three reasons.
One, their arsenal of smear tactics is dwindling. The fear of
"socialized medicine" is waning. Communism coming to America is an
outdated notion. Two, these companies are universally despised. A recent
poll demonstrated that almost all Americans believe that private
insurance companies are the biggest problem in our system. So there's
our message right there – we must get rid of private insurance companies
to have real health reform. Three, ultimately, the system cannot
function without us. If we remain silent, we will only allow these
companies to continue to reap massive benefits at the expense of our
patients and our professional code of ethics. If we, as health care
providers, are united in opposition, we will not be defeated.

You may believe that after 100 years of struggle we will never achieve
single payer. But let me tell you why we will win and what we have to do
to get there.

I want you to look around you. Our movement is growing exponentially.
There are now 35 student PNHP chapters, with 10 new ones in the last
year alone. There are 19,602 PNHP members, 731 of whom are students. The
second SNaHP summit had 40 students, the third had 80, and the fourth
has 160. I emphasize this growth because, historically, students have
been the stimulus and source for broader activism. Just recently in
Chile, following three years of nationwide student protests, the country
will make college tuition-free and are paying for it with a 27% tax on
corporations. Look at the civil rights movement in the US. It was the
Student Nonviolent Coordinating Committee (SNCC) that spearheaded the
civil rights movement. The Freedom Riders, not all, but the majority
were young people and students. Over time, it grew and became a mass
popular movement and achieved historic things. We don't know the names
of the leaders of SNCC, but that is the point with movements. We know
the name of Martin Luther King Jr, but who do you think organized the
marches, the talks, the sit-ins? Members of SNCC did. They did the heavy
lifting of organizing, going door to door, and putting their lives on
the line. Our movement does not need a figurehead. It needs unified
direct action.

As Noam Chomsky has said: 'Direct action carries the message forward in
a very dramatic fashion. Direct action means putting yourself on the
line. It indicates a depth of commitment and clarification of the
issues, which often stirs other people to do something.' Achieving
single payer will require resistance and civil disobedience. All the
great movements in history have. Look again at the civil rights
movement. Institutional segregation had been going on for hundreds of
years, but what sparked the movement? A couple of incidents of direct
action. Rosa Parks insisting on sitting in the front of the bus. Black
students sitting at a lunch counter in Greensboro. Without these
actions, the movement would probably never have happened. You can make
as many speeches as you like but they will never have the effect of
those actions. And while the movement started with students, it became
broad-based and diverse. Just like the movement for single payer, we
must reach out to and build ties with labor unions (over 600 have
already endorsed HR 676), civic and faith-based movements, and even
small businesses. While businesses may seem like natural allies of the
private insurance companies, many of them feel the strain of paying to
insure their employees and would clearly benefit from government-run
health insurance.

In closing, Americans are literally dying for equitable, universal
health care access. And so I know that deep down you feel, as I do, that
the time has come for direct action. The question is – when do we get
started? Here's one idea – Medicare's 50th birthday is coming up and a
nationwide coordinated action would be a powerful first step.

When I talk to people about single payer, I often hear: "Oh yeah, I
support single payer but it will never happen in this country." I tell
them that people once thought the abolition of slavery and women's
suffrage could never be won – that these were "unrealistic" dreams. And
yet both of these "unrealistic" dreams were ultimately won. While
moderates were advocating for incremental change, the activists pushed
for revolutionary change and were successful. What seemed impossible
yesterday is something we accept as a given today. So next time someone
says single payer will never happen, tell them this: "If you believe it
won't happen, it never will. But if you believe that the only way it
will happen is to actually do something about it, then I am sure you
will make the only choice that a moral and principled person would, and
that is to join me in this struggle."

Thank you."

(Scott Goldberg is a medical student at the University of Chicago
Pritzker School of Medicine and a member of the board of directors of
Physicians for a National Health Program.)

Wednesday, February 18, 2015

Cost of PCSK9 Inhibitors, and the president’s Precision Medicine Initiative

Health Affairs Blog
February 17, 2015
In The Debate About Cost And Efficacy, PCSK9 Inhibitors May Be The
Biggest Challenge Yet
By William Shrank, Alan Lotvin, Surya Singh, and Troyen Brennan

Health care reform is intended to lower costs, but they are still
rising, albeit less steeply than in the past. Moderation is not however
the case in the area of specialty pharmacy. The medications to treat
Hepatitis C are the most cited examples of a general inflationary trend,
but the pipeline of expensive medications is extensive.

Yet, policymakers and payers appear unwilling to undertake significant
cost controls on medication pricing. Indeed the controversy over the
$84,000 price tag for Sovaldi (sofosbuvir) has largely faded, suggesting
a certain resiliency in our system's ability to absorb costs.

We believe that resiliency is about to be challenged in a manner unlike
we have seen in the past, at least in the area of pharmaceuticals. A
number of pharmaceutical manufacturers are developing a new class of
medication to manage high cholesterol — the PCSK9 (proprotein convertase
subtilisin/kexin 9) enzyme inhibitors.

The PCSK9 inhibitors will be specialty medications and likely priced as
such. While we will not know exact pricing until the first generation of
these medications is approved for use by the Food and Drug
Administration sometime in mid-2015, estimates of annual pricing for
these injectable drugs are in the range of $7,000 – $12,000. Given the
number of people potentially eligible for treatment with the PCSK9
inhibitors will number in the millions, the potential overall
expenditures by payers are huge.

As this is chronic therapy, PCSK9 sales could be expected to persist and
grow over time, and will likely be the highest selling class of
medications in history. Plus, as a biologic agent, there will not be a
simple pathway to cheaper generics in a 10-15 year timeframe. Even in a
system that costs $4 trillion per year, a single therapy adding $100-200
billion in costs annually is extraordinary.

Managed pharmacy care, indeed the health care system, has never seen a
challenge like this to our resilience in absorbing costs. Payors, the
employers, and health insurers, will first be shocked, then expect
action. Action will take the form of compliance with clinical
guidelines, and careful managed care oversight.

But in addition, perhaps the costs of PCSK9 inhibitors will push us to
develop some consensus about the pricing of new specialty medications,
as part of a more thoughtful discussion about the use of scarce
resources on behalf of patients.

(The authors are from CVS Caremark and CVS Health.)


The White House
January 30, 2015
President Obama's Precision Medicine Initiative

Building on President Obama's announcement in his State of the Union
Address, today the Administration is unveiling details about the
Precision Medicine Initiative, a bold new research effort to
revolutionize how we improve health and treat disease. Launched with a
$215 million investment in the President's 2016 Budget, the Precision
Medicine Initiative will pioneer a new model of patient-powered research
that promises to accelerate biomedical discoveries and provide
clinicians with new tools, knowledge, and therapies to select which
treatments will work best for which patients.

Public-private partnerships:

The Obama Administration will forge strong partnerships with existing
research cohorts, patient groups, and the private sector to develop the
infrastructure that will be needed to expand cancer genomics, and to
launch a voluntary million-person cohort. The Administration will call
on academic medical centers, researchers, foundations, privacy experts,
medical ethicists, and medical product innovators to lay the foundation
for this effort, including developing new approaches to patient
participation and empowerment.


Comment by Don McCanne

In the United States, innovation and research in health care have been
well rewarded… too well rewarded. The hepatitis C drugs, and now the
PCSK9 inhibitors for high cholesterol are cases in point.

Our obsession with letting the market perform its miracles has led to a
culture in which we accept and even expect the medical entrepreneurs to
be rewarded with the maximum prices that the market will bear. In fact,
prices have been pushed up well beyond what any normal functioning
market would bear simply because the new products are able to bury their
prices in the risk pools established by the private insurers and the
pharmacy benefit managers.

Prices are so outrageous that now even the pharmacy benefit managers are
complaining, as in the article by Shrank, et al. It is interesting that
they suggest, as a solution, "careful managed care oversight." Yet it is
the intermediary "care managers" that have permitted this outrage.
Besides, the private insurers are using these high prices to their
advantage by placing these drugs in tiers that shift much of the costs
to patients, thereby chasing away patients that would have higher health
care costs.

President Obama's Precision Medicine Initiative, as proposed, should
have us all concerned. He calls for public-private partnerships that
include medical product innovators. You can be assured that these
biomedical innovators have already plotted to share in this lucrative
market, knowing that their products will be introduced with prices in
the stratosphere after they complete the nuisance stage of developing
the products for the market.

The government already plays a role in taxpayer financed research. The
public has a vested interest in these products and the government should
be protecting our interest. When markets go awry it is the government
that has the responsibility to step in and right the wrongs. Since the
private insurers and pharmacy benefit managers have served us so poorly,
we should replace them with our own public program - a single payer
national health program. That would end our culture of developing new
products that have outrageously high prices built in as an essential

Tuesday, February 17, 2015

Bloomberg editors question out-of-pocket costs

Bloomberg View
February 16, 2015
Out of Pocket, Out of Control
By The Editors

Obamacare's goal to expand access to health care has been only half a
success: More Americans have insurance, but a rise in cost sharing means
fewer can use it. Copayments -- those predetermined charges you pay at
the doctor's office -- are a big part of the problem. In recent years,
they've risen to the point where they no longer work as they're meant to.

In theory, charging moderate fees to see a doctor or get a procedure
gives people an incentive to consider whether they really need it. Done
carefully, copays can thus reduce unnecessary spending, benefiting everyone.

That means the charges have to be just large enough to influence
people's decisions, and not so big as to keep people from getting the
care they need. Yet copays have been going up significantly. In the past
five years, the average price to see a primary care doctor has risen 20
percent. For a specialist it's gone up 29 percent, and for outpatient
surgery it's up 43 percent. And that's just for employer-sponsored
insurance; on average, those covered through the Affordable Care Act's
exchanges face even higher expenses.

No wonder 22 percent of people now say the cost of getting care has led
them to delay treatment for a serious condition. That's the highest
percentage since Gallup started asking in 2001. Another poll found that
as many as 16 million adults with chronic conditions have avoided the
doctor because of out-of-pocket costs.

The wisdom of copayments also relies on the notion that consumers
understand the incentives the payments are supposed to impose. Yet
almost two-thirds of Americans don't know what costs they face for using
an emergency room or a walk-in clinic, a recent survey found.

When copayments grow too big and confusing to be effective cost
controls, they merely shift an ever-greater share of insurance costs
away from premiums. And this undermines the basic purpose of insurance,
which is to spread the risk of unforeseen costs across populations and
over time -- among not just the minority who need care, but also
everyone covered by the plan. Unlike premiums, out-of-pocket payments
concentrate spending on the few who get sick.

Canada has disposed of almost all out-of-pocket costs for doctor and
hospital services since 1984 -- and still spends half as much per person
on health care as the U.S. does. While Canadians are more likely to see
a doctor in any given year, they're less likely than Americans to wind
up in the hospital.

Rather than ban copayments entirely, however, the U.S. could make better
use of their ability to steer people away from high-cost, low-value care.

The government should also look at extending copay subsidies to
lower-income beneficiaries on employer plans and lowering the cap on
out-of-pocket costs.


Comment by Don McCanne

It is reassuring when we see representatives of the business community
shining light on the deficiencies in our system of health care
financing. In this article, the editors of Bloomberg View explain that
higher out-of-pocket spending shifts costs away from premiums, which are
designed to spread the risk, and instead concentrates spending on those
who get sick. As they state, this undermines the basic purpose of insurance.

As they explain. "Canada has disposed of almost all out-of-pocket costs
for doctor and hospital services since 1984 -- and still spends half as
much per person on health care as the U.S. does."

However, the Bloomberg editors, like most of the policy community, as a
principle of faith insist that we must still have modest copayments as
an incentive to deter low-value care. As if the administrative waste of
managing deductibles, copayments, and coinsurance were not already
enough, they would add further to these administrative excesses by
applying income-indexed subsidies to the copayments of
employer-sponsored plans, just as has been done with the ACA exchange plans.

Canada has shown us that the policies inherent in their single payer
system are far more effective in controlling excess spending than are
our feeble, market-based policies such as cost sharing. The differences
in the health spending trajectories of the two nations are proof enough;
Canada has bent the cost curve and we have not. Cost sharing has hardly
had even a negligible impact in our total spending.

We do know that cost sharing can impair access to necessary care and
create financial hardships for some. Since it hasn't controlled costs
and single payer would, we should make the change to a single payer
national health program with first dollar coverage. That would pool
risks and improve access without creating burdens for anyone, except
maybe a transitional burden for those in the insurance industry who
would have to find more gainful employment.

Monday, February 16, 2015

Important resource: “A Five-Year Assessment of the Affordable Care Act”

International Journal of Health Services
Published online before print February 10, 2015
A Five-Year Assessment of the Affordable Care Act
By John P. Geyman


The Affordable Care Act (ACA) was enacted in 2010 as the signature
domestic achievement of the Obama presidency. It was intended to contain
costs and achieve near-universal access to affordable health care of
improved quality. Now, five years later, it is time to assess its track
record. This article compares the goals and claims of the ACA with its
actual experience in the areas of access, costs, affordability, and
quality of care. Based on the evidence, one has to conclude that
containment of health care costs is nowhere in sight, that more than 37
million Americans will still be uninsured when the ACA is fully
implemented in 2019, that many more millions will be underinsured, and
that profiteering will still dominate the culture of U.S. health care.
More fundamental reform will be needed. The country still needs to
confront the challenge that our for-profit health insurance industry,
together with enormous bureaucratic waste and widespread investor
ownership throughout our market-based system, are themselves barriers to
health care reform. Here we consider the lessons we can take away from
the ACA's first five years and lay out the economic, social/political,
and moral arguments for replacing it with single-payer national health


Will the ACA be different, and if so, in what ways? And if it won't
work, what next? These are the questions we will deal with in this
article, drawing from my just-published book, How Obamacare Is
Unsustainable: Why We Need a Single Payer Solution for All Americans.
The goals of this article are three-fold: (a) to compare the goals and
claims for the ACA with its actual experience in the areas of access,
costs, affordability, and quality of U.S. health care; (b) to summarize
lessons we can already take away from its first five years; and (c) to
briefly consider economic, social/political, and moral arguments for
replacing the ACA with NHI.

Full Text (PDF - 17 pages):


Comment by Don McCanne

In this paper, John Geyman summarizes the content of his important new
book, "How Obamacare Is Unsustainable: Why We Need a Single Payer
Solution for All Americans." It is already clear that the Affordable
Care Act has not and will not provide adequate repairs to our fragmented
and dysfunctional health care system. Rather than inflicting more
suffering by continuing this flawed experiment in health policy, we
should immediately begin the transition to a system that will work - a
single payer national health program.

Both this IJHS article and his book serve as important resources in
educating the nation on why this transition should be initiated as soon
as possible. They should be distributed widely.

The book is available through the PNHP website at this link:

Thursday, February 12, 2015

Exchange plans increasingly use abusive drug tier design

February 11, 2015
Exchange Benefit Designs Increasingly Place All Medications for Some
Conditions on Specialty Drug Tier
By Caroline F. Pearson

New analysis from Avalere Health finds that some exchange plans place
all drugs used to treat complex diseases – such as HIV, cancer, and
multiple sclerosis – on the highest drug formulary cost-sharing tier.

"Plans continue to innovate on benefit design in the exchange markets,"
said Dan Mendelson, CEO of Avalere. "These designs are calibrated to
optimize enrollment by delivering low and stable premiums – the primary
metric that consumers use to select a plan."

Specifically, in five of the 20 classes of drugs analyzed, plans placed
all drugs in a class on the specialty tier. Specifically, in the
Protease Inhibitor and Multiple Sclerosis Agents classes, 29 and 51
percent of plans respectively place all drugs, including available
generics, on the highest tier.

Moreover, a subset of plans in each of 10 drug classes1 placed all
single-source branded drugs in a class on a specialty tier.
Specifically, in 8 of the 10 classes, 2015 exchange plans were more
likely than 2014 plans to assign all single-source branded drugs to the
highest cost sharing tier. A single-source branded medication is a brand
name drug without a generic equivalent. The practice was most common for
some cancer drugs and drugs used to treat multiple sclerosis. Roughly 30
percent of plans also place all single-source drugs for HIV/AIDS on the
specialty tier.

"Enrolling in a plan that places all medications for a particular
disease on the specialty tier can mean significant out-of-pocket costs
for consumers, particularly if they do not qualify for cost sharing
reductions," said Caroline Pearson, Vice President at Avalere.


Comment by Don McCanne

Some plans in the insurance exchanges are placing all drugs used to
treat complex diseases, such as HIV, cancer, and multiple sclerosis, on
the highest drug formulary cost-sharing tier. We have covered this
terribly abusive process before, but this update shows that they are
"increasingly" placing all medications for expensive conditions into
specialty drug tiers. In spite of the pushback, it's getting worse, not

The reasons are obvious. Higher patient cost sharing reduces the
insurer's portion of the payment for the drugs. Higher cost sharing
increases the probability that patients will not fill their
prescriptions due to the cost, saving the insurer even more money. Most
importantly, placing all drugs for an expensive chronic disorder in the
highest tier greatly increases the probability that the insurer will not
have to cover these high cost patients as they much more likely will
obtain their insurance from a competitor.

What then will the competitor do? It's obvious. They will also move
these drugs to the highest tier. That is the nature of business
competition. When we rely on private insurance plans to cover health
care, we should expect that those plans will always follow an optimal
business model.

This devious policy is great for insurers' businesses, but it is
terrible for patients. Health care reform should have been all about the
patient. We can still make it so by firing the private insurers and
placing our own public insurer in charge through an improved Medicare
that covers everyone.

Wednesday, February 11, 2015

Consumer-directed health plans reduce utilization of essential drugs

National Bureau of Economic Research
NBER Working Paper No. 20927
February 2015
Patient Responses to Incentives in Consumer-Directed Health Plans:
Evidence from Pharmaceuticals
By Peter J. Huckfeldt, Amelia Haviland Ateev, Mehrotra Zachary Wagner,
and Neeraj Sood


Prior studies suggest that consumer-directed health plans (CDHPs) -
characterized by high deductibles and health care accounts - reduce
health costs, but there is concern that enrollees indiscriminately
reduce use of low-value services (e.g., unnecessary emergency department
use) and high-value services (e.g., preventive care). We investigate how
CDHP enrollees change use of pharmaceuticals for chronic diseases. We
compare two large firms where nearly all employees were switched to
CDHPs to firms with conventional health insurance plans. In the first
firm's CDHP, pharmaceuticals were subject to the deductible, while in
the second firm pharmaceuticals were exempt. Employees in the first firm
shifted the timing of drug purchases to periods with lower cost sharing
and were more likely to use lower-cost drugs, but the largest effect of
the CDHP was to reduce utilization. Employees in the second firm also
reduced utilization, but did not shift the timing or use of low cost drugs

From the Introduction

Overall, we find evidence that employees in the CDHP with
pharmaceuticals subject to the deductible use more low cost drugs and
shift the timing of drug purchases to periods with lower cost sharing.
The majority of the response, however, is to reduce overall drug
utilization. These results imply that enrollees possess some awareness
of benefit design and availability of low cost drugs, but also suggest
that enrollees either discount or are not cognizant of the adverse
consequences of poor adherence. Employees in the CDHP with
pharmaceuticals exempt from the deductible also exhibit decreased
utilization relative to firms with conventional coverage. The presence
of a utilization response may suggest a lack of understanding of plan
design or reflect secondary effects where increased cost sharing leads
to fewer physician visits where drugs are prescribed. The persistence of
the response into the second year of the plan (presumably a sufficient
time period for enrollees to understand plan design) may suggest this
response is due to cost sharing for physician visits.

From the Conclusion

We investigate the effects of CDHPs on use of pharmaceuticals that treat
and prevent chronic diseases including high cholesterol, hypertension,
and type 2 diabetes. We compare changes in utilization among employees
in two firms that shift all of their employees to CDHPs relative to
employees in firms that offered no CDHP; in one firm (CDHP firm 1)
pharmaceuticals are subject to the deductible and in the other
pharmaceuticals are exempt from the deductible (CDHP firm 2). We find
that enrollees in CDHP firm 1 change utilization of pharmaceuticals
along each hypothesized margin: enrollees shift the timing of purchase
to periods with lower cost sharing, increase the use of lower cost drugs
(but only when such drugs were equally or more effective), and reduce
overall pharmaceutical utilization. The majority of the response,
however, is focused on the reduction in overall utilization. In
addition, most of these effects persist into the second year of the
CDHP. In CDHP firm 2, we observe insignificant changes in utilization
for statins, but statically significant or marginally significant
reductions in utilization of antihypertensive drugs and diabetes drugs.
We observe no effect, however, on the percentage of days supply
purchased or used that were low cost. The utilization effects for CDHP
firm 2 are larger and statistically significant for all drug categories
in the second year of the CDHP. We interpret the persistence of these
effects, combined with the absence of a change in use of low cost drugs,
as suggestive evidence of a "gatekeeper" effect, where higher cost
sharing for physician visits result in reductions in pharmaceutical use.
Moreover, some of the reduction in utilization in CDHP firm 1 could also
be driven by a reduction in access to physician visits, a phenomenon
observed in the RAND Health Insurance Experiment (Leibowitz, Manning,
and Newhouse 1985).


Comment by Don McCanne

One of the most important changes taking place in the financing of
health care is the widespread adoption of high-deductible health plans,
not only with the plans offered in the ACA insurance exchanges, but also
with employer-sponsored health plans. When high-deductible plans are
combined with a personal health account (health reimbursement
arrangement or health savings account) then they are referred to as
consumer-directed health plans (CDHPs). This study further informs us on
the perverse consequences of this model of health care financing.

Three different paragraphs, each describing this study, were selected
for today's quote to help the reader get through the fog of this fairly
complex, technical study. Basically, patient utilization rates for drugs
in three chronic conditions (hypercholesterolemia, hypertension, and
Type 2 diabetes) were measured under three different scenarios: a large
employer with a CDHP in which pharmaceuticals applied to the deductible,
requiring full payment until the deductible was reached, a large
employer with a CDHP in which pharmaceuticals were exempt from the
deductibles, requiring only copayments, and a third group of 19 other
firms that offered only traditional coverage and no CDHP.

The primary finding was that patients in CDHP plans decreased
utilization of pharmaceuticals for these disorders compared to patients
in traditional health plans. This was true whether or not drug purchases
applied to the deductible. It is crucial to note that having a personal
health account from which funds could be drawn to pay for these drugs
did not prevent patients from decreasing utilization of these important

It is easy to understand why patients declined to purchase drugs for
which they had to pay the full cost, even though those drugs were
important in their medical management. We have innumerable studies that
show that patients will decline care that they should have when they are
faced with significant out-of-pocket expenses, demonstrating why
high-deductible plans are a such a perverse method of controlling health
care spending.

But why would patients with high-deductible plans reduce their use of
beneficial drugs if they were exempt from the deductible, requiring them
to pay only the copayments? One reason may be that the intrusions and
complexities of private insurer cost-shifting arrangements, such as
through CDHPs, may be training patients to decline care except in the
most dire of circumstances. Another reason may be that the physician
visit required to obtain the prescription must be paid in full until the
deductible is met, causing patients to drop off of their therapeutic
program. Again, the availability of an employer-funded health
reimbursement arrangement did not prevent patients from declining to
fill their prescriptions (although an empty personal health account is
not very helpful).

The bottom line is that too many patients are not receiving drugs and
other care that they should have merely because of the increasing
transition to CDHPs, with their high-deductible barriers to care. We
should abandon CHDPs and shift to first dollar coverage in a program
that controls spending through patient-friendly efficiencies - a single
payer national health program.

Monday, February 9, 2015

Elisabeth Rosenthal’s “Insured, but Not Covered”

The New York Times
February 7, 2015
Insured, but Not Covered
By Elisabeth Rosenthal

The Affordable Care Act has ushered in an era of complex new health
insurance products featuring legions of out-of-pocket coinsurance fees,
high deductibles and narrow provider networks. Though commercial
insurers had already begun to shift toward such policies, the health
care law gave them added legitimacy and has vastly accelerated the
trend, experts say.

The theory behind the policies is that patients should bear more
financial risk so they will be more conscious and cautious about health
care spending. But some experts say the new policies have also left many
Americans scrambling to track expenses from a multitude of sources —
such as separate deductibles for network and non-network care, or
payments for drugs on an insurer's ever-changing list of drugs that
require high co-pays or are not covered at all.

For some… narrow networks can necessitate footing bills privately. For
others, the constant changes in policy guidelines — annual shifts in
what's covered and what's not, monthly shifts in which doctors are in
and out of network — can produce surprise bills for services they
assumed would be covered. For still others, the new fees are so
confusing and unsupportable that they just avoid seeing doctors.

(B)y endorsing and expanding the complex new policies promoted by the
health care industry, the law may in some ways be undermining its
signature promise: health care that is accessible and affordable for all.

Readers Comments:

Don McCanne
San Juan Capistrano, CA

The private insurance industry will always place a priority on
optimizing its business model, which means maximizing revenues
(premiums) and minimizing expenses (payments for patient care). Earlier
managed care models proved unpopular because of denial of care, but now
they have devised innumerable methods of denying payment instead, in
full or in part. Many examples are found in this article.

In sharp contrast, an insurer owned by the public, such as Medicare, has
a mission of serving patients. That is, our own public stewards are
there to help us get the care we need. They are not there to try to
produce a profit for the government; after all, its our own tax dollars.

We are close to the threshold wherein the public will no longer tolerate
private insurers shifting ever more costs onto patients with health care
needs, while taking away our choice of our health care professionals.

What is our way out? Improve Medicare and expand it to include everyone.

Len Charlap
Princeton, NJ

Some conservative commenters have pointed to Switzerland as a country
which only uses private insurance companies and appears to have a system
that works.

1. The Swiss government writes a basic policy that all companies are
required to offer with no change. Thus all the chicanery reported in the
article is avoided. The policy is accepted by all doctors. People know
exactly what they are getting. Everyone must have the basic policy.

2. The private insurance companies may make no profit on the basic policy.

3. The health care results of Switzerland are about average among the 10
or 12 wealthiest countries which is to say they are considerable better
than we get.

4. If the cost of insurance is more than 8% of a family's income. they
receive a subsidy from the government. About 40% receive such subsidies.

5. We pay about 50% more for health care than the Swiss, but the Swiss
pay almost 50% more than the other wealthy countries most of which use a
variation of single payer.

6. The Swiss government and insurance companies pay careful attention to
the practices of its physicians wrt to poor practice, unnecessary tests,
and overcharges. A suspected doctor will receive a dreaded "blue letter"
from the insurance company requiring him to justify his practice.

If we can't have an efficient single payer system like the UK or Canada,
for example, I would settle for something like the Swiss system. It
would do away with most of the scams illustrated in Rosenthal's great

Don McCanne
San Juan Capistrano, CA 23

In Reply to Len Charlap

The Swiss health care system is certainly superior to what we have in
the United States, precisely because of the reasons cited by Dr.
Charlap. However, a comprehensive report by OECD and WHO of the Swiss
system was released in 2011, and, if you read it carefully, you will
also find these features of the Swiss system - features they share with us:

* Highly inefficient and fragmented
* Profound administrative waste
* Inequitably funded
* Regressive financing
* Wide variations in premiums
* Highest out-of-pocket costs
* Increasing managed care intrusions
* Insurers game the system

Because of the inadequacies of the Affordable Care Act we need to return
to the negotiating table to fix our health care system. But when we do,
let's not start from a position of compromise, thereby allowing private
insurers to continue to inflict these abuses on us. Let's begin with a
bona fide single payer system - an improved version of Medicare that
covers everyone.


Comment by Don McCanne

This may be the most important article in Elisabeth Rosenthal's
outstanding series on health care costs and pricing in the United
States. She shows that the Affordable Care Act failed to prevent private
insurers from reducing their own risks by shifting much more of the
costs onto patients, while reducing patient choice by further limiting
their networks of approved providers.

Both access and affordability are worse now than they were with typical
plans available a generation ago. The nation expanded the numbers
covered by insurance, but at a cost of of leaving too many patients
broke and without adequate access to care.

In my first posted response to her article, I repeated our oft-expressed
view that it makes a difference on whether we finance health care
through private insurers structured to optimize their business success
or though public insurance designed specifically to serve patients.
Elisabeth Rosenthal shows that what is good for insurers is bad for

Some may wonder why I included two responses on the Swiss health care
system when this article is on the poor quality of private health plans
in America.

First I want to say that Len Charlap is one of the more astute and
ethically-driven commentators in the readers' response sections of The
New York Times. His highly appropriate response to this article explains
that our private insurance products could be greatly improved if we
adopted the policies that the Swiss have in their country to regulate
and control the excesses of the private insurance industry. Such a
system theoretically would be more politically feasible in the United
States since it is supported by a few prominent conservatives such as
Harvard Professor Regina Herzlinger.

We definitely do need to return to the negotiating tables since the ACA
reforms are intolerably flawed. Although I certainly agree with Len
Charlap that the Swiss system definitely would be superior to what we
have, I do have a problem supporting a Swiss-style private insurance
model as our opening position on renegotiating reform. Imagine having to
compromise with those on the far right who would insist that patients
have greater financial exposure to the health care that they receive.
They would perpetuate and make even worse the very problems that
Elisabeth Rosenthal discusses in her article.

The reason that I am reposting our responses here is that Len Charlap's
comment received very high exposure since it was selected and displayed
as a "NYT Picks" and at the top of the list of "Readers' Picks." On the
other hand, my response to him was held until some time after the
comments section was closed, and then, when it was posted, it was buried
under 300 plus responses, and thus had virtually no visibility.

My response to him listed findings from a OECD/WHO report that revealed
that the Swiss private insurance plans, though certainly better than
ours, still had many serious deficiencies that we should reject as we go
back to the tables to fix our sick system. Many NYT readers may assume
from Len Charlap's comment that the Swiss system is the answer, or at
least a reasonable compromise with broad political support (except that
the current Republican proposals move even further away from the highly
regulated Swiss system).

So the point of discussing these comments on the Swiss system is found
in my concluding remark in my second post above:

"Because of the inadequacies of the Affordable Care Act we need to
return to the negotiating table to fix our health care system. But when
we do, let's not start from a position of compromise, thereby allowing
private insurers to continue to inflict these abuses on us. Let's begin
with a bona fide single payer system - an improved version of Medicare
that covers everyone."

Friday, February 6, 2015

Burr, Hatch, and Upton’s Obamacare Replacement Plan

Press Release from Senator Richard Burr (R-N.C.)
February 5, 2015
Burr, Hatch, Upton Unveil Obamacare Replacement Plan

Today, U.S. Senator Richard Burr (R-N.C.), Senate Finance Chairman Orrin
Hatch (R-Utah), and House Energy and Commerce Chairman Fred Upton
(R-Mich.) unveiled the Patient Choice, Affordability, Responsibility,
and Empowerment (CARE) Act — a legislative plan that repeals Obamacare
and replaces it with common-sense, patient-focused reforms that reduce
health care costs and increase access to affordable, high-quality care.
In contrast with Obamacare and its government-centered mandates and
regulations, this bicameral proposal empowers the American people to
make the best health care choices for themselves and their families.

The Patient CARE Act provides a legislative roadmap to repeal the
President's health care law known as Obamacare and replace the law with
common-sense measures that would:

Establish sustainable, patient-focused reforms:

* Adopt common-sense consumer protections;

* Create a new protection to help Americans with pre-existing conditions;

* Empower small businesses and individuals with purchasing power;

* Empower states with more tools to help provide coverage while
reducing costs; and

* Strengthen consumer directed health care and allow Americans to buy
coverage across state lines.

Modernize Medicaid to provide better coverage and care to patients:

* Transition to capped allotment to provide states with predictable
funding and flexibility.

Reduce defensive medicine and rein in frivolous lawsuits:

* Medical Malpractice reforms.

Increase health care price transparency to empower consumers and patients:

* Require basic health care transparency to inform and empower patients.

Reduce distortions in the tax code that drive up health care costs:

* Cap the exclusion of an employee's employer-provided health coverage.

Empower Small Businesses and Individuals with Purchasing Power:

* Targeted tax credit to help buy health care.

The Patient Choice, Affordability, Responsibility, and Empowerment
(Patient CARE) Act:


Comment by Don McCanne

The Affordable Care Act has fallen far short of the health care reform
that America desperately needs, and the Republicans have repeatedly
voted for its repeal. To supposedly show that they are sincere about
wanting to fix our health care system, they have introduced The Patient
Choice, Affordability, Responsibility, and Empowerment (Patient CARE)
Act - not formal legislation but rather a nine page white paper
(accessible at the link above).

Although some have labeled this the Republican response to the
Affordable Care Act, House speaker John Boehner has assembled another
task force to prepare what presumably will be a more formal response,
though likely only a more detailed version of this proposal.

When you read past the glowing rhetoric of this white paper, it becomes
obvious that this is merely a rehash of several of the policies that
Republicans have supported for the past few decades. They would remove
mandates for insurance coverage, open the markets to plans with grossly
inadequate, stripped-down benefits, sell insurance plans across state
borders in a race to the bottom, shift more of the responsibility of
paying for care to patients in need, expand the use of high deductible
health plans, expand the use of health savings accounts (which do not
work when they are empty), shift more of the responsibility of funding
care for the poor to the cash-strapped states through Medicaid block
grants, make comprehensive plans even less affordable by taxing them,
establish under-funded high-risk insurance pools that are too small to
meet the need, etc., etc.

These policies will leave more people uninsured, and the majority of
those with insurance will end up with lousy plans because they will not
be able to afford more comprehensive benefits. These plans will impair
access and expose patients to financial hardship and even personal
bankruptcy. With fewer funds directed to health care, our health
delivery infrastructure could deteriorate, negatively impacting care for
even the affluent.

However, the Republicans are doing us a favor. They are publicizing the
deficiencies of the flawed reform program brought to us by the
Democrats, and they are exposing their own flawed concepts of reform.
That provides us with an opportunity to reenter the national dialogue on
health care reform. Instead of continuing to rummage through bad
policies, we can inject into the debate single payer policies that are
truly effective. With the 2016 presidential political season already
underway, we need to be sure that voters understand that their health
care depends on the policies supported by the politicians they elect.

Yesterday's message was about John Geyman's book, "How Obamacare Is
Unsustainable: Why We Need a Single-Payer Solution for All Americans" -
a book written specifically for the purpose of ensuring that single
payer occupies a prominent position in today's political arena. For
those who missed it yesterday, the message can be accessed at this link:

Thursday, February 5, 2015

John Geyman's timely book on ACA and single payer

Copernicus Healthcare
January, 2015

How Obamacare Is Unsustainable:
Why We Need a Single-Payer Solution for All Americans
By John Geyman, M.D.

As we all know, the intense debate over Obamacare, or the Affordable
Care Act (ACA), is a polarizing issue that sharply divides political
parties and the public. Confusion reigns over its benefits, problems and
prospects as claims and counterclaims fill press and media coverage.

This book is an attempt to make sense out of all of this - to cut
through the rhetoric, disinformation and myths to assess what is good
and bad about the ACA, and to ask whether or not it can remedy our
system's four main problems - uncontrolled costs, unaffordability,
barriers to access, and mediocre, often poor quality of care.

In Part One, we will briefly trace historical roots of various reform
attempts over the years, and summarize some of the major trends that
have changed the delivery system, professional roles and values, the
ethics of health care, and the role of government vs. the private
sector. In Part Two, we will compare the ACA's promises with realities
of what it has accomplished, examine its initial outcomes on access,
cost containment, affordability and quality of care, ask whether its
flaws can be fixed with a private insurance industry, and point out the
lessons that we can already take away from the first five years of the
law. In Part Three, we will discuss the many myths that are perpetuated
by opponents of single-payer national health insurance (NHI) and show
how that approach stands ready to deal directly with what has become a
national disgrace - our increasingly fragmented and cruel health care
system that serves corporate interests at the expense of ordinary
Americans. We will make the case for NHI in three ways - economic,
social/political, and moral. Most other advanced countries around the
world came to this conclusion many years ago.

Why this book now? With the 2014 midterm elections behind us, divisions
between the parties are even more polarized. The future of health care
is even more uncertain. The 2016 election cycle is already underway, and
both parties have to confront the failures of yet another incremental
attempt to reform our so-called health care system. We have a short year
and a half to re-assess where we are and try once again to get health
care reform right. As much of the public knows all too well, the stakes
get higher every day.

"How Obamacare Is Unsustainable" can be purchased through PNHP for
$15.00, at the following link. It is also available through
and for $18.95.


Comment by Don McCanne

John Geyman has been a prolific writer of books describing the major
deficiencies in health care in the United States, but "How Obamacare Is
Unsustainable" is set apart from the others for a couple of important
reasons. He explains what has been wrong with our five year experiment
in reform and what we can do about it, and, especially pertinent, it is
timed to coincide with a moment in history in which there will be an
intense national dialogue recognizing the health care failures of the
past and present, with a demand for political solutions as we enter the
season of the 2016 presidential election.

Just today, Sen. Burr, Sen. Hatch and Rep. Upton released a nine page
report being characterized as the Republican response to Obamacare
(though Speaker Boehner has requested another, likely similar proposal
from a House team that includes Rep. Upton). Unfortunately, the
Burr/Hatch/Upton response is highly partisan and thus gets most of the
policy wrong. Although the Affordable Care Act was conceived as a
non-partisan solution, it too became partisan as the politics shifted
from a largely right-wing concept advanced by Democrats (non-partisan)
to an exclusively Democrat-endorsed proposal (highly partisan). In the
turmoil, the result ended up being the most expensive model of reform,
yet it contained terribly flawed policies that fall intolerably short of
universality, affordability, accessibility, efficiency and equity. Both
the Democrats and the Republicans are wrong.

As we enter the pending national dialogue on reform we need to move the
rhetoric from partisan sniping to informed discussions of policy. We
know where Congress lies in the highly-polarized partisan divide, but
what about the nation?

According to a January 2015 Gallup poll, 42% of voters are Independents,
29% are Republicans, and 28% are Democrats. Thus a plurality is

According to that same Gallup poll, 45% of Independents support getting
their insurance "through an expanded, universal form of Medicare." To no
surprise, 79% of Democrats also support universal Medicare, but, of
great importance, 23% of Republicans do as well. When people understand
policy, the partisan polarization diminishes.

At this time in history, it is imperative that all solutions be on the
table, including those that give up on comprehensive reform
(Burr/Hatch/Upton), those that perpetuate unacceptable mediocrity (the
Affordable Care Act), and those that would actually achieve the goals
that a large majority of Americans support (single payer, improved
Medicare for all).

This is why John Geyman's book is so timely. It is a book on optimal
policy. It can be contrasted with today's partisan release on the
Republican answer to Obamacare. Their nine page proposal can be accessed
at the following link:

Partisan politics has not served us well with the Democrats giving us
overpriced and mediocre reform and the Republicans proposing to further
expose patients to the perverse dysfunctions of the market. Maybe
Independents can help us stamp out partisanship and instead become
serious about doing what is right for the nation.

Right now we have a chance to change history. We should make widely
available John Geyman's book based on sound, effective policy - just
what the nation desperately needs.

Wednesday, February 4, 2015

Use H.R. 676 to unify the reform movement

Physicians for a National Health Program
February 4, 2015

Doctors group hails reintroduction of Medicare-for-all bill

Single-payer health program would cover all 42 million uninsured,
upgrade everyone's benefits and save $400 billion annually on
bureaucracy, physicians say

A national physicians group today hailed the reintroduction of a federal
bill that would upgrade the Medicare program and swiftly expand it to
cover the entire population.

The "Expanded and Improved Medicare for All Act," H.R. 676, introduced
last night by Rep. John Conyers Jr., D-Mich., with 44 other House
members, would replace today's welter of private health insurance
companies with a single, streamlined public agency that would pay all
medical claims, much like Medicare works for seniors today.

Proponents say a Medicare-for-all system, also known as a single-payer
system, would vastly simplify how the nation pays for care, improve
patient health, restore free choice of physician, eliminate copays and
deductibles, and yield substantial savings for individuals, families and
the national economy.

"The global evidence is very clear: single-payer financing systems are
the most equitable and cost-effective way to assure that everyone,
without exception, gets high-quality care," said Dr. Robert Zarr,
president of Physicians for a National Health Program, a nonprofit
research and educational group of 19,000 doctors nationwide.

"Medicare is a good model to build on, and what better way to observe
Medicare's 50th anniversary year than to improve and extend the program
and its benefits to people of all ages?"

Zarr, a Washington, D.C.-based pediatrician, continued: "An expanded and
improved Medicare-for-All program would assure truly universal coverage,
cover all necessary services, and knock down the growing financial
barriers to care – high premiums, co-pays, deductibles and coinsurance –
that our nation's patients and their families are increasingly running
up against, often with calamitous results.

"Such a plan would save over $400 billion a year currently wasted on
private-insurance-related bureaucracy, paperwork and marketing. That's
enough money to provide first-dollar coverage for everyone in the
country – without increasing U.S. health spending by a single penny.


114th Congress

H.R.676 - To provide for comprehensive health insurance coverage for all
United States residents, improved health care delivery, and for other

Introduced: 02/03/2015

Sponsor: Rep. Conyers, John, Jr. [D-MI-13] (Introduced 02/03/2015)

Cosponsors: 44

Committees: House - Energy and Commerce; Natural Resources; Ways and Means

Latest Action: 02/03/2015 Referred to the Committee on Energy and
Commerce, and in addition to the Committees on Ways and Means, and
Natural Resources, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned.


Comment by Don McCanne

Last night, Rep. John Conyers reintroduced in the 114th Congress H.R.
676, his single payer bill based on an expanded and improved Medicare
that would cover everyone. Although the implementation of the Affordable
Care Act has diverted attention from this model of reform that actually
would provide affordable care for everyone, nevertheless, its
reintroduction provides us with actual legislation that we can use in
our advocacy for a more efficient and effective health care program for
the nation.

Those who are attempting to establish state-level single payer systems
will find this legislation to be essential since it addresses the
federal barriers that prevent states from establishing a bona fide
single payer system. Vermont's experience showed us that they had to
abandon the single payer concept early on because of these barriers,
though they continue to try to move forward with incremental measures
that can never lead to single payer, that is without enabling federal

H.R. 676 should be used by all supporters of health care justice as an
advocacy piece to further educate the public at large on the clear moral
imperative of the single payer model. That includes those working on
state single payer systems and those busy helping to implement the
Affordable Care Act. No matter how busy you are, you still need to use
every opportunity to advocate for a system that takes care of the health
care needs of the entire nation. The Affordable Care Act does not do that.

H.R. 676 has been posted to the website (link above), and
within the next few days, the entire text of the bill will be added.
Right now you can see the list of the 44 cosponsors and then use that
list to encourage other members of Congress to become cosponsors as
well. The Republicans concur that the Affordable Care Act needs to be
replaced with a program that actually is affordable and portable. A
minority of Republican and Independent voters understand that an
improved Medicare for everyone would be an ideal solution. As we craft
our messages, we must keep Republicans and Independents in mind. We care
about their health as well.

At any rate, make H.R. 676 the central piece of your advocacy for health
care justice for all. The nation's health depends on it.

Tuesday, February 3, 2015

President Obama’s consumer-directed recommendations for Medicare

Office of Management and Budget
Fiscal Year 2016 Budget of the U.S. Government

Reducing Cost Growth by Encouraging Beneficiaries to Seek High-Value

The Budget includes structural changes that will encourage Medicare
beneficiaries to seek high-value health care services. To help improve
the financial stability of the Medicare program, the Budget reduces the
Federal subsidy of Medicare costs for those beneficiaries who need that
subsidy the least. The Budget includes several modifications for new
beneficiaries starting in 2019, such as a modified Part B deductible and
a modest copayment for certain home health episodes. Research indicates
that beneficiaries with Medigap plans that provide first, or
near-first-dollar coverage have less incentive to consider the costs of
health care services, thus raising Medicare costs and Part B premiums
for all beneficiaries. The Budget applies a premium surcharge for new
beneficiaries beginning in 2019 if they choose such Medigap coverage.
Together, these proposals would save approximately $84 billion over 10


Comment by Don McCanne

Using the rhetoric of encouraging Medicare beneficiaries "to seek
high-value health care services," President Obama is recommending in his
FY 2016 Budget the application of more consumer-directed, moral hazard
suppressing, skin-in-the-game measures that shift more costs away from
the government and onto Medicare beneficiaries. Although the recommended
measures are not dramatic, they are steps that move away from a position
of egalitarian social solidarity (a progressive view), and toward a
position of encouraging greater personal responsibility for health care
(a conservative view).

Thus, as negotiations begin on the federal budget, instead of taking a
position of strongly supporting beneficial progressive policies for
Medicare, President Obama has adopted policies supported by
conservatives as his opening position in the negotiations. Any union
negotiator will tell you that you do not give up anything before you go
to the table. Yet President Obama is not only declining to ask for any
progressive improvements to Medicare, he is also giving the
conservatives policies that they support. That leaves him in the
position of starting negotiations only after having moved to the right,
into their camp, and then attempting to achieve compromises with the
much more highly polarized Republicans who have moved to the extreme far

So what specifically is wrong with his relatively benign-looking

He would reduce "the Federal subsidy of Medicare costs for those
beneficiaries who need that subsidy the least." That is, he will charge
much larger Medicare premiums for those with higher incomes. That will
diminish the support of the plutocrats who have the political power to
instead drive us closer to the premium support model of private
insurance plans advocated for by conservatives such as Paul Ryan (the
new Chair of House Ways and Means). Funding for Medicare should be
completely separated from the benefits. Instead it should be fully
funded through progressive taxes, ensuring full fixed benefits for
everyone, with equitable funding based on ability to pay.

He supports "a modified Part B deductible." That modification, of
course, is a higher deductible for Part B (physician) services. It is
true that higher deductibles do reduce spending modestly by causing
patients to forgo beneficial health care services. But erecting
financial barriers to care is exactly the opposite of what we should be
doing with a program that should be designed to remove financial
barriers, thereby encouraging people to get the care that they should
have. Medicare should be a prepaid system for everyone.

He would initiate "a modest copayment for certain home health episodes."
Home health care is a more economical and humane way of providing health
care services for many people with advanced illnesses. Individuals in
those circumstances may not have enough funds for cost sharing.
Introducing copays is a definitive first step in shifting ever more of
the costs of home care to patients, and certainly more steps would
follow. Bad move.

Conservatives have long targeted Medigap plans because they allegedly
create the moral hazard of patients using more health care simply
because it is free at the point of care - deductibles and coinsurance
being paid by the plan. This theory is based on a misinterpretation of
the results of the RAND HIE. Hypochondriasis is very rare. People always
have a legitimate medical reason for going to the doctor.

However, rather than requiring a minimum amount of cost sharing in the
Medigap plans, President Obama's recommendation is to apply a surcharge
to the Medigap premiums. Medigap plans are already one of the worst
values in health insurance, and jacking the premiums up even more with
surcharges is certainly a move in the wrong direction. Perhaps this is
an indirect way of intimidating people into forgoing Medigap plans in
order to expose them to more out-of-pocket costs, or perhaps to
stimulate a market for more spartan Medigap plans with no first dollar
coverage. Regardless, it is another push toward the perverse method of
reducing spending by making appropriate health care less affordable.

If nothing else, this shows that the conservative, consumer-directed
advocates have won the rhetorical debate. It astounds me how many people
across the political spectrum have bought the meme that paying medical
expenses out-of-pocket gives people pride in exercising their personal

Are people in other countries with lower costs and first-dollar coverage
ashamed that they abandoned personal responsibility by walking out of
their health care facility without making an out-of-pocket payment? If
they are ashamed, they have been very effective in hiding it behind the
false pride they show in their egalitarianism. Or, could it be? Are they
actually egalitarian? Can we try that?