Tuesday, June 30, 2015
The link to the PNHP statement on King v, Burwell - the subject of
today's Quote of the Day:
Physicians for a National Health Program
June 25, 2015
'Subsidies upheld, but health needs still unmet': doctors group
Although the Supreme Court has upheld the premium subsidies under the
Affordable Care Act, the law remains incapable of remedying the U.S.
health crisis, physician group says
Physicians for a National Health Program, an organization of 19,000
doctors who support single-payer national health insurance, released the
following statement today:
Today's decision by the Supreme Court in King v. Burwell to uphold the
Affordable Care Act's premium subsidies in about three dozen states will
spare more than 6 million Americans the health and financial harms
associated with the sudden loss of health insurance coverage.
For that reason alone the decision must be welcomed: Having health
insurance is better than not having coverage, as several research
studies have shown.
That said, the suffering that many Americans are experiencing today
under our current health care arrangements is intolerable, with
approximately 35 million people remaining uninsured, a comparable number
underinsured, and rapidly growing barriers to medical care in the form
of rising premiums, copayments, coinsurance and deductibles, and
The unfortunate reality is that the ACA, despite its modest benefits, is
not a remedy to our health care crisis: (1) it will not achieve
universal coverage, as it will still leave at least 27 million uninsured
in 2025, (2) it will not make health care affordable to Americans with
insurance, because of high copays, deductibles and gaps in coverage that
leave patients vulnerable to financial ruin in the event of serious
illness, and (3) it will not control costs.
Why is this so? Because the ACA perpetuates a dominant role for the
private insurance industry. Each year, that industry siphons off
hundreds of billions of health care dollars for overhead, profit and the
paperwork it demands from doctors and hospitals; denies care in order to
increase insurers' bottom line; and obstructs any serious effort to
In contrast, a single-payer system – an improved Medicare for All –
would achieve truly universal care, affordability, and effective cost
control. It would put the interests of our patients – and our nation's
health – first.
Single payer is simple: everyone in the U.S. would be covered for all
medically necessary care in a single program financed by equitable taxes.
By replacing multiple private insurers with a single, nonprofit agency
like Medicare that pays all medical bills, we would save approximately
$400 billion annually by slashing the administrative bloat in our
current private-insurance-based system. That money would be redirected
to clinical care. Copays, coinsurance and deductibles would be eliminated.
Further, such a single, streamlined system would be able to rein in
costs for medications and other supplies through the system's strong
bargaining clout – again, to our patients' benefit.
A single-payer system would also be legally robust.
Because of the ACA's administrative complexity and flaws – largely
reflecting its accommodation to the private health insurance industry
and other corporate, profit-oriented interests in U.S. health care – it
is particularly vulnerable to the kind of legal challenge we saw today.
Our patients, our people and our national economy cannot wait any longer
for an effective remedy to our health care woes. The stakes are too
high. We need to move beyond the administratively wasteful, complex and
inadequate ACA to a more fundamental, rational single-payer national
Contrary to the claims of those who say we are "unrealistic," a
single-payer system is within practical reach. The most rapid way to
achieve universal coverage would be to improve upon the existing
Medicare program – which is celebrating its 50th anniversary this year,
showing it has stood the test of time – and expand it to cover people of
all ages. There is legislation before Congress, notably H.R. 676, the
"Expanded and Improved Medicare for All Act," which would do precisely that.
What is truly unrealistic is believing that we can provide universal and
affordable health care in a system dominated by private insurers and Big
The American people desperately need a universal health system that
delivers comprehensive, equitable, compassionate and high-quality care,
with free choice of provider and no financial barriers to access. Polls
have repeatedly shown an improved Medicare for all, which meets these
criteria, is the remedy preferred by two-thirds of the population. A
solid majority of the medical profession now favors such an approach, as
We pledge to step up our work for the only equitable, financially
responsible and humane cure for our health care ills: single-payer
national health insurance, an expanded and improved Medicare for all.
Comment by Don McCanne
Before the release of the Supreme Court decision on King v. Burwell,
there was extensive speculation on the relatively narrow topic of what
would happen if some individuals lost their subsidies for purchasing
plans in the insurance exchanges. Following the decision supporting the
subsidies, much of the reporting has shifted to the view that the
Affordable Care Act (ACA) is here to stay; the inherent infrastructure
of ACA will guide further reform. Unfortunately, this framing of the
issues has diverted us from the conversation that we need to be having.
When considering what needed to be done, ACA fixed very little of our
health care financing system. This victory being celebrated now upheld
premium subsidies that will allow less than two percent of the
population to keep their ACA exchange plans - mostly low-actuarial-value
underinsurance plans. To characterize this as the make-or-break Supreme
Court decision for health care reform is entirely missing the essence of
an equitable health care financing system.
On the day that the Supreme Court decision was announced, a link to the
PNHP statement was included in the Quote of the Day message. That was
not enough. The PNHP statement does catch the essence of the problem and
thus is being distributed in full as today's message. It should be
shared widely with others since true health care equity is what the
nation now needs to be talking about.
at 1:42 PM
Monday, June 29, 2015
Supreme Court of the United States
King v. Burwell
Justice Scalia, dissenting
(The following paragraphs are not in continuity in the dissent.)
Faced with overwhelming confirmation that "Exchange established by the
State" means what it looks like it means, the Court comes up with
argument after feeble argument to support its contrary interpretation.
None of its tries comes close to establishing the implausible conclusion
that Congress used "by the State" to mean "by the State or not by the
The Court's next bit of interpretive jiggery-pokery involves other parts
of the Act that purportedly presuppose the availability of tax credits
on both federal and state Exchanges.
The Court persists that these provisions "would make little sense" if no
tax credits were available on federal Exchanges. Ante, at 14. Even if
that observation were true, it would show only oddity, not ambiguity.
The Court claims that the Act must equate federal and state
establishment of Exchanges when it defines a qualified individual as
someone who (among other things) lives in the "State that established
the Exchange," 42 U. S. C. §18032(f)(1)(A). Otherwise, the Court says,
there would be no qualified individuals on federal Exchanges,
contradicting (for example) the provision requiring every Exchange to
take the "'interests of qualified individuals'" into account when
selecting health plans. Ante, at 11 (quoting §18031(e)(1)(b)). Pure
The Court has not come close to presenting the compelling contextual
case necessary to justify departing from the ordinary meaning of the
terms of the law. Quite the contrary, context only underscores the
outlandishness of the Court's interpretation. Reading the Act as a whole
leaves no doubt about the matter: "Exchange established by the State"
means what it looks like it means.
On the other side of the ledger, the Court has come up with nothing more
than a general provision that turns out to be controlled by a specific
one, a handful of clauses that are consistent with either understanding
of establishment by the State, and a resemblance between the tax-credit
provision and the rest of the Tax Code. If that is all it takes to make
something ambiguous, everything is ambiguous.
The Court protests that without the tax credits, the number of people
covered by the individual mandate shrinks, and without a broadly
applicable individual mandate the guaranteed-issue and community-rating
requirements "would destabilize the individual insurance market." Ante,
at 15. If true, these projections would show only that the statutory
scheme contains a flaw; they would not show that the statute means the
opposite of what it says.
So even if making credits available on all Exchanges advances the goal
of improving healthcare markets, it frustrates the goal of encouraging
state involvement in the implementation of the Act. This is what
justifies going out of our way to read "established by the State" to
mean "established by the State or not established by the State"?
Worst of all for the repute of today's decision, the Court's reasoning
is largely self-defeating. The Court predicts that making tax credits
unavailable in States that do not set up their own Exchanges would cause
disastrous economic consequences there. If that is so, however, wouldn't
one expect States to react by setting up their own Exchanges? And
wouldn't that outcome satisfy two of the Act's goals rather than just
one: enabling the Act's reforms to work and promoting state involvement
in the Act's implementation? The Court protests that the very existence
of a federal fallback shows that Congress expected that some States
might fail to set up their own Exchanges. Ante, at 19. So it does. It
does not show, however, that Congress expected the number of
recalcitrant States to be particularly large. The more accurate the
Court's dire economic predictions, the smaller that number is likely to
be. That reality destroys the Court's pretense that applying the law as
written would imperil "the viability of the entire Affordable Care Act."
Perhaps sensing the dismal failure of its efforts to show that
"established by the State" means "established by the State or the
Federal Government," the Court tries to palm off the pertinent statutory
phrase as "inartful drafting." Ante, at 14. This Court, however, has no
free-floating power "to rescue Congress from its drafting errors."
It is entirely plausible that tax credits were restricted to state
Exchanges deliberately—for example, in order to encourage States to
establish their own Exchanges. We therefore have no authority to dismiss
the terms of the law as a drafting fumble.
Our only evidence of what Congress meant comes from the terms of the
law, and those terms show beyond all question that tax credits are
available only on state Exchanges. More importantly, the Court forgets
that ours is a government of laws and not of men. That means we are
governed by the terms of our laws, not by the unenacted will of our
Much less is it our place to make everything come out right when
Congress does not do its job properly. It is up to Congress to design
its laws with care, and it is up to the people to hold them to account
if they fail to carry out that responsibility.
Congress could also do something else altogether, entirely abandoning
the structure of the Affordable Care Act. The Court's insistence on
making a choice that should be made by Congress both aggrandizes
judicial power and encourages congressional lassitude.
The Act that Congress passed makes tax credits available only on an
"Exchange established by the State." This Court, however, concludes that
this limitation would prevent the rest of the Act from working as well
as hoped. So it rewrites the law to make tax credits available
everywhere. We should start calling this law SCOTUScare.
And the cases will publish forever the discouraging truth that the
Supreme Court of the United States favors some laws over others, and is
prepared to do whatever it takes to uphold and assist its favorites.
June 26, 2015
Justice Scalia is the Supreme Court's real loser in Obamacare ruling
By William Yeomans
It is reasonable to suspect that Scalia's distaste for the Affordable
Care Act, which likely inclined him to bring it down rather than save
it, made his textual argument easier for him to make here.
(William Yeomans served as Senator Edward M. Kennedy's chief counsel on
the Senate Judiciary Committee and as a Justice Department official.)
Pew Research Center
June 12, 2014
Political Polarization in the American Public
Overall, the public is divided over how far the government should go in
providing health care. About half (47%) say the government has a
responsibility to make sure all Americans have health care coverage,
while 50% say that is not the responsibility of the federal government.
While half say it isn't the government's responsibility to make sure all
have health care coverage, relatively few want the government to get out
of the health care system entirely. Rather, 43% say it's not the
government's responsibility to ensure health care coverage for all, but
believe the government should "continue programs like Medicare and
Medicaid for seniors and the very poor." Only 6% of Americans go so far
as to say the government "should not be involved in providing health
insurance at all."
Even among consistent conservatives, there is minimal support for the
government having absolutely no role in providing health care.
Three-quarters of consistent conservatives (75%) say the government
should continue Medicare and Medicaid while just 20% think the
government should not be involved in providing health insurance.
Comment by Don McCanne
In his dissent, Justice Antonin Scalia placed the importance of a
negligible textual drafting error over the importance of the clear
intent of the Affordable Care Act (ACA) to expand health care coverage
to more people while trying to keep insurance affordable. With a full
reading of both the majority opinion and Scalia's dissent, it is clear
that Justice Scalia's opposition was based on ideology, with only token
references to law. That is likely true with Justices Thomas and Alito as
well, although they did not explain the basis of their votes.
When the same set of justices review the same laws in arriving at their
decisions, yet quite consistently align themselves in two different
camps, it is difficult to draw any conclusion other than that the
decisions are being based primarily on ideology.
This divide also permeates not only Congress but the entire nation as
revealed last year by the Pew Research Center in their comprehensive
study of political polarization.
It is difficult for those of us who are ideologically inclined to
support social justice goals, such as health care for everyone, to
understand those who are opposed. Many try to give both views equal
credibility, yet when standing for a principle such as universal health
care, it is difficult to assign the same cogency to a view in opposition.
The Pew study suggests that there is greater agreement on the
fundamental moral principles such as ensuring health care coverage.
Three-fourths of conservatives say that the government should continue
Medicare and Medicaid. Yet half of the nation continues to support
politicians who campaign using conservative and libertarian rhetoric.
We have been traveling the last ten days and have engaged in many
conversations with individuals holding widely varying political views.
Specifically on health care, those opposed to reform seemed to explain
their positions through empty rhetorical memes such as those that are
frequently present in the selected Fox News programs that are
ideologically biased. In attempting to ferret out the reasoning behind
these statements, it seemed to me that these individuals were not well
informed on actual facts and policy implications, often admitting that
they didn't understand the details. This in no way is meant to criticize
them but rather is an observation that many important principles of
reform have not been widely distributed to the public.
But can we assume that Justice Scalia did not understand the adverse
consequences that his warped interpretation of the intent of ACA would
potentially have on the health of millions of Americans? Does it not
represent an uncaring view when he ridicules the majority decision with
terms such as "jiggery-pokery," "pure applesauce" and "SCOTUScare"? It
is very difficult to assume that there is no fundamental ethical
Politicians frequently bury their advocacy for harmful public policies
under rhetorical memes, thereby hiding their support for the rich and
powerful. But the public at large? When they understand the issues, they
do seem to support doing the right thing. But all too often it seems too
easy for them to accept and spread the rhetoric assuming that there is
not much more behind the memes which represent "the truth," and thus it
is not worth their time to learn more.
Living in Orange County, many of our friends are conservative. Most of
them do support health care for everyone, just as, nationally,
three-fourths of conservatives support Medicare and Medicaid. Wouldn't
it be nice if, after some introspection, caring conservatives selected
candidates who do share their values on health care for all? Maybe some
of the politicians already do and would gladly change their rhetoric if
they thought their constituents agreed.
at 2:47 PM
Friday, June 26, 2015
The Commonwealth Fund
June 24, 2015
How Insurers Competed in the Affordable Care Act's First Year
By Katherine Swartz, Mark Hall, Timothy S. Jost
Prior to the Affordable Care Act (ACA), most states' individual health
insurance markets were dominated by one or two insurance carriers that
had little incentive to compete by providing efficient services.
Instead, they competed mainly by screening and selecting people based on
their risk of incurring high medical costs. One of the ACA's goals is to
encourage carriers to participate in the health insurance marketplaces
and to shift the focus from competing based on risk selection to
processes that increase consumer value, like improving efficiency of
services and quality of care. Focusing on six states — Arkansas,
California, Connecticut, Maryland, Montana, and Texas — this brief looks
at how carriers are competing in the new marketplaces, namely through
cost-sharing and composition of provider networks.
From the Conclusions
The ACA reforms will surely stimulate continuing adaptations by
carriers, providers, and policymakers, and we expect the competitive
strategies in the marketplaces to evolve as consumers and carriers gain
more experience with marketplace competition.
Comment by Don McCanne
What should the consumer expect from marketplace competition? Business
experts tell us that competition is the key to higher quality at lower
cost. So what has competition between private health insurance plans
Based on international comparisons, our health care quality is mediocre
and our health care costs are by far the highest of all nations. The
insurers have been ineffective in improving either of those. Okay, but
what about the health plans themselves? Are we receiving high quality
insurance products at low prices?
Before the Affordable Care Act (ACA), insurers competed primarily on the
prices of their insurance premiums, and they still do. Before ACA, the
most effective method of keeping their premiums from increasing more
than they did was to exclude people from coverage who actually needed
health care. The most important purpose of insurance is to make health
care access affordable by diluting risk through insurance risk pools.
Yet the insurers instead excluded risk by attempting to insure only
those who could pass underwriting standards in the individual market, or
by pricing group plans out of the market if they experienced high health
A quality risk pooling program would be designed to ensure that everyone
receives essential health care, yet by excluding those who have the
greatest needs for care, the insurers abandoned any effort to ensure
quality in their insurance products.
As far as costs are concerned, health care costs continued to escalate
out of control, demonstrating that the insurers could not deliver on the
promise of lower costs either.
What has happened since ACA was implemented?
Although the act prohibits medical underwriting, the insurers are still
using devious methods to discourage individuals with greater heath care
needs from enrolling. As an example, drugs used for certain chronic
conditions are placed in upper tiers of drug coverage which require
greater coinsurance payments, pricing these products out of reach for
the patients, which deters them from joining the plan in the first
place. Plans also are still selectively marketed to healthier
populations. Professionals and institutions noted for providing care to
high needs patents are frequently left out of the insurers' networks,
chasing away patients who use these providers. Again, these efforts to
exclude those with needs confirm that the insurers are still marketing
low quality insurance products that fall short of the health care needs
of the community.
This new report from The Commonwealth Fund shows that the insurers are
using two innovations to improve their competitive positions in the
marketplace: cost sharing and narrow provider networks.
Cost sharing through deductibles, co-payments, coinsurance, and
exclusion of coverage erects financial barriers to care, reducing the
use of beneficial services and thus allowing the insurers' premiums to
be priced more competitively. An insurance product that is designed to
keep people away from care that they need is a low quality product.
Narrow provider networks reduce health care utilization by preventing
coverage of health care professionals and institutions that may be the
most appropriate for the patients' conditions, requiring them to turn to
lesser care or no care at all. Also, care may be made less accessible
simply by increasing the distances needed to travel to network providers
while excluding nearby providers from the networks. Again, insurance
products designed to impair access to appropriate health care providers
are low quality products.
Thus, with ACA, insurers are impairing quality through the use of the
barriers of cost sharing and narrow networks. And regarding costs, it
appears that they are again on an upward trajectory. Health care prices
have not been controlled. The only slowing has been due to a modest
reduction in the use of beneficial health care services caused by these
barriers that the insurers have erected. The insurers have failed again
on their promise of higher quality at lower cost.
What about the future? The Commonwealth Fund report states, "we expect
the competitive strategies in the marketplaces to evolve as consumers
and carriers gain more experience with marketplace competition." We know
what this means. The insurers will not be looking for ways to pay for
more beneficial health care services. They will be introducing more
innovations that prevent patients from getting the care that they need.
That's the way that the marketplace for health insurance products works.
Medicare doesn't work that way. Instead, efforts are made to include
everyone who is qualified and to include all health care professionals
and institutions. At the same time, payments are based on legitimate
costs and fair margins - a system that is less costly because of
If we really want higher quality at a lower cost, we need to improve
Medicare and expand it to cover everyone. The private insurance industry
certainly is never going deliver on quality and cost since they will do
better for themselves with their warped approach to competition.
at 2:39 PM
Thursday, June 25, 2015
SUPREME COURT OF THE UNITED STATES
KING ET AL. v. BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.
No. 14–114. Argued March 4, 2015—Decided June 25, 2015
Congress passed the Affordable Care Act to improve health insurance
markets, not to destroy them. If at all possible, we must interpret the
Act in a way that is consistent with the former, and avoids the latter.
Section 36B can fairly be read consistent with what we see as Congress's
plan, and that is the reading we adopt.
The judgment of the United States Court of Appeals for the Fourth Circuit is
The New England Journal of Medicine
June 25, 2015
The Elusive Right to Health Care under U.S. Law
By Jennifer Prah Ruger, Ph.D., M.S.L., Theodore W. Ruger, J.D., and
George J. Annas, J.D., M.P.H.
Is there a right to health care in the United States? No U.S. Supreme
Court decision has ever interpreted the Constitution as guaranteeing a
right to health care for all Americans. The Constitution does not
contain the words "health," "health care," "medical care," or
"medicine." But if we look deeper, a more nuanced picture emerges. The
Court has found rights to privacy, to bodily integrity, and to refuse
medical care within the vague right to "due process" contained in the
Constitution. The Court has also constructed a right to decide to
terminate a pregnancy, although it has also ruled that the government
has no obligation to subsidize the exercise of this right. When this
line of cases is considered together, it would appear that the U.S.
Constitution provides scant affirmative obligation to provide health care.
Despite the absence of a universal right to health care in the
Constitution, Congress and the Supreme Court have incrementally crafted
an incomplete web of health care rights during the past 50 years. In
prisons and emergency rooms across the country, physicians and medical
institutions have for decades been required to provide medical care. In
a 1976 landmark decision in Estelle v. Gamble, for example, the Supreme
Court found a right to adequate medical care for prisoners grounded in
the Eighth Amendment of the Constitution.
THE COURTS, THE CONGRESS, AND HEALTH CARE RIGHTS
It is notable that all three of these litigation efforts against the ACA
— the 2012 ruling on the individual mandate, the 2014 ruling in Hobby
Lobby, and the forthcoming ruling on subsidies for exchange participants
— arise from the devolved structures of American health governance; none
of the three issues would be valid constitutional or statutory
objections to a taxpayer-financed single-payer system. As the Court
ruled in Hobby Lobby, religious objections to general taxation used to
finance national imperatives are not protected as strongly as the
specific claim of Hobby Lobby against the regulatory mandate of the ACA.
Perhaps paradoxically, under the Court framework, a completely
single-payer system is more constitutionally sound than the ACA
statutory design, which aims to preserve a private institutional role in
the health care system.
Comment by Don McCanne
According to the Supreme Court, Congress's plan was "to improve health
insurance markets, not to destroy them," and thus they upheld the
subsidies for the plans offered through the state insurance exchanges.
But Congress has failed to establish a process through which absolutely
everyone is assured of health care when needed. That is, Congress has
established health care as a right only in selected circumstances, but
not for everyone. In contrast, as the authors of the NEJM article state,
"…under the Court framework, a completely single-payer system is more
constitutionally sound than the ACA statutory design…" Enacting a single
payer system would finally establish health care as a right throughout
the United States.
Physicians for a National Health Program release on the King v. Burwell
decision by the Supreme Court:
at 11:14 AM
Tuesday, June 23, 2015
June 22, 2015
Making the Economy Work for the Many and Not the Few
#11: Medicare Isn't the Problem; It's the Solution
By Robert Reich
Again and again the upcoming election you'll hear conservatives claim
that Medicare -- the health insurance program for America's seniors --
is running out of money and must be pared back.
Baloney. Medicare isn't the problem. In fact, Medicare is more efficient
than private health insurance.The real problem is that the costs of
health care are expected to rise steeply.
Medicare could be the solution -- the logical next step after the
Affordable Care Act toward a single-payer system.
Please see the accompanying video -- #11 in our series on ideas to make
the economy work for the many rather than for the few. And please share.
Some background: Medicare faces financial problems in future years
because of two underlying trends that will affect all health care in
coming years, regardless of what happens to Medicare:
The first is that healthcare costs are rising overall -- not as fast as
they were rising before the Affordable Care Act went into effect, but
still rising too quickly.
The second is that the giant postwar baby boom is heading toward
retirement and older age. Which means more elderly people will need more
health care, adding to the rising costs.
So how should we deal with these two costly trends? By making Medicare
available to all Americans, not just the elderly.
Remember, Medicare is more efficient than private health insurers
whose administrative costs and advertising and marketing expenses are
eating up billions of dollars each year.
If more Americans were allowed to join Medicare, it could become more
efficient by using its growing bargaining power to get lower drug
prices, lower hospital bills, and healthier people.
Allowing all Americans to join Medicare is the best way to control
future healthcare costs while also meeting the needs of the baby boomer
and other Americans.
Everyone should be able to sign up for Medicare on the healthcare
exchanges set up under the Affordable Care Act. This would begin to move
America away from its reliance on expensive private health insurance,
and toward Medicare for all - a single payer system.
Medicare isn't a problem. It's part of the solution.
Physicians for a National Health Program
March 26, 2009
Public Plan Option in a Market of Private Plans
By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.
The "public plan option" won't work to fix the health care system for
1. It forgoes at least 84 percent of the administrative savings
available through single payer. The public plan option would do nothing
to streamline the administrative tasks (and costs) of hospitals,
physicians offices, and nursing homes, which would still contend with
multiple payers, and hence still need the complex cost tracking and
billing apparatus that drives administrative costs. These unnecessary
provider administrative costs account for the vast majority of
bureaucratic waste. Hence, even if 95 percent of Americans who are
currently privately insured were to join the public plan (and it had
overhead costs at current Medicare levels), the savings on insurance
overhead would amount to only 16 percent of the roughly $400 billion
annually achievable through single payer — not enough to make reform
2. A quarter century of experience with public/private competition in
the Medicare program demonstrates that the private plans will not allow
a level playing field. Despite strict regulation, private insurers have
successfully cherry picked healthier seniors, and have exploited
regional health spending differences to their advantage. They have
progressively undermined the public plan — which started as the single
payer for seniors and has now become a funding mechanism for HMOs — and
a place to dump the unprofitably ill. A public plan option does not lead
toward single payer, but toward the segregation of patients, with
profitable ones in private plans and unprofitable ones in the public plan.
Comment by Don McCanne
In his enthusiastic endorsement of single payer Medicare for all, Robert
Reich also renews the call for the "public option" of allowing people to
purchase Medicare through the exchanges established by the Affordable
Care Act. During the health care reform process, the public option had
wide support, but was first weakened considerably and then eventually
rejected by Congress in a power play by Sen. Joseph Lieberman.
In spite of the modest benefits of the Affordable Care Act, nothing has
changed that would alter the concerns about the public option expressed
by David Himmelstein and Steffie Woolhandler and others of us at PNHP.
At the time the public option was being considered, I wrote the
following: "The option to purchase a public plan within a market of
private health insurance plans would merely provide one more player in
our inefficient, dysfunctional, fragmented, multi-payer system of
financing health care, that is if the public option even survives the
political process. It would leave in place the deficiencies that have
resulted in very high costs with the poorest health care value of all
nations (i.e., overpriced mediocrity in health care)."
Even if Medicare were offered for purchase in the exchanges, the
premiums would not be competitive with the low-actuarial-value silver
and bronze plans with their very high deductibles, especially since the
Medicare risk pool includes higher cost elderly and disabled
individuals. If Medicare were revised to make it competitive, benefits
would have to be reduced when what we need instead is an improved
Medicare with expanded benefits.
One possibility would be to provide subsidies for those electing the
Medicare option, but either the beneficiaries' share would still be too
great, certainly making the plan non-competitive, or the public
subsidies would have to be greater than those for the private
low-actuarial-value insurance plans - an approach that would be
vigorously opposed by the all-powerful private insurers.
Besides, it is unlikely that Congress would support higher subsidies for
a public option Medicare when their agenda has been the opposite -
providing higher subsidies for the private Medicare Advantage plans,
sending us in the direction of a privatized Medicare.
Although Robert Reich proposes a public option version of Medicare as a
way to begin moving us toward a single payer Medicare for all, it is
difficult to perceive how the transition would take place. Offering an
option to purchase Medicare is a very small step that leaves everything
else in place. As Medicare Advantage demonstrates, one-third of
beneficiaries have moved in the opposite direction - from traditional
Medicare to private insurance options. That would continue as long as
Congress continues to advance policies that cater to the insurers more
than they do to the public.
Reich seems to be recommending a two step path to reform - one step
offering the Medicare option and a second step of converting to single
payer Medicare for all. Quentin Young has compared that to taking two
steps to cross a chasm. That first step can lead to a serious
misadventure, but it should not be a surprise.
at 12:58 PM
Monday, June 22, 2015
Quote of the Day on dynamic scoring
In the comment, I wrote, "They determined that repeal of ACA would
reduce the supply of labor, and this reduction would result in a 0.7
percent increase in the gross domestic product (GDP) - an example of
dynamic scoring. Why should the supply of labor be reduced?" That should
read, "They determined that repeal of ACA would increase the supply of
labor, and this increase would result in a 0.7 percent increase in the
gross domestic product (GDP) - an example of dynamic scoring. Why should
the supply of labor be increased?"
I extensively revised the comment in the middle of the night, switching
sentences and phrases between what ACA does and what the repeal of ACA
would do. Obviously I didn't finish the editing since this one got away
at 6:48 PM
Budgetary and Economic Effects of Repealing the Affordable Care Act
In this report, the Congressional Budget Office and the staff of the
Joint Committee on Taxation (JCT) analyze the main budgetary and
economic consequences that would arise from repealing that law.
What Would Be the Major Effects of Repealing the ACA?
CBO and JCT estimate that repealing the ACA would have several major
effects, relative to the projections under current law:
** Including the budgetary effects of macroeconomic feedback, repealing
the ACA would increase federal budget deficits by $137 billion over the
2016–2025 period. That estimate takes into account the proposal's impact
on federal revenues and direct (or mandatory) spending, incorporating
the net effects of two components:
* Excluding the effects of macroeconomic feedback — as has been done
for previous estimates related to the ACA (and most other CBO cost
estimates) — CBO and JCT estimate that federal deficits would increase
by $353 billion over the 2016–2025 period if the ACA was repealed.
* Repeal of the ACA would raise economic output, mainly by boosting
the supply of labor; the resulting increase in GDP is projected to
average about 0.7 percent over the 2021–2025 period. Alone, those
effects would reduce federal deficits by $216 billion over the 2016–2025
period, CBO and JCT estimate, mostly because of increased federal revenues.
** For many reasons, the budgetary and economic effects of repealing the
ACA could differ substantially in either direction from the central
estimates presented in this report. The uncertainty is sufficiently
great that repealing the ACA could reduce deficits over the 2016–2025
period — or could increase deficits by a substantially larger margin
than the agencies have estimated. However, CBO and JCT's best estimate
is that repealing the ACA would increase federal budget deficits by $137
billion over that 10-year period.
** Repealing the ACA would cause federal budget deficits to increase by
growing amounts after 2025, whether or not the budgetary effects of
macroeconomic feedback are included. That would occur because the net
savings attributable to a repeal of the law's insurance coverage
provisions would grow more slowly than would the estimated costs of
repealing the ACA's other provisions — in particular, those provisions
that reduce updates to Medicare's payments. The estimated effects on
deficits of repealing the ACA are so large in the decade after 2025 as
to make it unlikely that a repeal would reduce deficits during that
period, even after considering the great uncertainties involved.
** Repealing the ACA also would affect the number of people with health
insurance and their sources of coverage. CBO and JCT estimate that the
number of nonelderly people who are uninsured would increase by about 19
million in 2016; by 22 million or 23 million in 2017, 2018, and 2019;
and by about 24 million in all subsequent years through 2025, compared
with the number who are projected to be uninsured under the ACA. In most
of those years, the number of people with employment-based coverage
would increase by about 8 million, and the number with coverage
purchased individually or obtained through Medicaid would decrease by
between 30 million and 32 million.
* About 14 million fewer people would be enrolled in Medicaid.
* About 18 million fewer people would have nongroup coverage. That
reduction is the net effect of a projected decline of about 22 million
in nongroup coverage purchased through exchanges (which would no longer
serve as a conduit for federal subsidies and might not exist at all) and
a projected increase of about 4 million enrollees in nongroup coverage
purchased directly from insurers.
* About 8 million more people, on net, would have employment-based
coverage—roughly mirroring the agencies' estimate of the extent to which
the ACA will reduce employment-based coverage in future years.
* About 24 million more nonelderly U.S. residents would be uninsured.
The Macroeconomic Feedback Effects of a Repeal and Their Impact on the
CBO and JCT also have analyzed the effects that repealing the ACA would
have on the U.S. economy and estimated the budgetary impact — or
feedback effects — of those macroeconomic changes. CBO and JCT estimate
that the net effect on the economy's output would be negligible in 2016
but would grow after that. According to the agencies' estimates, from
2021 through 2025, a repeal would increase GDP by about 0.7 percent, on
average — mostly by repealing provisions that, under current law, are
expected to reduce the supply of labor.
CBO and JCT estimate that repealing the ACA would increase the supply of
labor and thus increase aggregate compensation (wages, salaries, and
fringe benefits) by an amount between 0.8 percent and 0.9 percent over
the 2021–2025 period. Those effects would be the result of repealing
various provisions of the ACA that are estimated to reduce the amount of
labor that people choose to supply. In particular, the subsidies and tax
credits for health insurance that the ACA provides to some people are
phased out as their income rises — creating an implicit tax on
additional earnings — and those subsidies, along with expanded
eligibility for Medicaid, generally make it easier for some people to
work less or to stop working without losing health insurance coverage.
For other people, the act directly imposes higher taxes on labor income,
thus discouraging work. Repealing the ACA would reverse those effects.
In percentage terms, the increase in total hours worked is estimated to
be larger than the increase in aggregate compensation because the
largest increases in labor supply would occur among the lower-wage
workers whose incentives would be most strongly affected. Specifically,
repealing the ACA would increase the aggregate number of hours worked by
about 1.5 percent over the 2021–2025 period, CBO and JCT estimate.
How Would a Repeal Affect the Budget and the Economy Beyond 2025?
CBO and JCT expect that the trend projected for the latter part of the
coming decade would probably continue after 2025, whether or not the
effects of macroeconomic feedback are incorporated into the analysis. To
generate rough estimates for the decade beyond 2025, CBO and JCT
extrapolated the budgetary effects that a repeal of the ACA would have
in the years before 2025. According to that analysis, and excluding the
budgetary effects of macroeconomic feedback, a repeal would increase
annual deficits over the 2026–2035 period by amounts that lie within a
broad range around one percent of GDP. Although the macroeconomic
feedback stemming from a repeal would continue to reduce deficits after
2025, the effects would shrink over time because the increase in
government borrowing resulting from the larger budget deficits would
reduce private investment and thus would partially offset the other
positive effects that a repeal would have on economic growth.
Consequently, taking that feedback into account would not substantially
alter the increases estimated for federal deficits that would occur over
that period. A repeal of the ACA would probably increase deficits in
subsequent decades as well, whether or not the effects of macroeconomic
feedback are included.
The New York Times
June 19, 2015
Mixed Effects Are Seen on an Affordable Care Act Repeal
By Robert Pear
The nonpartisan Congressional Budget Office said Friday that repealing
the Affordable Care Act would significantly increase federal budget
deficits and the number of people who are uninsured.
But, it said, repealing the law would also raise economic output because
it would create incentives for some people to work more.
The estimates came in the first major study issued by the new director
of the budget office, Keith Hall. It was also the first report to use
new methods of fiscal analysis, according to instructions from the
Republican majority in both houses of Congress.
Repealing the law would increase federal budget deficits by $137 billion
in the decade from 2016 to 2025, Mr. Hall said in the report. In
addition, he said, the number of uninsured people, estimated at 35
million under current law, would increase by 24 million if the law was
Senator Michael B. Enzi, Republican of Wyoming and the chairman of the
Senate Budget Committee, said the report showed that "repealing the
president's health care law will increase economic growth." But
Representative Nancy Pelosi of California, the House minority leader,
said it showed that "repeal will explode the deficit."
The report analyzes the economic effects of the health care law and the
ways in which those effects may, in turn, influence federal spending and
revenues — a technique known as dynamic scoring. Democrats fear that
Republicans will use that approach to help justify tax cuts. But at
least in the report on Friday, Mr. Hall was cautious in using the new
technique and carefully documented the economic assumptions that led to
The New York Times
February 28, 2015
Dynamic Scoring in Congress Is Defensible but Slippery
By N. Gregory Mankiw
… congressional leaders appointed Mr. Hall, a veteran of the Bush
administration, to be the new head of the budget office.
Until now, conventional budget analysis has used a process called static
scoring, which assumes that the path of gross domestic product remains
the same when the government changes taxes or spending. This procedure
has the virtues of simplicity and transparency.
We don't yet know how Mr. Hall's leadership will differ from Mr.
Elmendorf's but we do know that he will face a big challenge. House
Republicans have recently changed the rules: The Congressional Budget
Office and Joint Committee on Taxation are now required to use "dynamic
scoring" when evaluating major changes in tax and spending policy. This
is the can of worms that awaits Mr. Hall as he takes on his new job.
The New York Times
June 20, 2015
Obamacare and Labor Supply
By Paul Krugman
I was critical of CBO yesterday — probably excessively — for giving what
seemed like undue cover for deficit scolds in its long-run budget
projection. So credit where credit is due: the new report on the
consequences of repealing the ACA is definitely not what the
Congressional majority wants to hear. Despite including "dynamic
scoring", the report finds, unambiguously, that Obamacare reduces the
deficit and repealing it would enlarge the deficit.
Is there anything in the report that provides fodder for the opponents?
I see that the Times report says that there are "mixed effects", because
CBO says that GDP would be higher if the ACA were repealed. And maybe
the usual suspects will try to spin it that way.
But the truth is that this report is much, much closer to what
supporters of reform have said than it is to the scare stories of the
critics — no death spirals, no job-killing, major gains in coverage at
relatively low cost.
And there's another important point: while the ACA may lead to somewhat
lower GDP because it reduces labor supply, this does not imply a
one-for-one loss in welfare. Suppose that a family's second earner, now
assured of being able to get health insurance, chooses as a result to
work shorter hours and spend more time taking care of the children. GDP
goes down — but there is a compensating non-monetary gain.
In fact, in a perfectly competitive economy the gain would fully offset
the fall in GDP: if workers are paid their marginal product, the fall in
GDP from the ACA is equal to the lost wages, but workers choosing to
work less clearly prefer to have the extra time to the extra wages. Or
to put it a bit differently, other things equal it's a good thing if
workers, freed from the fear that they won't be able to get health
insurance, respond by voluntarily working less.
OK, the story is made more complicated by taxes, which place a wedge
between wages paid and income received; so there probably is a net cost
to a fall in labor supply. But this effect is fully captured by the loss
in revenue, which CBO doesn't think would be large.
So overall this isn't at all a "mixed" report — it's a very big win for
Comment by Don McCanne
This report from the Congressional Budget Office (CBO) is important
because it describes the consequences of repealing the Affordable Care
Act (ACA) - a goal of many conservatives in Congress. But there also is
an important sub-story here - the advent of the use of "dynamic scoring"
by the CBO and its potential implications.
One of the more severe deficiencies of ACA is that when it is fully
implemented about 29 million people will still be uninsured. This CBO
analysis indicates that repeal of ACA will increase the numbers of
uninsured by another 24 million - bringing the total to over 50 million.
If no other lesson is drawn from this report, it is that we should not
move backwards with efforts to reject what progress has been made, but
that instead we should move forward with real reform that would cover
everyone (in case you need any hints, that would be single payer).
From the perspective of the federal budget, this report also shows that
repeal of ACA would cause significant increases in the deficit which
presumably would require either increased revenues (taxes) which the
conservatives reject, or decreases in spending which would be
intolerable when considering that our discretionary federal budget is
already spartan. If we moved forward with more effective reform - single
payer - the provisions of that reform would include equitable financing,
and thus the budgetary damage done by the displacement of ACA would
become a moot point.
But what about dynamic scoring, and what is it? It seems to have more to
do with politics and less with economic science. When the CBO analyzes
the potential impact of proposed legislation on the federal budget, they
look at not only the direct impact of the legislative requirements, but
they also look at the macroeconomic impact - the changes in the economy
at large that can result from the legislation. They can do this with
static scoring - assuming that the gross domestic product remains the
same when government changes taxes or spending - or they can use dynamic
scoring - evaluating how fiscal policy influences the course of the economy.
The Republicans who now control Congress have changed the rules for the
non-partisan CBO and now require dynamic scoring, and this is the first
CBO report in which this tool has been applied. Does it represent
economic science or political posturing?
They determined that repeal of ACA would reduce the supply of labor, and
this reduction would result in a 0.7 percent increase in the gross
domestic product (GDP) - an example of dynamic scoring. Why would the
supply of labor be reduced? They say that loss of insurance would drive
greater employment rates amongst the unemployed and underemployed. With
a continued sluggish economy, limited employment opportunities, and the
permanent exiting of millions from the job market, do they really
believe that health insurance status is a significant driver when
everyone already wants income and job security? Do they really believe
that people are not working because having insurance makes "it easier
for some people to work less or to stop working," as the CBO report
states? Do they really believe that employers are not hiring now because
there is a robust job market, whereas they would start hiring if the job
market contracted? Does anyone of any integrity really propose that we
do the experiment of repealing ACA and then follow the change in the GDP
to see if it increases, while ignoring declines in insurance coverage
and increases in the federal deficit?
Another concept implicit in this report is that the reduction in
government expenditures for health care brought about by repealing ACA
would somehow improve the economy. Yet health care is one of the most
important sectors of our economy, and its strength likely prevented the
Great Recession from becoming a full-on depression. Sidestepping the
issue of precisely how GDP is or should be defined, wouldn't the
stimulus to the health care industry provided by ACA (confirmed by Wall
Street reports) have a much greater impact on the economy than would
this reduction in labor supply caused by more people being insured?
Considering the numbers who would become uninsured and considering the
increase in the national debt that would occur with ACA repeal, it
sounds like repeal would be a cruel and fiscally irresponsible act. Yet
the conservatives are celebrating the fact that the CBO has allegedly
implied in this report that repeal of ACA would be good for the economy.
As Senate Budget Committee Chairman Mike Enzi said, "repealing the
president's health care law will increase economic growth" (Robert Pear,
New York Times, June 19), and Senate majority leader Mitch McConnell
said, in a tweet, "The CBO says an Obamacare repeal actually boosts the
American economy" (Kate Gibson, CBS Moneywatch, June 19).
The CBO has always been the source of highly credible, non-partisan
reports on important matters before Congress. Dynamic scoring could be
used to increase the accuracy of CBO analyses, but it would have to be
very carefully applied to avoid analyses driven by political ideology.
Through the appointment of a conservative economist with an order to
institute dynamic scoring, the Republicans may be impairing the
credibility of the CBO. Imagine how they might use dynamic scoring to
try to discredit single payer.
(In fairness to CBO Director Keith Hall, economist Paul Krugman does
remind us, "the ACA may lead to somewhat lower GDP because it reduces
labor supply." Also respected New York Times reporter Robert Pear
concludes, "Mr. Hall was cautious in using the new technique and
carefully documented the economic assumptions that led to his
conclusions." So a generous application of this economic principle
allows CBO to include in its summary the statement, "Repeal of the ACA
would raise economic output, mainly by boosting the supply of labor; the
resulting increase in GDP is projected to average about 0.7 percent over
the 2021–2025 period." But this isolated statement does allow, as
Krugman indicates, fodder for the usual suspects to try to put a
positive spin on repeal - exemplified by the statements of McConnell and
Enzi. Nevertheless, I still contend that the loss of health insurance
would not cause a major incremental increase in the labor supply for a
population that already craves employment security. "Hey, I got
insurance; forget about food and rent.")
at 7:33 AM
Friday, June 19, 2015
Annals of Internal Medicine
June 16, 2015
Did Medicare Part D Affect National Trends in Health Outcomes or
Hospitalizations?: A Time-Series Analysis
By Becky A. Briesacher, PhD; Jeanne M. Madden, PhD; Fang Zhang, PhD;
Hassan Fouayzi, MS; Dennis Ross-Degnan, ScD; Jerry H. Gurwitz, MD; and
Stephen B. Soumerai, ScD
Background: Medicare Part D increased economic access to medications,
but its effect on population-level health outcomes and use of other
medical services remains unclear.
Objective: To examine changes in health outcomes and medical services in
the Medicare population after implementation of Part D.
Results: Five years after Part D implementation, no clinically or
statistically significant reductions in the prevalence of fair or poor
health status or limitations in ADLs or instrumental ADLs, relative to
historical trends, were detected. Compared with trends before Part D, no
changes in emergency department visits, hospital admissions or days,
inpatient costs, or mortality after Part D were seen. Confirmatory
analyses were consistent.
Conclusion: Five years after implementation, and contrary to previous
reports, no evidence was found of Part D's effect on a range of
population-level health indicators among Medicare enrollees. Further,
there was no clear evidence of gains in medical care efficiencies.
June 16, 2015
Researchers find prescription drug benefit did not save money for Medicare
By Joe O'Connell
For years, the Medicare prescription drug benefit Part D has been
credited with positively impacting national trends in health
outcomes and medical services. But a recent study led by
Northeastern associate professor Becky Briesacher challenges that
"We are concluding that Medicare Part D did not save the (Medicare)
program any money overall," said Briesacher, a health services
researcher in the School of Pharmacy with nationally-recognized
expertise in drug policy and medication use in older adults. "You
have to be realistic about the fact that giving people access to
medication is important, but it's not going to substantially save
money in other parts of the health care system or keep a significant
number of people out of the hospital."
Comment by Don McCanne
Although it was important to include a drug benefit in the Medicare
program there was concern that the conservatives designing the program
wanted to allow the market to work its magic. The program was to be
administered by private pharmacy benefit managers (PBMs) rather than the
government. In fact, the government was even prohibited from negotiating
drug prices with the manufacturers. Further, it was thought that the
benefits of improving access to drugs would make patients healthier thus
reducing future costs for Medicare.
This study shows that the magic did not work in that the drug benefit
did not save money for Medicare, and it did not measurably change the
health status of Medicare beneficiaries. Specifically there were no
changes in emergency room visits, hospitalizations, and inpatient costs,
nor was there any change in mortality.
It would not be surprising to see conservatives propose that the Part D
program be terminated since it supposedly isn't doing any good. But
there are innumerable studies that have shown that some medications do
provide at least a modest benefit, though those benefits were not
detected by this study.
At any rate, it is clear that PBMs are not as effective price
negotiators as is our government, as demonstrated by the greater value
in drug purchasing that we have through the VA and the Medicaid program.
Also, the PBMs waste considerable funds in excess administrative
activities, not to mention the added middleman profits that they divert
Under an improved Medicare for all we would have a more efficient and
less costly publicly-administered program that would ensure that the
government was paying fair prices for our drugs. It is not that way now.
at 10:16 AM
Thursday, June 18, 2015
February 13, 2015
Randomize evaluations to improve health care delivery
By Amy Finkelstein, Sarah Taubman (MIT)
The medical profession has long recognized the importance of randomized
evaluations; such designs are commonly used to evaluate the safety and
efficacy of medical innovations such as drugs and devices.
Unfortunately, innovations in how health care is delivered (e.g., health
insurance structures, interventions to encourage the use of appropriate
care, and care coordination approaches) are rarely evaluated using
randomization. We consider barriers to conducting randomized trials in
this setting and suggest ways for overcoming them. Randomized
evaluations of fundamental issues in health care policy and delivery
should be — and can be — closer to the norm than the exception.
June 19, 2015
Health care reform unethical by research standards
A. Finkelstein and S. Taubman report on the underuse of randomized
controlled trials for U.S. health care reform ("Randomize evaluations to
improve health care delivery" Policy Forum, 13 February). This reliance
on suboptimal research compromises information needed for policy.
However, a second problem about health reform decision-making is more
serious, constituting a major ethical breach.
The principles of research with humans require that deviations from the
standard of care are allowable only if there is real uncertainty
regarding which intervention is better. This is called the "principle of
equipoise"; only when we don't know which strategy yields the best
results is it acceptable to compare them (1).
Yet for health care reform writ large — i.e., the basic payment system —
there is no equipoise. Research from dozens of developed countries
demonstrates convincingly that single-payer financing reduces costs,
assures access, and improves outcomes.
To ignore this compelling evidence risks lives in the United States as
we experiment with partial fixes to the multi-payer system. This
experimentation would be rejected by any responsible university
institutional review board as violating the principle of equipoise and
causing unacceptable patient harm.
James G. Kahn (UCSF)
Paul Hofmann (Moraga CA)
1. Freedman B. Equipoise and the Ethics of Clinical Research. N Engl J
Med 1987; 317:141-145
New England Journal of Medicine
July 16, 1987
Equipoise and the Ethics of Clinical Research
By Benjamin Freedman, Ph.D.
The ethics of clinical research requires equipoise — a state of genuine
uncertainty on the part of the clinical investigator regarding the
comparative therapeutic merits of each arm in a trial. Should the
investigator discover that one treatment is of superior therapeutic
merit, he or she is ethically obliged to offer that treatment. The
current understanding of this requirement, which entails that the
investigator have no "treatment preference" throughout the course of the
trial, presents nearly insuperable obstacles to the ethical commencement
or completion of a controlled trial and may also contribute to the
termination of trials because of the failure to enroll enough patients.
I suggest an alternative concept of equipoise, which would be based on
present or imminent controversy in the clinical community over the
preferred treatment. According to this concept of "clinical equipoise,"
the requirement is satisfied if there is genuine uncertainty within the
expert medical community — not necessarily on the part of the individual
investigator — about the preferred treatment.
Comment by Don McCanne
Here's a shocker. Enactment and implementation of the Affordable Care
Act has been and continues to be unethical, under the "principle of
equipoise." How could that be?
Amy Finkelstein and Sarah Taubman, of MIT, call for an increased use of
"randomized evaluations of fundamental issues in health care policy,"
likening policy research to medical research. On the surface this seems
quite reasonable, but James Kahn and Paul Hofmann reveal the potential
dire implications of such a proposal when policies are studied that, at
best, would fall short of already well established beneficial policy
Medical research requires the adherence to the principle of equipoise -
the principle that it is unethical to expose a patient to an
experimental treatment when there exists a better treatment that would
always be recommended regardless of the outcome of the study. Only when
there is agreement that the more effective and safer treatment is not
known is it ethical to proceed with a randomized trial.
How would this apply to health policy research? In randomized trials
proposed health policies could be compared with existing or other
proposed health policies to determine which policies produce more
favorable outcomes. This would require that the existing comprehension
of the policies would be clearly inadequate to reliably predict the
outcomes. Keep in mind that a health system's policies can impact
individual health as much or even more than the actual health care
received. If the outcomes are predictable, it would be unethical to
proceed with the study.
The problem with the proposal by Finkelstein and Taubman is that health
policy science is quite advanced, and we have a rich body of knowledge
of the potential impacts of various health policies. These researchers
suggest that randomized evaluations should be closer to the norm when,
in fact, it would be quite rare that two or more policy options would be
so poorly understood that it would require a randomized trial to
determine which would produce better outcomes.
To understand the enormous impact of this, let's compare the most basic
policies perpetuated and enacted by the Affordable Care Act with
fundamental policies inherent in a well designed single payer system -
policies that are well understood through our experiences and the
experiences of many other nations.
The Affordable Care Act
* Tens of millions will be left uninsured
* Tens of millions will be underinsured
* Financial barriers to care that result from being uninsured or
underinsured clearly impair access to beneficial health care services
and thus often result in poor health outcomes and even death
Single Payer National Health Program
* Everyone would be insured
* Underinsurance is eliminated by removing financial barriers,
especially high deductibles and coinsurance
* Removal of financial barriers improves access to health care with a
consequent improvement in health outcomes and with a lower mortality rate
Further, our current system wastes hundreds of billions of dollars on
administrative excesses - much of which could be recovered under a
single-payer system and be redirected into health care delivery.
We cannot do a randomized trial comparing single payer with the
Affordable Care Act since a single payer system cannot exist commingled
with a fragmented, multi-payer system, but we would not want to do that
study anyway since we already understand the policy science behind these
systems. Such a study would clearly violate the principle of equipoise.
To continue with our current grand national experiment in health care
reform is clearly unethical because of the financial hardships, physical
suffering and premature deaths that are perpetuated and would be
prevented if we switched to a single payer national health program.
It would be unethical to repeal the Affordable Care Act and do nothing
else since some provisions of the Act are beneficial. But since we can
enact and implement a single payer national health program, we are
engaging in unethical behavior by failing to do so.
Our national policymakers need to understand how profoundly unethical
their behavior is by their continued violation of the principle of
equipoise. People are suffering and dying as a result.
at 2:20 PM
Wednesday, June 17, 2015
California State Auditor
California Department of Health Care Services
Improved Monitoring of Medi-Cal Managed Care Health Plans Is Necessary
to Better Ensure Access to Care
Cover letter of report:
June 16, 2015
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the California
State Auditor presents this audit report concerning the California
Department of Health Care Services' (Health Care Services) oversight of
California Medical Assistance Program (Medi-Cal) managed care health
plans (health plans).
This report concludes that Health Care Services did not verify that the
provider network data it received from health plans were accurate.
Therefore, it cannot ensure that the health plans it contracts with had
adequate networks of providers to serve Medi-Cal beneficiaries. Health
Care Services' contracts with health plans to provide medical services
to Medi-Cal beneficiaries generally require the plans, among other
things, to maintain a network of primary care providers that are located
within either 30 minutes or 10 miles from a member's residence. To
determine whether the health plan has an adequate provider network to
meet these standards, Health Care Services receives provider network
data from each of the health plans. However, for the health plans we
reviewed, Health Care Services did not verify the accuracy of these data
before certifying the health plans' network adequacy during the Healthy
Families Program transition to Medi-Cal and did not verify data for
another health plan at the time the health plan entered the Medi-Cal
program. Similarly, it does not verify the accuracy of the data it
receives from health plans and that it provides to the California
Department of Managed Health Care (Managed Health Care), with which it
has an agreement to conduct quarterly network adequacy reviews.
Furthermore, it has not ensured that Managed Health Care performed all
quarterly reviews of health plans' provider networks required pursuant
to the agreement.
In addition, flaws in Health Care Services' process for reviewing
provider directories have resulted in it approving provider directories
with inaccurate information. Specifically, our review of provider
directories for three health plans — Anthem Blue Cross, Health Net and
Partnership HealthPlan — found many errors in directories, including
incorrect telephone numbers and addresses, or information about whether
they were accepting new patients. However, Health Care Services' review
of these same directories had not identified these inaccuracies before
it approved the directories for publication. Furthermore, we noted that
thousands of calls from Medi-Cal beneficiaries seeking assistance
through Health Care Services' Medi-Cal Managed Care Office of the
Ombudsman have gone unanswered. Specifically, each month between
February 2014 and January 2015 an average of 12,500 calls went
unanswered. Finally, Health Care Services has not performed all
statutorily required annual medical audits of Medi-Cal managed care
health plans to determine whether the health plans meet their
ELAINE M. HOWLE, CPA
Summary of report:
Comment by Don McCanne
Medicaid patients throughout the nation are being transferred into
Medicaid managed care plans, allegedly to provide more coordinated care
at a lower cost. There has been some justifiable concern that these
plans may not be delivering on their promises. This auditor's report of
California's Medi-Cal managed care plans provides some limited insight
into the performance of these plans.
Medi-Cal is California's Medicaid program for low-income individuals and
families. Three-fourths of the 12 million Medi-Cal patients are already
enrolled in the Medi-Cal managed care plans (state population 39
million). Astonishingly nearly half of all children in California are
enrolled in Medi-Cal managed care, especially since those previously
enrolled in CHIP were transferred to Medi-Cal. It is a massive program.
The auditor did not look at the adequacy or the quality of the health
care services that are being delivered. Rather she looked at the plans'
reports submitted to the Department of Health Care Services on the
adequacy and accessibility of their networks, the accuracy of the
provider directories, and the effectiveness of the Medi-Cal Managed Care
Office of the Ombudsman - basically just whether or not the
infrastructure was adequate to provide the promised services.
The auditor found that the reports from the plans were inadequate and
the oversight provided by the California Department of Health Care
Services and the Department of Managed Health Care was also inadequate.
It was not possible to determine the degree of the failures, but enough
information was gathered to know that the system fell far short of the
requirements. Some perspective of the extent of this problem is
demonstrated by the fact that each month about 12,500 calls to the
Office of the Ombudsman went unanswered. The Medi-Cal system wasn't
working for the patients, and the calls for help overwhelmed the
Some have suggested that the funding was inadequate. Medicaid has been
chronically underfunded, and Medi-Cal is near the bottom of all states
in its level of funding. Also governments chronically underfund their
own agencies. In a health care system that is infamous for its
administrative excesses, under the Affordable Care Act we have expanded
the need for yet more administrative services for both the health plans
and for the government bureaucracies that provide oversight (not to
mention the providers), yet our federal and state legislators do not
authorize adequate funds to carry out their requirements.
Although the auditor attributed most of the blame to failures of the
California Department of Health Care Services, the real blame lies with
those who devised these expensive and inefficient programs and then
failed to fund them adequately. The agencies cannot do their job if they
are unable to hire the personnel that they need.
Although this report raises serious concerns about the infrastructure,
much more important is whether or not the actual health care services
are adequate in both quantity and quality. Though this report does not
address that, there is reason to be concerned. Are the health plans
really delivering more integrated care at a lower cost? Is the funding
enough for the dedicated health care professionals to deliver on this
promise? Unlikely, based on preliminary information. It is unfortunate
that we will have to wait longer until the severity of the deficiencies
If nothing else, it does appear that, through Medicaid, we have
institutionalized a lower tier of a two-tiered health care system. The
Affordable Care Act perpetuates a mediocre system for middle-income
individuals and families and a substandard system for those with low
incomes. Most other wealthy nations have a single higher health care
quality standard for all of their people, delivered at a much lower
cost. What is our resistance to learning from them?
at 2:08 PM
Tuesday, June 16, 2015
June 15, 2015
Obamacare's final test: if it survives the Supreme Court, it's here to stay
By Sarah Kliff
In the next two weeks, the Supreme Court will rule in King v. Burwell, a
challenge that threatens to dismantle Obamacare by ending financial
subsidies for 6.4 million Americans.
If the challengers win, it would throw the health-care law into chaos.
But if the White House prevails, something equally momentous will have
occurred: President Obama's signature legislative accomplishment will
actually, really, definitely be here to stay.
"If we win this, I think that's major, and I'd call it a monumental
step," says Ron Pollack, executive director of the pro-Obamacare
advocacy group Families USA. "It means that the ACA is a permanent part
of the American health-care system."
June 15, 2015
Will Inefficient Financial Healthcare Reform Kill the ACA?
By Jacqueline DiChiara
Is the Affordable Care Act (ACA) hurling the healthcare industry further
into the red? The answer is a definite yes, according to a recent
RevCycleIntelligence.com article about key findings from a pair of
Harvard Medical School professors' Health Affairs blog study.
The bureaucracy will gobble up a quarter of federal spending; the ACA
will add almost $274 billion in new administrative costs heading into
2022, well beyond what would have been expected had the ACA not been
passed, maintain David U. Himmelstein, MD and Steffie Woolhandler, MD.
"Previous work we've done suggests that a third of the total healthcare
dollar goes to paperwork and bureaucracy," Himmelstein states. Such
numbers are likely mere underestimates that require updating, he confirms.
"Most other nations are much more efficient in the way that they finance
and administer healthcare," Himmelstein confirms. "There is no reason,
other than political difficulty, that we can't shed massive bureaucratic
Himmelstein predicts the ACA will soon lose dominance within the
healthcare industry, moving forward. "Instead of fighting about whether
to go back to an old system, repealing the ACA," he says, "the debate
will turn to how we move from here to something different, hopefully
"Costs are likely to resume an upward growth pattern and more and more
people are going to find themselves grossly underinsured. All of those
problems are going to be part of the debate very soon," he says. "We are
moving to a handful of giant organizations controlling the health
delivery system, largely focusing on their own interests and giving lip
service to wanting to serve patients, but really acting like corporate
masters of the healthcare system and shaping it to do what they want
rather than what patients need," he maintains.
The simple solution is to implement national health insurance,
Himmelstein maintains. "Is it appropriate that some private organization
have the decision making power over the healthcare of the vast majority
in that region?" he asks. "Privatization is much less efficient,"
Himmelstein states. "We'll again be coming to a debate about national
Comment by Don McCanne
Everywhere you turn these days there is rampant speculation on what the
impact will be of the soon-to-be-released Supreme Court decision on King
v. Burwell - the case on whether or not subsidies can be provided to
enrollees in federal ACA insurance exchanges. In the long run, the
outcome doesn't matter.
As David Himmelstein (co-founder of PNHP) explains in the
RevCycleIntelligence article above, "Costs are likely to resume an
upward growth pattern and more and more people are going to find
themselves grossly underinsured," and "Instead of fighting about whether
to go back to an old system, repealing the ACA, the debate will turn to
how we move from here to something different, hopefully better."
Regardless of the King v. Burwell outcome, "We'll again be coming to a
debate about national health insurance."
It's absolutely inevitable.
Monday, June 15, 2015
June 15, 2015
Health care cost-sharing prompts consumers to make big cuts in medical
By Ben Handel
Is that surgery really worth it? Do I really value that cancer
screening? Is that extra imaging service necessary?
These are the kinds of questions consumers ask themselves when their
insurance plans require higher cost-sharing for medical services. This
is a new reality in the US health care system as large employers
offering coverage have moved aggressively toward less generous,
high-deductible insurance offerings.
This shift was accelerated by the "Cadillac Tax" provision contained in
the Affordable Care Act (ACA), which, starting in 2018, places an excise
tax on employers offering insurance plans that cover very high levels of
medical spending. Further, many of the consumers enrolling in the public
state exchanges created under the ACA have enrolled in lower- coverage
financial plans that cover an average of 60% (bronze) or 70% (silver) of
medical expenditures, similar to typical high-deductible coverage.
Though these policies are in part motivated by the government's need to
reduce its share of total health care spending, they are also driven by
the expectation that they will lead consumers to use higher-value,
lower-cost medical services.
In my recent research with Zarek Brot-Goldberg, Amitabh Chandra, and Jon
Kolstad, we dug into the mechanisms for how and why consumers reduce
medical spending when faced with higher cost-sharing.
To do this, we studied the medical claims and medical spending of more
than 150,000 employees and dependents from one large firm that moved
everyone from an insurance plan that provided completely free health
care to a high-deductible plan covering 78% of medical spending on average.
During the switch, the in-network providers that consumers could access
and the services covered remained the same. As a result, this switch
presented an excellent opportunity to assess in detail how consumers
respond to markedly increased cost-sharing.
Primarily, we wanted to know whether employees would reduce their
medical spending as a result of the change and, if so, by how much.
Further, we hoped to learn where specifically they'd cut back. Would
they spend less on nonessential services or reduce spending across the
board? Would they try to find cheaper sources of health care? Do some
employees cut more than others? Do employees correctly perceive the true
marginal price of care in a complex insurance contract?
Health care spending plunges
We first established that increased cost-sharing does reduce medical
spending at the firm. Age- and inflation-adjusted medical spending
dropped by 19% – from a base of approximately US$750 million in spending
– when employees switched to high-deductible coverage.
Strikingly, many of the spending reductions come from the sickest
employees. The sickest 25% (based on prior diagnoses each year) reduced
spending by one-quarter after shifting coverage. This is especially
notable, and somewhat surprising, since these employees earn relatively
high incomes and their maximum out-of-pocket payment in high-deductible
coverage for the calendar year was approximately $6,500 for a family.
How did consumers reduce spending? A detailed data analysis reveals that
medical prices did not go down. Further, we show that consumers did not
price-shop after the switch – that is, they did not move toward cheaper
providers, for example, when they were going to undergo a specific
It turns out that all spending reductions were directly linked to
quantity reductions: consumers just consumed less medical care.
Cuts across the board
Importantly, it didn't seem like consumers were particularly choosy
about what kind of health care they cut: consumers appeared to reduce
consumption across a range of medical services, from low to high value.
For example, quantity reductions led to a 22% drop in spending on
imaging services (such as MRIs or CT Scans), some of which are likely
unnecessary. However, consumers also reduced how many preventive health
services they used – which policymakers typically believe are
underutilized – by 16%.
The cuts were across the board. Spending on mental health care fell 8%,
inpatient and outpatient hospital services declined 14% and 17%,
respectively, drug purchases dropped 20%, and emergency room services
plunged 27%. Of the top 30 medical procedures (by revenue) that we
investigated, we found that consumers reduced spending for 23 of them.
Simply put, consumers did not look for cheaper services but consumed
less medical care, and did so across almost the entire range of medical
Insurance price misperceptions
One possible reason for why these sick, relatively high-income consumers
reduced potentially valuable medical spending is that they perceived the
marginal price of their medical care to be higher than it actually is.
Take the example of a consumer who knows he/she is quite sick entering
the year and expects to spend a lot on health care. That consumer should
not worry about the deductible and cost-sharing when making medical
decisions early in the year because he/she knows that by the following
January, all medical care used after passing the plan's out-of-pocket
limit will be free. Thus, the true marginal price of health care for
this predictably sick consumer is close to $0, no matter how high the
deductible is, so care consumed early in the year is essentially free as
But we found that these consumers substantially reduced spending early
in the year when under the deductible, but once they passed it spent
more. In other words, many consumers whose true marginal price for care
throughout the year is essentially zero because of their impending high
spending don't treat incremental care as free when under the deductible.
Instead, they respond as if the price of care under the deductible is
the relevant price, despite the fact that they will spend that money
during the year regardless.
This suggests that they misperceive their own health risks, misperceive
how much medical care costs or don't understand how the high-deductible
insurance contract actually works. Similar consumer price misperceptions
are also documented in Medicare Part D, electricity markets and
What this means for reform efforts
Giving consumers direct incentives to think about their health care
spending is a cornerstone of health reform in the US and plays a large
role in several national health systems around the world, such as in France.
An important prerequisite for these reforms to be successful is that
consumers, who may or may not be making medical decisions in conjunction
with physicians, understand the costs and benefits of different health
care services. Our evidence suggests that consumers don't seem to be
responding to increased cost-sharing with nuanced expertise and instead
reduce consumption across the range of medical services, some valuable
and some likely wasteful.
Additionally, they reduce care heavily when sick and under the
deductible, even when their true marginal price of care is very low.
Thus, while increased consumer cost-sharing can be an effective
instrument for reducing health care spending, it may be a blunt
instrument for encouraging higher value medical spending, especially
relative to supply-side interventions that target physician incentives
or interventions that reduce the use of high-cost low-value medical
As health reform pushes forward, policymakers will need to recognize the
limits of consumer cost-sharing policies and focus more on how to
appropriately incentivize providers to deliver high-value, low-cost care.
"What Does a Deductible Do? The Impact of Cost-Sharing on Health Care
Prices, Quantities, and Spending Dynamics" by Zarek Brot-Goldberg,
Amitabh Chandra, Benjamin Handel and Jonathan Kolstad (43 slides):
Comment by Don McCanne
A cursory glance at this article suggests that it is simply one more
study that confirms that high deductible plans decrease health care
spending, and since you already know that you might be tempted to pass
on reading today's message. But don't skip this one if you wish to
better understand just what impact high deductibles really do have.
What is unique about this study is that it evaluated the patterns of the
change in health care spending when a large firm switched about 85
percent of its employees from a PPO plan that provided first dollar
coverage (no deductibles, no coinsurance, and $0 out-of-pocket maximum)
to a HDHP (high deductible health plan with $3,750 deductible, 10%
coinsurance, and $6,250 out-of-pocket maximum). The health care
providers were the same both before and after the change was made. This
is about as pure of a study as you could devise on this topic - the same
employees, the same health care providers, but with a change to a high
deductible with coinsurance and a new patient responsibility for up to
$6,250 in cost-sharing.
As expected, spending abruptly declined - by about 19%. So was this a
result of better price shopping, as the advocates of these
consumer-directed HDHPs tout? No. Medical prices did not go down after
the switch was made. These health care consumers did not shop prices.
What went down was the quantity of health care provided. In fact, the
sickest employees reduced their use of health care services even more -
by about 25%. The reductions in utilization were across the board -
inpatient services, outpatient services, emergency room services, mental
health care, drug purchases, imaging, and preventive health services.
Most of these are beneficial services.
Another interesting finding is that those individuals with significant
disorders who knew that they would reach their maximum out-of-pocket
spending nevertheless reduced their utilization of health care services
while they were still under the deductible. They did not need to reduce
their use of these services since after the out-of-pocket maximum is
reached, their marginal cost of additional health care is essentially
zero. Their net costs are the same regardless of their utilization. It
is likely that these sick individuals were needlessly forgoing
beneficial health care services.
The author states, "consumers appeared to reduce consumption across a
range of medical services, from low to high value." Clearly policies
that reduce the consumption of high value care are undesirable, and, for
this reason alone, deductibles and coinsurance should be eliminated. But
what about low value care? What is low value care? Is that the MRI that,
in retrospect, turned out to be normal? Wasn't there some benefit in
excluding potential pathology? Attempting to ferret out low value care
can be detrimental if it consequentially results in the blunt
elimination of high value care as well.
Besides, how much spending reduction would we really see with the
reduction in beneficial health care services that results from
deductibles? Remember that the 20 percent of individuals with greater
health care needs consume 80 percent of our health care services. Most
of this spending is well above the maximum out-of-pocket costs and thus
cost-sharing has very little impact on this spending. The deductibles
might influence utilization for the other 80 percent of us, but that
would reduce spending by only a fraction of the 20 percent of health
care that we use. Anyway, is the amount of health care used by us
low-utilizers really an egregiously excessive amount of care? We usually
have a legitimate reason for going to the doctor.
In this article, Ben Handel states, "while increased consumer
cost-sharing can be an effective instrument for reducing health care
spending, it may be a blunt instrument for encouraging higher value
medical spending, especially relative to supply-side interventions that
target physician incentives or interventions that reduce the use of
high-cost low-value medical technologies."
Instead of using detrimental demand-side patient cost-sharing
instruments to reduce spending, just think of what could be accomplished
on the supply-side using a well designed single-payer monopsony for
financing health care: global budgeting of institutions such as
hospitals, dramatic reduction of administrative waste, negotiation of
rates for services and products, bulk purchasing of pharmaceuticals,
avoiding excess capacity through planning and separate budgeting of
capital improvements, and establishing a global budget for the entire
health care delivery system.
There is no need to assess financial penalties (deductibles and
coinsurance) merely for accessing beneficial health care services. With
a single payer system, patients simply obtain the health care that they
need, when they need it. That's the way it should be.
at 2:36 PM