qotd: The tradeoff between equity and efficiency in health care financing

National Bureau of Economic Research

July 2016

NBER Working Paper 22440

Demand Heterogeneity in Insurance Markets: Implications for Equity and Efficiency

By Michael Geruso

Abstract

In many markets insurers are barred from price discrimination on consumer characteristics like age, gender, and medical history. By themselves, such restrictions are known to exacerbate adverse selection problems. But the conventional wisdom — widely reflected in policy — is that with regulatory tools like premium subsidies, it is possible to address selection and induce efficient plan choices without price-discriminating. In this paper, I show why this conventional wisdom is wrong: As long as different sets of consumers (men and women, rich and poor, young and old) differ in their willingness-to-pay for insurance conditional on the losses they generate, then price discrimination across such groups is welfare-improving. The conventional wisdom is wrong because it implicitly assumes a one-to-one mapping from insurable risk to insurance valuation. I show that demand heterogeneity that breaks this one-to-one relationship is empirically relevant in a consumer health plan setting. Younger and older consumers and men and women reveal strikingly different demand for health insurance, conditional on their objective medical spending risk. This implies that these groups must face different prices in order to sort themselves efficiently across insurance contracts. The theoretical and empirical analysis highlights a previously unexplored, but fundamental, tradeoff between equity and efficiency that is unique to selection markets.

http://www.nber.org/papers/w22440

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Comment by Don McCanne

Individuals vary in their preference for insurance and willingness to pay for it. Michael Geruso explains that insurance pricing that takes preference into consideration is welfare-improving and thus efficient. Yet efforts to improve equity by compensating for price discrimination result in a tradeoff between equity and efficiency. Do we care?

What the majority of us want is a health care system that is accessible to all and funded equitably based on ability to pay. Using the analogy of the tradeoff between equity and efficiency, a system funded by progressive taxes would be highly equitable but might be terribly inefficient because wealthier individuals might not have a preference to pay higher taxes.

The efficiency that we actually want to see is greater value in our health care purchasing through eliminating much of the administrative waste that occurs in our dysfunctional financing system. The economist's construct of efficiency as representing a measure of individual preference should be a negligible consideration when we have the ability to create a health care financing system that is equitable - fair - for everyone regardless of ideological preference.

qotd: RAND exploration of single payer alternatives

RAND

Pardee RAND Graduate School

Dissertation

May 2016

Exploring Single-Payer Alternatives for Health Care Reform

By Jodi L. Liu

Abstract

The Affordable Care Act (ACA) has reduced the number of uninsured and established new cost containment initiatives. However, interest in more comprehensive health care reform such as a single-payer system has persisted. Definitions of single-payer systems are heterogeneous, and estimates of the effects on spending vary. The objectives of this dissertation were to understand single-payer proposals and to estimate health care spending under single-payer alternatives in the United States.

Single-payer proposals are wide-ranging reform efforts spanning financing and delivery, but vary in the provisions. I modeled two sets of national scenarios – one labeled comprehensive and the other catastrophic – and compared insurance coverage and spending relative to the ACA in 2017. First, I estimated the effects of utilization and financing changes, and then I added the effects of "other savings and costs" relating to administration, drug and provider prices, and implementation.

Due to coverage of all legal residents and low cost sharing and prior to adjusting for other savings and costs, the comprehensive scenario increased national health care expenditures by $435 billion and federal expenditures by $1 trillion relative to the ACA. The range of the net effect of the other savings and costs in the literature was $1.5 trillion in savings to $140 billion in costs, with a mean estimate of $556 billion in savings. If this mean estimate was applied to the comprehensive scenario, national expenditures would be $121 billion lower but federal expenditures would still be $446 billion higher relative to the ACA. The catastrophic scenario also covered all legal residents but increased overall cost sharing, resulting in a reduction in national expenditures by $211 billion and federal expenditures by $40 billion even before adjusting for other savings and costs. Average household spending on health care in both sets of scenarios could be more progressive by income than spending under the ACA.

I also developed an interactive, web-based cost tool that allows the savings and cost assumptions to be adjusted by any user. As the debate on how to finance health care for all Americans continues, this study provides increased transparency about economic evaluations of health care reform.

http://www.rand.org/pubs/rgs_dissertations/RGSD375.html

Full Dissertation (Free download - 157 pages):

http://www.rand.org/content/dam/rand/pubs/rgs_dissertations/RGSD300/RGSD375/RAND_RGSD375.pdf

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Comment by Don McCanne

For her doctorate dissertation at Pardee RAND Graduate School, Jodi Liu has produced a superb paper on single payer reform. Single payer supporters will want to download this paper, and I'll explain why.

There remains some confusion as to the precise definition of single payer, and she shows us why by presenting the variations in twenty-five specific proposals, including, of course, the Proposal of the Physicians' Working Group for Single-Payer National Health Insurance - the 2003 version by Woolhandler, Himmelstein, et.al. Since PNHP supports a relatively precise, comprehensive model of single payer, many of the models she discusses we would not label as single payer, though we can see why others would (Vermont H 202 as an example). Because of this variation in design, it is difficult to state precisely what impact a generic single payer program would have. Each one is different.

She selects two sharply contrasting versions for specific analyses of health care spending: a comprehensive single payer proposal, the American Health Security Act (S 1782) of Sen Bernie Sanders and Rep Jim McDermott, and the Health-Insurance Solution, a "single payer" plan of catastrophic health insurance as proposed by Kip Hagopian and Dana Goldman. Although you can learn much on how not to design a single payer system from her analysis of the Hagopian/Goldman model, here we'll mention only her findings on the Sanders/McDermott model since it is fairly similar to the PNHP proposal.

She first determines the increased spending that would occur by covering everyone with comprehensive benefits (actuarial value 98 percent). She then determines the effect of other savings and costs that are supported by published policy studies, such as the reduction in administrative waste and the greater value obtained through monopsonistic health care purchasing.

It will come as no surprise that her estimate of the mean net savings in national health expenditures would be about $121 billion under this proposal. The federal portion of spending would be about $446 higher than under ACA, but that is actually desirable because the proposed federal taxes would be more equitable that the fragmented funding system we have under ACA. She points out that the mean estimate of savings resulting from the other savings and costs according to the policy literature would be about $550 billion, but the range of the estimate would be between a savings of $1.5 trillion to increased costs of $114 billion. The wide variation in the interpretation of the policy literature explains to some extent the reason why various analysts have come up with very different results when analyzing single payer models.

People frequently ask what it would cost them if we had a single payer system, and they want to compare that to their current insurance premium. There are far too many variables to answer that without having a final markup of single payer legislation, plus most people do not realize how much they are paying for health care besides their insurance premiums and cost sharing, especially considering that over 60 percent of health care spending is paid through our tax system.

But people can get a good idea of average percent in personal savings by checking Figure C.2 in the Appendix of this paper. It shows that both the comprehensive base proposal (Sanders/McDermott) and the comprehensive alternative proposal (John Conyers HR 676) would provide significant savings for everyone except those over 1000 percent of the federal poverty level ($253,000 for a family of four).

Another great feature of this study is that the author has created an interactive Cost Tool which is "to improve the transparency of the estimates by disaggregating the effects and allow users to view, in real time, the results of adjusting the assumptions underlying the effects." Although there still may be differences in opinions about the impact given to the various adjustments, it does bring us closer to understanding the overall financial impact of single payer reform. Although the Tool is not yet up on the Internet, in a personal communication Jodi Liu says that she hopes to have it available soon.

At any rate, this study shows once again that a well designed, comprehensive single payer system really would provide health care for everyone without increasing health care spending over the current level under ACA, based on the mean estimate of the financial impact of single payer.

So, again, download this paper now. It will be very helpful in your future advocacy for single payer.

qotd: Insurers automatically enrolling their clients in private Medicare Advantage plans

Kaiser Health News

July 27, 2016

Some Seniors Surprised To Be Automatically Enrolled In Medicare Advantage Plans

By Susan Jaffe

Only days after Judy Hanttula came home from the hospital after surgery last November, her doctor's office called with bad news: Records showed that instead of traditional Medicare, she had a private Medicare Advantage plan, and her doctor and hospital were not in its network.

Neither the plan nor Medicare now would cover her medical costs. She owed $16,622.

After more than five hours making phone calls, she learned that because she'd had individual coverage through Blue Cross Blue Shield when she became eligible for Medicare, the company automatically signed her up for its own Medicare Advantage plan after notifying her in a letter. Hanttula said she ignored all mail from insurers because she had chosen traditional Medicare.

With Medicare's specific approval, a health insurance company can enroll a member of its marketplace or other commercial plan into its Medicare Advantage coverage when that individual becomes eligible for Medicare. Called "seamless conversion," the process requires the insurer to send a letter explaining the new coverage, which takes effect unless the member opts out within 60 days.

Medicare officials refused recently to name the companies that have sought or received such approval or even to say how long the Centers for Medicare & Medicaid Services has allowed the practice. Numerous insurers, including Cigna, Anthem and other Blue Cross Blue Shield subsidiaries, also declined to discuss whether they are automatically enrolling beneficiaries as they turn 65.

(David Lipschutz, a senior attorney at the Center for Medicare Advocacy) said giving beneficiaries the chance to opt out doesn't adequately safeguard consumers. An insurer's notification letter can easily be mistaken or overlooked in the deluge of marketing materials seniors receive.

"The right to opt out doesn't exist if they didn't get the notice or if they did get the notice but didn't understand it," he said.

http://khn.org/news/some-seniors-surprised-to-be-automatically-enrolled-in-medicare-advantage-plans/

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Comment by Don McCanne

We have provided numerous examples wherein CMS has provided the private Medicare Advantage plans with an unfair advantage over the traditional Medicare program, at a considerable cost to taxpayers. This is yet one more example. In a secretive process, CMS is allowing private insurers to automatically enroll their current clients in their Medicare Advantage plans without requiring them to opt in. Patients must understand what is happening and then take specific action to opt out if they would prefer to be enrolled in the traditional Medicare program.

The is one more step towards privatization of Medicare and the transition to a premium support program (voucher equivalent, with declining purchasing value over time). This is supported by anti-government conservatives and many neoliberals, but, worse, it is with the complicity of CMS.

Once we have a dominant market of competing private Medicare plans, the egalitarian nature of the Medicare program will have been irreparably damaged, and with it our hopes for an improved Medicare for all will have been dashed. The more complex the privatization of Medicare becomes, the greater the resistance to single payer since it "will not be feasible" to dismantle the administratively complex, expensive private health care financing system. So why is it now feasible for us to dismantle our efficient and less costly public Medicare program?

The feasibility argument of the privatizers is a con job. The longer we wait to move to single payer, the worse will be the transition.

qotd: Orszag and Emanuel do not seem to understand bundled payments

Bloomberg View

July 25, 2016

Saving Money on Cardiac Care

By Peter R. Orszag

The federal government's own actuaries are once again pessimistic that America's health-care costs will continue their slow growth. Thankfully, their boss, Sylvia Burwell, the secretary of Health and Human Services, is working hard to prove them wrong.

A key driver of this Medicare spending deceleration has been the health-care market's expectation that the payment system is shifting toward value-based payments -- that is, paying doctors, hospitals and other providers based on how well they treat medical problems rather than on how many services they provide.

At this point, it's crucial to fulfill the market's expectations. If the system now fails to move quickly away from fee-for-service payments, many recent efficiency efforts are likely to be dropped.

A big question is how. The most promising, and practical, path forward is to set up a cascading array of "bundled payments" -- that is, all-inclusive reimbursement for specific episodes of care.

The bundled payments must be mandatory, as is Medicare's bundle for hip and knee surgery -- itself an historic step. Making the shift voluntary for hospitals and doctors leads to watered-down incentives, in an attempt to encourage participation. And weak incentives lead to disappointing outcomes.

Which brings us to Secretary Burwell's important announcement Monday. She is building on the hip and knee bundle, not only by expanding into other forms of orthopedics but, importantly, by introducing mandatory bundles in cardiac care.

Medicare will pay a set fee for coronary artery bypass grafts, a form of surgery that improves blood flow to the heart. The agency will also pay a set fee for the care involved in responding to a heart attack.

The Medicare actuaries may question whether these new bundles can save much money, but that's not too surprising; they've been missing the boat on the changing dynamic in health-care payments for years.

The bundled payments illustrate how the system is changing for the good. Secretary Burwell has just made it vividly clear to everyone in health care that the days of paying for volume are ending.

http://www.bloomberg.com/view/articles/2016-07-25/saving-money-on-cardiac-care-ir2iwfit

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Politico Pulse

July 26, 2016

Medicare doubles down on bundled payments

By Dan Diamond

With all eyes on the Democratic convention, CMS on Monday made a key move to secure the party's signature health reform: It introduced its second bundled mandatory payment program, this one focused on cardiac care.

The bundled payment program is the latest big initiative in the Obamacare effort to bend the health cost curve. It's also positioned to play a crucial role as the White House tries to tie 50 percent of Medicare payments to alternative care models by 2018. Liberal experts say they can't get there with accountable care organizations and voluntary models alone, and that mandatory bundled payment programs are proven successes.

The decision to make both mandatory programs eligible as Advanced APMs under MACRA is intended to entice physicians to participate.

For veterans of the White House fight over Obamacare, Monday's news felt like a valedictory. "Finally," said Zeke Emanuel, who served as a White House aide and pushed for mandatory bundled payments to be included in the Affordable Care Act. (Cost controls like bundled payments were left out, in part, to minimize the law's effect on the health care industry.) "I'm glad they drank my Kool-Aid."

http://www.politico.com/tipsheets/politico-pulse#ixzz4FXIuha3F

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Comment by Don McCanne

The bureaucrats are fixated on the meme that we can reduce spending by paying for the value of health care rather than the volume. They have been disappointed with models such as accountable care organizations, and they are now turning to MACRA and its alternative payment models (APMs), with a renewed surge of interest in bundled payments.

The concept behind bundled payments is that, by assigning a single fee to a given intervention such as a joint replacement, you will motivate physicians to not spend money on portions of the care that are not really necessary. Medicare, as the payer, gets the advantage of a discounted price, and the physicians and hospitals get to keep whatever they save beyond the discount.

Does this really reduce volume? The joint replacement will be done regardless, so what volume will be reduced? Doing only a cursory pre-op exam, missing the ejection murmur and omitting the pre-op cardiac consult? Send a patient home earlier when it is possible that the post-op status might not be fully stabilized? Cut back on rehabilitation, risking a less favorable long term outcome? These might reduce volume, but they certain bring into question quality and thus value.

Now they want to pay a set bundled payment for a heart attack. The clinical course of a heart attack is highly variable and could involve only a few or a great many interventions. Under a bundled payment, the physicians and hospital are bearing the risk of the high costs of a potentially complicated, protracted course. Isn't it the role of the insurer, in this case Medicare, to pool risk? Shifting that risk to the health care delivery system creates the potential for either a reduction in important beneficial health care services, or exposing the delivery system to potential monetary losses and the risk of insolvency - neither of which are desirable.

Perhaps an even more important issue is the fallacy that you can bundle most care and thus make strides in bending the cost curve. Think of the  current proposals to bundle coronary artery bypass grafts and to bundle care for a heart attack - one might work some of the time, but the other has outcomes that are too variable. Now think of other hospital admissions - such as workup of a protracted fever, diagnosis and management of an HIV positive patient who has symptoms of a potentially serious but undiagnosed complication, or perhaps a child with fatigue and weight loss. The costs and outcomes are highly variable. How can you bundle those? Or think of the multitude of patients presenting in a ten minute office visit with a set of complex clinical symptoms that would require extensive workups. How do you bundle those?

To get to the goal of fifty percent of Medicare payments being tied to APMs, you are going to have to figure how how to bundle the large numbers of common clinical presentations, like the sore throat that turns out to be due to acute leukemia, or the routine family planning visit in a patient who feels ill that day and turns out to have diabetic ketoacidosis, or the chronic headache patient who has a focal motor seizure in front of you during the visit. What would otherwise be routine medical visits are often not bundable but are better handled on a fee-for-service basis. That makes the point that most health care is provided in a relatively fixed volume. It is really difficult to reduce the volume for patients who actually need care, and that's almost all patients. Besides, in most instances we really don't know how to measure value and convert that into a fixed fee. Volume is relatively fixed, and value is what we all strive for anyway.

Peter Orzag and Ezekiel Emanuel don't listen to others, not even the Medicare actuaries, but they should be able to figure out these obvious fundamentals. Since they haven't, maybe it's them who have been drinking Zeke's Kool-Aid.

Since it's really cost that they are concerned about we should move forward with reform that has been proven repeatedly to slow the rate of health care inflation - a single payer national health program. Peter and Zeke need to abandon their false meme that single payer is "not feasible." What isn't feasible is expecting to fix our dysfunctional health care financing system with "bundled payments."

qotd: Drug firms gouge taxpayers by gaming Part D catastrophic coverage

Associated Press

July 25, 2016

Pricey Drugs Overwhelm Medicare Safeguard

By Ricardo Alonso-Zaldivar

A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.

The cost of Medicare's "catastrophic" prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program's number-crunching Office of the Actuary.

Medicare's catastrophic coverage was originally designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.

Lawmakers who created Part D in 2003 also hoped added protection would entice insurers to participate in the program. Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most expensive patients.

Concerns about catastrophic costs undercut the image of Medicare's prescription program as a competitive marketplace in which private insurers bargain with drugmakers to drive down prices.

"The incentive is to price it as high as they can," said Jim Yocum, senior vice president of Connecture, Inc., a company that tracks drug prices. Medicare is barred from negotiating prices, "so you max out your pricing and most of that risk is covered by the federal government."

http://hosted.ap.org/dynamic/stories/U/US_MEDICARE_PRICEY_DRUGS

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Comment by Don McCanne

When the Medicare Part D program covering drugs was designed, conservatives were in control of the government. As a result it was decided that the ideology of competition in the marketplace should be used to improve value rather than using government administered pricing. Today's message demonstrates once again that markets do not work in health care.

Congress knew that they would have to protect the private insurers from adverse selection - that patients with multiple chronic conditions could place an extra burden on the insurers with whom they enrolled. Thus they established catastrophic coverage with the government (taxpayers) paying 80 percent of the costs over a given threshold. This was not to protect the patients, but rather it was to protect the insurers. That is, it was not to protect the taxpayers who finance much of the program, but rather it was to protect the participants in the marketplace - the drug manufacturers, insurers, and pharmacy benefit managers - using our taxpayer funds.

Under the catastrophic coverage, insurers pay 15 percent, patients pay 5 percent, and the taxpayers pay 80 percent. This allows the drug companies to drive their prices sky high. The 15 percent paid by the insurers is closer to the reasonable price of drugs and so they have less incentive to negotiate better prices, since most of it is being paid by the government anyway. The 5 percent paid by the patient is accepted as a necessary "skin in the game" contribution so patients will not fill prescriptions that they allegedly "do not really need" (a flawed policy concept). The 80 percent paid by taxpayers perpetuates the highly dysfunctional, fragmented financing system in the U.S. - using government money for private solutions - that has driven our health care spending up to levels much higher than all other nations.

The magic of the marketplace in health care is a fraud. Taxpayers pay far less for drugs purchased by the government for Medicaid and the VA system. Other nations with greater government oversight of their health care systems also pay much less.

With a well designed single payer national health program, our nation's pharmacy bill would be fair, and everyone would get the drugs they need. With the price of many drugs now exceeding median household income, you would think there would be a demand to fix our health care financing system. You would think so, but where's the action?

qotd: Medical Economics: Obamacare receives a big, fat 'F' from physicians

Medical Economics

July 25, 2016

Obamacare receives a big, fat 'F' from physicians

By Joanna Haugen, Jordan Rosenfeld

The Affordable Care Act (ACA) has been a lightning rod for criticism from various healthcare stakeholders, including physicians, since the law's passage six years ago.

With the upcoming presidential election likely to alter the landscape of "Obamacare"—from simple tweaks by Democrats to outright attempted repeal by Republicans—Medical Economics asked healthcare policy experts and our readers to debate the law's effect on U.S. physicians.

Our editorial staff, with the assistance of our physician advisers, selected eight provisions and consequences (both intentional and unintentional) stemming from the law.  Policy analysts provided their thoughts on how Obamacare has shaped the last six years. Then we  asked physicians from our editorial advisory board, our 200-member Reader Reactor Panel (comprised of physician readers nationwide who help direct our content), and our e-newsletter subscribers to grade the various elements based on their own experiences.  Each physician ranked each element in terms of how it assisted their day-to-day work as physicians on a score from 0 (not at all) to 10 (extremely helpful). The average of all respondents was used to derive the letter grade. Physicians also offered short justifications for their ranking.

Medicare bonus for primary care physicians

  Grade: 33 = F

Medicaid-Medicare parity

  Grade: 34 = F

Increased coverage through healthcare insurance exchanges

  Grade: 35 = F

Narrow networks

  Grade: 29 = F

Accountable care organizations

  Grade: 29 = F

Outcomes-based reimbursement

  Grade: 28 = F

Physician ratings via the Physician Compare website

  Grade: 26 = F

Expansion of health IT

  Grade: 31 = F

http://medicaleconomics.modernmedicine.com/medical-economics/news/obamacare-receives-big-fat-f-physicians

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Comment by Don McCanne

Celebrations of the success of the Affordable Care Act have to be tempered by the knowledge that it leaves too many uninsured, that health care is still not affordable for far too many, and that the benefits of tighter insurance regulation were largely offset by the insurance design changes of excessive cost sharing and restrictive narrow networks. One other goal was to improve payment systems so that patients would receive greater quality at lower costs. So what do physicians think about the implementation and effectiveness of the design changes in the payment system?

In this survey, physicians gave a grade of F to all eight of the design features evaluated. In trying to improve payment systems, the legislators and bureaucrats have certainly botched things up. Not only have they failed to achieve any improvement, they have made things worse. Not only that, they have compounded physician burnout, now affecting over half of all physicians. Having an unhappy physician negatively impacts patient care.

Much blame can be attributed to the focus of the policy community and the MBAs that guide them. Medicine is about taking care of patients, but the policy community approaches it as a business that can be improved by incentives.

Would a single payer system fix this? It would provide a more equitable, efficient and effective financing system, but it would still be subject the whims of legislators and bureaucrats who do not seem to appreciate the sanctity of the physician-patient relationship. Once we have in place a national single payer system, our work is not done.

qotd: The adequacy of insurance coverage is under threat

Bloomberg View

July 20, 2016

Obamacare's Other Success, Under Threat

By Editorial Board

Obamacare has made great strides toward its signature goal: to reduce the number of Americans without health insurance. Unfortunately, another important goal -- ensuring that everyone's insurance policy provides adequate coverage -- remains under siege in the courts and Congress.

Before the Affordable Care Act, private health insurers were free to exclude coverage for all sorts of care.

Moreover, if anyone's medical expenses grew too high, insurers could cut them off. A serious or complicated illness or injury could leave people essentially uninsured.

Obamacare changed things by establishing 10 categories of benefits that most insurance plans must cover -- including hospitalization, prescription drugs, laboratory services and mental health care -- and prohibiting annual or lifetime limits on those benefits.

This month, however, a federal appeals court ruled that people can buy plans with far more limited coverage. Yet those who buy such plans risk being surprised twice -- first when they're saddled with the tax penalty for not carrying adequate insurance, and then when they need care and find their coverage doesn't go as far as they thought.

Republicans in Congress have likewise targeted Obamacare's minimum coverage requirements, arguing that consumers, not the government, should determine what services they want insurers to provide.

http://www.bloomberg.com/view/articles/2016-07-20/obamacare-s-other-success-under-threat

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Comment by Don McCanne

The majority of Americans believe that everyone should have the health care that they need when they need it, and that we need a financing system that will pay for it. Others believe that they should take care of their own health care needs and not be required to pay into a risk pool that covers the health care of others. So should the health insurance system provide comprehensive coverage for all, or should it allow individuals to purchase coverage for only those benefits they perceive they might need?

"As a man, why should I have to pay for maternity benefits I'll never use?" "As a woman, why should I have to pay for treatment of prostate cancer - a disease that I'll never have?" "I take good care of myself; why should I have to pay for care of disorders of others due to their smoking, illicit drug use, reckless driving, sexual promiscuity or whatever?" "I'm healthy so why can't I wait until I will likely need health care instead of wasting money on insurance now?"

"I want to take care of myself by buying only the insurance I need now, and everyone else can buy whatever they feel they need." But what about that unexpected disorder that racks up medical bills of $350,000? "Well, I didn't mean that. Nobody can pay those bills, so the government should pay it instead."

So we're divided between "we're all in this together" and "I'll take care of myself, and you're on your own." But medical care doesn't work that way. The twenty percent of people who use eighty percent of health care are reliant on pooled funds to pay for their health care. Most of the eighty percent who are relatively healthy will someday shift into the high health care needs group and likewise also be dependent on pooled funds.

Although the Affordable Care Act was a step forward in pooling health care risk, there is a campaign to move us in the other direction. An effort to shut down inadequate plans was reversed by the Supreme Court, even though those plans will unfairly shift costs to others when they do not adequately cover expensive diseases and injuries. Also many politicians want to ensure that people will be able to "buy only the insurance they need" through gimmicks such as private insurance exchanges offering the choice of low benefit plans, purchases out of state to avoid regulatory oversight of insurers, reliance on health savings accounts - usually underfunded, etc.

As a group, those individuals who want to take care of themselves include many individuals who will have high medical expenses. Whatever way they set funds aside - spartan insurance plans, health savings accounts, personal savings - collectively they will not have enough funds set aside to pay for the expensive care some members of their group will need. Besides, they have fragmented much of their funds such that only a limited amount would be available for others, largely through catastrophic plans that have intolerably high deductibles. Whereas those of us who support universal pooling of risk would cover our costs equitably, those who are on their own will dump costs onto the rest of us through taxes we pay for public programs or through higher medical bills due to shifting to us the costs of care provided to those who do not pay their bills.

When people sign up for Medicare, they do not ask for only the Medicare that they need. They expect that they will get essentially the same Medicare that everyone else has (though some may receive similar benefits through the private Medicare Advantage plans). It should be that way not for just Medicare beneficiaries, but for everyone. We should improve Medicare and then make it universal. That will satisfy the majority of us who believe that we are all in this together, and for those who want to be on their own, they will accept the benefits of a Medicare for all program just as they now accept Medicare in their retirement years. Also, they will have paid in their equitable share, based on ability, just like the rest of us.

qotd: What does the 13% average Covered California premium increase mean for the rest of us?

Kaiser Health News

July 19, 2016

Covered California Health Plan Rates To Jump 13.2 Percent In 2017

By Chad Terhune and Pauline Bartolone

California's Obamacare premiums will jump 13.2 percent on average next year, a sharp increase that is likely to reverberate nationwide in an election year.

The Covered California exchange had won plaudits by negotiating 4 percent average rate increases in its first two years. But that feat couldn't be repeated for 2017, as overall medical costs continue to climb and two federal programs that help insurers with expensive claims are set to expire this year.

Some health-policy experts were surprised by the magnitude of the increase in California. Others said it was inevitable the rates would catch up to the rest of the country after insurers determined their coverage had been priced too low.

Blue Shield of California said its premiums were going up 19.9 percent, the highest statewide increase. Anthem Inc., the nation's second largest health insurer, said it had an average increase of 17.2 percent in its Covered California plans. HMO giant Kaiser Permanente, in contrast, posted an average increase of 6 percent.

"While these rates hikes aren't as bad as the annual double-digit increases before the Affordable Care Act, that's not much comfort to consumers who don't see their paychecks increase by the same percentage," said Anthony Wright, executive director of Health Access, a consumer advocacy group.

These rate increases apply to people who purchase their own coverage in the individual market, not the majority of Americans who get their health insurance through work or government programs such as Medicare and Medicaid.

http://khn.org/news/covered-california-health-plan-rates-to-jump-13-2-percent-in-2017/

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Comment by Don McCanne

California has been a leader in establishing and implementing the health insurance exchanges authorized by the Affordable Care Act. Although they did hold down premium rate increases in the first two years to 4 percent (still above the rate of inflation), the higher costs of health care have caught up with them. That requires an average of a 13.2 percent premium increase for the next year (though other regulatory and market factors cause greater year to year fluctuation in the premiums). What does this mean for those enrolled in those plans and for the rest of us who obtain our health care coverage elsewhere?

Some of those enrolled in the Covered California plans will find the premium increases to be beyond their means. Many of them will be able to shop for plans with lower premiums, but they will likely have to pay higher deductibles, though those who are eligible for government subsidies may find that the burden is not too great. In changing plans, many will have to disrupt their current care since their new plans will have different provider networks. The effort to make the insurance premiums more affordable clearly has detrimental effects in physician choice and affordability of actual access to health care.

In California those people purchasing plans in the individual market will have very similar experiences except that they are not eligible for government subsidies that could reduce the impact of the premium increases.

The employee contribution to employer-sponsored plans has been more stable, although that is beginning to change. Starbucks is the latest of employers who are using private insurance exchanges in which the employees use a voucher or equivalent to purchase their plans. The impact will be very similar to the ACA exchanges - less choice in health care providers and greater out-of-pocket costs merely because eventually the voucher will not be enough to cover plans with wider networks and less cost sharing.

Even Medicare may eventually be impacted. The push to private Medicare Advantage plans is succeeding because of government overpayment to these plans. The conservative and neoliberal coalition is advocating for the establishment of a voucher program for private Medicare plans (premium support), crowding out the traditional Medicare program.

Politicians will likely respond to inevitable protests of intolerable increases in the beneficiaries' portion of the Medicare premium by allowing insurer innovations in coverage that will reduce the premiums. We already know what some of these will be: larger deductibles and other cost sharing, narrower provider networks, or intrusive prior authorization designed to limit access to expensive drug products and procedures. But this will be nothing compared to what the insurance industry will likely do once it is granted a free rein to innovate. It's in the DNA of this industry.

ACA supporters are assuring us that we don't have to worry about these high premium increases in the exchange plans because patients are free to shop for cheaper plans. But they have left out the rest of the story.

qotd: Republican and Democratic platforms on health care

2016 Republican Platform

Restoring Patient Control and Preserving Quality in Healthcare

Any honest agenda for improving healthcare must start with repeal of the dishonestly named Affordable Care Act of 2010: Obamacare. It weighs like the dead hand of the past upon American medicine. It imposed a Euro-style bureaucracy to manage its unworkable, budget-busting, conflicting provisions. It has driven up prices for all consumers. Their insurance premiums have dramatically increased while their deductibles have risen about eight times faster than wages in the last ten years.

Preserving Medicare and Medicaid

More than 100 million Americans depend on Medicare or Medicaid for their healthcare; with our population aging, that number will increase. To preserve Medicare and Medicaid, the financing of these important programs must be brought under control before they consume most of the federal budget, including national defense. We intend to save Medicare by modernizing it, empowering its participants, and putting it on a secure financial footing. We will preserve the promise of Medicaid as well by making that program, designed for 1965 medicine, a vehicle for good health in an entirely new era.

Medicare's long-term debt is in the trillions, and it is funded by a workforce that is shrinking relative to the size of future beneficiaries. When a vital program is so clearly headed for a train wreck, it's time to put it on a more secure track. That is why we propose these reforms: Impose no changes for persons 55 or older. Give others the option of traditional Medicare or transition to a premium-support model designed to strengthen patient choice, promote cost-saving competition among providers, and better guard against the fraud and abuse that now diverts billions of dollars every year away from patient care. Guarantee to every enrollee an income-adjusted contribution toward a plan of their choice, with catastrophic protection. Without disadvantaging present retirees or those nearing retirement, set a more realistic age for eligibility in light of today's longer life span.

Medicaid presents related, but somewhat different challenges. As the dominant force in the health market with regard to long-term care, births, and persons with mental illness, it is the next frontier of welfare reform. It is simply too big and too flawed to be administered from Washington. Most of the vaunted expansion of health insurance coverage under Obamacare actually has been an unprecedented expansion of the Medicaid rolls in many states. We applaud the Republican governors and state legislators who have undertaken the hard work of modernizing Medicaid. We will give them a free hand to do so by block-granting the program without strings. Their initiatives — whether premium supports for purchasing insurance, refundable tax credits, alternatives to hospitalization for chronic patients, disease prevention activities, and other innovations — are the best strategy for preserving Medicaid for those who need it the most.

https://prod-static-ngop-pbl.s3.amazonaws.com/media/documents/DRAFT_12_FINAL%5b1%5d-ben_1468872234.pdf?mid=76323&rid=16464502

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2008 Democratic Party Platform

Covering All Americans and Providing Real Choices of Affordable Health Insurance Options.

Families and individuals should have the option of keeping the coverage they have or choosing from a wide array of health insurance plans, including many private health insurance options and a public plan. Coverage should be made affordable for all Americans with subsidies provided through tax credits and other means.

http://www.presidency.ucsb.edu/ws/?pid=78283

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2016 Democratic Party Platform (DRAFT)

Universal Health Care

We believe as Democrats that health care is a right, not a privilege, and our health care system should put people before profits. Thanks to the hard work of President Obama and Democrats in Congress we took a critically important step towards the goal of universal health care by passing the Affordable Care Act (ACA), which has offered coverage to 20 million more Americans and ensured millions more will never be denied coverage on account of a pre-existing condition.

We will keep costs down by making premiums more affordable, reducing out-of-pocket expenses, and capping prescription drug costs. Democrats will also work to end surprise billing and other practices associated with out-of-control medical debt that lead to unconscionable economic strain on American households. We will offer relief so Americans do not face high costs, and we will fight back against insurers trying to impose excessive premium increases.

https://demconvention.com/wp-content/uploads/2016/07/2016-DEMOCRATIC-PARTY-PLATFORM-DRAFT-7.1.16.pdf

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Comment by Don McCanne

Political party platforms are typically loaded with rhetoric designed to fire up the political base, and, as such, are often not taken seriously. But piercing through the rhetoric there are often concepts of substance, good or bad. Take health care.

The Democratic platform of 2008 promised us a market of private health plans with government subsidies. That, in essence, is what we got as a major feature of the Affordable care Act. The Democrats rejected single payer and instead delivered on their comparatively feeble platform promises.

For the preliminary draft of their 2016 platform, the Democrats again voted to reject single payer and substituted it with a "health care is a right" statement void of any meaningful policy. They support instead mere tweaks to the Affordable Car Act.

Reading past the Republican's rhetoric, they are now promising in their platform changes to two of our most important government health programs. They would convert Medicare to a premium support program, shifting costs away from the federal government and onto the backs of Medicare beneficiaries. They would also establish block grants to the states for the Medicaid program, shifting costs from the federal government and onto the states, many of which which would likely respond with a reduction in essential health care benefits for the needy.

One party wants to coast along with a grossly deficient system, leaving millions uninsured and underinsured, and the other would begin to dismantle what protection the government does provide. Wish they would dump the rhetoric and start working on real policy that would ensure adequate, affordable health care for everyone.

Of course, several readers would remind us that the Green Party supports single payer reform. Yes... Hmm...

Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any political party or candidate for public office.

qotd: NHS privatization - lessons for the U.S.

Politics of Health Group

POHG Blog

July 17, 2016

NHS – on life support

By Alex Scott-Samuel

I want to give a broad political overview of what's happening in the NHS in England and of the background to the current situation.

As you'll know, the English NHS is in a bad way, with practically every part of the country in financial deficit. Many hospitals and many services are being closed down, cut back or rationed. At the same time, many long term contracts for the provision of NHS services are being awarded to private sector companies – though often people are unaware of this because the likes of Virgin, Carillion and SpecSavers are allowed to operate under the NHS logo.

By definition, these arrangements are wasteful, because private companies have a duty to make profits and to give those profits to their shareholders. That means that public money is haemorrhaging out of the NHS – whereas when a public provider of NHS services makes a surplus it is reinvested in the NHS.

There is also a substantial legacy of (mainly Labour initiated) private finance initiative (PFI) funded hospitals, whose exorbitant loan interest payments have to be made before NHS funds can be spent on routine services. And it's no coincidence that people's inboxes are filling up with adverts for health insurance, with their invitations to jump the NHS queues. Everything I've described forms part of what in my view is an intentional strategy by the Conservative government to create financial, managerial, professional and public chaos throughout the NHS, so that private provision of NHS services, alternative private health services, health insurance, and NHS co-payments and ultimately charges will be seen as inevitable.

This 'cultural revolution' takes many different and apparently unrelated forms whose destructive nature is denied by the government – which continues to assert that it has the public interest at heart and that it is factors like the ongoing impact of the credit crash, the increasing costs of drugs and medical equipment, the ageing population and our unhealthy lifestyles which are the true problems facing the NHS. The building blocks for privatisation to which I have referred currently include: the aforementioned awarding of NHS contracts to private bidders – often asset strippers who provide poor quality services, fragment and undermine the cohesive public ethos of the NHS; the creation by the Treasury of NHS deficits and of regulations which forbid them; enforced rationing of services to extend waiting lists and encourage patients to seek private alternatives; manufactured confrontations with doctors and other members of the NHS workforce; the imposition of 'new models of care' which undermine NHS hospitals and create community based healthcare structures ripe for privatisation; personal health budgets, designed to link with health insurance. There are many more and I can provide documented evidence for all of them. It is a national scandal.

What is to be done? Until we have a government committed to tackling and reversing this appalling onslaught on our beloved NHS, we must continue to expose what is happening, to challenge it and to campaign loudly and widely in order to increase public awareness and action.

http://www.pohg.org.uk/blog/nhs-on-life-support/

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Comment by Don McCanne

The phased privatization of England's National Health Service is taking a toll in undermining "the cohesive public ethos of the NHS." This brief description by Dr. Alex Scott-Samuel will give you a hint of the disaster that is taking place. Their political leaders apparently have learned nothing from the dysfunction that characterizes our system in the U.S., nor are we learning anything from them.

At a time that we need to be converting our fragmented public and private insurance system into a single public program, we are going in the opposite direction. Our public Medicare program is being privatized through similar cognitive processes as are taking place in England.

Just as the Conservative and Labor parties have conspired in these changes, here in the U.S. the Republicans and Democrats, the latter now dominated by the neoliberals, are damaging the traditional Medicare program through neglect while pushing on with fiscal and regulatory policies that have expanded enrollment in the private Medicare Advantage plans. When you read the paragraph above on the "cultural revolution" you cannot help but note the similar ethic of the two nations driving this insane march to rent-seekers nirvana at a cost of compromising patient care.

We can learn something from this, can't we?

qotd: Physicians are not familiar with the MACRA reforms, nor the ensuing pain

Modern Healthcare

July 14, 2016

Holy MACRA! Half of docs have never heard of Medicare payment reform

By Dave Barkholz

Half of non-pediatric physicians have never heard of the Medicare Access and CHIP Reauthorization Act of 2015—a new CMS payment plan that will put 4% or more of their Medicare reimbursement at risk beginning in 2019, according to a new survey by Deloitte & Touche.

With CMS preparing final rules this autumn, just 21% of self-employed or small-group physicians and 9% of physicians employed by hospitals or larger groups were even somewhat familiar with the pending reimbursement changes, the survey showed.

Physicians with a high share of Medicare payments were just as clueless about MACRA as those with lesser exposures, Deloitte found.

MACRA has two payment tracks. Clinicians in advanced alternative payment models can earn bonuses annually of 5%.

The majority of physicians, though, will participate in the Merit-based Incentive Payment System. On that track, physicians can earn plus or minus 4% of reimbursement in 2019, 5% in 2020, 7% in 2021 and 9% in 2022.

Medicare's own MACRA projections show the vast majority of physicians in groups of less than 10 suffering penalties.

That includes 87% of solo practitioners who can expect their reimbursement to fall and 70% of physicians in groups of two to nine, Medicare data show.

http://www.modernhealthcare.com/article/20160714/BLOG/160719930/blog-holy-macra-half-of-docs-have-never-heard-of-medicare-payment

Deloitte release:

http://www.prnewswire.com/news-releases/deloitte-survey-finds-low-physician-awareness-and-many-needed-changes-by-physicians-for-medicares-macra-program-300297982.html

Quote of the Day: MACRA and the ethics of physician burnout (4/22/16):

http://www.pnhp.org/news/2016/april/macra-and-the-ethics-of-physician-burnout

(WARNING: Reading the Table of Contents of the following document has been known to cause acute bouts of depression)

Federal Register: Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models:

https://www.federalregister.gov/articles/2016/05/09/2016-10032/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm

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Comment by Don McCanne

Physicians celebrated the passage of MACRA because it brought the end to the despised SGR method of making adjustments to Medicare payment rates. The legislation was not simply a repeal of SGR, but it was repeal and replace legislation. Most physicians are not "even somewhat familiar with the pending reimbursement changes."

Physicians complain about Medicare's low payment rates, but are they in for a surprise. Most solo and small group physicians will have rate cuts of up to 9 percent under MACRA.

Those interested in more information may want to read the Federal Register entry on MACRA's MIPS and APM (link above), or maybe not, since it could take you the better part of a week. Just reading the very long Table of Contents may be enough.

In a fairly recent Quote of the Day we described how MACRA will likely compound the current epidemic of physician burnout (link above). It's depressing.

We can do something about it. We can enact and implement a well designed single payer national health program. For those who think that the current system is better, it is probably time to make an appointment with your mental health professional.

qotd: Projected national health expenditures

Health Affairs

July 13, 2016 (Online before print)

National Health Expenditure Projections, 2015–25: Economy, Prices, And Aging Expected To Shape Spending And Enrollment

By Sean P. Keehan, John A. Poisal, Gigi A. Cuckler, Andrea M. Sisko, Sheila D. Smith, Andrew J. Madison, Devin A. Stone, Christian J. Wolfe and Joseph M. Lizonitz (all from CMS Office of the Actuary)

Abstract

Health spending growth in the United States for 2015–25 is projected to average 5.8 percent — 1.3 percentage points faster than growth in the gross domestic product — and to represent 20.1 percent of the total economy by 2025. As the initial impacts associated with the Affordable Care Act's coverage expansions fade, growth in health spending is expected to be influenced by changes in economic growth, faster growth in medical prices, and population aging. Projected national health spending growth, though faster than observed in the recent history, is slower than in the two decades before the recent Great Recession, in part because of trends such as increasing cost sharing in private health insurance plans and various Medicare payment update provisions. In addition, the share of total health expenditures paid for by federal, state, and local governments is projected to increase to 47 percent by 2025.

National Health Expenditures (NHE) 2016

NHE  $3.3507 trillion 

NHE as percent of GDP  18.1%

Government proportion of NHE  46%

NHE per capita  $10,345.5

Conclusion

The health sector is in the midst of a unique period, in which various forces are exerting differential pressures on health spending growth. Economywide and medical-specific price growth have been very low, helping restrain inflation's impact on health spending, and the Medicare program is experimenting with various alternative payment approaches. Meanwhile, many Americans are gaining access to health coverage for the first time, aging into Medicare, or finding that a greater share of their health expenses needs to be paid out of pocket. And the Medicaid program is evolving: Its population mix is increasingly likely to be covered through private plans.

For the period 2015–25, growth in health spending is projected to average 5.8 percent, influenced in part by an expectation of higher economywide and medical prices. By 2025, as economic, legislative, and demographic influences play out, the health spending share of the economy is projected to reach 20.1 percent, up from 17.5 percent in 2014, and governments are anticipated to sponsor 47 percent of health spending, up from 45 percent in 2014. The percentage of the US population that is uninsured is expected to be 8 percent in 2025, down from about 11 percent in 2014.

http://content.healthaffairs.org/content/early/2016/07/12/hlthaff.2016.0459.abstract

CMS National Health Expenditure Projections 2015-2025:

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2015.pdf

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Comment by Don McCanne

The Great Recession has contributed to slowing of the growth in health care spending in recent years, but the future changes are predicted to be more closely related to various demographic related coverage changes plus certain payment trends including the increase in cost sharing in private insurance plans. Also the increase in the government contribution to our national health expenditures deserves special mention.

Regarding increases in patient cost sharing, it is no secret that this has been a blunt instrument to control spending, resulting in a decline in use of beneficial health care services. As has been stated repeatedly, we need more patient-friendly methods of slowing the increase in spending such as fairer publicly-administered pricing through a single payer national health program.

The government contribution to our national health expenditures has increased to 46 percent, but that does not include two large components of taxpayer-funded government spending on health care: 1) The government contribution to employee health insurance on the federal, state and local levels, and 2) the massive tax expenditures for employer-sponsored health plans (i.e., the health insurance component of the employee benefit package is not subject to income taxes, reducing revenue for the government which must be made up by other taxpayers).

The irony is that we already pay in taxes devoted to health care alone more than almost every other nation pays in public and private health care spending combined. Without increasing our current level of spending we could pay for a comprehensive, government-financed, single payer national health program. Yet we continue to support our dysfunctional financing system that wastes so much on administrative excesses while perpetuating injustices by misallocating distribution of our health care resources.

We can and must do better.

qotd: Ending the scourge of surprise medical bills

Los Angeles Times

July 12, 2016

Ending the scourge of surprise medical bills

By The Times Editorial Board

California lawmakers have been trying for more than a decade to protect hospital patients from being hit with huge bills from doctors who aren't part of their health insurer's network. They have another opportunity to do so this year, and they should seize it.

The problem arises when patients go to an in-network hospital or clinic to be treated by an in-network surgeon or other physician, but wind up receiving care (often without their knowledge) from an anesthesiologist, pathologist, radiologist or other specialist who's not in the network. A nasty surprise arrives weeks later, when the out-of-network specialists bill them for the portion of their fee that the insurer wouldn't cover — an amount that can be in the thousands of dollars. According to a survey by the Kaiser Family Foundation, 70% of the patients struggling to pay out-of-network doctors had not known they were going to be treated by someone who didn't accept their insurance.

Physicians' trade groups insist that they don't like surprise medical bills either. The challenge has been figuring out how to create a system that encourages insurers, hospitals and doctors to avoid these situations while still providing a fair payment to the out-of-network physicians who provide treatment.

Congress provided a measure of help in the Affordable Care Act for patients receiving emergency care from out-of-network doctors by requiring insurers to cover the same percentage of the costs as they would have if the doctors had been in network. California law goes further, barring out-of-network doctors who deliver emergency care from billing patients for the amount the insurer doesn't cover. But that still leaves patients vulnerable for non-emergency care.

Having hospitals and clinics make sure that each patient is treated only by specialists in the patient's provider network would be one way to end surprise bills, but it would require them to manage doctors more directly than they do today. And there's no guarantee today that the necessary specialists would be available in a patient's network.

Assemblyman Rob Bonta (D-Alameda) and a bipartisan group of cosponsors have taken a more pragmatic approach. Their bill, AB 72, would require out-of-network doctors to obtain a patient's permission at least a day before providing non-emergency treatment at an in-network hospital or clinic. If the patient doesn't voluntarily agree to be treated by a specific out-of-network doctor and pay the extra charges, he or she couldn't be billed for more than an in-network provider would have cost — even if out-of-network doctors are brought in. Any participating out-of-network doctor, meanwhile, would have to accept the average amount paid to in-network doctors or go to arbitration with the insurer.

The risk here is that too many of the physicians that don't want to join insurance networks will simply refuse to see patients who won't pay their full rate. The bill takes a reasonable approach to the core problem, which is the fact that patients are being hit with huge bills they hadn't anticipated and had no say in. Lawmakers still have to iron out some details, however, to make sure the system works fairly for everyone. For example, the bill needs to give insurers an incentive to bring into their networks a full complement of specialists at every in-network hospital, rather than counting on out-of-network doctors being willing to treat patients at a discount. 

There will always be tension between what insurers want to pay and what providers want to be paid for their services, especially in regions where one or the other faces limited competition. So there will inevitably be fights over how much a provider's service is worth to an insurer, and vice versa. But there's no reason patients should be caught by surprise in the middle of that fight.

http://www.latimes.com/opinion/editorials/la-ed-surprise-medical-bills-20160711-snap-story.html

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Comment by Don McCanne

There are many injustices inherent in our dysfunctional, fragmented system of financing health care, and surprise medical bills from out-of-network physicians is one of them. Patients who have health insurance should not have to face these bills that otherwise would have been covered by their insurance. So what is the solution?

First we have to understand the problem. Surprise medical bills pop up because the insurer has not contracted with all of the members of the team that provides care for the patient. In-network physicians have their fees set by the contract they have signed with the insurer. Out-of-network physicians have no such contract and thus feel free to set their own fees.

The patient has selected an insurance plan - a contract - which provides coverage for in-network physicians. Some plans may provide partial coverage for out-of-network physicians but usually only at rates that are even lower than in-network physicians would be paid. Because the insurer has no contract with the out-of-network physician, the patient must pay not only the difference between the contracted rate and the lower out-of-network rate but also must pay the entire balance of the full fee charged by the out-of-network physician.

Various legislative solutions have been considered to protect the patient from these charges that most consider to be unfair when the patients have fulfilled their responsibility of obtaining adequate insurance coverage. Some have suggested that the insurers should be required to pay the full fee of the out-of-network physician. But then why would any physician sign a contract with the insurer if by remaining out-of-network they can receive their full list fee instead of the discounted contract fee? That would destroy the concept behind the contracted physician networks and result in intolerable fee inflation.

Most legislative solutions then turn to the physicians to demand that they accept the fee determined by the insurer even though no contract exists with these out-of-network physicians. In this instance, why would the insurer make an effort to be sure that they have a full complement of physicians available so that patients would not be inadvertently provided care by an out-of-network physician. Under such a requirement, if the insurer establishes only a narrow network of physicians then they could limit payments to the level of their contracted rates for all other out-of-network physicians without contracts. This gives private insurers the right to set rates outside of their plans, even if unreasonably low - hardly a free market solution.

So who is to blame? The patient for not selecting a plan that contracts with all physicians that might be needed in the future, even if that is impossible to know? The physician who the insurer has not included in their deliberately restricted networks? The insurer who has created restricted networks to control fees at the cost of limiting coverage for often unavoidable services provided by out-of-network physicians?

By now it should be obvious that the real problem is with the defective design of our dysfunctional health care financing infrastructure. Solutions should be directed at correcting the defects in the infrastructure.

In a single payer system that prohibits private insurance coverage for benefits provided by the public system, essentially all physicians are covered - the equivalent of all physicians being "in-network." Fees are fair since they are publicly administered, paying enough to support the system and provide fair margins, yet not paying so much that it would be an excessive burden on the taxpayers who finance the system. An ideal single payer system provides first dollar coverage for all essential benefits, thus the patient is not exposed to surprise bills, whether in- or out-of-network, nor to deductibles and coinsurance which can be unaffordable under our current financing system.

Private insurers are providing us services that we do not want: costly, excessive administrative services that serve the insurers rather than the patients, excessive patient cost-sharing that can make health care access unaffordable, and narrow provider networks that take health care choices away from patients. Instead of narrowly confining their considerations to surprise bills, our legislators should get to the root of the problem and eliminate the private insurer intermediaries who are screwing up the system.

It is long past time to enact a just system that works: a single payer national program, aka an improved Medicare for all.

qotd: President Obama on progress and the future of health care reform

JAMA

July 11, 2016 (Online)

United States Health Care Reform

Progress to Date and Next Steps

By Barack Obama, JD

Abstract

Importance  The Affordable Care Act is the most important health care legislation enacted in the United States since the creation of Medicare and Medicaid in 1965. The law implemented comprehensive reforms designed to improve the accessibility, affordability, and quality of health care.

Objectives  To review the factors influencing the decision to pursue health reform, summarize evidence on the effects of the law to date, recommend actions that could improve the health care system, and identify general lessons for public policy from the Affordable Care Act.

Evidence  Analysis of publicly available data, data obtained from government agencies, and published research findings. The period examined extends from 1963 to early 2016.

Findings  The Affordable Care Act has made significant progress toward solving long-standing challenges facing the US health care system related to access, affordability, and quality of care. Since the Affordable Care Act became law, the uninsured rate has declined by 43%, from 16.0% in 2010 to 9.1% in 2015, primarily because of the law's reforms. Research has documented accompanying improvements in access to care (for example, an estimated reduction in the share of nonelderly adults unable to afford care of 5.5 percentage points), financial security (for example, an estimated reduction in debts sent to collection of $600-$1000 per person gaining Medicaid coverage), and health (for example, an estimated reduction in the share of nonelderly adults reporting fair or poor health of 3.4 percentage points). The law has also begun the process of transforming health care payment systems, with an estimated 30% of traditional Medicare payments now flowing through alternative payment models like bundled payments or accountable care organizations. These and related reforms have contributed to a sustained period of slow growth in per-enrollee health care spending and improvements in health care quality. Despite this progress, major opportunities to improve the health care system remain.

Conclusions and Relevance  Policy makers should build on progress made by the Affordable Care Act by continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition, and taking actions to reduce prescription drug costs. Although partisanship and special interest opposition remain, experience with the Affordable Care Act demonstrates that positive change is achievable on some of the nation's most complex challenges.

Building on Progress to Date (excerpt)

Third, more can and should be done to enhance competition in the Marketplaces. For most Americans in most places, the Marketplaces are working. The ACA supports competition and has encouraged the entry of hospital-based plans, Medicaid managed care plans, and other plans into new areas. As a result, the majority of the country has benefited from competition in the Marketplaces, with 88% of enrollees living in counties with at least 3 issuers in 2016, which helps keep costs in these areas low. However, the remaining 12% of enrollees live in areas with only 1 or 2 issuers. Some parts of the country have struggled with limited insurance market competition for many years, which is one reason that, in the original debate over health reform, Congress considered and I supported including a Medicare-like public plan. Public programs like Medicare often deliver care more cost-effectively by curtailing administrative overhead and securing better prices from providers. The public plan did not make it into the final legislation. Now, based on experience with the ACA, I think Congress should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited. Adding a public plan in such areas would strengthen the Marketplace approach, giving consumers more affordable options while also creating savings for the federal government.

Lessons for Future Policy Makers (excerpt)

The third lesson is the importance of pragmatism in both legislation and implementation. Simpler approaches to addressing our health care problems exist at both ends of the political spectrum: the single-payer model vs government vouchers for all. Yet the nation typically reaches its greatest heights when we find common ground between the public and private good and adjust along the way. That was my approach with the ACA. We engaged with Congress to identify the combination of proven health reform ideas that could pass and have continued to adapt them since.

As this progress with health care reform in the United States demonstrates, faith in responsibility, belief in opportunity, and ability to unite around common values are what makes this nation great.

The full article can be downloaded for free at the JAMA website:

http://jama.jamanetwork.com/article.aspx?articleid=2533698

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Comment by Don McCanne

In this JAMA article, President Obama understandably touts the benefits of his Affordable Care Act (ACA) and describes some of the problems that remain that need to be addressed. Two serious deficiencies of his article are that he fails to acknowledge the fact that some of the changes taking place are actually detrimental, and his proposals for the way forward are grossly inadequate when considering the need.

A few examples of where changes have been detrimental include the expansion of intolerably high deductibles creating financial barriers to care, increased use of narrow provider networks impairing access to care, and expansion of administrative excesses including the Marketplaces (ACA insurance exchanges) and the new models of paying for care (APMs, ACOs, and MACRA models).

The President touts enhanced competition in the Marketplaces as a way forward when the prevailing evidence indicates that competition in private insurance markets is ineffective in improving quality and reducing costs. It is predicted that insurance premium increases for 2017 will confirm that the ACA exchanges have not been effective in controlling costs. Not only are insurance premiums going up, but more costs are being shifted to patients in the form of higher out-of-pocket spending.

The media are reporting the President's recommendation for a "Medicare-like public plan," yet the hope that a public option will open the door for single payer cannot be realized when it is offered only as another option in our fragmented system of financing health care. The failure of the co-ops should signal to us the deficiencies of a public or quasi-public option which is designed to protect the markets of the private insurers. The private Medicare Advantage plans are continuing to displace the traditional Medicare program because the politicians have provided the private plans with extra funds and regulatory freedom that allow them to "compete" unfairly with Medicare.

Finally, the President presents single payer and government vouchers for private plans as being the two extremes of health care financing reform, whereas ACA represents the "common ground between the public and private good." Placing ideologically-driven health care reform policies along a linear political spectrum and then choosing the middle is an extremely simplistic and highly flawed approach to health policy. Health policies should be placed along a spectrum of effectiveness of those policies in achieving health reform goals of universality, efficiency, equity, comprehensiveness, accessibility, and affordability. Then the extreme that achieves those goals should be accepted as the ideal model for reform while rejecting those policies at the other end. To no surprise, using a spectrum based on optimal health policy leads us logically to single payer.

The President ends with the statement, "As this progress with health care reform in the United States demonstrates, faith in responsibility, belief in opportunity, and ability to unite around common values are what makes this nation great." With the majority of the nation now supporting a federally funded health care system, isn't that a call for uniting around health care reform that really works: a single payer national health program?

qotd: Access to preferred physicians impaired by private health plans

Health Affairs

July 2016

Secret Shoppers Find Access To Providers And Network Accuracy Lacking For Those In Marketplace And Commercial Plans

By Simon F. Haeder, David L. Weimer and Dana B. Mukamel

Abstract

The adequacy of provider networks for plans sold through insurance Marketplaces established under the Affordable Care Act has received much scrutiny recently. Various studies have established that networks are generally narrow. To learn more about network adequacy and access to care, we investigated two questions. First, no matter the nominal size of a network, can patients gain access to primary care services from providers of their choice in a timely manner? Second, how does access compare to plans sold outside insurance Marketplaces? We conducted a "secret shopper" survey of 743 primary care providers from five of California's nineteen insurance Marketplace pricing regions in the summer of 2015. Our findings indicate that obtaining access to primary care providers was generally equally challenging both inside and outside insurance Marketplaces. In less than 30 percent of cases were consumers able to schedule an appointment with an initially selected physician provider. Information about provider networks was often inaccurate. Problems accessing services for patients with acute conditions were particularly troubling. Effectively addressing issues of network adequacy requires more accurate provider information.

From the Discussion

Two patterns emerged from our survey. First, and most striking, new patients in either Covered California or the comparable commercial plan had very low prospects—less than 30 percent—of securing an appointment with any randomly chosen provider. The odds got only slightly better in terms of getting an appointment with any provider in the practice. The results were particularly disheartening in the case of patients presenting with acute conditions. Although the average wait time was reduced by about half when compared to physical exams, it nonetheless took eight to twelve days to get an appointment with a physician or physician extender. Moreover, only a handful of providers suggested that patients seek care at an urgent care center. These findings suggest that the third step in health care access, scheduling an appointment with a physician, has much room for improvement. At least accurate lists of providers, including whether the provider is accepting new patients, should be available for patients when they make choices about health plans.

Second, patients in commercial plans tended to fare somewhat better than their counterparts in Covered California plans, in terms of both getting appointments and the time to appointment. However, not only were these differences relatively small and often statistically insignificant, they were dwarfed by the overall difficulty of getting appointments with the desired provider. So, although it was marginally more difficult to get timely care in Covered California plans than their commercial counterparts, substantially increasing access requires more than just equalizing access in the two types of insurance coverage.

Conclusion

Improving access to care by improving access to affordable health insurance is one of the main goals of the Affordable Care Act. However, as our analysis has shown, access to health insurance is not necessarily synonymous with access to health care services. Network accuracy is an important, albeit heretofore largely overlooked, component of access for patients. At the same time, as earlier reforms in Massachusetts have shown, increasing the number of insured people without a commensurate increase in capacity further exacerbates the situation. The more frustrated people become as they are trying to access care, the more likely they are to defer or forgo care, or to choose more expensive options such as emergency departments.

http://content.healthaffairs.org/content/35/7/1160.abstract

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Comment by Don McCanne

Covered California is one of the best functioning health insurance exchanges established under the Affordable Care Act (ACA), yet 70 percent of patients enrolled were not able to schedule an appointment with an initially selected physician from the provider list. This was not a problem unique to the ACA exchanges since the same was essentially true for individual insurance plans offered outside of the exchanges.

The fundamental defect is in having selected a health care financing system dependent on private insurance plans. Private plans use innovations such as narrow provider networks and high deductibles which improve the business outcome for the insurer at a cost of impairing health care access for the patient.

It is obvious that we would all benefit by replacing our current dysfunctional health care financing system with a single payer national health program - an Improved Medicare for All. Yet the political outlook seems quite dim right now. The leading advocate for single payer reform, Bernie Sanders, having failed to gain enough support for the Democratic nomination for president, is currently in negotiations with Hillary Clinton, an avowed opponent of single payer, in which he will withdraw his demand for Medicare for All in exchange for other beneficial health care policies such as the expansion of federally qualified community health centers.

We have a formidable task before us. The majority of the nation does want Medicare to be expanded to cover everyone, yet the two dominant political parties are controlled by conservatives and neoliberals, both supporting the private insurance industry. We must continue with our efforts to inform the public on the superiority of the single payer model, but we also have to step up our efforts in coalition and grassroots organizing. We may have majority support for the concept of Medicare for All, but we do not yet have a critical mass for political action.

We need to keep in mind that our mission is not to assuage our own egos by gaining a political victory, but it is the much more noble goal of improving the health care of the nation. That should make us want to continue to carry the torch in spite of the unfavorable political climate. We have a lot of work to do.

Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

qotd: Single payer versus free market for health care reform

Chest

July 2016

POINT:

Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform?

Yes

By Adam W. Gaffney, MD, Philip A. Verhoef, MD, PhD, Jesse B. Hall, MD, FCCP

As pulmonary and critical care physicians, we aim to utilize the highest quality evidence, in conjunction with our understanding of the pathophysiologic and social determinants of health, to provide the best care for patients. By taking such an evidence-based approach

to the realm of policy, we conclude that only a single-payer system can address the problem of rising health-care costs, while simultaneously ending the grave inequalities that continue to plague our critically ill health-care system.

From the Division of Pulmonary and Critical Care Medicine (Dr Gaffney), Massachusetts General Hospital; and the Section of Pulmonary and Critical Care Medicine (Drs Verhoef and Hall), University of Chicago.

COUNTERPOINT:

Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform?

No

By Gilbert G. Berdine, MD

Health-care providers compete with each other for the patronage of health-care consumers. Providers can compete by increasing quality or convenience or by decreasing price. Over time, ceteris paribus (all other things being equal), a competitive health-care market will see increases in quality or convenience at lower prices. The term "single-payer" is a euphemism for monopoly. A monopoly requires legal barriers against new competition entering the market. Monopolies have no reason to improve quality or convenience and have no reason to lower price as customers have nowhere else to go for a needed good or service. Over time, ceteris paribus, a monopoly will offer a declining quality of product or service at less convenience to customers at ever-increasing prices. There are no exceptions to these rules.

The best solution to the health care problem is to let people make choices without interference by the government. This approach is known as the free market.

The market always leaves the participants better off, in their own view, than government intervention; there are no exceptions.

From the Departments of Internal Medicine and Medical Education, Texas Tech University Health Sciences Center, and Free Market Institute (Dr. Berdine).

REBUTTAL:  From Drs Gaffney, Verhoef, and Hall

Dr Berdine argues that in an unhindered competitive health-care marketplace, the market will clear at a price and quantity of goods/services that, as if by definition, leaves all parties maximally satisfied. This argument is little more than a tautology that would, if possible, result in a health-care dystopia that society would not accept.

A free market for health care is not only undesirable: it is, as economists have noted for decades, a fantasy. Fundamentally, the degree of information asymmetry between the buyer (the patient) and the seller (the provider) prevents health care from conforming to the theoretical tenets of free-market economics. Kenneth Arrow famously contended that the uncertainty intrinsic to health care makes it unique from other goods and services. The health economist Bob Evans has argued that not only has there never been a pure free market in health care but that "inherent characteristics of health and health care make it impossible that there ever could be." On the contrary, he argues, attempts to inject market mechanisms into health care are fundamentally about redistribution. As health-care costs are shifted from public to out-of-pocket sources, those with higher incomes invariably benefit.

As others have noted, the savings made possible through a single-payer system would allow extension of health care as a social right to the entire nation. In contradistinction with a fantastical health-care free market, such a program is both attainable and desirable.

REBUTTAL:  From Dr Berdine

"Health insurance" is no longer pooled risk in America. The first step to making health care affordable is to separate catastrophic and insurable costs from routine health maintenance. It is impossible to subsidize an entire nation.

http://www.sciencedirect.com/science/article/pii/S0012369216416028

Until August 26, 2016, the POINT article will be available for free at the following link; then it will be behind a paywall, as are the COUNTERPOINT article and the two REBUTTALS:

http://authors.elsevier.com/a/1TKr62p-km2aS

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Comment by Don McCanne

The POINT article by Drs. Gaffney, Verhoef and Hall explains why physicians (and everyone else) should support single payer reform, with special emphasis for pulmonary/ICU physicians. (Chest is a publication of the American College of Chest Physicians.) The article is accessible for free until August 26, 2016.

The rationale for single payer reform presented in this article is based on PNHP's Physicians' Proposal for Single-Payer Health Care Reform.

Although a tremendous amount of data has been generated explaining why the advances of the Affordable Care Act are grossly inadequate and why we need a single payer system, this Point/Counterpoint is useful because the counter argument is presented by an advocate of free markets. Dr. Berdine uses standard college economic textbook principles to explain why only a competitive free market will bring us higher quality at lower prices, with "no exceptions."

In their Rebuttal, Drs. Gaffney, Verhoef and Hall explain how a free market in health care is a fantasy. It is important that we put the free market nonsense to rest and move forward with enacting and implementing a program that really will work - a single payer national health program, aka an Improved Medicare for All.