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: Aetna and Anthem shareholders condone secrecy of dark money contributions

Modern Healthcare

May 26, 2016

Shareholders vote down dark money disclosure at Aetna, Anthem

By Bob Herman

Health insurers Aetna and Anthem won't have to tell shareholders how much money they send to tax-exempt political organizations, at least for another year.

Shareholder resolutions that would've required Aetna and Anthem to disclose how much they spend on 501(c)(4) "social welfare" organizations and other business association groups failed to gain approval last week at the companies' respective annual shareholders meetings. Approximately 91% of Anthem investors rejected the proposal, and 75% of the votes were cast against Aetna's resolution.

Political not-for-profit organizations, also called dark money groups, do not have to reveal their donors, and they can receive unlimited amounts of money, much of which is routed toward influencing elections.

http://www.modernhealthcare.com/article/20160526/NEWS/160529926

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Comment by Don McCanne

The shareholders of Aetna and Anthem, by voting down disclosure of dark money contributions, are co-conspirators with the corporate executives in the efforts to prevent transparency of their financial contributions to dark money organizations that use their funds to influence elections.

Once we replace the private insurers with a publicly-owned Medicare for all program, we need show no special sympathy for the displaced insurance executives, and that goes for their rent-seeking shareholders as well. Our sympathies should be directed to the displaced employees of the insurance corporations who will need assistance in job training and in creating new employment opportunities.

qotd: Adam Gaffney responds to NYT’s Margot Sanger-Katz on cost of single payer

The New York Times

May 16, 2016

A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive

By Margot Sanger-Katz

Bernie Sanders's chances at enacting a "political revolution" are all but gone. But that doesn't mean his policy agenda won't continue to be felt in this election or future Democratic platforms.

One of his signature proposals is to move the country's health care system to a government-run, single-payer system.

But also last week, a detailed analysis of the Sanders health care plan from researchers at the Urban Institute showed that it would probably cost the government double what the campaign proposed. It is the second credible analysis to suggest that the Sanders plan costs more than advertised. (The other comes from the Emory health policy professor Kenneth Thorpe.)

The Sanders campaign and its academic allies dispute some of the Urban Institute's assumptions. A critique of the Urban analysis from David Himmelstein and Steffie Woolhandler, professors of public health at the City University of New York, argues, for example, that drug prices could be pushed even lower. And the Sanders team says that the researchers overestimated the costs associated with administering the government program. But it doesn't argue that the prices paid to medical providers could be cut more sharply.

http://www.nytimes.com/2016/05/17/upshot/why-single-payer-health-care-would-probably-still-be-expensive.html

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The Progressive Physician

May 17, 2016

Blog Post: What's Wrong with Margot Sanger-Katz's Single Payer Analysis

By Adam Gaffney

Yesterday, New York Times health care reporter Margot Sanger-Katz, whose work I very much respect, entered the debate on the costs of Sanders' single payer plan in a piece I find problematic, headlined "A Single-Payer Plan From Bernie Sanders Would Probably Still Be Expensive." I should first concede, however, the central argument of her article: it is true that a US single payer system would still be relatively expensive as compared to other single payer systems. We would, that is to say, continue to spend more than the United Kingdom or Canada if we transitioned to single payer. At the same time, there would nonetheless be enormous savings from such a transition, and these savings would allow us to affordably achieve real universal health care. This, in my opinion, would still be an excellent deal.

The background to this debate are two analyses of the Sanders' single payer proposal—the first by economist Kenneth Thorpe and the second by the Urban Institute—both of which cl aimed that the actual costs of Sanders' single payer plan would be significantly higher than what his campaign has predicted. The assumptions of each have been convincingly contested by colleagues David Himmelstein and Steffie Woolhandler: among other points, they argue that both analyses underestimate administrative savings and overestimate the cost of increased health care use resulting from a coverage expansion.

Anyway, without delving into the details, there is something rather puzzling when looking at the analyses of Thorpe and the Urban Institute from a broader perspective. How is it that single payer would massively increase costs in the United States, as these reports contend, even while countries with single pay er-type systems—like Canada and the United Kingdom—have much, much lower health care costs than we do?

To answer, a quick side note: our total health spending is, by definition, equal to the quantity of health services delivered multiplied by their price. The US does not consistently use more health services than other high-income nations. Therefore, the fact that we have higher health care costs is mostly explained by higher unit prices for services, as Sanger-Katz and others note. Now us single payer advocates cite lower administrative costs (and lower drug spending) as the major sources of savings under US single payer (effectively lowering the "price" side of the equation). But Sanger-Katz argues that this would be insufficient: prices would have to be slashed across the board, and some services would have to be cut:

Making the American health care system significantly cheaper would mean more than just cutting the insurance companies out of the game and reducing the high administrative costs of the American system. It would also require paying doctors and nurses substantially lower salaries, using fewer new and high-tech treatments, and probably eliminating some of the perks of American hospital stays, like private patient rooms.

Such a transition would, she notes, have some scary sounding downstream consequences: "…making big cuts all at once to doctors and hospitals could cause substantial disruptions in care. Some hospitals would go out of business. Some doctors would default on their mortgages and student loans." My understanding is that we aren't really allowed to effectively default on student loans, but admittedly this all sounds rather dicey.

But this frightful health care meltdown isn't even in the cards. She is correct in a narrow sense: it's true that immediately lowering US health care expenditures to, say, that of the United Kingdom — i.e. from 16.4% to 8.5% of gross domestic product — would require major, disruptive reductions in spending across the board. However, nobody is contending that we do that. The central claim for US single payer is more modest. Use the enormous administrative savings generated under single payer financing in combination with pharmaceutical savings to cover everybody with comprehensive benefits and no cost-sharing. Overall national health spending would, it is true, remain roughly the same (though we could better control cost growth moving forward). But this scenario of widespread hospital bankruptcies and the end of private (or semiprivate?) hospital rooms is a fantasy: nobody wants it to happen, and it's not happening.

It's worth noting that there is also a jarringly inconsistent aspect to single-payer critiques that warn of the threat to health care workers' income. As Woolhandler and Himmelstein note in an article in the Huffington Post, the Urban Institute simultaneously asserted that the coverage expansion under single payer would lead to an enormous increase in spending on physician services — by $1.6 trillion over a decade!—while simultaneously asserting that physician salaries would be "squeezed." Whatever one thinks of how much physicians should be paid, it's hard how these would both happen at the same time.

Transitioning to single payer will not mean reducing our health care expenses to British levels: that is probably not possible, and is certainly not desirable. But that's not to say that the savings from adopting a single payer financing system wouldn't be substantial—we're talking hundreds of billions annually on administrative savings alone, plus more by reducing drug prices to European levels. With that money, we'll build a much more decent health care system for all to use without having to worry about the cost of being sick, of being pregnant, or simply of obtaining preventive care. No wonder a majority of t he country wants it.

Dr. Adam Gaffney is a clinical and research fellow in pulmonary and critical care medicine at Massachusetts General Hospital. His writing has appeared in the New Republic, Los Angeles Review of Books, USA Today, Salon, CNN.com, Dissent, US News & World Report, Jacobin, In These Times, and elsewhere.

https://theprogressivephysician.net/2016/05/17/blog-post-whats-wrong-with-margot-sanger-katzs-single-payer-analysis/

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Comment by Don McCanne

There have been a multitude of recent media reports indicating that a single payer program, as proposed by Bernie Sanders, would cost much more than previous estimates have shown. These reports rely on recent analyses by the Urban Institute and by Emory Professor Kenneth Thorpe. Unfortunately, these analyses are being given more credibility than the contrasting conclusions of the nation's two leading experts on single payer - Professors David Himmelstein and Steffie Woolhandler.

NYT's Margot Sanger-Katz reiterated the conclusion that "the Sanders plan costs more than advertised." She is highly credible, and, in fact, she did link to an article on the topic by Himmelstein and Woolhandler. But she suggests that prices paid to medical providers must be cut more sharply than proposed, and, by this, seems to accept the fact that Sanders' single payer proposal is more expensive than anticipated. You may want to read her full article (link above) to better understand Adam Gaffney's response.

Adam Gaffney's full blog response is reproduced here, along with the live links, because it is imperative that we not allow the sometimes blind acceptance by the media of the two recent analyses that use dubious assumptions to refute the great body of policy literature that confirms the efficiency and effectiveness of the single payer model. Gaffney sets the record straight.

Study Gaffney's response and also the prior responses of Himmelstein and Woolhandler (live links in article) so that you will be prepared to refute the claims that single payer is unaffordable. It's our current highly dysfunctional system that is not affordable.

(Keep in mind that some of the misunderstanding is due to the fact that one view is referring only to federal spending and the taxes to pay for it whereas another view is referring to our total national health expenditures, public and private combined. Obviously transferring private health care spending to the federal government would cause federal spending and taxes to increase - the claim being made - but total spending under a well designed single payer system would remain about the same, with administrative and price savings being used for expanded benefits and coverage.)

Fwd: qotd: Urban Institute’s attack on single payer

Urban Institute

May 9, 2016

The Sanders Single-Payer Health Care Plan: The Effect on National Health Expenditures and Federal and Private Spending

By John Holahan, Matthew Buettgens, Lisa Clemans-Cope, Melissa M. Favreault, Linda J. Blumberg, Slyabonga Ndwandwa

Abstract

Presidential candidate Bernie Sanders proposed a single-payer system to replace all current health coverage. His system would cover all medically necessary care, including long-term care, without cost-sharing. We estimate that the approach would decrease the uninsured by 28.3 million people in 2017. National health expenditures would increase by $6.6 trillion between 2017 and 2026, while federal expenditures would increase by $32.0 trillion over that period. Sanders's revenue proposals, intended to finance all health and nonhealth spending he proposed, would raise $15.3 trillion from 2017 to 2026—thus, the proposed taxes are much too low to fully finance his health plan.

http://www.urban.org/research/publication/sanders-single-payer-health-care-plan-effect-national-health-expenditures-and-federal-and-private-spending

Urban Institute Board of Trustees:

http://www.urban.org/about/board-of-directors

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Tax Policy Center

May 9, 2016

An Analysis of Senator Bernie Sanders's Tax and Transfer Proposals

By Gordon B. Mermin, Leonard E. Burman, Frank Sammartino

Abstract

Presidential candidate Bernie Sanders proposes significant tax increases that would raise $15.3 trillion over the next decade. All income groups would pay more tax, but most would come from high-income households, particularly those with very high incomes. Sanders would also implement new government benefits—notably government-financed single-payer health care, long-term services and supports, college, and family leave benefits—and expand Social Security benefits. TPC finds the new government benefits would more than offset new taxes for 95% of households but the combined tax and transfer plan would increase federal budget deficits by more than $18 trillion over the next decade.

http://www.taxpolicycenter.org/publications/analysis-senator-bernie-sanderss-tax-and-transfer-proposals

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The Huffington Post

May 9, 2016

The Urban Institute's Attack On Single Payer: Ridiculous Assumptions Yiel d Ridiculous Estimates

By David Himmelstein and Steffie Woolhandler

The Urban Institute and the Tax Policy Center today released analyses of the costs of Sen. Bernie Sanders' domestic policy proposals, including single-payer national health insurance. They claim that Sanders' proposals would raise the federal deficit by $18 trillion over the next decade.

We won't address all of the issues covered in these analyses, just single-payer Medicare for all. To put it bluntly, the estimates (which were prepared by John Holahan and colleagues) are ridiculous. They project outlandish increases in the utilization of medical care, ignore vast savings under single-payer reform, and ignore the extensive and well-documented experience with single-payer systems in other nations - which all spend far less per person on health care than we do.

The authors' anti-single-payer bias is also evident from their incredible claims that physicians' incomes would be squeezed (which contradicts their own estimates positing a sharp rise in spending on physician services), and that patients would suffer huge disruptions, despite the fact that the implementation of single-payer systems elsewhere, as well as the start-up of Medicare, were disruption-free.

We outline below some of the most glaring errors in the Holahan analysis (which served as the basis for Tax Policy Center's estimates) regarding health care spending under the Sanders plan.

1. Administrative savings, Part 1: Holahan assumes that insurance overhead would be reduced to 6 percent of total health spending from the current level of 9.5 percent. They base this 6 percent estimate on figures for Medicare's current overhead, which include the extraordinarily high overhead costs of private Medicare HMOs run by UnitedHealthcare and other insurance firms. However, Sen. Sanders' proposal would exclude these for-profit insurers, and instead build on the traditional Medicare program, whose overhead is less than 3 percent. Moreover, even this 3 percent figure is probably too high, since Sanders' plan would simplify hospital payment by funding them through global budgets (similar to the way fire departments are paid), rather than the current patient-by-patient payments. Hence a more realistic estimate would assume that insurance overhead would drop to Canada's level of about 1.8 percent. Cutting insurance overhead to 2 percent (rather than the 6 percent that Holahan projects) would save an additional $1.7 trillion over the next 10 years.

2. Administrative savings, Part 2: Holahan completely ignores the huge savings on hospital administration and doctors' billing under a streamlined single-payer system. Every serious analyst of single-payer reform has acknowledged these savings, including the Congressional Budget Office, the Government Accountability Office, the Lewin Group (a consulting firm owned by UnitedHealth Group), and even Kenneth Thorpe (a former Clinton administration official who has criticized Sanders' plan, although his recent estimates of savings are far lower than those he made prior to the current presidential campaign).

These provider savings on paperwork would, in fact, be much larger than the savings on insurance overhead. At present, U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single-payer systems like Canada's or Scotland's. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.

Overall, these administrative savings for doctors and hospitals would amount to about $2.57 trillion over 10 years. Additional savings of more than $1.5 trillion from streamlined billing and administration would accrue to nursing homes, home care agencies, ambulance companies, drug stores and other health care providers.

In total, the Holahan analysis underestimates administrative savings by about $6 trillion over 10 years.

3. Drug costs: Holahan projects that a single-payer plan would have to pay 50 percent higher drug costs than those paid at present by Medicaid. Moreover, their estimate assumes that the U.S. would continue to pay much higher prices for drugs than other nations, despite the fact that a U.S. single-payer system would have much greater negotiating leverage with drug companies than other national health insurance schemes.

Reducing drug prices to the levels currently paid by European nations would save at least $1.1 trillion more than Holahan posits over 10 years. 

4. Utilization of care: Holahan projects a massive increase in acute care utilization, but does not provide detailed breakdowns of how big an increase they foresee for specific services like doctor visits or hospital care. However, it is clear that the medical care system does not have the capacity to provide the huge surge in care that he posits.

For instance Holahan's figures for the increase in acute care suggest that Sanders' plan would result in more than 100 million additional doctor visits and several million more hospitalizations each year. But there just aren't enough doctors and hospital beds to deliver that much care. Doctors are already working 53 hours per week, and experience from past reforms tells us that they won't increase their hours, nor will they see many more patients per hour.

Instead of a huge surge in utilization, more realistic projections would assume that doctors and hospitals would reduce the amount of unnecessary care they're now delivering in order to deliver needed care to those who are currently not getting what they need. That's what happened in Canada. Doctors and hospitals can adjust care to meet increasing demand, as happens every year during flu season.

Moreover, no surge materialized when Medicare was implemented and millions of previously uninsured seniors got coverage. Between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visit in the U.S.; Americans averaged 4.3 visits per person in 1964 and 4.3 visits per person in 1966. Instead, the number of visits by poor seniors went up, while the number of visits by healthy and wealthy patients went down slightly. The same thing happened in hospitals. There were no waiting lists, just a reduction in the utilization of unneeded elective care by wealthier patients, and the delivery of more care to sick people who needed it.

Bizarrely, despite projecting a roughly $1.6 trillion increase in total payments to doctors over 10 years, Holahan says in his discussion that "Physician incomes would be squeezed by the new payment rates."

5. Holahan's argument that the Sanders plan would cause a huge disruption of health care: This argument mirrors scare tactics used by Medicare's opponents in 1963. Back then, there were claims that doctors would boycott Medicare, and Wall Street Journal headlines warned of a "Patient Pileup," as "flocks of Medicare beneficiaries ... suddenly clog the nation's 7,200 hospitals." Nothing like that ever happened, nor did it happen when Taiwan implemented single payer more recently. And there's no reason to think it would happen here.

Moreover, surveys show that most doctors would welcome national health insurance, and thousands of doctors have recently issued a call (and detailed proposal) for single-payer reform in the American Journal of Public Health.

In summary, Holahan grossly underestimates the administrative savings under single payer; projects increases in the number of doctor visits and hospitalizations that far exceed the capacity of doctors and hospitals to provide this added care; and posits that our country would continue to pay much more for drugs and medical equipment than people in every other nation with national health insurance.

Rather than increasing national health spending, as Holahan claims, Sanders' plan (and the plan proposed by Physicians for a National Health Program) would almost certainly decrease total health spending over the next 10 years.

Drs. Himmelstein and Woolhandler are professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School. The opinions expressed do not necessarily reflect those institutions'.

http://www.huffingtonpost.com/david-himmelstein/the-urban-institutes-attack-on-single-payer-ridiculous-assumptions-yield-ridiculous-estimates_b_9876640.html

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Comment by Don McCanne

The health policy literature is rich with studies, reports and data confirming the that single payer health care financing is much more effective in ensuring universal coverage at lower costs than is our current fragmented, dysfunctional system of financing health care. Yet there has been a recent surge of interest in analyzing the single payer model, directly attributed to Sen. Bernie Sanders' advocacy for it during his presidential campaign. These reports from the Urban Institute and the Tax Policy Center are the latest which question the well documented fact that single payer would reduce per capita spending.

What is going on here? These two organizations are highly reputable and have produced many studies that are quite credible. Yet the nation's two leading researchers in single payer, Steffie Woolhandler and David Himmelstein, with their impeccable integrity, have shown that the researchers producing the critical reports have used incorrect assumptions in their analyses. This is not a matter of conflicting opinions, but rather a matter of the factual basis behind the assumptions. Yet the media ignore the facts and distribute only the compromised results from these otherwise reputable individuals and institutions that challenge the savings that would be accrued through the single payer model.

Why would John Holahan and his colleagues at the Urban Institute do this, at this time? Perhaps the composition of the Board of Trustees might give us a clue (link above). Most of them are members of "the establishment", many of them have served in President Clinton's administration (as did another critic - Kenneth Thorpe), and some are conservatives opposed to single payer. (The Tax Policy Center is a joint project of the Urban Institute and the Brookings Institution.) The timing of this report suggests that it is more than coincidental that it would be used to help defeat the only current challenger to Hillary Clinton's quest for the Democratic presidential nomination.

But why would respected researchers agree to such a blatantly political use of their work product? If you check their credentials, they are all deeply involved in health policy research that is designed to improve the function of our health care system, particularly its financing. That is, they are avowed incrementalists. Single payer would displace much of the work they have done with private insurance markets, Medicare, Medicaid, safety-net institutions and other aspects of our dysfunctional system. They are likely not well informed on single payer policy science since that has not been on their radar. This is not questioning the integrity of these researchers but merely an observation as to how they could come up with invalid conclusions. Their minds are simply pre-programmed to produce the results they get.

Hillary Clinton has declared that she will not consider single payer. When the policy community should be making efforts to convince her to support a superior model of reform they are instead discrediting that model in order to support her and Obamacare - the most expensive model of reform and one that fails to accomplish our goals of universality, efficiency and equity. Sadly, that reflects poorly on the policy community.

PNHP is a single issue organization supporting research and education on single payer reform. PNHP does not support nor oppose any political candidates.