qotd: Himmelstein and Woolhandler set the facts straight on Thorpe’s analysis

Huffpost Politics
January 29, 2016
On Kenneth Thorpe's Analysis of Senator Sanders' Single-Payer Reform Plan
By David Himmelstein and Steffie Woolhandler

Professor Kenneth Thorpe recently issued an analysis
<http://www.scribd.com/doc/296831690/Kenneth-Thorpe-s-analysis-of-Bernie-Sanders-s-single-payer-proposal>
of Senator Bernie Sanders' single-payer national health insurance
proposal. Thorpe, an Emory University professor who served in the
Clinton administration, claims the single-payer plan would break the bank.

Thorpe's analysis rests on several incorrect, and occasionally
outlandish, assumptions. Moreover, it is at odds with analyses of the
costs of single-payer programs that he produced in the past, which
projected large savings from such reform (see this study
<http://www.mffh.org/mm/files/ShowMe3a.pdf>, for example, or this one
<http://www.pnhp.org/sites/default/files/Thorpe%20booklet.pdf>).

We outline below the incorrect assumptions behind Thorpe's current analysis:

*1. He incorrectly assumes administrative savings of only 4.7 percent of
expenditures, based on projections of administrative savings under
Vermont's proposed reform.*

However, the Vermont reform did not contemplate a fully single-payer
system. It would have allowed large employers to continue offering
private coverage, and the continuation of the FEHBP and Medicare
programs. Hence, hospitals, physicians' offices, and nursing homes would
still have had to contend with multiple payers, forcing them to maintain
the complex cost-tracking and billing apparatus that drives up
providers' administrative costs. Vermont's plan proposed continuing to
pay hospitals and other institutional providers on a per-patient basis,
rather than through global budgets, perpetuating the expensive hospital
billing apparatus that siphons funds from care.

The correct way to estimate administrative savings is to use actual data
from real world experience with single-payer systems such as that in
Canada or Scotland, rather than using projections of costs in Vermont's
non-single-payer plan. In our study
<http://www.nejm.org/doi/full/10.1056/NEJMsa022033> published in the New
England Journal of Medicine we found that the administrative costs of
insurers and providers accounted for 16.7 percent of total health care
expenditures in Canada, versus. 31.0 percent in the U.S. - a difference
of 14.3 percent. In subsequent studies, we have found
<http://content.healthaffairs.org/content/33/9/1586.abstract> that U.S.
hospital administrative costs have continued to rise, while Canada's
have not. Moreover, hospital administrative costs in Scotland's
single-payer system were virtually identical those in Canada.

In sum, Thorpe's assumptions understate the administrative savings of
single-payer by 9.6 percent of total health spending. Hence he
overestimates the program's cost by 9.6 percent of health spending --
$327 billion in 2016, and $3.742 trillion between 2016 and 2024.
Notably, Thorpe's earlier analyses projected much larger administrative
savings from single-payer reform -- closely in line with our estimates.

*2. Thorpe assumes huge increases in the utilization of care, increases
far beyond those that were seen when national health insurance was
implemented in Canada, and much larger than is possible given the supply
of doctors and hospital beds.*

When Canada implemented universal coverage
<http://www.nejm.org/doi/pdf/10.1056/NEJM197311292892206> and abolished
copayments and deductibles there was no change in the total number of
doctor visits; doctors worked the same number of hours after the reform
as before, and saw the same number of patients. However, they saw their
healthy and wealthier patients slightly less often, and sicker and
poorer patients somewhat more frequently. Moreover, the limited supply
of hospital beds precluded the kind of big surge in hospitalizations
that Thorpe predicts. In health policy parlance, "capacity constraints"
precluded a big increase in system-wide utilization.

Thorpe bases his estimates on what has happened when a small percentage
of people in a community have had copayments eliminated or added. But in
those cases there are no capacity constraints, so it tells us little
about what would happen under a system-wide reform like single-payer.

Thorpe does not give actual figures for how many additional doctor
visits and hospital stays he predicts. However, his estimates that
persons with private insurance would increase their utilization of care
by 10 percent and that those with Medicare-only coverage would increase
utilization by 10 to 25 percent suggest that he projects about 100
million additional doctor visits and several million more
hospitalizations each year - something that's impossible given
real-world capacity constraints. There just aren't enough doctors and
hospital beds to deliver that much care.

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.

*3. Thorpe assumes that the program would be a huge bonanza for state
governments, projecting that the federal government would relieve them
of 10 percent of their current spending for Medicaid and CHIP --
equivalent to about $20 billion annually.*

No one has suggested that a single-payer reform would or should do this.

*4. Thorpe's analysis also ignores the large savings that would accrue
to state and local governments -- and hence taxpayers -- because they
would be relieved of the costs of private coverage for public employees.*

State and local government spent $177 billion last year on employee
health benefits
<http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2015.302997> -
about $120 billion more than state and local government would pay under
the 6.2 percent payroll tax that Senator Sanders has proposed. The
federal government could simply allow state and local governments to
keep this windfall, but it seems far more likely that it would reduce
other funding streams to compensate.

*5. Thorpe's analysis also apparently ignores the huge tax subsidies
that currently support private insurance, which are listed as "Tax
Expenditures" in the federal government's official budget documents.*

These subsidies totaled $326.2 billion last year
<http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2015.302997>, and
are expected to increase to $538.9 billion in 2024. Shifting these
current tax expenditures from subsidizing private coverage to funding
for a single-payer program would greatly lessen the amount of new
revenues that would be required. Thorpe's analysis makes no mention of
these current subsidies.

*6. Thorpe assumes zero cost savings under single-payer on prescription
drugs and devices.*

Nations with single-payer systems have in every case used their clout as
a huge purchaser to lower drug prices by about 50 percent. In fact, the
U.S. Defense Department and VA system have also been able to realize
such savings.

In summary, professor Thorpe grossly underestimates the administrative
savings under single-payer; posits increases in the number of doctor
visits and hospitalizations that exceed the capacity of doctors and
hospitals to provide this added care; assumes that the federal
government would provide state and local governments with huge windfalls
rather than requiring full maintenance of effort; makes no mention of
the vast current tax subsidies for private coverage whose elimination
would provide hundreds of billions annually to fund a single-payer
program; and ignores savings on drugs and medical equipment that every
other single-payer program has reaped.

In the past, Thorpe estimated that single-payer reform would lower
health spending while covering all of the uninsured and upgrading
coverage for the tens of millions who are currently underinsured. The
facts on which those conclusions were based have not changed.

/Drs. David Himmelstein and Steffie 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 here do not necessarily reflect the views of those
institutions./

http://www.huffingtonpost.com/david-himmelstein/kenneth-thorpe-bernie-sanders-single-payer_b_9113192.html?1454092127

***


Comment by Don McCanne

In the political battle over Bernie Sanders' proposal for a single payer
national health program, it is unfortunate that the perspective of just
how much single payer would benefit Americans is being lost in all of
the clamor.

This is not an issue with two opposing sets of facts. There is only one
truth and that is that a well designed single payer system would bring
comprehensive health care to everyone, while removing financial barriers
to care and making our national health expenditures sustainable well
into the future.

It is not at all clear why so many progressives have decided to attack
Sanders' single payer proposal. Most of them do understand the clear
advantages in improving access while controlling costs, but they seem
fixated on opposing it based on the alleged lack of political
feasibility. It is fine to condemn the politics, but that should give us
even more reason to advance a clearly superior model of health care
financing reform.

The latest attack that is being circulated widely is that by Kenneth
Thorpe, a highly respected Emory University professor. David Himmelstein
and Steffie Woolhandler lay the record straight. It is crucial that we
not be caught up in the numbers being bandied about - the trees - when
we need to see the forest - the fundamental principles of the single
payer model.


/Physicians for a National Health Program (PNHP) is a nonpartisan
educational organization. It neither supports nor opposes any candidates
for public office./

qotd: The lesson of BC/BS of NC on special enrollment periods

Forbes
January 30, 2016
Obamacare Pummels Blue Cross Blue Shield Of NC--What Can We Learn From This?
By Chris Conover

Blue Cross and Blue Shield of NC is expecting to lose more than $400
million on its first two years of Obamacare business. In response to its
bleak experience with the Obamacare exchange, the company has decided to
eliminate sales commissions for agents, terminate advertising of
Obamacare policies, and stop accepting applications on-line through a
web link that provides insurance price quotes–all moves calculated to
limited Obamacare enrollment.

BCBSNC reported an operating loss of $50.6 million in 2014–the first
such loss in 15 years. Why? Because its Obamacare policies lost $123
million despite $343 million in various insurer bailouts (the so-called
"Three R's"–risk adjustment, reinsurance, and risk corridors).

What makes this shocking is that BCBSNC is the state's dominant insurer,
covering 72% of the large group market. If a deep-pocketed insurer such
as this cannot make a go of Obamacare, that does not bode well for many
smaller carriers who do not have large profits on other lines of
business with which to absorb whatever losses are generated by policies
sold on the Obamacare exchanges.

The fact that one of the nation's largest insurers, UnitedHealthcare
also has raised doubts about its ability to carry plans on the
healthcare law's exchanges beyond 2016 makes clear that this problem is
not unique to North Carolina.

The Problem is Getting Worse, Not Better

A large carrier such as BCBSNC can afford to absorb a temporary hit to
its profits. But the evidence in NC is that Obamacare losses are growing
over time rather than shrinking–a clearly unsustainable business model.

Because of its enormous losses, BCBSNC was able to convince the state's
insurance commissioner to allow a 32.5% average increase in its rates
for the 2016 Obamacare policies now being sold.

Special Enrollment Period Enrollees Are a Problem

The special enrollment period is open to people whose circumstances have
changed, such as getting married, having children, losing/changing jobs
or similar situations. However, many such individuals evidently are
staying insured only for several months, generating a lot of medical
bills and then discontinuing their coverage.

People who buy their coverage during these special enrollment periods
cost twice as much as Obamacare customers who secure their coverage
during open enrollment.

Again, this is not unique to NC: earlier this month, in response to
complaints by insurance companies, Obamacare administrators eliminated
six additional conditions that allowed people to sign up for health
coverage outside of the general enrollment period. According to UPI,
these steps will "make it more difficult for persons without health
coverage to financially manipulate or abuse the Affordable Care Act."

These steps presumably will be good news for the bottom line of insurers
such as BCBSNC. But they by no means eliminate various ways in which
people have figured out to game the system.

University of Minnesota economist Stephen Parente has calculated that
the cost of the least expensive policies on the Obamacare exchanges will
more than triple in NC between 2016 and 2017!

http://www.forbes.com/sites/theapothecary/2016/01/30/obamacare-pummels-blue-cross-blue-shield-of-nc-what-can-we-learn-from-this/#6ead235634f6

***

ABC News
February 1, 2016
Insurer Aetna Lays out Concerns About ACA Exchange Business
By Tom Murphy, AP

Aetna has joined other major health insurers in sounding a warning about
the Affordable Care Act's public insurance exchanges.

The nation's third-largest insurer said Monday that it has been
struggling with customers who sign up for coverage outside the ACA's
annual enrollment window and then use a lot of care. This dumps claims
on the insurer without providing enough premium revenue to counter those
costs.

Both Aetna and UnitedHealth Group Inc. said the exchange customers they
get outside the annual enrollment window use more health care than those
who sign up within it. This includes some cases where it appears that a
customer bought coverage, used it and then dropped it.

"Insurance systems tend to get stressed when people can buy coverage
when they know they need it and then drop it when they know they don't,"
Chief Financial Officer Shawn Guertin told The Associated Press.

The Centers for Medicare and Medicaid Services recently outlined several
changes it said it was making to help shore up exchange enrollment windows.

Blue Cross-Blue Shield insurer Anthem Inc. also is paying close
attention to how the government deals with special enrollment periods as
it judges how sustainable the exchange business will be in the future,
CEO Joseph Swedish said recently.

UnitedHealth Group has said it will decide this year whether to
participate in the public exchanges in 2017.

HealthCare.gov CEO Kevin Counihan said in a Jan. 19 blog post that
special enrollment periods will not be available for "the vast majority
of consumers." HealthCare.Gov operates public insurance exchanges in 38
states.

"For example, special enrollment periods are not allowed for people who
choose to remain uninsured and then decide they need health insurance
when they get sick," he wrote.

http://abcnews.go.com/Business/wireStory/insurer-aetna-lays-concerns-aca-exchange-business-36647397

***

The Hill
January 29, 2016
Sustaining the marketplace for a healthier America
By former Sen. Tom Daschle (D-S.D.)

To ensure the affordability of healthcare services, we must help
individuals not only access health insurance coverage, but also stay
covered.
Instead, our current regulatory framework seems to be having the
opposite effect.

For example, there are over 30 "special enrollment periods" – more than
that of any other federal government program, including Medicare
Advantage. Rightfully so, these periods are intended to help
individuals seek coverage outside of the normal enrollment period due to
certain qualifying life events, such as relocating or losing prior
coverage. However, there is little oversight in place to ensure that
special enrollment period requirements are satisfied. The unintended
consequence is that special enrollment periods enable individuals to
only seek coverage when they need care the most – a more costly
proposition for the patient and the health care system.

Fortunately, the Centers for Medicare & Medicaid Services (CMS) is
already taking an important first step to help address these concerns.
CMS is eliminating six special enrollment periods that are either no
longer needed or subject to abuse.

The marketplace will also require greater opportunity for innovation.

The Affordable Care Act has demonstrated great potential for
establishing a high quality, affordable health care market. Now is the
time to leverage that progress and ensure its sustainability by removing
barriers that discourage market participation and incentives that make
it easier to not seek care.

http://thehill.com/opinion/op-ed/267412-sustaining-the-marketplace-for-a-healthier-america

***


Comment by Don McCanne

The losses experienced by Blue Cross and Blue Shield of North Carolina
represent a problem prevalent throughout the nation wherein patients,
when they become ill, enter the system during special enrollment periods
and then exit once their health care needs are met. The insurers along
with CMS have diagnosed the problem. There is nothing wrong with our
system of private insurers. It is the patients who are to blame because
they are gaming the system.

The solution? Reduce special enrollment periods that were designed to
assist patients who fell through the cracks. Instead, protect the
insurers by preventing these people from getting coverage for the care
that they need. Bankrupt them. That'll show them.

Reducing special enrollment periods is being touted as one of the
improvements that we need in the Affordable Care Act - the type of
incrementalism that we should pursue as we reject overtures to establish
a single payer national health program. We should pay no regard to the
fact that this incremental tweak is designed to assist the private
insurers and enhance their profits, at a cost of impairing access and
affordability for far too many patients.

Wasn't the Affordable Care Act designed to provide everyone with
affordable access to health care? No. Single payer has such a design,
but that was rejected to the benefit of the private insurers.

So now we are supposed to tweak the system to make it work better for
patients? No. We are tweaking it to make it work better for private
insurers. Damn those patients who try to cheat the insurers by gaming
the system.

Oh wait. Under single payer the goal is to deliberately include
absolutely everyone. The idea that someone is cheating by trying to
sneak into the system is totally foreign to the stewards of egalitarian
universal systems. How could anyone even think about devising methods of
keeping people out? Perhaps it's American Exceptionalism at work.

qotd: Paul Song on the real debate we should be having

HuffPost Politics

January 31, 2016

The Real Healthcare Debate Democrats Should Be Having

By Paul Y. Song, MD


Recently, a fierce debate has been ignited within the Democratic Party
regarding the merits and feasibility of a single-payer Medicare-for-All
universal healthcare system. Some liberal commentators have summarily
dismissed Senator Sanders' proposal as politically unrealistic or as
greatly lacking in details while championing a slightly improved status
quo, and other political surrogates have spread GOP-like untruths that
have no place in any honest discussion.


Regardless of ones' individual beliefs on Medicare-for-All, it is
crucial to note some indisputable facts regarding the Affordable Care
Act (ACA) and the current status quo:


1. While the ACA did indeed do some very positive things like end
lifetime caps on medical coverage and do away with discrimination for
pre-existing conditions, it was never intended to cover every uninsured
individual. In fact, after the ACA is fully implemented, the
Congressional Budget Office estimates that up to 29 million residents
will still remain uninsured.


2. The only area of the ACA that both Democrats and Republicans found
mutual agreement on was to exclude our undocumented brothers and sisters.


3. The average insured family still pays an extra $1,017 in premiums
(hidden tax) to cover the cost of care for the uninsured.


4. A recent Commonwealth Fund study revealed that 31 million people
with insurance had such high out-of-pocket costs or deductibles relative
to their incomes that they were UNDER-insured and that 51% of these
adults reported problems with their medical bills
<http://www.commonwealthfund.org/publications/issue-briefs/2015/may/problem-of-underinsurance>,
while 44% of all adults reported not getting care because of high
co-pays and deductibles despite being insured.


5. Even after a significant decrease in the total number of uninsured,
there were still 1.7 million medical related bankruptcies in 2014
<http://www.cnbc.com/id/100840148> of which 75% were actually insured,
and this is only expected to get worse.


6. Most individuals in the U.S. cannot afford an annual deductible of
$6,850 and most families of four cannot afford an annual deductible of
$13,700.


7. Despite premiums increasing over 150% over the past 9 years, there
is no federal insurance rate regulation.


8. Despite the fact that average branded drug prices have increased
127% during the past 8 years to the point that 73% of Americans now find
the cost of drugs unreasonable, there was no mechanism to control drug
prices.


9. Many states have huge underfunded retiree healthcare liabilities.
California's alone is $150 Billion.


10. Healthcare costs are currently 17.5% of GDP
<https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html>
with over 1% of GDP spent on Prescription drugs alone, and will only
continue to climb as mandatory federal health spending is projected to
double in the next 10 Years.


11. Recent data from the American Journal of Public Health found that
tax-funded expenditures accounted for 64.3% of all U.S. health spending
<http://www.medpagetoday.com/PublicHealthPolicy/HealthPolicy/55771#>.
U.S. health spending for 2013 was $9,267 per capita, with government's
share being $5,960.


12. Prior to the bailout, GM spent more on healthcare for its employees
than it did on steel. Rising healthcare costs are making U.S. companies
less competitive and taking money away from wages and capital investments.


13. Most Americans continue to get employer-sponsored healthcare but
worker's contributions to premiums have increased 212% since 2000 while
wages have only increased 54% during the same period.


14. Healthcare benefits have become the biggest source of labor
negotiation strife.


So if anything, most health policy experts believe that our current
healthcare system is unsustainable for individuals, businesses, states
and our federal government, and to continue this status quo is what is
really unrealistic.


The real debate Democrats should be having should not be about whether
single payer, a highly successful proven system in so many
industrialized nations, is the solution, but rather how we can
collectively come together to overcome the corporate forces that
derailed the ACA from providing a public option, drug price controls and
insurance rate regulation, and how we get to the ultimate goal of
Medicare for All.


Back in 2003, then Illinois State Senator Barack Obama said in a speech
to the AFL-CIO, "I happen to be a proponent of a single payer universal
healthcare plan...but first we need to take back the White House, then
the Senate, then the house".


Sadly, when Barack Obama became President and had a supermajority in the
Senate and House, single payer was never even introduced as an option.
In fact, well before the ACA was even written, the pharmaceutical
industry under the guidance of former congressman and Medicare Part D
architect, Billy Tauzin, negotiated a sweetheart deal that would provide
industry support for the administration's health reform agenda in
exchange for no significant reform of the pharmaceutical industry.


At the same time there were over 3,300 registered healthcare lobbyists
for the 535 members of congress who spent more in total than what was
spent on the entire Bush-Kerry election to influence the legislation.
Many of these lobbyists were former congressional staffers including two
former chiefs of staff to then Finance Committee Chairman Senator Max
Baccus. Many legislators from both sides of the aisle received lots of
money, but it was Baccus who received over $1.4 million and held up the
legislation in his committee for so long that Senator Ted Kennedy was
not alive to vote for it.


In the end, despite some positive aspects, the ACA looks like it was
essentially written by the pharmaceutical and insurance industry. It is
not socialism, but rather a $475 billion corporate welfare program that
mandated uninsured Americans buy a product from a for-profit industry
that only makes money by denying care, and this is why we still have so
many of the problems stated above.


Paul Krugman is correct when he says that Senator Sanders'
Medicare-or-All plan is not politically feasible today. As long as we
have Democrats who are consistently beholden to the Insurance and Pharma
cartels, we will definitely continue the status quo. As long as we do
not fight to reverse the awful cloud of Citizens' United and the grossly
disproportionate influence of money in politics, we cannot achieve any
meaningful progress in healthcare or any other critical challenge facing
our country and world.


Far beyond any Medicare-For-All proposal, what the Senator is really
calling for is a transformational movement, much larger than any one
individual, which can come together to fight against the Super PACs and
suffocating corporate influences. His campaign is the personification of
this fight.


58 percent of Americans currently favor Medicare-for-All once they learn
more about it, and 81% of Democrats already believe it is the best
solution. So, rather than demonize it with lies and scare tactics, we
should be educating more and more people who are disillusioned with
their current healthcare so that more and more of us can demand
something better from our representatives.


Sadly, the biggest major insurers also recognize the benefits and
efficiencies of a single payer system and have begun to rapidly
consolidate through huge mergers, which further eliminates what little
competition consumers have. So the question is not whether we will have
single payer, but whether it will be administered by one ruthless
for-profit entity that will keep all realized savings for its
shareholders while continuing to gauge, deny, and shortchange its
patients. Or whether it will be a Medicare-for-all, which will use the
cost savings of administrative efficiency and bulk purchasing power to
increase coverage and benefits for everyone, to provide the humane and
comprehensive health care system we as a society truly deserve and
already pay for.


Above all, we need to remember that we ARE the party that rejected the
status quo and created a very bold disruptive new program called
Medicare at a time when 44% of seniors were uninsured and 1/3 were
living in poverty. We are the party for the least among us and for those
without a voice. We are the party of "Yes, we can".


/Paul Y. Song, is a board certified radiation oncologist and the
Executive Chair of the Courage Campaign, Co-Chair for a Campaign for a
Healthy California, and Board Member of Physicians for a National Health
Program/


http://www.huffingtonpost.com/paul-y-song-md/the-real-healthcare-debat_b_9121210.html


***



Comment by Don McCanne


Currently the two leading candidates for the Democratic nomination for
president are debating whether or not a single-payer Medicare-for-All
universal healthcare system is politically feasible. Paul Song provides
us with evidence that our current system is inadequate and
unsustainable, so the real debate we should be having is whether we
should leave our health care system under the control the industries and
policies that are responsible for much of what is wrong, or if we should
initiate a transformational movement that will include Medicare-for-All
so that we can have "the humane and comprehensive health care system we
as a society truly deserve and already pay for."


This debate is not just for members of the Democratic Party. It is a
debate that the entire nation should be having. It is important that the
debate be informed with facts such as those presented here by Paul Song.



/Physicians for a National Health Program (PNHP) is a nonprofit,
nonpartisan, educational and policy research organization that neither
supports nor opposes any candidate for public office nor any political
party. Although Paul Song is a board member of PNHP, any partisan views
expressed in this article are his own and not those of PNHP./

/
/