qotd: Et tu, Atul?

Don Berwick for Governor (Massachusetts)


It is time to find a way to get to yes on a *single payer system* in
Massachusetts. The complexity of our health care payment system adds
costs, uncertainties, and hassles for everyone - patients,
families, doctors, and employers. On day one, I will appoint a
multi-stakeholder Single Payer Advisory Panel to investigate and report
back within six months on how Massachusetts moves to a single
payer health insurance system like Medicare for all.


http://www.berwickforgovernor.com/health-care


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0.jpg*Atul Gawande**Verified account*@Atul_Gawande
<https://twitter.com/Atul_Gawande>

My MA checklist for tomorrow: (1) Go to polling station. (2) Vote for

#DonBerwick <https://twitter.com/hashtag/DonBerwick?src=hash>for the
Democratic Gov nomination.


https://twitter.com/Atul_Gawande


****



Comment by Don McCanne


Although PNHP does not endorse political candidates, this is important
news for single payer advocates. Donald Berwick, former administrator of
the Centers for Medicare and Medicaid Services (CMS), has made single
payer a central issue in his campaign to be the Democratic nominee for
Governor of Massachusetts. And now he has been endorsed by noted Harvard
Professor and journalist Atul Gawande, who has quite a following
amongst the politicos in D.C., not to mention those around the nation
who follow health policy.


It is now more clear than ever that the Affordable Care Act is going to
fall far short of the reform that we need. The fact that single payer is
an issue in today's election in Massachusetts - the state that already
has both Romneycare and Obamacare - indicates that the single payer
concept is alive and well. Although it is likely that Martha Coakley
will be the nominee, that attests to her popularity within the state, as
the voters are going to the polls to select an individual personality as
their candidate and are not voting based on specific issues.


The message is that, although ACA is the law of the land, it is still
okay to advocate for single payer. In fact, more than okay. Fixing our
highly dysfunctional system is still an imperative.


Whether or not Don Berwick and Atul Gawande are ambitious men, they
surely are honorable.

qotd: U.S. far out in front again - in hospital administrative waste

Health Affairs
September 2014
A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs
Exceed All Others By Far
By David U. Himmelstein, Miraya Jun, Reinhard Busse, Karine Chevreul,
Alexander Geissler, Patrick Jeurissen, Sarah Thomson, Marie-Amelie Vinet
and Steffie Woolhandler

Abstract

A few studies have noted the outsize administrative costs of US
hospitals, but no research has compared these costs across multiple
nations with various types of health care systems. We assembled a team
of international health policy experts to conduct just such a
challenging analysis of hospital administrative costs across eight
nations: Canada, England, Scotland, Wales, France, Germany, the
Netherlands, and the United States. We found that administrative costs
accounted for 25.3 percent of total US hospital expenditures—a
percentage that is increasing. Next highest were the Netherlands (19.8
percent) and England (15.5 percent), both of which are transitioning to
market-oriented payment systems. Scotland and Canada, whose single-payer
systems pay hospitals global operating budgets, with separate grants for
capital, had the lowest administrative costs. Costs were intermediate in
France and Germany (which bill per patient but pay separately for
capital projects) and in Wales. Reducing US per capita spending for
hospital administration to Scottish or Canadian levels would have saved
more than $150 billion in 2011. This study suggests that the reduction
of US administrative costs would best be accomplished through the use of
a simpler and less market-oriented payment scheme.

From the Discussion

Hospitals' administrative overhead varied more than twofold across the
nations we studied as a share of total hospital costs and more than
fourfold in absolute terms. These costs were far higher in the United
States than elsewhere.

In all nations, hospital administrators must procure and coordinate the
facilities, supplies, and personnel needed for good care. In nations
where administrators have few responsibilities beyond these logistical
matters, administration seems to require about 12 percent of hospital
expenditures.

Modes of hospital payment can increase the complexity and costs
associated with two additional management tasks: garnering operating
funds and securing capital funds for modernization and expansion.

Garnering operating funds requires little administrative work in nations
such as Canada, Scotland, and Wales, where hospitals receive global,
lump-sum budgets. In contrast, per patient billing (for example, using
DRGs) requires additional clerical and management personnel and
special-purpose IT systems. This is true even in countries—such as
France and Germany—where payment rates, documentation, and billing
procedures are uniform.

Billing is even more complex in nations where each hospital must bargain
over payment rates with multiple payers, whose documentation
requirements and billing procedures often vary, as is the case in the
United States and the Netherlands.

Differences in how hospitals obtain capital funds also appear to affect
administrative costs. The combination of direct government grants for
capital with separate global operating budgets—as in Scotland and
Canada—was associated with the lowest administrative costs. (Wales has
recently transitioned to such a system, reversing previous market
reforms.) Hospitals in France and Germany, where direct government
grants account for a substantial share of hospital capital funding, have
relatively low administrative costs despite per patient, DRG-based billing.

Administration is costliest in nations where surpluses from day-to-day
operations are the main source of hospital capital funds: the United
States and, increasingly, the Netherlands and England. In such health
care systems, the need to accumulate capital funds for modernization and
expansion stimulates administrators to undertake the additional work
that is needed to identify and pursue profit opportunities.

http://content.healthaffairs.org/content/33/9/1586.abstract

****

PNHP Press Release
September 8, 2014
Bureaucracy consumes one-quarter of US hospitals' budgets, twice as much
as in other nations: Health Affairs study

A study of hospital administrative costs in eight nations published
today in the September issue of Health Affairs finds that hospital
bureaucracy consumed 25.3 percent of hospital budgets in the U.S. in
2011, far more than in other nations.

Administrative costs were lowest (about 12 percent) in Scotland and
Canada, whose single-payer systems fund hospitals through global,
lump-sum budgets, much as a fire department is funded in the U.S.

The article attributes the high administrative costs in the U.S. to two
factors: (1) the complexity of billing a multiplicity of insurers with
varying payment rates, rules and documentation requirements; and (2) the
entrepreneurial imperative for hospitals to amass profits (or, for
nonprofit hospitals, surpluses) in order to fund the modernization and
upgrades essential to survival.

"We're squandering $150 billion each year on hospital bureaucracy," said
lead author Dr. David Himmelstein, a professor at the CUNY/Hunter
College School of Public Health and lecturer at Harvard Medical School.
"And $300 billion more is wasted each year on insurance companies'
overhead and the paperwork they inflict on doctors."

He added: "Only a single-payer reform can squeeze out the bureaucratic
waste and use the money to give patients the care they need. Instead,
we're layering on more bureaucracy in insurance exchanges and
'accountable care organizations.'"

http://www.pnhp.org/news/2014/september/bureaucracy-consumes-one-quarter-of-us-hospitals'-budgets-twice-as-much-as-in-ot

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Comment by Don McCanne

This international comparison of hospital administrative costs further
documents the profound administrative waste that characterizes U.S.
health care financing. This study is particularly important because it
clarifies the two major factors resulting in this waste: 1) the
administrative complexity of interacting with a multitude of insurers,
and 2) "the entrepreneurial imperative for hospitals to amass profits or
surpluses" in a system with market-driven pricing.

Although all other nations waste less than we do on administration, they
do so in varying degrees. Thus we can learn lessons from them,
especially the two lessons above. Extrapolating from this Health Affairs
article, the solution for hospital financing is obvious: switch to
single payer and use global budgets for hospitals and separate budgeting
for capital improvements. But don't stop there. Apply single payer
principles to the financing of our entire health care delivery system.
That would free up perhaps $400 billion or more that could be used to
ensure appropriate health care for everyone.

qotd: Urban Institute and Bankrate on high deductibles

Urban Institute
September 4, 2014
QuickTake: Nonelderly Workers with ESI Are Satisfied with Nonfinancial
Aspects of Their Coverage but Less Satisfied with Financial Aspects
By Adele Shartzer and Sharon K. Long

The Urban Institute's Health Reform Monitoring Survey has been tracking
health insurance coverage, including employer-sponsored insurance
coverage (ESI), since the first quarter of 2013. This QuickTake reports
on nonelderly (ages 18–64) workers' ESI in June 2014. In June 2014, most
workers (88.6 percent) were insured and, among those who were insured,
most (80.7 percent) had ESI (data not shown). When asked to assess their
ESI, workers were generally satisfied with their ESI in terms of
available health care services, choice of doctors and other providers,
and the quality of the care available under the plan; less than 5
percent of nonelderly workers with ESI coverage report being
dissatisfied with any of these factors. However, satisfaction levels are
much lower for the financial aspects of coverage, with workers more
concerned about premiums, co-payments, and their potential financial
risk from high medical bills. Nearly one in four nonelderly workers with
ESI (23.4 percent) is dissatisfied with the premium they pay for
coverage, and 27.2 percent are dissatisfied with the deductibles they
pay when receiving care. The protection that ESI provides against high
medical bills may be particularly limited for low-income nonelderly
workers (those with family income at or below 138 percent of FPL): 32.1
percent of low-income workers with full-year ESI report having problems
paying medical bills in the past 12 months. Overall, 14.2 percent of
nonelderly workers with full-year ESI report having problems paying
medical bills over the past 12 months.

http://hrms.urban.org/quicktakes/Nonelderly-workers-with-ESI.html

****

The New York Times
September 4, 2014
How People Feel About Their Employer-Sponsored Health Plans
By Margot Sanger-Katz

There are new results from the Urban Institute's Health Reform
Monitoring Survey, which asked people with employer-based coverage how
they liked what they had.

For people earning between 138 percent and 400 percent of the federal
poverty limit, or between $33,000 to $95,000 — the income range of
people who are most likely to buy insurance on the public marketplaces —
more than 23 percent of workers with employer coverage reported having
problems paying their medical bills in the last year.

Sharon Long, a senior fellow at Urban, said that the results suggested
that consumers might not be prepared for what happened when they
combined a high-deductible insurance plan with big medical bills.

"What we've heard anecdotally from people with health plans is more
people are signing up for high-deductible health plans and then being
surprised that they have to pay the deductible," she said. That's a
concern on the new health insurance marketplaces, too. Early evidence
suggests that people tended to opt for cheaper plans, many of which came
with high deductibles — meaning that the newly insured may face some of
the same financial strain if they become seriously ill.

Deductibles and co-payments have been rising, as a growing number of
employers embrace the idea that giving workers more of a financial stake
in their medical care will help reduce overuse. "It's been going up over
the past few years," said Gary Claxton, a director of the Health Care
Marketplace Project at the Kaiser Family Foundation, which runs a
comprehensive annual survey of the employer insurance market. And no one
likes paying high insurance premiums or out-of-pocket costs

Over all, Ms. Long said, the rising costs of health care are likely to
remain a concern for consumers, wherever they get their insurance. "I
expect what we'll see over time, unless we are able to get costs under
control, is that all the cost questions are going to be an issue," she said.

http://www.nytimes.com/2014/09/05/upshot/how-people-feel-about-their-employer-sponsored-health-plans.html

****

Bankrate.com
September 4, 2014
Worried about health insurance? That's common
By Jay MacDonald

Bankrate's Health Insurance Pulse survey was conducted Aug. 21-24 by
Princeton Survey Research Associates International.

Tom Baker, a professor of insurance law at the University of
Pennsylvania Law School, points out that a majority of working adults
receive their health insurance through their employer and thus have
largely been spared a direct impact from the Obama health care law. But
the survey's concerned majority may partially reflect uneasiness about
employer-based plans.

"There is research being done on liquidity, or 'financial fragility,'
where they asked people if they could come up with $2,000 to pay for a
major medical bill in the next month," he says. "I think 40 percent of
respondents said they either couldn't or it would be very difficult.
That suggests that people are financially fragile."

David Cusano, a senior research fellow at Georgetown University's Health
Policy Institute in Washington, D.C., suspects some of the fear over
health costs may stem from growing first-hand experience with how health
insurance works.

"With the Affordable Care Act, anybody who now wants insurance can get
it," Cusano says. "The question now becomes: 'Can I afford to use it?'
When you think about people confronting out-of-pocket maximums at around
$7,000 or deductibles of $5,000 for a family, that's a lot of money. You
throw prescription drug copays into the mix, and I can see where you
would be worried."

http://www.bankrate.com/finance/insurance/health-insurance-poll-0814.aspx

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Comment by Don McCanne

These two surveys are of people who have employer-sponsored health
insurance - the very large market of health plans that was protected by
the Affordable Care Act ("you can keep the insurance you have"). The
most significant change in employer-sponsored plans is in the increased
use of high deductibles as a means of slowing premium growth for the
employers.

The trade off is that employees and their families are exposed to
greater out-of-pocket costs whenever they access health care. These
surveys demonstrate that this exposure is not merely theoretical but is
actually creating significant financial insecurity for the insured.

But isn't the primary purpose of insurance to relieve you of financial
hardship should you have health care needs? Instead, these newer
insurance product designs are increasing the risk of financial hardship,
both in the employer-sponsored market, and especially, by design, in the
plans offered by the ACA insurance exchanges. That is why they selected
a lower actuarial value plan as the benchmark plan in the exchanges.

Reform should have been about fixing the problems with our health care
financing, not making them worse. A far better system would simply
provide access to health care when needed, without linking that care to
specific financial transactions controlled by a third party insurance
intermediary. We don't need private insurance programs. We would do far
better with prepaid health care, financed equitably through progressive
tax policies.

It's in our name. PNHP is Physicians for a National Health Program, not
physicians for private health insurance.