Blog Post: Comments to the Washington Examiner

The Washington Examiners‘ Robert King had an article today about the ongoing single payer battle, “Sanders reignites fight over single-payer healthcare“.

The article notes that though some would contend that the debate over incrementalism vs. more fundamental reform is already behind us, “…single-payer advocates beg to differ.” In this case, I was the single-payer advocate doing the begging:

“The Affordable Care Act didn’t address a lot of the problems in the [healthcare] system,” said Adam Gaffney, a physician, writer and single-payer advocate. Gaffney said his views don’t represent any groups he is affiliated with.

Cost-sharing requirements such as co-pays and deductibles have increased, and more than 30 million Americans are underinsured, Gaffney said.

“Regardless of what happens in the coming general election, the Affordable Care Act will not have killed single payer,” he said.

Gaffney said he was disappointed that Clinton seems to be “closing the door on a single-payer program given that so many people support it.”

Available at: http://www.washingtonexaminer.com/sanders-reignites-fight-over-single-payer-healthcare/article/2580856

 

Newsletter #1

 

Newsletters are retro and trendy.  In an effort to not feel left out I’ve started one too. You can signup here: http://tinyletter.com/awgaffney

Given a paucity of current subscribers, I’ve decided to post the letter on this blog as well.  Here it goes …

This is the first of what I hope to be biweekly newsletters, which will combine what (if anything) I’ve written in the intervening period as well as some of the latest in health news/politics/policy (and other items of interest).

So this past week saw a rather vigorous exchange on everybody’s favorite topic (well, at least mine): single payer health insurance.  Hilary Clinton opened with a salvo about Sanders’ health care plan being a “risky deal,” as reported by the Washington Post, which would devolve responsibility for health insurance to state governors.  Chelsea Clinton one-upped this by describing Bernie Sanders’ single payer proposal as a rather frightening sounding scheme that might effectually “…strip millions and millions and millions of people off their health insurance,” as she was quoted by MSNBC.  Basically everybody agreed that this was nonsense.  Ezra Klein wrote about it here at Vox:

Hillary Clinton’s campaign has spent the past few days indulging its worst instincts. It blundered into a dumb attack on Bernie Sanders, but rather than back down it raised the stakes. The result has been a reminder, to liberals, of what they like about Sanders and mistrust about Clinton.

Well put.  I wrote a post (“Chelsea Clinton Grossly Misrepresents Single Payer“)  about the silliness of the Clintons’ charge, and also noted that Chelsea Clinton has little excuse not to have a handle on the issue given that she is something of a public health person (then again, so is Hillary Clinton).  Zaid Jilani of the Intercept also made the good point that, as the headline of his article puts it, “Hillary Clinton’s Single-Payer Pivot Greased By Millions in Industry Speech Fees.” Perhaps the best response was this tweet from the Bernie Sanders campaign, harkening back to an earlier era when HRC’s opinions on single payer were a bit different:

 

On the other hand, Matt Yglesias at Vox had a less helpful piece asserting, to some extent, that what really matters about single payer is lowering provider reimbursements, which might be done with or without single payer.  Indeed, implementing single payer without an across the board reduction in provider payments, he contends, would be very costly and not very useful.  I disagreed strongly with him in this post, “What’s wrong with Matt Yglesias’ Single Payer Analysis.” Now admittedly, I might be said to have something of a conflict of interest on the topic as a health care provider myself.  But that’s really beside the point: whether or not providers should be paid less is separate from the question of whether we should have a single payer system.  Single payer would have huge administrative efficiencies over our current fragmented mess of a system: it could save a great deal of money separate from the issue of provider reimbursement.  Fellow PNHPer Don McCanne had a more comprehensive take on his blog here.

In closing, consider having a look at a piece I wrote for The New Republic (online) about Sasha Issenberg’s forthcoming book, Outpatients: The Astonishing New World of Medical Tourism.  It’s a wacky world no doubt, and also a good book.  I more or less contend that medical tourism should be understood in the larger context of the corporatization of health care and a global retreat from a vision of universal public health care.

Blog Post: What’s wrong with Matt Yglesias’ Single Payer Analysis

Does single payer save money? Matt Yglesias had a piece in Vox today headlined “The single-payer debate we should be having,” in which he admits that Hillary Clinton’s recent anti-single payer (SP) attack is “questionable,” but contends that we’re missing the main point about SP: namely, that it saves money by reducing reimbursement to health care providers like physicians.

Such a move would be politically very difficult, he argues, and in any event we could very well cut payments without moving to SP – and save money all the same. It’s best to quote him at length:

Single-payer systems save money by squeezing health care providers — doctors, hospitals, and ultimately everyone who works for them — which would be very difficult to accomplish ex post facto. If the political consensus did exist for enacting large, across-the-board cuts in doctors’ fees and hospital charges, then there would be no need to shift to a single-payer system in order to accomplish the cuts. In the absence of such a consensus, the switch to single-payer actually wouldn’t save money, and the costs would become exorbitant.

Thus, he contends that “a single-payer structure is neither necessary nor sufficient” to reduce health expenditures in this fashion. He says a lot in this article, some of which is fair, but this specific point is incorrect.

In passing, Yglesias briefly mentions that SP would be administratively simpler, yielding some increased efficiencies. But this is entirely inadequate: reduced administrative expenditures would be a primary source of potential savings under SP. This may sound wonkish, but it’s a point of great importance in this very high-stakes debate.

There’s a whole literature about administrative inefficiencies of the US health care system, but I’d ask Yglesias to have a look at this paper by Jiwani et al., Billing and insurance-related administrative costs in United States’ health care: synthesis of micro-costing evidence, published in BMC Health Services Research in 2014 (note: two of the co-authors [DS and SW] are colleagues/collaborators on other projects). The paper provides an estimate for “billing and insurance-related” (BIR) costs for the US health care system, and compares it to Canada, which has a single-payer system.

The potential estimated efficiency savings are enormous. In comparison to the SP system in Canada, “added BIR costs” were estimated at $49 billion/year for physician practices, $54 billion/year for hospitals, and $69 billion/year for “other health service and supplies.” Using US Medicare as a benchmark, added BIR costs were estimated at $185 billion/year for private insurers and $18 billion/year for public insurers.   Depending on the exact assumptions used, the investigators produced a “plausible range for overall added BIR costs in the US of $254 – $507 billion in 2012…”

The implications of this are clear: the efficiencies of a SP system – which could reduce or eliminate the need for a whole range of administrative and billing activities at the level of insurance companies, hospitals, and doctors’ offices – could be a substantial contribution towards expanding coverage under SP. To quote the investigators:

Implementation of a simplified financing system offers the potential for substantial administrative savings, on the order of $375 billion annually, which could cover all of the uninsured and upgrade coverage for the tens of millions who are under-insured.

This might sound farfetched for those who are unfamiliar with the enormous administrative inefficiency of the US health care system. Hospitals, for example, currently tabulate complex patient-by-patient bills, sometimes for every service or supply utilized (and often chase down those with unpaid bills using debt collection agencies). Under SP, they could instead be paid “global budgets” to cover all operating expenses and all patients; the need for hospital billing departments would thereby shrivel. Physicians practices’ likewise must bill (and jostle with) an ever-changing roster of insurance plans, requiring significant staff and/or time.

In short, Yglesias’ analysis of the current SP debate almost entirely neglects how increased administrative simplicity could pay for a SP system that eliminated both uninsurance and underinsurance. Even if overall health care expenditures were unchanged at the end of the day, this would be quite a bargain.

 

 

 

 

Blog Post: Chelsea Clinton Grossly Misrepresents Single Payer

Chelsea Clinton isn’t just a political surrogate, she’s someone who purports to know something about public health. She is, after all, the Vice Chair of the Clinton Foundation, where – according to its website – she works on the organization’s multiple public health projects.  More to the point, she is an adjunct assistant professor in health policy and management at the Columbia Mailman School of Public Health, where she earned her Masters in Public Health degree.

Which makes her gross misrepresentation of Sanders’ health plan only that much more contemptible. “Sen. Sanders wants to dismantle Obamacare, dismantle the CHIP [Children’s Health Insurance] program, dismantle Medicare, and dismantle private insurance,” she was quoted as saying by MSNBC while on the campaign trail for her mother in New Hampshire. She continued (again as quoted by MSNBC): “I worry if we give Republicans Democratic permission to do that, we’ll go back to an era – before we had the Affordable Care Act – that would strip millions and millions and millions of people off their health insurance.”

This would be an absurd interpretation of Sanders’ single payer proposal for anybody, much less for someone with some background in health policy. It doesn’t seem to have been an off-the-cuff remark, however: it mirrors a somewhat similar comment made by Hillary Clinton the day before. As she was quoted by the Washington Post:

His plan would take Medicare and Medicaid and the Children’s Health Insurance Program and the Affordable Care Act health-care insurance and private employer health insurance and he would take that all together and send health insurance to the states, turning over your and my health insurance to governors.

Now I’m a single payer advocate, active in the organization Physicians for a National Health Program (though the views expressed in my articles and blog posts are mine only). If you don’t agree with the vision of a single payer program – whether because you think private insurers do a right proper job of delivering a right to health care or because your campaign receives generous funding from the pharmaceutical industry or whatever – so be it.

But don’t grossly misrepresent such a system by suggesting that Sanders would “dismantle Medicare,” as Chelsea Clinton did. Particularly not when the text of Sanders’ 2013 single payer bill states, “…the 113th Congress should enact a Medicare-for-All Single Payer Health Care System…” This bill is one of several single payer bills and proposals. Representative John Conyers’ single payer bill, H.R. 676, is in fact named the “Expanded & Improved Medicare For All Act.” To suggest that a system that would provide an improved Medicare program universally to the nation would somehow sneakily rob seniors of their Medicare coverage demonstrates a rather poor grasp of the issues (or something worse).

What both Clintons’ seem to be alluding to, as The Week’s typically on-point Ryan Cooper described earlier this week, is the fact that Sanders’ 2013 bill configures a single payer plan that would, to some extent, have a state-based administrative structure (though it would still be a federal plan and be implemented in every state). Cooper contends that there are some reasonable objections to such a structure, and that perhaps an entirely federal plan might well be superior.

Yet these are relatively minor details. To characterize Sanders’ single payer platform as some sort of dispersal of health care to the whim and fancy of each individual state is fantastically inaccurate. Sanders’ has proposed a fundamentally universal system: a national health program that would cover essentially everyone in every state. At that point, we wouldn’t need a separate Medicaid or Medicare program (or private insurer), which is the raison d’etre of “single payer.” Such a system would be far more just and equitable than what we have now, where – even with the Affordable Care Act largely intact – 32 million remain uninsured and another 31 million underinsured, among other failings.

Of course, such issues will never be a problem for Chelsea Clinton, primarily because she is part of a fabulously rich family. Indeed, as the Intercept’s Zaid Jilani described yesterday in a good piece entitled “Hillary Clinton’s Single-Payer Pivot Greased By Millions in Industry Speech Fees,” Hillary Clinton has raked in a cool $2.8 million in speaking fees in the past two years from the health care industry alone. Jilani also notes that Bill Clinton gave a speech (one presumes for a hefty fee) last year for America’s Health Insurance Plans, the main lobbying group for the health insurance industry. And Chelsea Clinton herself is already able to command $65,000 per college speaking gig, according to the Washington Post.

Like her parents, in other words, Chelsea Clinton is unlikely to go broke from a sky-high deductible or because she inadvertently went to an “out-of-network” doctor or hospital; she’ll never be forced to choose between filling a prescription and paying for rent. Nor should she – nor should anybody.

But obviously that’s no excuse for a campaign surrogate (much less an adjunct assistant professor of health policy and management) to so grossly mischaracterize a rather familiar health reform proposal, particularly not one that has the potential of improving – indeed saving – the lives of so many.

Wall Street Journal’s $15 trillion Single-Payer “Price Tag”

An article published in the Wall Street Journal today, headlined the “Price Tag of Bernie Sanders Proposals: $18 Trillion,” seems intended to induce what I might call “single payer sticker shock.” After all, the article states, $18 trillion not only “alarms conservatives,” but also “gives even many Democrats pause.” $15 of that $18 trillion is attributed to Sanders’ proposed single-payer health care reform. It sounds like a forbiddingly high number.

But is it a fair number? A story by David Dayen at The Intercept (“Wall Street Journal’s Scary Sanders Price Tag Ignores Health Savings) and a post by Matt Yglesias at Vox (“Bernie Sanders’ $18 trillion in proposed spending is more affordable than it sounds”) help put this number in context, but I think there are couple more things to be said about it.

As Dayen notes, the article draws from a study published by Gerald Friedman, an economist at the University of Massachusetts at Amherst, to compute the $15 trillion figure. Friedman wrote the study in 2013 in order to estimate how HR 676 – the single-payer bill sponsored by Congressman John Conyers – might be financed. The mix of taxes Friedman suggests is one potential approach to paying for single-payer; others are possible.

In any event, since the WSJ article relies on Friedman’s estimate, it’s worth turning to his report and asking: how much would single-payer cost? There are two ways to answer this question.

In Table 2, Friedman describes the “Estimated costs of health system improvement and transition costs under HR 676 (in billions of dollars),” which I’ve reproduced, verbatim, here:

Increased utilization $144
Cost of expanded coverage including government administrative costs $110
Cost of Medicaid rate adjustment $89
Transition cost of unemployment insurance and retraining for displaced workers $31
Transition cost of capital buy-out of private health care facilities $20
Total $394

Thus, according to Friedman’s analysis, the cost of expanding health coverage to everyone in America (i.e. eliminating uninsurance together with most out-of-pocket health care costs) along with various associated costs (e.g. reimbursing owners of for-profit health facilities and assisting newly unemployed insurance workers) would cost $394 billion annually ($51 billion of that would be for transitional costs, so would apply to the first year only).

So should we argue that single-payer “costs” $394 billion a year? No, we shouldn’t. Table 3, “Savings on provider administrative overhead and pharmaceutical costs,” details the various savings associated with a single-payer system. Direct governmental negotiation with pharmaceutical companies over drug prices would result in $115.9 billion savings annually. Reduced administrative expenditures (something I recently blogged about), would, according to Friedman’s numbers, save $476 billion a year.

In other words, at least according to this one study, overall savings under HR 676 would be $592 billion a year, while overall costs would be $394 billion a year. Here is Friedman’s pie chart, which I’ve redrawn:

Untitled

Now, as Dayen argues, this makes sense: “The entire point of a single-payer health care plan, aside from covering everyone in the country,” he writes, “is to minimize costs, by reducing administrative bureaucracy, the profit motive and middlemen.” Exactly. But if savings > costs, where does the $15 trillion figure come from?

In a universal single-payer health care system, everyone would be covered; all current expenditures on health care would be replaced by taxes. As the WSJ admits, the “trade-off” for such new taxes would be that “employers would no longer have to pay for or arrange their workers’ insurance.” However, this is entirely inadequate. The following additional expenditures would likewise disappear entirely:

1) Employee contributions to their insurance premiums

2) Payments made for insurance premiums for those not covered by their employer.

3) Out-of-pocket expenditures (which are on the rise) on things like copayments, deductibles, and co-insurance

4) Payments for long-term care, which are today essentially uncovered for most (except for those in poverty, through Medicaid)

Yes, all of those payments would have to be replaced by taxes (see note 2 below).  But as Yglesias notes, “[i]f you financed it [single payer] with a broad-based payroll tax (the way Social Security is financed), people with job-based insurance plans wouldn’t even notice the difference — today’s insurance premium line on your pay stub would become a tax line.”

While payroll taxes are only one way to finance single-payer (and, as the 2003 PNHP proposal notes, progressive taxation would actually be fairer), the overall principle holds: replacing current health care expenditures with taxes would be relatively unobtrusive for most of us.

And in return for what is essentially a spending swap, we would have universal first-dollar health care for everyone in the nation. That seems, to me, to be a small price to pay.

Note: Edited for unfortunate name misspellings … Apologies!  Also, my initial figures for administrative (and total savings) were incorrect in the text, though they were correct in the pie chart; they have now been corrected. Finally, I’ve now clarified that of Friedman’s $394 billion per year in costs for health system improvement under single-payer, $51 billion would be for transitional costs which would apply for the first year only.

Note 2: How much would those payments be?  Although the $15 trillion figure is sourced in the WSJ article to Friedman’s study, the study that I linked to doesn’t mention that number. I’m assuming the figure combines the assumptions of the study with projected national health expenditures over the next ten years (figures noted by both Dayen and Yglesias), which are available from CMS here (NHE  Projections 2014-2024, Table 3 “National Health Expenditures By Source of Funds”).  Summing the projected national health expenditures for the years 2014 – 2023 gives us $4.14 trillion in projected out-of-pocket payments and $13.16 trillion for private health insurance.  Those sources of payment would need to be replaced with public funding. Doug Henwood also pointed to this data, and made a similar overall point, at LBO.   

Note 3: I’ve noticed that Gerald Friedman, the author of the study cited by the WSJ, has weighed in on the use of his analysis at the Huffington Post, available here.  He includes his 10-year projections, and confirms that approximately $15 trillion in new federal spending would be required under HR 676.  However, “…by spending these vast sums,” he writes, “we would, as a country, save nearly $5 trillion over ten years in reduced administrative waste, lower pharmaceutical and device prices, and by lowering the rate of medical inflation.”   The bottom line couldn’t be clearer.

CNN: Racial injustice still rife in health care

Racism mars the history of health care in America. For years, black patients were relegated to separate — and appallingly unequal — hospitals and wards. Many were simply denied medical attention, either “dumped” into the care of other facilities or turned away at the hospital door … An Op-Ed by me and Vijay Das of Public Citizen at CNN.com today.

Blog Post: Hayek and Healthcare Administrative Expenditures (not at all wonkish)

Would a single-payer national health program, at the end of the day, truly be sleeker and slimmer than our bloated and fragmented semi-private system? Not according to Dr. Michel Accad, who takes on this important single-payer talking point in his blog post posted last week on KevinMD, “Will single-payer really reduce administrative waste?”

Given that savings from reduced expenditures on billing and overhead are a core argument that single-payer advocates (myself among them) employ to advance our cause, the piece caught my eye. To quote the proposal of the Physicians’ Working Group for Single-Payer Insurance (of note, I’m active in the organization Physicians for a National Health Program, which was behind the proposal), published in JAMA in 2003:

Our multiplicity of insurers forces US hospitals to spend more than twice as much as Canadian hospitals on billing and administration; forces US physicians to spend vast amounts on billing; and nourishes a panoply of business consultants, coding software vendors, and other satellite business.

So had a new study been published demonstrating, contrary to all existing data, that private insurers somehow had lower administrative costs than Medicare? Had Canadian expenditures on healthcare administration somehow suddenly vaulted ahead of that of the United States?

No, neither had come to pass (not surprisingly). In fact, Dr. Accad doesn’t really deal with any of the literature about the administrative efficiency of different types of health care systems. Instead, he employs a “Hayekian perspective” to make the argument that central economic planning is inherently inferior to an atomized free market where individual economic actors buy and sell, rationally relying on their intimate knowledge of local market circumstances. “Only in a decentralized system,” he argues, “of decision making, where price fluctuations can adjust to the reality of needs and provisions, are major gluts and shortages avoided.” (i.e. no one knows the business of bread making better than the bread maker, etc. etc.).

Now on the one hand, it’s a bit quixotic to invoke the political philosophy of a neoliberal economist to argue against what is essentially empirical point, i.e. that the United States spends more on health care administration than nations that have a single-payer system.

For it clearly does. To review, one 2003 study published in the New England Journal of Medicine found that the US spent about three-times as much as Canada on health administration ($1,059 vs. $307 per capita, in 1999). More recently, a study published in Health Affairs found that the US had the highest hospital administrative costs among eight high-income nations (an astronomical 1.43% of GDP spent annually on hospital administration in the US, as compared to 0.41% in Canada).

Closer to home, Medicare – a single-payer-like system for older Americans – has an administrative overhead around 2%, as compared to the 13.6% in overhead and profits of privatized Medicare Advantage, which is run by private insurers.

I could quote my favored political philosophers here to counter Accad’s quotes from Hayek, but it’s really all beside the point. “The question,” as the Princeton health care economist Uwe E. Reinhardt put it in a post on the issue in New York Times, “is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”

To be fair, Dr. Accad makes a good point ridiculing the extraordinarily complex and “byzantine scheme of codification” used by Medicare (and followed by private insurers) for billing purposes. “[A] CPT code 99204-21 (new patient visit, E/M coding level 4, prolonged service) associated with ICD-9 code 786.50 (chest pain, unspecified),” he notes, “hardly conveys any real knowledge and cannot possibly be a basis on which relevant decisions can be made or value established.”

No, it can’t, but that’s not what such codes are used for: they’re used to determine reimbursement. But they don’t have to be – and that’s where the administrative savings come in.

Under a single payer system (as PNHP’s proposals describe), hospitals would receive a global lump sum budget to pay for all operating costs; there would be no need to monitor services used by individual patients, tabulate costs, or hire debt collectors. Indeed, hospital billing could largely be eliminated from the ledgers of hospital operating expenses.

Simplified fee schedules, capitation, or salaries – without bonuses or penalties for more or less health care use – would be used to reimburse providers in the outpatient sector. The name of the game would be “[s]implicity, simplicity, simplicity!”, as one prominent New Englander put it in his important defense of a national single-payer system, Walden.

I share what I sense is Dr. Accad’s bitterness at onerous documentation obligations. But a universal system would make much of that documentation irrelevant, and therefore unnecessary. It would therefore be a win both for practitioners and for the public (though it would admittedly be a loss for many others, including those who profit from the system’s inefficiency, e.g. the health insurance industry).

“Reducing administrative waste” may or no not be the heady revolutionary slogan that today’s millennial physician-activists are looking for, but it’s no less true for that – whatever the unrelated musings of Hayek or Henry David Thoreau.

Note: Updated to note that the “global lump sum budget” is described in PNHP’s proposals.   

Note 2: A version of this post has been published on KevinMD.com.

Blog Post: The Problem with “Narrow Networks”

In a viewpoint recently published online in the Journal of the American Medical Association entitled “Narrow Networks and the Affordable Care Act,” Haeder and colleagues take on the controversial issue of the so-called health insurance “narrow network,” and warn that “populism” and “rash decision making” may lead to government regulation of insurance networks which might, they argue, be  counterproductive.

First, by way of background: a “network” refers to the physicians and hospitals that are “included” in a particular insurance plan.  Going “out of network” is a perilous pursuit: patients and families can easily accrue thousands or tens of thousands of dollars of medical bills in an encounter with the medical system when outside of the network of physicians or hospitals covered by their insurance plan.

“Narrow network” plans mainly refer to insurance plans purchased on the Obamacare “exchanges” (or marketplaces).  In order to keep premiums down, insurers play hardball with providers: those requesting relatively high fee schedules can simply be excluded from the insurance plan.  As Haeder and colleagues put it:

These so-called narrow networks (plans offered to patients that include services of only a subset of all hospitals and physicians in a geographic area) often severely restrict the choices offered to consumers … Although only a small number of studies have assessed the networks in plans sold in insurance marketplaces, substantial evidence suggests that networks are often narrower in size when compared with commercial insurers’ networks.

Exclusion of particular hospital systems, however, has understandably made many people rather unhappy, and has generated substantial attention from the press.  An AP story from March 2014 headlined “Health law concerns for cancer centers” reported that “some [of] the nation’s best cancer hospitals are off-limits” to patients with some exchange insurance plans.  According to the AP survey, only 4 out of 19 of designated “comprehensive cancer centers” (which responded to the survey) reported that patients would “have access through all the insurance companies in their state exchange.”

Now on the one hand, it is entirely understandable why cancer patients – who have enough on their plates to begin with – would find complex exclusions from well-regarded cancer centers daunting, exhausting, unfair and unjust.

Within the logic of our current health care system, however, the use of network size to contain premiums makes complete sense.  That’s the essence of the “marketplace” concept: insurers vie with one another in the competitive milieu of the “exchange” so as to deliver the lowest possible premium to health care ‘consumers.’

For this reason, Haeder and colleagues accurately argue that limiting the ability of insurers to control network size would at the same time compromise their ability to contain costs.  However, they also urge that at the very least, insurers should be transparent about what providers are available in each plan. They moreover contend that limiting networks could also be used to exclude lower quality providers (evidence on this point, however, is very limited).

At the end of the day, however, we all want to go to the physicians, facilities, and hospitals of our choice.  And there is simply no reason that we can’t: “one big network” in the form of a national health program would make such a reasonable wish a reality.  Within the framework of the Affordable Care Act, however, provider exclusion remains a key cost containment tool (albeit of questionable overall efficacy) of the marketplaces.  It we want something better, then, we have to move beyond that framework.