Category Archives: Health Plans

Moderate Democrats Health Care Plans Fall Short

Listening to the Democratic debates since they began last year, I have been dumbfounded and angered that so many of the candidates running for President this year believe that some halfway measure to achieve universal coverage for health care is possible, if only voters would vote for them.

With the exception of Bernie Sanders and Elizabeth Warren, the rest of the candidates, those still running, and those who dropped out, advocate a public option or fixing the ACA. (see “Medicare for All and the Democratic Debates”) Their proposals fly in the face of study after study, article after article that firmly states that the only way to provide universal coverage at lower cost, and that will save money is Medicare for All.

They are trying to scare the American people with words like “Socialism” and suggesting that their taxes will go up, or that they will lose their employer-based or private health insurance.

As I have written in the past, there is a concerted effort on the part of the health care industry to defeat Medicare for All/Single Payer, and they have been targeting the Democrats to do so.

An article last Monday in The Hill by Diane Archer, senior adviser at Social Security Works states that twenty-two studies agree that Medicare for All saves money.

According to Ms. Archer, researchers at three University of California campuses examined 22 studies on the projected cost impact for single-payer health insurance in the United States and reported their findings in a recent paper in PLOS Medicine.

Every single study, they found, predicted that it would yield net savings over several years. In fact, it’s the only way to rein in health care spending significantly in the U.S.

In addition, all of the studies, regardless of ideological orientation, showed that long-term cost savings were likely. As reported last year, even the Mercatus Center, a right-wing think tank belonging to the libertarian Koch Brothers, recently found about $2 trillion in net savings over 10 years from a single-payer Medicare for All system. Most importantly, everyone in America would have high-quality health care coverage

The key takeaway from the studies is that Medicare for All is far less costly than our current system largely because it reduces administrative costs.

This is because Administrative savings from Medicare for All would be about $600 billion a year. Savings on prescription drugs would be between $200 billion and $300 billion a year, if we paid about the same price as other wealthy countries pay for their drugs. A Medicare for All system would save still more with implementation of global health care spending budgets.

None of the other Democratic candidates can make that assertion because their plans leave many uninsured and and keep in place the insurance companies and pharmaceutical companies to make huge profits from the health of the American people.

While I am no fan of Bernie Sanders as a candidate, and his recent dispute with the Nevada Culinary Union not withstanding, his goal is to cover every American with universal health care. Elizabeth Warren’s plan differs somewhat from Sanders’, but has a more reasonable time frame for implementation.

The inconvenient truth, folks is that Medicare for All will save money, will cover everyone, and will finally bring down the cost of health care so that no one has to go broke paying for it, or decide not to get medical care when needed because they can’t afford it.’

Those of you who are not physicians or in the insurance industry, or the pharmaceutical industry who pontificate on social media that Medicare for All is bad, are only delaying the inevitable. You consultants, analysts, researchers and other auxiliary industries to health care must see the truth staring you in the face. You are on the wrong side of the debate, and on the wrong side of history.

COVID-19 and America’s Social Safety Net

Friday’s HuffPost published an article by Emily Peck on the Coronavirus (COVID-19) and its impact on the country’s broken social safety net.

The article indicates that millions of working Americans do not get paid sick days. It also states that a stunning 70% of low-wage workers and one of three workers in the private sector, have no access to paid sick time.

According to Ms. Peck, the US is one of the few countries in the world without a national paid sick leave policy. In addition, she adds, millions of Americans do not have health insurance, or their policies are designed to keep them away from doctors with high co-payments and deductibles.

Both these issues, Ms. Peck writes, highlights how coronavirus, or COVID-19, could test the US’ uniquely weak social safety net.

Kristin Rowe-Finkbeiner, the executive director of MomsRising, a nonprofit advocating for paid leave is quoted in the article, “Right now we’re looking at a situation where we have a lack of policies that most other countries take for granted that protect their public health.”

This isn’t just a “coronavirus” problem, Ms. Peck says. Even though the CDC warned Americans earlier in the week, so far there have been very few case reported in the US. (Note: As of this writing,  there have been 74 reported cases in the US, and two men have died in Washington State, and one case was recently reported in Rhode Island, and one in Manhattan)

Yet, fears of an outbreak has put a spotlight on the public health system. With cuts to many agencies by Trump, many experts fear that we will be unable to deal with the crisis, especially since the Trump called it a hoax at a recent political rally.

He also appointed his evolution-denying Vice President, Mike Pence to coordinate the Administration’s response after gagging several Administration personnel from appearing on the Sunday talk shows. It was mentioned after the announcement that Pence did not believe that smoking causes cancer when he was Governor of Indiana.

For the Democrats, says Ms. Peck, coronavirus makes the case for policies like universal health care and paid sick and family leave.

Some key points to consider:

First, flu rates are higher without sick leave. What about coronavirus?

In the US, the article reports, just 10 states, 20 cities and three counties have some kind of paid sick leave. This is compared with the rest of the world, where more than 145 countries have this benefit. People who live in those places, research shows, are less likely to get sick, Ms. Peck reports.

And lack of paid sick leave is certainly a “risk factor”, according to Nicolas Ziebarth, associate professor in health economics at Cornell. Professor Ziebarth’s 2019 paper in the Journal of Public Economics, looked at Google data on flu rates, compared cities with leave policies with those without, and found that flu rates were 5% lower in places with sick leave.

An upcoming paper of Professor Ziebarth’s, based on CDC data, has found that the rates are actually 11% lower.

For those workers in low-wage jobs, if they get sick, they cannot afford to take time off of work because they are barely getting by. So, they end up going to work, and they get their co-workers sick.

Working from home isn’t an option.

Many companies are telling employees to work from home with the threat from coronavirus. However, for low-wage hourly workers, says Ms. Peck, this just isn’t an option. Many work in industries that have contact with the community — such as food servers, people who care for children, clean offices and homes.

As stated above, it is not just sick leave, The US also lacks any kind of comprehensive paid family leave policy, according to Ms. Peck, which would enable workers to take time off to care for a close family member’s health issues. This issue first came to light in 1993 when Bill Clinton signed into law, the Family and Medical Leave Act, which required covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons.

An example of just how needed is paid family leave, comes from the experience of Ericka Farrell, a mother of three in Maryland, who lost her temp job in the early 2000s because she had to take so much time off to care for her young son. She did not regret staying home, but now works with MomsRising to advocate for paid leave herself, writes Ms. Peck.

Millions are uninsured. Many more have terrible insurance.

According to Ms. Peck, even if you take time off when you are sick, you might not be able to afford to see the doctor. Slightly more than 10% of Americans. she mentions, or about 30 million people, don’t have health insurance. This is because their employers do not offer it, or it is too expensive.

Things to consider regarding the uninsured:

  • Far less likely to go to the doctor
  • Americans with insurance face obstacles to getting care due to high co-payments
  • Then there are the deductibles, which have been going up for decades
  • Most people haven’t come near clearing those deductibles at the beginning of the year

John Graves, associate professor of health policy at Vanderbilt University Medical Center was quoted as saying, “If we as a society are going to face a spreading infectious disease, the worse time of the year is the beginning of the year.”

Graves added that the US health care system is simply not designed to deal with a potential pandemic.

First, he says, the US relies on employment-based insurance. If people are thrown out of work due to an economic downturn, they lose coverage.

Second, insurance is designed to encourage people not to see the doctor through so-called “cost-sharing.”  Co-payments and deductibles exist to discourage people from visiting the doctor or going to the hospital for every “cough and sniffle.” Graves said.

Lastly, in 2018, the Administration made it easier for people to buy insurance plans with less generous coverage, and don’t always cover expenses stemming from preexisting conditions, the article says. Experts have said that these plans they consider junk policies, have even higher out-of-pocket costs.

So what does this all mean?

It means that cuts to the social safety net guarantees that should the coronavirus get out of hand, the US is not prepared to deal with it effectively, and many more people will probably die who shouldn’t because of politics and ideology.

Hospital closings in rural areas, the firing of hundreds of health care personnel at the federal level, silencing the experts in infectious diseases, and the appointment of a man who rejects evolution and says smoking does not cause cancer to coordinate the Administration’s response, is a recipe for a catastrophe of unimanigable proportions. Calling it a hoax in front of your ardent supporters who believe everything you say, will only lead to more confusion and more deaths.

But this crisis also proves that it is high time those on social media sites like LinkedIn who are part of the health care industry, whether they are physicians, in the pharmaceutical industry, work in hospitals, are device manufacturers, or are consultants and researchers, accept the fact that single payer, universal health care (Medicare for All) is not just an economic necessity, but a public health necessity as well.

Is your big, fat five or six figure incomes more important than human health? It’s your call.

The $8,000 Rip-off That Is Healthcare

Picking up on a theme I presented in two earlier posts this year, Health Care is Not a Market  and The Free Market Utopian Fantasy, Joe Paduda today asks “what would you do with another $8,000?”

Joe’s post outlines how providers, big pharma, device companies, and healthplans make money from a system designed to do so, and not to help you and your family stay healthy and functional. [ Emphasis Joe’s]

He shows us graphically how big health sector profit margins are, how we spend more than any other country, but die younger, and how healthcare premiums and deductibles and out of pocket costs keep climbing, but wages do not.

His one key point, is the following:

Healthcare is not, and cannot ever be, a free market. A free market requires buyers have the ability to make sellers respond to buyers’ needs – yet we all know we consumers have zero ability to make pharma, hospitals, big doctor groups, device companies respond to our needs.

Lastly, Joe asks the question: “If air travel worked like health care?” [Video link]

Would you rely on the airlines with your health care? Would you rely on the health care industry to fly you to your nephew’s wedding in Orlando? Of course, not.

So, why would you continue to defend, support and protect a dysfunctional, broken, wasteful, bloated, health care system that does not work like the free market, but only makes huge profits for the insurance companies, drug companies, device manufacturers, hospitals, investors, stock and shareholders.

And yes, you hanger’s on in consulting and research organizations who constantly attack single payer health care because it, one, puts you out of a job, and two, takes away any profits you and your company makes from advising  on or researching how to squeeze more profit out of the system.

One thing is for certain. I could sure use that $8,000 right now. My health care and other issues have taken a lot more from me than $8,000, but I’d settle for that. Wouldn’t you?

Two Perspectives on Health Care

Dear Readers,

Sorry for the delay in getting back to writing in this new year, I have not seen too many things to write about, and have also been busy with personal issues.

So, the following post from an unknown individual via Joe Paduda, who informs us that this person is a good friend and colleague, shows just how broken and dysfunctional our health care system really is.

This post is followed by one from Don McCanne about the Canadian system, and differentiates their system with what is being proposed in the US under a Medicare for All system advocated by Bernie Sanders, Elizabeth Warren, Dr. McCanne, and the Physicians for a National Health Plan (PNHP), among others.

Joe’s post: The Greatest Healthcare System in the World

Dr. McCanne’s post was written by Caitlin Kelly in The American Prospect on January 8th. Here is her article in full, followed by comments by Don McCanne.

The American Prospect

January 8, 2020

What Medicare for All Really Looks Like

The Canadian system, also called Medicare, guarantees coverage to every resident north of the U.S. border.

By Caitlin Kelly

Canadian health care is publicly funded and privately delivered, approximately the same vision that single-payer enthusiasts have for the American system. It even shares the same name as our largest government-run insurance provider: Medicare. But contrary to persistent American partisan mythmaking, no government officials sit in doctors’ offices or haunt hospital hallways with a checklist of all the services they’ll question and deny. They don’t dictate hands-on care. Canadians face little government interference or oversight of their health care, although, for historical reasons, their doctors retain much more power than patients.

The familiar and dreaded words “co-pay,” “deductible,” “pre-existing condition,” and “out of network” are meaningless here, in English or French, Canada’s two official languages. Patients don’t waste time chasing pre-authorizations or fighting medical bills, while physicians save thousands of administrative hours.

As Americans’ life expectancy is dropping and maternal mortality is ranked shockingly high among other wealthy nations, Canadian health outcomes fare better; Canadian women live two more years than their American counterparts, men three.

But the system is far from perfect. Outpatient care, like physical and occupational therapy or prescription medicine, is paid for out of pocket. In some places, there’s no mandate to use electronic records, so patient information can be difficult to access. And medical care of impoverished and remote First Nation and Inuit communities is openly acknowledged as abysmal.

Canada provides coverage for about 35 million, one-tenth the population of the United States. But how they’ve set up their health care system, and how it evolved over the decades, is instructive, especially given the robust debate during the presidential primary about overhauling our current system. It can inform how U.S. policymakers—and Canadians, for that matter—approach cost control, physician payment, and services for vulnerable communities. Rather than scaring Americans with well-structured narratives about the alleged horrors of Canadian Medicare, we could take the opportunity to learn from it.

A Difference in Bedrock Philosophies

A fundamental conceptual difference also divides how Canadians and Americans view their relationship to using government-financed or -run services. Classic American insistence on the bedrock values of individualism, self-reliance, and shunning government aid as a sign of moral failure differs radically from that of Canadians, who are more committed politically and economically to health care equity as a collective good.  [Emphasis mine] Consistently receiving free health care and heavily subsidized university and college tuition fees means that Canadians of all ages and income levels experience firsthand a consistent, quantifiable return on their tax dollars.

“One thing I wish Americans would understand is that ‘who’s going to pay?’ is actually a distraction,” says Dr. Danielle Martin, executive vice president and chief medical executive of Women’s College Hospital in Toronto. “It’s ‘how will you organize delivery of it?’ Payment is just the first step on a worthy and interesting journey. The conflation of single-payer and wait times is false. We have wait times because of a million other issues, like we can’t get physicians to work in rural areas.”

Could This Work in the U.S.?

“The Canadian system is good, but underfunded,” says Steffie Woolhandler. “The American system is shitty but over-funded.”

https://prospect.org/health/what-medicare-for-all-really-looks-like/

===

Comment by Don McCanne

Our goal is to establish a single payer model of a dramatically improved version of our Medicare program that would ensure affordable, accessible, high quality health care for everyone in our nation. The model that is closest to that vision is the Canadian Medicare program – a series of provincial single payer programs. It is not the same system as what we propose.

It is helpful for us to understand the Canadian system since it has many beneficial features that would help us improve equity and access in our own system. Also it has some deficiencies, and it is important to understand those so that we can avoid them.

The excerpts from The American Prospect article by Caitlin Kelly give you an inkling of what the Canadian system is all about. This fairly long article should be read in its entirety for a few reasons:

*  People need to understand that we are not transporting the Canadian health financing infrastructure to the United States; rather we are building a new, better-than-Canadian Medicare for All.

*  When people reject single payer Medicare for All because of certain undesirable features of the Canadian system, it is important to understand what those features are and how we would guard against them in the United States.

*  When people say that we cannot afford Medicare for All it is important to understand and explain to them how we are already paying enough to fund a better-than-Canadian system, but we need to redirect the spending of the $600 billion in recoverable administrative waste that characterizes our dysfunctional multi-payer system.

*  The most common complaint about the Canadian system is the excessive queues for some non-urgent services. People need to understand that our Medicare for All would have enough funding to ensure adequate capacity in the system through central planning and budgeting of capital improvements, not to mention including adequate funding to improve queue management.

*  Perhaps the most important lesson from Canada: “Classic American insistence on the bedrock values of individualism, self-reliance, and shunning government aid as a sign of moral failure differs radically from that of Canadians, who are more committed politically and economically to health care equity as a collective good. Consistently receiving free health care and heavily subsidized university and college tuition fees means that Canadians of all ages and income levels experience firsthand a consistent, quantifiable return on their tax dollars.”

Notice that McCanne leaves us with the same statement that I emphasized above. That is the real reason we don;t have free medical care and free college. We gained our independence from Britain when the values of individualism, self-reliance, freedom, liberty, and the right to private property were the prevailing values.

Canada, on the other hand, became independent (sort of) during the latter half of the nineteenth century, when modern liberalism emphasized the greatest good for the greatest number. This was in opposition to the classical liberalism of the American experiment begun a century earlier.

Both articles point out just where we are deficient, and where and how we can make improvements, but only if we abandon the profit-making, overly administratively bureaucratic, wasteful, and bloated current system for a more efficient Medicare for All single payer system that guarantees health care for all Americans. Then there will never be any surprise bills or upfront charges required.

Friday Morning Catch-Up

It’s been a while, so I thought I’d play catch-up this morning with some relevant postings from Don McCanne and Joe Paduda.

First up is an article from The New York Times of December 3rd by Margot Sanger-Katz. The article, “Why the Less Disruptive Health Care Option Could Be Plenty Disruptive” explains that moderate Democratic plans for health care that does not fall in line with those proposed by Bernie Sanders and Elizabeth Warren can be as disruptive as not implementing Medicare for All.

Sanger-Katz writes: “The single-payer health plans proposed by Senators Bernie Sanders and Elizabeth Warren are often assailed as being too disruptive. A government plan for everyone, the argument goes, would mean that tens of millions of Americans would have to give up health insurance they like.

Democratic presidential candidates with more moderate brands have their own proposal: a “public option” that would preserve the current private insurance market, while giving people the opportunity to choose government insurance.

A public option would be less disruptive than a plan that instantly eliminated private insurance. But a public option that is inexpensive and attractive could shake up the private market and also wind up erasing some current insurance arrangements. Conversely, a public option that is expensive and unattractive might not do much good at all.

A public option would cover a smaller population at first, and might have to negotiate with hospitals for good deals, just as other insurance companies do. In those circumstances, several economists said, the public option might look a lot like existing insurance: pretty expensive, and covering a limited set of doctors and hospitals.”

Next, Health Affairs published an article by Tara Straw, also on December 3rd, that examines how low-income workers fare poorly under the ACA. According to Ms. Straw, “The Affordable Care Act (ACA) extended health coverage to more than 20 million people and strengthened consumer protections for millions more, but it didn’t dramatically change employer-sponsored coverage, the primary source of private health insurance. Employer coverage often works well, allowing many people to enroll in comprehensive health benefits using employer contributions that make premiums affordable. But compared to middle and upper-income employees, low-income workers are often offered less robust coverage, get less employer help with their premiums, and must pay a greater share of their income toward health care costs. Among workers with job-based coverage, those with income below 200 percent of the poverty line spend 14 percent of their income on premiums and out-of-pocket costs, on average. That’s far more than people between 200 and 400 percent of poverty, who spend 7.9 percent of their income, and people over 400 percent of poverty, who spend only 4.5 percent.

Some low-income workers are actually worse off with an offer of employer-sponsored coverage than without one because it locks them out of premium tax credit (PTC) eligibility in the ACA’s health insurance Marketplaces, a prohibition known as the “firewall.”

Under the ACA, the worker’s share of the employee-only premium must not exceed 9.86 percent of family income (in 2019), irrespective of the cost of family coverage, and the plan must cover at least 60 percent of expected medical costs. When an employer’s coverage offer meets that low federal bar, the ACA’s firewall provision makes low-income workers and their family members ineligible to receive a PTC for Marketplace coverage. However, employer coverage that meets the ACA standard may be more expensive and less comprehensive than Marketplace coverage. For example, under the ACA standard, a worker making $18,000 (about 150 percent of poverty) could pay up to nearly $1,800 toward premiums for single coverage in an employer plan. But if allowed to purchase a benchmark Marketplace plan, the worker’s expected contribution, net of the PTC, would be less than $750 (4.15 percent of income in 2019).

Again from Health Affairs, comes the following on national health spending in 2018:

Abstract

US health care spending increased 4.6 percent to reach $3.6 trillion in 2018, a faster growth rate than the rate of 4.2 percent in 2017 but the same rate as in 2016. The share of the economy devoted to health care spending declined to 17.7 percent in 2018, compared to 17.9 percent in 2017. The 0.4-percentage-point acceleration in overall growth in 2018 was driven by faster growth in both private health insurance and Medicare, which were influenced by the reinstatement of the health insurance tax. For personal health care spending (which accounted for 84 percent of national health care spending), growth in 2018 remained unchanged from 2017 at 4.1 percent. The total number of uninsured people increased by 1.0 million for the second year in a row, to reach 30.7 million in 2018.”

Additionally, CMS published the National Health Expenditure Fact Sheet (NHE).

Next, Christopher Cai and James Kahn wrote in Health Affairs that Medicare for All would improve hospital financing. According to Cai and Kahn, “Hospitals account for more than one trillion dollars of health expenditures annually, and analysts have raised concerns that a shift to single payer, or Medicare for All, might adversely affect hospital care. A common narrative has emerged in the popular press and in medical journals, suggesting that Medicare for All would decrease reimbursements and force hospitals, particularly rural hospitals, to cut back on much needed services or even close altogether. These concerns have received increased attention with Elizabeth Warren’s recently released financial proposal for Medicare for All. Understandably, these points have raised concern about the feasibility of Medicare for All. But is this narrative evidence based?

Their conclusion states that “Under single payer, patients could choose any doctor and hospital, everyone would be insured, and bureaucratic burdens would be greatly diminished. Furthermore, under global budgeting, payment levels would be monitored and adjusted over time by a panel of health care experts.

And lastly, here is a post from Joe Paduda of a Gallop poll that says Americans can’t afford healthcare, According to Joe, Gallup reported that quarter of Americans have put off treatment for serious medical conditions because they can’t afford it.

These are the reasons they can’t afford it:

  • US physicians make twice what docs in other countries do
  • Drug costs are much higher here than elsewhere
  • Hospitals are making bank
  • Administrative costs are twice what they are in other developed countries.

Physician incomes by specialty exceed $400,000. No wonder Americans can’t afford health care. The doctors are making more than they are.

So, the future of health care as we know it looks very bleak from these and other experts on the matter. It would be criminal for any rational person to not explore the Medicare for All/ single Payer option, rather than to continue to prop up a market-based system that is out of control and getting worse every year.

But so long as many Americans claim they like their private health insurance, whether it is from their employer or they purchase it directly from an insurance carrier, the fact remains that no other solution will fix the problems other than Medicare for All.

All Americans need to realize this before it is too late.

Public Option A Bad Policy

I’m back!

In case you missed me, I have been busy with personal matters and preparing for a trip out of town. Now that I am back, I have decided to pick up where I left off, and re-post an article from The Nation by Himmelstein and Woolhander on why private insurance or the public option is a bad policy choice. This article comes courtesy of Don McCanne, so thanks go to him.

Here is the entire article:

The Nation
October 7, 2019
The ‘Public Option’ on Health Care Is a Poison Pill
Some Democratic candidates are pushing it as a free-choice version of Medicare for All. That’s good rhetoric but bad policy.
By David U. Himmelstein and Steffie Woolhandler
Health care reform has been the most hotly contested issue in the Democratic presidential debates. Bernie Sanders and Elizabeth Warren have been pushing a single-payer Medicare for All plan, under which a public insurer would cover everyone. They would ban private insurance, except for items not covered by the public plan, such as cosmetic surgery or private rooms in hospitals. The other Democratic contenders favor a “public option” reform that would introduce a Medicare-like public insurer but would allow private insurers to operate as well. They tout this approach as a less traumatic route to universal coverage that would preserve a free choice of insurers for people happy with their plans. And some public option backers go further, claiming that the system would painlessly transition to single payer as the public plan outperforms the private insurers.
That’s comforting rhetoric. But the case for a public option rests on faulty economic logic and naive assumptions about how private insurance actually works. Private insurers have proved endlessly creative at gaming the system to avoid fair competition, and they have used their immense lobbying clout to undermine regulators’ efforts to rein in their abuses. That’s enabled them to siphon hundreds of billions of dollars out of the health care system each year for their own profits and overhead costs while forcing doctors and hospitals to waste billions more on billing-related paperwork.
Those dollars have to come from somewhere. If private insurers required their customers to pay the full costs of private plans, they wouldn’t be able to compete with a public plan like the traditional Medicare program, whose overhead costs are far lower. But this is not the case: In fact, taxpayers—including those not enrolled in a private plan—pick up the tab for much of private insurers’ profligacy. And the high cost of keeping private insurance alive would make it prohibitively expensive to cover the 30 million uninsured in the United States and to upgrade coverage for the tens of millions with inadequate plans.
Public option proposals come in three main varieties:
§  A simple buy-in. Some proposals, including those by Joe Biden and Pete Buttigieg, would offer a Medicare-like public plan for sale alongside private plans on the insurance exchanges now available under the Affordable Care Act. These buy-in reforms would minimize the need for new taxes, since most enrollees would be charged premiums. But tens of millions would remain uninsured or with coverage so skimpy, they still couldn’t afford care.
§  Pay or play. This variant (similar to the plan advanced by the Center for American Progress and endorsed by Beto O’Rourke) would offer employers a choice between purchasing private insurance or paying a steep payroll tax (about 8 percent). Anyone lacking employer-paid private coverage would be automatically enrolled in the public plan. The public option would be a good deal for employers who would otherwise have to pay more than 8 percent of their payroll for private coverage—for example, employers with older or mostly female workers (who tend to use more care and incur high premiums) or with lots of low-wage workers (for whom 8 percent of payroll is a relatively small sum). But many firms employing mostly young, male, or highly paid workers (e.g., finance and tech) would likely stay with a private insurer.
§  Medicare Advantage for All. The public option approach favored by Kamala Harris would mimic the current Medicare Advantage program. Medicare Advantage plans are commercial managed care products currently offered by private insurers to seniors. The Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, collects the taxes that pay for the program and passes the funds ($233 billion in 2018) along to the insurance companies. Under this approach, the public option would operate alongside the private Medicare Advantage plans and compete with them, as the traditional fully public Medicare program currently does.
No working models of the buy-in or pay-or-play public option variants currently exist in the United States or elsewhere. But decades of experience with Medicare Advantage offer lessons about that program and how private insurers capture profits for themselves and push losses onto their public rival—strategies that allow them to win the competition while driving up everyone’s costs.
IN US HEALTH INSURANCE, GOOD GUYS FINISH LAST
A public option plan that facilitates enrollees’ genuine access to health care can’t compete with private insurers that avoid the expensively ill and obstruct access to care. Despite having overhead costs almost seven times that of traditional Medicare (13.7 versus 2 percent), Medicare Advantage plans have grown rapidly. They now cover more than one-third of Medicare beneficiaries, up from 13 percent in 2005. Greed has trumped efficiency, and the efforts of regulators to level the playing field have been overwhelmed by insurers’ profit-driven schemes to tilt it.
Private insurers employ a dizzying array of profit-enhancing schemes that would be out of bounds for a public plan. These schemes, which continually evolve in response to regulators’ efforts to counter them, boil down to four strategies that are legal, in addition to occasional outright fraud.
§  Obstructing expensive care. Plans try to attract profitable, low-needs enrollees by assuring convenient and affordable access to routine care for minor problems. Simultaneously, they erect barriers to expensive services that threaten profits—for example, prior authorization requirements, high co-payments, narrow networks, and drug formulary restrictions that penalize the unprofitably ill. While the fully public Medicare program contracts with any willing provider, many private insurers exclude (for example) cystic fibrosis specialists, and few Medicare Advantage plans cover care at cancer centers like Memorial Sloan Kettering. Moreover, private insurers’ drug formularies often put all of the drugs—even cheap generics—needed by those with diabetes, schizophrenia, or HIV in a high co-payment tier.
Insurers whose first reaction to a big bill is “claim denied” discourage many patients from pursuing their claims. And as discussed below, if hassling over claims drives some enrollees away, even better: The sickest will be the most hassled and therefore the most likely to switch to a competitor.
§  Cherry-picking and lemon-dropping, or selectively enrolling people who need little care and disenrolling the unprofitably ill. A relatively small number of very sick patients account for the vast majority of medical costs each year. A plan that dodges even a few of these high-needs patients wins, while a competing plan that welcomes all comers loses.
In the employer market, cherry-picking is easy: Private insurers offer attractive premiums to businesses with young, healthy workers and exorbitant rates to those with older, sicker employees. As a letter this summer to The New York Times put it, like casinos, health insurers are profitable because they know the odds of every bet they place—and the house always wins.
The CMS, in theory, requires Medicare Advantage plans to take all comers and prohibits them from forcing people out when they get sick. But regulators’ efforts to enforce these requirements have been overwhelmed by insurers’ chicanery. To avoid the sick, private insurers manipulate provider networks and drug formulary designs. Despite the ban on forcing enrollees out, patients needing high-cost services like dialysis or nursing home care have switched in droves from private plans to traditional, fully public Medicare. And as a last resort, Medicare Advantage plans will stop offering coverage in a county where they’ve accumulated too many unprofitable enrollees, akin to a casino ejecting players who are beating the house.
Finally, Medicare Advantage plans cherry-pick through targeted marketing schemes. In the past, this has meant sign-up dinners in restaurants difficult to access for people who use wheelchairs or offering free fitness center memberships, a perk that appeals mainly to the healthiest seniors. But higher-tech approaches are just around the corner. Will Oscar, the health insurer founded by Jared Kushner’s brother—with Google’s parent company as a significant investor—resist the temptation to use Google’s trove of personal data to target enrollment ads toward profitable enrollees like tennis enthusiasts and avoid purchasers of plus-size clothing or people who have searched online for fertility treatments?
§  Upcoding, or making enrollees look sicker on paper than they really are to inflate risk-adjusted premiums. To counter cherry-picking, the CMS pays Medicare Advantage plans higher premiums for enrollees with more (and more serious) diagnoses. For instance, a Medicare Advantage plan can collect hundreds of dollars more each month from the government by labeling an enrollee’s temporary sadness as “major depression” or calling trivial knee pain “degenerative arthritis.” By applying serious-sounding diagnoses to minor illnesses, Medicare Advantage plans artificially inflate the premiums they collect from taxpayers by billions of dollars while adding little or nothing to their expenditures for care.
Though most upcoding stays within the letter of the law and merely stretches medical terminology, the CMS’s (rare) audits of enrollees’ charts indicate that Medicare Advantage plans are collecting $10 billion annually from taxpayers for entirely fabricated diagnoses. And that’s only a small fraction of their overall take from upcoding. Private insurers keep most of this pilfered money for their profits and overhead, but they use a portion to fund added benefits (for example, eyeglasses or slightly lower co-payments for routine care) that attract new enrollees and help private plans to seemingly outcompete traditional Medicare.
§  Lobbying to get excessive payments and thwart regulators. Congress has mandated that the CMS overpay Medicare Advantage plans by 2 percent (and even more where medical costs are lower than average). On top of that, Seema Verma, Trump’s CMS administrator, has taken steps that will increase premiums significantly and award unjustified “quality bonuses,” ignoring advice from the Medicare Payment Advisory Commission that payments be trimmed because the government is already overpaying the private plans. And she has ordered changes to the CMS’s Medicare website to trumpet the benefits of Medicare Advantage enrollment.
In sum, a public option insurer that, like traditional Medicare, doesn’t try to dodge unprofitable enrollees would be saddled with more than its share of sick, expensive patients and would become a de facto high-cost, high-risk pool. The CMS’s decades-long efforts to level the playing field have been thwarted by insurers’ upcoding, belying their promises of fair competition. And insurance companies have used their political muscle to sustain and increase their competitive advantage over traditional Medicare. The result: The public plan (and the taxpayers) absorbs the losses while private insurers skim off profits, an imbalance so big that private plans can outcompete a public plan despite squandering vast sums on overhead costs, CEO salaries, and shareholder profits.
SINGLE PAYER WOULD SAVE, PUBLIC OPTION WON’T
This year alone, private insurers will take in $252 billion more than they pay out, equivalent to 12 percent of their premiums. A single-payer system with overhead costs comparable to Medicare’s (2 percent) could save about $220 billion of that money. A public option would save far less—possibly zero, if much of the new public coverage is channeled through Medicare Advantage plans, whose overhead, at 13.7 percent, is even higher than the average commercial insurer.
Moreover, a public option would save little or nothing on hospitals’ and doctors’ sky-high billing and administrative costs. In a single-payer system, hospitals and other health facilities could be funded via global, lump-sum budgets—similar to the way cities pay fire departments—eliminating the need to attribute costs to individual patients and collect payments from them and their insurers. That global budget payment strategy has cut administrative costs at hospitals in Canada and Scotland to half the US level. The persistence of multiple payers would preclude such administrative streamlining, even if all of the payers are charged the same rates. (Under Maryland’s mislabeled global budget system, the state’s hospitals charge uniform rates but continue to bill per patient; our research indicates that their administrative costs haven’t fallen at all, according to their official cost reports.)
Similarly, for physicians and other practitioners, the complexity involved in billing multiple payers, dealing with multiple drug formularies and referral networks, collecting co-payments and deductibles, and obtaining referrals and prior authorizations drives up office overhead costs and documentation burdens.
The excess overhead inherent to multipayer systems imposes a hidden surcharge on the fees that doctors and hospitals must charge all patients—not just those covered by private insurance. All told, a public option reform would sacrifice about $350 billion annually of single payer’s potential savings on providers’ overhead costs, over and above the $220 billion in savings it could sacrifice annually on insurers’ overhead.
Finally, a public option would undermine the rational health planning that is key to the long-term savings under single payer. Each dollar that a hospital invests in new buildings or equipment increases its operating costs by 20 to 25 cents in every subsequent year. At present, hospitals that garner profits (or “surpluses” for nonprofits) have the capital to expand money-making services and buy high-tech gadgets, whether they’re needed or not, while neglecting vital but unprofitable services. For instance, hospitals around the country have invested in proton-beam-radiation therapy centers that cost hundreds of millions of dollars apiece. (Oklahoma City alone now has two.) Yet there’s little evidence that those machines are any better for most uses than their far cheaper alternatives. Similarly, hospitals have rushed to open invasive cardiology and orthopedic surgery programs, often close to existing ones. These duplicative investments raise costs and probably compromise quality.
Meanwhile, primary care and mental health services have languished, and rural hospitals and other cash-strapped facilities that provide much-needed care spiral toward closure. As in Canada and several European nations, a single-payer system could fund new hospital investments through government grants based on an explicit assessment of needs, instead of counting on private hospitals to use their profits wisely. That strategy has helped other nations direct investments to areas and services with the greatest need and to avoid funding wasteful or redundant facilities. Public option proposals would perpetuate current payment strategies that distort investment and raise long-term costs.
Because a public option would leave the current dysfunctional payment approach in place, it would sacrifice most of the savings available via single-payer reform. The bottom line is that a public option would either cost much more or deliver much less than single payer.
WHY NOT IMPORT GERMAN, SWISS, OR DUTCH HEALTH CARE?
Public option proponents often cite Germany, Switzerland, and the Netherlands as exemplars of how private insurers can coexist with thriving public health care systems. But they ignore the vast differences between those nations’ private insurers and ours.
The nonprofit German “sickness funds,” which cover 89 percent of the population (only wealthy Germans are allowed to purchase coverage from for-profit insurers), are jointly managed by employers and unions—a far cry from our employer-based coverage. The government mandates identical premium rates for all the sickness funds, takes money from those with low-risk enrollees and subsidizes others with older and sicker ones, and directly pays for most hospital construction. All sickness funds offer identical benefit packages, pay the same fees, and cover care from any doctor or hospital.
Although the details differ, a similarly stringent regulatory regime applies in Switzerland, whose system descended from Otto von Bismarck’s original German model, and as in Germany, the government funds most hospital construction. While for-profit insurers can sell supplemental coverage, only nonprofits are allowed to offer the mandated benefit package.
Since 2006, the Netherlands has been transitioning from the German-style universal coverage system to a more market-oriented approach championed by corporate leaders. However, the government pays directly for all long-term care, and a strong ethos of justice and equality has pressured both public and private actors to avoid any erosion of social solidarity. The Netherlands has long enjoyed ready access to care, and its system hasn’t descended (yet) into an American-style abyss. But under the new regime, hospital administrative costs have risen nearly to US levels, overall health costs have increased rapidly, doctors complain of unsustainable administrative burdens, and even in such a small nation, tens of thousands of people are uninsured. Insurers spend massively on marketing and advertising, and private insurers’ overhead costs average 13 percent of their premiums. Moreover, the United States and the Netherlands aren’t the only places where for-profit insurers’ overhead costs are high: They average 12.4 percent in Switzerland, 20.9 percent in Germany, and 26.2 percent in the United Kingdom.
Transforming the immensely powerful, profit-driven insurance companies of the United States into benign nonprofit insurers in the Swiss or German mold would be as heavy a lift as adopting Medicare for All. Nor can we count on the cultural restraints that have thus far softened the Dutch insurers’ rapacious tendencies and prevented a reversal of that country’s long-standing health care successes.
A final point: While allowing private insurers to compete with a public plan amounts to a poison pill, the same isn’t true for supplemental private plans that are allowed to cover only those items excluded from the public benefit package. While Canada bans the sale of private coverage that duplicates the public plan’s benefits, it has always allowed supplemental coverage, and that hasn’t sabotaged its system.
The efficiencies of a single-payer system would make universal coverage affordable and give everyone in the United States their free choice of doctors and hospitals. But that goal will remain out of reach if private insurers are allowed to continue gaming the system. Preserving the choice of insurer for some would perpetuate the affordability crisis that has bedeviled the US health care system for generations. Proponents of the public option portray it as a nondisruptive, free-choice version of single payer. That may be good campaign rhetoric, but it’s terrible policy.
David U. Himmelstein, MD and Steffie Woolhandler, MD, MPH are Distinguished Professors of Public Health at the City University of New York at Hunter College and are co-founders of Physicians for a National Health Program.

Majority of Americans Would Switch From Employer-based Health Care

Common Dreams and Business Insider both reported last week on polling that counters the right-wing narrative, and what some Democratic primary candidates are defending, that says that Americans like their employer-provided health care.

The survey, they wrote, showed that 59 percent of respondents who have employer-provided insurance “said they would support switching their employer-based health insurance to a government plan under Medicare for All” as long as quality of coverage would remain the same or improve.

The poll also found that Americans on government-run healthcare plans such as Medicare and Medicaid are more satisfied with their coverage than those on employer-sponsored plans, which have soared in cost over the past two decades.

According to BI, this is how the polling was broken down:

  • 44% of people said they were on an employer-based plan. Of them, 41% love their plan, 20% don’t like their plan, and 39% would be fine if it changed as long as they kept coverage.
  • 28% were on Medicare, Medicaid or military coverage. Of them, 57% love their plan, 14% don’t like their plan, and 29% would be fine if it changed as long as they kept coverage.
  • 12% directly purchased health insurance. 39% love their plan, 22% don’t like their plan, and 39% would be fine if it changed as long as they kept coverage.
  • 7% said they did not have health insurance.
  • 9% didn’t know or had some other type of coverage.

As reported in BI, the results highlight the fact that although a majority of Americans are fairly satisfied with their employer-based health coverage — which supports other polling on the subject — mainly people just like being covered in general, bearing little loyalty to a specific insurer.

Therefore, If the system provides equal or more comprehensive benefits, then broad swaths of Americans are likely to support it.

Medicare for All is not likely to pass anytime soon, but as more people come to see the benefits of such a program, compared to the rising cost of employer-based health insurance, that majority will only grow larger.

Those who advocate for Medicare for All need to keep pounding away at educating the public, and to make sure that coverage under Medicare for All is better than employer-based health care.