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eridani's Journal
eridani's Journal
March 13, 2014

Sanders Subcommittee Hearing - Access and Cost: What the US Health Care System Can Learn--

--from Other Countries

Statement by
Tsung-Mei Cheng, LL.B., M.A.
Health Policy Research Analyst
Woodrow Wilson School of Public and International Affairs, Princeton University

Today’s hearing is focused on “international single payer health system models that provide universal coverage of health care.” I will tailor my remarks according to the three sub-themes the Committee wishes to explore, namely:

* Primary care access in single payer systems
* Health care costs in single payer systems, and
* Cross-country comparisons of health outcomes

Before proceeding with the Committee’s agenda in more detail, however, I would like to provide the Committee with a summary of my main points:

1. If equity and social solidarity in access to health care and financing health care were fundamental goals of a health care system, the single payer system provides an ideal platform for achieving these goals.

2. Single-payer systems typically are financed by general- or payroll taxes in a way that tailors the individual’s or family’s contribution to health-care financing to their ability to pay, rather than to their health status, which until this year has long been the practice in the individual health insurance market in the U.S.

3. These systems protect individual households from financial ruin due to medical bills.

4. Single-payer health systems typically afford patients free choice of health-care provider, albeit at the expense of not having a freedom of choice among different health insurers. Remarkably, in the U.S. households have some freedom of choice of health insurers – to the extent their employer offers them choice – but most Americans are confined to networks of providers for their insurance policy. In other words, Americans appear to have traded freedom of choice among providers for the sake of choice among insurers.

5. In single-payer systems “money follows the patient.” Therefore providers of health care must and do compete for patients on the basis of quality and patient satisfaction, but not price.

6. In a single payer health insurance system, health insurance is fully portable from job to job and into unemployment status and retirement. The “job-lock” phenomenon prevalent in the US is unknown in those systems, contributing to labor-market efficiency.

7. Because all funds to providers of health care in a single-payer system flow from one payer, it is relatively easy to control total health spending in such systems. Indeed, total national health spending as a percent of GDP in countries with single-payer systems is lower than it tends to be in non-single-payer health systems. This does not mean providers are left without a voice. Provider inputs are part of the formal negotiations over health-care budgets.

8. For the most part, single-payer systems achieve their cost control by virtue of the monopsonistic market power they enjoy vis a vis providers of health care. It is a countervailing power that the highly fragmented U.S. health-insurance system lacks vis a vis providers.

9. As part of their effort to control total health spending, however, and to avoid the waste of excess capacity that easily develops in health care, some single-payer systems (the UK and Canada) put constraints on the physical capacity of their health system (number of inpatients beds, MRI scanners, etc). That approach can lead to rationing by the queue. The alternative to rationing by such administrative devices, of course, is rationing by price and ability to pay, an approach used by design or by default in the United States. Rationing by price or by non-price mechanism are just alternative forms of rationing.

10. A single-payer system is an ideal platform for a uniform electronic health information system of the sort, for example, used by our Veterans Administration health system (a single-payer system in its own right). There is a common nomenclature which enables 100% electronic billing and claims processing, thus yielding significant savings in administrative costs.

11. Because they conveniently capture information on all health-care transactions, single-payer systems provide a data base that can be used for quality measurement, monitoring and improvement, and also for more basic research on what drives health spending and what clinical treatments works and does not work in health care. It enables evidence based medicine and the tracking of efficacy and safety of new drugs and devices once they are introduced after approval by government based on results of clinical trials.

Statement of Tsung-Mei Cheng (28 pages):

Video of the hearing and links to statements of all participants:

Comment by Don McCanne of PHNP: Sen. Bernie Sanders chaired a Senate committee hearing on what the health care system in the United States can learn from other countries. Tsung-Mei Cheng provided an excellent overview of single payer and of the sharp contrasts between the United States and other nations. Her 28 page statement is well worth downloading to use as an information resource in educating others about single payer.

Other informative presentations included those of Victor Rodwin on France, Ching-Chuan Yeh on Taiwan, Danielle Martin on Canada, and Jakob Kjellberg on Denmark. Even the presentations from the other side by Sally Pipes and David Hogberg were helpful in that they showed how silly (sadly) their views were when contrasted with a group of experts who understand well how systems based on solidarity work. If you can find the time, viewing the entire video (1 hour & 46 minutes) and reading the statements would be well worth the effort (link above).

March 11, 2014

When Health Costs Harm Your Credit


Mounting evidence shows that chaos in medical billing is not just affecting our health care but dinging the financial reputation of many Americans: While the bills themselves frequently take months to sort out, medical debts can be reported rapidly to credit agencies, and often without notification. And even small unpaid bills can severely damage credit ratings.

A mortgage initiator in Texas, Rodney Anderson of Supreme Lending, recently looked at the credit records of 5,000 applicants and found that 40 percent had medical debt in collection, with the average around $400; even worse, most applicants were unaware of their debt. Richard Cordray, director of the federal Consumer Financial Protection Bureau, has noted that half of all accounts reported by collection agencies now come from medical bills, and the credit record of one in five Americans is affected.

The problem is accelerating for several reasons. Charges are rising. Insurance policies are requiring more patient outlays in the form of higher deductibles and co-payments. More important, perhaps, is that while doctors’ practices traditionally worked out deals for patients who had trouble paying, today many doctors work for large professionally managed groups and hospital systems whose bills are generated far away, by computer.

Comment by Don McCanne of PNHPOur fragmented, dysfunctional system of paying medical bills is having a major impact on personal credit ratings. Half of all accounts reported by collection agencies now come from medical bills. The credit record of one-fifth of Americans is affected, and many of us are unaware of it. Are people so broke that they can’t pay their medical bills, or is something else going on here?

There are two major factors at play here. One is that with flat wages and increasing household costs, many people do have problems paying all of their essential bills, and medical bills are moved to the bottom of the stack. When payment of medical bills is postponed, or perhaps not paid at all, they are commonly sent to collection agencies, eventually appearing on the debtor’s credit report. Now that high deductibles are being used more to shift costs from payers (employers or government) to patients, this phenomenon is much more common.

The other factor is how people with good incomes who are meticulous with management of their personal finances end up with dinged credit reports because of medical bills. It is often due to the administrative complexity of the system we have of paying medical bills through private insurers who make payments based on whether the providers are in or out of network, on whether or not the products or services being billed are even covered by the plans, and on how much the deductible and coinsurance are and what charges can be credited against the deductible.

Typically the individual receives an explanation of benefits which is difficult to decipher often because some of these questions still remain unanswered. Billings may start to come in from various health care providers but without adequate explanation. When the patient inquires as to why the amount was not applied to the deductible, or why the amount seems to be for out-of-network providers when this provider is in-network, or for whatever reason, the patient is often given a temporizing response. When more statements are received that failed to address concerns such as the deductible, further efforts to correct the problem are often met with reassurance. When nothing further is heard, the patient assumes the matter was cleared up. Only later when a collection agency begins to harass them or when they find their credit report includes unpaid medical bills do they discover that the matter never was resolved.

Add in further complexities such as when a person has primary coverage perhaps through Medicare and secondary coverage through a Medigap plan, or a person had a change in coverage coinciding with the medical services provided, straightening out who is responsible for which portions of the charges can be a monumental task.

These highly responsible individuals with previously excellent credit records are understandably angry. They tend to look elsewhere for blame - the physician’s office or billing service, the hospital’s billing department, the insurer’s claim processors, the credit agency’s disregard of registered protests, or perhaps the employer who provided such a screwed up health plan.

Single payer advocates know where most of the blame really lies. It is with our political leaders who insist on perpetuating this highly inefficient, fragmented system of financing health care instead of enacting a single payer national health program. This botched up system of medical billing is only one manifestation of the profound administrative excesses that permeate our system. Ironically, all of this extra administrative detail in handling medical billings doesn’t even work well. You would think that if we are going to be paying much more in administrative costs so that the insurers could do a “better” job than a single government payer in handling our claims, we would be demanding much better performance from them. But no, keep the government out and blame everyone else.

In typical D.C. fashion, our legislators continue to look for solutions that would increase regulatory oversight to prevent unfair damage to the credit ratings of conscientious individuals, though the legislators are receiving expected push back from the credit industry. What we do not need is more administrative oversight piled on top of an administrative boondoggle. Instead we need to replace it with an efficient improved Medicare, with first dollar coverage, that covers everyone. Credit scores dinged by medical bills then would become a quaint historical oddity.
February 15, 2014

Insurers drastically reduce choice in poorer counties


Hundreds of thousands of Americans in poorer counties have few choices of health insurers and face high premiums through the online exchanges created by the health-care law, according to an analysis by The Wall Street Journal of offerings in 36 states.

Consumers in 515 counties, spread across 15 states, have only one insurer selling coverage through the online marketplaces, the Journal found. In more than 80% of those counties, the sole insurer is a local Blue Cross & Blue Shield plan. Residents of wealthier, more populated counties in the U.S. receive lower-priced choices than those living in counties with a single insurer.

The price differences reflect the strategy of insurers to pick markets where they believe they can turn a profit—and avoid areas of high unemployment and a concentration of unhealthy residents they deem more risky.

Aetna Inc. and UnitedHealth Group Inc., for instance, have limited their participation in the new health-insurance marketplaces, where consumers shop for coverage, to a much smaller map than their traditional business. They offer coverage in more counties outside of the marketplaces, where plans are sold directly to consumers and federal subsidies aren't available.

Aetna targeted areas with stable levels of employment and income to attract desirable customers to its marketplace offerings, Chief Executive Mark Bertolini said last fall. "We were very careful to pick the markets" where the insurer could succeed, he said.

Reversing the trend presents a challenge because low-population areas are unlikely to draw more insurers, said Glenn Melnick, a health-care economist at RAND Corp: "I don't think the health law can overcome those economics."

Comment by Don McCanne of PNHP: We’ve always know that insurers market their plans in areas where there is the greatest potential for business success. As USC Health Finance Professor Glen Melnick explains, the Affordable Care Act cannot overcome those economics.

Clearly we have the wrong model for reform. Private insurers respond to business opportunities. Public insurance, such as a single payer national health program, simply enrolls everyone; there are no market decisions to be made.

So is it going to continue to be about private insurance markets, or will it be about patients - all patients? An improved Medicare for all would be about the latter
February 13, 2014

Obamacare’s Founding CEO Wants To Bring Single Payer To MA


On his first day as governor of Massachusetts, Donald Berwick promises to set up a commission tasked with finding a way to bring single payer to the Bay State. It'll have report back to him within a year -- ideally sooner.

Having run Medicare and Obamacare in Washington for 17 months, he has concluded that the existing hybrid system is too cumbersome and expensive, and that single payer is the right fix. And he's the only candidate in this year's contest who dares to go there.

"The Affordable Care Act is a majestic step forward for this country -- for the only nation that hasn't made health care a human right yet. But luckily I'm in a state that's able to take even a bigger step," Berwick told TPM in an interview. "And a single payer option -- even if the country is not ready for it, I think Massachusetts is ready and it's worth exploring."

A political novice, Berwick is an underdog candidate for the Democratic nomination in the 2014 elections -- the most outspoken progressive in the race. A pediatrician, Harvard health policy professor and former health care executive, his talent for -- and obsession with -- health management caught the eye of President Barack Obama, who in 2010 appointed him to be the Administrator of the Center for Medicare & Medicaid Services, which was tasked with getting Obamacare off the ground in its infancy. Berwick left in December 2011, after his recess appointment expired and Senate Republicans refused to confirm him.

"I've been looking hard at the Massachusetts budget and I've become more aware than ever of how the rising costs of health care are taking opportunity away from other investments," he said. "I saw it in Washington, and I see it in Massachusetts. We need to find money for transportation, education, the social safety net. ... And so I feel a sense of urgency about getting costs under control without harming patients at all."
January 30, 2014

In Defense of Pete Seeger, American Communist


As counterintuitive as it may sound, time after time American Communists such as Seeger were on the right side of history - and through their leadership, they encouraged others to join them there.

Communists ran brutal police states in the Eastern bloc, but in Asia and Africa they found themselves at the helm of anti-colonial struggles, and in the United States radicals represented the earliest and more fervent supporters of civil rights and other fights for social emancipation. In the 1930s, Communist Party members led a militant anti-racist movement among Alabama sharecroppers that called for voting rights, equal wages for women and land for landless farmers. Prominent and unabashedly Stalinist figures such as Mike Gold, Richard Wright and Granville Hicks pushed Franklin D. Roosevelt's New Deal to be more inclusive and led the mass unionization drives of the era. These individuals, bound together by membership in an organization most ordinary Americans came to fear and despise, played an outsize and largely positive role in American politics and culture. Seeger was one of the last surviving links to this great legacy.

"Stateside Communists were the underdogs, fighting the establishment for justice - the victims of censorship and police repression, not its perpetrators."

American communism was different during those years. It wasn't gray, bureaucratic and rigid, as it was in the U.S.S.R., but creative and dynamic. Irving Howe thought it was a put-on, a "brilliant masquerade" that fought for the right causes but in a deceptive, opportunistic way. But there was an undeniable charm to the Communist Party - an organization that hosted youth dances and socials, as well as militant rallies - that first attracted Seeger. One need only reread the old transcripts from his 1955 run-in with the House Un-American Activities Committee to see the difference between the stodginess of the interrogators and the crackling wit of the young firebrand.

January 28, 2014

GAO Examines Impact of Continuous Coverage Prior to Enrolling in Medicare

These are the people that get charged three times as much under the ACA


The US Government Accountability Office (GAO) recently published a report that examines how continuous health insurance before enrolling in Medicare relates to a beneficiary’s reported health status and use of medical services. The study included only people who were eligible for Medicare due to age, not people who were eligible due to disability. It examines the time span from six years before someone was eligible for Medicare to six years after someone had Medicare.

GAO found that people with prior continuous insurance reported being in better health throughout their first six years on Medicare. Additionally, they had lower Medicare spending during their first year on Medicare, translating to approximately $2,300 less in Medicare spending in their first year of coverage.

The study also found that beneficiaries with continuous prior insurance had less institutional outpatient care (e.g., hospital outpatient care) than those who did not during their first two years of Medicare coverage. Those with and without prior continuous insurance had similar noninstitutional outpatient care spending (e.g., physicians and labs) at first. However, beneficiaries with prior continuous insurance surpassed their counterparts in noninstitutional outpatient spending in the fourth and fifth year. This coincides with the finding that those with prior continuous insurance having more physician office visits during the first five years on Medicare.

GAO’s report suggests that beneficiaries with prior insurance are in better health and use fewer or less expensive Medicare services during their first years on Medicare. The care spending and usage patterns also suggest that people with and without prior continuous insurance may access healthcare in different ways. Overall, GAO’s report shows that, while Medicare can help those who are 65 and older access the care they need, their health status and use of services can be largely impacted by their health insurance status prior to Medicare.

January 25, 2014

Is medical care a good business?


Health care costs are at levels never before seen anywhere in the world and are increasing in an uncontrolled and unsustainable way. Despite our high per-person costs — double those of other developed countries — tens of thousands of Americans die every year from lack of timely access to health care.

The degree of interference with doctors’ and patients’ health care decisions that exists in America today would not be tolerated anywhere else in the world. “Death panels” do exist in America, but they are run not by government but by private corporations. Their purpose is to maximize profits.

Americans are unique in the world in thinking about health care as a business. In no other country is that notion so widely and unquestioningly accepted.


As Melody Petersen has documented in her book “Our Daily Meds,” instead of embracing George Merck’s philosophy, pharmaceutical companies have become huge marketing machines. They now are focused far more on their profitability than on their healing mission. Producing medicine that cures diseases instead of just treating symptoms has become a bad business model. Once a disease is cured the customer disappears and profits decline.
January 3, 2014

Comparing Medicare rollout with ACA rollout

Medicare’s Rollout vs. Obamacare’s Glitches Brew

The smooth and inexpensive rollout of Medicare on July 1, 1966 provides a sharp contrast to the costly chaos of Obamacare.

As of March, 2013, federal grants for Obamacare’s state exchanges totaled $3.8 billion. Spending for the federal exchange is harder to pin down because funding has come from multiple accounts, including: the $1 billion Health Insurance Implementation Fund; DHHS’ General Departmental Management Account and General Departmental Management Account; CMS’s Program Management Account and the Prevention and Public Health Fund. CMS estimates fiscal 2014 spending for the federally-operated exchanges at $2 billion. So it’s safe to say that the costs of getting the exchanges up and running, and (hopefully) enrolling 7 million people in the program’s first year will exceed $6 billion.

Bear in mind that the exchanges won’t actually pay any medical bills, just sign people up for coverage. So billions more in overhead costs will show up on the books of the private insurers and state Medicaid programs that will actually process medical claims.

Back in 1966, Medicare started paying bills for 18.9 million seniors (99 percent of those eligible for coverage) just 11 months after Pres. Johnson signed it into law. Overhead costs for the first year totaled $120 million (equivalent to $867 million in 2013). But that figure includes the cost of processing medical bills, not just the enrollment costs.

Signing up most of the elderly for Medicare was simple; they were already known to Social Security Administration, which handled enrollment. To find the rest, the feds sent out mailings to seniors, held local meetings, and asked postal workers, forest rangers and agricultural representatives to help contact people in remote areas. The Office for Economic Opportunity spent $14.5 million to hire 5,000 low income seniors who went door-to-door in their neighborhoods.

Obamacare’s byzantine complexity reflects the contortions required to simultaneously expand coverage and appease private insurers. And private insurers will exact a steep ongoing toll. Medicare’s overhead is just 2 percent, vs. an average of 13 percent for private plans (on top of the Exchanges’ costs, roughly 3 percent of premiums). A single payer plan that excluded private insurers could save hundreds of billions in transaction costs.

PNHP oress release

“Obamacare is a giant workaround crafted to keep private insurers at the center of the health care system,” said co-author Dr. David Himmelstein, a primary care physician, professor of public health at the City University of New York and lecturer in medicine at Harvard Medical School.

“The simple single-payer, Medicare-for-all approach would save more than $400 billion annually on bureaucracy, enough to give every American first-dollar coverage. But to get those savings you have to break private insurers’ stranglehold on health care and on Washington,” he said, adding, “The glitches in Obamacare’s rollout don’t come from government incompetence, but from political cowardice.”

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Gender: Female
Hometown: Washington state
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Member since: Sat Aug 16, 2003, 02:52 AM
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About eridani

Major policy wonk interests: health care, Social Security/Medicare/Medicaid, election integrity
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