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In reply to the discussion: The Urban Institute's Attack On Single Payer: Ridiculous Assumptions Yield Ridiculous Estimates [View all]beam me up scottie
(57,349 posts)11. It's in the article, didn't you read it?
We outline below some of the most glaring errors in the Holahan analysis (which served as the basis for Tax Policy Centers estimates) regarding health care spending under the Sanders plan.
1. Administrative savings, Part 1: Holahan assumes that insurance overhead would be reduced to 6 percent of total health spending from the current level of 9.5 percent. They base this 6 percent estimate on figures for Medicares current overhead, which include the extraordinarily high overhead costs of private Medicare HMOs run by UnitedHealthcare and other insurance firms. However, Sen. Sanders proposal would exclude these for-profit insurers, and instead build on the traditional Medicare program, whose overhead is less than 3 percent. Moreover, even this 3 percent figure is probably too high, since Sanders plan would simplify hospital payment by funding them through global budgets (similar to the way fire departments are paid), rather than the current patient-by-patient payments. Hence a more realistic estimate would assume that insurance overhead would drop to Canadas level of about 1.8 percent. Cutting insurance overhead to 2 percent (rather than the 6 percent that Holahan projects) would save an additional $1.7 trillion over the next 10 years.
2. Administrative savings, Part 2: Holahan completely ignores the huge savings on hospital administration and doctors billing under a streamlined single-payer system. Every serious analyst of single-payer reform has acknowledged these savings, including the Congressional Budget Office, the Government Accountability Office, the Lewin Group (a consulting firm owned by UnitedHealth Group), and even Kenneth Thorpe (a former Clinton administration official who has criticized Sanders plan, although his recent estimates of savings are far lower than those he made prior to the current presidential campaign).
These provider savings on paperwork would, in fact, be much larger than the savings on insurance overhead. At present, U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single-payer systems like Canadas or Scotlands. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.
Overall, these administrative savings for doctors and hospitals would amount to about $2.57 trillion over 10 years. Additional savings of more than $1.5 trillion from streamlined billing and administration would accrue to nursing homes, home care agencies, ambulance companies, drug stores and other health care providers.
In total, the Holahan analysis underestimates administrative savings by about $6 trillion over 10 years.
3. Drug costs: Holahan projects that a single-payer plan would have to pay 50 percent higher drug costs than those paid at present by Medicaid. Moreover, their estimate assumes that the U.S. would continue to pay much higher prices for drugs than other nations, despite the fact that a U.S. single-payer system would have much greater negotiating leverage with drug companies than other national health insurance schemes.
Reducing drug prices to the levels currently paid by European nations would save at least $1.1 trillion more than Holahan posits over 10 years.
4. Utilization of care: Holahan projects a massive increase in acute care utilization, but does not provide detailed breakdowns of how big an increase they foresee for specific services like doctor visits or hospital care. However, it is clear that the medical care system does not have the capacity to provide the huge surge in care that he posits.
For instance Holahans figures for the increase in acute care suggest that Sanders plan would result in more than 100 million additional doctor visits and several million more hospitalizations each year. But there just arent enough doctors and hospital beds to deliver that much care. Doctors are already working 53 hours per week, and experience from past reforms tells us that they wont increase their hours, nor will they see many more patients per hour.
Instead of a huge surge in utilization, more realistic projections would assume that doctors and hospitals would reduce the amount of unnecessary care theyre now delivering in order to deliver needed care to those who are currently not getting what they need. Thats what happened in Canada. Doctors and hospitals can adjust care to meet increasing demand, as happens every year during flu season.
Moreover, no surge materialized when Medicare was implemented and millions of previously uninsured seniors got coverage. Between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visit in the U.S.; Americans averaged 4.3 visits per person in 1964 and 4.3 visits per person in 1966. Instead, the number of visits by poor seniors went up, while the number of visits by healthy and wealthy patients went down slightly. The same thing happened in hospitals. There were no waiting lists, just a reduction in the utilization of unneeded elective care by wealthier patients, and the delivery of more care to sick people who needed it.
Bizarrely, despite projecting a roughly $1.6 trillion increase in total payments to doctors over 10 years, Holahan says in his discussion that Physician incomes would be squeezed by the new payment rates.
***
In summary, Holahan grossly underestimates the administrative savings under single payer; projects increases in the number of doctor visits and hospitalizations that far exceed the capacity of doctors and hospitals to provide this added care; and posits that our country would continue to pay much more for drugs and medical equipment than people in every other nation with national health insurance.
Rather than increasing national health spending, as Holahan claims, Sanders plan (and the plan proposed by Physicians for a National Health Program) would almost certainly decrease total health spending over the next 10 years.
Drs. Himmelstein and Woolhandler are professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School. The opinions expressed do not necessarily reflect those institutions.
1. Administrative savings, Part 1: Holahan assumes that insurance overhead would be reduced to 6 percent of total health spending from the current level of 9.5 percent. They base this 6 percent estimate on figures for Medicares current overhead, which include the extraordinarily high overhead costs of private Medicare HMOs run by UnitedHealthcare and other insurance firms. However, Sen. Sanders proposal would exclude these for-profit insurers, and instead build on the traditional Medicare program, whose overhead is less than 3 percent. Moreover, even this 3 percent figure is probably too high, since Sanders plan would simplify hospital payment by funding them through global budgets (similar to the way fire departments are paid), rather than the current patient-by-patient payments. Hence a more realistic estimate would assume that insurance overhead would drop to Canadas level of about 1.8 percent. Cutting insurance overhead to 2 percent (rather than the 6 percent that Holahan projects) would save an additional $1.7 trillion over the next 10 years.
2. Administrative savings, Part 2: Holahan completely ignores the huge savings on hospital administration and doctors billing under a streamlined single-payer system. Every serious analyst of single-payer reform has acknowledged these savings, including the Congressional Budget Office, the Government Accountability Office, the Lewin Group (a consulting firm owned by UnitedHealth Group), and even Kenneth Thorpe (a former Clinton administration official who has criticized Sanders plan, although his recent estimates of savings are far lower than those he made prior to the current presidential campaign).
These provider savings on paperwork would, in fact, be much larger than the savings on insurance overhead. At present, U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single-payer systems like Canadas or Scotlands. Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing.
Overall, these administrative savings for doctors and hospitals would amount to about $2.57 trillion over 10 years. Additional savings of more than $1.5 trillion from streamlined billing and administration would accrue to nursing homes, home care agencies, ambulance companies, drug stores and other health care providers.
In total, the Holahan analysis underestimates administrative savings by about $6 trillion over 10 years.
3. Drug costs: Holahan projects that a single-payer plan would have to pay 50 percent higher drug costs than those paid at present by Medicaid. Moreover, their estimate assumes that the U.S. would continue to pay much higher prices for drugs than other nations, despite the fact that a U.S. single-payer system would have much greater negotiating leverage with drug companies than other national health insurance schemes.
Reducing drug prices to the levels currently paid by European nations would save at least $1.1 trillion more than Holahan posits over 10 years.
4. Utilization of care: Holahan projects a massive increase in acute care utilization, but does not provide detailed breakdowns of how big an increase they foresee for specific services like doctor visits or hospital care. However, it is clear that the medical care system does not have the capacity to provide the huge surge in care that he posits.
For instance Holahans figures for the increase in acute care suggest that Sanders plan would result in more than 100 million additional doctor visits and several million more hospitalizations each year. But there just arent enough doctors and hospital beds to deliver that much care. Doctors are already working 53 hours per week, and experience from past reforms tells us that they wont increase their hours, nor will they see many more patients per hour.
Instead of a huge surge in utilization, more realistic projections would assume that doctors and hospitals would reduce the amount of unnecessary care theyre now delivering in order to deliver needed care to those who are currently not getting what they need. Thats what happened in Canada. Doctors and hospitals can adjust care to meet increasing demand, as happens every year during flu season.
Moreover, no surge materialized when Medicare was implemented and millions of previously uninsured seniors got coverage. Between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was absolutely no increase in the total number of doctor visit in the U.S.; Americans averaged 4.3 visits per person in 1964 and 4.3 visits per person in 1966. Instead, the number of visits by poor seniors went up, while the number of visits by healthy and wealthy patients went down slightly. The same thing happened in hospitals. There were no waiting lists, just a reduction in the utilization of unneeded elective care by wealthier patients, and the delivery of more care to sick people who needed it.
Bizarrely, despite projecting a roughly $1.6 trillion increase in total payments to doctors over 10 years, Holahan says in his discussion that Physician incomes would be squeezed by the new payment rates.
***
In summary, Holahan grossly underestimates the administrative savings under single payer; projects increases in the number of doctor visits and hospitalizations that far exceed the capacity of doctors and hospitals to provide this added care; and posits that our country would continue to pay much more for drugs and medical equipment than people in every other nation with national health insurance.
Rather than increasing national health spending, as Holahan claims, Sanders plan (and the plan proposed by Physicians for a National Health Program) would almost certainly decrease total health spending over the next 10 years.
Drs. Himmelstein and Woolhandler are professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School. The opinions expressed do not necessarily reflect those institutions.
Let's highlight their credentials again for those who want to dismiss their summary as the opinion of mere 'bloggers':
Drs. Himmelstein and Woolhandler are professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.
You're welcome!
We are fond of CBO scoring? Shall we wait for that?
The think tank didn't wait, and neither did you, so what changed after this article was posted?
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The Urban Institute's Attack On Single Payer: Ridiculous Assumptions Yield Ridiculous Estimates [View all]
melman
Sep 2017
OP
That says "industry funders are Cigna and Pfizer", it doesn't say how much. Plus...
George II
Sep 2017
#46
At least yours is reasonably current, not six years old, and has no mention of Cigna or Pfizer...
George II
Sep 2017
#87
Wait...Keynsian ecomomics is now a hall-mark of "the conservative wing of the Democratic party?"
Expecting Rain
Sep 2017
#61
How did you do that? I typed out the breakdown of their funding below (sans last two, got tired!!!)
George II
Sep 2017
#36
If the information being provided is inaccurate, it would sound that way. But...
George II
Sep 2017
#59
But if a corporation touches anything, it becomes impure! Unless it has been blessed of course
Ninsianna
Sep 2017
#113
Your link provides no evidence of significant funding. No dollar amounts, and no corporate donors
pnwmom
Sep 2017
#68
It doesn't sound like Himmelstein is just picking numbers to fit his preference.
dgauss
Sep 2017
#13
The ACA is a renamed "Romney care" that the GOP called Obamacare to play to the racism
guillaumeb
Sep 2017
#45
No, the ACA is the ACA, nicknamed "Obamacare". Has nothing to do with Romneycare except...
George II
Sep 2017
#47
Most countries do it with multi-payer system, some of which use private insurance companies to
ehrnst
Sep 2017
#97
Obama also said that it would not be wise to go directly to Single Payer from our current system
ehrnst
Sep 2017
#98
He did. He also pushed for a public option, which a couple Senators killed.
Warren DeMontague
Sep 2017
#102
I guess that he didn't actually think it was the "only moral, fiscal" solution.
ehrnst
Sep 2017
#104
it's a "rabbit hole" to point out that the ACA has its origins in a Heritage Foundation proposal?
Warren DeMontague
Sep 2017
#89
Do you folks forget that between Reagan and Bush (not sure which, probably the first) were...
George II
Sep 2017
#65
I really don't. It connected the ACA with Presidents Reagan and Bush, which occurred almost....
George II
Sep 2017
#72
When people go see the doctor for checkups and get regular dental care
Warren DeMontague
Sep 2017
#52
And someone who doesn't understand that when you pay for something with cash
Warren DeMontague
Sep 2017
#88
And a Single Payer System isn't going to magically create more health care spending.
Warren DeMontague
Sep 2017
#91
"People do worry about their health and they will use more care if it is free"
Warren DeMontague
Sep 2017
#96
Actually, the increase in the number of people using health care is a cost issue in implementation
ehrnst
Sep 2017
#108