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Julie Rovner: What happened to ‘Medicare for all’?

By JULIE ROVNER

For Kaiser Health News

After a raucous debate lasting nearly a year, the Democrats are united on health care. But that unity does not include a call for a single-payer “Medicare for all” health system.

“This campaign is about moving the United States toward universal health care and reducing the number of people who are uninsured or under-insured,” Sen. Bernie Sanders (I-Vt.) said Tuesday in endorsing his rival Hillary Clinton, the presumptive Democratic presidential nominee.

Sanders did win a few health care concessions in the negotiations leading to the endorsement. Clinton vowed to support more funding for community health centers and access to a “public option” government insurance plan, which she has supported in the past.

But on Sanders’s top health priority — his “Medicare for All” plan — there was not a word. At the Democratic Platform Committee meeting over the weekend, an amendment to add a single-payer plan to the document was defeated.

It wasn’t much of a surprise.

Most health-policy analysts — including those who are sympathetic to the idea — say moving from the current U.S. public-private hybrid health system to one fully funded by the government in one step is basically impossible. And that’s making a huge assumption that it could get through Congress.

“To try to do it in one fell swoop would be massively disruptive,” said Paul Starr, a professor at Princeton who was a health policy adviser to President Bill Clinton.

The U.S. healthcare system, said Jeff Goldsmith, a healthcare consultant and health futurist, is “the size of a country — it’s bigger than France — and it employs 16 million people.”

In moving to a single-payer system, he said, “you’re talking about reallocating $3 trillion, reducing people’s incomes and creating” in effect a single entity that would set prices for all medical services. Single-payer supporters dispute the idea that getting from here to there could not be done.

“We’re so used to such a complicated system in the U.S. that we envisage any change would be incredibly complicated as well,” said Steffie Woolhandler, a physician and one of the founders of the single-payer advocacy organization Physicians for a National Health Program. “But what you’re doing with single-payer is actually simplifying the system.”

For example, said Woolhandler, “the latest data are that U.S. hospitals are spending 25 percent of their total budget on billing and administration, and hospitals in single-payer nations like Canada and Scotland are spending 12 percent.”

But while a single-payer system would undoubtedly produce efficiencies, it would also bring huge disruptions. Said Starr, single-payer supporters “haven’t worked through the consequences.”

One of the biggest is exactly how to redistribute literally trillions of dollars. The problem, said Harold Pollack, a professor at the University of Chicago, is that the change will create losers as well as winners.

“Precisely the thing that is a feature for single-payer proponents is a bug for everyone who provides goods and services for the medical economy,” he said, since their profits — and possibly their incomes — could be cut.

And it’s not just the private insurance industry (which would effectively be put out of business) that could feel the impact to the bottom line. Parts of the health care industry that lawmakers want to help, like rural hospitals, could inadvertently get hurt, too. Many rural hospitals get paid so little by Medicare that they only survive on higher private insurance payments. Yet under single-payer, those payments would go away and some could not make it financially. “You would not want to wipe out a third of the hospitals in Minnesota by accident,” Pollack said. “And you could,” if payments to hospitals end up too low.

There are also questions about how feasible it would be to have the federal government run the entire health care system. “It’s hard to be nimble” when a system gets that big, said Ezekiel Emanuel, a former health-sector adviser in the Obama administration now at the University of Pennsylvania. “No organization in the world does anything for 300 million people and does it efficiently.”

The politics of Medicare — which serves roughly 50 million Americans — already make some things difficult or impossible, he said, pointing to a current fight in which doctors and patient advocacy groups blasted a proposal to move to a more cost-effective way to pay for cancer drugs. “You already can’t do certain things in Medicare because of the politicization,” he said. ”When you cover the whole country, it would be a lot of gridlock.”

Pollack agreed, and pointed out it’s not just the health care industry that could revolt. When the full Affordable Care Act was rolled out in 2013, he said, “the people who couldn’t keep their old plans — a very tiny number as a percent of Americans” were furious. “We saw how difficult that was and how angry the public was when that promise wasn’t kept. Now imagine the major shift we’d have to do to move to a single payer system.”

There’s also the question of whether it’s simply too late to go back to the health care drawing board.

Single-payer supporter Woolhandler insists it is not. “Other nations have gone to single-payer systems,” she said. “It usually can be done in about a year.”

The last industrialized country that did the switch was Taiwan, in the mid-1990s. Taiwan, however, with its 23 million residents, has a population larger than New York and smaller than Texas, and had no existing private health insurance system at the time.

“What I’ve often said is we could have done this in the 1940s when Harry Truman proposed it,” said Starr, who has written at length on the history of American health politics. “Health care at that point was probably about 4 percent of [gross domestic product] and there existed at that time a relatively small private insurance industry.” Today health care spending in the U.S. is approaching 18 percent of the nation’s GDP and the private health insurance industry accounts for half a trillion dollars per year.

Both Starr and Pollack, however, said it would be possible to make a switch, although it would have to be carried out over a very long period of time.

“You could imagine some kind of long transition, where you gradually expanded Medicare,” said Starr, “for example moving it down to age 55” and then in later years continue to lower the age threshold.

But even if the U.S. did manage to execute a single-payer system, said Pollack, it would likely prove problematic, particularly in how it would be financed.

“The major value of a single-payer system would be to help the bottom third of the income distribution, and that means the top 20 percent of the population will have to pay more,” he said. “I’m actually in favor of that, but let’s not kid ourselves. That’s a knife fight that’s going to be had.”


Hospitals fighting revival of ‘the public option’

 

Hillary Clinton, under pressure from the left wing of the Democratic Party, is now pushing for “public option” coverage in the state and federal health insurance exchanges.

This would be a compromise between Sen. Bernie Sanders, who backs a “Medicare-for-all” approach, and the current  very complex system of private insurance partially paid for by employers, private insurance bought in insurance exchanges, and expanded Medicaid under the Affordable Care Act.

Polls have suggested that a majority of the public favors extending Medicare t0 all or at least a public option, in which people could chose government-financed insurance instead of coverage from a private insurer.

It appears that hospital executives oppose a public option because they fear that it would  cut the payments that hospitals receive to provide care. So the American Hospital Association and the Federation of American Hospitals  has sent this message  to the Democratic Platform Drafting Committee.

“Our members have serious concerns that creating a public option with Medicare-like payments would subvert those goals by depressing insurer payments to healthcare providers and disrupting the fragile finance system that sustains hospitals today.”

The letter asserted that two-thirds of the two groups’ member hospitals received Medicare reimbursements that are below cost of providing care, while the average operating margin on Medicare reimbursements for hospitals was negative 5.8 percent in 2014.

“Adding millions more enrollees whose healthcare would be reimbursed at Medicare rates would likely threaten access to needed healthcare services, particularly for those in vulnerable communities,” the letter said.

To read more, please hit this link.


But what does ‘single payer’ really mean?

By JULIE ROVNER

For Kaiser Health News

Healthcare has emerged as one of the flash points in the Democratic presidential race.

Vermont Sen. Bernie Sanders has been a longtime supporter of a concept he calls “Medicare for All,” a health system that falls under the heading of “single-payer.”

Sanders released more details about his proposal shortly before the Democratic debate in South Carolina Sunday night. “What a Medicare-for-All program does is finally provide in this country health care for every man, woman and child as a right,” he said in Charleston.

Sanders’s main rival for the nomination, former Secretary of State Hillary Clinton, has criticized the plan for raising taxes on the middle class and said it is politically unattainable.  “I don’t want to see us start over again with a contentious debate” about health care, she said Sunday night.

Some of the details of Sanders’s plan are still to be released. But his proposal has renewed questions about what a single-payer health care system is and how it works. Here are some quick answers.

What Is Single-Payer?

Single-payer refers to a system in which one entity (usually the government) pays all the medical bills for a specific population. And usually (though again, not always) that entity sets the prices for medical procedures.

Single-payer is not the same thing as socialized medicine. In a truly socialized medicine system, the government not only pays the bills but owns the health care facilities and employs the professionals who work there.

The Veterans Health Administration (VA) is an example of a socialized health system run by the government. It owns the hospitals and clinics and pays the doctors, nurses and other health providers.

Medicare, on the other hand, is a single-payer system in which the federal government pays the bills for those who qualify, but hospitals and other providers remain private.

Which Countries Have Single-Payer Health Systems?

Fewer than many people think. Most European countries either never had or no longer have single-payer systems. “Most are basically what we call social-insurance systems,” said Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health, who has studied international health systems. Social insurance programs ensure that almost everyone is covered. They are taxpayer-funded but are not necessarily run by the government.

Germany, for example, has 135 “sickness funds,” which are essentially private, nonprofit insurance plans that negotiate prices with healthcare providers. “So you have 135 funds to choose from,” Anderson said.

Nearby, Switzerland and the Netherlands require their residents to have private insurance (just like the Affordable Care Act does), with subsidies to help those who cannot otherwise afford coverage.

And while conservatives in the United States often use Britain’s National Health Service as the poster child for a socialized system, there are many private insurance options available to residents there, too.

Among the countries that have true single-payer systems, Anderson lists only two — Canada and Taiwan.

Are Single-Payer Plans Less Expensive Than Other Health Coverage Systems?

Not necessarily. True, eliminating the profits and duplicative administrative costs associated with hundreds of different private insurance plans would reduce spending, perhaps as much as 10 percent of the nation’s $3 trillion annual health care bill, Anderson said. But, he noted, once that savings is achieved, there won’t be further reductions in following years.

More important, as many analysts have noted, is how much health services cost and how those prices are determined. In most other developed countries, even those with private insurance, writes Princeton Health Economist Uwe Reinhardt, prices “either are set by government or negotiated between associations of insurers and providers of care on a regional, state or national basis.” By contrast, in the U.S., “the payment side of the health care market in the private sector is fragmented, weakening the bargaining power of individual insurers.”

Would Medicare For All Be Just Like The Existing Medicare Program?

No, at least not as Sanders envisions it. Medicare is not nearly as generous as many people think. Between premiums (for doctor and drug coverage), cost-sharing (deductibles and coinsurance) and items Medicare does not cover at all (most dental, hearing and eye care), the average Medicare beneficiary still devotes an estimated 14 percent of all household spending to health care.

Sanders’s plan would be far more generous, including dental, vision, hearing, mental health and long-term care, all without copays or deductibles (which has given rise to a lively debate about how to pay for it and whether middle-class families will save money or pay more).

Would Private Insurance Companies Really Disappear Under Sanders’s Plan?

Probably not. Private insurers are fully integrated into Medicare, handling most of the claims processing and providing supplemental coverage through “Medigap” plans. In addition, nearly a third of Medicare beneficiaries are enrolled in private managed care plans as part of the Medicare Advantage program.

Creating an entirely new federal claims processing structure would in all likelihood be more expensive than continuing to contract with private insurance companies. However, Sanders makes it clear  that insurers in the future would no longer be the risk-bearing entities they are today, but more like regulated utilities.


Sanders releases details on his single-payer plan

 

 

Sen. Bernie Sanders releases details on his single-payer, “Medicare for all” plan. He says it will dramatically cut healthcare costs for most Americans as it raises taxes on the rich.


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