Elusive Waste:The Fermi Paradox in US Health Care
by Don Berwick - Journal of the American Medical Association - October 7, 2019
In 1950, at lunch with 3 colleagues, the great physicist Enrico Fermi is alleged to have blurted out a question that became known as “the Fermi paradox.” He asked, “Where is everybody?” referring to calculations suggesting that extraterrestrial life forms are abundant in the universe, certainly abundant enough that many of them should have by then visited our solar system and Earth. But, apparently, none had.Health care in the United States has its own version of the Fermi paradox. It involves the strong evidence of massive waste that is updated in the Special Communication by Shrank and colleagues in this issue of JAMA.1 The authors recalculate the proportion of US health care expenditures that is waste. Their estimates, which they suggest are conservative, are similar to other major reports of the past decade, which came up with median estimates of waste amounting to 30% to 35% of total health expenditures.2,3 Shrank and colleagues estimated that waste represents 20% to 25% of US health care expenditures, but they explicitly did not include some extrapolations from Medicare data to the population at large. The authors further reviewed the literature on efforts to reduce waste, which, they claim, suggests that about 25% of that amount—approximately 5% of total health care spending—could be reduced with implementation of well-documented, current programs.
These are massive numbers. With US health care expenditures exceeding $3.5 trillion annually, 25% of the total would amount to more than $800 billion per year of waste (more than the entire 2019 federal defense budget, and as much as all of Medicare and Medicaid combined). Even 5% of the total cost is more than $150 billion per year (almost 3 times the budget of the US Department of Education).
That is worth repeating: by many pedigreed estimates, annual waste in US health care equals or exceeds the entire annual cost of Medicare plus Medicaid.
But, to paraphrase Fermi, “Where is it?” Shrank and colleagues, like the prior studies they channel, examined 6 categories of waste: failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse, and administrative complexity; they estimated the amount of each. In one sense, “There it is!”
But that is not the proper analogy to Fermi’s paradox. The paradox is that, in an era of health care when no dimension of performance is more onerous than high cost, when many hospitals and clinicians complain that they are losing money, when individuals in the United States are experiencing financial shock at absorbing more and more out-of-pocket costs for their care, and when governments at all levels find that health care essentially confiscates the money they need to repair infrastructures, strengthen public education, build houses, and upgrade transportation—in short, in an era when health care expenses are harming everyone—as much as $800 billion in waste (give or take a few hundred billion) sits untapped as a reservoir for relief. Why?
Imagine a breakthrough in any other sector of commerce—cars or plane travel or computers—in which some spotlight suddenly revealed 30% of production costs to be pure waste. How long would it be before entrepreneurs would make efforts to eliminate that waste and return the money to their customers or to their stockholders? In an effective competitive market, that should not take long at all. Slow responders might not survive; quick ones would likely thrive and make a lot more money.
Actually, that is not quite what happens. Even in highly competitive industries, the methods of “lean thinking”4 and other approaches to uncovering and removing waste have been surprisingly slow to diffuse. The viscosity comes from legacy investments in capital structures, legacy workforce habits and configurations, and legacy thinking, blinding even smart executives and boards of directors to the need to change. Nonetheless, the tectonics of waste reduction in other industries are strong, and eventually waste is eliminated, or at least minimized. Computers get faster and less expensive. Household appliances get better and (absent tariff wars) less costly. Productivity rises more or less steadily.
Meanwhile, health care costs more and more and more, with expenditures relentlessly increasing at a multiple of the general rate of inflation. Incredibly, even health care economists purvey a kind of double-speak; they score a slowing of the rate of rise of costs as a cost reduction. That deceptive language would not last long when it came to cars or computers.
So, where is this waste? Why, with 25% or 30% of all costs not helping achieve health or relieve disease, has not a single hospital or clinic or integrated health system drawn on that “waste account” to reduce its costs thrillingly? Not even one?
There are at least 4 plausible explanations. First, maybe the waste is not really there. Second, maybe the waste cannot, technically, be extracted. Third, maybe it is not interesting enough, yet, to reduce waste. And fourth, maybe politics paralyzes change.
The first explanation—that waste is not present—is not tenable. The current estimates by Shrank and colleagues are just the latest in a long line of studies of non–value-added processes in US health care. The lineage of these reports goes back to the pathfinding studies of variation in health care costs by Wennberg and colleagues, which repeatedly found several-fold differences in resource use among small geographic areas with no relationship whatsoever with metrics of quality outcomes.5 The estimates also find roots in studies of supply-driven demand, famously “Roemer’s law,” that a built hospital bed will be a filled hospital bed. Supply, not need, drives demand.6 It is indeed remarkable that efforts at comprehensive estimation of waste levels have repeatedly come up with similar numbers—25% to 35%—from different sources using different methods of assessment.7
As for the second potential explanation, is it possible that the waste cannot be extracted without damage to the core of care? Is waste marbled so thoroughly into health care processes and structures that no scalpel is fine enough to work it free? The report by Shrank et al suggests the opposite. It finds numerous studies of effective cost reduction for some types of waste (failures in care delivery, coordination failures, and overtreatment), at least in research contexts, albeit not at large scale.
Beyond that, some categories of waste are so glaring that, prima facie, they can be removed with enough will. Consider, for example, the administrative waste that comes with cumbersome and inconsistent coding and billing practices. “Cannot remove” is just implausible compared with “will not remove.” Similarly, widespread overuse of ineffective drugs, tests, and procedures is difficult to justify by some vague claim of complexity. If a clinical intervention does not work, why shouldn’t physicians just stop using it? Equally obvious is the effect of greed on prices, such as when manufacturers raise the cost to consumers and insurers for insulin, new biologics, and equipment8 absurdly just because they can and no one stops them.
What about the third hypothesis: that waste reduction is just not interesting or a priority to the people and organizations that can, technically, achieve it? This is a far more plausible explanation. A telltale line from the article by Shrank et al is this one: “The administrative complexity category was associated with the greatest contribution to waste, yet there were no generalizable studies that had targeted administrative complexity as a source for waste reduction.” In other words, no one has seemed interested enough in this high-potential change to do something about it.
Many health services research studies have shown that, under the payment systems currently in charge, some of the very methods for waste reduction that Shrank et al cite would reduce profit for the health care organizations that use them.9 The much-touted switch from “volume” to “value” in health care payment that many policy experts push for has so far been rather timid and incomplete. And a critical review of evidence to date must conclude that this approach is of unproven worth.
The fourth explanation, politics, is the most plausible explanation of all. What Shrank and colleagues and their predecessors call “waste,” others call “income.” People and organizations (for-profit and not-for-profit) making big incomes under current delivery models include very powerful corporations and guilds in a nation that tolerates strong influences on elections by big donors. Those donors now include corporations whose “right” to “free speech” as “persons” has been certified by the US Supreme Court, conferring on them an unlimited license to support political candidates financially. When big money in the status quo makes the rules, removing waste translates into losing elections. The hesitation is bipartisan. For officeholders and office seekers in any party, it is simply not worth the political risk to try to dislodge even a substantial percentage of the $1 trillion of opportunity for reinvestment that lies captive in the health care of today, even though the nation’s schools, small businesses, road builders, bridge builders, scientists, individuals with low income, middle-class people, would-be entrepreneurs, and communities as a whole could make much, much better use of that money.
Some of this physicians cannot change, but much they can. Indeed, the localized successes reviewed by Shrank et al, such as reducing overtreatment, improving coordination, and making care safer, prove that aims like those are all within the reach of physician leaders who commit to waste reduction. Those successes should spread. The American Board of Internal Medicine’s Choosing Wisely campaign10 could be much bolder in its next iteration. In local markets, physicians can champion changing payment from fee-for-service to shared risk and forms of global payment that encourage everyone to end wasteful care. In the end, physicians can and should act with strong voices and political courage to openly oppose greed and deception in pricing policies wherever they arise.
In large measure, the challenge of removing waste from US health care and reinvesting that harvest where it could do much more good is not a technical one. It is a political one. In short, removing waste from US health care will require both awakening a sleepy status quo and shifting power to wrest it from the grip of greed.
https://jamanetwork.com/journals/jama/fullarticle/2752662
In the Land of Self-Defeat
What a fight over the local library in my hometown in rural Arkansas taught me about my neighbors’ go-it-alone mythology — and Donald Trump’s unbeatable appeal.
By
CLINTON, Ark. — Inside Washington, there’s a sense that
this scandal really is different. Even the White House’s memorandum of
the phone conversation President Trump had with the Ukrainian president
in July makes it clear that Mr. Trump asked a foreign country to help
him undermine a political rival. But while national polls show support
for impeaching him is growing, it’s still divided sharply along partisan
lines. Democrats strongly favor it, while Republicans tend to oppose
it.
I’ve been following this story from my little corner of the world in rural Van Buren County, Ark. Tim Widener, 50, who lives outside my hometown, Clinton, summed up the town’s attitude well: “It’s really a sad waste of taxpayers’ money,” he told me.
Mr. Widener could have been talking about anything. His comment reflected a worldview that is becoming ever more deeply ingrained in the white people who remain in rural America — Washington politicians are spending money that they shouldn’t be. In 2016, shortly after Mr. Trump’s victory, Katherine J. Cramer, a political scientist at the University of Wisconsin-Madison, summed up the attitudes she observed after years of studying rural Americans: “The way these folks described the world to me, their basic concern was that people like them, in places like theirs, were overlooked and disrespected,” she wrote in Vox, explaining that her subjects considered “racial minorities on welfare” as well as “lazy urban professionals” working desk jobs to be undeserving of state and federal dollars. People like my neighbors hate that the government is spending money on those who don’t look like them and don’t live like them — but what I’ve learned since I came home is that they remain opposed even when they themselves stand to benefit.
I’ve been following this story from my little corner of the world in rural Van Buren County, Ark. Tim Widener, 50, who lives outside my hometown, Clinton, summed up the town’s attitude well: “It’s really a sad waste of taxpayers’ money,” he told me.
Mr. Widener could have been talking about anything. His comment reflected a worldview that is becoming ever more deeply ingrained in the white people who remain in rural America — Washington politicians are spending money that they shouldn’t be. In 2016, shortly after Mr. Trump’s victory, Katherine J. Cramer, a political scientist at the University of Wisconsin-Madison, summed up the attitudes she observed after years of studying rural Americans: “The way these folks described the world to me, their basic concern was that people like them, in places like theirs, were overlooked and disrespected,” she wrote in Vox, explaining that her subjects considered “racial minorities on welfare” as well as “lazy urban professionals” working desk jobs to be undeserving of state and federal dollars. People like my neighbors hate that the government is spending money on those who don’t look like them and don’t live like them — but what I’ve learned since I came home is that they remain opposed even when they themselves stand to benefit.
I
returned to Van Buren County at the end of 2017 after 20 years living
on the East Coast, most recently in the Washington area, because I’m
writing a book about Clinton, Van Buren’s county seat. My partner and I
knew it would be a challenge: The county is very remote, very religious
and full of Trump voters, and we suspected we’d stand out because of our
political beliefs.
Since coming back, I’ve
realized that it is true that people here think life here has taken a
turn for the worse. What’s also true, though, is that many here seem
determined to get rid of the last institutions trying to help them, to
keep people with educations out, and to retreat from community life and
concentrate on taking care of themselves and their own families. It’s an
attitude that is against taxes, immigrants and government, but also
against helping your neighbor.
Most Americans live in cities, but our political system gives rural areas like Van Buren outsize voting power. My time here makes me believe that the impeachment scandal will not hurt Mr. Trump — and that Democrats who promise to make the lives of people like my neighbors better might actually help him.
I realized this after a fight over, of all things, our local library.
In April, a local man who operates the Facebook group, “Van Buren County Today Unfiltered,” posted the agenda for a coming meeting of the Quorum Court, the county’s governing body. The library board wanted to increase the pay it could offer a new head librarian, who would be combining her new job with an older one, to $25 an hour.
Most Americans live in cities, but our political system gives rural areas like Van Buren outsize voting power. My time here makes me believe that the impeachment scandal will not hurt Mr. Trump — and that Democrats who promise to make the lives of people like my neighbors better might actually help him.
I realized this after a fight over, of all things, our local library.
In April, a local man who operates the Facebook group, “Van Buren County Today Unfiltered,” posted the agenda for a coming meeting of the Quorum Court, the county’s governing body. The library board wanted to increase the pay it could offer a new head librarian, who would be combining her new job with an older one, to $25 an hour.
Only
about 2,500 people live in my hometown. The library serves the entire
county, which has an estimated 16,600 people, a marked decline from the
population at the last census in 2010. The library has historically
provided a variety of services for this community. It has offered summer
reading camps for children and services like high-speed internet,
sewing classes and academic help. I grew up going to the library and
visited it often when I returned. It was always busy. I thought people
would be supportive.
Instead, they started a fight. The battle began on the Facebook post, which had 240 comments by the end. The first comment came from Amie Hamilton, who reiterated her point when I interviewed her several months later. “If you want to make $25 an hour, please go to a city that can afford it,” she wrote. “We the people are not here to pay your excessive salaries through taxation or in any other way.”
There was general agreement among the Facebook commenters that no one in the area was paid that much, — the librarian’s wages would have worked out to be about $42,200 a year — and the people who do actually earn incomes that are similar — teachers and many county officials — largely remained quiet. (Clinton has a median income of $34,764 and a poverty rate of 22.6 percent.) When a few of us, including me, pointed out that the candidate for the library job had a master’s degree, more people commented on the uselessness of education. “Call me narrow-minded but I’ve never understood why a librarian needs a four-year degree,” someone wrote. “We were taught Dewey decimal system in grade school. Never sounded like anything too tough.”
I watched the fight unfold with a sense of sadness, anger and frustration. I started arguing. It didn’t work. The pay request was pulled from the Quorum Court’s agenda.
I didn’t realize it at first, but the fight over the library was rolled up into a bigger one about the library building, and an even bigger fight than that, about the county government, what it should pay for, and how and whether people should be taxed at all. The library fight was, itself, a fight over the future of rural America, what it meant to choose to live in a county like mine, what my neighbors were willing to do for one another, what they were willing to sacrifice to foster a sense of community here.
The answer was, for the most part, not very much.
Instead, they started a fight. The battle began on the Facebook post, which had 240 comments by the end. The first comment came from Amie Hamilton, who reiterated her point when I interviewed her several months later. “If you want to make $25 an hour, please go to a city that can afford it,” she wrote. “We the people are not here to pay your excessive salaries through taxation or in any other way.”
There was general agreement among the Facebook commenters that no one in the area was paid that much, — the librarian’s wages would have worked out to be about $42,200 a year — and the people who do actually earn incomes that are similar — teachers and many county officials — largely remained quiet. (Clinton has a median income of $34,764 and a poverty rate of 22.6 percent.) When a few of us, including me, pointed out that the candidate for the library job had a master’s degree, more people commented on the uselessness of education. “Call me narrow-minded but I’ve never understood why a librarian needs a four-year degree,” someone wrote. “We were taught Dewey decimal system in grade school. Never sounded like anything too tough.”
I watched the fight unfold with a sense of sadness, anger and frustration. I started arguing. It didn’t work. The pay request was pulled from the Quorum Court’s agenda.
I didn’t realize it at first, but the fight over the library was rolled up into a bigger one about the library building, and an even bigger fight than that, about the county government, what it should pay for, and how and whether people should be taxed at all. The library fight was, itself, a fight over the future of rural America, what it meant to choose to live in a county like mine, what my neighbors were willing to do for one another, what they were willing to sacrifice to foster a sense of community here.
The answer was, for the most part, not very much.
A 2016 analysis by National Public Radio found
that as counties become more rural, they tend to become more
Republican. Completely rural counties went for Mr. Trump by 70.6 percent
over all, which makes my county politically average — Van Buren gave
Mr. Trump 73 percent
of its vote. Rural America is not a monolith, but a majority of rural
counties fit perfectly into Mr. Trump’s preferred demographics: They are
largely white (96.2 percent in Van Buren), and rates of educational
attainment are low.
People are leaving rural areas
for cities because that’s where the jobs are. According to one
analysis, between 2008, during the Great Recession, and 2017, the latest
year for which data is available, 99 percent of the job and population
growth occurred
in counties with at least one city of 50,000 people or more or in
counties directly adjacent to such cities. It’s hard to generalize
what’s happening to rural counties, but many are faced with a shrinking
property tax base and a drop in economic activity, which also decreases
sales tax revenues.
Many rural counties are also experiencing declines in whatever industries were once the major employers. In Appalachia, this is coal; in much of the Midwest, it is heavy manufacturing; and in my county, and many other counties, it’s natural gas and other extractive industries.
This part of Arkansas sits on the Fayetteville Shale, which brought in natural gas exploration in the early 2000s. For about a decade, the gas companies paid local taxes on their property, equipment and the money they made from extracting natural gas, and landowners paid property taxes on the royalties they earned. It was a boom. Many people at the time, here and elsewhere, expected that the money would last longer than it did.
Instead, the price of natural gas plummeted in 2009 and profits declined. Production slowed. One of the biggest natural gas companies in the area, Houston-based Southwestern Energy, stopped paying taxes to the counties here, arguing that the rates were unfair. The company and five Arkansas counties, including mine, are still locked in litigation over some of the money it owes (it recently paid a portion of it).
Van Buren’s County’s chief executive, Dale James, told me that county revenues had declined by at least 20 percent from when gas production was at its height in 2008. The county budget is now just over $11 million, including revenue from local taxes and state and federal grants.
Many rural counties are also experiencing declines in whatever industries were once the major employers. In Appalachia, this is coal; in much of the Midwest, it is heavy manufacturing; and in my county, and many other counties, it’s natural gas and other extractive industries.
This part of Arkansas sits on the Fayetteville Shale, which brought in natural gas exploration in the early 2000s. For about a decade, the gas companies paid local taxes on their property, equipment and the money they made from extracting natural gas, and landowners paid property taxes on the royalties they earned. It was a boom. Many people at the time, here and elsewhere, expected that the money would last longer than it did.
Instead, the price of natural gas plummeted in 2009 and profits declined. Production slowed. One of the biggest natural gas companies in the area, Houston-based Southwestern Energy, stopped paying taxes to the counties here, arguing that the rates were unfair. The company and five Arkansas counties, including mine, are still locked in litigation over some of the money it owes (it recently paid a portion of it).
Van Buren’s County’s chief executive, Dale James, told me that county revenues had declined by at least 20 percent from when gas production was at its height in 2008. The county budget is now just over $11 million, including revenue from local taxes and state and federal grants.
When local economies are flagging, state governments don’t step in to help as much as they once did. The Pew Charitable Trust found
that state aid to local governments fell by 5.3 percent during the
recession’s lowest point, in fiscal year 2013, and it still is below
what it was before the recession. On top of that, 45 states restrict
the way local governments can collect property taxes on their citizens
in some way: In Arkansas, property and sales tax increases, the main
source of revenue for many local governments, have to be approved by
voters.
It means many county governments are
getting less money on several fronts. A report from the National
Association of Counties from 2016 was titled, “Doing More With Less.” It’s the new normal.
Local budgets pay for the infrastructure and institutions people deal with every day — schools, roads, water, trash collection, libraries and animal shelters. Cuts to those services are felt in a visceral way.
The fight over the pay for the new head librarian had a larger context: The library moved into a new building, with new services, in 2016. Construction began during the natural gas boom years, and ended after the bust, just as the county budget was being squeezed and services were being cut.
During the boom, the new building had seemed necessary, but with the revenue decreases, the county knew it was going to have a hard time paying the $2.1 million still owed on it. (Disclosure: My mother was on the library board when some of the decisions about the new building were made.)
Local budgets pay for the infrastructure and institutions people deal with every day — schools, roads, water, trash collection, libraries and animal shelters. Cuts to those services are felt in a visceral way.
The fight over the pay for the new head librarian had a larger context: The library moved into a new building, with new services, in 2016. Construction began during the natural gas boom years, and ended after the bust, just as the county budget was being squeezed and services were being cut.
During the boom, the new building had seemed necessary, but with the revenue decreases, the county knew it was going to have a hard time paying the $2.1 million still owed on it. (Disclosure: My mother was on the library board when some of the decisions about the new building were made.)
The library made its own budget cuts, but the savings
weren’t enough to cover the shortfall in paying for the building, and
there was a real danger of the library closing, leaving its new, hulking
brick building empty. The people who didn’t frequent the library argued
that the community didn’t really need it anymore, anyway. After all, if
you have internet, you can get whatever you want in a day.
Such was the situation when the pay raise showed up on the Quorum Court agenda. Why give one person a raise when the county was slashing its budget, when we were going without so much else? The head librarian candidate, Andrea Singleton, eventually took the job at the old salary, just over $19 an hour, although at first the fight made her upset enough to consider leaving.
Such was the situation when the pay raise showed up on the Quorum Court agenda. Why give one person a raise when the county was slashing its budget, when we were going without so much else? The head librarian candidate, Andrea Singleton, eventually took the job at the old salary, just over $19 an hour, although at first the fight made her upset enough to consider leaving.
“It was enough to make
me want to run away,” Ms. Singleton, who had been on the library’s
staff for four years when she was offered the promotion, told me. “But I
got over it.”
When I spoke to other county residents, many thought all of the budget cuts were a sad but necessary correction to the county’s previously profligate ways.
Ms. Hamilton, the Facebook commenter, told me that the voters fixed the county’s problems by electing Republicans to countywide offices in 2018, including Mr. James, who replaced a Democrat who’d held the office for four terms. “Some people are more fiscally responsible than others,” she said.
Ms. Hamilton, who is 52, had moved to the county during the natural gas boom, in 2008, and continued working with that industry even after it left. She commutes each week to work in the Midland-Odessa area of Texas. She noted that Clinton is a small town and simply couldn’t afford the luxury of government services. “If you’re looking for a handout, this is not the place; we can’t support that,” Ms. Hamilton said.
Mr. Widener, 50, has lived in the county on and off for 18 years, and was born in the nearby town of Conway, home to the University of Central Arkansas. He commutes there for work in the university’s information technology department. He told me the idea of paying the librarian $25 an hour was “typical government waste.” He added, “It’s the same thing in Washington.”
The typical private-sector wage in Van Buren, $10 to $13 an hour, was right for the county, many people said. Anything more than that was wasteful, or evidence of government corruption.
When I spoke to other county residents, many thought all of the budget cuts were a sad but necessary correction to the county’s previously profligate ways.
Ms. Hamilton, the Facebook commenter, told me that the voters fixed the county’s problems by electing Republicans to countywide offices in 2018, including Mr. James, who replaced a Democrat who’d held the office for four terms. “Some people are more fiscally responsible than others,” she said.
Ms. Hamilton, who is 52, had moved to the county during the natural gas boom, in 2008, and continued working with that industry even after it left. She commutes each week to work in the Midland-Odessa area of Texas. She noted that Clinton is a small town and simply couldn’t afford the luxury of government services. “If you’re looking for a handout, this is not the place; we can’t support that,” Ms. Hamilton said.
Mr. Widener, 50, has lived in the county on and off for 18 years, and was born in the nearby town of Conway, home to the University of Central Arkansas. He commutes there for work in the university’s information technology department. He told me the idea of paying the librarian $25 an hour was “typical government waste.” He added, “It’s the same thing in Washington.”
The typical private-sector wage in Van Buren, $10 to $13 an hour, was right for the county, many people said. Anything more than that was wasteful, or evidence of government corruption.
Almost everyone I spoke with feels that the county
overspent during the gas boom years, and that the bill is coming due.
“We got wasteful and stupid, and now we have to go back to common
sense,” Corrine Weatherly, who owns a dress- and costume-making shop,
Sew What, told me. Ms. Weatherly also runs the county fair, and so she
shows up to almost every Quorum Court meeting.
This worldview will continue to affect national elections. The most dominant news source here is Fox News, which I think helps perpetuate these attitudes. There’s another element, too: For decades, the dominant conservative theory of politics is that government should be run like a business, lean and efficient, and one of the biggest private employers here is Walmart, where Mr. James was working when he was elected.
There’s a prevailing sense of scarcity — it’s easy for people who have lived much of their lives in a place where $25 an hour seems like a high salary to believe there just isn’t enough money to go around. The government, here and elsewhere, just can’t afford to help anyone, people told me. The attitude extends to national issues, like immigration. Ms. Hamilton told me she’d witnessed, in Texas, a hospital being practically bankrupted by the cost of caring for immigrants and said, “I don’t want my tax dollars to be used to pay for people that are coming here just to sit on a government ticket.” Mr. Widener, who described himself as “more libertarian” than anything else, told me his heart goes out to migrant children who are held in detention centers at the border, but he blames the parents who brought them to this country.
Where I see needless cruelty, my neighbors see necessary reality.
The people left in rural areas are more and more conservative, and convinced that the only way to get things done is to do them yourself. Especially as services have disappeared, they are more resentful about having to pay taxes, even ones that might restore those services.
And many of those who want to live in a place with better schools, better roads and bigger public libraries have taken Ms. Hamilton’s suggestion — they’ve moved to places that can afford to offer them. This includes many of my peers from high school who left for college or jobs and permanently settled in bigger, wealthier cities and towns around the region.
Over the summer, after the uproar about Ms. Singleton’s pay, library supporters gathered signatures for a special election that would have slightly increased the amount of county property taxes collected for the library, helping it pay off the new building and stave off closing altogether. It set off a new furor, even though the increase was estimated to cost about $20 a year for properties assessed at $100,000, and many people have properties valued at much less than that.
This worldview will continue to affect national elections. The most dominant news source here is Fox News, which I think helps perpetuate these attitudes. There’s another element, too: For decades, the dominant conservative theory of politics is that government should be run like a business, lean and efficient, and one of the biggest private employers here is Walmart, where Mr. James was working when he was elected.
There’s a prevailing sense of scarcity — it’s easy for people who have lived much of their lives in a place where $25 an hour seems like a high salary to believe there just isn’t enough money to go around. The government, here and elsewhere, just can’t afford to help anyone, people told me. The attitude extends to national issues, like immigration. Ms. Hamilton told me she’d witnessed, in Texas, a hospital being practically bankrupted by the cost of caring for immigrants and said, “I don’t want my tax dollars to be used to pay for people that are coming here just to sit on a government ticket.” Mr. Widener, who described himself as “more libertarian” than anything else, told me his heart goes out to migrant children who are held in detention centers at the border, but he blames the parents who brought them to this country.
Where I see needless cruelty, my neighbors see necessary reality.
The people left in rural areas are more and more conservative, and convinced that the only way to get things done is to do them yourself. Especially as services have disappeared, they are more resentful about having to pay taxes, even ones that might restore those services.
And many of those who want to live in a place with better schools, better roads and bigger public libraries have taken Ms. Hamilton’s suggestion — they’ve moved to places that can afford to offer them. This includes many of my peers from high school who left for college or jobs and permanently settled in bigger, wealthier cities and towns around the region.
Over the summer, after the uproar about Ms. Singleton’s pay, library supporters gathered signatures for a special election that would have slightly increased the amount of county property taxes collected for the library, helping it pay off the new building and stave off closing altogether. It set off a new furor, even though the increase was estimated to cost about $20 a year for properties assessed at $100,000, and many people have properties valued at much less than that.
Phillip Ellis, who was chosen to be
chairman of the library board right before the controversies began,
thought the outrage about the potential tax increase was more about
philosophy than actual numbers. “I think it’s just anti-tax anything,”
he said.
He recounted some of the complaints people in the county had made to him about the proposed increase. “They’d say, ‘So-and-so has a big farm and they may not even use the library,’” he recalled. He would tell them, “Well, I don’t have children and never use the school.” With that sort of mentality, he said, “no one will do anything.”
That was the crux of the issue — people didn’t want to pay for something they didn’t think they would use. I suspect that many residents are willing to pay for some institutions they see as necessary, like the sheriff’s department, but libraries, symbols of public education and public discourse, are more easily sacrificed.
The library tax vote was quickly scrapped: Instead, Mr. James has suggested extending a 1 percent sales tax that went into place in 2001 to help pay for a new hospital building. Residents are due to vote on the idea in March.
Many other counties have turned to sales taxes as property taxes dwindle: It means that people who stop to shop when they’re passing through pay it as well, but it’s also a tax that tends to fall harder on lower-income households. It is also likely to be more expensive for some residents than a property tax increase would have been, but it will be paid in small amounts over time at the grocery store and Walmart, and voters are less likely to notice it.
If the tax extension passes, it’s estimated to pay off the library debt in about a year. But it delays a reckoning on whether and how the people who live here should contribute to the well-being of the county’s infrastructure and services.
A considerable part of rural America is shrinking, and, for some, this means it’s time to go into retreat. Rather than pitching in to maintain what they have, people are willing to go it alone, to devote all their resources to their own homes and their own families.
It makes me wonder if appeals from Democratic candidates still hoping to win Trump voters over by offering them more federal services will work. Many of the Democratic front-runners have released plans that call for more federal tax investment in rural infrastructure. Mr. Widener told me he had watched some of the Democratic debates, and his reaction was that everything the candidates proposed was “going to cost me money.”
Economic appeals are not going to sway any Trump voters, who view anyone who is trying to increase government spending, especially to help other people, with disdain, even if it ultimately helps them, too. And Trump voters are carrying the day here in Van Buren County. They see Mr. Trump’s slashing of the national safety net and withdrawal from the international stage as necessities — these things reflect their own impulse writ large.
They believe every tax dollar spent now is wasteful and foolish and they will have to pay for it later. It is as if there will be a nationwide scramble to cover the shortfall just as there was here with the library. As long as Democrats make promises to make their lives better with free college and Medicare for all sound like they include government spending, these voters will turn to Trump again — and it won’t matter how many scandals he’s been tarnished by.
https://www.nytimes.com/2019/10/04/opinion/sunday/trump-arkansas.html?action=click&module=Opinion&pgtype=Homepage
Health care is Americans’ number-one priority, based on recent polls, so it’s no wonder it’s been a hot topic in the Democratic primary.
Every candidate is offering a plan, ranging from Joe Biden’s Affordable Care Act upgrade to Bernie Sanders’ “Medicare for all” that would abolish private health insurance. Even the president is joining the bandwagon and unveiled his own Medicare plan.
On the high end, a full-scale single-payer heath care system would come at a steep price: I estimate about US$40 trillion over 10 years.
There is, however, a simpler and less costly path toward single-payer, and it may have a better chance of success: simply strike the words “who are age 65 or over” from the 1965 amendments to the Social Security Act that created Medicare, which would mean virtually everyone would be covered by the existing Medicare program.
I have been researching health care for over four decades. While this idea wouldn’t be single-payer – in which the government covers all health care costs – and private insurers would continue to operate alongside Medicare, I believe it would be a substantial improvement over the current system. And it might even be politically possible.
Moynihan, who held several roles in the Kennedy and Johnson administrations, was an original architect of the War on Poverty and a central figure in the evolution of health care policy in the latter half of the 20th century.
Many original Medicare advocates intended it to be the basis for universal health insurance. A key reason it serves so well as the foundation is that it includes a funding mechanism – the 2.9% Medicare payroll tax paid by you and your employer, alongside modest monthly premiums.
In addition, its limited scope, skimpy benefits and cost-sharing keep costs low. Medicare covers only a little more than half of participants’ health care spending, forcing many elderly Americans to buy private insurance and pay significant out-of-pocket expenses. A little over 11 million poorer participants also rely on Medicaid, especially for long-term care.
For example, Medicare covers hospitalization only after a person has paid the $1,364 deductible, and there’s a copay of $341 per day after 60 days and double that beyond 90. It also covers only 80% of the cost of doctor visits and the use of medical equipment – though only after a $185 deductible and the monthly $136 premium.
Still, it provides meaningful protection against the potentially crippling cost of accident or illness.
This is the way health insurance is provided in the United Kingdom and Canada. Sanders’ plan would follow this framework, even extending it to cover long-term care.
A simple expansion of Medicare would be more like a hybrid system in which the government program exists alongside private insurers, with residents free to use any combination of the two.
One of the reasons single-payer health care has failed in the United States is that even though it might eventually lower costs, it would require substantial new taxes up front. Sanders’ plan, as I noted earlier, would cost around $4 trillion a year. But because of its lower benefit levels and built-in revenue stream, a simple Medicare expansion would cost substantially less, maybe only half that.
In 2018, the last year with complete data, nearly 60 million Americans received Medicare benefits—including most elderly Americans and 9 million who were disabled. Total spending was over $700 billion that year, or an average of $11,800 per recipient.
A simple expansion would add the nondisabled population under age 65 to Medicare: 28 million without insurance, 66 million covered by Medicaid or the Children’s Health Insurance Plan and 176 million with private insurance. For the purposes of my calculations, which I last conducted earlier this year, I assume everyone eligible for Medicare would take advantage of the program.
Because the vast majority of the new enrollees would be younger
and healthier than current Medicare participants, the cost per person
would be much less, or about $5,527 for the once uninsured and $3,593 for everyone else. With a few other calculations, the total annual price tag of an expansion would tally around $836 billion.
I estimate that a full single-payer system would likely save about 20% of current spending, or nearly $700 billion in 2019. A simple Medicare expansion – the kind I’m suggesting here – wouldn’t save quite as much, but it’d still be significant.
So where would the savings come from?
To begin with, studies show that medical billing is more expensive in the U.S. than in many countries.
The U.S. health care system spends twice as much as Canada, for example, because more "payers" means more complexity. Savings from a simple Medicare expansion could reduce this waste by about $89 billion a year.
Another source of savings is on insurance administration. Private insurers spend more than 20% of total expenditures on overhead, compared with around 2% for traditional Medicare. Savings from moving everyone to Medicare would approach around $200 billion because of economies of scale, lower managerial salaries and more meager marketing expenses.
A third way a simple Medicare expansion would yield savings is by reducing the ability of hospital networks with market power to overcharge private insurers. By using its market power to negotiate lower prices, Medicare pays prices barely half as high and is able to pay 22% less for the same services as do private health insurers. If we all paid Medicare prices, we would save nearly $400 billion on hospital overcharging.
Making conservative estimates, and assuming that the expanded Medicare would only cover services it already does, these three areas then would save $220 billion, bringing the cost down to $618 billion.
https://www.commondreams.org/views/2019/10/07/how-us-could-afford-medicare-all
He recounted some of the complaints people in the county had made to him about the proposed increase. “They’d say, ‘So-and-so has a big farm and they may not even use the library,’” he recalled. He would tell them, “Well, I don’t have children and never use the school.” With that sort of mentality, he said, “no one will do anything.”
That was the crux of the issue — people didn’t want to pay for something they didn’t think they would use. I suspect that many residents are willing to pay for some institutions they see as necessary, like the sheriff’s department, but libraries, symbols of public education and public discourse, are more easily sacrificed.
The library tax vote was quickly scrapped: Instead, Mr. James has suggested extending a 1 percent sales tax that went into place in 2001 to help pay for a new hospital building. Residents are due to vote on the idea in March.
Many other counties have turned to sales taxes as property taxes dwindle: It means that people who stop to shop when they’re passing through pay it as well, but it’s also a tax that tends to fall harder on lower-income households. It is also likely to be more expensive for some residents than a property tax increase would have been, but it will be paid in small amounts over time at the grocery store and Walmart, and voters are less likely to notice it.
If the tax extension passes, it’s estimated to pay off the library debt in about a year. But it delays a reckoning on whether and how the people who live here should contribute to the well-being of the county’s infrastructure and services.
A considerable part of rural America is shrinking, and, for some, this means it’s time to go into retreat. Rather than pitching in to maintain what they have, people are willing to go it alone, to devote all their resources to their own homes and their own families.
It makes me wonder if appeals from Democratic candidates still hoping to win Trump voters over by offering them more federal services will work. Many of the Democratic front-runners have released plans that call for more federal tax investment in rural infrastructure. Mr. Widener told me he had watched some of the Democratic debates, and his reaction was that everything the candidates proposed was “going to cost me money.”
Economic appeals are not going to sway any Trump voters, who view anyone who is trying to increase government spending, especially to help other people, with disdain, even if it ultimately helps them, too. And Trump voters are carrying the day here in Van Buren County. They see Mr. Trump’s slashing of the national safety net and withdrawal from the international stage as necessities — these things reflect their own impulse writ large.
They believe every tax dollar spent now is wasteful and foolish and they will have to pay for it later. It is as if there will be a nationwide scramble to cover the shortfall just as there was here with the library. As long as Democrats make promises to make their lives better with free college and Medicare for all sound like they include government spending, these voters will turn to Trump again — and it won’t matter how many scandals he’s been tarnished by.
https://www.nytimes.com/2019/10/04/opinion/sunday/trump-arkansas.html?action=click&module=Opinion&pgtype=Homepage
How the US Could Afford 'Medicare for All'
Medicare,
America’s greatest success in advancing health care, succeeded
precisely because it was limited and had its own dedicated funding
streams.
by
Health care is Americans’ number-one priority, based on recent polls, so it’s no wonder it’s been a hot topic in the Democratic primary.
Every candidate is offering a plan, ranging from Joe Biden’s Affordable Care Act upgrade to Bernie Sanders’ “Medicare for all” that would abolish private health insurance. Even the president is joining the bandwagon and unveiled his own Medicare plan.
On the high end, a full-scale single-payer heath care system would come at a steep price: I estimate about US$40 trillion over 10 years.
There is, however, a simpler and less costly path toward single-payer, and it may have a better chance of success: simply strike the words “who are age 65 or over” from the 1965 amendments to the Social Security Act that created Medicare, which would mean virtually everyone would be covered by the existing Medicare program.
I have been researching health care for over four decades. While this idea wouldn’t be single-payer – in which the government covers all health care costs – and private insurers would continue to operate alongside Medicare, I believe it would be a substantial improvement over the current system. And it might even be politically possible.
Medicare and what it was meant to be
Striking the words “over 65” from the Medicare statutes was an idea championed by the late Sen. Daniel Patrick Moynihan.Moynihan, who held several roles in the Kennedy and Johnson administrations, was an original architect of the War on Poverty and a central figure in the evolution of health care policy in the latter half of the 20th century.
Many original Medicare advocates intended it to be the basis for universal health insurance. A key reason it serves so well as the foundation is that it includes a funding mechanism – the 2.9% Medicare payroll tax paid by you and your employer, alongside modest monthly premiums.
In addition, its limited scope, skimpy benefits and cost-sharing keep costs low. Medicare covers only a little more than half of participants’ health care spending, forcing many elderly Americans to buy private insurance and pay significant out-of-pocket expenses. A little over 11 million poorer participants also rely on Medicaid, especially for long-term care.
For example, Medicare covers hospitalization only after a person has paid the $1,364 deductible, and there’s a copay of $341 per day after 60 days and double that beyond 90. It also covers only 80% of the cost of doctor visits and the use of medical equipment – though only after a $185 deductible and the monthly $136 premium.
Still, it provides meaningful protection against the potentially crippling cost of accident or illness.
Giving Medicare to everyone
In its pure form, a single-payer program would make the government everyone’s insurer, largely replacing private insurance.This is the way health insurance is provided in the United Kingdom and Canada. Sanders’ plan would follow this framework, even extending it to cover long-term care.
A simple expansion of Medicare would be more like a hybrid system in which the government program exists alongside private insurers, with residents free to use any combination of the two.
One of the reasons single-payer health care has failed in the United States is that even though it might eventually lower costs, it would require substantial new taxes up front. Sanders’ plan, as I noted earlier, would cost around $4 trillion a year. But because of its lower benefit levels and built-in revenue stream, a simple Medicare expansion would cost substantially less, maybe only half that.
In 2018, the last year with complete data, nearly 60 million Americans received Medicare benefits—including most elderly Americans and 9 million who were disabled. Total spending was over $700 billion that year, or an average of $11,800 per recipient.
A simple expansion would add the nondisabled population under age 65 to Medicare: 28 million without insurance, 66 million covered by Medicaid or the Children’s Health Insurance Plan and 176 million with private insurance. For the purposes of my calculations, which I last conducted earlier this year, I assume everyone eligible for Medicare would take advantage of the program.
SCROLL TO CONTINUE WITH CONTENT
Substantial savings
Something that often gets lost in the debate over the cost of single-payer is that its implementation would lead to a host of savings that make the bill to taxpayers a lot less than the sticker price.I estimate that a full single-payer system would likely save about 20% of current spending, or nearly $700 billion in 2019. A simple Medicare expansion – the kind I’m suggesting here – wouldn’t save quite as much, but it’d still be significant.
So where would the savings come from?
To begin with, studies show that medical billing is more expensive in the U.S. than in many countries.
The U.S. health care system spends twice as much as Canada, for example, because more "payers" means more complexity. Savings from a simple Medicare expansion could reduce this waste by about $89 billion a year.
Another source of savings is on insurance administration. Private insurers spend more than 20% of total expenditures on overhead, compared with around 2% for traditional Medicare. Savings from moving everyone to Medicare would approach around $200 billion because of economies of scale, lower managerial salaries and more meager marketing expenses.
A third way a simple Medicare expansion would yield savings is by reducing the ability of hospital networks with market power to overcharge private insurers. By using its market power to negotiate lower prices, Medicare pays prices barely half as high and is able to pay 22% less for the same services as do private health insurers. If we all paid Medicare prices, we would save nearly $400 billion on hospital overcharging.
Making conservative estimates, and assuming that the expanded Medicare would only cover services it already does, these three areas then would save $220 billion, bringing the cost down to $618 billion.
After Hospitals’ Donation to New York Democrats, a $140 Million Payout
Gov. Andrew Cuomo raised payments to hospitals at a time when Medicaid spending was already drastically over budget.
by J. David Goodman - NYT - October 3, 2019
With Medicaid costs soaring in New York, the Greater New
York Hospital Association was pushing for the seemingly impossible: more
state reimbursement money.
It was a big ask, and for years, it had gone nowhere. Medicaid spending already represented an enormous and ever-growing share of the state budget, and Gov. Andrew M. Cuomo had taken steps to keep the program in check.
Then things changed.
As Mr. Cuomo was locked in a bitterly fought Democratic primary last year, his campaign asked the association, one of Albany’s most influential and richest power centers, to make a major donation to the State Democratic Party, according to a person familiar with the discussions.
The hospital association wrote two checks for the state party, totaling more than $1 million, campaign finance reports show. It was twice as much as the association, which represents New York City’s biggest health care institutions, had given to any campaign in at least a decade.
It was a big ask, and for years, it had gone nowhere. Medicaid spending already represented an enormous and ever-growing share of the state budget, and Gov. Andrew M. Cuomo had taken steps to keep the program in check.
Then things changed.
As Mr. Cuomo was locked in a bitterly fought Democratic primary last year, his campaign asked the association, one of Albany’s most influential and richest power centers, to make a major donation to the State Democratic Party, according to a person familiar with the discussions.
The hospital association wrote two checks for the state party, totaling more than $1 million, campaign finance reports show. It was twice as much as the association, which represents New York City’s biggest health care institutions, had given to any campaign in at least a decade.
Soon after, the state
quietly authorized an across-the-board increase in Medicaid
reimbursement rates for the first time since 2008 — a move officials
expect will cost the state roughly $140 million a year in extra payments
to hospitals and nursing homes.
The increase in Medicaid payments underscored the power of the hospital association, whose deep pockets and long alliance with an influential union, 1199 S.E.I.U., make it a fearsome presence in Albany. The association has increasingly eclipsed real estate as the Capitol’s most influential lobbying force, as it pours funds into political campaigns; its top lobbyist is among the biggest donors in New York.
Mr. Cuomo has denied that his decisions as governor are influenced by campaign contributions. State officials said the rate increase had been contemplated for months before the donations.
“Yes, health care costs are increasing and that is not a news flash, but rather a well-documented national phenomenon that has nothing to do with politics, the weather or religion,” said Richard Azzopardi, a spokesman for the governor. “The only news is how low our increases have been: 1.5 and 2 percent after flat funding for more than eight years.”
But the increased spending on hospitals raised questions over whether the Cuomo administration, as it provided a windfall to an influential lobbyist, ignored signs of a large and looming shortfall in the Medicaid budget: By March, the state had exceeded its budgeted allocation by roughly $1.7 billion, records show.
The increase in Medicaid payments underscored the power of the hospital association, whose deep pockets and long alliance with an influential union, 1199 S.E.I.U., make it a fearsome presence in Albany. The association has increasingly eclipsed real estate as the Capitol’s most influential lobbying force, as it pours funds into political campaigns; its top lobbyist is among the biggest donors in New York.
Mr. Cuomo has denied that his decisions as governor are influenced by campaign contributions. State officials said the rate increase had been contemplated for months before the donations.
“Yes, health care costs are increasing and that is not a news flash, but rather a well-documented national phenomenon that has nothing to do with politics, the weather or religion,” said Richard Azzopardi, a spokesman for the governor. “The only news is how low our increases have been: 1.5 and 2 percent after flat funding for more than eight years.”
But the increased spending on hospitals raised questions over whether the Cuomo administration, as it provided a windfall to an influential lobbyist, ignored signs of a large and looming shortfall in the Medicaid budget: By March, the state had exceeded its budgeted allocation by roughly $1.7 billion, records show.
Rather
than disclose that shortfall, officials attempted to conceal it during
budget discussions in March. They then pulled off a fiscal sleight of
hand, delaying $1.7 billion in scheduled Medicaid payments by three days
— effectively pushing the cost to the following year’s budget.
“It’s everything that’s wrong with Albany in one ugly deal,” said Bill Hammond, a health policy expert at the nonpartisan Empire Center who first noticed the budgetary trick. “The governor was able to unilaterally direct a billion dollars to a major interest group while secretly accepting its campaign cash and papering over a massive deficit in the Medicaid program.”
“It’s everything that’s wrong with Albany in one ugly deal,” said Bill Hammond, a health policy expert at the nonpartisan Empire Center who first noticed the budgetary trick. “The governor was able to unilaterally direct a billion dollars to a major interest group while secretly accepting its campaign cash and papering over a massive deficit in the Medicaid program.”
Medicaid,
which provides health care to those who cannot afford it, matches
federal funds to state spending. New York’s program has long been among
the nation’s most expensive, now reaching a total cost of more than $75 billion, and Albany shifts more of the burden to local counties than most states do.
Mr. Cuomo, from the start of his administration, took steps to reform the Medicaid system and rein in spending, including the freeze on rate hikes for hospitals and nursing homes. The efforts saw some success, with several years of declining costs per Medicaid enrollee. But recently that trend has reversed.
Spending has grown in part because people are living longer, long-term care costs are rising and there has been an expansion of the number of people covered by Medicaid, officials and analysts said. Democratic initiatives have also added costs, notably with the rise in New York’s minimum wage.
Mr. Cuomo, from the start of his administration, took steps to reform the Medicaid system and rein in spending, including the freeze on rate hikes for hospitals and nursing homes. The efforts saw some success, with several years of declining costs per Medicaid enrollee. But recently that trend has reversed.
Spending has grown in part because people are living longer, long-term care costs are rising and there has been an expansion of the number of people covered by Medicaid, officials and analysts said. Democratic initiatives have also added costs, notably with the rise in New York’s minimum wage.
As Medicaid spending grew last year, Mr. Cuomo found himself in a tricky situation: He was facing an energetic primary challenge from Cynthia Nixon,
who supported a “Medicaid for all” plan for the state. If he were to
try to crack down on Medicaid spending, he would risk alienating some
Democratic voters, as well as the hospital lobby.
Mr. Mujica, the state’s
top budget official, said he was not told about the Medicaid gap until
late March. “My fiscal planning people came to me and said we had a
Medicaid issue,” he recalled in a telephone interview.
By then, the Department of Health had already realized there was a problem, forcing the state to rely on what it calls “cash management” — paying the outstanding Medicaid bills from surplus discretionary cash in the budget.
Mr. Mujica said the governor was not told of the issue. “A payment lag of three days was not something that had to rise to that level,” he said.
Health officials disclosed the last-minute maneuver in a monthly report issued in March, adding that it was not the first time the state had done so; in recent years, the health department “managed the timing of payments across state fiscal years that ranged from $50 million to roughly $435 million,” the report said.
Around that time, with the state concerned over federal tax law changes, Mr. Cuomo did propose a major cut to Medicaid in his executive budget proposal. It was furiously opposed by the hospital association and 1199. A month later, the governor withdrew the plan. Mr. Mujica said neither he nor the governor were aware at the time of the budget shortfall.
The state still has no plan for what to do about the sharp rise in Medicaid spending, officials acknowledged.
Officials also have yet to account for the excess spending in its budget plan, raising the possibility that the payment delays could happen again next year. The monthly reports on Medicaid spending, which had been posted online, stopped appearing after March.
At the same time, insurgent Democrats were running successful primaries against longtime office holders, upending the balance of power in the State Senate.
“The politics were that the governor during the primary season was being pulled further and further to the left,” said Lev Ginsburg of the Business Council of New York State. “So at that point, he was not going to do things that were going to be unacceptable to the left.”
The governor instead found a stopgap: He negotiated a $2 billion payment to the state from the sale of a nonprofit Roman Catholic health insurance company, Fidelis, using that money to create a health care fund that he would control. Much of the money so far has gone to hospitals and other providers, in part to offset the cost of new labor contracts. (The sale is under review by the federal Medicaid agency.)
Robert Mujica, the state budget director, said the Medicaid reimbursement rate increase was directly tied to the Fidelis sale — and that he told the hospitals lobbying for the increase that it would be.
“They lobby for it every year,” Mr. Mujica said. “I was very matter of fact: If I have the money, I’ll be able to do it; if I didn’t have the money, I won’t be able to do it.”
The hospital association and the union lobbied hard for the Fidelis deal, Mr. Mujica said.
Then last August, Greater New York Hospital Association dumped more than $1 million into the housekeeping account of the State Democratic Party, which Mr. Cuomo controls.
“The politics were that the governor during the primary season was being pulled further and further to the left,” said Lev Ginsburg of the Business Council of New York State. “So at that point, he was not going to do things that were going to be unacceptable to the left.”
The governor instead found a stopgap: He negotiated a $2 billion payment to the state from the sale of a nonprofit Roman Catholic health insurance company, Fidelis, using that money to create a health care fund that he would control. Much of the money so far has gone to hospitals and other providers, in part to offset the cost of new labor contracts. (The sale is under review by the federal Medicaid agency.)
Robert Mujica, the state budget director, said the Medicaid reimbursement rate increase was directly tied to the Fidelis sale — and that he told the hospitals lobbying for the increase that it would be.
“They lobby for it every year,” Mr. Mujica said. “I was very matter of fact: If I have the money, I’ll be able to do it; if I didn’t have the money, I won’t be able to do it.”
The hospital association and the union lobbied hard for the Fidelis deal, Mr. Mujica said.
Then last August, Greater New York Hospital Association dumped more than $1 million into the housekeeping account of the State Democratic Party, which Mr. Cuomo controls.
Housekeeping
accounts, which can accept unlimited donations, are, in principle, for
spending related to party activities, not particular candidates. But in
practice, the state party has used its account to promote the governor’s agenda. (Mr. Cuomo proposed limiting donations to the housekeeping accounts in early 2018, but the changes were not adopted.)
Because of the nature of the account, the association’s donations were not publicly disclosed until more than a month after the election. Neither Mr. Cuomo’s campaign nor the hospital association disputed that a campaign official solicited the contribution.
Brian Conway, a spokesman for the hospital association, said the donations were part of a strategy to combat “terrible health care policies from Washington, D.C.”
“The contributions were in recognition of New York Democrats’ commitment to protecting the state’s health care delivery system in the face of this federal assault, which continues to this day,” Mr. Conway said.
The Medicaid rate increase went into effect in November; the Health Department placed a short public notice on Pages 90-91 of the State Register a day before the rate increases — 2 percent for hospitals and 1.5 percent for nursing homes — went into effect.
The new spending did not cause the Medicaid budget shortfall, but it added to it, and will continue to do so in future years, budget analysts said.
“This is a really big deal,” said Andrew Rein, president of the Citizens Budget Commission, a nonpartisan watchdog. “This is not just a delayed payment. It obfuscates the state’s fiscal reality.”
Because of the nature of the account, the association’s donations were not publicly disclosed until more than a month after the election. Neither Mr. Cuomo’s campaign nor the hospital association disputed that a campaign official solicited the contribution.
Brian Conway, a spokesman for the hospital association, said the donations were part of a strategy to combat “terrible health care policies from Washington, D.C.”
“The contributions were in recognition of New York Democrats’ commitment to protecting the state’s health care delivery system in the face of this federal assault, which continues to this day,” Mr. Conway said.
The Medicaid rate increase went into effect in November; the Health Department placed a short public notice on Pages 90-91 of the State Register a day before the rate increases — 2 percent for hospitals and 1.5 percent for nursing homes — went into effect.
The new spending did not cause the Medicaid budget shortfall, but it added to it, and will continue to do so in future years, budget analysts said.
“This is a really big deal,” said Andrew Rein, president of the Citizens Budget Commission, a nonpartisan watchdog. “This is not just a delayed payment. It obfuscates the state’s fiscal reality.”
By then, the Department of Health had already realized there was a problem, forcing the state to rely on what it calls “cash management” — paying the outstanding Medicaid bills from surplus discretionary cash in the budget.
Mr. Mujica said the governor was not told of the issue. “A payment lag of three days was not something that had to rise to that level,” he said.
Health officials disclosed the last-minute maneuver in a monthly report issued in March, adding that it was not the first time the state had done so; in recent years, the health department “managed the timing of payments across state fiscal years that ranged from $50 million to roughly $435 million,” the report said.
Around that time, with the state concerned over federal tax law changes, Mr. Cuomo did propose a major cut to Medicaid in his executive budget proposal. It was furiously opposed by the hospital association and 1199. A month later, the governor withdrew the plan. Mr. Mujica said neither he nor the governor were aware at the time of the budget shortfall.
The state still has no plan for what to do about the sharp rise in Medicaid spending, officials acknowledged.
Officials also have yet to account for the excess spending in its budget plan, raising the possibility that the payment delays could happen again next year. The monthly reports on Medicaid spending, which had been posted online, stopped appearing after March.
High Medical Bills Set Up Major Legal Showdown in California
Sutter Health, the big hospital group, is accused of abusing its market power to charge higher prices.
by Reed Abelson - NYT - October 3, 2019
n a less than a week, Sutter Health, a sprawling system of
24 hospitals and 5,500 doctors, will face a court trial over accusations
that it used its dominance in Northern California to stifle competition
and force patients to pay higher medical bills.
Sutter, the
nonprofit hospital group in Sacramento, with operating revenues of $13
billion, has long been viewed as the classic example of a hospital
system that got way too big. Its network of hospitals and services
enabled it to essentially corner much of the market, corralling insurers
and patients so that they couldn’t go elsewhere for less expensive or
better treatment, according to a lawsuit filed by Xavier Becerra, the California state attorney general. In bringing the case, Mr. Becerra cited research showing people in Northern California paid thousands of dollars more for certain hospital procedures than those in the southern part of the state.
While hospital care for a heart attack cost around $25,000 in San Francisco, it was closer to $15,000 in parts of Los Angeles. A doctor’s visit for a common cold cost $205 in San Francisco, compared to as low as $122 in Los Angeles.
“There’s a point where you’re starting to show signs of a bully,” Mr. Becerra said.
With giant hospital systems busily buying up hospitals and doctors, employers and insurers — as well as executives running comparable systems — are watching the Sutter case very closely. “This case is getting a tremendous amount of attention in hospital boardrooms across the United States,” said David A. Balto, a former federal regulator who is now an antitrust lawyer in Washington.
A new study released Thursday underscores concerns over the rapid increase of mergers among hospital groups and medical practices. Researchers from the Petris Center at the University of California at Berkeley show increased consolidation among doctors and hospitals across the country.
With giant hospital systems busily buying up hospitals and doctors, employers and insurers — as well as executives running comparable systems — are watching the Sutter case very closely. “This case is getting a tremendous amount of attention in hospital boardrooms across the United States,” said David A. Balto, a former federal regulator who is now an antitrust lawyer in Washington.
A new study released Thursday underscores concerns over the rapid increase of mergers among hospital groups and medical practices. Researchers from the Petris Center at the University of California at Berkeley show increased consolidation among doctors and hospitals across the country.
Sutter is hardly the only mega-system in the country. Nearly three-quarters of metropolitan areas were considered highly concentrated hospital markets in 2016, according to a recent analysis by the Health Care Cost Institute, a nonprofit group.
“Sutter was the first and they figured out how to make this model work,” said Glenn Melnick, a health economist at the University of Southern California who consulted with the lawsuit plaintiffs early on. “Other systems have copied the Sutter model,” he said.
“Sutter was the first and they figured out how to make this model work,” said Glenn Melnick, a health economist at the University of Southern California who consulted with the lawsuit plaintiffs early on. “Other systems have copied the Sutter model,” he said.
In
particular, more doctors’ practices are being subsumed by these
hospital networks. Looking at national data, the researchers found that
nearly half of all primary care doctors and 45 percent of specialists
worked for practices owned by a hospital or hospital group in 2018.
The trend is mirrored in California. In 2010, about a quarter of physicians, both specialists and primary care doctors, worked in groups owned by hospitals, according to the researchers, who were funded by the California Health Care Foundation, a nonprofit group. By 2018, 52 percent of specialists and 42 percent of primary care doctors were employed by practices owned by a hospital or hospital group.
The researchers point to that “market concentration” as a critical factor spurring “the fast growth of prices in California.” They describe the gap in health care costs between the northern and southern parts of California, which lead to higher insurance prices paid by employers and individuals.
“You see it in the premiums,” said Anthony Wright, the executive director of Health Access, a California consumer group.
The researchers found that a midlevel individual policy cost about $3,000 more a year in Sacramento than in Los Angeles in 2019.
Frustrated by the increasing clout of systems like Sutter, the lawsuits, including a complaint filed by employers and labor unions, represent a new way for regulators and businesses to try to rein in big hospital groups.
Jaime King, a law professor at U.C. Hastings College of the Law, described the approach as “a landmark case.” Rather than trying to block a merger over antitrust concerns, the Sutter trial is an attempt to attack the practices of a powerful hospital system.
The trend is mirrored in California. In 2010, about a quarter of physicians, both specialists and primary care doctors, worked in groups owned by hospitals, according to the researchers, who were funded by the California Health Care Foundation, a nonprofit group. By 2018, 52 percent of specialists and 42 percent of primary care doctors were employed by practices owned by a hospital or hospital group.
The researchers point to that “market concentration” as a critical factor spurring “the fast growth of prices in California.” They describe the gap in health care costs between the northern and southern parts of California, which lead to higher insurance prices paid by employers and individuals.
“You see it in the premiums,” said Anthony Wright, the executive director of Health Access, a California consumer group.
The researchers found that a midlevel individual policy cost about $3,000 more a year in Sacramento than in Los Angeles in 2019.
Frustrated by the increasing clout of systems like Sutter, the lawsuits, including a complaint filed by employers and labor unions, represent a new way for regulators and businesses to try to rein in big hospital groups.
Jaime King, a law professor at U.C. Hastings College of the Law, described the approach as “a landmark case.” Rather than trying to block a merger over antitrust concerns, the Sutter trial is an attempt to attack the practices of a powerful hospital system.
“The Sutter case is challenging a whole system of behavior,” she said.
Sutter, which disputes the attorney general’s findings, denies it is engaging in any inappropriate activity. “Sutter is not violating antitrust laws by integrating its hospital system and negotiating systemwide contracts with insurance companies,” it said in a statement. “There is no evidence that Sutter has hurt competition.”
Sutter, which disputes the attorney general’s findings, denies it is engaging in any inappropriate activity. “Sutter is not violating antitrust laws by integrating its hospital system and negotiating systemwide contracts with insurance companies,” it said in a statement. “There is no evidence that Sutter has hurt competition.”
Sutter contends that major insurers are behind the latest
efforts to target its system. “The largest health insurance companies in
the nation openly and actively support this lawsuit,” it said in a
statement. They “want to maximize profits by pushing patients into
insurance plans that limit their choices and result in surprise
billing,” it said.
The hospital group also disputes the Petris Center’s analysis, cited by the California attorney general, showing higher prices in Northern California resulting from big systems, saying it was flawed and based on incomplete data. It went on to describe the researchers as “pro-insurer.” Pointing to research Petris has done about how increased concentration among insurers leads to higher premiums, the center’s director says there is no evidence of any bias in the work.
In California, big systems are driving up prices, according to the Petris Center researchers, who examined prices for hospital stays and doctors’ visits from 2012 to 2016. In many cases, the care in California was much more expensive than elsewhere in the country. The average price for a normal birth was $9,751, compared with the national average of $7,295, adjusting for wage differences, according to the analysis.
The gap between prices in Northern California and the rest of the state remained high, averaging 24 percent for a normal delivery, after adjusting for wage differences within the state.
Unlike big hospital mergers, which come under scrutiny by state and federal officials, physician groups tend to be quietly absorbed. “Most of it is under the radar, and it doesn’t get picked up by the regulators,” said Richard Scheffler, the director of the Petris Center and one of the study’s authors. “It’s adding more power to a concentrated market,” he said.
The hospital group also disputes the Petris Center’s analysis, cited by the California attorney general, showing higher prices in Northern California resulting from big systems, saying it was flawed and based on incomplete data. It went on to describe the researchers as “pro-insurer.” Pointing to research Petris has done about how increased concentration among insurers leads to higher premiums, the center’s director says there is no evidence of any bias in the work.
In California, big systems are driving up prices, according to the Petris Center researchers, who examined prices for hospital stays and doctors’ visits from 2012 to 2016. In many cases, the care in California was much more expensive than elsewhere in the country. The average price for a normal birth was $9,751, compared with the national average of $7,295, adjusting for wage differences, according to the analysis.
The gap between prices in Northern California and the rest of the state remained high, averaging 24 percent for a normal delivery, after adjusting for wage differences within the state.
Unlike big hospital mergers, which come under scrutiny by state and federal officials, physician groups tend to be quietly absorbed. “Most of it is under the radar, and it doesn’t get picked up by the regulators,” said Richard Scheffler, the director of the Petris Center and one of the study’s authors. “It’s adding more power to a concentrated market,” he said.
Big systems view control of
physicians’s groups as key to determining where patients go for medical
care, particularly for lucrative procedures or tests.
“One of the biggest drivers in cost and quality is who the doctors work for,” said Dr. Zeyad Baker, the chief executive of ProHEALTH Care, a physician group in New York and New Jersey that is owned by Optum, a unit of UnitedHealth Group, the giant health insurer. Optum has become one of the nation’s largest employers of physicians.
Doctors who work for the big hospital systems are closely monitored, Dr. Baker said. “They are being checked on where they are sending their patients,” he said.
When a large system owns so many hospitals and physician practices in an area, private insurers have typically not pushed back. “Too many health plans conceded to the idea that if someone had market power, you pay them a lot,” said Dr. Farzad Mostashari, a former Obama administration official who is now the chief executive of Aledade, a company that helps independent physicians compete. “You concede and concede and concede.”
The prices now being paid by employers and insurers are often two to three times what Medicare pays for the same care, especially in areas where a large system controls many of the hospitals and doctors.
“The horse has left the barn,” said Erin Fuse Brown, who teaches health care law at Georgia State University. “You can’t rely on merger review to protect competition. That’s not possible. Competition has already been lost.”
Regulators don’t have many options, said Leemore Dafny, a former federal official with the Federal Trade Commission and a business professor at Harvard University. Mammoth systems could be broken up, but she acknowledged “it would be a battle.”
“One of the biggest drivers in cost and quality is who the doctors work for,” said Dr. Zeyad Baker, the chief executive of ProHEALTH Care, a physician group in New York and New Jersey that is owned by Optum, a unit of UnitedHealth Group, the giant health insurer. Optum has become one of the nation’s largest employers of physicians.
Doctors who work for the big hospital systems are closely monitored, Dr. Baker said. “They are being checked on where they are sending their patients,” he said.
When a large system owns so many hospitals and physician practices in an area, private insurers have typically not pushed back. “Too many health plans conceded to the idea that if someone had market power, you pay them a lot,” said Dr. Farzad Mostashari, a former Obama administration official who is now the chief executive of Aledade, a company that helps independent physicians compete. “You concede and concede and concede.”
The prices now being paid by employers and insurers are often two to three times what Medicare pays for the same care, especially in areas where a large system controls many of the hospitals and doctors.
“The horse has left the barn,” said Erin Fuse Brown, who teaches health care law at Georgia State University. “You can’t rely on merger review to protect competition. That’s not possible. Competition has already been lost.”
Regulators don’t have many options, said Leemore Dafny, a former federal official with the Federal Trade Commission and a business professor at Harvard University. Mammoth systems could be broken up, but she acknowledged “it would be a battle.”
While
the F.T.C., which oversees hospital mergers, cannot pursue
anti-competitive behavior in nonprofit groups after they have already
combined, state attorneys general and the Justice Department are
starting to study whether lawsuits like the ones against Sutter might
change the pattern of consolidation and result long-term in lower
prices.
“Banning these practices would be a step in the right direction,” Ms. Dafny said.
A similar case, brought by the Justice Department and the North Carolina attorney general, resulted in a settlement with Atrium Health, the state’s largest hospital group, over the practice of insisting that insurers not steer customers to less expensive hospitals. Atrium agreed to discontinue that practice.
“We can’t allow Atrium to use its size and market dominance to the detriment of health care consumers,” said Josh Stein, the North Carolina attorney general, in a statement at the time. Atrium did not acknowledge any wrongdoing and did not pay a financial penalty. In the case of Sutter, the system is accused of employing numerous tactics to protect its dominance and could be liable for more than $2 billion under state law because the injured parties could collect treble damages.
If Sutter is forced to change how it negotiates with insurers, “it could have a chilling effect on these practices nationwide,” said Ms. Dafny.
She cautioned that these lawsuits may not be able to fully address the leverage enjoyed by a powerful hospital group, even if it is forced to change its contracts with insurers. A big organization “would still have a lot of market power,” she said.
https://www.nytimes.com/2019/10/03/health/sutter-hospitals-medical-bills.html?action=click&module=Well&pgtype=Homepage§ion=Health
The
administration also issued an executive order in June demanding
hospitals and insurers make prices they charge patients more
transparent. Another in July encouraged novel treatments for kidney
disease.
Trump considered other proposals that did not reach fruition.
A federal judge in July shot down an executive order that would have forced drugmakers to display list prices in advertisements, and Trump scrapped another planned order that would have banned some rebate payments drugmakers make to payers.
The administration is mulling a plan to tie some Medicare reimbursement rates for drugs to the price paid for those drugs by foreign governments, Reuters reported.
https://www.nytimes.com/reuters/2019/10/03/us/politics/03reuters-usa-trump-healthcare.html?searchResultPosition=2
“Banning these practices would be a step in the right direction,” Ms. Dafny said.
A similar case, brought by the Justice Department and the North Carolina attorney general, resulted in a settlement with Atrium Health, the state’s largest hospital group, over the practice of insisting that insurers not steer customers to less expensive hospitals. Atrium agreed to discontinue that practice.
“We can’t allow Atrium to use its size and market dominance to the detriment of health care consumers,” said Josh Stein, the North Carolina attorney general, in a statement at the time. Atrium did not acknowledge any wrongdoing and did not pay a financial penalty. In the case of Sutter, the system is accused of employing numerous tactics to protect its dominance and could be liable for more than $2 billion under state law because the injured parties could collect treble damages.
If Sutter is forced to change how it negotiates with insurers, “it could have a chilling effect on these practices nationwide,” said Ms. Dafny.
She cautioned that these lawsuits may not be able to fully address the leverage enjoyed by a powerful hospital group, even if it is forced to change its contracts with insurers. A big organization “would still have a lot of market power,” she said.
https://www.nytimes.com/2019/10/03/health/sutter-hospitals-medical-bills.html?action=click&module=Well&pgtype=Homepage§ion=Health
Trump Woos Seniors With Order to Boost Medicare Health Program
By
THE VILLAGES, Fla. — U.S. President Donald Trump sought to
woo seniors on Thursday with an executive order aimed at strengthening
the Medicare health program by reducing regulations, curbing fraud, and
providing faster access to new medical devices and therapies.
The order, which Trump discussed during a visit to a retirement community in Florida known as the Villages, is the Republican president's answer to some Democrats who are pushing for a broad and expensive expansion of Medicare to cover all Americans.
Trump referred to such proposals as socialist and pledged to prevent them from coming to fruition, a political promise with an eye toward his 2020 re-election campaign in which healthcare is likely to be a major issue.
"They want to raid Medicare to fund a thing called socialism," Trump told an enthusiastic crowd in Florida, a political swing state that is critical to his goal of keeping the White House.
The order, which Trump discussed during a visit to a retirement community in Florida known as the Villages, is the Republican president's answer to some Democrats who are pushing for a broad and expensive expansion of Medicare to cover all Americans.
Trump referred to such proposals as socialist and pledged to prevent them from coming to fruition, a political promise with an eye toward his 2020 re-election campaign in which healthcare is likely to be a major issue.
"They want to raid Medicare to fund a thing called socialism," Trump told an enthusiastic crowd in Florida, a political swing state that is critical to his goal of keeping the White House.
The executive
order follows measures his administration rolled out in recent months
designed to curtail drug prices and correct other perceived problems
with the U.S. healthcare system. Policy experts say the efforts are
unlikely to slow the tide of rising drug prices in a meaningful way.
Trump suggested that drug companies were backing impeachment efforts in Washington, which he considers a "hoax," as a way to sabotage his efforts to make prescriptions affordable.
"We're lowering the cost of prescription drugs, taking on the pharmaceutical companies. And you think that's easy? It's not easy... I wouldn't be surprised if the hoax didn't come from some of the people that we're taking on," he said.
Medicare covers Americans who are 65 and older and includes traditional fee-for-service coverage in which the government pays healthcare providers directly and Medicare Advantage plans, in which private insurers manage patient benefits on its behalf.
Seniors are a key political constituency in America because a high percentage of them vote.
The order pushes for Medicare to use more medical telehealth services, which is care delivered by phone or digital means, leading to cost reductions by reducing expensive emergency room visits, an administration official told Reuters ahead of the announcement.
Trump suggested that drug companies were backing impeachment efforts in Washington, which he considers a "hoax," as a way to sabotage his efforts to make prescriptions affordable.
"We're lowering the cost of prescription drugs, taking on the pharmaceutical companies. And you think that's easy? It's not easy... I wouldn't be surprised if the hoax didn't come from some of the people that we're taking on," he said.
Medicare covers Americans who are 65 and older and includes traditional fee-for-service coverage in which the government pays healthcare providers directly and Medicare Advantage plans, in which private insurers manage patient benefits on its behalf.
Seniors are a key political constituency in America because a high percentage of them vote.
The order pushes for Medicare to use more medical telehealth services, which is care delivered by phone or digital means, leading to cost reductions by reducing expensive emergency room visits, an administration official told Reuters ahead of the announcement.
The
order directs the government to work to allow private insurers that
operate Medicare Advantage plans to use new plan pricing methods, such
as allowing beneficiaries to share in the savings when they choose
lower-cost health services.
It also aims to bring payments for the traditional Medicare fee-for-service program in line with payments for Medicare Advantage.
Trump's plans contrast with the Medicare for All program promoted by Bernie Sanders, a Democratic socialist who is running to become the Democratic Party's nominee against Trump in the 2020 presidential election.
Sanders' proposal, backed by left-leaning Democrats but opposed by moderates such as former Vice President Joe Biden, would create a single-payer system, effectively eliminating private insurance by providing government coverage to everyone, using the Medicare model.
"Medicare for All is Medicare for none," said Seema Verma, the administrator of the U.S. Centers for Medicare and Medicaid Services, on a conference call with reporters, calling the proposal a "pipe dream" that would lead to higher taxes.
Sanders has argued that Americans would pay less for healthcare under his plan.
The White House is eager to show Trump making progress on healthcare, an issue Democrats successfully used to garner support and take control of the House of Representatives in the 2018 midterm elections. Trump campaigned in 2016 on a promise to repeal and replace the Affordable Care Act, his predecessor President Barack Obama's signature healthcare law also known as "Obamacare." So far he has not repealed or replaced it.
In July, the U.S. Department of Health and Human Services (HHS) said it would propose a rule for imports of cheaper drugs from Canada into the United States. A formal rule has not yet been unveiled.
It also aims to bring payments for the traditional Medicare fee-for-service program in line with payments for Medicare Advantage.
Trump's plans contrast with the Medicare for All program promoted by Bernie Sanders, a Democratic socialist who is running to become the Democratic Party's nominee against Trump in the 2020 presidential election.
Sanders' proposal, backed by left-leaning Democrats but opposed by moderates such as former Vice President Joe Biden, would create a single-payer system, effectively eliminating private insurance by providing government coverage to everyone, using the Medicare model.
"Medicare for All is Medicare for none," said Seema Verma, the administrator of the U.S. Centers for Medicare and Medicaid Services, on a conference call with reporters, calling the proposal a "pipe dream" that would lead to higher taxes.
Sanders has argued that Americans would pay less for healthcare under his plan.
The White House is eager to show Trump making progress on healthcare, an issue Democrats successfully used to garner support and take control of the House of Representatives in the 2018 midterm elections. Trump campaigned in 2016 on a promise to repeal and replace the Affordable Care Act, his predecessor President Barack Obama's signature healthcare law also known as "Obamacare." So far he has not repealed or replaced it.
In July, the U.S. Department of Health and Human Services (HHS) said it would propose a rule for imports of cheaper drugs from Canada into the United States. A formal rule has not yet been unveiled.
Trump considered other proposals that did not reach fruition.
A federal judge in July shot down an executive order that would have forced drugmakers to display list prices in advertisements, and Trump scrapped another planned order that would have banned some rebate payments drugmakers make to payers.
The administration is mulling a plan to tie some Medicare reimbursement rates for drugs to the price paid for those drugs by foreign governments, Reuters reported.
https://www.nytimes.com/reuters/2019/10/03/us/politics/03reuters-usa-trump-healthcare.html?searchResultPosition=2
