Here is a link to a very good show - for NPR - on the underlying pathology of our American "health care" system that goes to the heart of the problem. Worth listening to.
https://itunes.apple.com/us/podcast/our-hamstrung-health-care-system/id121534955?i=1000389615345&mt=2
-SPC
G.O.P. Support of Senate Health Repeal Erodes During Break
by Jennifer Steinhauer and Robert Pear - NYT - July 7, 2017
WASHINGTON — A week that Senate Republicans had hoped would mobilize conservatives and shore up support for their measure to repeal the Affordable Care Act instead ended with eroding enthusiasm, as usually reliable Republican senators from red states blanched at its impact on rural communities.
With Congress set to return on Monday after a week’s recess, Republican lawmakers are increasingly aware that their seven-year promise to dismantle President Barack Obama’s largest policy achievement is deeply imperiled. Senator John Hoeven, Republican of North Dakota, signaled this week that he would not vote for the bill as written, following negative remarks from other senators with large poor and rural populations. That was the 10th defection.
Three other Republican senators, Bob Corker of Tennessee, Charles E. Grassley of Iowa and John Boozman of Arkansas, have withheld their support, although they have not declared their opposition, and others have largely remained silent.
Mr. Grassley told voters on Friday that he was unsure if he would vote for the Senate Republican bill in its current form, according to The Des Moines Register. “I don’t even know if we’re going to get a bill up,” said Mr. Grassley, an expert on health policy and taxes who has been in Congress for more than 40 years.
In small counties, rural hospitals and other health care providers are often the largest employers, and after years of railing against Mr. Obama’s law, Republican senators are now grappling with the impact of its possible demise.
“I am a product of rural Kansas,” Senator Jerry Moran, Republican of Kansas, told constituents this week. “I understand the value of a hospital in your community, of a physician in your town, of a pharmacy on Main Street.”
Well short of the 50 votes needed to pass his bill, Senator Mitch McConnell of Kentucky, the majority leader, repeated his fears this week that his party may be stuck tweaking the Affordable Care Act with Democrats. He raised the prospects of a bipartisan fallback last week on the driveway of the White House, and again on Thursday in Glasgow, Ky.
If Republicans cannot pass a bill on their own, they may need to work with Democrats on short-term measures to stabilize insurance markets that, by their account, are on the verge of collapse in many states.
The original Republican opposition to the repeal bill was led mainly by senators from states that have expanded their Medicaid programs under the Affordable Care Act, providing coverage to millions of people who had been uninsured. Now senators from largely rural states, where hospitals stand to lose millions of dollars under the bill, are expressing concerns.
On Thursday, Mr. Moran faced constituents upset at the prospect that the health law might be repealed, and he reiterated his opposition to the bill as it stands now.
Earlier this week, Mr. Hoeven, after a round table with health care executives in North Dakota, said he did “not support the Senate health care bill in its current form.”
Republican leaders may have worried most about Republican senators from states that expanded Medicaid and feared the loss of federal funds, but objections have also come from other places. Twenty Republican senators are from states that have expanded Medicaid; 32 are from states that have not.
Those nonexpansion states are concerned that the repeal bills devised by Republicans in both houses of Congress could harm their residents.
Health care providers and others in the nonexpansion states worry that the legislation would lock in significant disparities in federal Medicaid spending, to the disadvantage of those states.
“We need Medicaid parity,” said Herb B. Kuhn, the president of the Missouri Hospital Association. “Our research shows that per capita federal spending on Medicaid would be much higher in states that have chosen to expand Medicaid, two-thirds higher in 2026. We’d be left with ‘have’ and ‘have-not’ states.”
In Georgia, doctors, hospitals and business groups expressed similar concerns. “Without the increased federal funding that comes with Medicaid expansion, health care providers in nonexpansion states are left with all of the cuts, but none of the coverage,” said a letter to Senator Johnny Isakson, Republican of Georgia, from the Georgia Chamber of Commerce, the Georgia Academy of Family Physicians and the Georgia Hospital Association.
And in a letter to Mr. Moran, Kansas’ health care providers said the Senate bill was “uniformly inequitable to states like Kansas that have not expanded Medicaid.”
The Senate bill would provide some financial assistance to nonexpansion states, estimated by the Congressional Budget Office at $29 billion in the coming decade. But Mr. Kuhn said the funds “fall far short of true equity.”
In Texas, hospitals are putting pressure on Senator Ted Cruz, the state’s junior Republican senator, who is up for re-election next year. If the Senate bill is adopted, said Ted Shaw, the president of the Texas Hospital Association, more people will be uninsured and “more Texans will be forced to rely on hospital emergency departments for care.”
In rural areas where people tend to be older and sicker and have lower incomes, many hospitals say they are already struggling to survive and would be hit hard by the cuts to Medicaid in the repeal bills.
“I talked with the marketing director of the small hospital in Greenville, Maine, yesterday at lunch,” said Senator Susan Collins, Republican of Maine, who has opposed the bill. “She told me that the hospital is the biggest employer in town, with 180 employees, and that it relies on Medicaid for 65 percent of its revenues. It is unlikely that this community hospital could survive the cuts that are in the Senate bill.”
“In addition, if it were to close, the economic blow would be devastating because of the loss of so many good-paying jobs,” she continued. “I am not surprised that those of us who represent rural states that would be particularly hard hit by the Medicaid cuts tend to be particularly concerned” about the impact of the bill.
Republicans are quick to point out that while providers, patient advocacy groups and medical associations have generally opposed the bill, Republicans have avoided making the sorts of deals that the Obama administration cut with hospitals, drug companies, insurance companies and other groups to get its bill passed.
House Republicans are watching the efforts in the Senate with concern. They passed their own bill this spring that has proved unpopular, and they will not be pleased to have taken a difficult vote only to have the Senate punt, perhaps the worst-case situation for them as they prepare to defend their majority next year.
Many shied away from town hall-style meetings during the recess to avoid engaging with voters and protesters on the issue.
“I don’t want to have a situation where we just have a screaming fest, a shouting fest where people are being bused in from out of the district to get on TV because they are yelling at somebody,” said the House speaker, Paul D. Ryan, on Friday in his home state, Wisconsin. “That does nobody any good, and what I want to do is have a civil, good conversation with constituents, and that’s why I do all these different things, whether it’s planned tours, telephone town halls, office hours, and the rest.”
Senate GOP and White House plan final, urgent blitz to pass health-care law
by Kelsey Snell, Sean Sullivan and Robert Costa - Washington Post - July 7, 2017
The White House and Senate Republican leaders are planning a final, urgent blitz to pressure reluctant GOP senators to pass an overhaul of the Affordable Care Act before their month-long August recess.
Aware that the next 14 days probably represent their last chance to salvage their flagging endeavor, President Trump, Vice President Pence and Senate Majority Leader Mitch McConnell (R-Ky.) intend to single out individual senators and escalate a broad defense of the evolving proposal, according to Republicans familiar with their plans.
When Trump returns from Europe, he plans to counter the nonpartisan Congressional Budget Office’s analysis of the legislation — which shows that 22 million fewer people would have insurance coverage by 2026 than under the current law — with figures and analyses from conservative groups and Republicans that show more benefits and less disruption, should the bill pass, according to a White House official familiar with the strategy.
Pence, meanwhile, is being asked to help bring along skeptical GOP senators, including Sen. Dean Heller (Nev.), to whom he has already reached out personally.
McConnell is expected to place greater responsibility on Sen. Ted Cruz (R-Tex.) to pitch his controversial amendment that would allow insurers to offer plans that don’t meet ACA requirements — provided they also offer some that do. McConnell could ask Cruz to speak to Republican senators as soon as Tuesday, according to a person familiar with his strategy. Cruz has often talked about his amendment in the senators’ regular Tuesday lunches, but the burden of building support for the bill could be left to the firebrand conservative.
Sen. Lisa Murkowski (R-Alaska) said that she's reached out to Democrats in hopes of a bipartisan health-care deal. (Kyle Hopkins for The Washington Post)
The plans, which the Republicans described on the condition of anonymity, reflect the immense pressure GOP leaders feel as they aim to bring their bill to a vote on the Senate floor the week after next.
It is far from clear that the strategy will work. Even as Trump has sought to complement McConnell’s efforts with his own, he has also complicated the majority leader’s life — most notably urging a vote on strictly repealing the law if the current effort is unsuccessful. McConnell has floated a different backup plan: working with Democrats to stabilize the insurance markets.
The biggest challenge the leaders face is the widespread disagreement among Republican senators about how the nation’s health-care laws should be structured, as well as frustration about the secretive process McConnell used to craft his bill. It was that anger and discord that spoiled McConnell’s plan to vote on the bill before the Fourth of July recess and forced him to rewrite his draft.
“It may be that there is another discussion draft. If there is, I can’t tell you what’s in it. That’s what happens when you don’t have an open process,” Sen. Lisa Murkowski (R-Alaska) said Friday at an event with constituents in Homer, Alaska.
Murkowski is one of several key moderate senators whom McConnell desperately needs to win over with his next draft, the details of which could be released as soon as early next week. He can afford to lose only two of the 52 Republican senators if he hopes to pass the bill. No Democrats plan to vote for the measure, but Pence is ready to cast a tiebreaking vote if needed.
McConnell must also woo recalcitrant conservatives who came out against the initial draft the day it was released. They include Cruz, who has been pushing his amendment as a means of winning his own vote as well as those of his conservative allies.
“It adds additional choices so that people who can’t afford insurance now will be able to purchase some form of insurance that they want, that they desire, that helps meet their needs,” Cruz said Thursday at a town hall in Austin hosted by Concerned Veterans for America, a group backed by the billionaire conservative Koch brothers.
But Cruz’s amendment has drawn concern from critics who worry that it would destabilize the risk pool that brings together healthy and sick individuals, and that it could mean higher coverage costs for less-healthy people.
“There’s a real feeling that that’s subterfuge to get around preexisting conditions,” said Sen. Charles E. Grassley (R-Iowa), according to Iowa Public Radio. “If it is subterfuge and it has the effect of annihilating the preexisting-condition requirement that we have in the existing bill, then obviously I would object to that.”
It’s not yet clear whether Cruz’s proposal would be allowed under arcane Senate rules that Republicans are using to pass their bill with a simple majority rather than the supermajority required of most legislation. It’s also unclear what the impact would be on coverage levels or the deficit. The CBO is reviewing it along with other proposed changes, according to Republicans familiar with the situation. To some in McConnell’s orbit, Cruz is taking a risk by waging such a public campaign for his measure before those aspects are determined.
Cruz stands to be left responsible for the success or failure of a conservative amendment that could alienate other Republicans or undermine the special protections allowing the bill to pass along GOP party lines.
A Cruz spokeswoman did not respond to a request for comment Friday.
GOP leaders are also trying to win the support of Mike Lee (R-Utah) and Ron Johnson (R-Wis.), two Cruz allies who also opposed the draft legislation.
Inside the West Wing, Trump associates are working closely with McConnell’s legislative aides to track Republican senators. White House legislative director Marc Short speaks regularly with McConnell chief of staff Sharon Soderstrom and with GOP Senate leaders to hear their concerns, according to two Republicans involved in the discussions.
But while the relationship between the White House and McConnell’s operation has been tight, it is far from the only nexus driving the process.
Other influential White House figures, such as chief strategist Stephen K. Bannon, have their own networks of friendly lawmakers and aides on Capitol Hill, at times vexing the McConnell orbit as it tries to hold together the Senate Republican conference. Bannon, for instance, has built a strong rapport with Rep. Mark Meadows (R-N.C.), the chairman of the House Freedom Caucus, who is known for telling the White House what could or could not pass muster among his colleagues in the House even as the Senate leadership toils over the bill.
McConnell’s proposal to work with Democrats if things fall apart could be an equally stiff challenge, given the intense partisanship that has gripped lawmakers in recent years. Nevertheless, some Republicans are hopeful.
Murkowski said she has personally contacted Democrats to see whether they might be more willing partners in fixing the health-care system in a way that fits the needs of her state. She is one of a number of rank-and-file Republicans who are warming to the idea of abandoning plans for repeal and working with Democrats to fix the existing system.
This week, Sen. Susan Collins (R-Maine), another critic of the GOP bill, said she had also been in contact with Democrats who say they are waiting for McConnell to abandon repeal so they can move on to work with moderate Republicans on bipartisan health-care legislation.
“I had one Democratic senator call me last Thursday morning at 6:54 a.m. and say to me, ‘I really want to negotiate, but until this bill fails I’m prohibited from doing so,’ ” Collins said in an interview.
McConnell’s troubles have spread in recent weeks from the roughly half-dozen early GOP skeptics on either ideological flank. Even reliable leadership allies such as Sen. Jerry Moran (R-Kan.) have raised questions about the bill. Moran was the only Republican senator to face constituents at an unregulated town hall meeting this week, and he found himself flooded with voters demanding that he not support the Senate bill.
“I think there are many senators — more senators than are having town hall meetings — more senators out there who have genuine concerns with this legislation,” Moran told reporters after the meeting.
As GOP moves toward repeal, a government report shows Obamacare is working well
by Michael Hiltzik - LA Times- July 3, 2017
New data have been released contradicting Republican propaganda about the “failing” Affordable Care Act. What may be more embarrassing to the hardliners pushing repeal is that it comes from the government, specifically the Department of Health and Human Services.
Under Secretary Tom Price, the department has been a fount of anti-ACA rhetoric. But in an annual report about the ACA’s risk-management provisions issued Friday, Health and Human Services established that the key programs are “working as intended,” protecting insurers from unexpectedly large risks and moderating premiums for consumers.
Not only that, the data “would seem to refute the commonly held belief that the marketplace population is becoming sicker,” observes health economist Timothy Jost, writing in Health Affairs. In fact, according to the figures from 2016 in the latest report, the customer base is getting healthier and the risk pools have been stabilizing.
The report covers the ACA’s permanent risk adjustment program and its temporary reinsurance program, which ran from 2014 through the end of last year and then expired.
The first program imposes a charge on plans with lower average risks and transfers those funds to the higher-risk plans. It’s designed to be neutral within each state, and the HHS data show that’s exactly what has happened. Among California’s 15 eligible insurance carriers, about $392.7 million appears on both sides of the ledger for 2016.
The idea of risk adjustment is to remove the incentive for insurers to cherry-pick healthy customers. Although the ACA requires that insurers in the individual market sell insurance to all applicants without surcharging them for pre-existing conditions or their medical histories, there are many ways for insurers to discourage sicker patients from signing up — for instance, they can drop certain drugs from their prescription formularies or assemble narrow physician networks that skimp on certain specialties. Thanks to risk-adjustment, the more successful such plans are in achieving low-risk enrollment pools, the more they’ll get dinged for a payment each year.
Reinsurance was designed to protect insurers from individual high-cost enrollees. It was limited to the first three years of the individual exchanges, 2014-16, on the reasoning that by the end of that period insurers would have enough experience and sufficiently large customer bases to cover high-cost outliers without assistance. The provision was to pay out $20 billion to insurers via assessments on the industry over its three-year life. Payment requests came to about $7.5 billion for 2016.
Programs like these are anything but novel. They’re permanent features of Medicare Part D, the prescription drug program that was championed by Republican lawmakers when it was enacted in 2003. Part D also includes a risk-corridor provision, which places an assessment on insurers collecting large profits from the program and pays them out to insurers with commensurate losses.
The ACA also has a risk-corridor provision, but it was seriously hamstrung by congressional Republicans, who suddenly decided that it was an insurer “bailout” even though they wrote it into their Part D legislation. We’ve reported before on the flagrant hypocrisy of this act (we’re looking at you, Marco Rubio, R-Fla.), which merely drove up costs for consumers.
But Jost correctly observes that the risk management programs have worked, as is documented in Friday’s HHS report and the previous annual surveys. In 2016, reinsurance is estimated to have reduced net claim costs by 4%-6%. Its termination, Jost writes, “has been a major driver of premium increases for 2017 and 2018.” As a result, both the House and Senate Obamacare repeal bills include more reinsurance funds for the individual market.
The conclusions in the Department of Health and Human Services report confirm that the ACA marketplace was stabilizing through 2016, despite GOP claims to the contrary. In fact, the marketplace did better than expected.
“There were a number of reasons to believe that risk scores would be higher for the 2016 benefit year relative to the 2014 benefit year,” HHS reported. Among other factors, the average enrollee spent more months on the exchanges in 2016 than in previous years. That typically leads to higher claims, because it produces “increased numbers of reported diagnoses, higher risk scores, and greater paid claims amounts per member, even when the risk profile of the membership is held constant…. Despite these factors, risk scores were stable in the individual market and decreased by 4 percent in the small group market.”
What will the ACA’s enemies in Congress, the White House, and the office of HHS Secretary Tom Price make of this report, since it gives the lie to the argument that Obamacare is in a “death spiral” (House Speaker Paul Ryan, R-Wisc.)? The betting here is that if they can’t distort its findings to say the opposite of what’s there in black and white, then you won’t be hearing much about it at all.
So far, that’s the case: Price, who was last heard praising the Senate GOP’s incompetent and malevolent Obamacare repeal bill, has been silent on his own agency’s data showing that Obamacare is working as designed, and that it’s helping Americans get healthier and stay that way.
Attack of the Republican Deceptions
by Paul Krugman - NYT - July 7, 2017
Does anyone remember the “reformicons”? A couple of years back there was much talk about a new generation of Republicans who would, it was claimed, move their party off its cruel and mindless agenda of tax cuts for the rich and pain for the poor, bringing back the intellectual seriousness that supposedly used to characterize the conservative movement.
But the rise of the reformicons never happened. What we got instead was the (further) rise of the decepticons — not the evil robots from the movies, but conservatives who keep scaling new heights of dishonesty in their attempt to sell their reverse-Robin Hood agenda.
Consider, in particular, Republican leaders’ strategy on health care. At this point, everything they say involves either demonstrably dishonest claims about Obamacare or wild misrepresentations of their proposed replacement, which would — surprise — cut taxes for the rich while inflicting harsh punishment on the poor and working class, including millions of Trump supporters. In fact, there’s so much deception that I can’t cover it all. But here are a few low points.
Despite encountering some significant problems, the Affordable Care Act has, as promised, extended health insurance to millions of Americans who wouldn’t have had it otherwise, at a fairly modest cost. In states that have implemented the act as it was intended, expanding Medicaid, the percentage of nonelderly residents without insurance has fallen by more than half since 2010.
And these numbers translate into dramatic positive impacts on real lives. A few days ago the Indiana G.O.P. asked residents to share their “Obamacare horror stories”; what it got instead were thousands of testimonials from people whom the A.C.A. has saved from financial ruin or even death.
How do Republicans argue against this success? You can get a good overview by looking at the Twitter feed of Tom Price, President Trump’s secretary of health and human services — a feed that is, in its own way, almost as horrifying as that of the tweeter in chief. Price points repeatedly to two misleading numbers.
First, he points to the fact that fewer people than expected have signed up on the exchanges — Obamacare’s insurance marketplaces — and portrays this as a sign of dire failure. But a lot of this shortfall is the result of good news: Fewer employers than predicted chose to drop coverage and shift their workers onto exchange plans. So exchange enrollment has come in below forecast, but it mostly consists of people who wouldn’t otherwise have been insured — and as I said, there have been large gains in overall coverage.
Second, he points to the 28 million U.S. residents who remain uninsured as if this were some huge, unanticipated failure. But nobody expected Obamacare to cover everyone; indeed, the Congressional Budget Office always projected that more than 20 million people would, for various reasons, be left out. And you have to wonder how Price can look himself in the mirror after condemning the A.C.A. for missing some people when his own party’s plans would vastly increase the number of uninsured.
Which brings us to Republicans’ efforts to obscure the nature of their own plans.
The main story here is very simple: In order to free up money for tax cuts, G.O.P. plans would drastically cut Medicaid spending relative to current law, and they would also cut insurance subsidies, making private insurance unaffordable for many people not eligible for Medicaid.
Republicans could try to make a case for this policy shift; they could try to explain why tax cuts for a wealthy few are more important than health care for tens of millions. Instead, however, they’re engaging in shameless denial.
On one side, they claim that a cut is not a cut, because dollar spending on Medicaid would still rise over time. What about the need to spend more to keep up with the needs of an aging population? (Most Medicaid spending goes to the elderly or disabled.) La, la, la, we can’t hear you.
On the other side — even I was shocked by this one — senior Republicans like Paul Ryan dismiss declines in the number of people with coverage as no big deal, because they would represent voluntary choices not to buy insurance.
How is this supposed to apply to the 15 million people the C.B.O. predicts would lose Medicaid? Wouldn’t many people drop coverage, not as an exercise in personal freedom, but in response to what the Kaiser Family Foundation estimates would be an average 74 percent increase in after-tax premiums? Never mind.
O.K., so the selling of Trumpcare is deeply dishonest. But isn’t that what politics is always like? No. Political spin used to have its limits: Politicians who wanted to be taken seriously wouldn’t go around claiming that up is down and black is white.
Yet today’s Republicans hardly ever do anything else. It’s not just Donald Trump: The whole G.O.P. has become a post-truth party. And I see no sign that it will ever improve.
Congress Moves to Stop I.R.S. From Enforcing Health Law Mandate
by Robert Pear - NYT - July 3, 2017
WASHINGTON — Congress is moving to prevent the Internal Revenue Service from enforcing one of the more unpopular provisions of the Affordable Care Act, which requires most Americans to have health insurance or pay a tax penalty.
The plan is separate from Republican efforts to repeal the health care law, and appears more likely to be adopted because it would be written into the annual spending bill for the Treasury and the I.R.S.
But it has a similar purpose: to weaken the health law that President Trump and Republicans in Congress want to dismantle.
Congress has been working for months on a bill to repeal President Barack Obama’s health care law, including the coverage requirement. That provision, known as the individual mandate, is widely disliked, according to opinion polls.
In case that effort fails or bogs down, the House Committee on Appropriations has drafted a provision to stop the I.R.S. from enforcing the mandate. The restrictions, for the fiscal year that starts Oct. 1, are included in an appropriations bill that was approved on Thursday by the Subcommittee on Financial Services and General Government.
“None of the funds made available by this act may be used by the Internal Revenue Service to implement or enforce section 5000A of the Internal Revenue Code,” which imposes the tax penalty on people who go without insurance, the bill says.
The bill would also prohibit the I.R.S. from enforcing a requirement that employers and insurance companies inform the government of the name and Social Securitynumber of anyone to whom they provide health insurance coverage. The government uses these reports to help administer the individual mandate and other requirements.
Representative Tom Graves, Republican of Georgia and chairman of the subcommittee, said the panel had produced “a very conservative bill that aligns closely with President Trump’s budget.” He said the bill would hold the budget of the I.R.S. “below the 2008 level” while providing money to improve its customer service and cybersecurity.
Garrett Hawkins, a spokesman for Mr. Graves, explained the reason for the restrictions by saying, “While Congress works to pass President Trump’s health care plan, stopping the I.R.S. from implementing the harmful individual mandate helps provide relief for the families suffering under Obamacare.”
The penalty for failing to maintain coverage is either a flat dollar amount or a specified percentage of household income, whichever is greater. For an individual with annual income of $40,000 and no coverage during the year, the penalty would be $741, according to a calculator on the I.R.S. website. For a couple with annual income of $90,000 and no insurance, the penalty would be $1,732.
Employers and insurers are supposed to file “information returns” identifying each person to whom they provide coverage. If they fail to do so, they too may be subject to penalties.
Aides to the Senate majority leader, Mitch McConnell, Republican of Kentucky, were working Monday on his bill to repeal major provisions of the Affordable Care Act, with the hope that they could meet objections from about one-fifth of his 52-member caucus. He has sent proposed revisions to the Congressional Budget Office for analysis.
To mollify moderate Republicans, he is considering restoring some money to Medicaid or keeping a tax on the investment income of the most affluent Americans. To satisfy conservatives, he is considering a proposal that would allow insurers to sidestep most federal insurance rules if they offer at least one health plan that complies with those standards.
Republicans in the Senate and the House generally agree on one thing: “The individual mandate has no place in a free society,” in the words of Representative Michael C. Burgess, Republican of Texas and a physician.
Many supporters of the Affordable Care Act, including Democrats in Congress, describe the individual mandate as an important part of the law. The law itself said the mandate would increase the number of healthy people buying insurance. Their premium payments help defray the cost of care for less healthy people and thus lower premiums in general, Congress said in 2010.
Using similar logic, the Congressional Budget Office said last week that repealing the individual mandate penalty, by itself, could lead to higher premiums. And many insurers cite uncertainty about the mandate as a reason for seeking rate increases for 2018.
The Obama administration went to the Supreme Court in a successful effort to defend the individual mandate, but the Trump administration has indicated that it is not planning aggressive enforcement. On his first day in office, Mr. Trump told agencies to use their discretion, “to the maximum extent permitted by law,” to waive or grant exemptions from any fee, tax or penalty imposed by the Affordable Care Act.
Less than a month later the I.R.S. said it would accept tax returns from people who did not provide the requested information about whether they had coverage. The agency had planned to reject such returns.
The I.R.S. commissioner, John A. Koskinen, said that 6.5 million taxpayers reported paying a total of $3 billion in penalties for not having coverage in 2015. In addition, 12.7 million taxpayers claimed exemptions from the coverage requirement, on account of hardship or other factors. And more than four million people filed “silent returns,” not paying a penalty, not indicating if they had coverage and not claiming an exemption.
Hey, Democrats: Quit Defending Obamacare! Let’s Fix It—By Moving Toward a Single-Payer System
by Bill Curry - Salon - July 2, 2017
I’ve spent my life in politics, and the health care bill Mitch McConnell appears so desperate to revive is the single worst piece of legislation I’ve ever read. I say “appears” because I still can’t quite believe he wants to pass it. Its actual enactment would threaten his Senate majority as surely as it would the health of tens of millions of Americans. McConnell’s judgment is so clouded by partisanship and ideology one can easily see how he’d be blind to the bill’s moral dimensions. What’s harder to accept is that so sly a political fox wouldn’t sniff the enormous risk.
As is their custom, Democrats are doing all they can to help him reduce that risk. Hell-bent on proving they can beat something with nothing, they offer criticism but no alternative. Their one tangible vow is to save Obamacare, not fix it. They studiously avoid telling us how they’d do either. This approach has the advantage of allowing even the most corporatist Democrats to stage scripted protests; when nobody asks what anybody’s for, any street-fighting man can be a member of “the resistance.”
This fight feels like a reprise of the Democrats’ 2016 presidential campaign, heavy on moralizing, light on detail. Now as then, the words Democrats live by — “Why take a chance?” and “Don’t scare the donors” — leave them precious little to say. Sixty percent of Americans favor single-payer health care. Zero percent of Democratic leaders in Congress stand with them. The only other practical way to cut costs is a public option. Democrats only whisper its name. Why risk getting lost in the policy weeds or ruffling the feathers of their sometime allies in the insurance industry?
What they do instead is what Bill Clinton guru Dick Morris called “triangulation.” Democrats claim to hate Morris, but 20 years later still crib from his playbook. The idea is to seize the center-right and drive Republicans to the far right, so Democrats soft-pedal even a public option and train their sights on the richest Republican targets: a proposal to let insurers go back to denying coverage based on prior medical conditions, and one to slash Medicaid to finance another massive tax cut for plutocrats. Democrats talk of little else.
Clever, but what if Republicans figure out that to enact such policies would be covert suicide? What if they drop the tax cut and stretch out the Medicaid cuts to make them seem less draconian? Or ban insurers from denying coverage, but let them charge exorbitant prices for it? We may know soon. McConnell’s trying to do just that. It’s not inconceivable he’ll round up the 50 votes he needs. What then?
Republicans will have co-opted every Democratic talking point without adopting any Democratic policy they didn’t have to swallow just to pull their own caucuses together and save their own skins. The top 1 percent won’t get a windfall right away, but they’ll do fine, while millions of the poor and the middle class will be denied what all other developed countries regard as a basic human right. What will Democrats say? What they say now, I’d expect: Obamacare is good. Republicans are bad. Trump’s a liar and a fool. It’s not enough.
It doesn’t help in this fight that Democrats have retained the services of Nancy Pelosi and Chuck Schumer. Pelosi, once a pretty good speaker, is now a very bad minority leader. It’s a job that requires a firm grasp of policy and the ability to live off the land, neither of which she has. Like Pelosi, Schumer rose by raising money from the rich and doling it out to colleagues. At heart a tactician, he’s better at explaining how a policy benefits his party than how it may benefit the public. His deep ties to Wall Street subvert the party’s core values, identity and mission.
Pelosi and Schumer bleat on about “bipartisan legislative fixes” and challenge McConnell to “come to the table.” To discuss what? How many elderly and disabled to throw off Medicaid? They see the bipartisanship riff as a harmless pander, but it fosters a false equivalency and gives Republicans much-needed cover. There won’t be any bipartisan negotiation. Calling for one only makes GOP extremists look respectable. Fixing health care means moving in a whole other direction. Why waste time pretending otherwise?
Democrats spend lots of time “defending Obama’s legacy.” I suppose it’s unavoidable. But Obamacare doesn’t need to be defended. It needs to be fixed, and not just tweaked. We start with a strategic choice: Go direct to single-payer, or look first to a public option? As I know a bit about the latter, I’ll take a stab at framing the issue.
Twenty-six years ago, I proposed what I think was the first public option introduced in a legislative chamber in America. I’d just been elected Connecticut state comptroller and was the final signatory on the state employee health care contract. Negotiations with insurers were coming up and I was trying to get up to speed. Reading the plan, I saw how good it was and wondered if there were a way to open it up to the public. I found people in Connecticut and other states mulling over similar ideas, but nowhere was a program underway. I almost flinched. I was new to the job. The insurance industry, a local behemoth, wouldn’t be happy.
But the idea, if enacted, could transform the marketplace and it had an irresistible simplicity. We’d open the state-employee plan to small business, the self-employed, nonprofits, municipalities and municipal retirees. The program would be mandatory for municipalities and their retirees but voluntary for everyone else. If you liked it you could stay; if not, you could go right back to getting gouged in the individual market. Everyone paid their own way, so state taxpayers were off the hook. In fact, the state saved money, first due to lower per-capita overhead costs and then to lower prices due to increased market clout. In the fight over Obamacare, analyses by the Office of Management and Budget, the Congressional Budget Office and staff of the Bowles-Simpson Commission all found the same thing. Having government provide a public option lowers government’s own cost by a whole lot.
The big winners were those refugees from the individual market, small businesses and the self-employed. They often paid double what big corporate or government buyers paid and for worse coverage. Insurers said it was because they got sicker and it cost more to solicit and administer their business, but wouldn’t divulge data to back up the claim. I soon realized the industry was lying. Small businesses pay more for insurance for the same reason groceries cost more in inner cities; they had no market clout of their own. Our initial survey was startling. By lending them our clout we could cut their health care costs by a quarter to a third. That’s how much rent our antiquated, parasitic insurance industry was extracting from them.
The president of the Connecticut State Senate was my then-rival and now good friend John Larson, today a leader in Congress. He loved the idea and introduced the bill. It passed the Senate. The uproar from the industry was instantaneous and deafening. Angry men in expensive suits crawled the Capitol. The bill died in the House. It was reintroduced every year for 20 years, but never passed.
In 2008, candidate Barack Obama backed a public option and opposed a mandate that would force people to purchase insurance. He observed drily, and correctly, that the main reason most people don’t buy health care is because they can’t afford it. His chief primary opponent, Hillary Clinton, promised the opposite: a mandate but no public option. Obama made other related promises, among them that he’d allow Medicare to negotiate drug prices. He even vowed to let C-SPAN cameras into heretofore secret health care negotiations.
In office, Obama reversed himself. In early 2009, in meetings to which he forgot to invite C-SPAN, he made private pacts with leaders of the insurance and drug industries. He dropped negotiated drug prices and the public option, and picked up Clinton’s mandate. Experts said he needed it to pay for the whole thing. But it also guaranteed insurers permanent, expanded control of the “market.” According to his own analysts, he thus passed on the two greatest sources of savings in his entire plan.
The fatal flaw of the Affordable Care Act is that it costs too much. Early on in the debate over the bill, we heard the novel phrase “bending the cost curve,” a sure sign the White House had given up on actually cutting costs. Those hardest hit were the very small businesses and self-employed the public option was meant to serve. When the law took effect in 2014, a single person previously insured and earning $46,000 a year got no public subsidy but saw her premiums, deductibles and copays soar. Many lost what coverage they had, and paid a fine to boot. When they realized what had been done to them, they didn’t need Fox News to rile them up.
In 2016, backers of Hillary Clinton called Bernie Sanders’ single-payer plan a “fairy tale,” but the real fantasy is that you can grandfather in the insurance and pharmaceutical industries and still contain costs. Obamacare brought health insurance to upwards of 20 million people, an historic achievement. But for the millions of unsubsidized, the mandates and exchanges with which it is most closely identified just made life harder.
America is descending into cartel capitalism. It’s become a nation of middlemen we call “entrepreneurs” but who are really mere gatekeepers and toll collectors. Own the pipeline, own the product. It’s why Google gets money that should go to the New York Times (and Salon), and why Comcast owns NBC. New technologies account for some of the phenomenon. Pay-to-play politics accounts for the rest.
By reputable accounts, close to 30 cents of every health care dollar we spend goes to overhead. As it happens, Canada has the second-highest overhead in the world, at about 16 cents. If we could just tie Canada for last place rather than having it all to ourselves, we’d save enough money to pay for the health care of every one of the 20 million people served by Obamacare, and all of the 28 million it has yet to reach. We could even bring relief to those left out of its equation, who due to high copays and deductibles must splurge on insurance and scrimp on care.
A single-payer system is, hands down, the most cost-effective way to finance and administer health care. But how do we get there? Recent experiences in Vermont and California suggest the barriers to entry at the state level are high, due largely to fragmentation of program jurisdiction. Progressives, who at present are the only political force in the country dedicated to the kind of systemic change the system needs — and the public overwhelmingly supports — must consider their next move carefully.
We must build our system piece by piece, and at low transition cost. A “robust” public option, one that is self-administered as well as self-insured, would do the trick. Our workforce totals 125 million people. Government, nonprofits and businesses employing 100 or fewer people account for one-third of that total. If state employee plans were to invite the others in, they’d quickly recoup their investment and see savings of their own. A third of the country could soon be enjoying its own single-payer health care system, with the rest busting down the door to get in.
Bill Curry was White House counselor to President Clinton and a two-time Democratic nominee for governor of Connecticut. He is at work on a book on President Obama and the politics of populism.
If you're on a spouse's health plan, what happens if the worst should happen?
by David Lazarus - LA Times - July 4, 2017
My wife and I were chatting the other night about Republican efforts to reboot the U.S. healthcare system as a horror movie — stripping health coverage from more than 20 million Americans, boosting premiums for many and gutting Medicaid.
She finally brought the conversation home by asking: “What happens if something happens to you?”
It’s a question that should resonate with many families. As of 2015, according to the Kaiser Family Foundation, nearly a quarter of women in the United States under age 64 received health coverage through their spouse’s employer-sponsored plan.
“Because women are more likely than men to be covered as dependents, a woman is at greater risk of losing her insurance if she becomes widowed or divorced, her spouse loses a job, or her spouse’s employer drops family coverage or increases premium and out-of-pocket costs to unaffordable levels,” the foundation noted.
My family is no different from millions of others. Health, dental and vision coverage are provided by my employer (though not as affordably as once was the case). My self-employed wife and our teenage son are covered through my plan.
And I confess: When my wife asked what would happen if something happened to me, my answer was, “I’m not sure.”
Amy Bach, executive director of the advocacy group United Policyholders, said my uncertainty wasn’t surprising. She said there are a lot of variables when it comes to spousal benefits, and often it comes down to “whether or not your employer is generous.”
“Your family might be protected,” Bach told me. “Or it might not be.”
The Affordable Care Act was intended in part to mitigate such concerns. As originally conceived, a surviving spouse and any dependents would still be able to obtain affordable coverage on a state-run insurance exchange.
Things haven’t worked out that way. Premiums for Obamacare policies have risen much faster than expected because program enrollees were sicker than insurers had anticipated. A relatively weak coverage mandate made it cheaper in many cases for younger, healthier people to avoid joining the risk pool.
Now, of course, Republican lawmakers are determined to scrap Obamacare and replace it with a system that, according to the nonpartisan Congressional Budget Office, would result in as many as 23 million more Americans being uninsured within a decade.
Worse, President Trump and some GOP senators have floated the idea of repealing the Affordable Care Act without any replacement plan in sight — a move that would cause millions to lose insurance and wipe out all protections provided by the law, such as guaranteed coverage for people with pre-existing conditions.
The upshot, Bach said, is that “the spouse of a deceased person is in as much jeopardy as the Affordable Care Act. It’s a pretty serious concern.”
The first thing a family’s breadwinner should consider is life insurance. If you’re the sole or primary source of your household’s financial security, you’ll want to make sure your loved ones are protected in the event of your early demise.
That doesn’t just mean sufficient cash for housing, food and whatnot, but also enough for healthcare, which can be pricey.
For the surviving spouse — and here’s where I’m getting to the news-my-wife-can-use part — the law says a deceased employee’s company health plan can be maintained for up to three years.
The Consolidated Omnibus Budget Reconciliation Act, a.k.a. COBRA, requires that group health plans offer continued coverage for up to 18 months for workers and their dependents who lose their jobs or retire.
That coverage extension rises to 36 months for a plan’s dependents in the event of the death of a covered spouse (or a divorce, but that’s not a thing we’re worried about, honey). Keep this in mind, though: COBRA isn’t cheap.
“Once the employee is gone, there’s no longer any obligation for the employer to pay anything,” said James Milber, a San Francisco insurance broker specializing in health coverage.
That means some super-cool businesses may keep paying the bulk of their late employee’s coverage, at least until his or her family is back on its feet. But most probably won’t.
Average annual premiums for an employer-sponsored family plan totaled $18,142 last year, according to the Kaiser Family Foundation. Of that amount, workers contributed an average of $5,277.
Under COBRA, in other words, the surviving spouse would likely have to pay the full $18,000.
The most straightforward alternative, obviously, is to find work that comes with health benefits.
If that’s not possible, the smart move — at least for the time being — is to skip COBRA and turn instead to Covered California, the state’s Obamacare health-insurance exchange.
The health-insurance website eHealth says the average monthly premium for an individual Obamacare policy was $393 in the first two months of this year’s open enrollment, with an average deductible of $4,328. The average rate for a family plan was $1,021 a month, with an average $8,352 deductible.
The Affordable Care Act provides generous subsidies for people with limited incomes, relative to what’s called the federal poverty level. Basically, you’re eligible for some measure of financial assistance if your income is up to 400% of that limit.
What that means in practice is that an individual making between $16,644 and $47,520 a year would qualify for tax credits under the program. The subsidy eligibility for an adult and two kids, say, would be an annual income ranging from $28,181 to $80,640.
An estimated 85% of Americans and 90% of Californians qualify for some degree of financial assistance under the Affordable Care Act. The average Covered California subsidy last year was $499 a month, representing about 70% of total premiums.
An individual making $16,643 or less, or a family of three with an income less than $28,180, would look to Medicaid (Medi-Cal in California) for health coverage. A third of Californians are insured by the program.
Medi-Cal requires no premiums, just co-pays. The big downside is that many doctors won’t see Medi-Cal patients because of relatively low reimbursement rates.
The wild card here is Republican efforts to “improve” the U.S. healthcare system by cutting coverage requirements and Medicaid spending so they can lower taxes for rich people, which is about as vicious a goal as you’ll likely see from lawmakers who otherwise consider themselves decent, churchgoing people.
Janice Rocco, deputy California insurance commissioner, said it’s unclear how things would shake out if pending Republican healthcare legislation became law.
“The proposals we’ve seen so far would leave millions of people without affordable healthcare options and be devastating to a lot of people,” she said.
As such, I’ve decided the best way I can protect my family is by not dying.
For as long as I can, that is.
Universal, Government-Sponsored Health Care Is What Americans Really Want
by Chase Madar - Alternet - July 3, 2017
Enthusiasm for socialised healthcare is suddenly sweeping through the American political landscape, which means the lack of universal care (something that has long made the US an outlier among wealthy nations) may be ending.
Healthcare is a matter of right in every other wealthy industrialised nation, although guaranteed and administered in different ways. In Germany, the state sets prices with heavily regulated private providers for standard treatments and medications and citizens must pay according to their income level, often with state support. In Canada, each province is the ‘single payer’ of health services, contracting with independent providers, although with laws that discourage or prohibit private health insurance. In the UK, the National Health Service is fully socialised and its employees are civil servants, a true single payer system. The care provided by these systems is universal, heavily regulated and funded by the state. In all, medical care is far cheaper than in the US.
The US spends more on medical care, per person and as a percentage of gross domestic product, than any other nation: Costs are expected to hit 18% of American GDP next year, compared to an Organisation for Economic Cooperation and Development (OECD) nation average of around 11%. Despite this enormous expenditure, roughly 10% of American adults have no health insurance and millions more are underinsured, with medical debt the leading cause of personal bankruptcy. Nor is American healthcare yielding especially impressive results on a national scale, with life expectancy and infant mortality rates markedly worse than in peer nations.
Given the cost in the US, it is no surprise that politicians and pundits have viewed universal, state-run healthcare as something the country cannot afford, an inefficient government takeover that would result in higher taxes, lower standards of care and worsening costs. That the evidence from every other industrialised nation with universal care belies this has made little impact. Only 36% of Americans hold valid passports, and relate no more to the example of Danish healthcare than they would to reports of bacterial life on Mars. Yet the idea is suddenly catching on.
Socialising all healthcare was not part of the official debate on Obama’s Affordable Care Act of 2010 (Obamacare), his signature domestic legislation that reformed private health insurance markets, extended coverage to the previously uninsured without universalising it, and left the system more deeply entrenched.
The leading legislative reaction to Obamacare is not expansion but destruction. The Republican Party, with control of the executive branch and both branches of the federal legislature, is developing a massive tax cut for the wealthy, paid for by revoking healthcare coverage and heavily cutting Medicaid, the federal programme for the poor. According to the Congressional Budget Office, a federal body that runs cost-benefit analysis on proposed legislation, the version of the American Health Care Act 2017 (AHCA) passed by the House but not, at the time of writing, by the Senate would immediately strip 14 million Americans of their health insurance, and by 2026, 26 million would be without coverage.
The sudden prospect of millions losing medical coverage has energised Democrats (and some Republicans) who have packed local town hall meetings with their elected members of Congress, and have been raucous, even confrontational, about healthcare. (This focus contrasts with the Democratic Party elites’ fixation on the Trump circle’s alleged collusion with the Russian government, an issue more important to centrist pundits than constituents’ wallets and health.)
This popular response to Obamacare’s potential destruction has gone far beyond defence of the status quo and become radical by American standards, with demands for government-run universal healthcare, often called single payer but increasingly known as Medicare For All. ‘Single payer has become the most important policy issue because people have a dramatic fear of losing their healthcare now — and we have a solution,’ says RoseAnn DeMoro, executive director of National Nurses United and the California Nurses Association, powerful unions leading the charge for universal healthcare. A bill to establish single payer — the Expanded and Improved Medicare for All Act, HR 676 — is floating around the House of Representatives though it is far from summoning a majority.
At state level, enthusiasm for universal healthcare, long on the progressive back burner, is suddenly boiling over. New York state assemblyman Dick Gottfried has proposed a bill for years; the measure suddenly has a majority in the state’s lower legislative chamber. It will probably take several attempts to get this or similar bills signed into law: In 2014 a watered-down universal healthcare bill stalled out in Vermont; a Colorado ballot initiative for single payer tanked last November, and the governor of Nevada has just vetoed a massive expansion of Medicaid.
Yet these setbacks have only stimulated the appetite for change and legislation is moving in the state governments of Washington, Oregon and (probably soon) Illinois. New chapters of Physicians for a National Health Programme are springing up; and that group’s detailed proposals are being published in prestigious medical journals, while more physicians, fed up with fighting insurance companies to get reimbursed, are turning to single payer.
Although universalising healthcare is a matter of fairness and social justice, it is also, counter-intuitively, the only proven way to control healthcare costs. Savvy plutocrats, such as Berkshire Hathaway investment gurus Warren Buffett and Charlie Munger, have come to support state-run universal care, given that soaring healthcare costs drag down the competitiveness of American firms.
The chief savings are in reducing the administrative costs of private insurers, which add no medical value. A June 2016 study in the American Journal of Public Health by Adam Gaffney, Steffie Woolhandler, Marcia Angell and David U Himmelstein, all members of Physicians for a National Health Program, estimates that $500bn a year would be saved by this market restructuring.
Independently, the US government could follow multi-payer systems like Germany and flex its buying power to negotiate down prices of healthcare procedures, prescription drugs and medical technology, given that with Medicare and Medicaid it is overwhelmingly the largest purchaser. Intellectual property law, properly revised, could also push down prices by limiting patents on medicines (often partly developed with publicly funded research) and allowing low-cost generic equivalents to enter the market more quickly. Big Pharma’s profit margins are enormous, roughly twice the Fortune 500 average, evidence of cartel privileges at the expense of patients.
Development of new drugs should ultimately pass out of the private sector with its inefficiencies and profit-seeking conflicts of interest. As economist Dean Baker has proposed, a state-managed research institute could easily develop new drugs and sell them at cost with enormous savings: Contrary to capitalist folklore, many of the 20th century’s important breakthroughs, from penicillin to the polio vaccine, were developed by state and non-profit academic researchers.
The barriers to socialising medicine in the US are more political than economic, and are considerable. Many Republican elected officials have spoken out against the idea of health insurance as collectivist and morally wrong. Republican Scott Perry of Pennsylvania has declared that he shouldn’t be asked to pay towards maternity care since his family does not plan on any more children, while Republican Mo Brooks of Alabama has said he would make the AHCA require the sick to pay more than the healthy ‘who lead good lives’.
Despite such market Calvinism, it’s not clear how deep or enduring is this opposition to socialised medicine among Republican voters. In the early 1960s, Republicans and most of the medical profession militantly opposed Medicare (the American Medical Association hired Ronald Reagan to denounce the programme as communism in radio advertisements), before the programme was signed into law in 1965. Now Medicare is popular across the political spectrum and politically impregnable. And with both parties realigning their social bases, all bets are off. As DeMoro notes, ‘We’re a little perplexed by Donald Trump because he’s spoken favourably about Australia’s single payer system but now he’s got this draconian plan that takes a lot of people’s healthcare away.’
The first step will be convincing enough Democrats: no easy task. While Bernie Sanders campaigned on single-payer healthcare, his victorious rival Hillary Clinton condemned it as ‘utopian’, an odd choice of words for a system that works smoothly in many nations. The close ties between donors and lobbyists from the biomedical industry and the Democratic Party can be seen in the family of Senator Joe Manchin of West Virginia and his daughter Heather Bresch, CEO of Mylan, a firm which has jacked up the price of its EpiPen (an emergency device for allergic reactions) from $100 to $600 since 2009. Manchin defended his daughter’s decision.
But even if Washington Democrats remain opposed to universal care, activity at the state level is going ahead. For now, the big battleground for universal healthcare is California, where the upper legislative chamber on 1 June passed a non-committal Senate bill (562) calling for a single-payer state system without a specific plan to fund it. This is the result of much activist prodding: At the state’s most recent Democratic Party convention, members of National Nurses United chanted outside the event. Although the bill was just killed off by the Democratic state assembly speaker Anthony Rendon, it had support from both lieutenant governor Gavin Newsom, likely the state’s next governor, state attorney general Xavier Becerra and many other elected officials.
Is California’s single-payer plan financially feasible in the near term? The programme’s cost is estimated at $400bn, only half of which could be covered by the state’s general fund without raising the additional revenue necessary until money-saving reforms can be passed at state and federal level. Advocates are optimistic. ‘California is the sixth-largest economy in the world and passing single payer there will have a large ripple effect,’ says DeMoro. ‘We’re hoping California will lead the US in joining the rest of the industrialised world in providing healthcare for its people.’
California’s path to single payer will not be smooth. Even if such a measure eventually does get signed into law and state funds are found, Obama’s Affordable Care Act requires the federal government to grant a waiver for any state to set up its own publicly funded system. Conservative commitments to federalism aside, it is far from certain that the ultraconservative director of the federal Department of Health and Human Services, former Georgia Republican congressman Tom Price, would give California a waiver.
No one expects socialised medicine to happen all at once and without political resistance at every level of government. But even if it takes several election cycles, what was recently a dream is suddenly a defining issue in US domestic politics, and may soon be legislated into reality.
Healthcare is a matter of right in every other wealthy industrialised nation, although guaranteed and administered in different ways. In Germany, the state sets prices with heavily regulated private providers for standard treatments and medications and citizens must pay according to their income level, often with state support. In Canada, each province is the ‘single payer’ of health services, contracting with independent providers, although with laws that discourage or prohibit private health insurance. In the UK, the National Health Service is fully socialised and its employees are civil servants, a true single payer system. The care provided by these systems is universal, heavily regulated and funded by the state. In all, medical care is far cheaper than in the US.
The US spends more on medical care, per person and as a percentage of gross domestic product, than any other nation: Costs are expected to hit 18% of American GDP next year, compared to an Organisation for Economic Cooperation and Development (OECD) nation average of around 11%. Despite this enormous expenditure, roughly 10% of American adults have no health insurance and millions more are underinsured, with medical debt the leading cause of personal bankruptcy. Nor is American healthcare yielding especially impressive results on a national scale, with life expectancy and infant mortality rates markedly worse than in peer nations.
Given the cost in the US, it is no surprise that politicians and pundits have viewed universal, state-run healthcare as something the country cannot afford, an inefficient government takeover that would result in higher taxes, lower standards of care and worsening costs. That the evidence from every other industrialised nation with universal care belies this has made little impact. Only 36% of Americans hold valid passports, and relate no more to the example of Danish healthcare than they would to reports of bacterial life on Mars. Yet the idea is suddenly catching on.
Socialising all healthcare was not part of the official debate on Obama’s Affordable Care Act of 2010 (Obamacare), his signature domestic legislation that reformed private health insurance markets, extended coverage to the previously uninsured without universalising it, and left the system more deeply entrenched.
The leading legislative reaction to Obamacare is not expansion but destruction. The Republican Party, with control of the executive branch and both branches of the federal legislature, is developing a massive tax cut for the wealthy, paid for by revoking healthcare coverage and heavily cutting Medicaid, the federal programme for the poor. According to the Congressional Budget Office, a federal body that runs cost-benefit analysis on proposed legislation, the version of the American Health Care Act 2017 (AHCA) passed by the House but not, at the time of writing, by the Senate would immediately strip 14 million Americans of their health insurance, and by 2026, 26 million would be without coverage.
The sudden prospect of millions losing medical coverage has energised Democrats (and some Republicans) who have packed local town hall meetings with their elected members of Congress, and have been raucous, even confrontational, about healthcare. (This focus contrasts with the Democratic Party elites’ fixation on the Trump circle’s alleged collusion with the Russian government, an issue more important to centrist pundits than constituents’ wallets and health.)
This popular response to Obamacare’s potential destruction has gone far beyond defence of the status quo and become radical by American standards, with demands for government-run universal healthcare, often called single payer but increasingly known as Medicare For All. ‘Single payer has become the most important policy issue because people have a dramatic fear of losing their healthcare now — and we have a solution,’ says RoseAnn DeMoro, executive director of National Nurses United and the California Nurses Association, powerful unions leading the charge for universal healthcare. A bill to establish single payer — the Expanded and Improved Medicare for All Act, HR 676 — is floating around the House of Representatives though it is far from summoning a majority.
At state level, enthusiasm for universal healthcare, long on the progressive back burner, is suddenly boiling over. New York state assemblyman Dick Gottfried has proposed a bill for years; the measure suddenly has a majority in the state’s lower legislative chamber. It will probably take several attempts to get this or similar bills signed into law: In 2014 a watered-down universal healthcare bill stalled out in Vermont; a Colorado ballot initiative for single payer tanked last November, and the governor of Nevada has just vetoed a massive expansion of Medicaid.
Yet these setbacks have only stimulated the appetite for change and legislation is moving in the state governments of Washington, Oregon and (probably soon) Illinois. New chapters of Physicians for a National Health Programme are springing up; and that group’s detailed proposals are being published in prestigious medical journals, while more physicians, fed up with fighting insurance companies to get reimbursed, are turning to single payer.
Although universalising healthcare is a matter of fairness and social justice, it is also, counter-intuitively, the only proven way to control healthcare costs. Savvy plutocrats, such as Berkshire Hathaway investment gurus Warren Buffett and Charlie Munger, have come to support state-run universal care, given that soaring healthcare costs drag down the competitiveness of American firms.
The chief savings are in reducing the administrative costs of private insurers, which add no medical value. A June 2016 study in the American Journal of Public Health by Adam Gaffney, Steffie Woolhandler, Marcia Angell and David U Himmelstein, all members of Physicians for a National Health Program, estimates that $500bn a year would be saved by this market restructuring.
Independently, the US government could follow multi-payer systems like Germany and flex its buying power to negotiate down prices of healthcare procedures, prescription drugs and medical technology, given that with Medicare and Medicaid it is overwhelmingly the largest purchaser. Intellectual property law, properly revised, could also push down prices by limiting patents on medicines (often partly developed with publicly funded research) and allowing low-cost generic equivalents to enter the market more quickly. Big Pharma’s profit margins are enormous, roughly twice the Fortune 500 average, evidence of cartel privileges at the expense of patients.
Development of new drugs should ultimately pass out of the private sector with its inefficiencies and profit-seeking conflicts of interest. As economist Dean Baker has proposed, a state-managed research institute could easily develop new drugs and sell them at cost with enormous savings: Contrary to capitalist folklore, many of the 20th century’s important breakthroughs, from penicillin to the polio vaccine, were developed by state and non-profit academic researchers.
The barriers to socialising medicine in the US are more political than economic, and are considerable. Many Republican elected officials have spoken out against the idea of health insurance as collectivist and morally wrong. Republican Scott Perry of Pennsylvania has declared that he shouldn’t be asked to pay towards maternity care since his family does not plan on any more children, while Republican Mo Brooks of Alabama has said he would make the AHCA require the sick to pay more than the healthy ‘who lead good lives’.
Despite such market Calvinism, it’s not clear how deep or enduring is this opposition to socialised medicine among Republican voters. In the early 1960s, Republicans and most of the medical profession militantly opposed Medicare (the American Medical Association hired Ronald Reagan to denounce the programme as communism in radio advertisements), before the programme was signed into law in 1965. Now Medicare is popular across the political spectrum and politically impregnable. And with both parties realigning their social bases, all bets are off. As DeMoro notes, ‘We’re a little perplexed by Donald Trump because he’s spoken favourably about Australia’s single payer system but now he’s got this draconian plan that takes a lot of people’s healthcare away.’
The first step will be convincing enough Democrats: no easy task. While Bernie Sanders campaigned on single-payer healthcare, his victorious rival Hillary Clinton condemned it as ‘utopian’, an odd choice of words for a system that works smoothly in many nations. The close ties between donors and lobbyists from the biomedical industry and the Democratic Party can be seen in the family of Senator Joe Manchin of West Virginia and his daughter Heather Bresch, CEO of Mylan, a firm which has jacked up the price of its EpiPen (an emergency device for allergic reactions) from $100 to $600 since 2009. Manchin defended his daughter’s decision.
But even if Washington Democrats remain opposed to universal care, activity at the state level is going ahead. For now, the big battleground for universal healthcare is California, where the upper legislative chamber on 1 June passed a non-committal Senate bill (562) calling for a single-payer state system without a specific plan to fund it. This is the result of much activist prodding: At the state’s most recent Democratic Party convention, members of National Nurses United chanted outside the event. Although the bill was just killed off by the Democratic state assembly speaker Anthony Rendon, it had support from both lieutenant governor Gavin Newsom, likely the state’s next governor, state attorney general Xavier Becerra and many other elected officials.
Is California’s single-payer plan financially feasible in the near term? The programme’s cost is estimated at $400bn, only half of which could be covered by the state’s general fund without raising the additional revenue necessary until money-saving reforms can be passed at state and federal level. Advocates are optimistic. ‘California is the sixth-largest economy in the world and passing single payer there will have a large ripple effect,’ says DeMoro. ‘We’re hoping California will lead the US in joining the rest of the industrialised world in providing healthcare for its people.’
California’s path to single payer will not be smooth. Even if such a measure eventually does get signed into law and state funds are found, Obama’s Affordable Care Act requires the federal government to grant a waiver for any state to set up its own publicly funded system. Conservative commitments to federalism aside, it is far from certain that the ultraconservative director of the federal Department of Health and Human Services, former Georgia Republican congressman Tom Price, would give California a waiver.
No one expects socialised medicine to happen all at once and without political resistance at every level of government. But even if it takes several election cycles, what was recently a dream is suddenly a defining issue in US domestic politics, and may soon be legislated into reality.
At parades and protests, GOP lawmakers get earful about health care
by David Weigel, Murray Carpenter and Julia O'Malley - Washington Post - July 4, 2017
For the 15th year, Sen. Susan Collins (R-Maine) spent July 4 marching through this town of 1,331, a short boat ride away from Canada. She walked and waved, next to marching bands and Shriner-driven lobster boats. Her constituents cheered — and then asked whether she would vote against repealing the Affordable Care Act.
“There was only one issue. That’s unusual. It’s usually a wide range of issues,” Collins said in an interview after the parade. “I heard, over and over again, encouragement for my stand against the current version of the Senate and House health-care bills. People were thanking me, over and over again. ‘Thank you, Susan!’ ‘Stay strong, Susan!’ ”
Collins, whose opposition to the Better Care Reconciliation Act helped derail last week’s plans for a quick vote, is being lobbied to smother it and make Congress start over. Republicans, who skipped the usual committee process in the hopes of passing a bill quickly, are spending the Fourth of July recess fending off protesters, low poll numbers and newspaper front pages that warn of shuttered hospitals and 22 million people being shunted off their insurance. It was a bill, Collins said, that she just couldn’t vote for.
“If you took a blank sheet of paper and said, ‘How could we get a bill that would really hammer Maine,’ this would be it,” said Sen. Angus King (I-Maine), who walked ahead of Collins in the parade.
Few Republicans have responded like Collins, who let voters know where to find her. Last month, when Congress broke for the long holiday, just four of the Senate’s 52 Republicans — Collins, Sen. Ted Cruz (R-Tex.), Sen. Dean Heller (R-Nev.), and Sen. Lisa Murkowski (R-Alaska) — announced appearances at Fourth of July parades. Just three — Cruz, Sen. Jerry Moran (R-Kan.) and Sen. Bill Cassidy (R-La.) — said they would hold public town hall meetings. All have criticized the bill; three “no” votes would sink it.
Still, the relative scarceness of the senators — more of them joined a delegation to Afghanistan this week than scheduled town halls — challenged the busy liberal “resistance” movement. Since the repeal debate began, protesters have made direct confrontations with elected officials a central part of their opposition to the Republican bill — copying what worked for tea party activists, who packed Democratic town halls during the lengthy 2009-2010 Affordable Care Act debate.
In the run-up to July 4, activists shared details of Republican appearances on sites created by the progressive group Indivisible (“Red, White, and You”) and the crowd-sourced Town Hall Project. Democratic senators who spoke at a June 28 rally outside the Capitol repeatedly urged activists to make noise wherever they saw Republicans. It was the protesters, they said, who had repeatedly spoiled Republicans’ plans to pass a bill and move on to tax restructuring. A president who had once floated a special session of Congress to repeal the Affordable Care Act had become distracted by feuds with the media. The “resistance,” Democrats said, had not become distracted by anything.
“Thinking back to February recess, it was all we could do to keep up with your energy and follow all the incredible actions you took,” Indivisible organizers wrote in a weekend fundraising message to supporters. “Over June, we were able to [move] methodically to target senators in specific states while also facilitating coordinated actions across the country. And as the delayed bill proves — THIS WORKS!”
Over the weekend, and on July 4, activists had only a few chances to prove it. In Kentucky, Senate Majority Leader Mitch McConnell (R-Ky.) navigated around an estimated 85 protesters — many organized by Planned Parenthood — to tell Hardin County Republicans that he was still trying to solve the “Rubik’s Cube” called the Better Care Reconciliation Act.
“Obamacare is a disaster,” said McConnell, according to video captured by the Louisville Courier-Journal. “No action is not an option. But what to replace it with is very challenging.”
McConnell did not explain how the Better Care Reconciliation Act might change, and some of the ideas floated to win votes have fallen flat with skeptical lawmakers. The idea of offering subsidies for cheaper plans that did not include the Affordable Care Act’s “essential health benefits,” favored by Cruz as a compromise, did not satisfy Collins.
“If you have a health savings account that is federally funded, that equals the deductible, that can work, but it has to be designed right,” Collins said. “I don’t want to see insurance that’s not really insurance.”
The Republicans' time-crunched effort to pass a health-care bill is hitting a lot of resistance in the Senate. The Post's Paige Cunningham explains five key reasons the party is struggling to move their plan forward. (Video: Jenny Starrs/Photo: Jabin Botsford/The Washington Post)
Yet with protesters kept outside, McConnell faced no interruptions or skeptical questions. Cruz faced something else in McAllen, Tex., a city on the Mexican border that had voted heavily for Hillary Clinton last year. Early Tuesday morning, as Cruz grabbed a microphone, protesters behind a short fence waved signs reading “No Transfer of Wealth 4 Our Health” and “No Repeal, No Medicaid Cuts.” Supporters with Cruz gear tried, in vain, to drown them out.
“Isn’t freedom wonderful?” Cruz asked. “In much of the world, if protesters showed up, they would face violent government oppression. In America, we’ve got something different.”
In a follow-up interview with the Texas Tribune, Cruz characterized the protesters as members of “a small group of people on the left who right now are very angry.” Other Republicans used similar language to explain why cutting back on open forums made sense. Some have pivoted to call-in events, where there’s no threat of moments caught on video going viral. Some have cited the shooting of House Majority Whip Steve Scalise (R-La.) to argue that public forums would expose them and local police to unnecessary risks.
“The last thing we’re going to do is give in to a lot of left-wing activists and media,” Rep. Devin Nunes (R-Calif.) told a radio interviewer last month. “With these security situations, I don’t know how any member of Congress can do a town hall.”
The senators who did appear at Fourth of July events found ways to minimize the risks. Apart from Cruz, all appeared in fairly remote areas; Murkowski and Collins stopped by island towns far from the states’ population centers.
Heller, the only Republican up for reelection next year in a state President Trump lost, made a horseback appearance in Ely, Nev., the largest town in a rural county that gave Trump a 53.5-point landslide. Reporters who made the trek heard something that has become rare: Well-wishers asking a senator to vote for the Republican bill. (Heller opposed the first version but is being lobbied to vote for a revision.)
“Glad I could help them get away from the east coast and to one of the most beautiful parts of NV,” Heller tweeted at reporters after the Ely parade.
In Maine and Alaska, where Republican senators came out loud and early against the bill, residents applauded their lawmakers. Murkowski, who has criticized the Better Care Reconciliation Act for defunding Planned Parenthood and cutting Medicaid, was deluged by health-care questions as she walked a parade in the small town of Wrangell. Kirk Garbisch, 63, thanked her for being “the voice of reason” and slowing down the bill.
“She’s looking at the issues and not just following party lines,” he said. “There have been so few Republicans who can get in some good reason, rather than blindly following.”
Murkowski was hearing that particular sort of praise again and again. She moved comfortably through a crowd gathered to watch children street-race and lumberjacks saw logs.
“Most people don’t ask ‘for or against,’ ” she said. “They just say, ‘Make sure you’re taking care of our interests.’ In fairness for those that do the ‘for or against,’ everybody is pretty much [saying] they don’t think this is good for us.”
After the parades, there will be few chances for Better Care Reconciliation Act critics to face their senators during the recess. Cassidy’s town halls have passed and mostly focused on flood relief. Cruz’s events in Texas, sponsored by the conservative group Concerned Veterans for America, require attendees to register first.
Activists are encouraging one another to get more ambitious — and creative. Protesters in Colorado got headlines for sitting down at one of Sen. Cory Gardner’s (R-Colo.) offices and refusing to leave. The progressive Action Network urged protesters to wage more sit-ins on Thursday.
In New York, two Long Island activist groups are planning “health-care cook-outs” close to the offices of Rep. Peter T. King (R-N.Y.) and Rep. Lee Zeldin (R-N.Y.), under the motto “We can’t let seniors, children and people with disabilities GET BURNED!” Topher Spiro, the vice president of health policy at the Center for American Progress, urged activists on Twitter to keep organizing, whether or not Republicans would face them.
“Protesting Trumpcare this week is the pinnacle of democracy and patriotism,” he wrote.
As Seniors Get Sicker, They're More Likely To Drop Medicare Advantage Plans
by Fred Schulte - Kaiser Health News - July 5, 2017
When Sol Shipotow enrolled in a new Medicare Advantage health plan earlier this year, he expected to keep the doctor who treats his serious eye condition.
"That turned out not to be so," said Shipotow, 83, who lives in Bensalem, Pa.
Shipotow said he had to scramble to get back on a health plan he could afford and that his longtime eye specialist would accept. "You have to really understand your policy," he said. "I thought it was the same coverage."
Boosters say that privately-run Medicare Advantage plans, which enroll about one-third of all people eligible for Medicare, offer good value. They strive to keep patients healthy by coordinating their medical care through cost-conscious networks of doctors and hospitals.
But some critics argue the plans can prove risky for seniors in poor or declining health, or those like Shipotow who need to see specialists, because they often face hurdles getting access.
A recent report by the Government Accountability Office, the auditing arm of Congress, adds new weight to criticisms that some health plans may leave sicker patients worse off.
The GAO report, released this spring, reviewed 126 Medicare Advantage plans and found that 35 of them had disproportionately high numbers of sicker people dropping out. Patients cited difficulty with access to "preferred doctors and hospitals" or other medical care as the leading reasons for leaving.
"People who are sicker are much more likely to leave [Medicare Advantage plans] than people who are healthier,"James Cosgrove, director of the GAO's health care analysis, said in explaining the research.
David Lipschutz, an attorney at the Center for Medicare Advocacy, says the GAO findings were alarming and should prompt tighter government oversight.
"A Medicare Advantage plan sponsor does not have an evergreen right to participate in and profit from the Medicare program, particularly if it is providing poor care," Lipschutz says.
The GAO did not name the 35 health plans, though it urged federal health officials to consider a large exodus from a plan as a possible sign of substandard care. Most of the 35 health plans were relatively small, with 15,000 members or fewer, and had received poor scores on other government quality measures, the report said. Two dozen plans saw 1 in 5 patients leave in 2014, much higher turnover than normal, the GAO found.
Medicare Advantage plans now treat more than 19 million patients, and are expected to grow as record numbers of baby boomers reach retirement age.
Kristine Grow, a spokeswoman for America's Health Insurance Plans, an industry trade group, says Medicare Advantage keeps expanding because most people who sign up are satisfied with the care they receive.
She says that patients in the GAO study mostly switched from one health plan to another because they got a better deal, either through cheaper or more inclusive coverage.
Grow says many Medicare Advantage plans offer members extra benefits not covered by standard Medicare, such as fitness club memberships or vision or dental care, and do a better job of coordinating medical care to keep people active and out of hospitals.
"We have to remember these are plans working hard to deliver the best care they can," Grow says. Insurers compete vigorously for business and "want to keep members for the long term," she adds.
Some seniors, wary of problems ahead, are choosing to go with traditional Medicare coverage. Pittsburgh resident Marcy Grupp says she mulled over proposals from Medicare Advantage plans, but worried she might need orthopedic or other specialized health care and wanted the freedom to go to any doctor or hospital. She's decided on standard Medicare coverage and paid for a "Medigap" policy to pick up any uncovered charges.
"Everything is already in place," says Grupp, a former administrative assistant who turns 65 this month.
The GAO report on Medicare Advantage comes as federal officials are ramping up fines and other penalties against errant health plans.
In the first two months of this year, for instance, the federal Centers for Medicare and Medicaid Services fined 10 Medicare Advantage health plans a total of more than $4.1 million for alleged misconduct that "delayed or denied access" to covered benefits, mostly prescription drugs.
In some of these cases, health plans charged patients too much for drugs or failed to advise them of their right to appeal denials of medical services, according to government records. Industry watchers predict more penalties are to come.
Last month, CMS officials ended a 16-month ban on enrollment in Cigna Corp.'s Medicare Advantage plans. CMS took the action after citing Cigna for "widespread and systematic failures" to provide necessary medical care and prescription drugs, policies officials called a "serious threat to enrollee health and safety."
A flurry of whistleblower lawsuits have surfaced, too. In late May, Freedom Health, a Florida Medicare Advantage insurer, agreed to pay nearly $32 million to settle allegations that it exaggerated how sick some patients were to boost profits, while getting rid of others who cost a lot to treat.
Freedom Health allegedly kept a list of some "unprofitable" patients that it discouraged from staying in the health plan, while encouraging healthier, "more profitable" members to remain, according to the whistleblower suit. Federal regulations prohibit health plans from discriminating based on a person's health.
Asked by Kaiser Health News for comment, Freedom Health corporate counsel Bijal Patel emailed a statement that read, in part: "We agreed to resolve the case so that we can continue focusing on providing excellent care."
Casey Schwarz, a lawyer with the Medicare Rights Center, a consumer service organization, notes that health plans are required to have a formal process for patients to appeal denials of medical services. She says patients should know their rights and insist on them.
"We want people to vote with their feet and leave plans not serving them," Schwarz says.
Mitch McConnell, Master Tactician, Faces Daunting Challenge: A Health Bill
by Carl Hulse - NYT - July 7, 2017
WASHINGTON — Mitch McConnell excels at devising crafty ways for Senate Republicans to avoid paying a high price on politically explosive issues.
Take, for instance, his ingenious 2011 plan to clear the way for increases in the federal debt limit without Republican fingerprints. The McConnell maneuver turned the always-contentious process on its head and allowed Republicans to register their opposition to the increases while simultaneously permitting the necessary rise in the debt limit to avoid an economic meltdown. Even critics tipped their hats.
Mr. McConnell, Republican of Kentucky and the majority leader, is going to need all the creativity he can muster to escape his current predicament.
The Senate’s Republican health care plan is in real trouble, and the fight that will be renewed next week on Capitol Hill is exposing the limits of Mr. McConnell’s prowess in bending his colleagues and the Senate to his will. Deep understanding of Senate procedures and shrewd political instincts can only get you so far when many of your colleagues are truly anxious and fear the consequences of taking major action on health care policy.
“It could not be more different from the difficulty of raising the debt limit because it is policy that affects millions of Americans and health care is so personal,” said Senator Susan Collins, Republican of Maine, who is among those who have balked at her party’s plan.
Mr. McConnell knew his best chance to pass the bill was a quick strike before the Fourth of July recess, and he was right. As expected, the weeklong break has only complicated his already difficult task. Even usually certain Republican votes such as Senators Jerry Moran of Kansas and John Hoeven of North Dakota have joined the cadre of Republicans expressing resistance to the health care proposal, creating more distance between Mr. McConnell and the magic number of 50 votes needed to pass the bill.
At the same time, conservative advocacy groups have intensified their demand that Republicans follow through on their repeated promises to repeal former President Barack Obama’s health care bill or incur their wrath. They have also gotten behind a proposal by two Republican senators, Ted Cruz of Texas and Mike Lee of Utah, that would move the health care proposal to the right and potentially drive off more support than it gathers.
“Repealing Obamacare was the central and most explicit promise of G.O.P. Senate candidates for eight years,” Ralph Reed, the head of the Faith and Freedom Coalition, wrote on Facebook this week. “The Senate must act now to repeal Obamacare to keep trust with the American people. To fail to do so will have far-reaching consequences for our health care system, our economy, and at the ballot box in 2018.”
Mr. McConnell has expressed mounting frustration at the inability of the unified Republican government to make progress on health care and other issues.
“The American people said, ‘We elected a Republican president, a Republican House and a Republican Senate and we want to see some results,’” he told an audience in Kentucky over the recess. “And I can’t say anything other than I agree with you. But it is not easy, and we are going to continue to wrestle with this and try to get it done.”
“No action is not an option,” he emphasized. That remark seemed aimed at quelling calls to simply repeal the law, an alternative that faces steep procedural obstacles because it would require Democratic votes and Democrats will not provide them.
On Thursday, Mr. McConnell again suggested that Republicans might find themselves in negotiations with Democrats on a modest plan to shore up the existing health insurance exchanges if they cannot advance their own legislation. His comment both laid the groundwork for a defeat while trying to provide an incentive for Republicans to get behind the leadership plan.
The health care fight does not play to Mr. McConnell’s typical strengths. It is an extremely complex policy matter, and Mr. McConnell has often reveled more in tactics and procedure than the arcana of community rating and adverse selection.
Even some fellow Republicans acknowledge that Mr. McConnell’s refusal to allow hearings on the health care proposal has backfired, denying Republican lawmakers the opportunity to hear from experts, gauge the strengths and weaknesses of the legislation, and discern potential lines of attack as well as the support for any changes.
Republicans are finding how constituents respond when Congress tries to take a benefit away. The closest comparison might be the decision in 1989 to repeal a new Medicare catastrophic coverage law.
But it was overturned in only about a year with the enthusiastic approval of the people who were supposed to benefit from it. The Affordable Care Act has had much more time to become enmeshed in the health care system, with millions of people relying on it — especially those receiving guaranteed coverage for pre-existing conditions. The beneficiaries of the law are now making their sentiments clearly known.
“I think it is so difficult for Mitch to thread the needle on this given the narrow majority in the Senate,” Ms. Collins said. “I just don’t see how he does it. But I don’t ever underestimate his abilities.”
Mr. McConnell has had failures in the past, like his inability to prevent the 2013 government shutdown. But he has more often fashioned a way out that few others saw, whether it was cutting a deal on student loans and transportation spending or keeping the Congress and the country from plunging over a fiscal cliff.
He has compared the current situation to a Rubik’s cube, where he is busily twisting and turning until he finally lines up the elusive 50 votes. But in this case, he is discovering that there is no solution within easy reach.
The Hidden Subsidy That Helps Pay for Health Insurance
by Kate Zernike - NYT - July 7, 2017
As Republican senators work to fix their troubled health care bill, there is one giant health insurance subsidy no one is talking about.
It is bigger than any offered under the Affordable Care Act — subsidies some Republicans loathe as handouts — and costs the federal government $250 billion in lost tax revenue every year.
The beneficiaries: everyone who gets health insurance through a job, including members of Congress.
Much of the bitter debate over how to repeal and replace the law known as Obamacare has focused on cutting Medicaid and subsidies that help low-income people buy insurance.
But economists on the left and the right argue that to really rein in health costs, Congress should scale back or eliminate the tax exclusion on what employers pay toward employees’ health insurance premiums. Under current law, those premiums are not subject to the payroll or income taxes that are taken out of employees’ wages, an arrangement that vastly benefits middle- and upper-income people.
That one policy tweak could reduce health care spending, stabilize the health insurance market and, according to Congressional Budget Office estimates, shrink the federal budget deficit by between $174 billion and $429 billion over a six-year period.
Lawmakers briefly pondered the idea this year but quickly abandoned it, recognizing how politically explosive it would be. Still, as Congress seeks to push ahead with major changes to the health system and the tax code, there has been a growing awareness of how long-established tax subsidies — like the mortgage deduction for homeowners — have contributed to economic inequality in the United States.
Republicans who have been fighting for seven years to repeal the Affordable Care Act argue that the Medicaid expansion has cost too much, that the subsidies for lower-income insurance customers are in some cases handouts. Senator Orrin G. Hatch of Utah, the chairman of the Finance Committee, likened the expenditures recently to “the dole.”
“The public wants every dime they can be given,” he told reporters in May as he left a health care meeting to explain the difficulty in cutting those programs. “Let’s face it, once you get them on the dole, they’ll take every dime they can.”
The tax exclusion, though, is also a subsidy, one that disproportionately helps the affluent, who are more likely to receive generous health benefits from an employer and who fall into higher tax brackets, making the tax break worth more.
A 2008 study by the Joint Committee on Taxation found that not paying taxes on these benefits saved people with incomes less than $30,000 about $1,650. For people with incomes above $200,000, the average tax savings was $4,580.
The Affordable Care Act required companies to start reporting the value of employer-sponsored health benefits on W-2 forms (Box 12; Code DD). But most people don’t even realize they get a subsidy typically worth thousands of dollars a year.
For the federal government, the health benefits exclusion is the single largest tax expenditure, accumulating over the next decade to about 1.5 percent of the nation’s gross domestic product. (Economists say it is effectively the federal government’s third-largest health care expenditure, after Medicare, which cost about $581 billion last year, and Medicaid, at $349 billion.)
It costs five times as much as the subsidies the Affordable Care Act set up to help people buy health insurance, which are estimated to total $49 billion this year. And it is far more than the $70 billion the federal government is spending to expand Medicaid under Obamacare this year.
But few lawmakers, Republican or Democrat, have ever argued to change the exclusion. The closest Congress came to making the system more progressive — that is, to make it scale up according to income — was the so-called Cadillac tax included in the Affordable Care Act.
That was supposed to tax the most generous employer benefits to help pay the subsidies in the law, but its effective date got pushed back to 2020. Both the Republican House and Senate health bills shove it back further, so long — a decade in the Senate bill — that many analysts say it is unlikely to ever take effect.
“This seems like a natural place to look for revenue to expand coverage,” said Stephen Zuckerman, a senior fellow and co-director of the health policy center at the left-leaning Urban Institute. But, he said, “It becomes a political problem.”
Business groups, which tend to back Republicans, argue that a cut in the tax exclusion is a tax increase; labor unions, which tend to support Democrats, say it will lead them to lose benefits at the same time their wages have stagnated.
“We don’t think it does the things economists say it’s going to do,” said James Gelfand, senior vice president for health policy for the Erisa Industry Committee, which lobbies for large employers. “Ultimately these proposals are designed to end the employer-sponsored system,” he said. “They’re not indexed to reality.”
The benefit began with the wage controls of World War II. Employers got around those limits by offering more generous health benefits, and the Internal Revenue Service and later Congress said those benefits did not have to be taxed.
Employer-based health insurance now covers more than half the non-elderly population in the United States. The average premium in 2016, according to the Kaiser Family Foundation, was $6,435 for an individual and $18,142 for a family, and the tax exclusion reduced the cost of insurance by about 30 percent.
Even economists who dislike the exclusion recognize its benefit: It pools risk, the way some countries have done with national health insurance, and reduces adverse selection by encouraging the healthy to buy insurance.
But economists also argue that the exclusion creates perverse incentives that drive up the cost of coverage. Studies have found it encourages workers to buy more expensive insurance and to use more medical services than they need.
“Because we have invented a system where most people have extremely generous coverage, no one asks about the price, and no one tells them what the price is,” said Joseph Antos, an economist and scholar in health care policy at the American Enterprise Institute, a conservative think tank.
Every year the Congressional Budget Office analyzes options for reducing the deficit, including reductions in the tax exclusions for employer-provided health insurance.
In its 2016 analysis, the C.B.O. found that imposing income and payroll taxes on premiums higher than the 50th percentile beginning in 2020 — this would be contributions above $7,700 a year for individuals and $19,080 for families — would cut the federal deficit by $429 billion by 2026, more than either the House or Senate health bills would achieve, according to C.B.O. analyses.
It would also cause four million fewer people to have employer-based health insurance, the analysis found. Half of those people would go to health insurance exchanges set up by the Affordable Care Act, fewer than 500,000 would enroll in Medicaid, and one million would remain uninsured.
Subjecting premiums at the 75th percentile or higher to payroll and income taxes beginning in 2020 — premiums higher than $9,520 for an individual and $23,860 for a family — would reduce the deficit by $174 billion by 2026, the C.B.O. found.
Economists bet that employers would pay less for health insurance and pass on that savings in the form of higher wages. But business groups and business owners say that is unlikely.
Particularly in high-cost states, employers say offering a less attractive package of health benefits hurts their ability to hire.
“Good employees are the most important resource companies have, and this is part of the landscape that folks expect,” said William McDevitt, a shareholder with Wilkin & Guttenplan, an accounting and consulting firm in New York and New Jersey. “Messing with that matrix to generate revenue, I just see it as anarchy, politically.”
Even if companies did increase wages, employees would have to pay higher taxes, leaving them with less money to buy health insurance.
“You’re going to tell every employee they’re going to pay 20 percent more in federal taxes? Is that going to change what they need and their behavior?” asked Bill Grant, the chief financial officer of Cummings Properties in Massachusetts, a real estate firm that spends about $2 million a year to pay about 70 percent of the health insurance premiums for its 350 full-time employees. “And if part of that premise is that they are using more than they need, is paying more to Uncle Sam going to change that lifestyle? I don’t think so.”
One Woman’s Slide From Middle Class to Medicaid
by Ron Lieber - NYT - July 7, 2017
DEDHAM, Mass. — A dozen or so years into retirement, Rita Sherman had plenty going for her financially.
Recently widowed, she had a net worth of roughly $600,000 as of 1998. Her health was excellent, and she dutifully purchased a long-term care insurance policy that would cover three years of nursing home costs should she ever need help. Watching over it all was her daughter, a medical social worker, and her son-in-law, a financial planner.
By the time she died at the age of 94 last year, however, all of the money was gone after a diagnosis of dementia and five and a half years in a nursing home. Like so many people who never see it coming, she’d gone from being financially comfortable to qualifying for Medicaid.
This is the same Medicaid that our representatives in Washington are aiming to cut right now. While there is no telling how the debate over health care legislation will end, it ought to matter plenty to everyone who hopes to grow old and is not certain that their savings could last for decades. While many people don’t realize it until well into old age, it is Medicaid, not Medicare, that pays for most nursing home and community or home-based care for older adults who run out of money.
Marcia Perna, Ms. Sherman’s daughter, and her husband, Michael, were acutely aware of this fact from decades of work at their day jobs, but it was not something that they imagined they would personally encounter.
Rita Sherman did worry about money, according to her daughter. Ms. Sherman’s father had fallen ill when Rita was a child, and the family’s fortunes had taken a negative turn. Ms. Sherman worked much of her adult life as a bookkeeper and also as a recreational aide for older people who were sick. Her husband, Stanley, had worked as an industrial psychologist and educator before becoming too ill from emphysema to work.
Ms. Perna still remembers the stern warning her father gave her about his own care. “‘You make sure I don’t go to a nursing home!’ he told me,” she said. “‘If you think you’re going to transport me, I’m going to jump out of the car.’”
She didn’t dare try. Her mother had quit her job to take care of him before he died, and once Ms. Sherman was on her own, she soon sold the family home — the same postwar ranch house in Natick, Mass., they’d had all along — and moved to an apartment.
Her mother, according to Ms. Perna, was the kind of health-obsessed person who even decades ago would exercise regularly and go sparingly on the cheese. Still, Ms. Sherman had watched her own mother end up in a nursing home and wanted to plan for that possibility in a way that might preserve some of her money for Ms. Perna, her only child. So after her husband’s death, another relative helped Ms. Sherman buy that long-term care insurance policy.
According to Ms. Perna, her mother’s mother succumbed to her illness mere months after moving into a nursing home, and everyone assumed that Ms. Sherman would go just as quickly, too, if it ever came to that. But just in case, the family put some of her assets in a trust, so that in the unlikely event that she lived in a nursing home longer than the three years that her insurance policy would cover, any bills would not entirely wipe out her savings.
Things did not work out that way, though. Ms. Sherman started having trouble with daily tasks, was found to have dementia and moved into an assisted-living facility and then a nursing home with specialized staff members for memory care patients. Along the way, the insurance company declared her not sufficiently ill to warrant paying out on the policy. Then the trust, which is common and legal, did not hold up to state scrutiny because of a problematic passage.
These twists and turns reveal two terrifying facts about aging and how we pay for it. While it’s hard to imagine a couple better suited to help an aging parent navigate her final years than a social worker-financial planner duo, the Pernas still ended up hiring five additional professionals to help them with complex, specialized tasks: a long-term care insurance salesman, a nurse consultant to help get the insurance company’s decision reversed, an elder care lawyer to set up the trust, another consultant to help with the Medicaid application, and a malpractice lawyer to sue the attorney who created the defective trust. (The family eventually received a settlement. And to the many readers who have asked about the ethics and economics of Medicaid planning and trusts, please watch this space in the coming weeks.)
So add aging to the maddeningly long list of enormously complex financial tasks that each of us faces. And pity those in their 70s or 80s who must navigate this morass without expert adult children or other advocates.
Second, for people like Rita Sherman who lead healthy lives for three-quarters of a century, it is often their brains that give out first, not their bodies. And when that happens, the decline can be both lengthy and expensive, given how much supervision dementia patients need.
Just over three years into Ms. Sherman’s nursing home stay, her money was gone and the long-term care insurance had been used up. She eventually did qualify for Medicaid, which paid for much of her final two years of care. By then, her daughter was calling the shots, since Ms. Sherman was no longer able to speak. “By the time my mother died, I had long since said goodbye to her,” Ms. Perna said.
Sitting in their garden here this week, still a bit shocked by all that happened before Ms. Sherman’s death last year, the Pernas tried to make sense of their story and its morals. First, there are their own circumstances. Michael, 67, has diabetes and assumes that qualifying for long-term care insurance is impossible for him at any price. He plans to keep working, in part because he loves it, though the ability to self-insure with more savings for his own possible future care doesn’t hurt. Marcia, 66 and less than two years into retirement, may price out a policy for herself soon.
As for the rest of us, Ms. Perna has a few words of advice. To the people who believe that adult children should simply take in their aging parents and care for them at home, she paints a harrowing picture of dementia. The incontinence may come first, often many years before someone dies. Then there are the middle-of-the-night wakings and the insistence that there is someplace urgent to go. Wandering is frequent, and violence is not unusual. Her mother, physically contracted in her final days, required two nursing home staff members to lift her into her wheelchair and frequent, manual bed-turning to prevent too much skin damage.
Mr. Perna had to prod her into discussing how many hours she had put into the coordination, the logistics and all the rest. Adult children who handle even this suffer their own lost productivity, which may make it harder for them to retire comfortably.
And to those who think Medicaid recipients simply should have worked harder, more and longer, Ms. Perna makes no apology for her taxpaying mother, who lived in her starter home until her husband died and stopped working only to take care of him when he was sick.
“I think that it’s human nature to think that if someone is in a bad circumstance, that there was something they were doing to cause it,” she said. “But that is not how life works. Things happen to people, and people don’t really understand how easily those things can happen.”
State budget includes new fees on businesses to help the state pay for health care costs
by Priyanka Dayal McCluskey - Boston Globe - July 8, 2017
State lawmakers on Friday approved an annual budget that imposes new fees on businesses to help pay the state’s ever-rising health care costs, but they rejected a controversial series of proposals from the Baker administration to rein in those costs, drawing a rebuke from the business community.
Advocates for the poor applauded the Legislature’s decision to leave out policy changes that they said would have hurt families who rely on public health coverage. But employers said it was unfair of lawmakers to ask them to pay more without also taking steps to attack the underlying costs of the state Medicaid program, called MassHealth.
“We’re very disappointed,” said Christopher Carlozzi, state director of the National Federation of Independent Business, or NFIB. “This was sold to the business community as a temporary assessment that would directly go to relieving and reining in the cost of MassHealth. Without those reforms within this package, we feel the underlying cost is not going to be addressed.”
The annual budget includes a plan crafted by the Baker administration to raise $200 million a year in new revenue from fees on employers. An existing assessment that almost all businesses already pay, called the employer medical assistance contribution, or EMAC, will increase from $51 to $77 per employee. Employers whose workers currently receive public health benefits also will pay as much as $750 per worker.
The new employer fees are to be phased out after two years. To help offset the costs for employers, the Legislature agreed to lower the rate of increase in state unemployment insurance premiums.
But the budget omits a series of other changes requested by the Baker administration, including a proposal to move thousands of families and individuals off MassHealth and onto private health plans by changing eligibility rules. The administration also wanted lawmakers to approve a new kind of care provider called a dental therapist, strengthen pricing requirements on certain insurance plans, and make many other changes to rein in spending.
MassHealth covers about 1.9 million state residents and costs more than $16 billion a year. The costs are split between the state and federal governments.
It’s unclear whether the administration will accept the Legislature’s decision to ask employers to pay more for MassHealth without making other changes to the program. Governor Charlie Baker’s office did not directly respond Friday when asked how he would handle the issue.
“The administration will continue to pursue the reforms necessary to stabilize the health care safety net and protect taxpayers from picking up the tab for more workers’ health coverage,” Billy Pitman, a spokesman for Baker, said in a statement.
The governor has several options once he receives the budget, including signing the document or sending it back to legislators with changes for further debate.
“When the administration was seeking support for their package, they made it clear to the employer community that they would accept this as a package only,” said Eileen McAnneny, president of the Massachusetts Taxpayers Foundation.
Legislators said they didn’t have enough time to consider all of the administration’s health care proposals, which they received just a couple weeks ago. But State Representative Brian S. Dempsey, the House budget chairman, said the proposals deserve a closer look.
“I applaud them for their work,” Dempsey said reporters Friday. “It takes time. You’re dealing with a lot of stakeholders, a lot of interests. I think it’s positive that we have those proposals to go back to and look at.”
The Senate budget chief, Karen E. Spilka, said in an interview that she’d be open to reconsidering the proposals but that “there should be more time, and the process should be more transparent.”
NFIB, Mass. Taxpayers, Associated Industries of Massachusetts, the Massachusetts Business Roundtable, the Retailers Association of Massachusetts, and other business groups signed a letter Friday opposing the Legislature’s decision to leave big MassHealth changes out of its budget.
“Further delays to meaningful health care cost reforms are unacceptable and unwise. The Commonwealth must not lose sight of this urgent need for MassHealth and commercial health insurance reforms and we call for the rapid approval of the reform package in its entirety by the end of July,” the business groups said.
The administration was criticized by health care advocates and some Democrats last week for proposing policy changes that would cause many poor families to pay more out of pocket for their health coverage — and for raising the proposals so late. The lengthy plan was sent to a small committee of lawmakers as they were finalizing a budget behind closed doors in late June. The proposals have not been publicly debated.
Advocates had raised concerns about two policies in particular: One change would have allowed the administration to shift about 140,000 adults, including 100,000 parents, from MassHealth to commercial insurance plans on the state Health Connector, where they would have received less generous coverage at higher out-of-pocket costs.
Another proposal would have barred many low-income adults with access to employer-sponsored health insurance from obtaining MassHealth.
“We’re definitely relieved that those changes were not included in the conference budget,” said Victoria Pulos, a health care lawyer at the Massachusetts Law Reform Institute. “We look forward to working with the administration and coming up with alternatives that aren’t so harmful to MassHealth members.”
Brian Rosman, policy director at Health Care For All, said given that Republicans in Congress are working to repeal and replace the Affordable Care Act — which could destabilize health care programs in Massachusetts and other states — this is not the right time “to be messing with major changes to MassHealth and Connector programs.”
But Jon B. Hurst, president of the retailers association, said changes to MassHealth are necessary. “We do not want an assessment that is absent reforms of this system.”
The media fundamentally misunderstands conservatives on health care
by Gary Abernathy - The Washington Post - July 7, 2017
In small rural communities such as mine — places that largely supported Donald Trump for president but have higher-than-average uninsured populations — conflicting feelings about what to do about reforming health care run deep. There are divisions between health-care providers and the populations they serve, and divisions even within individuals themselves, as an inherent anti-government political bent collides with real-world struggles to pay for medical needs.
The Affordable Care Act has brought some undeniable benefits, especially for our local hospitals, by expanding Medicaid coverage and allowing more people to seek preventive care.
Even so, rising premiums and the fragile state of the insurance exchanges have people worried. They want to see Republicans follow through on their promise to repeal Obamacare, but questions about what comes next leave them anxious.
One real-world perspective comes from Highland District Hospital, a small facility in southern Ohio governed by rural township trustees, where officials are not at all torn. They cheered Ohio Gov. John Kasich’s decision to expand Medicaid in 2013, noting that the percentage of uninsured people here in Highland County was higher than the state average and that the costs of treating them were driving up costs for everyone else.
That opinion hasn’t changed much. Randy Lennartz, the hospital’s chief executive, told me that while Obamacare isn’t perfect, it did result in a wave of people seeking medical care who had previously ignored preventive-care visits. Those numbers have tailed off, but Lennartz said he believes that’s largely because their conditions were successfully treated.
The downside of Obamacare, he said, was that most people who signed up through the insurance exchanges chose the cheapest plans available, plans that came with deductibles in the $5,000-to-$10,000 range that few can afford. The median household income in Highland County is just under $40,000, according to census figures.
As in other states, insurance premiums rose under Obamacare, and choices continued to shrink. Just a few weeks ago, Anthem Blue Cross and Blue Shield announced it will not sell policies in Ohio in the Obamacare marketplace in 2018. On the heels of that announcement, Premier Health Plan said it is also pulling out, leaving as many as 20 Ohio counties with no health insurer on the state exchange.
It’s not surprising that some people look at this mess and say, “I told you so.” Still, Republicans in Congress find themselves in a dilemma. Obamacare is not working as advertised, but it works for some, even here.
With the opioid crisis in Ohio and other Midwestern states, GOP lawmakers such as my old boss, Sen. Rob Portman — a longtime proponent of recovery and “second chance” programs — aren’t comfortable with the reduction in Medicaid growth contained in the GOP health-care proposals.
But Portman is well aware of the 2016 presidential election returns from Ohio, and he likely wants to find a way to support a repeal-and-replace bill. Along those lines, Portman took the lead in promoting a separate $45 billion fund dedicated to opioid treatment that was added to the Senate bill, significantly increasing the chances of getting him to “yes.”
Passing a plan that hurts rural communities through Medicaid cutbacks is a risk. But for many GOP lawmakers, not repealing Obamacare is a bigger risk among voters in those same communities, where Trump reigns supreme and where people don’t look to the government to solve all their problems.
That there are such people is what a lot of folks in Washington have trouble understanding. The campaign by the Democrats and many in the media to save Obamacare relies largely on dire warnings about how many people will lose health-care coverage under the GOP plan. They wonder: How can Trump’s supporters stick with him when his proposals hurt them the most?
What they fail to grasp is that Trump’s supporters, by and large, are more dedicated to the principle of freedom from government mandates than they are worried about the loss of government subsidies or programs that social activists in Washington think they need.
Until Democrats can figure that out, their efforts to pry Trump’s supporters away from him — on health care or any other subject — will continue to be an endless source of frustration.
To my colleagues in Congress: I have MS. Don’t make my insurance unaffordable
by Donna Edwards - Washington Post - July 7, 2017
Dear colleagues in Congress,
I struggled over whether to write, but following the House passage of the American Health Care Act, and now the work that’s going on in the Senate, I knew I must.
In March 2015, when I decided to run for U.S. Senate in Maryland, I felt great. I had the energy to campaign across the state and also to make our votes and committee hearings in the House. I rarely missed a leadership or Democratic Caucus meeting because I was determined to continue doing my job even as I campaigned across the state.
All my life, I’ve mostly been active and healthy (save for the occasional sports injury). While in Congress, I rode my bicycle regularly to clear my head. I played on our congressional women’s softball team and on our football team. Each January, I jumped in the ice-cold Potomac River to call attention to climate change. In 2015, I ran a handful of 5K and 10K races. I thought I was in great health. I was not.
After my loss in the April 2016 Senate primary, I wasn’t just disappointed, I was exhausted. During the recess that May, I decided to spend a week relaxing in the Outer Banks of North Carolina. The beach was beautiful, but it did not cure my exhaustion. One day, on an early-morning run, my legs felt like spaghetti. Assuming I had a pinched nerve or stretched tendon, I decided to see my doctor on my return. Still, I went to work and kept up my schedule; after all, we had votes in the House on Monday.
The doctor found nothing out of the ordinary, though I was still tired. Because all the tests were normal, I decided to go for a 10-mile bike ride the following weekend, thinking the exercise would make me feel better. Trying to avoid some runners and children on the bike path, I upended on my bike and flipped into the brush. I was scratched and bruised, and my ankle was pretty badly sprained, but I survived. I was fortunate, though, because the accident prompted some additional delving into my symptoms.
As a member of Congress, I had pretty decent health care. After the passage of the Affordable Care Act — Obamacare — we were required to leave the Federal Employees Health Benefit Plan and go into the D.C. Health Exchange. I chose a gold-tier Blue Cross-Blue Shield plan with a $400-a-month premium (plus deductibles and copays) that enabled me to see all the specialists I needed. I finally got my diagnosis after nearly two months of tests and analysis. It came June 22, 2016 — the day of the House sit-in in support of gun-control legislation.
That morning, I went to the House floor to join the sit-in. But hours into our protest, the House attending physician called me to his office to tell me I had multiple sclerosis, an autoimmune disease that attacks the central nervous system. At first, I couldn’t process what he was saying. I thought I had a pinched nerve; I didn’t know anything about MS. Devastated, I blinked away my tears and went back to the chamber, where I stayed for the remainder of the evening.
I’ve learned a lot about MS since that day. It’s likely that I have had the disease for the past decade, undiagnosed. I’ve learned that more than 400,000 Americans have MS, that it’s not fatal and that it affects different people in different ways. Once I received my diagnosis, I was determined to find a great neurologist, which I did. I read up on the latest treatments and research studies. I wanted to take control of my treatment. I also knew that I was fortunate to be diagnosed relatively early and to have great health-care coverage, which enabled me to take care of my medical needs without worrying.
A year later, I am no longer in Congress, and my future health care is uncertain. I am not employed, and I pay $800 a month for my COBRA coverage, which ends in June 2018. I’m not sure what I’ll do then. My medication, which has thankfully halted the progression of my MS, costs roughly $73,000 a year. I’ve had three sets of MRI scans and will require one each year to check my progress; that’s roughly $7,000 each. I admit, I do not completely understand all of the bills. It’s very confusing.
Unlike some of you, I am not wealthy. When I was younger, I had the experience of not having health insurance, and I almost lost my home after landing in the emergency room. One reason I ran for Congress was to help make sure no one would have to go through that, and I was proud to be one of the presiding officers when the Affordable Care Act passed. I did not think the law was perfect; I believed it was a good start. I never thought I could have to go back to a time when I would not have health-care coverage.
And yet, with the health-care bills you are now advancing, here I am. If we return to a time when people with preexisting conditions can be charged more than healthy people, it will surely result in my never being able to afford insurance again. If we return to a time of lifetime caps, I will no longer have health insurance.
In January, I set out in a 25-foot motor home and logged 12,000 miles through 27 states over three months. I talked to a lot of people in Alabama and Mississippi, Arizona and Texas, Kansas and Indiana. We talked about our dreams and aspirations — about jobs, education and health care, about children and grandchildren. I heard people’s stories about losing jobs, working in retirement, not having health care and family members dying. They told me about their cancer, diabetes and heart disease. I told them about my MS — all strangers.
Most of the people I met in RV parks across the country were Republicans. They had no idea that I once was privileged to serve in Congress as a Democrat. And this story, my diagnosis of MS, is not about me; it’s about them — millions of Americans who are trusting you to help, not harm. Like them, I’m scared. Like them, I’m scared of being sick and not being able to afford to go to my doctor or purchase the medicine that is saving my life; like them, I’m worried that one day I will have to sell my home or spend my retirement savings on my health care. I don’t know what I will do next or whether I will run for public office again. I do know that my MS will not stop me. But not having health-care coverage because of my MS could stop me permanently.
I’m doing fine. I’ve adjusted to my new body and different capacity. But I pray that as you finish doing whatever it is that you are doing with health care, you remember that I was one of your colleagues, that I worked hard and that I don’t have a preexisting condition because I was a bad person who led an unhealthy life. I have a preexisting condition simply because I do; and I, like millions of other Americans in the same situation, deserve quality, affordable health care.
Liberals, get your story straight on single payer
by Paul Waldman - The Week - July 5, 2017
Support for single-payer health care is on its way to becoming the consensus position in the Democratic Party.
This is particularly true after the debacle of the Republican health-care effort. Not only has the debate demonstrated that Americans are perfectly fine with the idea of government-provided health coverage, it has convinced Democrats that there's no point in trimming their political sails in the hope of getting buy-in from Republicans for whatever they advocate, so they might as well go all the way. When 500 or so Democrats run for president in 2020, we'll probably see many if not most of them drop the equivocation and come right out and say they favor single payer.
But before we get there, Democrats need to take a breath and do some thinking. Do they understand exactly what it is they want to advocate for?
Consider what has been going on in California. A bill to establish a single-payer plan in the state passed the state Senate there, but it was recently pulled in the Assembly by Speaker Anthony Rendon. Democrats have a super-majority in the legislature, so why didn't they go ahead? As Rendon argued, the bill would have created massive budget problems given other California laws; for instance, the state is required to spend 40 percent of its budget on education, so it would have had to come up with hundreds of billions of new dollars even beyond what it would spend on health care. It also would have required waivers from the Trump administration to divert money currently being spent by federal programs like Medicaid, waivers which of course would not have been forthcoming (David Dayen explains all the convoluted problems the bill would have created).
Nevertheless, some on the left treated Rendon's decision like the most perfidious treason against progressive principles. RoseAnn DeMoro, head of National Nurses United and a prominent Bernie Sanders supporter, tweeted out a picture of the California flag with a knife labeled "Rendon" sticking out of the bear's back, and characterized anyone who objected to the bill as in the pocket of insurance companies. When liberal blogger Kevin Drum criticized the bill as unrealistic, NNU's communication director sent him an email saying "the name of your magazine [should] be changed from Mother Jones — who actually fought for working people — to Milton Friedman, which would better reflect your class sympathies."
The truth is that establishing single payer in a single state is a nearly impossible challenge when the country as a whole continues to exist within our largely private system. It's why Vermont tried to do it and then abandoned the effort, why Colorado voters rejected it at the polls last year, and why it isn't going to work in California. Nevertheless, more and more in the future, single payer is going to be treated as a litmus test by which "true" progressives can be distinguished from establishment sellouts.
In the abstract, that's not such a terrible thing — health care is a vitally important issue that affects all our lives in profound ways, and it's one of the major dividing lines between the two parties. There's no reason why Democratic voters shouldn't use health-care policy as a means to judge prospective candidates, for president or anything else.
But everyone who cares about it needs a very specific and clear answer to this question: When you say "single payer," what exactly do you mean?
I suspect that many people don't actually mean single payer when they say "single payer." Liberals like myself have long lamented the fact that alone among the world's advanced industrialized democracies, the United States doesn't have a system that provides universal health coverage. We look around with jealousy at other systems that manage to cover everyone and produce health results that are equal to or better than what we get, all at dramatically lower cost. But those systems vary widely in design, and none of them are truly single payer.
In a true single-payer system, there is only one insurer, the government. It pays for all health care, and is able to use its regulatory and market power to hold prices down and take advantage of bureaucratic efficiencies. The country that comes closest to single payer is Great Britain, with its National Health Service. You might recall that Britons are so proud of the NHS that the opening ceremony of the 2012 London Olympics included a tribute to it.
But even the British system has some private elements to it. And moving to a completely public system from our current mishmash of public and private insurance (and mostly private health providers) would require an extraordinarily costly, complex, and lengthy transition. But maybe that's fine with you — you can argue that in the long run, that maximizes the benefits.
Or perhaps you would prefer a hybrid system like the one they have in France, where there's a universal government insurance program that covers everyone's basic needs, and then most people buy private but highly regulated supplemental insurance on top of it (Canada has something similar, but with much more control at the provincial level). That happens to be my preference, particularly since we can foresee a path to it from where we are now, by expanding Medicaid (which already covers almost 75 million Americans) and changing what private insurers provide but not eliminating them entirely. I think you'd have a hard time arguing that a hybrid system would be some kind of betrayal of progressive principles.
Or you might prefer a system like Germany's, where tax money goes to fund non-profit insurers ("sickness funds") that people can choose from. The point is, those are just a few of the options. Each country that has addressed this problem has come up with a slightly different solution (if you want to compare them, this is a terrific source), but what they have in common is that they all achieve universal coverage at a cost much lower than what we pay.
If we're going to remake the American health-care system — and we should — we're going to have to decide which of those models would work the best for us. But they're not "single payer."
I'll admit that like many people, in the past I've used the term "single payer" too loosely. And there's a rhetorical problem: We don't have a name that would refer to all the different kinds of universal health systems we might consider moving toward. It's hard to communicate what you're for in a simple and understandable way without such a name; it's much easier to say "I'm for single payer." But you probably aren't — or at the very least, you're open to any number of styles of health system, so long as they cover everyone in a way that's equitable.
We're now finally approaching a point where something we call single payer can be considered politically feasible. So we'd better make sure we know what we're talking about.
The Battles Ahead: Meet the Biggest Opponents of Single-Payer
by Michael Corcoran - Truthout - July 5, 2017
It has become fashionable to write premature obituaries of the Senate bill to "repeal and replace" the Affordable Care Act, using hyperbolic and misleading language. The Senate bill, according to varying headlines, is "in peril," on "life support" and "dead on arrival." These stories should be of little comfort given that the exact same headlines were published prior to the House passing its version of the repeal. That bill was also reportedly "on the verge of collapse," "in tatters," "flailing" and even "dead."
Such sentiment could give Americans a false sense of complacency. There is still a real danger that this contemptible bill, which according to the Congressional Budget Office would lead to 22 million Americans becoming uninsured, will still become law. Considering this, stopping this legislation -- which repeals Medicaid as much as it does the ACA -- should remain the top short-term priority for advocates of health care justice.
But the fight to stop Trumpcare must also be part of a wider struggle for health care justice. The threat of this shameful legislation alone has demonstrated that it is morally indefensible to leave anyone without coverage. As a result, the argument for single-payer health care is starting to make sense to a lot of people, including a record number of Congress members and Sen. Elizabeth Warren, who publicly came out in favor of the policy in a Wall Street Journal article last week.
What Constituency Is Being Served in Washington?
Indeed, it is a testament to this growing support for single-payer that the New York Times devoted a front-page story to the issue in June. "The Single-payer Party? Democrats Shift Left on Health Care," the headline read. But while a front-page story on momentum for Medicare for All is a welcome sight for advocates, the article amplifies a falsehood that reflects why the policy remains so elusive.
"Representative Nancy Pelosi of California, replied with a flat 'no' when asked if Democrats should make single-payer a central theme in 2018," the Times reported. "The comfort level with the broader base of the American people is not there yet," Pelosi said.
The House minority leader, however, is wrong. Polls show the public supports "Medicare for all," and has for years. A recent Economist/YouGov poll, for instance, shows 60 percent support for the policy, including 75 percent of Democrats. Even a plurality of Republicans supports single payer: 46 percent support Medicare for All, compared with 38 percent opposed. (Seventeen percent are not sure.)
This begs the questions: If Medicare for All has popular support why do power brokers like Pelosi claim it isn't viable? What constituency is not "comfortable" with a more efficient system that would provide universal health care? It is an especially relevant question now when we see Republicans go full bore trying to pass a bill that has only 12 percent support from the public, according to a USA Today poll.
The fact is that a very small and powerful group of rich people would be a little less rich if single-payer became a reality. "Insurance and pharmaceutical firms are the most important opponents of single payer," said Dr. David Himmelstein, a founder of Physicians for a National Health Program, in an interview with Truthout. For-profit hospitals and manufacturers of medical devices oppose single-payer for the same reasons, he added.
These industries, and not the public, are the constituency who are not "comfortable," with Medicare for All. This group might represent a very small number of people, but it is disproportionately powerful. In fact, according to data from the Center for Responsive Politics, Pelosi gets more money from health services than from any other industry -- more than double the amount she receives from public-sector unions and investment firms combined:
A screen shot of data from the Center for Responsive Politics shows the industries who spent the most in lobbying in 2016. Health-related industries accounted for four of the top six sectors. (Credit: Center for Responsive Politics)
From a wider angle, the attack on single payer (and Medicaid for that matter) is, like so much of the neoliberal agenda, a form of class warfare that seeks to privatize and commodify almost everything. The goal is to add to the enormous fortunes of corporations and billionaires while, in the words of Eugene Debs, "millions of men and women who work all the days of their lives secure barely enough for a wretched existence." These forces are emboldened by the ever-pervasive role of money in politics and enabled by the corporate-owned media establishment, which reliably serves elite interests.
Other enemies of single-payer include the American Medical Association (AMA), AARP, the Koch Brothers and the Chamber of Commerce. Even some ostensibly liberal advocacy groups, particularly those with industry funding, have also served as an obstacle to single-payer.
Understanding the nature of the opposition is a necessary, if daunting, step for advocates of health care justice to take on the road to making this reform a reality.
Single-Payer: An Existential Threat to the For-Profit Industry
The most significant enemies are health insurance and drug companies. "A single-payer reform would end insurers' role in the health care system, essentially wiping out their entire business," Himmelstein said.
The health sector spent more than $500 million on lobbying in 2016 and several billion in the last decade, according to the Center for Responsive Politics' data. Lobbying from pharmaceutical firms accounts for almost half of the overall spending, totaling a little more than $245 million.
(Chart: Michael Corcoran / Truthout; Data is from the Center for Responsive Politics)
"The [pharmaceutical] industry has never lacked for resources to amplify its voice in politics and policy making. Since 1999, pharmaceutical firms and health product companies have poured more money annually into lobbying than any other industry, including $229 million last year alone. PhRMA [Pharmaceutical Research and Manufacturers of America] led the group, plowing $16.6 million into helping advance drug makers' priorities in Washington," observed a report by the Center for Responsive Politics.
The insurance industry has even more at stake. American Health Insurance Plans (AHIP) is the primary lobby for health insurers. Russell Mokhiber of Single Payer Action once described the lobby as "public enemy number one," and "the most aggressive opponent to single payer."
"The health insurance corporations must die so that the American people can live," he said.
Indeed, a true single-payer system would effectively abolish private health insurance as we know it. Therefore, the insurance lobby will always oppose any shift away from our system, which provides it with billions in profit every year. UnitedHealth Group, for instance, took in $185 billion in revenue in 2016, up $28 billion from 2015, according to its shareholder report released in January. The report "estimated revenues of $197 billion to $199 billion" in 2017.
AHIP has donated more than $250,000 to 100 Congress members in the current election cycle; 59 percent of that went to Republicans. The group has 36 registered lobbyists, and a startling 76 percent of them have been through the "revolving door," according to the Center for Responsive Politics' data: They formerly worked for the US government. Kyle Nevins, a lobbyist from Harbinger Strategies, spent "over a decade on Capitol Hill working with the House Republican Leadership."
Another AHIP lobbyist, Aryana Khalid, worked for prominent Democrats until recently. She was chief of staff to the director of the Centers for Medicare and Medicaid (CMS) and a project director for the Affordable Care Act, and spent years working for Democrats. Her Twitter account is filled with support for the Affordable Care Act and critiques of Trump, but her day job is to help maximize profits for the nation's biggest opponent of universal health care.
How the Industry Shapes the Debate
These industries have not been forced to actively lobby against a single-payer bill since none have come close to becoming law. Insurance and drug companies, however, have attacked single-payer successfully in other ways for years, using misinformation campaigns decrying the evils of "socialized medicine." Wendell Potter, the former CIGNA executive who has turned into an advocate for health care justice, has described this sinister work from an insider's point of view. He observed that a front group, Health Care America, founded largely by drug companies and maintained with the help of AHIP and the PR firm APCO Worldwide, existed "for the sole purpose of attacking" Michael Moore's film Sicko -- released 10 years ago this month.
AHIP's planning documents for its strategy to counter Sicko's influence are quite revelatory. They show an industry that greatly fears a blossoming movement for single-payer, cautioning lobbyists to "prepare for the worst." The documents outline plans to ally with corporate/centrist groups like the Democratic Leadership Council and the Progressive Policy Institute, and to shape "media coverage to reflect the industry position" and highlight "horror stories" of government-run systems.
These industries have also spent decades smearing the Canadian health care system, which is universal, far less expensive and beloved by citizens of the country. "Over the course of a two-decade career as a health insurance executive, I spent hours and hours implementing my industry's ongoing propaganda campaign to mislead people about the Canadian health care system," Potter once said to a Canadian audience, noting he had yet to "encounter a single Canadian who didn't talk about their Medicare program with pride."
These campaigns to spread falsehoods about government-run health care have been quite effective. As of this writing, searching for "Canada" and "health care" via Google, pulls up numerous attacks about the "ugly truth" of the Canadian system and articles that describe Canada's embrace of universal health care as a "cautionary tale."
Fairness and Accuracy in Reporting (FAIR) has documented for years how the corporate media has been dismissive of single-payer -- when they give it any attention at all. That bias continues to this day. The Times's front page article on June 3 cited a poll saying there is only "40 percent" support for single-payer, even though when the language "Medicare for All" is used, support is near or above 60 percent. There was no mention of these polls, or other polls showing that the insurance industry is no longer succeeding in making "single-payer" into a pejorative term.
The dominant media, however, have played right into the industry's hands. AHIP's president was given space in USA Today to advance the industry narrative after Sicko was released. CNN famously ran a smear job by Dr. Sanjay Gupta, which Gupta later begrudgingly confessed contained provable falsehoods. The response from Washington Post staff writer Stephen Hunter to Moore was similar to the most common (and spurious) straw man attacks against Bernie Sanders: that the left thinks health care can be "free." In reality, single-payer health care is not free, it is simply paid for by taxes rather than by co-pays, premiums, and so on.
This attack was used not only by the usual suspects, but also by some self-identified progressives. This is also an obstacle to single-payer. Some liberal groups like Health Care for America Now, the Center for American Progress, and the Urban Institute, have not come out in support of single-payer and sometimes attack it. They also tend to cut it out of the conversation entirely. For instance, a search of the website for Health Care for America Now for the term "single payer" yields zero results. These groups narrow the parameters of debate to the exclusion of the most humane and efficient solution.
Single-Payer as Class Warfare
Opponents of single-payer, as noted above, are not merely those in the health sector. By and large, the top 1 percent of the population -- the billionaire class, as Sanders would call it -- embraces privatization of most things, including health care.
A Center for Public Integrity (CPI) analysis of Senate lobbying disclosure forms from 2010 "shows that more than 1,750 companies and organizations hired about 4,525 lobbyists -- eight for each member of Congress -- to influence health reform bills in 2009."
The industry's money did not go to waste.
"A close look at the health reform bills that passed the House and Senate show lobbyists were apparently effective at blocking provisions like a robust government-run insurance program," the CPI analysis observed.
But the health industry was not the only powerful player working to quash single payer. The US Chamber of Commerce, for instance, was hiring lobbyists to shape the federal reform. They were also active in successfully opposing state-wide single-payer efforts in Colorado and Vermont. Koch-funded groups like Americans for Prosperity, the Independence Institute and the Ethan Allen Institute also contributed to the battle to halt momentum for Medicare for All. More recently a bill in California for a state-wide single-payer died in the State Assembly on June 23. The Chamber has been attacking the bill as a "job killer" before the Democrats pulled the legislation back.
The Koch brothers aren't even active in the for-profit health industry; they deal largely in energy. But pushing back against single-payer is aligned with their wider goal: shrinking government as much as possible.
"If single payer ever took off anywhere, it could threaten their anti-government messages," Mary Bottari, of the Center for Media and Democracy, told Truthout in a previous interview about the Kochs' activities on health policy.
Single Payer and the Fight for Social Democracy
In this sense, we see how single payer is not merely a threat to the insurance industry; it is also a boon to democracy. Its passage would threaten part of the top 1 percent of Americans -- the constituents politicians care most about. Their ability to keep that level of influence is threatened if the public can enforce its will and win single-payer, either in a state or nationally.
This is one of many reasons why the battle for single-payer is about much more than health care policy. How a nation treats its sick people says something about the country's ability to have a functioning social democracy. Winning this battle against single-payer's powerful enemies would not only be good for the health of the nation; it would serve as an enormous victory for the movement for social justice more broadly.
Fighting for Our Lives: The Movement for Medicare for All
Fighting for Our Lives: The Movement for Medicare for All
Since the inauguration of Donald Trump, the health care debate has taken a turn for the terrifying. Republicans in the House of Representatives managed to pass the draconian American Health Care Act -- nicknamed "Trumpcare" or "Ryancare" -- which would severely threaten the health coverage of 24 million Americans and weaken the coverage of millions more. Republicans in the Senate are now finishing the draft of a parallel bill that threatens to be equally destructive.
It's crucial to push back urgently against Republicans' dystopian health care vision. Inspiringly, progressive forces have met this threat not only with a growing resistance, but also with a vision for something bold: Medicare for All. The House of Representatives' single-payer plan now has more co-sponsors than ever before, and activists and politicians alike are increasingly approaching Medicare for All as a real possibility -- not just a far-flung dream.
It's crucial to push back urgently against Republicans' dystopian health care vision. Inspiringly, progressive forces have met this threat not only with a growing resistance, but also with a vision for something bold: Medicare for All. The House of Representatives' single-payer plan now has more co-sponsors than ever before, and activists and politicians alike are increasingly approaching Medicare for All as a real possibility -- not just a far-flung dream.
As the struggle builds, Truthout is diving in with our new series, "Fighting for Our Lives: The Movement for Medicare for All." In this ongoing series, we'll cover the front lines of the campaign for single payer, the history behind it, its practical implications, its intersections with other movements, and the millions upon millions of lives it will affect. We hope you will join us!
Why Single-Payer Health Care Saves Money
by Robert H. Frank - NYT - July 7, 2017
Lingering uncertainty about the fate of the Affordable Care Act has spurred the California legislature to consider adoption of a statewide single-payer health care system.
Sometimes described as Medicare for all, single-payer is a system in which a public agency handles health care financing while the delivery of care remains largely in private hands.
Discussions of the California measure have stalled, however, in the wake of preliminary estimates pegging the cost of the program as greater than the entire state government budget. Similar cost concerns derailed single-payer proposals in Colorado and Vermont.
Voters need to understand that this cost objection is specious. That’s because, as experience in many countries has demonstrated, the total cost of providing health coverage under the single-payer approach is actually substantially lower than under the current system in the United States. It is a bedrock economic principle that if we can find a way to do something more efficiently, it’s possible for everyone to come out ahead.
By analogy, suppose that your state’s government took over road maintenance from the county governments within it, in the process reducing total maintenance costs by 30 percent. Your state taxes would obviously have to go up under this arrangement.
But if roads would be as well maintained as before, would that be a reason to oppose the move? Clearly not, since the resulting cost savings would reduce your county taxes by more than your state taxes went up. Likewise, it makes no sense to oppose single-payer on the grounds that it would require additional tax revenue. In each case, the resulting gains in efficiency would leave you with greater effective purchasing power than before.
Total costs are lower under single-payer systems for several reasons. One is that administrative costs average only about 2 percent of total expenses under a single-payer program like Medicare, less than one-sixth the corresponding percentage for many private insurers. Single-payer systems also spend virtually nothing on competitive advertising, which can account for more than 15 percent of total expenses for private insurers.
The most important source of cost savings under single-payer is that large government entities are able to negotiate much more favorable terms with service providers. In 2012, for example, the average cost of coronary bypass surgery was more than $73,000 in the United States but less than $23,000 in France.
Despite this evidence, respected commentators continue to cite costs as a reason to doubt that single-payer can succeed in the United States. A recent Washington Post editorial, for example, ominously predicted that budget realities would dampen enthusiasm for single-payer, noting that the per capita expenditures under existing single-payer programs in the United States were much higher than those in other countries.
But this comparison is misleading. In most other countries, single-payer covers the whole population, most of which has only minimal health needs. In contrast, single-payer components of the United States system disproportionately cover population subgroups with the heaviest medical needs: older people (Medicare), the poor and disabled (Medicaid) and returned service personnel (Department of Veterans Affairs).
In short, the evidence is clear that single-payer delivers quality care at significantly lower cost than the current American hybrid system. It thus makes no sense to reject single-payer on the grounds that it would require higher tax revenues. That’s true, of course, but it’s an irrelevant objection.
In addition to being far cheaper, single-payer would also defuse the powerful political objections to the Affordable Care Act’s participation mandate. Polls consistently show that large majorities want people with pre-existing conditions to be able to obtain health coverage at affordable rates. But that goal cannot be achieved unless healthy people are required to join the insured pool. Officials in the Obama administration tried, largely in vain, to explain why the program’s insurance exchanges would collapse in the absence of the participation mandate.
But the logic of the underlying argument is actually very simple. Most people seem able to grasp it if you ask them what would happen if the government required companies to sell fire insurance at affordable rates to people whose houses had already burned down.
No home insurer could remain in business if each policy it sold required it to replace a house costing several hundred thousand dollars. Similarly, no health insurer could remain in business if each of its policy holders generated many thousands of dollars in health care reimbursements each month.
That’s why the lack of a mandate in the alternative plans under consideration means that millions of people with pre-existing conditions will become uninsurable if repeal efforts are successful. An underappreciated advantage of the single-payer approach is that it sidesteps the mandate objection by paying to cover everyone out of tax revenue.
Of course, having to pay taxes is itself a mandate of a sort, but it’s one the electorate has largely come to terms with. Apart from fringe groups that denounce all taxation as theft, most people understand that our entire system would collapse if tax payments were purely voluntary.
The Affordable Care Act is an inefficient system that was adopted only because its architects believed, plausibly, that the more efficient single-payer approach would not be politically achievable in 2009. But single-payer now enjoys significantly higher support than it did then, and is actually strongly favored by voters in some states.
Solid majorities nationwide now favor expansion of the existing single-payer elements of our current system, such as Medicare and Medicaid. Medicaid cuts proposed in Congress have been roundly criticized. Perhaps it’s time to go further: Individual states and, eventually, the entire country, can save money and improve services by embracing single-payer health care.
How Two Common Medications Became One $455 Million Specialty Pill
After I was prescribed a brand-name drug I didn’t need and given a coupon to cover the out-of-pocket costs, I discovered another reason Americans pay too much for health care.
by Marshall Allen - Pro Publica and The Atlantic - June 20, 2017
Everything happened so fast as I walked out of the doctor’s exam room. I was tucking in my shirt and wondering if I’d asked all my questions about my injured shoulder when one of the doctor’s assistants handed me two small boxes of pills.
“These will hold you over until your prescription arrives in the mail,” she said, pointing to the drug samples.
Strange, I thought to myself, the doctor didn’t mention giving me any drugs.
I must have looked puzzled because she tried to reassure me.
“Don’t worry,” she said. “It won’t cost you any more than $10.”
I was glad whatever was coming wouldn’t break my budget, but I didn’t understand why I needed the drugs in the first place. And why wasn’t I picking them up at my local CVS?
At first I shrugged it off. This had been my first visit with an orthopedic specialist and he, Dr. Mohnish Ramani, hadn’t been the chatty type. He’d barely said a word as he examined me, tugging my arm this way and bending it that way before rotating it behind my back. The pain made me squirm and yelp, but he knew what he was doing. He promptly diagnosed me with frozen shoulder, a debilitating inflammation of the shoulder capsule.
But back to the drugs. As an investigative reporter who has covered health care for more than a decade, the interaction was just the sort of thing to pique my interest. One thing I’ve learned is that almost nothing in medicine — especially brand-name drugs — is ever really a deal. When I got home, I looked up the drug: Vimovo.
The drug has been controversial, to say the least. Vimovo was created using two readily and cheaply available generic, or over-the-counter, medicines: naproxen, also known by the brand Aleve, and esomeprazole magnesium, also known as Nexium. The Aleve handles your pain and the Nexium helps with the upset stomach that’s sometimes caused by the pain reliever. The key selling point of this new “convenience drug”? It’s easier to take one pill than two.
But only a minority of patients get an upset stomach, and there was no indication I’d be one of them. Did I even need the Nexium component?
Of course I also did the math. You can walk into your local drugstore and buy a month’s supply of Aleve and Nexium for about $40. For Vimovo, the pharmacy billed my insurance company $3,252. This doesn’t mean the drug company ultimately gets paid that much. The pharmaceutical world is rife with rebates and side deals — all designed to elbow ahead of the competition. But apparently the price of convenience comes at a steep mark-up.
Think about it another way. Let’s say you want to eat a peanut butter and jelly sandwich every day for a month. You could buy a big jar of peanut butter and a jar of grape jelly for less than 10 bucks. Or you could buy some of that stuff where they combine the peanut butter and grape jelly into the same jar. Smucker’s makes it. It’s called Goober. Except in this scenario, instead of its usual $3.50 price tag, Smucker’s is charging $565 for the jar of Goober.
So if Vimovo is the Goober of drugs, then why have Americans been spending so much on it? My insurance company, smartly, rejected the pharmacy’s claim. But I knew Vimovo’s makers weren’t wooing doctors like mine for nothing. So I looked up the annual reports for the Ireland-based company, Horizon Pharma, which makes Vimovo. Since 2014, Vimovo’s net sales have been more than $455 million. That means a lot of insurers are paying way more than they should for their Goober.
And Vimovo wasn’t Horizon’s only such drug. It has brought in an additional $465 million in net sales from Duexis, a similar convenience drug that combines ibuprofen and famotidine, AKA Advil and Pepcid.
This year I have been documenting the kind of waste in the health care system that’s not typically tracked. Americans pay more for health care than anyone else in the world, and experts estimate that the U.S. system wastes hundreds of billions of dollars a year. In recent months I’ve looked at what hospitals throw away and how nursing homes flush or toss out hundreds of millions of dollars’ worth of usable medicine every year. We all pay for this waste, through lower wages and higher premiums, deductibles and out-of-pocket costs. There doesn’t seem to be an end in sight — I just got a notice that my premiums may be increasing by another 12 percent next year.
With Vimovo, it seemed I stumbled on another waste stream: overpriced drugs whose actual costs are hidden from doctors and patients. In the case of Horizon, the brazenness of its approach was even more astounding because it had previously been called out in media reports and in a 2016 congressional hearing on out-of-control drug prices.
Health care economists also were wise to it.
“It’s a scam,” said Devon Herrick, a health care economist with the National Center for Policy Analysis. “It is just a way to gouge insurance companies or employer health care plans.”
Unsurprisingly, Horizon says the high price is justified. In fact, the drug maker wrote in an email, “The price of Vimovo is based on the value it brings to patients.”
Thousands of patients die and suffer injuries every year, the company said, because of gastric complications from naproxen and other non-steroid anti-inflammatory drugs (NSAIDs). Providing pain relief and stomach protection in a single pill makes it more likely patients will be protected from complications, it said.
And Horizon stressed Vimovo is a “special formulation” of Aleve and Nexium, so it’s not the same as taking the two separately. But several experts said that’s a scientific distinction that doesn’t make a therapeutic difference. “I would take the two medications from the drugstore in a heartbeat — therapeutically it makes sense,” said Michael Fossler, a pharmacist and clinical pharmacologist who is chair of the public-policy committee for the American College of Clinical Pharmacology. “What you’re paying for with [Vimovo] is the convenience. But it does seem awful pricey for that.”
Public outrage is boiling over when it comes to high drug prices, leading the media and lawmakers to scold pharmaceutical companies. You’d think a regulator would monitor this, but the Food and Drug Administration told me they are only authorized to review new drugs for safety and effectiveness, not prices. “Prices are set by manufacturers and distributors,” the FDA said in a statement.
Horizon acquired Vimovo in November 2013 from the global pharmaceutical giant AstraZeneca. Horizon knew it faced challenges trying to get top dollar for inexpensive ingredients. “Use of these therapies separately in generic form may be cheaper,” it said in its 2013 report to investors. But the company executed a shrewd strategy to give everyone — insurers, patients, doctors and pharmacies — the incentive to use Vimovo. It’s instructive to review its playbook.
To get Vimovo covered, Horizon made deals with insurance payers and pharmacy benefit managers — the intermediaries who help determine which drugs get reimbursed. The contracts generally included special rebates and even administrative fees for these intermediaries, the Horizon reports said, so the drug maker got paid much less than the sticker price, though it wouldn’t say how much. But the company’s net sales show the deals worked.
Horizon put boots on the ground to get the prescriptions rolling, expanding its sales force by the hundreds and focusing its marketing and sales efforts on doctors who already liked to prescribe brand-name drugs. The company’s message to doctors emphasized the convenience of prescribing the two ingredients in a single pill and that the single pill protected patients by making it more likely they would take their medication as directed.
Horizon also primed the medical community by giving donations totaling $101,000 to the American Gastroenterology Association, a specialty nonprofit for physicians. Some doctors refuse drug-industry money, if only to at least avoid the appearance of a conflict of interest. ProPublica has done loads of stories showing why doctors taking money is indeed problematic, including one about drug makers’ influence on physician specialty groups. When I went on the American Gastroenterology Association’s website, the first thing I saw was a pop-up ad from a drug company. Several of the association’s board members have received drug-company money, too. Horizon has made clear in its annual reports that donations to the group “help physicians and patients better understand and manage” the risks of pain relievers causing gastric problems.
Horizon also zeroed in on patients’ worries about drug costs. To encourage them to fill their prescriptions, Horizon covered all or most of their out-of-pocket costs. That’s why my doctor’s office could promise me I wouldn’t spend too much for my Vimovo. The program, Horizon told investors in reports, addressed the impact of pharmacies switching to less expensive alternatives and could “mitigate” the effect of payers searching for cheaper alternatives.
The strategy worked on me. I didn’t even know why I was getting the prescription, but when they told me it wouldn’t cost more than I would spend on lunch with a friend, I gave it the OK. A pharmacy I’d never heard of sent me a bottle of Vimovo for $10, even though my insurance company rejected the claim.
Turns out paying the patient’s costs motivated my doctor, too. I waited until the end of my next visit to bring up Vimovo, and then we had a follow-up conversation on the phone. Ramani didn’t know the price of the drug and found it “disturbing” when I told him. That was a surprise to me, but not to him. He said he leaves billing to his staff and doesn’t even know how much he gets paid for a lot of the procedures he performs, let alone how much insurers are being charged for drugs. The marketing arms of companies like Horizon must count on this sort of blindness.
Ramani doesn’t receive money or gifts from Horizon. (I confirmed this on ProPublica’s Dollars for Docs website, which lists drug-company payments.) He said he likes Vimovo because Horizon covers the patient’s out-of-pocket costs, entirely in many cases. Prescribing the generics or over-the-counter medications separately would actually cost more, he said. Which of course is exactly the company’s plan. But Ramani agreed that the high cost of the drug to insurers ultimately raises overall health care costs for all Americans.
Knowing Vimovo’s price, I asked him if he would continue to prescribe it. “It changes my thought process,” he said. “But at the end of the day, I have to think about the patient and whether the patient will be able to pay out of pocket or not.”
Ramani said the Horizon drug rep told him Vimovo prescriptions had to go through a particular pharmacy for the patient to receive financial assistance. In its 2016 annual report, Horizon wrote that prescriptions for its drugs might not be filled by certain pharmacies because of insurance-company exclusions, co-payment requirements, or incentives to use lower-priced alternatives. So that’s why they didn’t give me the option of picking up my pills at my neighborhood drugstore.
Instead, my Vimovo was mailed to me from White Oak Pharmacy in Nutley, New Jersey, which is about 45 minutes from my house. I drove there to find out why. The neighborhood pharmacy is on the bottom floor of a two-story brick building on a street corner, next to a hair salon.
Vishal Chhabria, the pharmacist who owns White Oak, told me the drug company sets the price of Vimovo. He insisted his pharmacy has no special relationship or contract with Horizon. Maybe the drug company steers prescriptions his way, he said, because his pharmacy will process the coupons that reduce or eliminate the patient costs, which some pharmacies don’t.
Chhabria said there is no approved generic alternative to Vimovo, so he can’t suggest one to patients. And while other drugs, like over-the-counter medications, would be cheaper for the health system overall, they are more expensive for the individual patient, he said.
In poring through Horizon’s financial filings, it appears the drug’s run may be ending. Horizon said in its report for the first quarter of 2017 that fewer insurance companies have been willing to cover Vimovo and many that do have demanded larger rebates. As a result, Horizon has been eating more of the costs of providing the drug to patients, as they must have in my case. The prescriptions have still been coming in, but net sales were just under $5 million in the first quarter of this year, down 81 percent from the first quarter of 2016.
Critics of Vimovo say that’s still more than patients should be spending on the drug. “That number should be zero,” said Linda Cahn, an attorney who advises corporations, unions and other payers to help reduce their costs. “If you want to talk about waste, that’s waste.”
Herrick, the health care economist, said Horizon cashed in by eliminating many of the barriers in the system that are meant to control costs. The company got patients on board by covering their out-of-pocket costs. It appealed to doctors by promoting the benefits to patients. And it did an end-run around chain pharmacies, which typically might suggest a lower-priced alternative, by steering prescriptions to pharmacists who would participate in their patient-assistance program.
“Somebody brainstormed: ‘How can we nullify any consumer check and balance in this supply chain? What can we do to keep the customer from asking questions?’” Herrick said.
The scheme that played out with Vimovo is bound to happen again, Herrick said. Maybe it already is. Drug companies are always on the lookout to deploy similar strategies.
I dutifully took my Vimovo for several days, until I noticed it kept me awake until 3 in the morning — a rare side effect. (Perhaps they need to add a third drug to the combo.) I probably have more than 50 pills left in the bottle on my bedside table. Maybe I could sell it back to Horizon for $1,500.
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