“Easy to Pay for Something That Costs Less”: New Study Shows Medicare for All Would Save US $5.1 Trillion Over Ten Years
by Jake Johnson - Common Dreams - December 1, 2018
Burlington, VT – Confronting the question most commonly asked of the growing number of Americans who support replacing America’s uniquely inefficient and immoral for-profit healthcare system with Medicare for All—”How do we pay for it?”—a new paper released Friday by researchers at the Political Economy Research Institute (PERI) shows that financing a single-payer system would actually be quite simple, given that it would cost significantly less than the status quo.
“It’s easy to pay for something that costs less,” Robert Pollin, economics professor at the University of Massachusetts Amherst and lead author of the new analysis, declared during a panel discussion at The Sanders Institute Gathering in Burlingon, Vermont, where Pollin unveiled the paper for the first time.
According to the 200-page analysis of Sen. Bernie Sanders’ (I-Vt.) Medicare for All Act of 2017, the researchers found that “based on 2017 US healthcare expenditure figures, the cumulative savings for the first decade operating under Medicare for All would be $5.1 trillion, equal to 2.1 percent of cumulative GDP, without accounting for broader macroeconomic benefits such as increased productivity, greater income equality, and net job creation through lower operating costs for small- and medium-sized businesses.”
The most significant sources of savings from Medicare for All, the researchers found, would come in the areas of pharmaceutical drug costs and administration.
In a statement, Pollin said his research makes abundantly clear that the moral imperative of guaranteeing decent healthcare for all does not at all conflict with the goal of providing cost-effective care.
“The most fundamental goals of Medicare for All are to significantly improve healthcare outcomes for everyone living in the United States while also establishing effective cost controls throughout the healthcare system,” Pollin said. “These two purposes are both achievable.”
As Michael Lighty, a Sanders Institute fellow former director of public policy for National Nurses United, put it during the Gathering on Friday, “We really can get more and pay less.”
The official roll-out of PERI’s analysis came on the heels of a panel discussion of the moral urgency of Medicare for All, particularly during a time when tens of millions of Americans are uninsured, life expectancy is declining, and thousands of families are bankrupted by soaring medical costs each year.
Far from being an unaffordable “pipe dream,” Columbia University professor Jeffrey Sachs—who introduced the panel at The Sanders Institute Gathering on Friday—argued that the PERI study shows Medicare for All “offers a proven and wholly workable way forward.”
“Medicare for All promises a system that is fairer, more efficient, and vastly less expensive than America’s bloated, monopolized, over-priced and under-performing private health insurance system,” Sachs said. “America spends far more on healthcare and gets far less for its money than any other high-income country.”
How 2 New Yorkers Erased $1.5 Million in Medical Debt for Hundreds of Strangers
by Sharon Otterman - NYT - December 5, 2018
If a slim, yellow envelope with a Rye, N.Y., return address lands in your mailbox this holiday season, don’t throw it out. It’s not junk.
Some 1,300 such envelopes have been sent to New Yorkers around the state, containing the good news that R.I.P. Medical Debt, a New York-based nonprofit organization, has purchased their medical debt — and forgiven it.
Last spring, Judith Jones and Carolyn Kenyon, both of Ithaca, N.Y., heard about R.I.P. Medical Debt, which purchases bundles of past-due medical bills and forgives them to help those in need. So the women decided to start a fund-raising campaign of their own to assist people with medical debt in New York.
Over the summer months, the women raised $12,500 and sent it to the debt-forgiveness charity, which then purchased a portfolio of $1.5 million of medical debts on their behalf, for about half a penny on the dollar.
Ms. Jones, 80, a retired chemist, and Ms. Kenyon, 70, a psychoanalyst, are members of the Finger Lakes chapter of the Campaign for New York Health, which supports universal health coverage through passage of the New York Health Act.
“The way sort of opened,” Ms. Jones said. They cast a wide net for donations, she said, explaining to people that the campaign was only a short-term fix for the larger problem of out-of-control medical costs.
Many people take on extra jobs or hours to afford health care, and 11 percent of Americans have turned to charity for relief from medical debts, according to a 2016 poll conducted by The Times and the Kaiser Family Foundation.
The 1,284 New Yorkers who had their debts forgiven live in 40 of the state’s 62 counties, from Westchester to Chautauqua. The sources of the debt were some 130 hospitals and branches that had provided medical services, R.I.P. Medical Debt said.
It has become increasingly easy for regular citizens to purchase bundles of past-due medical bills and forgive them because of the efforts of the debt-relief charity, which was founded in 2014 by two former debt collection industry executives, Craig Antico and Jerry Ashton.
After realizing the crushing impact medical debts were having on millions of Americans, the men decided to flip their mind-set. They began purchasing portfolios of old debts to clear them as a public service, rather than try to hound the debtors.
“I like doing this much more than I liked doing collecting,” Mr. Antico said.
R.I.P. Medical Debt had its first star turn in 2016, when John Oliver did a segment on his HBO show “Last Week Tonight,” in which he paid $60,000 to forgive $14.9 million in medical debts through the charity. About 9,000 people received the yellow forgiveness envelopes as a result.
Since then, other high-profile efforts to forgive debts through the charity include fund-raisers sponsored by NBC and Telemundo affiliates.
In all, the organization says its donations have forgiven $434 million in medical debt so far, assisting some 250,000 people. That remains only a fraction, though, of the more than $750 billion in past-due medical debt that it says Americans owe.
“It is a drop in the bucket,” Mr. Antico said.
R.I.P. Medical Debt specifically seeks to buy the debts of people who earn less than two times the federal poverty level, those in financial hardship and people facing insolvency.
It purchases the portfolios at a steep discount, a penny or less on the dollar. These bills have typically passed through several collection agencies and months or years of collections. The people, who do not know they have been selected, receive the debt relief as a tax-free gift, and it comes off their credit reports.
Mr. Antico said he thought of his charity as a “resolutionary, not a revolutionary” effort, one that offers people relief, but that cannot solve underlying issues like high medical costs. Through personal data associated with the debt accounts, they are able to target specific classes of people, such as veterans, to relieve their debts.
“I do like the idea that people do not have to ask for help,” he said. “The random act of kindness is kind of a cool thing.”
The envelopes from Ms. Jones and Ms. Kenyon’s gift went out in November, but new letters are going out all the time. And don’t worry. Even if you throw your yellow letter out, your debt is still forgiven. You just might not know about it until the next time you run your credit.
A Tough Negotiator Proves Employers Can Bargain Down Health Care Prices
by Marshall Allen - NPR - October 2, 2018
Marilyn Bartlett took a deep breath, drew herself up to her full 5 feet and a smidge, and told the assembled handful of Montana officials that she had a radical strategy to bail out the state's foundering benefit plan for its 30,000 employees and their families.
The officials were listening. Their health plan was going broke, with losses that could top $50 million in just a few years. It needed a savior, but none of the applicants to be its new administrator had wowed them.
Now here was a self-described pushy 64-year-old grandmother interviewing for the job.
Bartlett came with some unique qualifications. She had just spent 13 years on the insurance industry side, first as a controller for a Blue Cross Blue Shield plan, then as the chief financial officer for a company that administered benefits. She was a potent combination of irreverent and nerdy, a certified public accountant whose smart car's license plate reads "DR CR," the Latin abbreviations for "debit" and "credit."
Most importantly, Bartlett understood something the state officials didn't: the side deals, kickbacks and lucrative clauses that industry players secretly build into medical costs. Everyone, she had observed, was profiting except the employers and workers paying the tab.
Now, in the twilight of her career, Bartlett wanted to switch teams. In her view, employers should be pushing back against the industry and demanding that it justify its costs. They should ask for itemized bills to determine how prices are set. And they should read the fine print in their contracts to weed out secret deals that work against them.
The way health care works in America, most employers cede control of costs to their health insurers, the hospitals that treat their employees and the companies they pay to manage their benefits. The costs are a dense thicket that few employers feel equipped to hack through. So they don't.
This failure helps explain why Americans pay the highest health care costs in the world — and why the tab continues to increase, year after year. Employers fund these costs through employee compensation packages, so the math is typically bad news for workers: Rising health costs mean fewer wage increases and less take-home pay. Montana was no different.
And so Bartlett pitched a bold strategy. Step 1: Tell the state's hospitals what the plan would pay. Take it or leave it. Step 2: Demand a full accounting from the company managing drug costs. If it won't reveal any side deals it had with drugmakers, replace it.
Bartlett's strategy would expose a culture in which participants fail to question escalating costs and the role each part of the health care industry plays in them. These little-seen aspects of the health insurance industry and the way Americans pay for medical care are the focus of an ongoing series from ProPublica and NPR.
As Bartlett laid out her plan that day in July 2014 in a conference room in Helena, Sheila Hogan, then-director of the state's Department of Administration, liked what she was hearing. They needed something radical. To her knowledge, no one had ever tried anything like this.
Bartlett would be taking on some of the state's power players: hospitals and health insurers — and their politically connected lobbyists. If her plan didn't work, the state and its employees were in trouble. If it did, it could create a blueprint for employers everywhere.
Bartlett knew employers have negotiating power that few of them use. The health care system depends on the revenue produced by the surgeries, mammograms, lab tests and other services it provides, and it can ill afford to lose it. Bartlett got the job. She would call the industry's bluff.
Ballooning medical costs
Employer-sponsored health benefits are almost as old as America itself. In 1798, John Adams, the second U.S. president, signed a law that took 20 cents per month from the paychecks of U.S. seamen to fund their medical care. After the Civil War, lumber, mining and railroad companies in the American West withheld money from employee paychecks to pay for doctors and hospitals.
After World War II, such plans became mainstream. Today, about 150 million Americans get their health benefits through their employers. The industry is dominated by what some call the "BUCAH" plans – Blue Cross Blue Shield, UnitedHealth Group, Cigna, Aetna and Humana. Half a dozen health insurers currently sit near the top of the Fortune 500, with combined annual revenue of about half a trillion dollars.
Despite the money at stake, many employers have, wittingly or not, deferred to the industry. Decisions about health benefit plans are usually made by midlevel human resources managers who may not understand the forces in the medical industry operating against them. They're often advised by insurance brokers, who are traditionally funded by the industry. And they're trying to keep the peace for employees — who demand convenient access to the care they need. It's a recipe for inertia.
The conventional wisdom is that insurance companies want to reduce health care spending. In reality, insurers' business plans hinge on keeping hospitals and other providers happy — and in their networks — often at the expense of employers and patients.
Employers often feel caught between rising costs and concern that changes they make will be bad for their employees, says Michael Thompson, president of the National Alliance of Healthcare Purchaser Coalitions, which represents groups of employers who provide benefits to more than 45 million Americans. And, he says, they rely on the advice of industry experts instead of digging into the details.
"We have got to get control of this thing or it's going to bring down the economy, our personal bankrolls and our wages," he says. "It'll cost jobs in the United States and it'll bring down our public programs. This is not a small issue. It's a huge issue."
But Bartlett soon discovered that it was easier to talk about pushing back than to do it.
A showdown with Montana's hospitals
Bartlett arrived in Helena, the state capital, in fall 2014 as an outsider navigating a minefield of established relationships. From the start, she knew she would have to tackle the staggering bills from the state's hospitals, which made up the largest chunk of the plan's expenses. It wouldn't be popular because they also made up a significant chunk of hospitals' profits
Montana, like many large employers, self-funds its plan. That means it pays the bills and hires an insurance company or other firm to process the claims. More than half of American workers are covered by self-funded plans. As the boss in this arrangement, Bartlett assumed she would have access to detailed information about how much the plan, which was managed by Cigna, paid for procedures at each hospital. But when she asked Cigna for its pricing terms with the hospitals, Cigna refused to provide them.
Its contracts with hospitals were secret, Cigna representatives told her. That didn't sit well with Bartlett, she recalls. "The payer cannot see the contract," she says, "but we agree to pay whatever the contract says we will pay."
A cumbersome querying process set up by Cigna allowed her to get individual claims and other limited information. But the company would only give her aggregate data, with things lumped together, to show what she paid each hospital. It was like telling a family trying to reduce its grocery spending that it could only see what it spent in a year, not a breakdown of what bread and fruit and other items cost at each market.
When Bartlett continued to demand information, Cigna balked; it needed to balance what she wanted with keeping the hospitals happy. "I don't see the need for a balance," she recalls telling them. "I am representing the payer."
Cigna declined to answer questions about its relationship with Montana's plan, but it said in a statement that it had prioritized the plan's preferences and needs.
Bartlett ultimately settled on a radical solution: The plan would set its own prices for the hospitals.
In the illusory world of hospital billing, the hospitals typically charge a high price for a procedure, then give insurers in-network discounts. These charges and discounts might be different for each procedure at each hospital, depending on who has more leverage during negotiations.
The discounts, however, are meaningless if the underlying charges aren't capped. When Bartlett looked at a common knee replacement, with no complications and a one-night hospital stay, she saw that one hospital had charged the plan $25,000, then applied a 7 percent discount. So, the plan paid $23,250.
A different hospital gave a better discount, 10 percent, but on a sticker price of $115,000. So, the plan got billed $103,500 — more than four times the amount it paid the other hospital for the same operation. Bartlett recalled wondering why anyone would think this was OK.
Under Bartlett's proposed new strategy, the plan would use the prices set by Medicare as a reference point. Medicare, the federal government's insurance for the disabled and patients over 65, is a good benchmark because it makes its prices public and adjusts them for hospitals based on geography and other factors. Montana's plan would pay hospitals a set percentage above the Medicare amount, a method known as "reference-based pricing," making it impossible for the hospitals to arbitrarily raise their prices.
Fed up, Bartlett ended the plan's relationship with Cigna. Her battle to upend the status quo riled some employees of her own office, who complained that she was demanding too many changes. Some quit. Bartlett didn't let up.
That Christmas, the Cigna representative sent each employee in Bartlett's office a small gift, a snow globe. Bartlett didn't get one.
But her ideas were exciting to Ron Dewsnup, the president of Allegiance Benefit Plan Management, a Montana-based subsidiary of, ironically, Cigna. Allegiance had been studying variation in hospital prices for years and had twice sent reports to Montana hospitals showing how their prices for the same procedures differed significantly. The company had also considered a reference-based pricing model, but it "didn't have any employers that were serious about taking a stand," Dewsnup says.
Allegiance got the state contract and began by comparing what the plan paid the 11 biggest hospitals in the state with the Medicare rates. The cheaper ones averaged about twice the Medicare rates, the most expensive one about five times the Medicare rates.
No one wanted to stiff the hospitals, but this was ridiculous, Bartlett recalls thinking. She determined the new rate for all hospitals would be a little more than twice the Medicare rate — still a lucrative deal, but a good starting point to get prices under control. The contracts would also prohibit a practice called "balance billing," under which hospitals bill patients for whatever charges a health plan refuses to pay.
It would mean a boost for some lower-cost hospitals. Now, she had to persuade the more expensive hospitals to take less.
"You're in or you're out"
Kirk Bodlovic, the chief financial officer of Providence St. Patrick Hospital in Missoula, remembers the day an entourage from the state health plan, including Bartlett and Hogan, arrived at his hospital.
Bodlovic knew from Allegiance's reports that St. Patrick's prices were on the high side. But he wasn't prepared for the ultimatum: If St. Patrick's wanted to treat state employees, the hospital would have to accept lower rates. If it didn't, the state would pay for its employees to travel to other hospitals.
"You're in or you're out, basically," Bodlovic says.
The state's demand set off a series of meetings within the Providence chain, which also operates in California, Alaska and the Northwest. It didn't have a lot of leverage because Missoula is a two-hospital town. Its competitor, one of the lower-priced facilities, had already agreed to the deal.
St. Patrick's considered rejecting the deal. Bodlovic says that thought gives him heartburn to think about now, envisioning the wrath of doctors if some 3,000 state plan members had ended up at a rival hospital. And the hospital would have lost about $4 million in annual revenue. "That's a good chunk of business," he says.
In their final analysis, he says, St. Patrick's officials decided it was the "lesser pain" to accept the new contract than to be left out of the deal.
While the state worked to get hospitals to sign new contracts, their CEOs and lobbyists plotted end runs, scheduling meetings with the governor's office to propose alternative solutions. When they arrived for the meetings, they found that Bartlett had also been invited. She effectively blocked their ideas.
Still, Bartlett had to get all the hospitals on board — or else. The new pricing was set to go live on July 1, 2016, and, with a month to go, six of the major hospitals were holding out. "I started to panic," Bartlett recalls.
During sleepless nights, Bartlett imagined thousands of state employees being forced to zigzag across the state for medical care or running up massive bills at noncontracted hospitals. She put together communication plans for members describing how they would need to travel to avoid certain hospitals.
With her stomach in knots, she went on the offensive. She took a graph showing the variation in hospital prices to state legislators. Then she threatened to go public. She couldn't name names because of contract restrictions, but she could tell the media that some hospitals' prices were three times as high as others and let reporters figure out which ones were which.
Five of the holdouts surrendered and signed the contract. "The hospitals didn't want that out there," she says.
Only Benefis Health System in Great Falls, one of the higher-priced hospitals, refused. The hospital's CEO told the local newspaper that "it was business for them and it was business for us."
The new plan went into place July 1, without Benefis as a contracted hospital. Bartlett ratcheted up the pressure one more time, calling in the Montana Federation of Public Employees. The union has hundreds of members in the Great Falls area, including Keith Leathers, who works as an investigator with the state's child support enforcement division.
Leathers has a young daughter with scoliosis, and he didn't want to drive long distances to get her the care she needs. He readily engaged in the fight.
"We have a regional medical facility here that's supposed to be able to handle almost any medical problem, period," he recalls thinking. "And I got to go out of town to get care because they want to charge more than anyone else?"
Union leaders launched a campaign against the hospital. Leathers says he sent a postcard and made a phone call every day to the hospital CEO, the board members — anyone he could find in leadership. He urged them to accept the new rates. Hundreds of other employees from across the state did the same.
Within a month, Benefis agreed to join the health plan. The hospital declined to comment for this story.
Leathers says employers and workers should be protesting health care costs "over and over again" all over the country. "Are we going to wait until the health care system just crashes?" he says.
When Bartlett took over the state health plan, it spent about $200 million a year. Bartlett's team estimated that the new hospital pricing schedule saved the plan more than $17 million in the second half of 2016 and all of 2017 — almost $1 million a month. By 2017, a plan that state officials had predicted would go broke had turned itself around. And it's projected to save an additional $15 million in 2018 without cutting benefits to employees or raising their rates.
Exposing hidden drug deals
But Bartlett had one more target in her sights: prescription drug costs.
Health plans contract with separate companies, middlemen entities known as pharmacy benefit managers, to get members their medication. And everyone assured Bartlett the state's pharmacy benefits deal was "state of the art." But just like with Cigna, she insisted on examining it herself. That wasn't easy because the pharmacy benefits were run through a cooperative arrangement with other health plans, including those of universities, school trusts and counties. The state plan anchored the co-op, and the other partners were happy with the arrangement.
Bartlett knew that pharmacy benefit managers are notorious for including deals that boost their profits at the expense of employers. One of the common tricks is called the "spread." A pharmacy benefit manager, for example, will tell an employer it cost $100 to fill a prescription that actually cost $60, allowing the pharmacy benefit manager to pocket the extra $40. The fine print in the contracts often allows it.
The spread is widespread. A recent report by the Ohio state auditor noted that the spread on generic drugs had cost that state's Medicaid plan $208 million in a single year — 31 percent of what it spent.
Sure enough, when she got the contract, Bartlett found that the state plan had fallen victim to the spread.
Pharmacy benefit managers also rake in dollars through rebates paid by pharmaceutical companies. Most health plans would assume that because they're paying for the drugs, they should get any rebates. But pharmacy benefit managers often don't disclose the size of the rebate, which allows them to keep some or most of it for themselves. When Bartlett pressed, she discovered the state wasn't getting the full amount of its rebates.
Montana was getting taken, but it put Bartlett in a touchy political situation. The co-op needed the state as a partner or it wouldn't survive. Bartlett decided her allegiance was to the plan's bottom line. She pulled out of the deal.
"She wasn't afraid of ruining her career or making people angry," says Scott McClave, a consultant with Alliant Insurance Services who helped analyze the pharmacy benefit contract.
Bartlett says it helped that she was near the end of her career and didn't need to please people. "I'm 67, so I could give a s***," she says. "What are they going to do, fire me? I'm packin' a Medicare card."
Bartlett found a pharmacy benefit manager, Navitus Health Solutions, that would not take any spread and would pass along all rebates in full. The next year, the plan saved an average of almost $16 per prescription. It purchased a similar mix and volume of drugs in 2016 and 2017. But it saved $2 million on the spread. And its revenue from rebates jumped from $3.5 million to $7 million, Bartlett said. The savings continue to this day.
In July of this year, her mission accomplished, Bartlett left her position as administrator of the state employee health plan. She now works for the office of the Montana insurance commissioner, which is taking on pharmacy benefit managers in a bigger way.
But Bartlett also has a side gig as a guru to other employers across the country seeking to pay less for their health benefits. Her advice boils down to pushing back. "You've got to get in there and do it," she says.
So how are Montana's hospitals after the price cut? Just fine, it appears.
Bob Olsen, vice president of the Montana Hospital Association, says he has not heard hospital leaders say they are struggling under the new state contract. They have had "reasonable financial performance," he says.
But Bartlett's legacy may be even greater. With the state's model in mind, St. Patrick's Bodlovic said Blue Cross Blue Shield of Montana, the state's largest insurer, recently came calling. Now it wants a similar pricing arrangement.
ProPublica is a nonprofit newsroom based in New York. Sign up to get ProPublica's Big Story newsletter to receive stories like this one in your inbox as soon as they are published.
Why mixing Medicare with commercial insurance is not the health reform we need
by Diane Archer - Just Care - December 5,. 2018
At a gathering last weekend in Burlington, Vermont, convened by the Sanders Institute, with support from National Nurses United, I spoke about the perils of giving people the choice between Medicare and commercial insurance. We need improved Medicare for all, one single federally administered health plan that meets everyone’s needs.
To maximize profits, commercial health insurers, including Medicare Advantage plans have to steer clear of delivering good affordable care to people who most need care, people with complex or disabling conditions. They don’t compete to deliver better care at lower cost for people with costly needs and never will. It’s not in their financial interest.
Think about it. When was the last time you heard Aetna, or UnitedHealth boast about its great cancer or stroke care or say “Join us if you have heart disease?”
Commercial health insurers too often design their networks so that they don’t include the top cancer center or other centers of excellence in a community. They want to keep people with cancer and other costly conditions from signing up with them. Have you ever heard of a health plan that says if you need costly care, you can use top doctors and hospitals with low costs? That’s the one we all want. That’s Medicare for all. You can’t get that from a commercial health plan.
Here’s why. If a group of people got together to offer the best commercial health insurance, with a robust network of the best hospitals and doctors, they would be out of business before they opened their doors. Everyone needing costly care would join. They couldn’t spread costs across healthy and sick. And, they couldn’t afford to deliver needed care. And, that, in a nutshell is why commercial health insurers will never meet our needs.
There is no way to create a level playing field between commercial insurers and Medicare. Commercial health insurers will always game the system if there is a public option and people have the choice of traditional Medicare. Only if there is a single payer, as with improved Medicare for all, can you pool and broadly distribute costs, rein in spending, and guarantee everyone good coverage.
Commercial health insurers force people to gamble with their health and their savings. If you’ve ever wondered why you have little or no clue what you’ll pay for your care with your health insurance, it’s not your fault. They do not tell you.
Commercial health plans are designed specifically to not meet everyone’s needs. Their narrow networks, arbitrary delays and denials of care and high out-of-pocket costs penalize people who need costly care and keep people from getting needed care.
We need to end systemic bureaucratic waste and profiteering in our health care system. Commercial insurers drive up administrative costs and pocket profits for their shareholders rather than investing in their members’ needs, let alone the public health. They don’t look out for the long-term collective health of Americans.
We need a transparent single-payer health care system so we understand what’s working and what’s not working and the government can drive systemic improvements. Commercial insurers hide their data, claiming it’s proprietary. Their financial incentives are not aligned with the public good.
If you support Medicare for All, please sign this petition to Congress.
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