Bill Nemitz: On cancer and credit cards: Speaking her truth to the guys in suits
by Bill Nemitz - Portland Press Herald - April 21, 2019
As paid lobbyists line up in Augusta against a package of prescription
medication reform bills, the lone voice of a woman from Limestone lays
bare the travesty of high drug prices.
by Bill Nemitz - Portland Sunday Telegram - April 21, 2019
Christina Raymond didn’t care. She’d never been to a legislative hearing before, let alone spoken at one. But on this day, 250 miles from her home in far northern Maine, she would be heard.
“The thing is, I have breast cancer,” Raymond told members of the Health Coverage, Insurance and Financial Services Committee. “And I have an auto-immune disease called lupus. So, I have been 20 years being sick and thousands and thousands of dollars in medication and health care. However, surviving my cancer is not all I’ve had to deal with. The high costs of medication have led me to go into debt and I had to file bankruptcy.”
High costs? Try crime in progress.
Raymond, 39, has lived all her life in Aroostook County. She grew up in Madawaska, then moved to Caribou and now lives with her husband, Jeffrey, in Limestone.
She smiles a lot, even when she’s nervous. And make no mistake, as she rose to the podium in this roomful of people she’d never met, Raymond was palpably nervous.
But she’s also angry. The longer she struggles to stay alive, the deeper into debt she sinks. Taking her many and varied prescription medications, medical miracles every one, is the easy part. Paying for them isn’t.
“I have had 18 rounds of chemotherapy to treat my breast cancer. Before each round, I had to take a drug called Neulesta, which helps my body fight infections after treatment. And the Neulesta costs $6,000 a shot, which costs $12,000 a month. And I had to take it for two months. Twenty-four thousand dollars out of pocket,” she testified.
“I also need a cancer medication called Lupron, and the Lupron is for five years, which will cost myself $1,500 a month out of pocket. Five years of treatment costs $99,000,” she continued. “Because this medication is not approved for breast cancer treatments, that $99,000 is out of my pocket, which I had to go into debt on credit cards.”
Medicare, which Raymond receives through Social Security disability insurance, pays for a small portion of her meds. Her never-ending search for discounts and grants to help beat back the bills also helps some – although there are no guarantees from one year to the next that this or that sliver of assistance will be renewed.
Nevertheless, it’s never enough. The last time she checked, Raymond owed $36,000 on credit cards she uses not just at the pharmacy, but for food, gas and other daily necessities.
Hence the bankruptcy, now in progress.
“It’s quite difficult,” Raymond told the committee in a moment of painfully obvious understatement.
Last week’s proceedings focused on five bills, all spearheaded by Senate President Troy Jackson, D-Allagash.
The measures would allow the state to import wholesale lower-priced drugs from Canada; establish a Prescription Drug Affordability Board to oversee and set limits on excessively expensive drugs; codify federal drug policy into state law so Mainers can individually fill their prescriptions across the border (where, according to Jackson’s office, the price averages 30 percent cheaper); force insurers and pharmacy benefit managers to pass along any and all drug manufacturer rebates to the consumer; and require fuller disclosure of the costs of drug production, research and development, marketing, advertising and the actual price paid for a drug by the patient.
The guys in the suits, all paid to testify via one or another tentacle of Big Pharma, told lawmakers – and, by extension, the people of Maine – that this was all a terribly misguided crusade.
Speaking of the importation of low-price Canadian drugs, they warned that all of Canada hates the idea, that there are only so many drugs up there and our neighbors to the north will run out, that sooner or later organized crime will get involved. Plus, they said, it’s all in conflict with federal law anyway, so why even try?
It was enough to make Jackson laugh. “All of a sudden, we’re going to run out of drugs. The whole country,” he said, parodying his opponents “I mean, come on.”
Sitting in the quiet of his office, Jackson said he’s pushing this reform package at the state level, as have other states as politically diverse as Vermont, Utah, Colorado, Missouri and West Virginia, for one simple reason.
“I say we have to do it because if we don’t, no one else is going to,” he said. “What else are you going to do? We’re not going to make that result in D.C. There’s no other way to make it happen.”
Health care and prescription costs are, by far, the No. 1 concern Jackson says he hears from his constituents. And he’s beyond weary of listening to their stories – food or medication? mortgage payment or co-pay? – only to shake his head and say, “I feel for you, but there’s nothing I can do for you.”
He’s also had it up to here with the lobbyists who “are all taking money off the backs of consumers in this state. Their greed is just so rampant, it’s unbelievable.”
Christina Raymond would second that. Her in-laws recently paid for her passport as a Christmas present – she’d long held off because she couldn’t afford the $145 fee – after she learned that the Lupron she pays $1,500 per dose for here costs less than a third of that right across the border.
She knew, as she took a deep breath Wednesday, who all those guys by the far wall were and why they were there. She also knows there’s a vast chasm between their world, which took in $457 billion in prescription drug sales from Americans in 2015, and her world, which teeters on a precarious pile of maxed-out credit cards.
“I’m just thinking, ‘These guys are making good money. They don’t know what it’s like to be the little guy.’” Raymond said in an interview after her testimony. “And I’m like, ‘I’ve got a story to share and I’m going to do my best to share that. Maybe they’re not going to listen, but I have to say what I have to say.’”
And so, share she did. And as the crowded room listened in rapt attention, Raymond’s story rang truer than all the over-the-top warnings, all the single-space typed statements and supporting documentation, all the expressions of sympathy rendered hollow by the fact that the men in suits, first and foremost, are paid large sums of money to preserve the status quo.
As Jackson so succinctly put it, “I don’t even know how they can show up in a building like this and continue to spout their (expletive).”
But they do. And they will. And should one or more of Jackson’s bills pass, the pharmaceutical lobbyists will make way for the pharmaceutical lawyers, who will flock to the courts the next morning to argue that Maine has no idea what it’s doing.
“Screw ‘em,” Jackson said. “Sue us, then.”
https://www.pressherald.com/2019/04/21/on-cancer-and-credit-cards-speaking-her-truth-to-the-guys-in-suits/
The healthcare claims adjudication process in the United States—A picture is worth a thousand words
by Henry Broeska - Original Article
We already know that Canada’s healthcare costs across the board are cheaper by half. And we know that Canadians don’t pay personal premiums, co-pays, or anything out of pocket for their basic medical care, and that includes hospitalizations. So how can Canada cover everyone and do it for less, given all of the advanced technology we’ve thrown at our system? One of the most powerful visual aids I can imagine illustrates the difference between Canada and the US in the area of claims processing. Almost everyone reading this can relate to claims processing problems because most Americans have had issues with multiple different bills for the same doctor’s visit, or have received care-related bills that they never owed. How do they handle the same problem in Canada?
Claims adjudication is the process by which a third-party payer receives the claims of an insured member’s medical bills. Claims for those bills are then accepted or rejected based on the member’s insurance policy. In the US there are hundreds of Payers, each offering perhaps hundreds of differently structured health insurance policies. This means that for each Payer there are tens of thousands of permutations based on the benefit structures they offer.* Providers and insured plan members alike must navigate their system in order to be assured of payment for any insured service. In the United States, the healthcare claim payment infrastructure for any one Payer looks something like Figure 1, but all Payers have their own unique architecture and mechanisms for completing the adjudication process. Very little is standardized except for the growing number of regulatory requirements related to electronic healthcare payment security and health data transfer and storage. If anything, I’ve oversimplified the Payer’s work flow process in my illustration. There are layers and layers of processes and rules that sit below what is shown on top. I’ve also dredged up some of those deeper processes in order to display the various categories.
Fig.1 US Healthcare Claim System Payment Infrastructure
Over recent years, with the advancement of internet connectivity and electronic technologies, health insurance companies have tried to speed-up their floundering adjudication processes through more automation. The claim adjudication and payment processes that used to be fairly straight forward several decades ago turned into the illustration represented by Figure 1 (above). In an attempt to expedite the adjudication process, insurance companies expanded their administrative divisions and technological capacities by building in-house solutions and/or by contracting with third-parties like Cerner, Epic, or McKesson among others. Each of those companies offer their own different technology services and process solutions related to billing. This has ultimately exacerbated the adjudication challenge because no two companies use common solutions. The Holy Grail for all companies has been ‘real-time adjudication’ (RTA), just like credit cards, but nobody has yet to demonstrate an RTA adjudication model for healthcare claims that works effectively. And there’s a good reason why it can’t be done.
The Rube Goldberg-inspired flow chart is how ridiculous the system looks on paper. In practice it’s actually much worse. Imagine several layers of connected processes below the top layer represented in the drawing; imagine each Payer with their own similar system with no adjudication being performed the same way across the entire system.
As the fragmented administrative processes become more complex each year, they have also become institutionalized. By institutionalized, I mean that each one of those small waypoints connected to some other function in the process represents an entire area of industry where dozens of companies compete for dominance within that silo of specialized function. For example, let’s isolate electronic data interchange or EDI, which is necessary for the secure transfer of health data between multiple organizations. We find many companies offering EDI solutions including IBM, SAP, Microsoft, along with a hundred other smaller companies. It’s impossible to do without EDI in US healthcare because of the system’s need for complex security. But similarly, it’s impossible to do without all of the other complicated features as well. In the current multipayer system, the way it is now is the way it’s going to stay, as long as Payers can continue to offload the costs of the system’s inefficiencies to the Providers and the members themselves.
From the perspective of the insured member, the only thing that’s public-facing is the care that’s received. Members have no idea that far more technological complexity goes into making their invoices than any treatment they could receive for their medical condition. They only know that waiting to get the final bill takes months, and often includes unexpected charges that seem arbitrary and unfair. The costs of the administrative inefficiencies are completely hidden so there’s little patients can do about the ‘baked-into-the-cake’ administrative costs that make up about 25% of all US healthcare expenditures.
With so much technology and cost attributed to the billing process, you’d think that they would have gotten pretty good at it by now. But the billing process causes real pain for Americans. The interviews I conducted for this exposition led me to believe that receiving multiple bills of different amounts from Providers is the norm, not the exception. Every person I spoke with indicated they had encountered billing problems from their doctors over the past few years. Chief among their complaints were incorrect bills, surprise charges, costs not covered by their plans, and erroneously denied claims. Bill corrections often took so long to fix that outstanding balances—for money not owed, mind you—had already been handed off to collection agencies and members’ credit ratings had been damaged as a result. Sometimes the patient didn’t even know they were in debt collection until they searched their credit score. I couldn’t find any data on the extent of healthcare billing issues in the US, but problems seem to be commonplace and persistent. Unpaid bills lead to other problems that can impact health. Patients requiring care often don’t get seen by their doctors for reasons related to unpaid bills.
The US stands alone in this Dystopic model of administrative inefficiency, which is reflected in almost any healthcare-related statistic you care to name. About a third of each dollar spent on healthcare in the US goes to supporting the waste, fraud and abuse in the system—over a trillion dollars each year. But that trillion in excessive cost serves a darker purpose. Because billions of dollars in profit are being rewarded to corporations for this institutionalized inefficiency, it’s a system that represses any attempt at constructive reform. The companies don’t want change; complexity is necessary for the illusion to work. The insurance companies want to show us convincing evidence that the system is too complex to ever consider something less. To maintain their pre-eminence in the sector, industry’s solution will always be the application of more advanced technologies. In reality, they are achieving the opposite of their goals—adding on even more confusion and complexity.
Part of each dollar ‘earned’ on the backs of both members and taxpayers goes towards opposing reformers who are attempting to apply a measure of control over national health policy. The obscene amount of revenue generated by each company continues to fund unrelenting attacks on proposed changes to the status quo, even though consumer problems related to the billing process are legion. As insurance companies look to deny more health benefits in aid of profits, their influence on government policy has already produced more unreliable and unsafe insurance products through institutionalized deception (ie: high-deductible, low coverage insurance policies, otherwise known as ‘junk insurance policies’). With deductibles, out-of-pocket expenses, and co-payments increasing each year, more patients are facing costs that they can’t afford. But hurting their customers isn’t a problem taken seriously by the insurance companies. Addicted to profits, there’s no way around it. Their lobbying and control of lawmakers with campaign re-election financing perpetuates their narrow, special interest to the unending detriment of the American public’s social, economic, and healthcare needs.
“Masters in our own house we must be, but our house is the whole of Canada.”—Pierre E. Trudeau
For comparison, I’ve created the same claim adjudication flow for a healthcare system like Canada’s (represented by Fig 2). Keep in mind that claims for exactly the same medical tests and procedures occur in Canada as the US. On their authority as accredited Providers, Canadian physicians make claims submitted electronically to the provincial health Payer through a secure interface. The process happens much the same way as it does in the US. But that’s where the similarity ends because there’s only one plan and one Payer. Canadian physicians claim against the single provincial Payer based on their ID numbers and the work they provided. To put it into American terms, Canadians are all members of the same plan with the same coverage.
To make a claim for a service provided to a patient, a doctor or his office staff simply enter standardized international codes for any diagnostic or procedural service (ICD-10), along with the provincial tariff codes into a database hosted by the Payer. For Providers, there is only one set of prices for each province based on a fee-for-service payment structure. These prices are maintained for years with an annual inflation factor added. For patients, there is nothing to do; no paperwork, no bills. Everyone receives the same comprehensive coverage through their provincial plan based on a system that covers all basic medical services. Because the provincial plan pays, no Canadian has ever been denied care or accumulated personal debt for a medical reason. The administrative cost in such a system is minimal. In a well-known comparative study, administrative overhead accounted for 11.7% of private plan healthcare expenditures in the US, compared to 1.9% for provincially administered plans in Canada. US Medicare, a single payer plan, roughly analogous to the Canadian plan, had expenditures that were closer to Canadian expenditures at 3.6%, indicating there is true value in adopting a single payer.
In my experience, one Canadian clinic administrator can take care of all of the billing for a group of 10 to 20 doctors along with performing additional office tasks. Billing is made easier because there’s no such thing as pre-authorization on the front end and the adjudication process for claims is infinitely simpler. While some small percentage of initial claims are denied for cause by the provincial Payer, many re-submitted claims are paid once they are corrected or challenged. Depending on area of practice, 95-100% of claims are paid by the provincial Payer every 15 days. That’s the length of the revenue cycle in Canada—two weeks. Some doctors choose to use a third-party billing service, which generally takes 2% of the gross but reduces physicians’ time away from clinical practice. Most Canadian physicians tell me that they spend less than an hour each day on paperwork even if they do their own billing. In such a simple system that’s so easy to audit, there really is no opportunity for fraud to occur. Healthcare fraud is virtually unknown in Canada. The flow chart for the Canadian healthcare system looks like Fig. 2.
Fig. 2 Healthcare Claim Payment Infrastructure in Single Payer System
Meanwhile, back in the States
Apart from the direct administration of healthcare, there are millions of Americans who are employed in the representation of each one of those little boxes seen in Fig. 1. Most of them work in private tech companies outside of the healthcare system itself and are not considered part of the administrative waste. They say that the products they are building today like Blockchain and Artificial Intelligence will be the future of the healthcare claims adjudication and payments in the US. There is fierce competition that drives innovation in each category. They make promotional assertions that their companies build the products that already reduce the cost of US healthcare administration. They say their products stop fraud or increase efficiencies related to data capture, debt collection, or prolonged revenue cycles. But the truth is that their products only serve to preserve and eternalize the current bloated system. There is no doubt that in a single payer system like Canada’s, there would be no use for their products or services. Imagine—an entire industrial tech sector that’s as redundant as a fireman on a bullet train!
“Different is better than better.” —Sally Hogshead
The medical billing process is a major driver of healthcare spending in the US. Technology has streamlined many other consumer/industrial sectors; everything from banking to online purchasing to media distribution and ride sharing. Technology in business has changed the landscape of America. But that’s not true for the healthcare claims process. The complexity of the process with its multiplicity of plans and contracts, medical codes, share of government and private funding, inconsistent deductibles and reimbursement levels, even within the same plan, make it impractical to apply algorithms. Algorithms are computations that deal with finite numbers of precisely defined successive states, eventually producing a final outcome. But health insurance claims are more like snowflakes—no two are exactly the same, making algorithms that depend on ‘sameness’ difficult to adapt. In fact, hundreds of different rules may apply to the resolution of each different transaction. And that’s really why the claims flow chart in Figure 1 looks the way it does. No matter how many feedback loops you build in, there continue to be so many computational failures along the algorithmic flow that real humans must intervene every so often to resolve problems and move the claim forward. But human touches are expensive and time consuming.
To me the healthcare payments system is like an expensive new Mercedes S-Class coup without a working motor. It connects to all of the latest internet technology and looks wonderful parked on your driveway—but if you want to go somewhere, you must hire people to push it around. This is why job growth in the health sector is in the double-digits. Unable to make automation work, companies are hiring more low-level administrators to key in data at the choke-points. In this scenario there is no need for more physicians who would only generate more paperwork—best to curtail the care to lessen the admin burden, and raise prices to pay for the new hires. Oddly, Americans seem to be proud that the health sector is producing so many jobs, but at what cost? We’ve placed higher value on the function of administration than the delivery of healthcare itself. So far, industry’s solution is to simply pass on higher costs to member/patients through higher premiums and out-of-pocket costs, while providing less coverage.
Fig. 3 Growth in Physicians and Administrators US Healthcare System 1970-2017
Cleaving the Gordian Knot
When will Americans say ‘enough is enough?’ According to a Harvard study, we put up with $60bil in overpayments (Americans being charged and paying more than they should have been billed) and $270bil in medical billing fraud each year (Sparrow). The American system absorbs more in unrecoverable costs due to fraud each year than the entire Canadian healthcare system costs to run! The creeping loss of health insurance coverage year-over-year portends a disastrous outcome for the health and welfare of tens of millions of Americans if we don’t act.
If a picture is worth a thousand words, then the two comparison process diagrams I’ve illustrated for this essay supplies the solution to our problem. The two-part solution to the injustices spawned by the insurance companies is the abandonment of the current fragmented system and the consolidation of authority over national health policy. Only a Medicare-for-all single payer solution can achieve the outcomes Americans need and deserve.
*This is the ‘differentiation of healthcare’ in the United States that doesn’t exist in any other country. Making Americans believe that some healthcare is better than other healthcare is a trick used by the medical industry to make Americans believe that it’s the same as purchasing Cadillacs vs Chevys. In reality, there is only healthcare based on best practices.
Hospitals Stand to Lose Billions Under ‘Medicare for All’
by Reed Abelson - NYT - April 19, 2019
For a
patient’s knee replacement, Medicare will pay a hospital $17,000. The
same hospital can get more than twice as much, or about $37,000, for the
same surgery on a patient with private insurance.
Or take another example: One hospital would get about $4,200 from Medicare for removing someone’s gallbladder. The same hospital would get $7,400 from commercial insurers.
The yawning gap between payments to hospitals by Medicare and by private health insurers for the same medical services may prove the biggest obstacle for advocates of “Medicare for all,” a government-run system.
If Medicare for all abolished private insurance and reduced rates to Medicare levels — at least 40 percent lower, by one estimate — there would most likely be significant changes throughout the health care industry, which makes up 18 percent of the nation’s economy and is one of the nation’s largest employers.
Or take another example: One hospital would get about $4,200 from Medicare for removing someone’s gallbladder. The same hospital would get $7,400 from commercial insurers.
The yawning gap between payments to hospitals by Medicare and by private health insurers for the same medical services may prove the biggest obstacle for advocates of “Medicare for all,” a government-run system.
If Medicare for all abolished private insurance and reduced rates to Medicare levels — at least 40 percent lower, by one estimate — there would most likely be significant changes throughout the health care industry, which makes up 18 percent of the nation’s economy and is one of the nation’s largest employers.
Some hospitals, especially struggling rural centers, would close virtually overnight, according to policy experts.
Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.
The prospect of such violent upheaval for existing institutions has begun to stiffen opposition to Medicare for all proposals and to rattle health care stocks. Some officials caution that hospitals providing care should not be penalized in an overhaul.
Dr. Adam Gaffney, the president of Physicians for a National Health Program, warned advocates of a single-payer system like Medicare for all not to seize this opportunity to extract huge savings from hospitals. “The line here can’t be and shouldn’t be soak the hospitals,” he said.
“You don’t need insurance companies for Medicare for all,” Dr. Gaffney added. “You need hospitals.”
Soaring hospital bills and disparities in care, though, have stoked consumer outrage and helped to fuel populist support for proposals that would upend the current system. Many people with insurance cannot afford a knee replacement or care for their diabetes because their insurance has high deductibles.
Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.
The prospect of such violent upheaval for existing institutions has begun to stiffen opposition to Medicare for all proposals and to rattle health care stocks. Some officials caution that hospitals providing care should not be penalized in an overhaul.
Dr. Adam Gaffney, the president of Physicians for a National Health Program, warned advocates of a single-payer system like Medicare for all not to seize this opportunity to extract huge savings from hospitals. “The line here can’t be and shouldn’t be soak the hospitals,” he said.
“You don’t need insurance companies for Medicare for all,” Dr. Gaffney added. “You need hospitals.”
Soaring hospital bills and disparities in care, though, have stoked consumer outrage and helped to fuel populist support for proposals that would upend the current system. Many people with insurance cannot afford a knee replacement or care for their diabetes because their insurance has high deductibles.
Proponents of overhauling
the nation’s health care argue that hospitals are charging too much and
could lower their prices without sacrificing the quality of their care.
High drug prices, surprise hospital bills and other financial burdens
from the overwhelming cost of health care have caught the attention (and
drawn the ire) of many in Congress, with a variety of proposals under
consideration this year.
But those in favor of the most far-reaching changes, including Senator Bernie Sanders, who unveiled his latest Medicare for all plan as part of his presidential campaign, have remained largely silent on the question of how the nation’s 5,300 hospitals would be paid for patient care. If they are paid more than Medicare rates, the final price tag for the program could balloon from the already stratospheric estimate of upward of $30 trillion over a decade. Senator Sanders has not said what he thinks his plan will cost, and some proponents of Medicare for all say these plans would cost less than the current system.
The nation’s major health insurers are sounding the alarms, and pointing to the potential impact on hospitals and doctors. David Wichmann, the chief executive of UnitedHealth Group, the giant insurer, told investors that these proposals would “destabilize the nation’s health system and limit the ability of clinicians to practice medicine at their best.”
Hospitals could lose as much as $151 billion in annual revenues, a 16 percent decline, under Medicare for all, according to Dr. Kevin Schulman, a professor of medicine at Stanford University and one of the authors of a recent article in JAMA looking at the possible effects on hospitals.
“There’s a hospital in every congressional district,” he said. Passing a Medicare for all proposal in which hospitals are paid Medicare rates “is going to be a really hard proposition.”
Richard Anderson, the chief executive of St. Luke’s University Health Network, called the proposals “naïve.” Hospitals depend on insurers’ higher payments to deliver top-quality care because government programs pay so little, he said.
“I have no time for all the politicians who use the health care system as a crash-test dummy for their election goals,” Mr. Anderson said.
But those in favor of the most far-reaching changes, including Senator Bernie Sanders, who unveiled his latest Medicare for all plan as part of his presidential campaign, have remained largely silent on the question of how the nation’s 5,300 hospitals would be paid for patient care. If they are paid more than Medicare rates, the final price tag for the program could balloon from the already stratospheric estimate of upward of $30 trillion over a decade. Senator Sanders has not said what he thinks his plan will cost, and some proponents of Medicare for all say these plans would cost less than the current system.
The nation’s major health insurers are sounding the alarms, and pointing to the potential impact on hospitals and doctors. David Wichmann, the chief executive of UnitedHealth Group, the giant insurer, told investors that these proposals would “destabilize the nation’s health system and limit the ability of clinicians to practice medicine at their best.”
Hospitals could lose as much as $151 billion in annual revenues, a 16 percent decline, under Medicare for all, according to Dr. Kevin Schulman, a professor of medicine at Stanford University and one of the authors of a recent article in JAMA looking at the possible effects on hospitals.
“There’s a hospital in every congressional district,” he said. Passing a Medicare for all proposal in which hospitals are paid Medicare rates “is going to be a really hard proposition.”
Richard Anderson, the chief executive of St. Luke’s University Health Network, called the proposals “naïve.” Hospitals depend on insurers’ higher payments to deliver top-quality care because government programs pay so little, he said.
“I have no time for all the politicians who use the health care system as a crash-test dummy for their election goals,” Mr. Anderson said.
The American Hospital Association, an industry trade group, is starting to lobby against the Medicare for all proposals.
Unlike the doctors’ groups, hospitals are not divided. “There is total
unanimity,” said Tom Nickels, an executive vice president for the
association.
“We agree with their intent to expand coverage to more people,” he said. “We don’t think this is the way to do it. It would have a devastating effect on hospitals and on the system over all.”
“We agree with their intent to expand coverage to more people,” he said. “We don’t think this is the way to do it. It would have a devastating effect on hospitals and on the system over all.”
Rural hospitals, which have been
closing around the country as patient numbers dwindle, would be hit
hard, he said, because they lack the financial cushion of larger
systems.
Big hospital systems haggle constantly with Medicare over what they are paid, and often battle the government over charges of overbilling. On average, the government program pays hospitals about 87 cents for every dollar of their costs, compared with private insurers that pay $1.45.
Some hospitals make money on Medicare, but most rely on higher private payments to cover their overall costs.
Medicare, which accounts for about 40 percent of hospital costs compared with 33 percent for private insurers, is the biggest source of hospital reimbursements. The majority of hospitals are nonprofit or government-owned.
Big hospital systems haggle constantly with Medicare over what they are paid, and often battle the government over charges of overbilling. On average, the government program pays hospitals about 87 cents for every dollar of their costs, compared with private insurers that pay $1.45.
Some hospitals make money on Medicare, but most rely on higher private payments to cover their overall costs.
Medicare, which accounts for about 40 percent of hospital costs compared with 33 percent for private insurers, is the biggest source of hospital reimbursements. The majority of hospitals are nonprofit or government-owned.
The profit margins on
Medicare are “razor thin,” said Laura Kaiser, the chief executive of SSM
Health, a Catholic health system. In some markets, her hospitals lose
money providing care under the program.
She says the industry is working to bring costs down. “We’re all uber-responsible and very fixated on managing our costs and not being wasteful,” Ms. Kaiser said.
Over the years, as hospitals have merged, many have raised the prices they charge to private insurers.
“If you’re in a consolidated market, you are a monopolist and are setting the price,” said Mark Miller, a former executive director for the group that advises Congress on Medicare payments. He describes the prices paid by private insurers as “completely unjustified and out of control.”
Many hospitals have invested heavily in amenities like single rooms for patients and sophisticated medical equipment to attract privately insured patients. They are also major employers.
“You would have to have a very different cost structure to survive,” said Melinda Buntin, the chairwoman for health policy at the Vanderbilt University School of Medicine. “Everyone being on Medicare would have a large impact on their bottom line.”
People who have Medicare, mainly those over 65 years old, can enjoy those private rooms or better care because the hospitals believed it was worth making the investments to attract private patients, said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University. If all hospitals were paid the same Medicare rate, the industry “should really collapse down to a similar set of hospitals,” he said.
She says the industry is working to bring costs down. “We’re all uber-responsible and very fixated on managing our costs and not being wasteful,” Ms. Kaiser said.
Over the years, as hospitals have merged, many have raised the prices they charge to private insurers.
“If you’re in a consolidated market, you are a monopolist and are setting the price,” said Mark Miller, a former executive director for the group that advises Congress on Medicare payments. He describes the prices paid by private insurers as “completely unjustified and out of control.”
Many hospitals have invested heavily in amenities like single rooms for patients and sophisticated medical equipment to attract privately insured patients. They are also major employers.
“You would have to have a very different cost structure to survive,” said Melinda Buntin, the chairwoman for health policy at the Vanderbilt University School of Medicine. “Everyone being on Medicare would have a large impact on their bottom line.”
People who have Medicare, mainly those over 65 years old, can enjoy those private rooms or better care because the hospitals believed it was worth making the investments to attract private patients, said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University. If all hospitals were paid the same Medicare rate, the industry “should really collapse down to a similar set of hospitals,” he said.
Whether hospitals would be able to adapt to sharply lower payments is unclear.
“It would force health care systems to go on a very serious diet,” said Stuart Altman, a health policy professor at Brandeis University. “I have no idea what would happen. Nor does anyone else.”
But proponents should not expect to save as much money as they hope if they cut hospital payments. Some hospitals could replace their missing revenue by charging more for the same care or by ordering more billable tests and procedures, said Dr. Stephen Klasko, the chief executive of Jefferson Health. “You’d be amazed,’ he said.
While both the Medicare-for-all bill introduced by Representative Pramila Jayapal, Democrat of Washington, and the Sanders bill call for a government-run insurance program, the Jayapal proposal would replace existing Medicare payments with a whole new system of regional budgets.
“We need to change not just who pays the bill but how we pay the bill,” said Dr. Gaffney, who advised Ms. Jayapal on her proposal.
Hospitals would be able to achieve substantial savings by scaling back administrative costs, the byproduct of a system that deals with multiple insurance carriers, Dr. Gaffney said. Under the Jayapal bill, hospitals would no longer be paid above their costs, and the money for new equipment and other investments would come from a separate pool of money.
But the Sanders bill, which is supported by some Democratic presidential candidates including Senators Kirsten Gillibrand of New York, Cory Booker of New Jersey, Elizabeth Warren of Massachusetts and Kamala Harris of California, does not envision a whole new payment system but an expansion of the existing Medicare program. Payments would largely be based on what Medicare currently pays hospitals.
Some Democrats have also proposed more incremental plans. Some would expand Medicare to cover people over the age of 50, while others wouldn’t do away with private health insurers, including those that now offer Medicare plans.
“It would force health care systems to go on a very serious diet,” said Stuart Altman, a health policy professor at Brandeis University. “I have no idea what would happen. Nor does anyone else.”
But proponents should not expect to save as much money as they hope if they cut hospital payments. Some hospitals could replace their missing revenue by charging more for the same care or by ordering more billable tests and procedures, said Dr. Stephen Klasko, the chief executive of Jefferson Health. “You’d be amazed,’ he said.
While both the Medicare-for-all bill introduced by Representative Pramila Jayapal, Democrat of Washington, and the Sanders bill call for a government-run insurance program, the Jayapal proposal would replace existing Medicare payments with a whole new system of regional budgets.
“We need to change not just who pays the bill but how we pay the bill,” said Dr. Gaffney, who advised Ms. Jayapal on her proposal.
Hospitals would be able to achieve substantial savings by scaling back administrative costs, the byproduct of a system that deals with multiple insurance carriers, Dr. Gaffney said. Under the Jayapal bill, hospitals would no longer be paid above their costs, and the money for new equipment and other investments would come from a separate pool of money.
But the Sanders bill, which is supported by some Democratic presidential candidates including Senators Kirsten Gillibrand of New York, Cory Booker of New Jersey, Elizabeth Warren of Massachusetts and Kamala Harris of California, does not envision a whole new payment system but an expansion of the existing Medicare program. Payments would largely be based on what Medicare currently pays hospitals.
Some Democrats have also proposed more incremental plans. Some would expand Medicare to cover people over the age of 50, while others wouldn’t do away with private health insurers, including those that now offer Medicare plans.
Even
under Medicare for all, lawmakers could decide to pay hospitals a new
government rate that equals what they are being paid now from both
private and public insurers, said Dr. David Blumenthal, a former Obama
official and the president of the Commonwealth Fund.
“It would greatly reduce the opposition,” he said. “The general rule is the more you leave things alone, the easier it is.”
https://www.nytimes.com/2019/04/21/health/medicare-for-all-hospitals.html
“It would greatly reduce the opposition,” he said. “The general rule is the more you leave things alone, the easier it is.”
https://www.nytimes.com/2019/04/21/health/medicare-for-all-hospitals.html
‘Medicare for All’ Is Hammering Health Care Stocks. For Now.
by Jeff Somer - NYT - April 19, 2019
UnitedHealth Group has been a stock market darling for much
of the past decade, dependably churning out earnings increases and
rewarding shareholders with staggering returns.
Its latest quarterly report, issued on Tuesday, was superb, as expected. Earnings per share jumped 24 percent. Based on the news about the diversified health service company’s fundamental businesses, you might have expected its stock price to rise.
Nope. UnitedHealth’s share price dropped 4 percent that day and almost 2 percent the next. And, along with much of the health care sector, it has been on a downward trend for the past few months.
What’s wrong with the stock? It has nothing to do with the company’s short-term profit outlook, which is splendid. But like other health care companies, UnitedHealth is confronting a major political problem: the ascendance of “Medicare for All” as a lodestar for the Democratic Party.
Its latest quarterly report, issued on Tuesday, was superb, as expected. Earnings per share jumped 24 percent. Based on the news about the diversified health service company’s fundamental businesses, you might have expected its stock price to rise.
Nope. UnitedHealth’s share price dropped 4 percent that day and almost 2 percent the next. And, along with much of the health care sector, it has been on a downward trend for the past few months.
What’s wrong with the stock? It has nothing to do with the company’s short-term profit outlook, which is splendid. But like other health care companies, UnitedHealth is confronting a major political problem: the ascendance of “Medicare for All” as a lodestar for the Democratic Party.
Medicare for All
isn’t a new idea. It may be defined, basically, as universal health
insurance under a single government-run, taxpayer-financed plan. It
would certainly alter, and probably limit, the role of private health
insurance companies like UnitedHealth. Senator Bernie Sanders
of Vermont has supported the idea for years. But it wasn’t much of an
issue for investors because it never went anywhere in Congress.
Now, however, Mr. Sanders is the front-runner among the announced aspirants for the Democratic presidential nomination. What’s more, he appears to have moved the entire political conversation into territory that is exceedingly uncomfortable for health care companies.
When he introduced a new version of his Medicare for All legislation in the Senate on April 10, the stock market noticed that his co-sponsors included at least four Senate Democrats who are also running for president: Kirstin Gillibrand of New York, Cory Booker of New Jersey, Elizabeth Warren of Massachusetts and Kamala Harris of California.
It’s far too early to divine whether Medicare for All — particularly a version that bans or severely limits private insurance — has even a modest chance of coming into existence after the 2020 election. Even now, amid all the hoopla, the odds may not be propitious.
The current Democratic leaders in Congress — Senator Chuck Schumer of New York, the minority leader, and Nancy Pelosi of California, the House speaker — have not supported it. President Trump and Republican leaders in Congress have been demanding a smaller government role in health care, not a larger one. And the giant health care companies, which have enormous wealth and influence, are, for the most part, committed to blocking the idea.
Now, however, Mr. Sanders is the front-runner among the announced aspirants for the Democratic presidential nomination. What’s more, he appears to have moved the entire political conversation into territory that is exceedingly uncomfortable for health care companies.
When he introduced a new version of his Medicare for All legislation in the Senate on April 10, the stock market noticed that his co-sponsors included at least four Senate Democrats who are also running for president: Kirstin Gillibrand of New York, Cory Booker of New Jersey, Elizabeth Warren of Massachusetts and Kamala Harris of California.
It’s far too early to divine whether Medicare for All — particularly a version that bans or severely limits private insurance — has even a modest chance of coming into existence after the 2020 election. Even now, amid all the hoopla, the odds may not be propitious.
The current Democratic leaders in Congress — Senator Chuck Schumer of New York, the minority leader, and Nancy Pelosi of California, the House speaker — have not supported it. President Trump and Republican leaders in Congress have been demanding a smaller government role in health care, not a larger one. And the giant health care companies, which have enormous wealth and influence, are, for the most part, committed to blocking the idea.
But that hasn’t stopped the stock market from acting as though Medicare for All were just around the corner.
In a note to clients on Wednesday, Stephen Tanal, a Goldman Sachs analyst, said that fear of government intervention would probably weigh on health care share prices “perhaps until the presidential election itself.” Because many of the companies’ current business models are solid, he added: “It seems likely to us that the trough should occur well before the November 2020 election — assuming, of course, that the market likes the ‘signposts’ that occur between now and then — specifically, in this case, the ‘spot’ probability of single-payer policy that would actually ban the sale of private health insurance.”
In a note to clients on Wednesday, Stephen Tanal, a Goldman Sachs analyst, said that fear of government intervention would probably weigh on health care share prices “perhaps until the presidential election itself.” Because many of the companies’ current business models are solid, he added: “It seems likely to us that the trough should occur well before the November 2020 election — assuming, of course, that the market likes the ‘signposts’ that occur between now and then — specifically, in this case, the ‘spot’ probability of single-payer policy that would actually ban the sale of private health insurance.”
David
Wichmann, UnitedHealth Group’s chief executive, began his prepared
remarks during a recent earnings call with Wall Street analysts by
making a direct attack on Medicare for All.CreditTodd Buchanan
For the moment, though, as Democratic candidates embrace
Medicare for All, the stock market is shunning health insurance
companies like UnitedHealth, Anthem, Centene, Cigna and Humana. Hospital
groups like Tenet Healthcare and HCA Healthcare have been caught in the
downturn, too, under the assumption that their revenue could be
squeezed if the federal government is the country’s “single payer.”
Comments by David Wichmann, UnitedHealth’s chief executive, during an earnings call on Tuesday, appear to have focused market attention on the issue, which made matters worse. He began his prepared remarks to Wall Street analysts with a direct attack on Medicare for All.
“The wholesale disruption of American health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best,” he said. “And the inherent cost burden would surely have a severe impact on the economy and jobs, all without fundamentally increasing access to care.”
After his remarks, the company’s shares plunged, and the decline spread to other companies.
Data from Bespoke Investment Group shows that the damage to health care stocks became much more acute on Tuesday and Wednesday. On those days, according to Bespoke, the health care sector, dominated by UnitedHealth, underperformed the S&P 500 by its widest margin since April 2009. Investors’ aversion to health care stocks was far greater than it was for any other market sector, using a common measure: the degree to which its share price has dropped below its 50-day moving average.
Comments by David Wichmann, UnitedHealth’s chief executive, during an earnings call on Tuesday, appear to have focused market attention on the issue, which made matters worse. He began his prepared remarks to Wall Street analysts with a direct attack on Medicare for All.
“The wholesale disruption of American health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best,” he said. “And the inherent cost burden would surely have a severe impact on the economy and jobs, all without fundamentally increasing access to care.”
After his remarks, the company’s shares plunged, and the decline spread to other companies.
Data from Bespoke Investment Group shows that the damage to health care stocks became much more acute on Tuesday and Wednesday. On those days, according to Bespoke, the health care sector, dominated by UnitedHealth, underperformed the S&P 500 by its widest margin since April 2009. Investors’ aversion to health care stocks was far greater than it was for any other market sector, using a common measure: the degree to which its share price has dropped below its 50-day moving average.
The
difference, or spread, between the market’s aversion to health care
stocks, the most-hated sector, and its attraction to financial services,
the most-loved, was extraordinarily wide. The polarization was greater
than it has been for 99.93 percent of all trading days in the American
stock market since the start of 1990, Bespoke found. When such extremes
in market sentiment have occurred in the past, the depressed sector has
rarely bounced back quickly, Paul Hickey, a Bespoke founder, said in an
interview.
“When momentum is this extreme, it often takes some time to recover,” he said.
A Bloomberg article compared the rout in health care stocks to the “‘Dark Days’ of the Financial Crisis,” when, in addition to the crisis afflicting the overall stock market, the sector grappled with uncertainty over what, eventually, became the Affordable Care Act, a.k.a. Obamacare.
But as I’ve written, the Affordable Care Act turned out to be a boon for managed care companies, which profited handsomely despite continuing to gripe about the government’s expanded role.
In the 10 years through March, for example, UnitedHealth’s shares returned 1,345 percent, including dividends, dwarfing the 376 percent total return for the S&P 500. UnitedHealth trailed Apple’s total return of 1,593 percent and Amazon’s, 2,649 percent, but it was far better than Google (now a unit of Alphabet) at 596 percent.
At some point, stocks that fly that high simply drop in value. For health care stocks, this may just be one of those times.
But if profits for major health care companies remain strong, as expected, their share prices could begin to stabilize. And if the presidential cycle starts to shift in their favor, they could resume their path upward.
It’s even possible that many health care companies, which already do extensive government business, could find ways of prospering under some version of Medicare for All, especially one that reserves a substantial role for private companies.
It has been an awful stretch for health care stocks. But it would be foolish to underestimate the companies’ ability to adapt under duress and to ultimately profit, no matter who is in power.
https://www.nytimes.com/2019/04/19/business/medicare-for-all-health-care-stocks.html?action=click&module=RelatedCoverage&pgtype=Article®ion=Footer
Another big difference between Singapore and the United States lies in social determinants of health. Citizens there have much less poverty than one might see in other developed countries.
The tax system is progressive. The bottom 20 percent of Singaporeans in income pay less than 10 percent of all taxes and receive more than a quarter of all benefits. The richest 20 percent pay more than half of all taxes and receive only 12 percent of the benefits.
Everyone lives in comparable school systems, and the government heavily subsidizes housing. Rates of smoking, alcoholism and drug abuse are relatively low. So are rates of obesity.
All of this predisposes the country to better health and accompanying lower health spending. Achieving comparable goals in the United States would probably require large investments in social programs, and there doesn’t appear to be much of an appetite for that.
“When momentum is this extreme, it often takes some time to recover,” he said.
A Bloomberg article compared the rout in health care stocks to the “‘Dark Days’ of the Financial Crisis,” when, in addition to the crisis afflicting the overall stock market, the sector grappled with uncertainty over what, eventually, became the Affordable Care Act, a.k.a. Obamacare.
But as I’ve written, the Affordable Care Act turned out to be a boon for managed care companies, which profited handsomely despite continuing to gripe about the government’s expanded role.
In the 10 years through March, for example, UnitedHealth’s shares returned 1,345 percent, including dividends, dwarfing the 376 percent total return for the S&P 500. UnitedHealth trailed Apple’s total return of 1,593 percent and Amazon’s, 2,649 percent, but it was far better than Google (now a unit of Alphabet) at 596 percent.
At some point, stocks that fly that high simply drop in value. For health care stocks, this may just be one of those times.
But if profits for major health care companies remain strong, as expected, their share prices could begin to stabilize. And if the presidential cycle starts to shift in their favor, they could resume their path upward.
It’s even possible that many health care companies, which already do extensive government business, could find ways of prospering under some version of Medicare for All, especially one that reserves a substantial role for private companies.
It has been an awful stretch for health care stocks. But it would be foolish to underestimate the companies’ ability to adapt under duress and to ultimately profit, no matter who is in power.
https://www.nytimes.com/2019/04/19/business/medicare-for-all-health-care-stocks.html?action=click&module=RelatedCoverage&pgtype=Article®ion=Footer
What Can the U.S. Health System Learn From Singapore?
Americans argue over insurance while Singaporeans keep perfecting the delivery of care.
by Aaron Carroll - NYT - April 22, 2019
SINGAPORE — Singapore’s health care system is sometimes
held up as an example of excellence, and as a possible model for what
could come next in the United States.
When we published the results of an Upshot tournament on which country had the world’s best health system, Singapore was eliminated in the first round, largely because most of the experts had a hard time believing much of what the nation seems to achieve.
It does achieve a lot. Americans have spent the last decade arguing loudly about whether and how to provide insurance to a relatively small percentage of people who don’t have it. Singapore is way past that. It’s perfecting how to deliver care to people, focusing on quality, efficiency and cost.
Americans may be able to learn a thing or two from Singaporeans, as I discovered in a recent visit to study the health system, although there are also reasons that comparisons between the nations aren’t apt.
When we published the results of an Upshot tournament on which country had the world’s best health system, Singapore was eliminated in the first round, largely because most of the experts had a hard time believing much of what the nation seems to achieve.
It does achieve a lot. Americans have spent the last decade arguing loudly about whether and how to provide insurance to a relatively small percentage of people who don’t have it. Singapore is way past that. It’s perfecting how to deliver care to people, focusing on quality, efficiency and cost.
Americans may be able to learn a thing or two from Singaporeans, as I discovered in a recent visit to study the health system, although there are also reasons that comparisons between the nations aren’t apt.
A population that is healthier
Singapore is an island city-state of around 5.8 million. At 279 square miles, it’s smaller than Indianapolis, the city where I live, and is without rural or remote areas. Everyone lives close to doctors and hospitals.Another big difference between Singapore and the United States lies in social determinants of health. Citizens there have much less poverty than one might see in other developed countries.
The tax system is progressive. The bottom 20 percent of Singaporeans in income pay less than 10 percent of all taxes and receive more than a quarter of all benefits. The richest 20 percent pay more than half of all taxes and receive only 12 percent of the benefits.
Everyone lives in comparable school systems, and the government heavily subsidizes housing. Rates of smoking, alcoholism and drug abuse are relatively low. So are rates of obesity.
All of this predisposes the country to better health and accompanying lower health spending. Achieving comparable goals in the United States would probably require large investments in social programs, and there doesn’t appear to be much of an appetite for that.
There’s
also a big caveat to Singapore’s success. It has a significant and
officially recognized guest worker program of noncitizens. About 1.4 million foreigners work in Singapore, most in low-skilled, low-paying jobs. Such jobs come with some protections, and are often better than what might be available in workers’ home countries, but these workers are also vulnerable to abuse.
Guest workers are not eligible for the same benefits (including access to the public health system beyond emergency services) that citizens or permanent residents are, and they aren’t counted in any metrics of success or health. Clearly this saves money and also clouds the ability to use data to evaluate outcomes.
In the United States, conservatives may be pleased that one objective stresses personal responsibility and cautions against reliance on either welfare or medical insurance. Another notes the importance of the private market and competition to improve services and increase efficiency.
Liberal-leaning Americans might be impressed that one objective is universal basic care and that another goal is cost containment by the government, especially when the market fails to keep costs low enough.
Singapore appreciates the relative strengths and limits of the public and private sectors in health. Often in the United States, we think that one or the other can do it all. That’s not necessarily the case.
Dr. Jeremy Lim, a partner in Oliver Wyman’s Asia health care consulting practice based in Singapore and the author of one of the seminal books on its health care system, said, “Singaporeans recognize that resources are finite and that not every medicine or device can be funded out of the public purse.”
He added that a high trust in the government “enables acceptance that the government has worked the sums and determined that some medicines and devices are not cost-effective and hence not available to citizens at subsidized prices.”
Guest workers are not eligible for the same benefits (including access to the public health system beyond emergency services) that citizens or permanent residents are, and they aren’t counted in any metrics of success or health. Clearly this saves money and also clouds the ability to use data to evaluate outcomes.
Things to like, for the left and right
The government’s health care philosophy is laid out clearly in five objectives.In the United States, conservatives may be pleased that one objective stresses personal responsibility and cautions against reliance on either welfare or medical insurance. Another notes the importance of the private market and competition to improve services and increase efficiency.
Liberal-leaning Americans might be impressed that one objective is universal basic care and that another goal is cost containment by the government, especially when the market fails to keep costs low enough.
Singapore appreciates the relative strengths and limits of the public and private sectors in health. Often in the United States, we think that one or the other can do it all. That’s not necessarily the case.
Dr. Jeremy Lim, a partner in Oliver Wyman’s Asia health care consulting practice based in Singapore and the author of one of the seminal books on its health care system, said, “Singaporeans recognize that resources are finite and that not every medicine or device can be funded out of the public purse.”
He added that a high trust in the government “enables acceptance that the government has worked the sums and determined that some medicines and devices are not cost-effective and hence not available to citizens at subsidized prices.”
In the end, the
government holds the cards. It decides where and when the private sector
can operate. In the United States, the opposite often seems true. The
private sector is the default system, and the public sector comes into
play only when the private sector doesn’t want to.
In Singapore, the government strictly regulates what technology is available in the country and where. It makes decisions as to what drugs and devices are covered in public facilities. It sets the prices and determines what subsidies are available.
“There is careful scrutiny of the ‘latest and greatest’ technologies and a healthy skepticism of manufacturer claims,” Dr. Lim said. “It may be at the forefront of medical science in many areas, but the diffusion of the advancements to the entire population may take a while.”
Government control also applies to public health initiatives. Officials began to worry about diabetes, so they acted. School lunches have been improved. Regulations have been passed to make meals on government properties and at government events healthier.
In the United States, the American Academy of Pediatrics and the American Heart Association recently called on policymakers to impose taxes and advertising limits on the soda industry. But that’s merely guidance; there’s no power behind it.
In Singapore, campaigns have encouraged drinking water, and healthier food choice labels have been mandated. The country, with control over its food importation, even got beverage manufacturers to agree to reduce sugar content in drinks to a maximum of 12 percent by 2020.
In Singapore, the government strictly regulates what technology is available in the country and where. It makes decisions as to what drugs and devices are covered in public facilities. It sets the prices and determines what subsidies are available.
“There is careful scrutiny of the ‘latest and greatest’ technologies and a healthy skepticism of manufacturer claims,” Dr. Lim said. “It may be at the forefront of medical science in many areas, but the diffusion of the advancements to the entire population may take a while.”
Government control also applies to public health initiatives. Officials began to worry about diabetes, so they acted. School lunches have been improved. Regulations have been passed to make meals on government properties and at government events healthier.
In the United States, the American Academy of Pediatrics and the American Heart Association recently called on policymakers to impose taxes and advertising limits on the soda industry. But that’s merely guidance; there’s no power behind it.
In Singapore, campaigns have encouraged drinking water, and healthier food choice labels have been mandated. The country, with control over its food importation, even got beverage manufacturers to agree to reduce sugar content in drinks to a maximum of 12 percent by 2020.
Should beverage companies fail to comply, officials might not just tax the drinks — they could ban them.
Primary care, which is mostly at low cost, is provided mostly by the private sector. About 80 percent of Singaporeans get such care from about 1,700 general practitioners. The rest use a system of 18 polyclinics run by the government.
As care becomes more complicated — and therefore more expensive — more people turn to the polyclinics. About 45 percent of those who have chronic conditions use polyclinics, for example.
The polyclinics are a marvel of efficiency. They have been designed to process as many patients as quickly as possible. The government encourages citizens to use their online app to schedule appointments, see wait times and pay their bills.
Even so, a major complaint is the wait time. Doctors carry a heavy workload, seeing upward of 60 patients a day. There’s also a lack of continuity. Patients at polyclinics don’t get to choose their physicians. They see whoever is working that day.
Care is cheap, however. A visit for a citizen costs 8 Singapore dollars for the clinic fees, a little under $6 U.S. Seeing a private physician can cost three times as much (still cheap in American terms).
But in recent years, as in the United States, costs have started to rise much more quickly with greater use of modern technological medicine. The population is also aging rapidly. It’s unlikely that the country’s spending on health care will approach that of the United States (18 percent of G.D.P.), but the days of spending significantly less than the global average of 10 percent are probably numbered.
Medical officials are also worried that the problems of the rest of the world are catching up to them. They’re worried that diabetes is on the rise. They’re worried that fee-for-service payments are unsustainable. They’re worried hospitals are learning how to game the system to make more money.
But they’re also aware of the possible endgame. One told me, “Nobody wants to go down the United States route.”
Perhaps most important, the health care system in Singapore seems more geared toward raising up all its citizens than on achieving excellence in a few high-profile areas.
Without major commitments to spending, we in the United States aren’t likely to see major changes to social determinants of health or housing. We also aren’t going to shrink the size of our system or get everyone to move to big cities.
It turns out that Singapore’s system really is quite remarkable. It also turns out that it’s most likely not reproducible. That may be our loss.
https://www.nytimes.com/2019/04/22/upshot/singapore-health-system-lessons.html
What’s really special is the delivery
Singapore gets a lot of attention because of the way it pays for its health care system. What’s less noticed is its delivery system.Primary care, which is mostly at low cost, is provided mostly by the private sector. About 80 percent of Singaporeans get such care from about 1,700 general practitioners. The rest use a system of 18 polyclinics run by the government.
As care becomes more complicated — and therefore more expensive — more people turn to the polyclinics. About 45 percent of those who have chronic conditions use polyclinics, for example.
The polyclinics are a marvel of efficiency. They have been designed to process as many patients as quickly as possible. The government encourages citizens to use their online app to schedule appointments, see wait times and pay their bills.
Even so, a major complaint is the wait time. Doctors carry a heavy workload, seeing upward of 60 patients a day. There’s also a lack of continuity. Patients at polyclinics don’t get to choose their physicians. They see whoever is working that day.
Care is cheap, however. A visit for a citizen costs 8 Singapore dollars for the clinic fees, a little under $6 U.S. Seeing a private physician can cost three times as much (still cheap in American terms).
For
hospitalizations, the public vs. private share is flipped. Only about
20 percent of people choose a private hospital for care. The other 80
percent choose to use public hospitals, which are — again — heavily
subsidized. People can choose levels of service there (from A to C, as described in an earlier Upshot article), and most choose a “B” level.
About half of all care provided in private hospitals is to noncitizens of Singapore. Even for citizens who choose private hospitals, as care gets more expensive, they move to the public system when they can.
So Singapore isn’t really a more “private” system. It’s just privately funded. In effect, it’s the opposite of what we have in the United States. We have a largely publicly financed private delivery system. Singapore has a largely privately financed public delivery system.
There’s also more granular control of the delivery system. In 1997, there were about 60,000 ambulance calls, but about half of those were not for actual emergencies. What did Singapore do? It declared that while ambulance services for emergencies would remain free, those who called for nonemergencies would be charged the equivalent of $185.
Of course, this might cause the public to be afraid to call for real emergencies. But the policy was introduced with intensive public education and messaging. And Singaporeans have identifier numbers that are consistent across health centers and types of care.
“The electronic health records are all connected, and data are shared between them,” said Dr. Marcus Ong, the emergency medical services director. “When patients are attended to for an emergency, records can be quickly accessed, and many nonemergencies can be then cleared with accurate information.
“By 2010, there were more than 120,000 calls for emergency services, and very few were for nonemergencies.”
About half of all care provided in private hospitals is to noncitizens of Singapore. Even for citizens who choose private hospitals, as care gets more expensive, they move to the public system when they can.
So Singapore isn’t really a more “private” system. It’s just privately funded. In effect, it’s the opposite of what we have in the United States. We have a largely publicly financed private delivery system. Singapore has a largely privately financed public delivery system.
There’s also more granular control of the delivery system. In 1997, there were about 60,000 ambulance calls, but about half of those were not for actual emergencies. What did Singapore do? It declared that while ambulance services for emergencies would remain free, those who called for nonemergencies would be charged the equivalent of $185.
Of course, this might cause the public to be afraid to call for real emergencies. But the policy was introduced with intensive public education and messaging. And Singaporeans have identifier numbers that are consistent across health centers and types of care.
“The electronic health records are all connected, and data are shared between them,” said Dr. Marcus Ong, the emergency medical services director. “When patients are attended to for an emergency, records can be quickly accessed, and many nonemergencies can be then cleared with accurate information.
“By 2010, there were more than 120,000 calls for emergency services, and very few were for nonemergencies.”
The good times may not last
Singapore made big early health leaps, relatively inexpensively, in infant mortality and increased life expectancy. It did so in part through “better vaccinations, better sanitation, good public schools, public campaigns against tobacco” and good prenatal care, said Dr. Wong Tien Hua, the immediate past president of the Singapore Medical Association.But in recent years, as in the United States, costs have started to rise much more quickly with greater use of modern technological medicine. The population is also aging rapidly. It’s unlikely that the country’s spending on health care will approach that of the United States (18 percent of G.D.P.), but the days of spending significantly less than the global average of 10 percent are probably numbered.
Medical officials are also worried that the problems of the rest of the world are catching up to them. They’re worried that diabetes is on the rise. They’re worried that fee-for-service payments are unsustainable. They’re worried hospitals are learning how to game the system to make more money.
But they’re also aware of the possible endgame. One told me, “Nobody wants to go down the United States route.”
Perhaps most important, the health care system in Singapore seems more geared toward raising up all its citizens than on achieving excellence in a few high-profile areas.
Without major commitments to spending, we in the United States aren’t likely to see major changes to social determinants of health or housing. We also aren’t going to shrink the size of our system or get everyone to move to big cities.
It turns out that Singapore’s system really is quite remarkable. It also turns out that it’s most likely not reproducible. That may be our loss.
https://www.nytimes.com/2019/04/22/upshot/singapore-health-system-lessons.html
What Makes Singapore’s Health Care So Cheap?
by Aaron Carroll and Austin Frakt - NYT - October 2, 2017
Singapore’s
health care system is distinctive, and not just because of the
improbability that it’s admired by many on the American left as well as
the right.
It spends less of its economy on health care than any country that was included in our recent tournament on best health systems in the world.
And it spends far, far less than the United States does. Yet it achieves some outcomes Americans would find remarkable. Life expectancy at birth is two to three years longer than in Britain or the United States. Its infant mortality rate is among the lowest in the world, about half that of the United States, and just over half that of Britain, Australia, Canada and France. General mortality rates are impressive compared with pretty much all other countries as well.
When the World Health Organization ranked health care systems in 2000, it placed the United States 37th in quality; Singapore ranked sixth.
It spends less of its economy on health care than any country that was included in our recent tournament on best health systems in the world.
And it spends far, far less than the United States does. Yet it achieves some outcomes Americans would find remarkable. Life expectancy at birth is two to three years longer than in Britain or the United States. Its infant mortality rate is among the lowest in the world, about half that of the United States, and just over half that of Britain, Australia, Canada and France. General mortality rates are impressive compared with pretty much all other countries as well.
When the World Health Organization ranked health care systems in 2000, it placed the United States 37th in quality; Singapore ranked sixth.
Americans
tend to think that they have a highly privatized health system, but
Singapore is arguably much more so. There, about two-thirds of health
care spending is private, and about one-third is public. It’s just about
the opposite in the United States.
Singapore’s health system also has a mix of public and private health care delivery organizations. There are private and public hospitals, as well as a number of tiers of care. There are five classes: A, B1, B2+, B2 and C. “A” gets you a private room, your own bathroom, air-conditioning and your choice of doctor. “C” gets you an open ward with seven or eight other patients, a shared bathroom and whatever doctor is assigned to you.
But choosing “A” means you pay for it all. Choosing “C” means the government pays up to 80 percent of the costs.
What also sets Singapore apart, and what makes it beloved among many conservative policy analysts, is its reliance on health savings accounts. All workers are mandated to put a decent percentage of their earnings into savings for the future. Workers up to age 55 have to put 20 percent of their wages into these accounts, matched by an additional 17 percent of wages from their employer. After age 55, these percentages go down.
The money is divided among three types of accounts. There’s an Ordinary Account, to be used for housing, insurance against death and disability, or for investment or education. There’s a Special Account, for old age and investment in retirement-related financial products. And there’s a Medisave Account, to be used for health care expenses and approved medical insurance.
Singapore’s health system also has a mix of public and private health care delivery organizations. There are private and public hospitals, as well as a number of tiers of care. There are five classes: A, B1, B2+, B2 and C. “A” gets you a private room, your own bathroom, air-conditioning and your choice of doctor. “C” gets you an open ward with seven or eight other patients, a shared bathroom and whatever doctor is assigned to you.
But choosing “A” means you pay for it all. Choosing “C” means the government pays up to 80 percent of the costs.
What also sets Singapore apart, and what makes it beloved among many conservative policy analysts, is its reliance on health savings accounts. All workers are mandated to put a decent percentage of their earnings into savings for the future. Workers up to age 55 have to put 20 percent of their wages into these accounts, matched by an additional 17 percent of wages from their employer. After age 55, these percentages go down.
The money is divided among three types of accounts. There’s an Ordinary Account, to be used for housing, insurance against death and disability, or for investment or education. There’s a Special Account, for old age and investment in retirement-related financial products. And there’s a Medisave Account, to be used for health care expenses and approved medical insurance.
The
contribution to Medisave is about 8 percent to 10.5 percent of wages,
depending on your age. It earns interest, set by the government. And it
has a maximum cap, around $52,000, at which point you’d divert the mandatory savings into some other account.
A second health care program is Medishield Life. This is for catastrophic illness, and while it’s not mandatory, almost all of the population is covered by it. It’s really cheap, from $16 a month for a 29-year-old in 2019 to $68 a month for a 69-year-old, without subsidies.
A second health care program is Medishield Life. This is for catastrophic illness, and while it’s not mandatory, almost all of the population is covered by it. It’s really cheap, from $16 a month for a 29-year-old in 2019 to $68 a month for a 69-year-old, without subsidies.
Medishield Life kicks in when you’ve paid the deductibles for the year, and after you’ve paid your coinsurance. Deductibles vary by your age and the class of care you choose, and range from $1,500 to $3,000. Coinsurance
ranges from 3 percent to 20 percent, varying by the size of the medical
bill. Medishield Life has an annual limit of $100,000 but no lifetime
limit.
Medishield Life is managed so that it covers most of a hospitalization in a Class B2 or C ward. Patients would cover the rest out of their Medisave accounts. Patients also have the option to pay for additional insurance, which would cover a higher class of care. Some plans are offered by the government, and people can use Medisave money to pay for those. Other plans are purely private, and sometimes offered by employers as benefits.
A third health care program is Medifund, which is Singapore’s safety net program. Only citizens are eligible; it covers only the lowest class of wards; and it’s available only after people have depleted their Medisave account and Medishield Life coverage. The amount of help someone could get from Medifund depends on a patient’s and family’s income, condition, expenses and social circumstances. Decisions are made at a very local level.
A number of people hold up Singapore as an example of how conservative ideas of competition and consumer-directed spending work. Unfortunately, the story isn’t so clean when you look at the data. In a 1995 paper in Health Affairs, William Hsiao looked at how health spending fared in Singapore before and after the introduction of Medisave. He found that health care spending increased after the introduction of increased cost-sharing, which is not what most proponents of such changes would expect. Michael Barr had similar thoughts in his “critical inquiry” into Singapore’s medical savings account, published in The Journal of Health Politics, Policy and Law in 2001.
Medishield Life is managed so that it covers most of a hospitalization in a Class B2 or C ward. Patients would cover the rest out of their Medisave accounts. Patients also have the option to pay for additional insurance, which would cover a higher class of care. Some plans are offered by the government, and people can use Medisave money to pay for those. Other plans are purely private, and sometimes offered by employers as benefits.
A third health care program is Medifund, which is Singapore’s safety net program. Only citizens are eligible; it covers only the lowest class of wards; and it’s available only after people have depleted their Medisave account and Medishield Life coverage. The amount of help someone could get from Medifund depends on a patient’s and family’s income, condition, expenses and social circumstances. Decisions are made at a very local level.
A number of people hold up Singapore as an example of how conservative ideas of competition and consumer-directed spending work. Unfortunately, the story isn’t so clean when you look at the data. In a 1995 paper in Health Affairs, William Hsiao looked at how health spending fared in Singapore before and after the introduction of Medisave. He found that health care spending increased after the introduction of increased cost-sharing, which is not what most proponents of such changes would expect. Michael Barr had similar thoughts in his “critical inquiry” into Singapore’s medical savings account, published in The Journal of Health Politics, Policy and Law in 2001.
But
why is Singapore so cheap? Some think that it’s the strong use of
health savings accounts and cost-sharing. People who have to use their
own money usually spend less. But that’s not the whole story here.
There’s a lot of government regulation as well.
Through the tiered care system and its public hospitals, the government has a great deal of control over inpatient care. It allows a private system to challenge the public one, but the public system plays the dominant role in providing services.
Initially, Singapore let hospitals compete more, believing that the free market would bring down costs. But when hospitals competed, they did so by buying new technology, offering expensive services, paying more for doctors, decreasing services to lower-class wards, and focusing more on A-class wards. This led to increased spending.
In other words, Singapore discovered that, as we’ve seen many times before, the market sometimes fails in health care. When that happened in Singapore, government officials got more involved. They established the proportion of each type of ward hospitals had to provide, they kept them from focusing too much on profits, and they required approval to buy new, expensive technology.
Singapore heavily regulates the number of physicians, and it has some control over salaries as well. The country uses bulk purchasing power to spend less on drugs.
The most frustrating part about Singapore is that, as an example, it’s easily misused by those who want to see their own health care systems change. Conservatives will point to the Medisave accounts and the emphasis on individual contributions, but ignore the heavy government involvement and regulation. Liberals will point to the public’s ability to hold down costs and achieve quality, but ignore the class system or the system’s reliance on individual decision-making.
Singapore is also very small, and the population may be healthier in general than in some other countries. It’s a little easier to run a health care system like that. It also makes the system easier to change. We should also note that some question the outcomes on quality, or feel that the government isn’t as honest about the system’s functioning.
There is a big doctor shortage, as well as a shortage of hospital beds. As Mr. Barr noted in a longer discussion of Singapore’s system, “It seems to be highly likely that if one could examine the Singapore health system from the inside, one would find a fairly ordinary health system with some strong points and many weaknesses — much like health systems all over the developed world.” This concern about how much we can really know about Singapore’s true outcomes is one of the reasons it didn’t fare so well in our contest.
https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html?module=inline
Through the tiered care system and its public hospitals, the government has a great deal of control over inpatient care. It allows a private system to challenge the public one, but the public system plays the dominant role in providing services.
Initially, Singapore let hospitals compete more, believing that the free market would bring down costs. But when hospitals competed, they did so by buying new technology, offering expensive services, paying more for doctors, decreasing services to lower-class wards, and focusing more on A-class wards. This led to increased spending.
In other words, Singapore discovered that, as we’ve seen many times before, the market sometimes fails in health care. When that happened in Singapore, government officials got more involved. They established the proportion of each type of ward hospitals had to provide, they kept them from focusing too much on profits, and they required approval to buy new, expensive technology.
Singapore heavily regulates the number of physicians, and it has some control over salaries as well. The country uses bulk purchasing power to spend less on drugs.
The most frustrating part about Singapore is that, as an example, it’s easily misused by those who want to see their own health care systems change. Conservatives will point to the Medisave accounts and the emphasis on individual contributions, but ignore the heavy government involvement and regulation. Liberals will point to the public’s ability to hold down costs and achieve quality, but ignore the class system or the system’s reliance on individual decision-making.
Singapore is also very small, and the population may be healthier in general than in some other countries. It’s a little easier to run a health care system like that. It also makes the system easier to change. We should also note that some question the outcomes on quality, or feel that the government isn’t as honest about the system’s functioning.
There is a big doctor shortage, as well as a shortage of hospital beds. As Mr. Barr noted in a longer discussion of Singapore’s system, “It seems to be highly likely that if one could examine the Singapore health system from the inside, one would find a fairly ordinary health system with some strong points and many weaknesses — much like health systems all over the developed world.” This concern about how much we can really know about Singapore’s true outcomes is one of the reasons it didn’t fare so well in our contest.
https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html?module=inline
No comments:
Post a Comment