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Tuesday, May 14, 2019

Health Care Reform Articles - May 14, 2019

Generic Drugmakers Conspired to Inflate Prices Up to 1,000%, State Prosecutors Say

by Heather Murphy - NYT - May 11, 2019

According to a new lawsuit, generic medications including oral antibiotics, blood thinners, cancer drugs, contraceptives and H.I.V. treatments were subject to unlawful price fixing.CreditRamin Rahimian for The New York Times



Leading drug companies including Teva, Pfizer, Novartis and Mylan conspired to inflate the prices of generic drugs by as much as 1,000 percent, according to a far-reaching lawsuit filed on Friday by 44 states.
The industrywide scheme affected the prices of more than 100 generic drugs, according to the complaint, including lamivudine-zidovudine, which treats H.I.V.; budesonide, an asthma medication; fenofibrate, which treats high cholesterol; amphetamine-dextroamphetamine for A.D.H.D.; oral antibiotics; blood thinners; cancer drugs; contraceptives; and antidepressants.
“We all know that prescription drugs can be expensive,” Gurbir S. Grewal, the New Jersey attorney general, said in a statement. “Now we know that high drug prices have been driven in part by an illegal conspiracy among generic drug companies to inflate their prices.”
In court documents, the state prosecutors lay out a brazen price-fixing scheme involving more than a dozen generic drug companies and just as many executives responsible for sales, marketing and pricing. The complaint alleges that the conspirators knew their efforts to thwart competition were illegal and that they therefore avoided written records by coordinating instead at industry meals, parties, golf outings and other networking events.
The bulk of the collusive activity occurred from July 2013 to January 2015, according to the complaint, when Teva raised prices on nearly 400 formulations of 112 generic drugs. A key element of the scheme, the complaint alleges, was an agreement among competitors to cooperate on pricing so each company could maintain a “fair share” of the generic drug markets. At the same time, the companies colluded to raise prices on as many drugs as possible, according to the complaint.
Though the complaint paints Teva Pharmaceuticals USA, which is based in Pennsylvania, as a leader in the conspiracy, it describes the conduct as “pervasive and industrywide.”
“Rather than enter a particular generic drug market by competing on price in order to gain market share,” the complaint states, “competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices.”
Teva denied the allegations. “Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability,” the company said in a statement.
The Israeli drugmaker Teva Pharmaceutical Industries is one of the world’s largest manufacturers of generic medicines. The company faced criticism in February 2018 for charging $18,375 for a bottle of 100 pills for a rare medical condition known as Wilson disease. Mylan has also generated outrage for raising the price for a two-injection EpiPen set to over $600 from $100. The latest lawsuit comes as drug companies are already facing widespread scrutiny from lawmakers over drug prices.
The lawsuit was filed in the Federal District Court in Connecticut, where the multistate investigation began. On Saturday, William Tong, the Connecticut attorney general, said on Twitter that the organized effort to maximize profits was “a highly illegal violation of antitrust laws.”
The new lawsuit is a more expansive version of a similar suit filed by the previous Connecticut attorney general in December 2016 in the Federal District Court for the Eastern District of Pennsylvania.
Pfizer denied any wrongdoing in a statement on Saturday. The company said that Greenstone, a Pfizer subsidiary that produces generic drugs, “has been a reliable and trusted supplier of affordable generic medicines for decades and intends to vigorously defend against these claims.”
State prosecutors say the conspiracy has negatively affected the national economy while damaging state health plans and federal health care programs like Medicare and Medicaid.
In his statement, Mr. Grewal described the pharmaceutical industry in New Jersey, where much of the illegal conduct is alleged to have occurred, as “the envy of the world.”
“But no New Jersey company will get a free pass when it violates the law and harms our residents.”
https://www.nytimes.com/2019/05/11/health/teva-price-fixing-lawsuit.html?smid=nytcore-ios-share

Maine Joins Pharmaceutical Antitrust Lawsuit 

by Patty Wight - Maine Public - May 13, 2019

Maine has joined 43 other states in an antitrust lawsuit against pharmaceutical companies for artificially inflating prices and reducing competition.
The lawsuit, filed in US district court in Pennsylvania, alleges that drug manufacturers including Teva, Pfizer, and Mylan coordinated a broad campaign to fix prices for more than 100 generic drugs.
In a press release, Maine Attorney General Aaron Frey says that drug costs create significant financial pressure on individuals and families, and Maine is joining the lawsuit to hold generic drug manufacturers accountable.
The suit seeks civil penalties and actions to restore competition to the generic drug market.
https://www.mainepublic.org/post/maine-joins-pharmaceutical-antitrust-lawsuit

Mainers with private insurance pay nearly 3 times what Medicare patients pay for same service, study finds

by Patty Wight - Maine Public - May 13, 2019

A new study on hospital prices from the RAND corporation finds that patients with private insurance in Maine pay nearly three times what Medicare would pay for the same service.
The nonprofit think tank is urging employers to use the findings to push for lower costs in their health plans, but the Maine Hospital Association said the study findings come with caveats.
The RAND study evaluated hospital claims data in 25 states.
Senior policy researcher Chapin White said that in 2017 the prices paid to hospitals overall averaged about 241 percent of what Medicare would have paid. In Maine, the average price was even more: 283 percent.
“Maine is definitely on the higher end among the states we looked at,” White said.
States on the lower end, such as Pennsylvania and New York, paid average prices that were between 150 percent to 200 percent of Medicare payments.
White said it is difficult to say what is a reasonable price for private insurers to pay compared with Medicare. The benefit of the study, he said, is that employers — who have historically been kept in the dark about prices — can use it as a reference point to start asking their health plans how much they are paying for services.
“The second takeaway is, I think, employers should be asking their health plans not just what prices are we paying, but how are we paying for hospital services?” White said.
Most private health plans negotiate complicated discount rates for services. But another option is to base payments on a set percentage of what Medicare pays — a method that White said typically elicits lower costs.
“Paying multiples of Medicare is a simple approach to contracting that enables shopping,” he said
But Jeff Austin of the Maine Hospital Association cautioned against that approach.
“Moving towards Medicare rates — I can understand why commercial folks and the industry would want to do that. We would have a hard time making it, if that were to happen, though,” he said.
Austin said Medicare reimbursement rates in Maine cover only about 85 percent to 90 percent of the cost of services. Medicaid rates are even lower. Commercial plans help cover those losses. Even then, he said, the average operating margin for hospitals in Maine is 1 percent.
“At the end of the day, out of every dollar, there’s one penny left. And that’s an average,” Austin said. “As you know, about 16, 17 hospitals are in the red. They actually walk away with a deficit.”
Trevor Putnoky of the nonprofit Healthcare Purchaser Alliance of Maine recognizes that rural hospitals are struggling, and said that his organization is not currently pushing for health plans to negotiate prices based on Medicare rates.
“But that being said, we do know employers are looking at this as a means to control costs and get more transparency into their health care spend,” Putnoky said.
And the prices unveiled in the RAND report, he said, should be used to help steer Maine toward lower health costs.

Our View: The shifting behind Maine health care costs

by The Editorial Board - Portland Press Herald - May 14,  2019

Imagine eating in a restaurant where the waiter demands some information from you before you can have your check.
Depending on your answers, that hamburger you ordered might cost $5 or it could cost $15. Either way, you won’t know until after you’ve eaten.
That’s relative pricing, and it’s something we would never tolerate in a restaurant but accept as a well-established feature of our health care system. Hospitals charge one set of prices for patients who are covered by Medicare, and another set for people covered by private insurance. The difference between them varies from state to state, but in Maine, private-pay consumers shell out 300 percent more than Medicare patients would pay for exactly the same services.
The result is high private health insurance premiums that drive healthy self-employed people out of the insurance pool and put a lid on wages for people who get their insurance through work. And since consumers don’t know that it’s happening, providers don’t face pressure to innovate to control costs.
The latest relative pricing data come from a 25-state study by the Rand Corp., which compared the prices paid to hospitals by privately insured patients to what Medicare would have paid. Medicare, the federal health care program for people age 65 and older and some people with disabilities of all ages, is a single-payer system that sets its own prices – and that’s the problem, providers say.
Medicare covers only 90 percent of the real cost of the services, and Medicaid, the federal-state partnership for the poor, pays even less. So the hospitals say that they need the private pay patients to make up the difference.
That might help the hospitals balance their books, but it puts a heavy burden on the people who buy private insurance. People who pay out of pocket on the individual insurance market know how heavy the burden is, but it’s just as bad for those who have employer plans, where most of their premiums are part of their compensation, making increasing costs less visible.
Maine is an expensive place to buy health insurance. We are an old state, which makes us more likely to need medical care. And our population is small and spread out over a large area, making it expensive to deliver it.
You would expect some cost shifting if the federal bureaucrats set the prices too low, but 300 percent relative pricing is outrageous. It’s not as if people with private insurance are all rich – they included low-wage and middle-income workers who have watched their wages stagnate and out-of-pocket health costs climb as a direct result of the high cost of health insurance.
It’s time to link the prices paid by privately insured patients to the Medicare prices. If a discount for Medicare is considered necessary for the system to be solvent, then the state could cap private insurance prices at a reasonable point above the Medicare price. If that’s not enough for the hospitals to pay their bills, it would better for them to make their case to Washington than to pad the bills of people who might not even know that they are paying them.
The goal should be to set prices that are related to the real underlying costs, and all patients should be paying about the same amount for the same services.
https://www.pressherald.com/2019/05/14/our-view-the-shifting-behind-maine-health-care-costs/

Doctors quit EMMC as changes leave less time with patients, push morale to ‘all-time low’

by Charles Eichacker - Bangor Daily News - May 13, 2019

At least eight doctors are resigning from Bangor’s Northern Light Eastern Maine Medical Center amid a push by the hospital to reduce their ranks, cut their benefits and have fewer doctors work each day, forcing those on duty to see more patients in a shift.
The resignations also come as doctors from departments across the Bangor hospital have criticized management for sidelining them from recent major decisions. Those doctors recently told managers and board members of the hospital’s parent organization, Northern Light Health, that doctors’ morale is at an “all-time low” and that there could be a “mass exodus” if things don’t improve.
The tensions have emerged as Northern Light leaders make a variety of changes to standardize compensation and operations across the $1.76 billion Northern Light health care system, which has grown in recent years to include nine hospitals stretching from Portland to Presque Isle. Northern Light is poised to grow even more through a merger in the works with Mayo Regional Hospital in Dover-Foxcroft.
The eight who have submitted their resignations since the beginning of March belong to a group of about 45 physicians called hospitalists, who provide a wide range of care to admitted patients.
Their resignations will start to take effect in the middle of the summer and have come as their group has been negotiating a new contract with EMMC’s administrators that would eliminate their paid time off.
But more departures could be coming. A hospitalist who still works at EMMC said at least 12 hospitalists have decided to resign in recent weeks.
A Northern Light Health spokeswoman confirmed the eight departures and attributed them to normal turnover.
But even eight resignations would take away almost a fifth of the hospitalist group and be unprecedented, according to Dr. James Westhoven, a hospitalist who resigned at the end of March and said he can’t remember a time in his 16 years at EMMC when more than about five hospitalists left in short succession.

‘Handed to us as a done deal’

Westhoven and the current hospitalist — who did not want to be identified out of fear that speaking publicly could lead to repercussions from the hospital — both attributed the departures to the changes EMMC leaders have made since late last year.
They’re the reason that Westhoven, 72, decided to resign in March rather than retire at the end of the year, as he had previously been planning to do.
“This was just handed to us as a done deal,” Westhoven said. “I realized I can’t take part in this wholesale dismantling. It’s really hard to work with staff who are demoralized. They just are fed up with the things that have been done to them over the last six months.”
Early this year, the hospitalists were told that they would be reclassified as shift-based workers and lose all of their paid time off, while other types of doctors at EMMC either lost lesser amounts or even gained paid time off. That has meant they must work more weeks each year for no extra pay.
Since last fall, EMMC has also reduced the number of hospitalists who work each day by about four, according to the one who still works there.
That has increased their daily workload. A few years ago, hospitalists usually saw about a dozen patients during a 10-hour shift, but the cuts have meant that they now see 15 to 17 in the same length of time, according to the hospitalist.
Northern Light officials said the changes align EMMC hospitalists’ workload with a national guideline from the Society of Hospital Medicine that hospitalists should see 15 patients over a 10-hour shift.
But Westhoven and the current hospitalist said they have forced the hospitalists to devote less attention to individual patients with complex health problems and affected the overall care residents of eastern Maine can expect from the state’s second-largest hospital.
“They’ve dramatically increased the work,” the current hospitalist said. “They’ve made it totally unsafe, and on top of that, they’ve pissed off the entire group.”
Besides reducing daily staffing, EMMC’s leaders have said they plan to reduce the total number of hospitalists to about 40, from a high of 50 in recent years.
The system has also eliminated a four-hour period that hospitalists were paid to work at the end of a weeklong rotation, which Westhoven said was a critical time to discharge patients or share information about patients with doctors just starting a new rotation.
“You hurry yourself,” Westhoven said. “You don’t pay as much attention. A lot of times, I’d see patients two to three times a day, going back to see them after their tests. Now, that second visit doesn’t happen.”
Adding to the cascade of changes, the hospital’s parent group, Northern Light Health, last year signed a controversial contract with a for-profit Tennessee company, TeamHealth, that has been providing behind-the-scenes guidance on the hospitalists’ work. TeamHealth also has become the employer of hospitalists and emergency room doctors in four smaller hospitals in the Northern Light system, which until recently was called Eastern Maine Healthcare Systems.
Altogether, Westhoven and the current hospitalist said the changes will make it harder for EMMC to recruit well-trained doctors to the Bangor region and force the hospital to fill openings with temporary traveling doctors, also known as locum tenens physicians, who are more costly to hospitals than employed physicians.
Northern Light officials have described the recent changes as part of a systemwide improvement effort and said that they align EMMC’s practices with national norms and its compensation with similar markets’.
“The clinical leadership at EMMC was really engaged in working through the [benefits packages] that they have introduced,” Michelle Hood, Northern Light’s CEO, said during an interview in April. “I don’t expect that we’re going to see a problem with recruitment. This is a very standard package.”
Northern Light spokeswoman Suzanne Spruce described the departure of eight hospitalists as “all very normal movement.” She said reasons for the resignations included expiring visas, fellowship opportunities at other organizations and out-of-state work opportunities for relatives.
“I can tell you that it is not unusual for a group of this size to have members leave our employment and the state for such reasons,” she said.

‘A break-even’

Northern Light leaders said they’re not pursuing the reduction to the hospitalists’ ranks and the changes to doctors’ compensation packages with a specific savings goal in mind.
“It’s really a break-even,” said Timothy Dentry, the chief operating officer of Northern Light who is now serving as the Bangor hospital’s interim president after last month’s departure of Donna Russell-Cook. “There’s some that lose a little bit; there’s some that gain some.”
Although some of Northern Light’s smaller hospitals have suffered operating losses in recent years and the overall system in 2017 received a low credit rating, its flagship hospital has been operating in the black.
From 2013 through 2017 — the five most recent years for which financial data are available — EMMC posted positive margins every year that exceeded the state median for hospitals, according to data from the Maine Health Data Organization. Its net operating income has hovered around $28 million in recent years.
The coming resignations could add to some of Northern Light’s costs.
EMMC is now working to recruit physicians to replace the hospitalists who have announced they are resigning this summer, Spruce said, but it may have to hire more costly locum tenens physicians until it can fill the openings.
It also may not fill all the vacancies, she said.

Under a single banner

It’s not unusual for large health care systems to alienate some of their medical staff when they try to unify diverse hospitals under a single banner and institute new standards across previously independent organizations.
Another example of that happening in Maine came just last year, when the staff of three hospitals belonging to Lewiston-based Central Maine Healthcare held votes of no confidence in the system’s CEO, Jeff Brickman, amid a series of physician resignations.
Health care systems need to avoid hiring too many administrators who are disconnected from the actual medical care their hospitals deliver, and they need to be open and attentive to the doctors who are pivotal to their success, said John Morrow, managing director of Franklin Trust Ratings, which specializes in analyzing health care industry data.
“To a great extent, physicians make the hospital or break the hospital,” Morrow said. “When you have systems trying to run health care — which is always local — more as a corporate entity, it can be a struggle. If the people who are contributing to the system’s success by bringing in patients are now not being listened to, it’s a failure of management.”
At Northern Light Health, the cuts to paid time off represented a breaking point for many practicing doctors at EMMC, who thought they had been cut out of important decisions affecting their jobs and the care they deliver to patients, according to documents obtained by the BDN and interviews with doctors and administrators.
In letters on Feb. 7 and Feb. 11, a group of doctors who lead their divisions at EMMC told Northern Light Health board members that “morale is at an all-time low among the employed physicians at our institution” and that the cuts to paid time off were part of a “recurrent pattern” of “disenfranchisement of clinically active physicians.”
During a March 12 meeting, one of them warned board members and administrators that there could be a “mass exodus” of doctors if things didn’t improve, according to official minutes from the meeting.
Even as Northern Light Health tries to standardize operations across its nine hospitals, the system needs to ensure its hospitals can still respond to the unique health care needs of their regions, said Dr. Jonathan Wood, EMMC’s senior lead physician for pediatrics, who has been among the physicians pushing Northern Light leaders to listen to their larger concerns.
“Whether it’s been intended or not, the feeling has been every square peg pounded in a round hole, everyone the same,” said Wood, who was present for the interview with Northern Light CEO Hood at the group’s headquarters in Brewer. “We know that is not the case. Clinically, that’s so not the case.”
During that interview, Hood said that the organization’s leaders have tried to collect physicians’ feedback in various ways over the last two years, including by elevating them into administrative roles and placing them on committees, but that those efforts need to improve.
Wood and another EMMC doctor who was present for the interview, Dr. Michelle Toder, director of surgical and nonsurgical weight loss programs, both said they are cautiously encouraged by Hood’s efforts to respond to their concerns.
But they also said they don’t speak for all of their colleagues. “I can tell you that not everyone in that huge group of people feels that way,” Wood said.

https://bangordailynews.com/2019/05/13/news/bangor/doctors-quit-emmc-as-changes-leave-less-time-with-patients-push-morale-to-all-time-low/?mc_cid=7b2e4063ca&mc_eid=fe3184f17e


Why Vermont’s single-payer effort failed and what Democrats can learn from it

by Amy Goldstein - Washington Post -April 29, 2019

Three and a half years after then-Gov. Peter Shumlin of Vermont signed into law a vision for the nation’s first single-payer health system, his small team was still struggling to find a way to pay for it. With a deadline bearing down, they worked through a frozen, mid-December weekend, trying one computer model Friday night, another Saturday night, yet another Sunday morning.
If they kept going, the governor asked his exhausted team on Monday, could they arrive at a tax plan that would be politically palatable? No, they told him. They could not.
Two days later, on Dec. 17, 2014, Shumlin, a Democrat who had swept into office promising a health-care system that left no one uninsured, announced he was giving up, lamenting the decision as “the greatest disappointment of my political life so far.”
The trajectory of Green Mountain Care, as Vermont’s health system was to be known — from the euphoric spring of 2011 to its crash landing in late 2014 — offers sobering lessons for the current crop of Democrats running for president, including Vermont’s own Sen. Bernie Sanders (I), most of whom embrace Medicare-for-all or other aspirations for universal insurance coverage.
Vermont’s foray into publicly financed health care — in a state that in many ways offered the optimal conditions — demonstrates the extraordinary difficulty of trying to convert liberals’ dream of a more just, efficient health system into reality.
Then as now, many of the advocates shared “a belief that borders on the theological” that such a system would save money, as one analyst put it — even though no one knew what it would cost when it passed in Vermont.
That belief would prove naive. The choices Shumlin favored would essentially have doubled Vermont’s budget, raising state income taxes by up to 9.5 percent and placing an 11.5 percent payroll tax on all employers — a burden Shumlin said would pose “a risk of economic shock” — even though Vermonters would no longer pay for private health plans.
The dozens of decisions the governor’s team made in designing the system — what benefits to include, whom to cover and the amount of out-of-pocket costs — required trade-offs with big winners and losers.
Other things got in the way, too, according to nearly a dozen and a half actors and observers in the fight for Green Mountain Care interviewed for this report. Vermont’s leaders were too optimistic about the financial help they could lure from Washington. They were late in writing the financing plan, losing political momentum in the process.
Far and away the biggest hurdles, though, were untamed health-care costs, which were growing faster than the U.S. economy and making care increasingly unaffordable no matter how it was paid for.
“What I learned the hard way,” Shumlin said, “is it isn’t just about reforming the broken payment system. Public financing will not work until you get costs under control.”

Protesters hold a banner in support of universal health-care during Shumlin's inauguration speech on Jan. 8, 2015, in Montpelier. (Andy Duback/AP)
Those building a national single-payer model would confront many of those same dilemmas. But as the 2020 campaigns get underway, few Democrats show signs of acknowledging, let alone wrestling with, the gritty complexities. Even Sanders, eager as he was for Vermont to become the first single-payer state, seldom mentions that it did not come to pass.
“I see no evidence from the Medicare-for-all advocacy community of a serious effort to understand and learn from the lessons from Vermont’s failure,” said John McDonough, who was a senior aide to Sen. Edward M. Kennedy (D-Mass.) and is now a professor at the Harvard T.H. Chan School of Public Health. “Those who ignore history are cursed to repeat it.”
If any state offered fertile terrain to create a single-payer version of universal health care, Vermont was it.
It has some of the nation’s healthiest residents, with some of the lowest rates of uninsured. It is small and homogeneous. It shares a border with Canada, putting an existing single-payer system within sight. And it has just one main insurer, the nonprofit Blue Cross Blue Shield of Vermont, repeatedly ranked the most efficient Blue Cross Blue Shield plan in the nation.
In a bastion of liberal politics, state lawmakers had flirted with single-payer plans as early as the 1990s. But the grass-roots crusade really took off on May Day of 2009, when more than 1,000 people, toting red signs saying “Healthcare Is a Human Right,” gathered at the gold-domed statehouse for the largest weekday rally at the capitol in Vermont history.
In a state with two-year governor terms, 2010 was an election year, and Shumlin, then the state Senate leader, was running in a crowded Democratic primary field.
“His first TV ad was for single-payer,” recalled James Haslam, then-executive director of the Vermont Workers’ Center, which organized rallies.
After Shumlin won the governorship, he laid out a bill for Green Mountain Care on the first day of the next legislative session, quickly followed by a Harvard consultant’s estimates, commissioned a year earlier, that such a plan would lower total health spending, eliminate health-care fraud and abuse, and cover more people. The consultant “was doing a 36,000-foot view, not ‘we are landing the plane,’ ” Shumlin recalled. “No one in their right mind was relying on those numbers.”
As liberals still contend, Shumlin said the newly enacted Affordable Care Act signed by President Barack Obama “wouldn’t take us far enough,” recalled a former legislative leader who spoke on the condition of anonymity to avoid a professional conflict.
Early that May, the legislation, called Act 48, passed the state Senate, 21 to 9. Two days later, it passed the state House, 94 to 49.
Under a brilliant spring sky later that month, Shumlin signed the bill at a wooden table on the statehouse steps, surrounded by cheering legislators and activists. People wept, recalled Peter Sterling, a leading advocate at the time: “You couldn’t believe the day had come.”
A few noted the idea would be divisive.
“We all have to be ready to fight the fight that surely will be coming,” John Campbell (D), who succeeded Shumlin as the Senate’s president pro tem, told the crowd.
Still, the governor sounded resolute. The law was “an opportunity and an obligation,” he said. “We will get this done in Vermont.”
* * *
As with any attempt to dismantle one American health-care system and replace it with another, Green Mountain Care was always going to be a long game. For starters, it would not be until 2017 that any state could get federal permission to change the way it used insurance subsidies created under the ACA.
Shumlin and a top aide traveled to Washington to cajole the Treasury Department and the Department of Health and Human Services to allow Vermont to start sooner. They argued the state should be able to take the tax advantages available to employers that offer health benefits and count that money toward public financing.
The requests were rejected because they were premature or not allowed under what the federal health-care law and tax law permitted, recalled Jason Levitis, a Treasury Department official at the time specializing in the ACA.
Act 48 was 141 pages — far more specific than any plans from Democrats now running for president or Senate legislation Sanders recently reintroduced. Still, it left scores of knotty decisions for Shumlin’s administration.
“It’s easy to write a bill saying we are going to cover everybody,” said a member of his staff who worked on the plan and spoke on the condition of anonymity to avoid a professional conflict. “It’s much harder to figure out . . . what exactly your benefit coverage will be [and] are you going to have co-payments.”
On the fifth floor of the Pavilion, the governor’s office building, the small team of Shumlin’s staffers divided the tasks. Under the law, the deadline to present a financing plan to state lawmakers was January 2013 — just as the state was creating the machinery for its ACA insurance marketplace.
“Its political timing couldn’t be worse,” Shumlin recalled. Like a number of states that created their own insurance exchanges, Vermont’s online marketplace malfunctioned. “Voters were saying, ‘If this guy can’t get an exchange running, how could we trust him to revamp our entire health-care system?’ ” Shumlin said.
It was nearly two years after he had signed the bill when Shumlin assigned a tax specialist to begin developing Green Mountain Care’s financing.
By then, the governor had been under intense pressure on other decisions. Single-payer advocates and unions pressed hard for generous benefits. In a state with workers coming in from Massachusetts, New Hampshire and New York, some employers argued that their out-of-staters needed to be included.
In the end, Shumlin agreed that businesses should not need to exclude part of their workforce from the system and that it would be unfair to offer benefits less than public employees already had. The plan would have covered, on average, 94 percent of Vermonters’ health-care costs.
Meanwhile, small businesses that did not offer health benefits, such as Vermont’s “creemee stands” selling soft-serve ice cream, feared the specter of higher taxes, recalled Bram Kleppner, a chief executive of a pewter company who supports single-payer and was on a Shumlin business advisory council. “We never figured out the creemee stand — the notion we were going to put all these beloved little businesses run by our cousins and our neighbors out of business by imposing a payroll tax.”
And big companies that were self-insured, such as IBM, resented the prospect of being taxed more to help other Vermonters get coverage.
Consultants had said that the amount Vermonters and their employers were paying in insurance premiums and patients’ out-of-pocket costs was more than what would be needed in additional tax revenue. But the prediction that Vermont’s overall health spending would decrease, while more people got coverage, was unproven — and, in any case, was a hard sell in the face of big new taxes.
Shumlin’s team developed 14 alternative financing concepts, according to the governor’s former staffer. “The pressure on us was to see if we could get the payroll tax under double digits, which we couldn’t figure out how to do without making the income tax” on individuals too high, that staffer said.
The governor promised to announce the financing soon after the 2014 elections. With liberals fearing he was losing political will to launch Green Mountain Care, amid other controversies, Shumlin won a third term over a GOP political neophyte in a contest so close it ended up being decided by the legislature.
By then, the computer runs kept showing that the only way to set taxes at rates as low as they were striving for was to provide skimpier coverage than most insured Vermonters already had.
“As we completed the financing modeling,” Shumlin said at a news conference at which he abandoned his quest, “it became clear that the risk of economic shock is too high at this time to offer a plan I can responsibly support for passage in the legislature.”
Green Mountain Care would have cost $4.3 billion in its first year, with less funding than the state wanted from the federal government and $2.6 billion in new state tax revenue. By 2020, Shumlin’s team estimated, the cost would have swollen to $5 billion.
“We were pretty shocked at the tax rates we were going to have to charge,” he recalled.
Health-care activists delivered a platter of burned toast to his office, saying it symbolized his political future. At Shumlin’s inauguration the next month, 29 single-payer demonstrators were arrested in the House chamber, and he was escorted out a back door for his safety. Months later, he said he would not run for a fourth term.
* * *
T
he day Shumlin announced that Green Mountain Care was dead, Vermont’s junior senator, Sanders, was in Iowa, testing liberals’ receptivity as he considered a first run for president. The day before, he had talked up single-payer in two appearances, news accounts show. But that day, he did not mention its demise in his state, according to the accounts and people interviewed for this report.
When Congress adopted the ACA in 2010, Sanders had fought to build in flexibility for states to try experiments, so that Vermont could become the first with a single-payer system. Later, it was two other Senate Democrats, not Sanders, who introduced an unsuccessful bill to allow such experiments sooner than 2017.
Shumlin recalled that when he made trips to federal agencies to advance his plan, “Sanders was the one who got in the car and came with me to those meetings.” Back in Vermont, though, the senator was hands-off, neither helping on the technical work nor pressing state lawmakers to support the taxes that would be needed.
Haslam, one of the leading health-care activists, said: “I’m not sure any senator would play that role in their statehouse. We were just hoping, because he’s such a champion.”
Sanders declined to be interviewed for this report. The policy director for his 2020 campaign, Josh Orton, said the senator “has focused tirelessly on health-care policy at the federal level. . . . If we are going to pass Medicare-for-all, we will need a national grass-roots movement.”
To some who still bear the battle scars of Green Mountain Care, the state’s unrealized vision is a neon warning for Sanders and other disciples of single-payer health care.
“If you can’t do it in Vermont, with one private health plan and low uninsured rates, then the amount of disruption you would have nationally with winners and losers would be enormous,” said Kenneth Thorpe, an Emory University health-policy researcher who worked as a consultant to Vermont.
Advocates, however, are undeterred.
“Health care is not free,” acknowledged Deb Richter, a family physician who moved to Vermont three decades ago to crusade for single-payer. “There is no Santa Claus.” But, she argued, “there is more than enough money already floating on health care” — it just needs to be removed from the control of private insurance companies, she said.
Shumlin, who has returned to private business, has come to believe it is not that simple. In his last two years in office, he pursued innovations to drive down health-care spending, including an experiment approved by the Obama administration.
After reflecting on what he tried and failed to do, he sometimes thinks a national single-payer effort might be easier to pull off.
But when he listens to the 2020 candidates, their health-care pitches strike him as shallow.
“I kind of know why,” he said. “Their job is to try to build support for an idea. I did the same thing when I ran. Listen — changing health-care systems is wonky work.”
Still, he said, “if I were running for president of the United States, I would have a team working on a plan so I don’t sell an idea to Americans that you can’t achieve. That’s the mistake I made.”

An Economist Who Believes Only Government Can Save Capitalism

by Daniel W. Drezner - NYT - May 10, 2019

PEOPLE, POWER, AND PROFITS
Progressive Capitalism for an Age of Discontent
By Joseph E. Stiglitz
A diverting Beltway pastime during the heyday of the Washington Consensus was to gently mock Joseph E. Stiglitz. It was remarkably easy for pundits to wave away his prestigious awards (Nobel Prize in Economics) and positions (World Bank chief economist, chairman of Bill Clinton’s Council of Economic Advisers) and dismiss his warnings about “market fundamentalism” as overripe hyperbole. In 2004 the financial columnist Sebastian Mallaby described Stiglitz as “like a boy who discovers a hole in the floor of an exquisite house and keeps shouting and pointing at it.” Fifteen years later, the house that capitalism built looks rather shabby. Maybe, just maybe, more people should have taken Stiglitz seriously.
This is certainly what Stiglitz, now a professor of economics at Columbia, is hoping for with his latest book, “People, Power, and Profits.” He argues that the American system of capitalism has fallen down and needs government help to get back up again. “People, Power, and Profits” builds on Stiglitz’s earlier work and adds some pretty big ambitions. In the preface, he writes: “This is a time for major changes. Incrementalism — minor tweaks to our political and economic system — are inadequate to the tasks at hand.” In the introduction, he adds: “It is not just economics that has been failing but also our politics. Our economic divide has led to a political divide, and the political divide has reinforced the economic divide.”
Stiglitz’s diagnosis of what ails the American economy will have a familiar ring to anyone who has followed these debates. The rules of the game have been stacked in favor of the haves over the have-nots. This has widened economic inequality and increased the concentration of market power among leading firms in every sector, slowing down broad-based productivity growth. These firms and wealthy individuals are converting their riches into political power, further revising the rules to entrench their position at the top. They advocate for tax cuts and the deregulation of everything except intellectual property rights. Anyone who relies on countervailing institutions, like public education, labor unions or social safety nets, loses out.
“People, Power, and Profits” goes beyond diagnosis to treatment. At the core of Stiglitz’s plan is the strengthening of the state. “The view that government is the problem, not the solution, is simply wrong. To the contrary, many if not most of our society’s problems, from the excesses of pollution to financial instability and economic inequality, have been created by markets.” He proposes a whole host of reforms, including significant investments in public goods like basic research, more stringent regulation of firms and measures to preserve and protect the voting franchise.
A cruel irony of “People, Power, and Profits” is that in arguing the free market has declined, Stiglitz is competing in an extremely crowded marketplace. The genre of “How has America gone wrong?” is overstuffed; we are living in a golden age of authors telling Americans that we no longer live in a golden age. Given the plethora of books on this topic, does Stiglitz’s stand out?
One of his book’s comparative advantages is that while Stiglitz has impeccable economic credentials, he also recognizes some of his profession’s blind spots. He observes, correctly, that standard textbook economics talks a lot about competition but little about economic power. He also excels at swatting away bromides about the miracles of markets and the failures of governments. He notes, for example, that the Social Security Administration is far more efficient at disbursing retirement benefits than private pensions.
Stiglitz could have done much better, however, if he had narrowed his focus to the sharpest arguments in his policy quiver. For instance, he discusses the idea that taxes on carbon or financial transactions “can simultaneously increase economic performance and raise revenue.” This sounds like the progressive doppelgänger of the Laffer Curve, that is, a concept that would be good policy and good politics. Stiglitz should be selling the hell out of it; instead, he breezes through it in one page.
Some of his other ideas seem less thought out or more politically toxic. On antitrust, for example, he encourages a doctrine of pre-emption: “Regulation of mergers must take into account the likely future shape of markets.” This would require considerable foresight, so it is a problem that 75 pages later Stiglitz allows that “often there is far from perfect information about where a market will be evolving, and the world turns out to be different from what we expected.” He fails to explain how regulators would handle this conundrum. Another of Stiglitz’s ideas — a public mortgage financing system that could access an individual’s I.R.S. and Social Security data — sounds unpalatable in the current low-trust political environment.
Indeed, I wish Stiglitz had taken seriously his pledge to take politics seriously. At one point, “People, Power, and Profits” rules out the idea of a universal basic income because the necessary tax increases would be politically impractical. That was the only moment in the book in which Stiglitz seemed to think at all about how any progressive policy reform would be, to use the language of economics, “incentive compatible.” There is no discussion whatsoever of polling data or other metrics to gauge public support for his ideas.
The policy shop of every 2020 Democratic candidate for president would be wise to pore over “People, Power, and Profits” and cherry-pick its best ideas. Other readers should feel free to browse the genre a bit more widely.
https://www.nytimes.com/2019/05/10/books/review/joseph-e-stiglitz-people-power-profits.html?action=click&module=Features&pgtype=Homepage

Private equity investments in physician practices and overuse

Over the past few years, more and more physician practices have been bought by private equity firms. While these investments were previously concentrated in a few specialties (eye care, pain management, dermatology and dentistry), firms are now expanding to buy practices in orthopedics, urology, gastroenterology, radiology, and primary care.
According to a recent Bloomberg Law article, private equity firms are on track this year to set a record for most deals made buying physician firms. “Deal activity is projected to eclipse over 1,200 deals by the end of 2019, compared to 1,059 deals in 2018,” according to the article.
What’s behind this pattern of private equity investment? And what does it mean for doctors and patients?
Private equity firms are recognizing that there is potential for profit by buying and consolidating private practices. By putting several individual practices under one company, firms can reduce administrative costs and gain market power to negotiate higher reimbursement rates with insurers — which means more profit.
Private equity firms are also tapping into some physicians’ frustrations trying to stay financially sustainable in an increasingly complex health system. From adopting new health care information technologies, to achieving quality measures, to figuring out reimbursement rates, there are many business-side factors physicians have to think about when running a practice, which can involve hours of administrative work and additional costs. Turning to private equity for an “injection” of capital can be tempting.
However, there are reasons for both doctors and patients to be wary of private acquisitions. When profit is your top priority, quality can suffer. A recent study in the Journal of the American Academy of Dermatology found that dermatology clinics backed by private equity were are more likely to do an excessive amount of well-reimbursed procedures, many of which are likely not necessary. The publication of the study was immediately followed by an industry effort to suppress the findings. The same pattern of overuse to maximize reimbursements was found in investigations of private equity-owned dental practices.
Private acquisition of firms may also lead to higher prices for patients, because they will be able to demand those prices from insurers. “The consolidation of various parts of the healthcare industry has been shown to increase prices and decrease choice, and if you’re lucky, quality stays about the same. This is just the next wave of that consolidation,” said Dr. Barbara McAneny, current President of the American Medical Association.
For primary care clinicians who are overwhelmed by business worries and are considering a private equity buy-out, Dr. Halee Fischer-Wright, President of the Medical Group Management Association (MGMA), offers a warning in a Modern Healthcare op-ed. “All private equity is really offering is capital and some business expertise, and doctors rarely consider the true cost of that capital,” writes Fischer-Wright.
Private equity firms often make deals based on an expectation of profits which are hard to hit, even the added capital and business expertise. If they don’t hit these targets, firms can take over more ownership of the firm than was initially agreed upon, leaving doctors with little say in what goes on in their practice.
Patients want to trust their clinicians and clinicians want to do the best thing for patients, but with private equity takeovers, profit will come before patient care. Doctors and patients should be aware and concerned about increasing private equity investment in physician practices.
https://lowninstitute.org/news/blog/private-equity/


 



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