What’s in a Slogan – “Medicare For All.”  Part 2: What Does It Mean For The Future?

May 31, 2019

In part 1, we explored the current US healthcare “system” in all its Byzantine complexity and unsustainability.  “Medicare For All” has become the standard by which nearly all potential 2020 presidential candidates (at least the Democrats) are being judged.  But what exactly does it mean?

Recall that Medicare is the current federal insurance program primarily for the elderly.  All Americans over 65 are eligible, and costs are paid primarily from Medicare payroll taxes and premiums paid by enrollees.  Payments for hospital services, doctor fees, and prescription drugs are made according to a set fee schedule (with adjustments for local factors), with some cost sharing to enrollees.  It is, essentially, a single-payer system for older Americans.  However, private insurance has a role.  First of all, enrollees can choose either traditional Medicare, where payments are made directly by the government, or Medicare Advantage, in which private insurance companies are contracted by the government to provide the benefit.  (In this arrangement, the private insurer can offer additional benefits, typically by negotiating lower payments to providers in exchange for narrowing the provider choice for enrollees.)  Also, traditional Medicare beneficiaries can purchase supplemental private insurance known as Medigap to pay for services not covered by Medicaid, or to offset some of the cost sharing.

So, what is Medicare For All (MFA)?  There are at least five different basic variations on this theme, and people supporting any of these have claimed to be in favor of MFA.  Here is my (admittedly simplified) synopsis, along with my alternate name to help distinguish them:

  1. Medicare for All. This is the bill officially introduced by Bernie Sanders in the Senate and Pramila Jayapal in the House under the name “Medicare for All,” and truly represents, well, Medicare for all.  Literally.  It would in large part extend the current Medicare program to all US residents except veterans and Native Americans (see below).  It would be financed and administered at the federal level, paid completely by taxes.  It would not only replace Medicaid (the federal-state program for the poor and disabled), it would replace all employer-provided and ACA exchange private insurance.  While the government would be the sole payer, providers would be independent rather than government owned.  This makes it most similar to the Canadian system, as opposed to the British National Health Service where hospitals and physicians are government-run.  (These bills would, however, retain the Veterans Affairs and Indian Health Services, which are fully nationalized as it is.)  It actually goes quite a bit further than the current US Medicare system in that there would be no premiums, no cost sharing by individuals, and no role for private insurance or managed care organizations.
  2. Medicare for Many, Opt-Out version (officially, Medicare for America). In many respects similar to number one, but employers could continue to offer private insurance, and people receiving this could opt out of the Medicare system.  The version that has been introduced also retains the Medicare Advantage options, thus preserving a role for private insurance companies.
  3. Medicare for Many, Opt-In version (there are several similar competing bills, such as Choose Medicare). In these flavors of MFA, Medicare would be a federal public plan available to anyone on the healthcare marketplace (“the exchange”).  Anyone could purchase this instead of a private plan, with the same subsidies though the cost to purchase would presumably be lower than for commercial insurance and therefore this would attract many people, including a large number who currently receive insurance from their employer.
  4. Medicare for More (known officially as Medicare at 50). Keeps the system more or less as is, but lowers the eligibility age to 50.
  5. Medicaid for More. This is similar to #3 above, but uses the federal-state Medicaid program to provide a public option rather than the purely federal Medicare.

Got all that?  Good.  In my third and final installment, I’ll share some thoughts on where we might go with all this.


What’s in a Slogan – “Medicare For All.”  Part 1: The Current System

May 28, 2019

My son Evan, when he worked on political campaigns, liked to say “yard signs don’t vote.”  You need to actually convince voters to support your candidate and get them to cast a ballot.  In a similar, though less catchy, way, one might say “slogans don’t create policy.”  Access and affordability of health care remains one of the top issues on the minds of Americans, and it is likely to have a marquee role in the 2020 elections.  The phrase “Medicare For All” has attracted a lot of attention from candidates and media, but what exactly does it mean, and how would it play out as policy?

To explore this question, I want to start with an overview of our current “system.”  I put that word in quotes because in reality we don’t have a health care system, we have a health care hot dish, a patchwork of various private and public methods of payment and delivery.  Let’s start with payment.  The annual spend on health care in the US is about $3,500,000,000,000 ($3.5 trillion – but it looks more impressive with all those zeroes, doesn’t it.)  Although the largest individual slice of that is from private insurance, cumulatively, public spending is almost half.  In fact, surprisingly, as a percent of GDP, government spending on health care in the US is almost the same as in other industrialized countries; the difference is we also spend far, far more from private sources.  Here is the breakdown (numbers may not add to 100% due to rounding):

  1. Private insurance (35% of total spending). As I said, this is the largest single source.  Most of this is provided by employers, with the cost of the premiums split between the employer and the employee.  It also includes private insurance obtained by individuals on the so-called Affordable Care Act-created exchanges or marketplaces.  Of the 167 million Americans covered by private insurance, roughly half are in for-profit plans (e.g., United HealthCare, Aetna) and half in not-for-profit plans (Kaiser, many Blue Cross/Blue Shield).
  2. Government insurance (41%). While the total here is higher than for private, it actually includes multiple different programs:
  3. Medicare (20%). This is a government insurance plan for elderly and certain disabled individuals; essentially all people 65 and older are eligible for Medicare, which covers some 62 million people. It is akin to the Canadian single-payer system (which is also called Medicare): government pays for the care, but is not the provider.  Medicare is paid for and administered entirely by the federal government, which pays for medical services either directly to providers, or indirectly through various private insurance companies which act as a sort of middleman (via “Medicare Advantage” plans).  The government share of the funding comes from a dedicated Medicare payroll tax, and individuals also pay a monthly premium based on their income.  Payment rates to providers are established nationally.  Importantly, while the figures are different for hospitals and physicians, overall the total reimbursement from Medicare tends to be less than the actual cost of providing the care, by 8-10%.
  4. Medicaid (17%). Like Medicare, this is a government insurance plan, but with some key differences. Eligibility is determined by income, rather than age; this is a plan primarily to cover the poor and some others with disabilities, totaling approximately 68 million people.  More importantly, this is a joint federal-state program.  Funding comes from a combination of federal and state sources, and the program is administered by the states, so while there are common standards set by the federal government, states have a good deal of flexibility to set eligibility criteria, benefits, and reimbursement rates to providers.  On average, the gap between Medicaid payments and the actual cost of care is larger than for Medicare, about 12-15% less, though in some states like Minnesota it is as much as 30% less than the cost. (The tradeoff is that Minnesota covers more people; we have very few uninsured.)  As with Medicare, payments may be made directly to providers, or indirectly via insurance companies who contract with the state to provide Medicaid managed care.
  5. Veterans and military (4%). The Department of Veterans Affairs and Department of Defense run systems more like the British National Health Service where government is not only the payer but the provider for some 15 million people.
  6. Individuals (10%). This includes out-of-pocket cost sharing (copayments, deductibles, coinsurance) for those people with one or more of the forms of private or public insurance above, as well as the cost of care for the 27 million people who remain uninsured.
  7. Other (14%). This includes a host of things including public health programs, Indian Health Service, school health, worker’s compensation, liability insurance, etc.

A few key observations (and I will want to get back to these in part 2 of this blog):

  1. The system is very complicated, even in this ridiculously oversimplified rendition. (I don’t even get into the issue of people who qualify for more than one, such as the elderly poor who may be on both Medicare and Medicaid, or kids with disabilities who may have both Medicaid and private insurance.)  And while most other countries have managed to figure out how to provide universal coverage at a lower cost than the US, their systems are also relatively complicated.  None of them is easily described by a simple slogan.
  2. It is incorrect to say we do not have a government health system in the US. As you can see, government spending is as high as private.  Moreover, when you account for tax deductions for employer-provided insurance and health savings accounts, subsidies for exchange-based plans, etc., the government’s indirect spending (tax expenditures) is another $280 billion on top of the direct spending of $1.1 trillion.
  3. On the other hand, while health spending in the US is predominantly by the government, providers are primarily private: roughly 54% of hospitals are private not-for-profit, 24% private for-profit, and 22% public.
  4. Government sources of insurance do not cover the cost of providing care; doctors and, to a greater extent, hospitals tend to lose money when treating patients under Medicare or Medicaid. This has worked thanks to cost shifting.  For decades, private insurance has paid higher reimbursement to make up for the difference.  This has been a sort of social compact, stabilizing the system.  As the shortfalls from government programs grow, and costs of private insurance outpace inflation, this social compact is unraveling.

 

I’ll let you digest that for a couple of days and then consider “Medicare For All.”  Spoiler alert – it’s not as simple as it sounds.


Nurses Week 2019 – Show Me Your Cards

May 6, 2019

You’ve all no doubt heard by now of the Washington state senator who claimed nurses sit and play cards all day. At first I was outraged like everyone else.  But then I thought about it.  Now, I don’t know about the sitting part, but nurses do play cards every day.  Each day they come in and are dealt a new hand, never knowing what it’s going to contain, and they do their absolute best with whatever cards they get.  Moreover, you can never tell whether they got dealt a straight flush or a nine-high – they keep the same steady, compassionate, determined, get-it-done look regardless.  It may just be a metaphor, but nurses are the best darn card players I know.

On a more serious note, in my 30+ years in pediatric health care, I have had the opportunity to work with thousands of nurses, and my respect and appreciation for them and what they do grows every year.  For those of you who are nurses, you have my utmost gratitude.  I hope you have a happy Nurses Week.


Never Forget – Christchurch, NZ, 15 March 2019

March 19, 2019

Mucad Ibrahim, age 3

Abdullahi Dirie, 4

Sayyad Milne, 14

Khaled Mustafa

Hamza Mustafa, 16

Naeem Rashid & son Talha, 21

Ansi Karippakulam Alibava, 25

Atta Elayyan, 33

Haroon Mahmood, 40

Husne Ara Parvin, 42

Mohammad Imran Kahn, 47

Linda Armstrong, 65

Haji-Daoud Nabi, 71

Lilik Abdul Hamid

Ashraf Ali

Vora Ramiz, 28

Farhaj Ahsan, 30

Mojammel Hoq, 30

Syed Jahandad Ali, 34

Hussain Al-Umari, 36

Osama Adnan, 37

Kamel Darwish, 39

Amjad Hamid, 57

Abdelfattah Qasem, 59

Ali Elmadani, 66

Sohail Shahid

Syed Jahandad Ali

Syed Areeb Ahmed

Mahboob Haroon

Ghulam Hussain

Karam Bibi

Zeeshan Raza

Osama Abu Kowik

Maheboob Khokhar

Ramiz Vora

Asif Vora

Ozair Kadir

Hafiz Musa Patel

Mounir Sulaiman

Ahmed Jamal Aldean Abdulghani

Ashraf al-Morsi

Ashraf al-Masri


Majority Rule?

March 12, 2019

It was two years ago this week that we moved to Minneapolis.  We had much to look forward to – lakes, bike paths, Juicy Lucys – but we didn’t know that list also included Election Day.  Let me explain.

In most elections in the US, the winner is the person who gets the most votes.  Now, many people are aware that occasionally in our history – five times to be exact, including twice in the past 5 elections – someone has become president while losing the popular vote but winning a majority of the electoral college.  But did you know that in 19 of the 58 presidential elections since the passage of the 12th amendment, the winner did not get a majority of the popular votes?  That is, fully 1/3 of our presidents have been elected by fewer than half of the voters.  Now, this doesn’t have to mean a bad result – Abraham Lincoln received less than 40% of the total votes, for example.  But it does make you wonder.  In a system where you only need to receive one more vote than the next person (i.e., a plurality as opposed to a majority), the winner may simply be the least bad option.

To prevent this, many other countries, and a number of jurisdictions in the US, use a runoff system.  If no one gets a majority of the votes in one cycle, then the top two vote getters compete in a runoff.  This ensures that the ultimate winner will have attracted at least some level of support from a majority of the voters.  But it has problems.  It is expensive and inefficient to have two different elections.  Also, those voters whose preferred candidate was eliminated in the first round may not bother to show up for the runoff, so the winner may not have a majority among all the voters who participated.

An increasingly popular approach to deal with this is what was formerly known as “instant runoff voting,” now most often referred to as “ranked choice voting.”  At election time, voters list several choices (typically first, second, and third).  All the first choice votes are counted, and if one candidate has a majority, the election is over.  If not, then there is a virtual runoff: the lowest vote getter is eliminated, and her/his second choice votes are counted.  This continues until someone has a majority of the votes and is declared the winner.

Minneapolis and St. Paul both use this system for local elections.  Experience here and in other locations both in the US and abroad have shown some important advantages of RCV:

  • Higher voter turnout
  • Lower cost (no need for a separate runoff election)
  • Less negative campaigning. After all, candidates have to appeal to voters who may not want them as their first choice to at least list them second or third. I am less likely to rank you as one of my options if you are busy slinging mud at my preferred candidate (and indirectly at me).
  • Broader range of candidates and voices. In a plurality system, when there are more than two candidates voting is often defensive, aimed at keeping the candidate you perceive as the worst from winning. Third party or lesser known candidates are thus discouraged from even running lest they serve as a “spoiler”.
  • Less polarization and more focus on issues. The winner in RCV has to end up with a majority of votes. The only way to attract second and third choice rankings is to focus on the issues that are important to the voters, convincing them that even though they may rank another candidate first, they are comfortable with your stand on issues that are important to them. Similarly, extreme candidates who appeal to only a minority of voters cannot win under this system (even if they can get a plurality of first choice votes).

My first hand experience bears this out. If we ignore the Packer-Viking thing, Wisconsin and Minnesota are actually quite similar politically and culturally. But the municipal elections here in 2017 were nothing like the hyper-polarized, corrosive electoral environment I experienced in Milwaukee just the year before. Ranked choice voting produced an issues-oriented, civil campaign and high-turnout election that was refreshing and began to counter my growing cynicism about our democracy. FairVote MN is a non-partisan organization pushing for wider use of RCV in the state, an effort I am supporting enthusiastically, because I appreciate the advantages of RCV as a citizen, as a business leader, and as a pediatrician and advocate for kids.

How so? In short, I have seen how RCV encourages civic engagement. And that is a good thing. A 2013 report from National Conference on Citizenship (funded by the non-partisan Knight Foundation) summarized studies showing links between civic engagement on the one hand and economic resilience on the other, including lower unemployment and less adverse economic impact during the Great Recession, as well links between civic engagement and other measures of community health such as public school performance, net in-migration of residents, and infrastructure investment. Civic engagement and voter participation are good for democracy and good for the community. And that means it’s good for kids.


Moving On Up

February 12, 2019

When it comes to health and wellness, we are learning that your Zip code is at least as important as your genetic code.  Differences between neighborhoods in access to education, transportation, open space, food, etc. lead to differences in health outcomes including life expectancy.  And since we can’t do anything to change the genetic code (at least not much), efforts at improving the social determinants of health are a reasonable target for reducing health disparities.

One market-based approach has been the use of housing vouchers.  Providing rental subsidies for low-income families should allow them to move to neighborhoods with more resources.  Such relocations have been shown to provide long-term benefits to children.  Unfortunately, important barriers remain according to a new study from the Center on Budget and Policy Priorities, reported in the Washington Post.  In nearly all the 50 largest US metro areas, families with housing vouchers were located primarily in low-opportunity neighborhoods, despite enough affordable housing in higher-opportunity areas.  Overall, while 18% of all voucher-affordable rentals were located in high-opportunity neighborhoods, only 5% of families with vouchers lived in those areas.  Moreover, minority families with vouchers are more likely to live in concentrated minority neighborhoods, even though most of the affordable housing units are located in more mixed neighborhoods.  In most of the metro areas studied, this racial gap was on top of the income gap.

In other words, money does not equate to access.  This is not dissimilar to health care: while Medicaid has markedly improved health insurance coverage for low-income children, many have trouble accessing health care due to a paucity of medical facilities in urban neighborhoods, among other factors.  The research on housing vouchers does not elucidate the barriers, but several possible causes stand out, including historical patterns of racist housing policies, and local policies that do not tie the value of the voucher to local markets.

For the Twin Cities metro, there is a little bit of good news.  We have among the highest percentage of low-income families living in high-opportunity neighborhoods (17%, 5th of 50 metro areas), one of the lowest percentages of voucher families of color living in minority-concentrated neighborhoods (50%, 7th lowest of 50), and a smaller than average gap between voucher-affordable housing available in higher-opportunity neighborhoods and the actual use of such housing.

Nevertheless, as cities face an increasing problem with affordable housing, we need to be aware that, as is so often the case, the market is a useful but imperfect tool, especially for eradicating ingrained disparities.  It’s almost as if inequity is in our genes.


A Rising Tide Lifts Some Boats

January 23, 2019

“A rising tide lifts all boats.” This phrase, attributed to John F. Kennedy but actually coined by a regional New England chamber of commerce, is a common way to express the notion that economic growth is by definition good for all.  It’s certainly an appealing metaphor, and when thought of literally appears unassailably true.  But is it?

A recent study from the National Bureau of Economic Research and reported by the Washington Post, suggests not.  In an earlier era, the basis for this “rising tide” analogy was that growing businesses generate more jobs and higher wages, which help the people who have those jobs.  However, experience in the past few decades has shown that business growth does not necessarily translate to growth in either jobs or wages, and corporate profits have grown markedly faster than wages for workers.  Another rationale for the rising tide lifting all boats arose in an era where, thanks to the prevalence of defined contribution retirement plans like 401(k), the majority of households own stock.  Corporate profits are returned to shareholders in the form of dividends and higher stock prices.  One way to increase profit is to raise prices.  Such higher prices that could hurt consumers should be offset if those same consumers were also shareholders.

Again, facts trump theory.  Using data from several US government sources, researchers found that because consumption and equity ownership are unequally distributed, rising prices serve to shift resources from low- and middle-income individuals to the wealthy.  Lower income consumers pay far more in the higher prices than they get from any equity increase.  The net effect of this reverse Robin Hood effect was a shift in 3% of national household income from poor to rich in 2016.

Think about that the next time a pharma company jacks up the price of an Epi-Pen or some other life-saving drug.  Watch how much higher the corporate yacht floats.


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