Medicare expansion would make socialized health insurance inevitable

MedizinSeveral lawmakers want to pull more people into Medicare. This would hurt anyone with private insurance, and it would inevitably lead to single-payer, government funded healthcare, which would deprive people of any choice over their healthcare.

Sen. Debbie Stabenow, D-Mich., recently introduced S.470, a bill that would let any citizen or permanent resident between the ages of 50 and 64 buy into Medicare. It received broad support from her Democratic colleagues. Numerous 2020 presidential hopefuls, including Sens. Cory Booker, D-N.J., Kamala Harris, D-Calif., and Kirsten Gillibrand, D-N.Y., have co-sponsored the bill.

Lawmakers in the House of Representatives want to go even further. In December, Reps. Rosa DeLauro, D-Conn., and Jan Schakowsky, D-Ill., introduced a plan called Medicare for America. It would allow anyone in America, regardless of age, to buy into an expanded Medicare system that covers prescription drugs along with dental, vision, and hearing benefits. Those currently covered by Medicare, Medicaid, and CHIP would be shunted onto the new plan, as would anyone who buys policies on the individual market.

These proposals would cause prices for private plans to spike.

Medicare underpays for the services its beneficiaries receive. In 2017, hospitals only received 87 cents per dollar spent treating Medicare patients. That means Medicare underpaid hospitals by $53.9 billion.

As more patients shift to Medicare, providers will have to charge private insurers more to make up the difference. That will result in higher premiums for the privately insured.

In other words, Uncle Sam would charge people twice for Medicare, once through the IRS and again at the doctor’s office.

Gradually, people on private plans would get sick of high prices and start moving to Medicare. As people abandoned private plans, insurers would start going out of business. Before long, it would be easy to turn Medicare into an obligatory, single-payer program. That would leave patients with no insurance options.

Patients wouldn’t like that. More than seven in 10 folks with employer-sponsored health insurance are satisfied with their plans. Nearly 60 percent of people say they oppose Medicare for All if it comes at the expense of private insurance, according to a recent Kaiser Family Foundation poll.

Expanding Medicare is a bad deal. Lawmakers should abandon the idea.

This article was originally published by the Pacific Research Institute.

California’s Single-Payer Health Care Plan Would Be Costly and Risky

MedizinSingle-payer health care is e a major issue in California’s 2018 gubernatorial election. Democratic candidate Gavin Newsom has strongly endorsed the idea, while Republican candidate John Cox is opposed. Last year, a single-payer bill, SB 562: The Healthy California Act, passed the state Senate but was placed on hold in the Assembly.

SB 562 would replace the current health care system with a state program under which all provider claims are paid centrally with no network restrictions, deductibles, co-pays, or other limitations. One governing body would replace the current array of public and private insurers. Medicare, Medi-Cal, and the Children’s Health Insurance Program (CHIP) would be integrated into the new system.

Proponents of single-payer primarily tout its ability to move the state towards universal coverage. However, California is already fairly close to achieving universal coverage. The June 2017 CDC report states that only 6.8 percent of Californians are uninsured. The other 93.2 percent already have private insurance, Medi-Cal, or gained insurance through Covered California during the Affordable Care Act (ACA) expansion.

Creating a single-payer health care system would be enormously costly, time-consuming, and difficult from a political and implementation standpoint. If achieving universal coverage is the primary goal, existing insurance schemes and government programs could be expanded to cover the uninsured instead. If Medi-Cal coverage is considered insufficient, it could be enhanced without impacting other categories of insurance.

A major argument from proponents of single-payer is the claim that it saves money by eliminating profits and administrative overhead — money that is going to insurance providers. Relative to all health care costs, these amounts are quite small. Most California residents already have coverage either through the government (Medi-Cal or Medicare) or a non-profit provider (Kaiser Permanente or Blue Shield), so profits only enter into the equation for a minority of Californians. Second, SB 562 would remove incentives to control costs, eliminating managed care. As a result, provider charges would probably increase substantially, overwhelming any savings from the elimination of middlemen.

Kaiser Permanente, the nation’s largest non-profit health plan and the insurer for many Californians, is known for its high quality of care and cost-conscious decision-making. A single-payer system would eliminate managed care organizations, and with them, the years of efficiency gains made to eliminate wasteful spending and improve quality. A statement by Kaiser’s CEO last year emphasized the difference between universal coverage and single-payer, mentioning his hesitations with single payer’s outdated fee-for-service model.

Perhaps the most daunting challenge of a single-payer system is the price tag. Analyses estimate that implementing a single-payer system would cost California between $330 billion and $400 billion per year, and there are reasons to believe that these estimates are too low. To put the potential costs in perspective, the entire California state budget for 2018-2019 is $201.4 billion. SB 562 does not provide details about how funds would be raised to pay for single-payer.

Furthermore, SB 562 has no mention of cost control measures, while explicitly saying there will be no co-pays, deductibles, or premiums. It plans to cover all medically necessary care, including medical, vision, dental, hearing, and reproductive services. Other services like chiropractic care and acupuncture would also be fully covered under the new program.

Many other countries have universal health care coverage and better health outcomes than the United States, an argument frequently used in favor of single-payer. However, many of these countries utilize free-market mechanisms that promote cost-conscious decision-making. These include price transparency, fewer regulations, consumer choice, and cost-sharing to prevent overuse of services.

Aside from the fundamental problems aforementioned, there are considerable political and legal roadblocks associated with implementing a single-payer system in California. Assuming that tax increases would be a necessity for funding purposes, a key obstacle would be gaining the two-thirds vote requirement for passing any such increases in the state legislature. Other obstacles include Proposition 4 of 1979, referred to as the Gann Limit, which limits state and local appropriations. Implementation of a taxpayer-funded single-payer system would necessitate repealing the Gann Limit or exempting the new taxes from the limit. Proposition 98, passed in 1988, requires that a certain amount of state tax revenues be diverted toward education funding and taxes for a single-payer system would fall into this category. So, once again, voters would have to approve exempting these new taxes from Prop. 98.

Proponents of the single-payer system believe that the new taxes needed to fund it could be addressed in legislation without requiring voter approval. The California Budget & Policy Center sees this as “very unlikely,” since it would require amending the state Constitution. When it comes to Proposition 98, the likelihood of exempting new taxes is less clear, since it depends on differences between the General Fund and Special Fund, potentially opening the door to a lawsuit.

Much uncertainty exists about the possibility of rolling federal funding into the California Health Fund (a new fund from which the state government would pay all medical expenses). The federal government funds Medicare and most of Medi-Cal, setting or at least influencing eligibility rules. This creates a hurdle to covering undocumented immigrants; federal funds are currently not allowed to finance any of the social services provided to this population.

The combination of the political and legal complications, SB 562’s enormous price tag, and the lack of cost-control measures and long-term funding uncertainties need to be carefully considered by Californians. Vermont tried to implement a single-payer health care system in 2014 but ultimately abandoned it following a myriad of challenges. Vermont had a population of 625,000 residents at the time. California’s is home to nearly 40 million people. Increasing access to health care is a laudable goal, but changes to the system should focus on improving health care outcomes for patients and  improving the quality and affordability of care. Increasing the state government’s role in health care is unlikely to deliver those results.

This article was originally published by Reason.com

Allowing a market in health care

In 1965, Medicare was passed as an amendment to the Social Security Act and the government became the primary payer for medical care for all those over 65. With the stroke of a pen, a health care system that had been centered on individualized care was transformed into at system about population management fervently fixated on cost containment.

At the time it was clear that Congress appreciated its limitations. It acknowledged a physician’s professional expertise and the value of the sacrosanct patient/doctor relationship. Congress memorialized this acknowledgement in Section 1801 of the Medicare Act as follows:

Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine, or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer, or employee, or any institution, agency or person providing health care services. …  Section 1801, Medicare Act, 1965

Since then, Congress has relentlessly imposed themselves into the exam room and interfered with our opportunity to do what is best for our patients in the name of controlling cost. Government regulations and computer systems designed to invade the privacy of our patients and send bad data back to the government eat away at any semblance of physician autonomy. Repeatedly and assuredly, government intrusion has only led to confusion, wasted resources and added cost.

The concept of Balanced Billing allows the government or any third party payer to pay a fixed dollar amount for a service. The patient pays the difference between the retail price and the “subsidy” paid by the government. Physicians compete and patient choice is preserved. It is a fair market place with a subsidized floor. Balanced Billing was made illegal in 1984 under the Deficit Reduction Act.

The Physician Fee Schedule was established in the late 1980s in an attempt to control the cost of care. Instead, costs escalated and the volume of services continued to increase as would be expected when the fixed cost of managing a physician practice is well over 70 percent.

The SGR was established in 1997 under the Balanced Budget Act, tying physician payments to the GDP. The SGR formula was contrived to ensure that the (increased) Medicare dollars spent per patient was less than the per capita increase in the GDP.

The SGR has proven to be an ineffective means of controlling cost. Every year Congress finds itself with a choice to cut physician payments substantially or “give the physician community a loan.” This is only a budget gimmick serving as a noose around our neck compelling our professional community to allow the government to reduce our discretion as experts and to limit patient choice.

The bottom line: Health care costs continue to skyrocket, patients have fewer choices and physicians find themselves serving the public more as slaves than professionals.

Americans properly expect a trusting relationship with their doctor. However, together with Obamacare, Congress is proposing to further intrude into their medical care. Masquerading as a “fix” to another failed congressional Medicare system of price controls, congress has written the SGR reform bill that serves to create a penalty system that will force doctors to follow government cookbooks and ration care. The SGR reform bill is another contrived financing system that fails to provide quality, affordable health care to the greatest number of Americans.

We are left with a tireless array of manufactured financial systems that serve to address large populations rather than individuals. Failure to allow our patients to voluntarily privately contract and own their lives denies them the privilege of choice.

Congress has decided it is time to get the SGR off its plate. We applaud the decision. In the spirit of limited government, a healthy economy and the First Amendment, America’s physicians ask that Congress do the right thing and finally get out of the exam room and allow America’s physicians to work for our patients and do our job.

Marcy Zwelling-Aamot, MD FACEP, CoChair, National Physicians Council for Healthcare Policy