Tuesday, April 15, 2014

Berwick proposes Medicare for all in Massachusetts

Massachusetts gubernatorial candidate Don Berwick is holding a press conference on Wednesday, April 16, at 7pm at Bakst Auditorium at Boston University's School of Medicine to present his plan called "Medicare for All," a single payer system for the state.  Many will be curious to see what he proposes.

As one of Don's supporters in the Democratic primary race, I don't necessarily agree with all he says, but I love that he stretches the limits in his public policy proposals.  It keeps the race vibrant and gets people engaged.

There is a delicious irony to Don's single payer approach in this state, in that a large argument for it has been provided by the state's largest insurer, Blue Cross Blue Shield--which would be put out of business by the proposal.  Why?  Well, BCBS has been so intent on expanding the use of global payments that it has effectively shifted actuarial risk from itself to the providers who have adopted that payment regime.  One can logically ask the question: "If insurance companies don't bear risk, why do we need insurance companies?"  If all they do is handle transactions and claims, who needs them as plan administrators?  What core competencies do they bring to bear that any well-run financial services organization does not?

I'm being slightly facetious but not a lot.  The state's insurers continue to collect a similar percentage of the premium dollar each year for administrative functions.  They seem unable to realize economies and improvements in that part of their business.  Thus, as premiums have risen, their share has risen proportionately. Indeed, one can argue that they have an incentive for higher premiums and more claims processing.  Hmm, it sounds like they operate under their own fee-for-service reimbursement approach, something they decry as inappropriate for the rest of the industry!

Poke that sleeping lion, Don, and we'll see whether it responds with a roar or a meow!


Anonymous said...

The impact of putting all Mass residents into Medicare would be enormous. You would eliminate three huge employers in BCBS of Mass, Tufts and HPHC along with tens of thousands of other jobs at "paper pushing" organizations like the Mass GIC and the layer of admin that the provider networks and hospitals employ. The hospitals and physicians would see a huge hit to their revenue losing the higher commercial reimbursements they have survived on causing huge losses and probably a huge wave of cost cutting and layoffs. The people with good coverage now (places like the GIC and Unions) would look at Medicare as a step down and fight any changes. I just think that there are too many entrenched organizations with tens of thousands of employees that would lobby against such a radical change. The idea may float in liberal Massachusetts and with the Democrats but the impact of actually doing this would be devastating to local employment, hospitals, physicians and any other current stakeholders.

Anonymous said...

Anon, unfortunately that's a typical argument - 'health care is too large a segment of the economy to 'damage', we need the jobs', etc etc. However, this broken 'system' will continue to damage and kill us in innumerable ways without forward-looking action (not saying single payer is the only way). Don't just look at the short term please.

nonlocal MD

akhan13 said...

Just to clarify- my comment is in no way to be interpreted as supporting Don's plan- I am not going to comment on whether I am for or against. But the argument that BCBS should be allowed to continue running just so it can provide employment even if a lower cost alternative policy were available doesn't seem to represent good economics. If we hired 100,000 people to build walls and then tear them down for no purpose, would we consider that an indispensable piece of the economy because ceasing to do so would lead to unemployment? If there is a more efficient way to provide healthcare, it should be pursued- inefficiency should not be rewarded just because it creates more jobs by doing work more inefficiently.

Frank Opelka, MD FACS said...

Paul, two points you made could be lost by the over arching theme of a single payer. I applaud your highlights about the concerns in shifting of actuarial risk from insurers to providers. The risk based capital held by insurers exists to cover that actuarial risk and shifting that to providers exposes the providers and therefore the patients.
Secondly, your point about the fixed percent of premium going to payers rather than a fixed expense fosters the payers to raise premium, blame the delivery systems and pocket the net gains. I wish your points were not true. I know they are very true.

Barry Carol said...

As you probably know, I oppose a single payer system for healthcare financing. I think single payer advocates put way too much emphasis on the potential (one time) savings in administrative costs and don’t pay nearly enough attention to mitigating fraud. It is generally believed that there is significant fraud in both the Medicare and Medicaid programs though it’s impossible to quantify with any precision. However, the more fraud there is, the more efficient these programs look from an administrative cost standpoint.

Neither program has shown any expertise or meaningful innovation in controlling healthcare utilization. Basically, they just pay bills and without too much scrutiny at that. Medicare was in existence for 41 years before it even offered a prescription drug program which private insurers offered for decades. Also, their dictated prices overpay for some services, mainly expensive procedures, and underpay for others, especially primary care.

As far as I know, only Canada, the UK and Taiwan have single payer systems. Most countries use insurers including Switzerland, Germany and the Netherlands. Sweden used to have a single payer system but switched back to using insurers. France has the equivalent of Medicare for all but in only pays for 70% of the cost of covered services. 92% of the French people buy a supplemental plan to cover the other 30% of get a plan through their employer.

If large hospital systems think they can keep more of the premium dollar in house by becoming an insurer as well, they are certainly free to enter the market and hire whatever actuarial expertise they think they might need.

I know Don Berwick has spoken positively about the UK’s NHS in the past. When he fleshes out his ideas, I hope he also addresses the probable eventual need for explicit rationing and how he would tackle that delicate issue which will be a tough sell to put it mildly in the U.S.

I think healthcare is unusually expensive in Massachusetts because of a large number of academic medical centers relative to the size of the state’s population doing too much routine care in expensive settings, a culture of aggressive medical treatment compared to other regions like the upper Midwest, and huge market power in the hands of one dominant healthcare system.

I think moving away from fee for service payment in favor of bundled payments for surgical procedures and capitation where appropriate is a necessary part of bending the medical cost growth curve. So are price and quality transparency, sensible tort reform and limiting how much can be charged for care that must be delivered under emergency conditions.

I don’t think single payer is the answer and, from what I can tell, liberal experts including Ezekiel Emanuel and Uwe Reinhardt don’t either.

Anonymous said...

I wasn't saying that BCBS, Tufts and HPHC shouldn't be eliminated if they are no longer effective. I was saying that entrenched companies and other organizations in this space will not be easy to get rid of. They will not willingly close their doors, let go all of their employees and go away... instead they will lobby politicians and make the case that they are effective. It is hard to get rid of anything these days and when it comes to thousands of jobs it seems like politicians will do anything to maintain the status quo. Look at the situation down in Quincy with labor unions protesting outside of Granite Medical to try and keep Quincy Hospital open. People get crazy when their jobs are on the line. Medicare for all would threaten tens of thousands of administrative level jobs at all of these organizations currently pushing paper back and forth and doing things they think are important. I just think Berwick should elaborate on things like this.... come out and say all of the HMOs will close up shop and there will be thousands of layoffs as we move to Medicare for All and see how it is received. Go tell Dolores Mitchell you are shutting down the GIC and moving all of the covered lives there into Medicare and see what happens. Tell Partners that their commercial contracts are null and void and ALL of their payments will be based on the Medicare fee schedule.... good luck with that. There are a lot of ramifications downstream that need to be addressed in such a radical proposal.

Barry Carol said...

The problem with any significant healthcare or health insurance reform is that it creates both winners and losers. Putting aside the issue of what happens to private insurance companies and powerful hospital systems that would be forced to accept lower payment rates than they get now, political challenges would likely include the following: (1) public sector unions now have much more comprehensive coverage than standard fee for service Medicare which they would presumably be reluctant to give up, (2) the current Medicare eligible population would get nothing new but would have to help pay for extending Medicare to the rest of the population, (3) even if employers who currently provide health insurance raised salaries to the full extent of current health insurance costs net of the employer share of FICA taxes on the higher pay, employees would have to pay their share of FICA taxes plus federal and state income taxes on the pay increase plus the incremental taxes needed to pay for extending Medicare to them and their families, (4) there will be significant chunks of medical spending that don’t get paid for by Medicare including long term custodial care which would presumably still have to be means tested, routine dental and vision care, public health initiatives, medical research and hospital construction, and (5) the downside of low administrative costs is more fraud.

So, even if doctors and hospitals found administrative life easier by only having to deal with one payer and one set of rules, it’s far from clear that employers would see any reduction in compensation costs or employees would see any net new money in their paychecks. Moreover, Medicare requires lots of documentation and recovery audit contractors (RAC’s) can come in an audit provider bills up to three years after the date of service. Assuming federal taxpayers are not going to pick up the cost of expanding Medicare to the population of Massachusetts but not to other states, state income taxes will have to increase big time even if the federal government gives MA the current federal share of Medicaid costs for Massachusetts Medicaid enrollees.

Isn’t Vermont already trying to implement a single payer system? Since Vermont has either the smallest or 2nd smallest population in the country, the lowest risk approach might be to let them try it out and see if it works before trying it on a bigger scale.

Tim said...

There are about 20 different problems with Berwick's proposal that I don't know even where to start. First and foremost I may not get all of my facts exactly right so I am quite happy to be corrected.

1. Even among single payer system the UK and Canada do NOT have the same system. The UK system(which I suspect Berwick is more partial too) is not just single payor it is largely single provider i.e. most of the doctors work directly for NHS. So bringing the UK system to Massachusetts wouldn't just eliminate the insurers it would effectively nationalize most of the hospitals and providers. While I suspect Berwick in his heart of hearts likes the idea of nationalizing(or commonwealthizing) all the major hospitals I suspect very few other people do. It was not that long ago when the state was pushing municipalties to get out of the hospital business due to horrific loses.
2. If we are to have a serious conversation about a single payor system its best that we look to our neighbor to the north. First Canada does not have a national single payor. Instead the Federal government provides significant funding for each province to implement its own payor within certain broad guidelines set out by Ottawa. Some provinces such as those in Western Canada do have a more integrated UK NHS style system however, for MA purposes it is probably best that we look at Ontario and Quebec. ON and QC do have a single payors per say however, care delivery is largely provided by indepedent not for profit hospitals and a small number of for profit hospitals. In Montreal and Toronto particularily have dominant providers in in the form of McGill Medical, UNAM, and University of Toronto UHN along with some smaller specialized institutions such as Shouldice Clinic(Sound familar). Over the past 20 years these network hospitals have expanded beyond the original AMC facilities and have all aquired smaller "community" insitutions such as McGill buying Lachine Hospital in the suburbs of Montreal(Sound familar again). It is also well known that Ontario and Quebec have the highest healthcare costs in all of Canada but the sickest patients from other parts of the country often to travel to Montreal and Toronto for the most advanced care.
3. While to be clear Ontario and Quebec do have lower healthcare costs than much of the US they are trending up. In theory the government in the context of being the sole payor does have mechanisms to control costs I question how effective they truely are. For example the Quebec government attempted to restrict cancer patients living off the Island of Montreal from receiving oncologogy treatment at McGill instead encouraging such patients to receive treatment from local providers. There was however a huge public backlash to this policy from the affected patients and within weeks the provincial government backed down and continued to allow such patients to receive treatment at McGill despite the fact the cost of treatment at McGill was substantially higher.
4. Notwithstanding the aforementioned cost containment efforts McGill and UHN have been allowed to acquired smaller community based instituions with little objection. McGill is currently building a massive new "super hospital" pictures of which can be found below. Both the provincial government and McGill have jusitified in order to "keep up" with AMC's in other cities such as Boston.
I don't doubt there are real cost containment efforts in both Ontario and Quebec but there is a lot of annectdotal evidence that the burden of such cost containment falls not on the large Toronto and Montreal AMC's but smaller more rural institutions.
5. I suspect Don Berwick would simply propose nationalizing McGill Health Center and UHN to bring them to heel. Talking to people in both provinces though the odds of that happening are slim to none.


Tim said...

There are a few more issues I did mention in my first post:

6. Medicare in the US is a "Federal" program where providers directly bill the US Federal govt. No state whether it be Vermont or Massachusetts can interfere in the relationship between the US govt and the provider without the unlikely approval of Congress. At this point Vermont has acknowledged for example "Federal" medicare beneficiaries will not be part of its proposed program.

7. Many if not most people receive not health insurance per say but an "ERISA" health benefit provided by their employer that is often but not always "administered" by a Tufts, BCBS etc but where the legal obligation remains with the employer. So the insurance companies in many cases are already just administered claims not managing actuarial risk.

7. There are very significant questions as to whether ERISA can be preempted by any state government without(unlikely) Congressional approval. Vermont as of late seems to be acknowledging it can't be and thus ERISA beneficiaries will not be part of the single payor system

8. The largest provider in Vermont actually isn't in Vermont that is Dartmouth Hitchcock located across the border in NH. Currently the State of Vermont and Dartmouth are negotiating its participation in VT's proposed system but VT doesn't necessarily have the same power it would have if Dartmouth was instate.

9. Nothing prevents any state whether it be Massachusetts or Vermont from simply expanding the eligibility for Medicaid/Masshealth. "Medicaid" for all even Medicare beneficiares. The problem is of course paying for. If you expand Medicaid coverage beyond Federal guidelines you basically have to pay for 100% of it. Massachusetts actually has done this to a limited degree in the past few months related to the exchange website snafus.

Chris S. said...

Something doesn't add up here-for decades the US has been signing free trade agreements like NAFTA and the WTO services agreement (GATS) that contain "standstill" clauses that ban new public services and mandate dismantling of existing ones. Be aware that FTA's BAN various aspects of single payer. They ban creation of any new "government monopolies" which they frame as "unfairly competing"

There are only the narrowest exceptions possible. Nothing has changed. So something doesn't pass the smell test.They will will run into this wall- in the form of the GATS or TAFTA or NAFTA or TPP, or any of several others which restrict any area which has become world trade. Please also read this

cautionary tale of what happened in Ontario with single payer auto insurance-- after they signed NAFTA (Pages 8+9) The insurance industry is trying to muddle the issue of what is and what isn't single payer Whatever it is, if its not real single payer-it can't save money- it will actually be more expensive.

These FTA agreements are intentionally ambiguous but a prudent reading of them needs to be cautious because the stakes are huge. all it takes is for one multi-national to get involved and they suddenly get a new right to own the market forever -gain a permanent entitlement under investor-state rules to remain forever.

We must clarify this situation immediately, Health care advocates need to do a very careful reading of the recommendations in the Skala paper and also read "Putting Health First" being extremely careful to demand Obama Administration to clarify these huge ambiguities and make an explicit declaration reserving our right to determine our own healthcare policy.
After that point, which happens by default, invisibly as shown by the Antigua-USA WTO dispute over online gambling services -we would need in essence, to buy our freedom which would become unbelievably costly- Please read the linked documents,
NAFTA and GATS standstill clauses (see the WTO/GATS understanding on commitments in financial services) actually would indicate that arguably the politicians signed our rights to single payer away 20 years ago, without telling America! We've argued (pp 8+9) to other nations that these agreements banned THEM from similar actions- However, that block is now subject to some interpretation, BUT if we let a multinational in, they would gain the permanent right and right to compensation that never existed before- it would become unambiguous and require compensation to BUY our country's freedom.

I can't overemphasize what a dangerous position we are in right now.- for example, selling insurance across state lines (NAIC model law for whole US) was part of an EU request to the US under GATS, our allowing that (WHICH HAS BEEN AN ELEMENT IN GOP PROPOSALS) would trigger a disaster for the US by giving multinationals an IRREVERSIBLE green light making real single payer impossible, forever.

No election could reverse it! Thank you!
Chris S

Paul Levy said...


I don't see how those trade agreements can be read as prohibiting a change in the health care system.

Barry Carol said...

I learned yesterday that while VT passed legislation to develop a single payer health insurance system, it has not yet settled on a way to pay for it. Cost estimates I’ve seen are in the range of $2 billion per year which appears to be a tall order for a state that currently raises only $2.7 billion at the state level. Also, it can’t implement a single payer system until 2017 at the earliest under ACA rules without losing its federal Medicaid funding. Finally, hospitals and other providers would need to maintain some of the old administrative infrastructure to deal with out-of-state patients and their insurers as those people would not be eligible for Green Mountain Care.

For Massachusetts, it’s also interesting to note that, according to CMS data, its Medicare spending per enrollee is about 29% higher than VT’s. Funding a single payer system would most likely have to be in the form of a dedicated income tax, sales tax or both which would, of course, be highly visible to taxpayers. I always think transparency is a good thing but, in this context, it’s not likely to be helpful in pushing a single payer system and the necessary funding mechanism through the state legislature.

I’m not sure ERISA would be an issue. Lots of employers would be happy to get out of the health insurance financing business. As for Medicare, the simplest approach would be to just adopt the existing Medicare system for younger enrollees. Presumably, that would include the option to select a Medicare Advantage plan as well but there would probably need to be an age rating mechanism to set premiums for people under 65 years old.

Tim said...

@Chris S

The issue in Ontario with auto insurance wasn't so much trade agreements is that once the government that promised public auto insurance was actually elected and started looking into its implementation they discovered that putting into place public auto insurance would throw a lot of people out of work who worked for private insurance companies and as private insurance agents in what was then a faltering economy. My understanding is women workers would have been hit especially hard. Other Canadian provinces DO have public auto insurance.


I forgot to mention Medicare Advantage. I wonder what Berwick thinks of Medicare Advantage. I do know that the VT legislature and governor want to ban Medicare Advantage in Vermont.

Chris S. said...

Barry Carol, do you realize that single payer requires that it be the only payer, otherwise it cannot save money.

That means health insurance companies are given a date to cease operations in the state.

What's the date they must cease operations in Vermont?

Did you read the late Nick Skala's last paper and "GATS and Public Service Systems"?

That is where I would start.

Here are some others:







The US is waging a war on public healthcare, pointing to its "success" with privatization here in the US.

Do you really think the US of all countries would ever allow real single payer here? When we have a quarantine on news of single payer. (If anybody so much as mentions single payer the US news media won't cover them. They say they are sick of getting thousands of letters to the editor supporting it.)

Never- they never would. So I think the likelihood that a state could institute real single payer is basically nil.

However, big money and big PR firms are working on how to confuse people as to what single payer is. They know that as long as insurance coverage remains in a market the is no possibility to save money (also, as you see GATS bans that)

Chris S. said...

Tim, The situation in Ontario is literally a textbook case. It is useful in introducing several basic concepts which are essential to understanding free trade agreements. Particularly investor-state entitlements. Read the link above, pages 8 and 9. The Ontario standoff was just one of many examples where a nation's signing of a free trade agreement created a loss of sovereignty.

I propose that much of this is a cover up. Politicians right and left are putting forward schemes which are not single payer, cant save money, and for that reason, are guaranteed to fail, because of adverse selection. Then they call THEM single payer. After they fail, single payer can be claimed to have been tried and failed. The important fact- they aren't even remotely single payer, and so can't save money, will be suppressed.

I suspect that besides AVOIDING the money savings only possible with REAL single payer another goal is to use the FTA's hidden gotchas to block real single payer permanently, taking it out of the set of things politicians can change. Perhaps by means of the WTO GATS agreement, Article XXI.

The FTAs prohibit any kind of public service expansion, due to their "standstill" clauses, (which essentially lock in the privatization state which existed upon the signing of the FTA, and mandate movement in one direction, towards privatization ONLY) Obamacare could NEVER have been a "stepping stone to single payer" without an acknowledgement of and explicit, formal changes. As laid out in Skala's paper inked below, and "Putting Health First" by Policy Alternatives.

We have a similar dilemma/disconnect between reality and "truth" - with drug pricing, which is now the highest in the world, arguably because of the US's backroom trade policy decisions. I suspect that because we have signed so many multilateral FTAs with so many other countries to get the highest possible prices for our drugs, we've had to pay the highest prices too. They could never admit this. Both parties would want to cover it up. That's why in 2008, I suspect a cover up was in progress long before Obama even got the nomination, leading to a huge surge in donations to his campaign in early 2008, when it became clear to the big money interests that Obama "got it" - was a team player.

I suspect that everything that could save money for drugs was already either in an FTA (like CAFTA) or had become an entrenched part of US trade policy boilerplate, and was about to be written into FTA's. If most options - needed for any meaningful savings on drug prices, were already "off the table" or about to be, Obama was just making a big show for the TV cameras about putting them off the table, twice.

Taking all this into account, I think the evidence is quite compelling that the main goal of the ACA and the entire Obama Presidency, may have been to prevent any real healthcare reform and cover up the failure to act in the US public's interest shown by both parties, than to promote anything even remotely resembling affordability.

Ihat was what I think after reading Nick Skala's paper. The 27 year old Northwestern University law student and single payer activist cant be here to see his "worst case scenario" coming true, as despite his apparent excellent health, he died suddenly on August 8, 2009, shortly after his paper was published. Please pray for our country and our planet.

Chris S. said...

Paul Levy,


>I don't see how those trade agreements can be read as prohibiting a change in the health care system.

Well, a great many health care experts including the WHO do. So we should take this very seriously, because a huge amount of money for each of us (at least a quarter million dollars) in diferences between a public and private system, and that cost can only go up. That's not the total lifetime cost, its the difference between the two costs. Public is both cheaper, and better. That's why the US is waging a stealthy global war on public healthcare by means of our "free trade" "agreements". I think we all can understand why they would not like us to realize that this is being done in our names or the blowback it arguably causes on drug prices and lack of REAL healthcare options.

They are also trying to privatize oter countries public healthcare. Its basically a war between the concept of healthcare as a human right and an essential part of a civilized society, and the amoral US privatization model which sees no such right, and arguably frames most forms of compassion as bad, "devaluing markets" - frames everything amorally in terms of markets and corporate "rights". Its a very scary way of seeing things.

Chris S. said...

Tim, reading back through your posts, I am wondering what you think of the quite useful and informative publications put out by Policy Alternatives.ca for example, "Putting Health First" which lays out a plan for Canada to explicitly reserve and defend its sovereign healthcare policy self-determination rights.

Because of mentions of some act by Canada (I should have written this down but didn't) in some of the literature (I can't remember the exact cite right now- maybe it was the WHO?)

I think they actually did pursue the recommendations in "Putting Health First" or something similar with regard to WTO/GATS and other FTAs that attempt to incrementally privatize public systems by means of the death of a thousand cuts.

If in fact they have taken steps in that direction, I would be extremely appreciative to know what Canada has done - to protect their public healthcare system from the mandatory privatization/FTA pressures.

Paul Levy said...

Tim and Chris,

You've pretty well hijacked this discussion into areas that are very abstruse and, I think, not of general interest.

I don't do this often, but at this point, I'm not inclined to print more comments along this line.

Barry Carol said...

The two main attractions of a single payer system are universal coverage and the ability to hold down prices per service, test, procedure, drug and device through the use of administered or dictated prices. Health systems like those in Switzerland, Germany and the Netherlands achieve administrative efficiencies by having insurers negotiate as a group with providers which also negotiate as a group. So, in Switzerland, for example, every insurer pays the same price for a given service, test or procedure in a given canton (like out states) and every provider receives the same price no matter which insurer pays it. Switzerland spends about 12% of GDP on healthcare vs. 17.2% or thereabouts in the U.S. I think Germany spends in the 11% range which is comparable to Canada. Also in Switzerland, all the insurance policies cover the same set of benefits with the only allowable difference being the size of the deductible which can range, I believe, between 300 and 2,300 CHF (add 13% to convert to U.S. dollars).

The failing of single payer systems, including U.S. Medicare, is that they can’t control utilization of services. Traditional fee for service Medicare is unmanaged care. The better Medicare Advantage plans are doing a superior job of managing chronic disease and keeping patients out of the hospital. Inpatient bed days per thousand enrollees are well below the rate for FFS Medicare. More thorough discharge planning and case management are also helping to reduce readmissions.

Many state Medicaid systems have contracted with private insurers to enroll their members in managed care plans. The plans pay providers the same Medicaid rates as standard Medicaid but they do a better job of managing care. If they didn’t save the states money, the states wouldn’t be hiring them.

The notion that health insurers are just money sucking bureaucrats that add no value is inaccurate to put it diplomatically. At least that’s my opinion.