Call/text: (617) 682-9697 | e: [email protected] | f: 617-391-3067

Rising health care costs answers

Medicare for All will not reduce health care spending

Irene Papanicolas, PhD1,2,4; Alberto Marino, MSc1,3; Luca Lorenzoni, MSc3;, 2020, https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2769102, Comparison of Health Care Spending by Age in 8 High-Income Countries, Corresponding Author: Irene Papanicolas, PhD, Department of Health Policy, London School of Economics, Houghton Street, London WC2A 2AE, United Kingdom ([email protected]).

Introduction

The United States spends more on health care than any other country.1 Unlike many other high-income countries, which have largely uniform financing schemes for health care, the US has different financing schemes for different populations. The degree to which this fragmentation in US financing explains higher spending is not clear. Some policy makers believe that expanding the Medicare model, which has a financing system that more closely resembles that of other high-income countries (ie, it is government run and tax financed), could reduce spending substantially. To examine whether this policy has potential, this cross-sectional study compared nominal and relative spending in the US, by 5-year age groupings, with that of other high-income countries that have more homogenous financing systems. This comparison allows us to better understand spending differentials between the US and other countries for people aged 65 years or older, as well as for other age groups. Methods This cross-sectional study was granted exemption from institutional review board approval and informed consent by the London School of Economics because the data used are publicly available and cannot be linked back, directly or indirectly, to any individuals. This article followed the relevant portions of the Strengthening the Reporting of Observational Studies in Epidemiology (STROBE) reporting guidelines. We used data from the Organisation for Economic Co-operation and Development2 to examine variations in total current health care spending per capita, by age cohort, for the US and 7 other high-income countries (ie, Australia, Canada, Germany, Japan, the Netherlands, Switzerland, and the United Kingdom) in 2015. These data were derived from national sources and the “Health Expenditures by Diseases and Conditions” report.3 For the US, per capita health spending by age cohort was derived from 2013 Institute for Health Metrics and Evaluation expenditure. Data on the US 2015 population structure were obtained from the United Nations “World Population Prospects: The 2017 Revision.”4 Expenditure data were translated into US dollar equivalents using 2015 actual individual consumption purchasing power parities from the Organisation for Economic Co-operation and Development. Results For all 7 comparator countries, the mean (SD) per capita spending in health care was $4924 ($937). In the US, per capita health care spending was $9524, or 1.9-fold higher than the mean for the 7 comparator countries. The Figure illustrates US and comparator countries’ health care expenditures per capita by age cohort. The absolute difference between US spending and that of the other countries for ages 0 to 4 years was $3899, and that difference decreased at approximately age 5 years, after which it slowly increased. The difference increased faster after age 65 years, peaking at $18 645 for ages 80 to 84 years. The Table illustrates differences in US spending relative to the comparator mean for 3 broader groups: youths (ages 0 to 19 years), adults (ages 20 to 64 years), and older adults (65 years and older), as well as the entire population. The gap in per capita health care spending in the US vs the mean (SD) of comparator nations was highest for the adult age group, at $8161 vs $3603 ($753), a difference of 2.3-fold the mean for the 7 comparator nations. The gap in per capita health care spending between the US and the mean (SD) of comparator nations decreased for individuals aged 65 years and older ($24 665 vs $12 309 [$2213]; difference relative to mean: 2.0) and for those aged 0 to 19 years ($4097 vs $2166 [$867]; difference relative to the mean: 1.9). Discussion This cross-sectional study found that the US spent a mean of 1.9-fold more on health care per capita compared with the mean of 7 high-income countries. The ratio of spending in the US to that in comparator countries was lower for people aged 65 years and older (2.0-fold the mean) than for those aged 20 to 64 years (2.3-fold). However, the Medicare-eligible population in the US still spent 100% more per capita on health care than older adults spent in the 7 comparator countries. In addition, the narrowing in the spending gap for individuals aged 65 and older was driven by substantial increases in spending among those aged 85 years and older in the comparator nations, not by a reduction in spending in the US older population. Moreover, in absolute dollar amounts, not ratios, this spending gap actually increased to be the largest among individuals 65 years and older, with the typical person in the US spending nearly $18 600 more at approximately age 80 years than the typical person in these other high-income countries. Greater spending on health care in the US is likely associated with various factors, including health status,1,5 health care prices,6 and the breadth of services covered. This study has some limitations, including differences in local data collection and accounting methods, as well as variability across national benefit packages, particularly long-term care. These differences may influence comparability. Additionally, the data presented are purely descriptive and do not explain which factors contribute to per capita health care spending at different ages. Our findings suggest that despite appearing similar in structure to the health care systems of other high-income countries, the US health care system for individuals aged 65 years and older is comparably more costly. These findings suggest that moving to a Medicare-for-all model may not substantially reduce US health care spending relative to that of other high-income countries. Different approaches are likely needed if the US is to adopt a system that achieves this aim.

Alternative opportunities to control prices

Brian BlasĂ©, Contributor, July 23, 2020, The ApothecaryContributor Group, I was a Special Assistant to the President at the White House’s National Economic Council from 2017-2019. I now head Blase Policy Strategies, Forbes, What Congress Should And Should Not Do On Health Care, https://www.forbes.com/sites/theapothecary/2020/07/23/what-congress-should-and-should-not-do-on-health-care/#4cfc7ea9704f

While Congress debates issues related to the health and economic fallout of the coronavirus epidemic, it also should use this opportunity to enact several broader reforms that would help people now as well as improve families’ ability to obtain better and more affordable health care and coverage in the future. Congress should consider four positive actions and should avoid acting on two prominent proposals. Specifically, Congress should codify the Trump administration’s price transparency rules, prohibit balance billing, expand health savings accounts (HSAs), and provide states with greater Medicaid flexibility. Congress should not subsidize health insurance through a COBRA continuation subsidy or expanded ACA subsidies and should not provide a state bailout.

Codify Price Transparency Rules

Brian BlasĂ©, Contributor, July 23, 2020, The ApothecaryContributor Group, I was a Special Assistant to the President at the White House’s National Economic Council from 2017-2019. I now head Blase Policy Strategies, Forbes, What Congress Should And Should Not Do On Health Care, https://www.forbes.com/sites/theapothecary/2020/07/23/what-congress-should-and-should-not-do-on-health-care/#4cfc7ea9704f

Nearly nine-out-of-ten Americans agree that insurers and hospitals should be required to provide price information in advance of patients receiving health care. Transparent price information will enable patients to be better shoppers of care and will help employers reduce costs and design better benefit plans for their employees. The Trump administration has finalized a rule that requires hospitals to provide upfront and real prices, including prices for 300 shoppable services in a consumer-friendly format. The administration also has proposed a rule requiring insurers to publicize the amounts they reimburse for health care services. A federal judge recently upheld the hospital price transparency rule, rejecting arguments from hospitals, but there is still legal risk around both rules. Last month, I wrote a piece in Health Affairs that analyzed the arguments and concluded that “Congress should lock in the Trump administration’s price transparency rules to end the legal battles over them and to give the American people the information they need to make smarter decisions about their health care and coverage.” Prohibit Balance Billing The Trump administration already has taken prudent action to prohibit hospitals and providers from balance billing patients if they receive money from the coronavirus bailout fund. This means that patients cannot be billed more than the network cost-sharing amounts stipulated in their insurance contracts, even if they received care from an out-of-network provider. Congress should go further and ban balance billing, so patients don’t receive surprise bills after they receive treatment at in-network hospitals or medical facilities. (I explored this subject with my Galen Institute colleague Doug Badger in a December 2019 paper.) The administration reportedly has been advancing a sound policy that would prevent patients from being balance-billed at in-network facilities, leaving the payment rates to be negotiated between insurers, hospitals, and physicians without government rate-setting. Congress should adopt this proposal.

HSAs produce better engaged consumers seeking value in their health care spending, which in turn puts pressure on providers to reduce prices and improve quality. HSAs allow people to use pre-tax dollars for current care and to grow their health savings tax-free for future care. Unfortunately, only people with a certain type of coverage—a plan with a high deductible that meets several other requirements—can make HSA contributions. Congress should allow everyone, regardless of the design of their insurance, to have an HSA. In the near-term, Congress could help people by allowing anyone to contribute to an HSA during the extent of the coronavirus public health emergency. Texas Sen. Ted Cruz and North Carolina Rep. Ted Budd have introduced important legislation that would do this.

In addition to expanding the ability of people to save their own money in an HSA, Congress should consider contributing funds into HSAs for people with employer coverage who lost that coverage over the past few months. Congress could contribute $1,500 to the HSAs of people with single coverage and $4,000 to the HSAs of people with family coverage in order for them to pick coverage and care that works best for them. Congress should also clarify that people can make HSA contributions if they utilize direct primary care arrangements that eschew middlemen from the doctor-patient relationship.

Provide States Greater Medicaid Flexibility

The Families First Coronavirus Response Act (FFCRA), signed into law in March, provided a 6.2 percentage point increase in the federal reimbursement of state Medicaid expenditures for traditional enrollment categories. This policy disproportionately benefits states with profligate Medicaid programs, and a provision in this law also ties states’ hands in guarding program integrity. Abundant evidence shows that a large number of Medicaid enrollees, particularly in expansion states, are ineligible for the program, but FFCRA prohibits states from taking steps to ensure only eligible enrollees are receiving benefits. This policy is misguided because it forces states, many of which are experiencing severe budget pressures, to pay health care expenses of ineligible enrollees who consume funds and medical resources needed by poorer and more vulnerable recipients. Congress should undo the restrictions placed in FFCRA that prevent states from ensuring Medicaid enrollees meet program requirements. 

Many alternatives ways to solve high prices

Arian Blase and Lanhee Chen, The Washington Times, July 22, 2020, Recommendations for Trump’s second-term health care agenda, https://galen.org/2020/recommendations-for-trumps-second-term-health-care-agenda/

President Trump has an opportunity to offer a second-term agenda that builds on his administration’s successes to expand families’ control over their health care. Given the importance that Americans place on health care issues for their vote, Mr. Trump probably can’t win reelection without doing so, Blase and Chen write. They recommend working with Congress to codify administration actions to expand options like Association Health Plans, short-term plans, and health reimbursement arrangements and then list five priorities that build on the 120-page Choice and Competition report the administration issued 20 months ago: Ensure every American has a health savings account, giving them the freedom to better control their health care spending and seek value and pressure providers to lower prices and improve quality.   Tackle high costs by confronting the growing consolidation among hospitals and providers that has driven up prices, by directing the administration to battle anticompetitive mergers and growing consolidation.  Ensure Americans have access to telehealth and other emerging technologies, and work with states to eliminate rules that prevent doctors and nurses from moving to where they are most needed and from practicing at the top of their licenses. Address Obamacare’s failings that hurt middle-income families who are forced to pay skyrocketing premiums and deductibles, often without the benefit of subsidies. Real reform would return significant regulatory flexibility to states. With this control and with reformed subsidies, states can take the lead on making coverage more affordable, while targeting financial assistance to those who need it. Finally, Mr. Trump should reform Medicare and Medicaid that are on unsustainable fiscal trajectories, often wasting taxpayer dollars and delivering inferior care Mr. Trump has an opportunity to lay out a second-term agenda that will build on his initial successes and further expand choice, transparency and competition to help Americans obtain better health care at lower cost. A clear vision will show voters that this year’s election represents a true choice between two very disparate views of the future: One where government rules and middlemen limit our choices and access to care, or one where patients and their doctors are in control.