Evaluating Sanders’s Medicare for All Act of 2019, Part 5

Part 1 reviewed Title 1, which states that basically everyone will be covered and can receive care from pretty much any provider. Part 2 reviewed Title 2, which states that insurance benefits will be comprehensive without any regular out-of-pocket expenditures. Part 3 reviewed Titles 3 and 4, which lay down some provider standards and also some expectations regarding data reporting. Part 4 reviewed Titles 5 and 6, which establish some quality standards and a national health budget, plus it gives an updated process for how provider fee schedules will be made.

We’ve gotten through the main architectural parts of this bill, but let’s see if the rest offers any additional insight into how M4A would be structured so we can evaluate it properly.

Title 7

This creates a universal Medicare trust fund, which is where the taxes used to fund M4A will be placed. It reappropriates all the funds that used to go to Medicare, Medicaid, the Federal employees health benefit program, the TRICARE program, and a variety of smaller programs that M4A will make obsolete.

It also dedicates a short paragraph to ensuring that any prior restrictions on spending federal funds on “reproductive health services” do not apply to any money in this trust fund.

This is just administrative stuff that is important but not so germane to our purposes.

Title 8

There is no new exciting information in here, it is just clarifying statements that there cannot be health plans administered by employers that duplicate any of the M4A benefits, plus a number of clerical statements to amend some existing laws so that they conform to the changes proposed in this bill.

Title 9

I don’t think I mentioned it in Title 2, but states will receive grants to pay for “institutional long-term care services” (nursing facilities, inpatient psychiatric care, intermediate care facilities). That’s basically the one category of healthcare expenditures that will be delegated to the states. I’m not sure I understand why this decision was made.

This title also clarifies that if states are already providing benefits over and above what M4A will provide, it doesn’t automatically take those away; states can continue to provide those extra benefits.

The rest of Title 9 is just a list of other “conforming amendments.”


Ok, we’re getting close to finishing. Title 10 is a big one–it discusses details of the transition to M4A, so that should be interesting. And the last title–Title 11–is a number of miscellaneous crossing of T’s and dotting of I’s. So this means that, after next week, we will have looked at the entire bill! And after that I will proceed with giving a more complete assessment of what changes would be needed for this bill to get M4A right.

Continue to Part 6.

Evaluating Sanders’s Medicare for All Act of 2019, Part 4

Part 1 reviewed Title 1, which states that basically everyone will be covered and can receive care from pretty much any provider. Part 2 reviewed Title 2, which states that insurance benefits will be comprehensive without any regular out-of-pocket expenditures. Part 3 reviewed Titles 3 and 4, which lay down some provider standards and also some expectations regarding data reporting.

Ok let’s continue. I’ll try to make the less exciting stuff concise but still get through it so we have the foundation of understanding necessary to critically evaluate this bill.

Title 5

The Centers for Medicare & Medicaid Services (CMS) will be responsible for establishing and reviewing quality standards, such as clinical practice guidelines and other performance reviews and standards.

There’s also a section on health care disparities in here. Providers will be required to report data that help CMS evaluate health care disparities, and then those data have to be reported to Congress regularly.

I don’t have any commentary on this title.

Title 6

Ok this is an important one. It talks about establishing a national health budget. It requires a budget to be made that includes the cost of health services but also covers the cost of other components, including administration, quality assessment activities, innovation, and public health activities.

Interestingly, it says that up to 1% of the budget can be, for up to 5 years, allocated to support people whose health insurance-related jobs are displaced by the implementation of M4A. It will also have a “reserve fund,” which will be available to be used during health emergencies, such as natural disasters or pandemics. Yeah that’s probably a good idea!

The Secretary is responsible for establishing fee schedules for provider reimbursement. And the Secretary will also have to “establish, document, and make publicly available a standardized process for reviewing the relative values of physicians’ services. . . .” And then there are requirements added to make the Secretary accountable by requiring these efforts to be tracked and reported to Congress.

The U.S. Code Title 42 is where payments for physician services is discussed. This bill adjusts that a little bit to require the Secretary to make fee schedules in coordination with the Medicare Payment Advisory Commission (MedPAC), which is a 17-member group of diverse healthcare experts who are appointed for 3 years at a time to analyzing Medicare payments and other Medicare-related issues and then advising Congress on them. One of my health policy idols, Paul Ginsburg, is currently the Vice Chairman of MedPAC. (If anyone wants to introduce me to him, let me know.)

The Comptroller General is also assigned to do periodic audits on these relative values established for physicians’ services.

This title also establishes an Office of Primary Health Care within the Agency for Healthcare Research and Quality (known as AHRQ–I fondly know this agency as the one that funded my first two years of med school and then dropped my institution’s funding when I was about to start my full-time health policy PhD). This Office of Primary Health Care will be tasked with monitoring the number of PCPs and generally working to develop policies that improve the access to and implementation of primary care.

Lastly, the title talks about prescription drug prices. It says drug prices shall be negotiated annually by the Secretary. And the Secretary will develop a prescription drug formulary that promotes generic drug use and discourages the use of “ineffective, dangerous, or excessively costly medications when better alternatives are available.”

I wish I had a better sense for what the implications are of giving the Secretary power to adjust fee schedules and to involve MedPAC in the decisions. Does this mean the not-well-known but still highly criticized RVU Update Committee (known as the RUC, generally referred to as the secretive specialist-dominated group that sets the fee schedule that is, with little to no editing, implemented by CMS) will be a thing of the past? The RUC, by the way, is the reason why proceduralists are paid so much more than non-proceduralists–it’s easy to over-estimate the amount of time it takes to perform a procedure, which then translates into higher per-minute reimbursements to proceduralists.

From a high level, establishing a system of administrative pricing in this way, where smart individuals confer and do it rationally with good oversight and accountability, seems like a great idea. But remember that even the smartest experts will never be able to take all the factors into account that should determine a price. Not only are there different influencing factors that would make the price different in each locality, but also the knowledge of all the factors to get even one price right in one locality is dispersed over all individuals who deal with the service, its necessary inputs, and the alternative uses for those inputs. This is an insight from Friedrich Hayek, and I believe it correctly explains why administrative prices will never be efficient. Read more about that directly from Hayek here. I’ll have to write more on this in the future.

But short-term efficiency aside, I have explained in my Healthcare Incentives Framework how administrative prices also create a major barrier to healthcare evolving toward higher value.

So, maybe a different group of experts making prices with lots of oversight and transparency would be better than what we have now. I’m guessing it would be. But if these experts were willing to set these best-guess prices as price ceilings (allowing providers to choose to be reimbursed less than the set price) and then if Medicare could also somehow pass part of those savings on to the patients, this would overcome some of the issues caused by administrative prices. I’ve explained how this would work and why it’s important in my description of an optimal single-payer system article.

Continue to Part 5.


Evaluating Sanders’s Medicare for All Act of 2019, Part 3

This is my ongoing series summarizing and evaluating the Medicare for All Act of 2019, sponsored by Senator Sanders. Even though he is out of the running now for president, this Medicare for All (M4A) idea is gaining steam and will come back every few years with seemingly increasing popularity. People need to understand that there are quite a few implementation details of M4A that, if done wrong, will cause it to fail. This is yet another attempt of mine to help us avoid that if it does in fact eventually pass!

Part 1 reviewed Title 1, which states that basically everyone will be covered and can receive care from pretty much any provider. Part 2 reviewed Title 2, which states that insurance benefits will be comprehensive without any regular out-of-pocket expenditures.

Title 3

This title reviews which providers get to participate in M4A–any who meet state and federal requirements–and also outlines the rules of participation, which include the usual nondiscrimination requirements, no charging fees to patients, submission of proper statistical information, and submitting bills in a timely manner. It also includes the usual national standards for healthcare facilities.

It also says providers can enter into private contracts with patients (and sets forth in detail what needs to be written in that contract) as long as they’re not also receiving any reimbursement from M4A for those same services.

All necessary stuff, but really nothing to see here.

Title 4

This talks about how this law would be administered. The Secretary of Health and Human Services is granted the power to develop policies, procedures, guidelines, and requirements to carry out the act, including eligibility, enrollment, benefits, provider participation, and really anything I’ve already discussed in the prior titles. Nothing new here.

Title 4 does get interesting though. It also requires the Secretary to develop uniform reporting standards and then require providers to report on those things, including quality and outcomes (without “excessively burdening providers”). And it says this information will be made available for research purposes.

I like all of that. It’s the necessary groundwork for getting patients standardized quality information about providers, and it’s exactly what I have requested patients be given so that they can make good decisions and, thereby, reward better providers with more patients. Unfortunately, as discussed last week, there would be no cost sharing, so there will be no motivation to offer slightly lower quality at a drastically lower cost, but at least there would competition to optimize quality at the pre-specified level of reimbursement.

It then goes on to establish regional offices, which will be responsible for providing regular state health needs assessments, recommending changes in provider reimbursement, and establishing quality assurance mechanisms.

Ok, that’s it for this week. I am starting to think that, at the end of this series, I will need to write a list of recommended changes to this act–just the minimum necessary–to allow us to build an optimal M4A system. That should be fun!

Continue to Part 4.

Evaluating Sanders’s Medicare for All Act of 2019, Part 2

This is a 7-part series. Links here: Part 1, Part 3, Part 4, Part 5, Part 6, Part 7.

Before I get into the M4A Act, I want to update my assessment of how providers will fare with this whole coronavirus pandemic. I said they will love it because hospital beds will be full. I am aware of many more factors now that will be fighting against that increase in revenue from COVID-19 patients . . .

  • Most surgeries have been canceled, so ORs are sitting empty
  • Most outpatient clinics are closed
  • People are generally doing fewer things that lead to hospitalizations
  • Many caregivers are dependent on a continued stream of income, so hospital systems are trying to help them out by either continuing to pay them the same for less work (a personal example: as a hospitalist at a hospital where we have very few COVID-19 positive patients, I’m seeing about half the patients I usually do, but my pay per shift remains the same; we are feeling like it is the calm before the storm though, and I may make up for that by seeing many more patients than usual a few weeks from now) or are re-deploying them
  • Hospital systems are organizing testing sites and doing informational campaigns, all of which cost a lot of money too without much coming back

This does not mean providers are guaranteed to suffer a profitability loss this year compared to the counterfactual no-COVID-19 world. It depends on how many extra patients they end up getting from the pandemic, and the time course of which those patients are spread. Plus, a decreased demand for services now means there will be a lot of pent-up demand that will still be serviced after things calm down a bit. My best guess is that places that get hit hard with a high prevalence of COVID-19, especially early on, will do ok. But others, especially those still waiting for the surge of COVID-19 patients, will likely end up losing money from all this. I’ll be interested to look back a year or two from now and see how profitability turns out.


Now, back to the M4A Act. In Part 1, I said there are 11 titles, and I only looked at title 1. Let’s continue!

Title II

This title starts out by listing the benefits everyone gets under M4A. I could sum it up by saying it will cover . . . everything. Notable inclusions: psychiatric treatment, outpatient prescriptions, long-term care (home and community based), EMS, transportation for low-income or disable individuals, oral health, audiology, vision, and even alternative/complementary medicine (if it has evidence to suggest it’s useful). States can add more services if they want to cover additional things.

This does not talk about how they will decide whether a boderline more effective treatment that costs way more than the standard of care will be covered. But it does specifically talk about “experimental” treatments, which are defined as anything that is not consistent with accepted treatment guidelines. Experimental treatments may or may not be covered, it just depends on the Secretary, who will make a nationwide coverage determination for each one that is being considered.

This title also reviews cost sharing. There will be no cost sharing (no premiums, no copays, no coinsurance, no balance billing, etc.) except for a maximum of $200 out of pocket per individual per year, which would only take effect if someone is choosing a brand-name medication when there is a generic alternative available.

Finally, this title gives states the freedom to set additional standards of their own for benefits or eligibility or minimum provider standards, but it’s clear in stating that none of those state standards can result in restricted eligibility or benefits or access. I guess this is their way of allowing states to be even more generous in coverage or benefits, or to enact different provider standards as they see fit.

I’m planning an overview post at the end of this series that recaps all the key points, and I’ll talk more about cost sharing issues at that time, but this is the biggest area that will make or break a M4A system, and Sanders and Co. are getting it completely wrong. I understand they want to ensure people can afford treatment (I do, too!), and I understand they want it to be simple (I do, too!), but this kind of no-cost-sharing policy is going to prevent healthcare providers from innovating in ways that improve care quality and lower care costs. Which means it’s doing the opposite of its intended effect. I’ve described before the details of why appropriate cost-sharing policies in single-payer systems are so crucially important.

Continue to Part 3.