The Sanders single payer starts the needed process of fleshing out how single payer as envisioned by its proponents, would work in the United States. This is a needed step. We must have a blueprint with which to assess viability, identify areas of concern, note critical omissions and evaluate feasibility and points of weakness. The bill and the three page explainer can be downloaded from this link.
Emma Sandoe has the best initial take on the bill:
The window of opportunity is shut. This is about getting ducks in a row for when it opens. pic.twitter.com/enExc1SGEV
— Emma Sandoe (@emma_sandoe) September 13, 2017
The bill, as I understand it, aims to create a model that is fairly close to Medicaid for all with Medicare branding. It assumes multiple trillions of dollars of new revenue every year as it is trying to just lay out the coverage side of the problem.
Now let’s dig into the weeds:
Everyone in the country would be covered. There would be no cost sharing for non-pharmacy services. Small and limited cost sharing would be in play for brand name prescription drugs. Regular medical care, preventative care, dental, vision, mental health and long term care would be covered. Reproductive health care would be “comprehensive”.
Coverage would be based on a modification of the current fee for service system. Private insurance contracts that cover the same services as the Universal Medicare system would be banned. Service contracts would be allowed but as soon as a medical service provider receives a single dollar from one of these contracts, they lose eligibility to receive any payments from the Universal Medicare system for a year.
It makes no mention of Health Sharing Ministries or the Tennessee Farm Bureau that both sell insurance like products that are not currently regulated as insurance. Private direct primary care provider organizations still seem like they would be allowed and viable under the bill. Non-covered service providers such as cosmetic surgery would also remain a viable business proposition. However most other private individual to provider transactions become economically non-viable.
Long term care would be a split program between the states’ Medicaid programs and the federal government. There no mention of pediatric long term care financing. I am assuming that it will be covered somewhere but I am not seeing it in the bill.
The bill addresses ERISA. It prohibits ERISA regulated entities from issuing benefits that duplicate Universal Medicare benefits. This basically wipes out employer sponsored insurance as a benefit and makes ERISA irrelevant as a regulating law except in the oddest of edge cases.
Transition is addressed. The bill would be in full effect on the 4th January 1st after the bill is signed into law. Kids would be covered in the on January 1st after the bill is signed into law. Medicare for the old and the disabled would see immediate benefit enhancement with vision and dental coverage plus the elimination of cost sharing in the first year. Medicare age eligibility decreases in each year until the program fully phases in on the fourth January after enactment. There would be a transition fund equal to 1% of national health expenditures per year for five years to give transition assistance to people in the insurance industry who have to find new work. The program would be run at the regional and state level so there would be some new jobs there.
I have several major concerns for this bill. I don’t understand where the money is coming from. The prescription drug elements of the bill seems to conflict with other parts of the law. I don’t agree with the level of trust in the Secretary of Health and Human Services that the bill uses. I see de facto nationalization of most medical facilities given the payment structure and contract limitations.
The bill barely addresses financing. Eliminating the ability of employers to offer insurance effectively captures almost all of the lost revenue form the favored tax treatment of insurance premiums as theoretically wages should roughly increase at the same magnitude. There are some intergovernmental transfers that will provide some funding. But there is a funding gap that I am incapable of estimating beyond the language of my five year old in assessing how tall the buildings around him are. The hole is either very big or super, super huge.
Section 201 says the standard for payment will be “medically necessary and appropriate”. Section 202 forbids most cost sharing but does allow some prescription drug cost sharing:
(2) set a cost-sharing schedule for prescription drugs and biological products that encourages the use of generic drugs, provided that any such cost sharing does not apply to preventive drugs.
Section 614 states that the Secretary shall negotiate pharmaceutical prices annually. Furthermore, the formulary should encourage generic drugs first. Finally the formulary should discourage “the use of ineffective, dangerous, or excessively costly medications when better alternatives are available.”
I have two major questions on how these sections work together. Can the HHS Secretary say no? For classes of drugs that are clinical substitutes such as Harvoni and Sovaldi for Hep-C genotype 1, can the Secretary credibly say “We’re buying one of these pills as the first line treatment, make me your best offer….” And then go with only one treatment regime? If so, then the cost savings are real. Yet, Section 201 has a medically necessary and appropriate standard that seems to invite at best only an effectiveness and not a cost-benefit standard towards inclusion and payment. If Section 201 dominates, negotiation is merely cost control window-dressing as Universal Medicare would not be able to say no to any first line treatments.
However Section 202 seems to imply that the only differential cost sharing allowed is for a two tier formulary of generic versus non-generic, not preferred brand and non-preferred brand or preferred specialty versus non-preferred specialty. Section 614 formulary language implies an allowance to tier or withhold until failure some medications. I consider pharmacy benefits a black box that I don’t understand well, but I have a hard time seeing how this works at a decent cost savings.
The phrase “Secretary shall….” Is used twenty six times in the bill. There is a lot of flexibility for the Secretary of Health and Human Services in the act. Some of it is needed. Other areas such as defining eligibility for non-permanent residents of the United States is at risk of an HHS run by someone like Tom Price instead of an HHS run by Sylvia Burwell. I am surprised that for a messaging and dream bill that there is so many points of potential sabotage are addressed. I would have written stronger Congressional guidelines into black letter law and then reduce the downside option space.
Finally, while this bill is on its face a coverage bill, it will have incredible changes on the provision of medical services as well as the organization of the medical economy. The provision in 303-C-2-b that make it incredibly difficult for most doctors and facilities to accept non-Universal Medicare funding effectively means over the long run that the federal government could decide to limit competition by controlling the capital funding allocations built into the proposed fee schedule. This element as well as other sections of the bill regarding provider credentialing, invites regulatory capture by incumbent providers. A captured regulatory structure will reduce the number of medical providers and increase costs without concurrent increases in positive outcomes. It would be a system that is prone to rent seeking behavior.
This bill is a needed attempt to explain how single payer goes from a slogan with one thousand different meanings to an actual system. It hand-waves the financing of a system while primarily focused on the mechanics of benefit provision. That is fine for a first step but even within this limited first step, I am having a hard time seeing how the bill produces the positive outcomes it wants to produce at an acceptable long run cost.
UPDATE AND DISCLAIMER: I commented on an intermediate draft of the proposal and talked through several areas of concern and improvement with members of Senator Sanders’ staff.
First thoughts on the Sanders single payer billPost + Comments (173)