This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
How the High Cost of Medical Care Is Affecting Americans
By Elisabeth Rosenthal
The New York Times, December 18, 2014
The Times designed a questionnaire with CBS News and conducted a national poll this month.
Americans are eager for relief.
There seems to be widespread agreement that medical prices are burdensome for American patients, and new solutions are needed. But will the answer be a market-based approach involving greater price transparency? More regulation, focusing on price? A government-sponsored single-payer health system, like that in Canada? Or allowing younger people to join Medicare, the popular health insurance program for seniors? Many readers surprised me by saying they could not wait to turn 65. As one reader from Texas said: “I bought medicine in Mexico for 23 years before I became eligible for the promised land of Medicare.”
Would you favor or oppose a government-administered health insurance plan — something like the Medicare coverage that people 65 and older get — that would compete with private health insurance plans?
8% No opinion
Would you favor or oppose a single-payer health care system, in which all Americans would get their health insurance from one government plan that is financed by taxes?
7% No opinion
During the health care reform debate there was considerable support for a “public option” – providing individuals an option of choosing a Medicare-like program, administered by the government, that would compete with the private health plans. During the legislative process it received much publicity, but it was eventually eliminated from consideration under pressure from the insurance industry that did not want any competition from the government. A vote on a single payer proposal also was promised by the Democratic leadership in the House, but eventually the opportunity for that vote was traded away in politics as usual.
We still hear calls for a public option that many contend would address the high costs of health care, though few seem to understand that it would hardly have any impact on costs since it would be only one more player in our dysfunctional multi-payer financing system. But we also hear calls for a single payer system – an improved Medicare for all – that actually would slow spending while meeting other important goals such as universality and equity.
How are these messages resonating with the public? The competitive public option concept is supported by 59% of those polled, whereas the single payer concept is supported by only 43%, with 50% opposed.
Although some might dispute this polling based on the phrasing of the questions or whatever, to me these results seem to suggest a much more serious problem. Instead of the national debate that we should be having – single payer versus our fragmented multi-payer system – the debate is being shifted to our private insurance-dominated multi-payer system versus a multi-payer system with a public option – a Medicare-like program that you can purchase in place of private insurance.
What does that shift in the debate do? Well, first of all, it ensures that single payer will continue to be left off of the table as we move forward. Second, it allows the insurers to exercise damage control by ensuring, through their ownership of Congress, that the public option would be prohibited from gaining an “unfair” competitive advantage against the private insurers. During the reform debate the insurance lobby was successful in selling the concept that the public option had to be removed from the control of government and have restrictions placed on it that would make it worse than the private plans. Just opening that door was still too much for the insurers, and so the concept was tabled. But when it comes back up again, the insurers want to have that debate rather than the single payer debate, and they are ready for it.
Another concern about the public option debate is that the concept is being deliberately conflated with the premium support concept as a means of ensuring that there is strong public support for improving health care value through competition – competition of private health plans, that is. The government would provide support for the insurance premiums through virtual vouchers that would provide an option to purchase various plans through the public exchanges. Thus the insurance industry gets precisely what it wants with the debate being limited to how much damage can be done to the free-standing public option, public in name only, to be sure that it does not unfairly compete with the private insurers (inadequate funding of reserves, prohibition of “advertising,” increasing adverse selection through the requirement of being the safety-net insurer, requirement to maximize cost sharing, requirement of using ultra-narrow networks, etc.).
Maybe some of this is a stretch, but we really have to be concerned when the perception of the public at large is that we don’t want a single payer system but we do want a government plan that competes with private insurers. The issues are complex. We have a lot of work to do to educate the nation on the true facts behind reform options. As far as messaging is concerned, right now the single payer opponents can dismiss our model with just one word: competition. Now just try to find one word or phrase that explains why single payer is vastly superior to private plans competing in the marketplace.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Governor says: ‘Now is not the time for single payer financing plan’
Times Argus, December 17, 2014
Gov. Peter Shumlin is backing away from a commitment to pass a single payer health care financing plan in Vermont in 2015. He just made the announcement at a press conference in Montpelier.
Gov. Shumlin has provided a very valuable lesson for all of us. He did almost everything possible on a state level to try to establish a single payer system within Vermont. He has established the fact that, beyond all doubt, a bona fide single payer system is impossible to enact and implement on a state level without comprehensive enabling federal legislation.
We can be thankful to Gov. Shumlin for his valiant efforts. He has shown us that it is imperative that we continue with our efforts toward a goal of enactment of federal single payer legislation.
Those of us working on the state level still have very important work to do. We need to continue our education efforts on a local, statewide, and national basis. We will not have single payer until the people understand it and elect a Congress that will bring it to us.
There are other important health care measures that can provide some improvements in our dysfunctional health care system, and we should support those. But we cannot be fooled into thinking that these are incremental steps on the path to single payer. Our health financing infrastructure must be replaced with a single payer system. Mere patches, such as we see with the Affordable Care Act, fall far, far short of what we need, and will only perpetuate health care injustices.
We have plenty of dedicated people who will continue with efforts to provide the beneficial patches to our system, and we should support their work. But, above all, we need to regroup and intensify our efforts to educate the nation on the imperative of a federal solution. That must be our first and foremost priority. Nobody should become discouraged and start thinking of leaving our ranks. We need to get busy and recruit more soldiers for our cause, beginning today. We are fighting for the health of the nation.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Many Obamacare Plans Set Out-Of-Pocket Spending Limits Below The Cap
By Michelle Andrews
Kaiser Health News, December 12, 2014
Seventy-four percent of 2015 silver level plans’ out-of-pocket spending caps are below the $6,600 spending limit allowed for individual plans and $13,200 maximum for family plans, according to Avalere, a consulting firm. The average out-of-pocket maximum for 2015 individual silver plans will be $5,853, says Caroline Pearson, a vice president at Avalere. Silver was the most popular plan type this year, selected by about two-thirds of enrollees.
After a policyholder reaches the out-of-pocket spending limit during the year, the insurer pays all the bills, unless, for example, they involve doctors and hospitals not in the health plan’s network.
The vast majority of other plans also feature lower limits on out-of-pocket spending—which includes deductibles, copayments and co-insurance, but not premiums. Seventy-one percent of bronze plan spending limits were below the allowed maximum (with an average spending limit for single coverage of $6,381), as were 94 percent of gold plans (average limit, $4,458) and 98 percent of platinum plans (average limit, $2,145).
The tradeoff for lower out-of-pocket spending maximums may be a higher deductible, says Pearson. The average deductible for silver plans will increase 7 percent in 2015, to $2,658. Other metal-level average plan deductibles are increasing as well.
Higher deductibles are likely helping keep premiums low, and low premiums are what consumers are looking for, Pearson says.
Kaiser Health News: http://kaiserhealthnews.org/news/many-obamacare-plans-set-out-of-pocket-…
This Avalere report reminds us that, at a given actuarial value of a health plan (average percent of the health care costs covered by the plan), there is a reciprocal relationship between the maximum out-of-pocket spending for which the insured is responsible and the deductible that must be met before the plan begins paying for health care.
Ignoring other variables, such as waiving the deductibles for certain preventive services, let’s look at the 2015 average deductibles and average maximum out-of-pocket spending (MOOP) for the four metal tiers representing different levels of actuarial values (AV) in the insurance exchanges. The numbers are for individual plans that must be capped at a MOOP of $6,600 or less.
It is obvious that, in these examples, as AVs increase, both the deductibles decrease and the MOOPs decrease. The higher the AV value, the more complete is the coverage. But then why are both adjusted? Why didn’t the actuaries set the MOOP for each plan at the statutory maximum ($6,600) and simply adjust the deductibles? That way the higher the premium paid, the lower the deductible would be.
If you look at the platinum plan (90% AV) the average deductible is only $189. With the essential health benefits and the networks remaining the same, in order to push the AV up to 90%, the actuaries had to reduce the maximum out-of-pocket to an average $2,145. For the gold plans, in order to have a product with a standard $1000 deductible ($1,080 with 2015 adjustment), the actuaries also had to lower the MOOP to meet the 80% AV.
The bronze plans, with the lowest AV (60%), had to push their MOOP up to close to the statutory maximum – $6,381, just below $6,600 – but then that required an average deductible of a whopping $5,249 – quite a blow for the low-income individuals and the young invincibles who would be attracted to the low premiums of these plans.
The silver plans, which about two-thirds of exchange purchasers select, have a more balanced deductible and MOOP. So why didn’t they push the MOOP up to the maximum ($6,600) so that they could offer a more reasonable deductible? For one reason, having greater cost sensitivity through higher deductibles advances the consumer-directed approaches of those ideologues who place more importance on the theory of moral hazard than they do on patients getting the care that they need.
Another reason is that, since about 80% of the population uses only about 20% of health care, most insurance plan enrollees would never meet their deductible. With the silver plan deductible of $2,658, insurers would be paying for almost no care for about four-fifths of their enrollees (except preventive services – a very small part of our health care services). The extra that would have to be paid by the insurers for having a modestly lower MOOP would apply to only about one-fifth of their enrollees, most of whom would far exceed their deductibles anyway.
Left out of this are considerations of the consequences of obtaining care out-of-network, even if inadvertent, and of being required to pay retail prices for services that are later determined to not be covered benefits.
Seems like a pretty good deal for the insurers. Isn’t it our turn to get a good deal? We would have to get rid of the insurers first.
Two Theologies Have Blocked Medicare-For-All
By Theodore Marmor and Kip Sullivan
Health Affairs Blog, December 11, 2014
In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.
Two Myths that Undercut Medicare-for-All: Managed Care and Competition
In the paper we presented at the Yale conference (Yale Law School, November 6 & 7) , we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.
The managed care movement helped marginalize support for Medicare’s expansion primarily through its influence on the proponents of national health insurance. It did so by persuading many potential proponents of Medicare expansion to pursue a different reform strategy. Insurance companies practicing managed care, the rhetoric claimed, were more efficient than Medicare. Managed care kept Medicare-for-all off the congressional agenda primarily by inducing potential proponents of Medicare expansion to support managed care rather the expansion of the traditional Medicare program.
The rise of the pro-competition movement constituted another significant impediment to Medicare expansion. It did so by strengthening the belief that market competition among private health insurance firms could be invigorated, largely by eliminating tax subsidies for insurance and shifting more costs onto patients, and that vigorous competition would make the health care sector much more efficient than Medicare could ever be. But because this movement appealed primarily to conservatives who did not support universal coverage in the first place, its impact on the debate about Medicare’s expansion, although powerful, was less direct.
To sum up, the pro-competition movement contributed to keeping the expansion of Medicare off the national agenda by keeping national health insurance off the national agenda throughout most of Medicare’s 50 years. And the managed care movement contributed by persuading liberals to endorse managed care proposals, not the expansion of Medicare, during those infrequent periods when universal coverage was at the top of the national agenda.
Why have the Managed Care and Competition Movements been Politically Successful?
The answer, in our view, is two-fold. First, both movements acquired immense economic power compared with supporters of Medicare expansion. Second, both movements clothed their diagnoses of and solutions to the health care crisis in rhetoric that induces listeners to overlook unproven assumptions that underlie those diagnoses and solutions. This permitted both movements to present their solutions in idealized, oversimplified forms, and to compare their idealized forms to real-world Medicare. Over the years both movements have developed cultures which resist acknowledging the discrepancy between their assumptions and the evidence.
In the first few months of 1970, Paul Ellwood and representatives of the Nixon administration agreed to promote an unproven diagnosis of the health care crisis and an unproven solution. The unproven diagnosis was overuse of the health care system induced by the fee-for-service method of paying doctors. The unproven solution was a new form of insurance company they called the “health maintenance organization” (HMO).
Ellwood and Nixon administration officials made the deliberate decision to refrain from describing how HMOs were supposed to achieve the powers attributed to them. As assistant HEW secretary Lewis Butler put it, “Let’s specify what we want it to do…. Let’s describe the thing by what we want it to do, not how it’s formed.”
This convention – describing an entity that will supposedly alleviate the health care crisis according to what “we want it to do” – was quickly adopted by Democrats. The convention encouraged, and to some degree forced, HMO advocates to explain their support for the concept in highly abstract terms. It also encouraged the use of opinion and wishful thinking as substitutes for evidence and scientific discourse.
The tendency to adopt abstract concepts defined only by the aspirations of their proponents, to give these abstract concepts labels designed to influence rather than illuminate, and to ignore or downplay evidence contradicting claims made for these concepts has persisted within the managed care movement ever since. These habits of thought can be seen in the movement’s support for other managed care proposals, including “pay-for-performance” and “accountable care organizations.”
The pro-competition movement has exhibited similar traits – a tendency not to examine fundamental assumptions and to gloss over evidence contradicting them. Like the managed care movement, the pro-competition movement rests its diagnosis on the unproven assumption that financial incentives are the single greatest cause of health care inflation. Unlike the managed care movement, which sees physician incentives as paramount, the pro-competition movement claims patient financial incentives are the fundamental cause of high medical costs. Like the managed care movement, the pro-competition movement bases its solution on unproven assumptions, the most important of which is that patients can shop for medical care just as they do for food and other commodities.
The willingness of the two movements to compare real-world Medicare with their idealized proposals has contributed significantly to their ability to keep the expansion of Medicare off the table. It has also contributed significantly to their inability to address the problems that bedevil the American health care system – a chronically unacceptable rate of uninsured, barriers to care even for the insured, and rising costs.
The dream of expanding Medicare to cover all of us has failed to materialize in a large part because of the nation’s obsession with marketplace concepts of health care financing. On the supply side, health care providers are responding to financial incentives that maximize their revenue. On the demand side, patient-consumers are responding to financial incentives that minimize their out-of-pocket spending. In both instances, health care access is compromised – in managed care by erecting structural barriers to care (“managing” the care), and in competition by erecting financial barriers to care (buying competitively-priced plans with lower premiums that have higher deductibles and other cost sharing).
Where did this obsession come from? Gilens and Page have shown that the very wealthy and large business interests have control over major legislation. These interests benefit from marketplace approaches to health care through investments in for-profit insurance companies and in health care delivery organizations, including for-profit hospitals. In contrast, their tax burden in publicly-financed health programs is greater when taxes are progressive. Also many other important government programs are financed through progressive taxes, so the moneyed interests benefit by privatizing government functions to the maximum extent possible.
These interests, along with ideologues, have made a meme of the concept that private markets are always more efficient than massive government bureaucracies, when the evidence is almost always to the contrary. Unfortunately, much of the media have accepted this meme as a given. Since everyone “knows,” based on a lifetime of exposure to these memes, that the private sector can always do it better, they are quite willing to support private solutions to problems such as the financing of health care.
Whenever proposals such as expanding Medicare come up, the insurance industry pulls the puppet strings in Congress, and the public is reminded how well UnitedHealth and the other for-profit insurers are doing in creating private products that have lower out-of-pocket costs than Medicare (not mentioning that they are doing that with one-third of the overpayments they receive while keeping the other two thirds for profits and to pay for the excessive administrative services that they are selling us – a bad deal for taxpayers).
So those who support the intrusive managed care organizations and who support shifting more costs directly to patients under the false banner of marketplace competition (see Kenneth Arrow) have been effective in suppressing any serious consideration of improving Medicare and expanding it to cover everyone. As long as the public continues to buy their meme, there is little likelihood of change.
We need to continue to inform the public on the legitimate findings of health policy science (national health programs that include everyone while providing higher quality at a lower cost), but that is a daunting task considering how difficult it is to communicate complex policies to a population blunted by unfounded memes.
The Search For A National Child Health Coverage Policy
By Sara Rosenbaum and Genevieve M. Kenney
Health Affairs, December 2014
Thirty-eight percent of US children depend on publicly financed health insurance, reflecting both its expansion and the steady erosion of employment-based coverage. Continued funding for the Children’s Health Insurance Program (CHIP) is an immediate priority. But broader reforms aimed at improving the quality of coverage for all insured children, with a special emphasis on children living in low-income families, are also essential. This means addressing the “family glitch,” which bars premium subsidies for children whose parents have access to affordable self-only employer-sponsored benefits. It also means addressing the quality of health plans sold in the individual and small-group markets—whether or not purchased through the state and federal exchanges—that are governed by the “essential health benefit” standard of the Affordable Care Act (ACA). In this article we examine trends in coverage and the role of Medicaid and CHIP. We also consider how the ACA has shaped child health financing, and we discuss critical issues in the broader insurance market and the need to ensure plan quality, including the scope of coverage, use of a pediatric medical necessity standard that emphasizes growth and development, the structure of pediatric provider networks, and attention to the quality of pediatric health care.
The ACA’s Pediatric Essential Health Benefit Has Resulted In A State-By-State Patchwork Of Coverage With Exclusions
By Aimee M. Grace, Kathleen G. Noonan, Tina L. Cheng, Dorothy Miller, Brittany Verga, David Rubin and Sara Rosenbaum
Health Affairs, December 2014
The Affordable Care Act (ACA) establishes essential health benefits as the coverage standard for health plans sold in the individual and small-group markets for all fifty states and the District of Columbia, including the health insurance Marketplaces. “Pediatric services” is one of the required classes of coverage under the ACA. However, other than oral health and vision care, neither the act nor the regulations for implementing it define what these services should be. We investigated how state benchmark plans—the base plan chosen in each state as the standard or benchmark of coverage in that state under ACA rules—address pediatric coverage in plans governed by the essential health benefits standard. Our review of summaries of all the state benchmark plans found that no state specified a distinct pediatric services benefit class. Furthermore, although benchmark plans explicitly included multiple pediatric conditions, many plans also specifically excluded services for children with special health care needs. The Department of Health and Human Services has made a commitment in the essential health benefits regulations to review its approach for the 2016 plan year. Thus, our findings have implications for future regulations regarding the essential health benefits standard for pediatric services.
The Scheduled Squeeze On Children’s Programs: Tracking The Implications Of Projected Federal Spending Patterns
By C. Eugene Steuerle and Julia B. Isaacs
Health Affairs, December 2014
Federal programs for children are under increasing budgetary pressure. According to current federal law or any budget alternative being offered by the president or congressional leaders, spending on children would decline as a share of the budget and of the national economy. This article summarizes past, current, and projected budgets for children’s programs. It traces significant historical expansions of means-tested programs, such as the Supplemental Nutrition Assistance Program; depicts fairly significant declines in more universal supports, such as the income tax exemption for dependents; and shows the future squeeze on children’s programs brought about by automatic growth in health, retirement, and tax subsidy programs, along with the failure of revenues to keep pace with the overall growth in spending. Federal programs for health care have been a mixed blessing for children: Medicaid has grown to be the largest federal support for children, but overall federal health care costs eat away at the share of the budgetary pie left for anything else.
During the health care reform process there seemed to be an attitude that we were already doing well in ensuring that the health care needs of children were being met. Employer-sponsored family coverage took care of middle- and upper-income children, Medicaid and SCHIP covered lower-income children, and community health centers and other safety-net institutions took care of children who were not covered by the other programs. The Affordable Care Act expanded assurances of coverage by providing income-based subsidies for plans offered through the exchanges. So what is the problem?
Having multiple sources of coverage with different eligibilities that change with continual changes in life circumstances – income levels, employment status of family income source, changes in geographical location, variations in community resources, citizenship status, etc. – results in instability of coverage for everyone, certainly including children. These articles from the current Health Affairs summarize some of these variations in the public and private programs, variations in benefits covered, and variations in financing of the programs. The current situation might be summed up as lacking “a national child health coverage policy” (Rosenbaum and Kenney).
Although many factors contribute to the deficiencies in child health coverage, one of the more important is that we continue to try to build upon a fragmented combination of public and private programs, an approach that only perpetuates many of these deficiencies. An example is the “family glitch” in which children do not have access to exchange subsidies if the employed parent receives solo coverage through their work. Efforts to patch the various flaws only increase the complexity and administrative burden of our dysfunctional system, and yet patches on a fundamentally flawed infrastructure can never provide the stability that we need.
So what can we do? We can build a new health care financing infrastructure that serves well the needs of not only our children, but all of us. That would be a single payer national health program – an improved Medicare for all – but not just a Medicare that serves only the elderly and persons with disabilities, rather, like Canada, a Medicare that serves all of us. Our children deserve it, and so do we.
Access to Care: Provider Availability in Medicaid Managed Care
Department of Health and Human Services, Office of Inspector General, December 2014
Examining access to care takes on heightened importance as enrollment grows in Medicaid managed care programs. Under the Patient Protection and Affordable Care Act, States can opt to expand Medicaid eligibility, and even States that have not expanded eligibility have seen increases in enrollment. Most States provide some of their Medicaid services—if not all of them—through managed care. The Office of Inspector General received a congressional request to evaluate the adequacy of access to care for enrollees in managed care.
We found that slightly more than half of providers could not offer appointments to enrollees. Notably, 35 percent could not be found at the location listed by the plan, and another 8 percent were at the location but said that they were not participating in the plan. An additional 8 percent were not accepting new patients. Among the providers who offered appointments, the median wait time was 2 weeks. However, over a quarter had wait times of more than 1 month, and 10 percent had wait times longer than 2 months. Finally, primary care providers were less likely to offer an appointment than specialists; however, specialists tended to have longer wait times.
- Half of providers could not offer appointments to enrollees
- Forty-three percent of providers were not participating in the plan at the listed location
- Another 8 percent of providers were not accepting new patients
- Among the providers who offered appointments, the median wait time was 2 weeks; however, over a quarter had wait times of more than 1 month
- A small number of providers required patients to submit medical records prior to scheduling an appointment or would not accept patients with certain medical conditions
- Primary care providers were less likely to offer an appointment than specialists; however, specialists tended to have longer wait times
- The median wait time for specialists was twice as long as that for primary care providers
Our findings demonstrate significant vulnerabilities in provider availability, which is a key indicator for access to care. These findings also raise serious questions about the abilities of plans, States, and CMS to ensure that access-to-care standards are met. Without adequate access, enrollees cannot receive the preventive care and treatment necessary to achieve positive health outcomes and improved quality of life.
Notably, 51 percent of providers were either not participating in the plan at the location listed or not accepting new patients enrolled in the plan. When providers listed as participating in a plan cannot offer appointments, it creates a significant obstacle for an enrollee seeking care. Moreover, it suggests that the actual size of provider networks may be considerably smaller than what is presented by Medicaid managed care plans.
Among the providers who offered appointments, the median wait time was 2 weeks. However, over a quarter had wait times of more than 1 month, and 10 percent had wait times longer than 2 months. Long wait times can have a significant impact on patient care. It also raises questions about whether these plans are complying with their States’ standards for access to care, as most States have access standards that require appointments be provided within 1 month or less. That so many providers could not offer appointments within a month raises concerns about enrollees’ ability to obtain timely access to care.
One of the major features of the Affordable Care Act was to expand Medicaid to cover a greater number of low-income individuals. Although many states opted out of the expansion, nevertheless Medicaid enrollment increased in those states as well. Because of the expansion of state budgets required to cover the burgeoning Medicaid population, most states have moved most if not all of their Medicaid patients into Medicaid managed care plans.
Although states claim that this benefits patients by placing them in organizations that are designed to manage their health care, the real reason is that the states wanted to save money. The managed care plans agree to provide care at a cost lower than the costs of comparable care provided by community hospitals and physicians. Because of the increased enrollment, the total costs of Medicaid are increasing, but the payments per individual are not.
Medicaid, being a welfare program, was already chronically underfunded. Further limiting payments per patient can place a serious strain on resources that would pay for all of the promised care. This OIG study was done in the summer of 2013, before the surge in enrollment that began later that year. If half of providers could not offer appointments to patients at that time, what is happening now that the managed care organizations must accommodate the added demand?
Although there are already many anecdotal reports that the managed care organizations are not meeting their obligations under these state contracts, we will have to wait longer before we have a comprehensive objective evaluation of the extent of the deficiencies in health care services.
Isolating low-income individuals and placing them into an underfunded welfare program will certainly perpetuate disparities in care. Yet the deficiencies in health care services are even worse in those states that opted out of Medicaid expansion, and they are worse for the undocumented residents who are prohibited from participating in Medicaid or in the subsidized plans offered by the exchanges.
Under a single payer national health program – an improved Medicare for all – everyone would have access to a system that met the highest standards of care. The wealthy would still have their high standard of care, but with their special amenities paid for separately, such as private hospital suites, whereas low-income individuals could have the same high standard of care, but without the amenities. Because of the efficiencies of the single payer model, it would not cost the nation any more than we are now spending on health care.
National Trends in the Cost of Employer Health Insurance Coverage, 2003–2013
By Sara R. Collins, David Radley, Cathy Schoen, Sophie Beutel
The Commonwealth Fund, December 9, 2014
Looking at trends in private employer-based health insurance from 2003 to 2013, this issue brief finds that premiums for family coverage increased 73 percent over the past decade—faster than median family income. Employees’ contributions to their premiums climbed by 93 percent over that time frame. At the same time, deductibles more than doubled in both large and small firms. Workers are thus paying more but getting less protective benefits. However, the study also finds that while premiums continued to rise through 2013, the rate of growth slowed between 2010 and 2013, following implementation of the Affordable Care Act. While families experienced slower growth in premium contributions and deductibles over this period, sluggish growth in median family income means families are paying more in premiums and deductibles as a share of their income than ever before.
Premium Increases Outpace Growth in Family Income
Despite the recent slowdown in growth, insurance premiums have risen faster than median incomes for the under-65 population. While average family premiums have climbed by 73 percent since 2003, median family income has risen by 16 percent over the same time period. As a result, total premiums (including the employer and employee shares) relative to income have continued to climb for middle-income working-age families. In 2013, average annual family premiums were 23 percent of median family income, up from 15 percent in 2003 and 21 percent in 2010. There are similar trends in premiums for single coverage: average premiums have climbed 60 percent over the decade, while median income for single-person households has grown by only 11 percent.
Although workers are paying more for their health insurance, their premiums are buying less financial protection, partly because more plans include deductibles and the size of those deductibles has spiked dramatically. In 2013, 81 percent of workers were enrolled in a health plan with a deductible, up from 78 percent in 2010 and just over half (52%) in 2003. As with employee contributions to premiums, incomes have lagged growth in deductibles such that deductibles are consuming an ever-growing share of worker income.
Research has shown that the slower growth in wages during the past decade has been part of a trade-off to preserve health benefits. But while growth in premiums and deductibles has slowed over 2010–2013, median family income, when adjusted for inflation, remains below 2010 levels. Indeed, U.S. families are still trying to recapture lost income from the financial crisis and recession of 2008: real median income is 8 percent lower than it was in 2007. It is unlikely that most families at the middle and lower end of the income distribution are able to detect or feel the premium slowdown in their pocketbooks since they are paying more in premiums and deductibles as a share of their income than ever before.
Both premiums for employer-sponsored health plans and employee out-of-pocket expenses for health care have continued to increase well in excess of employee income, in spite of a general slowing in health care spending. Employees “are paying more in premiums and deductibles as a share of their income than ever before,” and it is likely that there is no relief in site, in spite of the enactment of the Affordable Care Act.
We desperately need public policies to correct the excessive and increasing inequality in America, and a good start would be to replace our current inequitable health care financing system with an equitably-financed and more efficient single payer national health program – an improved Medicare that covers everyone.
The Health-Cost Slowdown Isn’t Just About the Economy
By David Leonhardt
The New York Times, December 5, 2014
It’s one of the most important economic questions today: Is the snail-like growth of health costs over the last several years a real trend, or is it merely a temporary part of the Great Recession’s aftermath?
The data experts who compile the government’s official numbers on health spending lean toward the more pessimistic view. They think the slowdown – to the lowest level of growth on record – stems in large part from Americans skimping on medical care during tough times.
In the aftermath of the 1990-91 recession and the slow recovery that followed, health spending stopped growing more quickly than the rest of the economy. It accounted for 13.4 percent of economic output in 1996, the same share as it had in 1993.
But the weak economy doesn’t seem to have been the main reason. The rise of health maintenance organizations (or H.M.O.’s) – along with other attempts by insurers to hold down costs – was.
Then a backlash against H.M.O.’s took hold, and health spending started growing rapidly again. The surge didn’t end until the last few years, when the efforts of the reformers began to have a widespread effect.
It’s simply not true that G.D.P. and health costs have historically moved in tandem. On the other hand, the experience of the 1990s demonstrates that a slowdown in health costs isn’t guaranteed to persist.
If patients start to rebel against some of the changes that have held down health costs – like narrow networks, which restrict which doctors they can see – spending may start to rise again. It also may start to rise if labor unions manage to undercut a tax on generous health plans or if Republicans succeed in stopping efforts to make Medicare more efficient. (Yes, that’s related to the infamous death-panel debate.)
The American health care system really is changing. What happens next will be one of the biggest economic stories of the coming decade.
There are several factors contributing to the slowdown in health care spending, but one of the most important is insurance innovation that is impairing affordability and access. These innovations include “consumer empowerment” measures, such as ever-higher deductibles, shift from co-payments to higher coinsurance, establishment of higher-cost tiers, and narrower provider networks that impair access.
The supporters of consumer-directed health care celebrate these “savings” that we are seeing, but this represents forgone health care – much of it beneficial health care. While some cite studies such as the RAND HIE and the Oregon natural experiment as showing no harm done, in fact, these studies were not powered to shown harm, but only to show a difference in spending.
People are doing without the care that they should have. Based on my clinical experiences, people really do suffer and die merely because they delayed care when they could not afford it.
Today, because of the transfer of health care costs to patients, being insured is no longer enough to prevent personal bankruptcy. It is not even enough to ensure that you will not die from causes for which intervention is effective.
There are far more effective ways to control health care spending, beginning with a single payer system. The recovered administrative waste alone would be more than enough to pay for care that patients are now avoiding due to our ill-advised and inhumane “skin in the game” policies.
Big Changes in Fine Print of Some 2015 Obamacare Plans
By Charles Ornstein, Lena Groeger and Ryann Grochowski Jones
ProPublica, December 4, 2014
Millions of people nationwide bought health insurance this year through the federal government’s health insurance exchange, often through the website Healthcare.gov. Now, as they pick plans for next year, they face a complex battery of choices and changes.
They have until Dec. 15 to select a new plan or they’ll be re-enrolled automatically in the one they currently have. Or, if that plan no longer exists, they’ll be enrolled in another product offered by the same insurer, when available. But even if they get the same plan — of the nearly 2,800 health plans offered in 2014, about 1,700 of them will exist in the same form next year — their benefits may not stay the same.
Much attention has focused on changes to plans’ monthly premiums, but changes to other kinds of benefits — affecting the cost of things like doctors’ visits and prescriptions — can be trickier to understand and make a huge difference in annual health care costs.
Some policy changes appear subtle, just a matter of adding or subtracting a few words, but are actually quite significant. This year, many insurers charged members a set fee of a few hundred dollars for emergency room visits. For next year, some of those plans changed the wording of their benefit, adding “co-pay after deductible.” That means the insurers won’t pay for any portion of an emergency room visit until consumers meet their deductible, spending thousands of dollars.
What ProPublica’s analysis suggests is that even those who would be willing to pay higher premiums to keep their current plan may be surprised to learn that substantial details have changed. They should go back to Heatlhcare.gov or to ProPublica’s news app to make sure their plan is still the best choice.
Changes to insurance benefits are hardly exclusive to the Affordable Care Act marketplaces. They happen regularly in health plans offered by employers.
Will everyone who is surprised that the the private insurers are changing the fine print on the plans offered through the exchanges please raise your hands. (Sorry, I can’t see your hands, just as most of those purchasing plans on the exchanges won’t see the fine print either.)
Exchange Plans Increase Costs of Specialty Drugs for Patients in 2015
By Caroline F. Pearson
Avalere, December 2, 2014
A new analysis from Avalere Health finds that patients accessing specialty medications – drugs often used to treat life threatening illnesses, such as cancer, rheumatoid arthritis, or multiple sclerosis – through exchange plans are more likely to experience higher out-of-pocket costs in 2015 than in 2014.
In particular, the incidence of plans charging coinsurance greater than 30 percent for specialty medications has increased from 27 percent of Silver plans in 2014 to 41 percent in 2015. Coinsurance is the practice of charging consumers a percentage of the total cost of the medication, as opposed to a set co-payment fee. Approximately two-thirds of exchange enrollees picked Silver plans in 2014.
“Health plans continue to focus on managing drug costs to keep premiums low,” said Dan Mendelson, CEO at Avalere Health. “Competitive premiums are key to a sustainable exchange marketplace, which has led plans to pursue more significant cost-sharing. In some cases this could make it difficult for patients to afford and stay on medications.”
Percent of Exchange Plans with Coinsurance Above 30% for Specialty Tier drugs
Bronze (60% actuarial value)
Silver (70% actuarial value)
Gold (80% actuarial value)
Platinum (90% actuarial value)
Specialty drugs are a problem for private insurers for two reasons. They are very expensive, and they are taken by individuals with serious high-cost disorders such as cancer, rheumatoid arthritis and multiple sclerosis. It is important to understand the insurers’ responses to their concerns.
Although set-dollar copays were common for drugs covered by insurance plans, the modest patient payments left the insurer responsible for the high costs of expensive drugs. So the insurers established different tiers of drugs covered, ranging from the bottom tier of very low cost generic drugs which were not a burden for the insurers, to the highest tier with the most expensive drugs – specialty drugs. For the more expensive tiers, the insurers now use coinsurance – a percentage of the cost – instead of copays, so that the patient is paying much more of the costs of the drug. A coinsurance of 30% soon became the standard. The patient would pay $3000 toward a $10,000 drug, or maybe about $25,000 toward an $82,000 drug such as Sovaldi (for chronic hepatitis C).
This addressed to some degree the two concerns that the insurers had. For the very high costs of these drugs, either patients would be paying a very significant portion or they would simply not fill the prescription simply because it was unaffordable, in either case saving the insurer considerable costs.
The even more important problem for the insurers was that these seriously ill patients would continue to have very high health care costs. By assigning high coinsurance payments for specialty drugs, patients who were on them would go elsewhere for their insurance coverage when they found out that the coinsurance amount was unaffordable. Although the insurers are now prohibited from turning away anyone because of preexisting disorders, this was a deceptive, dishonest way of avoiding adverse selection – avoiding covering patients with more expensive disorders. Understandably, competing insurers are adopting the same coinsurance practices so they do not get stuck with the high cost patients. It is the patients who are on the losing end.
This has not gone unnoticed. Patients are being deprived of these specialty drugs. The government is now considering options on how to make these drugs more accessible for those who need them, including the option of imposing new regulations which the insurers would oppose.
In a single payer system dedicated to patient service, the prices of the drugs would be negotiated, and they would be made readily available to those who need them. But what is the response of the private insurance industry that operates under a business model rather than a service model – even though they know they are under a cloud of suspicion? Make the patient responsible for even more of the costs by increasing the coinsurance rates well above the 30% level, impairing further access to these drugs.
Look at the table above and you will see the percentage of plans that have moved beyond a 30% coinsurance in this year alone. Over 40% of benchmark-level silver plans now have a coinsurance rate of over 30%. Over 50% of the cheapest plans – the bronze plans that are more attractive to low-income individuals – now have coinsurance in excess of 30% – pricing these drugs totally out of the reach of the purchasers of these plans. Even the plans for the wealthy – the platinum plans – are not unaffected. Over one-fourth of them exceed a coinsurance of 30% – not likely to be well received by this group who thought they were buying the best. You would think that the insurers would tread lightly with this group that has significant political voice.
The solution is obvious. Dump the business model of the private insurers and replace it with our own patient service model – a single payer national health program. Then everyone would get the drugs they need.
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