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.
NBER Working Paper 22440
Demand Heterogeneity in Insurance Markets: Implications for Equity and Efficiency
By Michael Geruso
National Bureau of Economic Research, July 2016
In many markets insurers are barred from price discrimination on consumer characteristics like age, gender, and medical history. By themselves, such restrictions are known to exacerbate adverse selection problems. But the conventional wisdom — widely reflected in policy — is that with regulatory tools like premium subsidies, it is possible to address selection and induce efficient plan choices without price-discriminating. In this paper, I show why this conventional wisdom is wrong: As long as different sets of consumers (men and women, rich and poor, young and old) differ in their willingness-to-pay for insurance conditional on the losses they generate, then price discrimination across such groups is welfare-improving. The conventional wisdom is wrong because it implicitly assumes a one-to-one mapping from insurable risk to insurance valuation. I show that demand heterogeneity that breaks this one-to-one relationship is empirically relevant in a consumer health plan setting. Younger and older consumers and men and women reveal strikingly different demand for health insurance, conditional on their objective medical spending risk. This implies that these groups must face different prices in order to sort themselves efficiently across insurance contracts. The theoretical and empirical analysis highlights a previously unexplored, but fundamental, tradeoff between equity and efficiency that is unique to selection markets.
Individuals vary in their preference for insurance and willingness to pay for it. Michael Geruso explains that insurance pricing that takes preference into consideration is welfare-improving and thus efficient. Yet efforts to improve equity by compensating for price discrimination result in a tradeoff between equity and efficiency. Do we care?
What the majority of us want is a health care system that is accessible to all and funded equitably based on ability to pay. Using the analogy of the tradeoff between equity and efficiency, a system funded by progressive taxes would be highly equitable but might be terribly inefficient because wealthier individuals might not have a preference to pay higher taxes.
The efficiency that we actually want to see is greater value in our health care purchasing through eliminating much of the administrative waste that occurs in our dysfunctional financing system. The economist’s construct of efficiency as representing a measure of individual preference should be a negligible consideration when we have the ability to create a health care financing system that is equitable – fair – for everyone regardless of ideological preference.
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.
Exploring Single-Payer Alternatives for Health Care Reform
By Jodi L. Liu
Pardee RAND Graduate School Dissertation, May 2016
The Affordable Care Act (ACA) has reduced the number of uninsured and established new cost containment initiatives. However, interest in more comprehensive health care reform such as a single-payer system has persisted. Definitions of single-payer systems are heterogeneous, and estimates of the effects on spending vary. The objectives of this dissertation were to understand single-payer proposals and to estimate health care spending under single-payer alternatives in the United States.
Single-payer proposals are wide-ranging reform efforts spanning financing and delivery, but vary in the provisions. I modeled two sets of national scenarios – one labeled comprehensive and the other catastrophic – and compared insurance coverage and spending relative to the ACA in 2017. First, I estimated the effects of utilization and financing changes, and then I added the effects of “other savings and costs” relating to administration, drug and provider prices, and implementation.
Due to coverage of all legal residents and low cost sharing and prior to adjusting for other savings and costs, the comprehensive scenario increased national health care expenditures by $435 billion and federal expenditures by $1 trillion relative to the ACA. The range of the net effect of the other savings and costs in the literature was $1.5 trillion in savings to $140 billion in costs, with a mean estimate of $556 billion in savings. If this mean estimate was applied to the comprehensive scenario, national expenditures would be $121 billion lower but federal expenditures would still be $446 billion higher relative to the ACA. The catastrophic scenario also covered all legal residents but increased overall cost sharing, resulting in a reduction in national expenditures by $211 billion and federal expenditures by $40 billion even before adjusting for other savings and costs. Average household spending on health care in both sets of scenarios could be more progressive by income than spending under the ACA.
I also developed an interactive, web-based cost tool that allows the savings and cost assumptions to be adjusted by any user. As the debate on how to finance health care for all Americans continues, this study provides increased transparency about economic evaluations of health care reform.
Full Dissertation (Free download – 157 pages):
For her doctorate dissertation at Pardee RAND Graduate School, Jodi Liu has produced a superb paper on single payer reform. Single payer supporters will want to download this paper, and I’ll explain why.
There remains some confusion as to the precise definition of single payer, and she shows us why by presenting the variations in twenty-five specific proposals, including, of course, the Proposal of the Physicians’ Working Group for Single-Payer National Health Insurance – the 2003 version by Woolhandler, Himmelstein, et.al. Since PNHP supports a relatively precise, comprehensive model of single payer, many of the models she discusses we would not label as single payer, though we can see why others would (Vermont H 202 as an example). Because of this variation in design, it is difficult to state precisely what impact a generic single payer program would have. Each one is different.
She selects two sharply contrasting versions for specific analyses of health care spending: a comprehensive single payer proposal, the American Health Security Act (S 1782) of Sen Bernie Sanders and Rep Jim McDermott, and the Health-Insurance Solution, a “single payer” plan of catastrophic health insurance as proposed by Kip Hagopian and Dana Goldman. Although you can learn much on how not to design a single payer system from her analysis of the Hagopian/Goldman model, here we’ll mention only her findings on the Sanders/McDermott model since it is fairly similar to the PNHP proposal.
She first determines the increased spending that would occur by covering everyone with comprehensive benefits (actuarial value 98 percent). She then determines the effect of other savings and costs that are supported by published policy studies, such as the reduction in administrative waste and the greater value obtained through monopsonistic health care purchasing.
It will come as no surprise that her estimate of the mean net savings in national health expenditures would be about $121 billion under this proposal. The federal portion of spending would be about $446 billion higher than under ACA, but that is actually desirable because the proposed federal taxes would be more equitable that the fragmented funding system we have under ACA. She points out that the mean estimate of savings resulting from the other savings and costs according to the policy literature would be about $550 billion, but the range of the estimate would be between a savings of $1.5 trillion to increased costs of $114 billion. The wide variation in the interpretation of the policy literature explains to some extent the reason why various analysts have come up with very different results when analyzing single payer models.
People frequently ask what it would cost them if we had a single payer system, and they want to compare that to their current insurance premium. There are far too many variables to answer that without having a final markup of single payer legislation, plus most people do not realize how much they are paying for health care besides their insurance premiums and cost sharing, especially considering that over 60 percent of health care spending is paid through our tax system.
But people can get a good idea of average percent in personal savings by checking Figure C.2 in the Appendix of this paper. It shows that both the comprehensive base proposal (Sanders/McDermott) and the comprehensive alternative proposal (John Conyers HR 676) would provide significant savings for everyone except those over 1000 percent of the federal poverty level ($253,000 for a family of four).
Another great feature of this study is that the author has created an interactive Cost Tool which is “to improve the transparency of the estimates by disaggregating the effects and allow users to view, in real time, the results of adjusting the assumptions underlying the effects.” Although there still may be differences in opinions about the impact given to the various adjustments, it does bring us closer to understanding the overall financial impact of single payer reform. Although the Tool is not yet up on the Internet, in a personal communication Jodi Liu says that she hopes to have it available soon.
At any rate, this study shows once again that a well designed, comprehensive single payer system really would provide health care for everyone without increasing health care spending over the current level under ACA, based on the mean estimate of the financial impact of single payer.
So, again, download this paper now. It will be very helpful in your future advocacy for single payer.
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.
Some Seniors Surprised To Be Automatically Enrolled In Medicare Advantage Plans
By Susan Jaffe
Kaiser Health News, July 27, 2016
Only days after Judy Hanttula came home from the hospital after surgery last November, her doctor’s office called with bad news: Records showed that instead of traditional Medicare, she had a private Medicare Advantage plan, and her doctor and hospital were not in its network.
Neither the plan nor Medicare now would cover her medical costs. She owed $16,622.
After more than five hours making phone calls, she learned that because she’d had individual coverage through Blue Cross Blue Shield when she became eligible for Medicare, the company automatically signed her up for its own Medicare Advantage plan after notifying her in a letter. Hanttula said she ignored all mail from insurers because she had chosen traditional Medicare.
With Medicare’s specific approval, a health insurance company can enroll a member of its marketplace or other commercial plan into its Medicare Advantage coverage when that individual becomes eligible for Medicare. Called “seamless conversion,” the process requires the insurer to send a letter explaining the new coverage, which takes effect unless the member opts out within 60 days.
Medicare officials refused recently to name the companies that have sought or received such approval or even to say how long the Centers for Medicare & Medicaid Services has allowed the practice. Numerous insurers, including Cigna, Anthem and other Blue Cross Blue Shield subsidiaries, also declined to discuss whether they are automatically enrolling beneficiaries as they turn 65.
(David Lipschutz, a senior attorney at the Center for Medicare Advocacy) said giving beneficiaries the chance to opt out doesn’t adequately safeguard consumers. An insurer’s notification letter can easily be mistaken or overlooked in the deluge of marketing materials seniors receive.
“The right to opt out doesn’t exist if they didn’t get the notice or if they did get the notice but didn’t understand it,” he said.
We have provided numerous examples wherein CMS has provided the private Medicare Advantage plans with an unfair advantage over the traditional Medicare program, at a considerable cost to taxpayers. This is yet one more example. In a secretive process, CMS is allowing private insurers to automatically enroll their current clients in their Medicare Advantage plans without requiring them to opt in. Patients must understand what is happening and then take specific action to opt out if they would prefer to be enrolled in the traditional Medicare program.
The is one more step towards privatization of Medicare and the transition to a premium support program (voucher equivalent, with declining purchasing value over time). This is supported by anti-government conservatives and many neoliberals, but, worse, it is with the complicity of CMS.
Once we have a dominant market of competing private Medicare plans, the egalitarian nature of the Medicare program will have been irreparably damaged, and with it our hopes for an improved Medicare for all will have been dashed. The more complex the privatization of Medicare becomes, the greater the resistance to single payer since it “will not be feasible” to dismantle the administratively complex, expensive private health care financing system. So why is it now feasible for us to dismantle our efficient and less costly public Medicare program?
The feasibility argument of the privatizers is a con job. The longer we wait to move to single payer, the worse will be the transition.
Saving Money on Cardiac Care
By Peter R. Orszag
Bloomberg View, July 25, 2016
The federal government’s own actuaries are once again pessimistic that America’s health-care costs will continue their slow growth. Thankfully, their boss, Sylvia Burwell, the secretary of Health and Human Services, is working hard to prove them wrong.
A key driver of this Medicare spending deceleration has been the health-care market’s expectation that the payment system is shifting toward value-based payments — that is, paying doctors, hospitals and other providers based on how well they treat medical problems rather than on how many services they provide.
At this point, it’s crucial to fulfill the market’s expectations. If the system now fails to move quickly away from fee-for-service payments, many recent efficiency efforts are likely to be dropped.
A big question is how. The most promising, and practical, path forward is to set up a cascading array of “bundled payments” — that is, all-inclusive reimbursement for specific episodes of care.
The bundled payments must be mandatory, as is Medicare’s bundle for hip and knee surgery — itself an historic step. Making the shift voluntary for hospitals and doctors leads to watered-down incentives, in an attempt to encourage participation. And weak incentives lead to disappointing outcomes.
Which brings us to Secretary Burwell’s important announcement Monday. She is building on the hip and knee bundle, not only by expanding into other forms of orthopedics but, importantly, by introducing mandatory bundles in cardiac care.
Medicare will pay a set fee for coronary artery bypass grafts, a form of surgery that improves blood flow to the heart. The agency will also pay a set fee for the care involved in responding to a heart attack.
The Medicare actuaries may question whether these new bundles can save much money, but that’s not too surprising; they’ve been missing the boat on the changing dynamic in health-care payments for years.
The bundled payments illustrate how the system is changing for the good. Secretary Burwell has just made it vividly clear to everyone in health care that the days of paying for volume are ending.
Medicare doubles down on bundled payments
By Dan Diamond
Politico Pulse, July 26, 2016
With all eyes on the Democratic convention, CMS on Monday made a key move to secure the party’s signature health reform: It introduced its second bundled mandatory payment program, this one focused on cardiac care.
The bundled payment program is the latest big initiative in the Obamacare effort to bend the health cost curve. It’s also positioned to play a crucial role as the White House tries to tie 50 percent of Medicare payments to alternative care models by 2018. Liberal experts say they can’t get there with accountable care organizations and voluntary models alone, and that mandatory bundled payment programs are proven successes.
The decision to make both mandatory programs eligible as Advanced APMs under MACRA is intended to entice physicians to participate.
For veterans of the White House fight over Obamacare, Monday’s news felt like a valedictory. “Finally,” said Zeke Emanuel, who served as a White House aide and pushed for mandatory bundled payments to be included in the Affordable Care Act. (Cost controls like bundled payments were left out, in part, to minimize the law’s effect on the health care industry.) “I’m glad they drank my Kool-Aid.”
The bureaucrats are fixated on the meme that we can reduce spending by paying for the value of health care rather than the volume. They have been disappointed with models such as accountable care organizations, and they are now turning to MACRA and its alternative payment models (APMs), with a renewed surge of interest in bundled payments.
The concept behind bundled payments is that, by assigning a single fee to a given intervention such as a joint replacement, you will motivate physicians to not spend money on portions of the care that are not really necessary. Medicare, as the payer, gets the advantage of a discounted price, and the physicians and hospitals get to keep whatever they save beyond the discount.
Does this really reduce volume? The joint replacement will be done regardless, so what volume will be reduced? Doing only a cursory pre-op exam, missing the ejection murmur and omitting the pre-op cardiac consult? Send a patient home earlier when it is possible that the post-op status might not be fully stabilized? Cut back on rehabilitation, risking a less favorable long term outcome? These might reduce volume, but they certain bring into question quality and thus value.
Now they want to pay a set bundled payment for a heart attack. The clinical course of a heart attack is highly variable and could involve only a few or a great many interventions. Under a bundled payment, the physicians and hospital are bearing the risk of the high costs of a potentially complicated, protracted course. Isn’t it the role of the insurer, in this case Medicare, to pool risk? Shifting that risk to the health care delivery system creates the potential for either a reduction in important beneficial health care services, or exposing the delivery system to potential monetary losses and the risk of insolvency – neither of which are desirable.
Perhaps an even more important issue is the fallacy that you can bundle most care and thus make strides in bending the cost curve. Think of the current proposals to bundle coronary artery bypass grafts and to bundle care for a heart attack – one might work some of the time, but the other has outcomes that are too variable. Now think of other hospital admissions – such as workup of a protracted fever, diagnosis and management of an HIV positive patient who has symptoms of a potentially serious but undiagnosed complication, or perhaps a child with fatigue and weight loss. The costs and outcomes are highly variable. How can you bundle those? Or think of the multitude of patients presenting in a ten minute office visit with a set of complex clinical symptoms that would require extensive workups. How do you bundle those?
To get to the goal of fifty percent of Medicare payments being tied to APMs, you are going to have to figure how how to bundle the large numbers of common clinical presentations, like the sore throat that turns out to be due to acute leukemia, or the routine family planning visit in a patient who feels ill that day and turns out to have diabetic ketoacidosis, or the chronic headache patient who has a focal motor seizure in front of you during the visit. What would otherwise be routine medical visits are often not bundable but are better handled on a fee-for-service basis. That makes the point that most health care is provided in a relatively fixed volume. It is really difficult to reduce the volume for patients who actually need care, and that’s almost all patients. Besides, in most instances we really don’t know how to measure value and convert that into a fixed fee. Volume is relatively fixed, and value is what we all strive for anyway.
Peter Orzag and Ezekiel Emanuel don’t listen to others, not even the Medicare actuaries, but they should be able to figure out these obvious fundamentals. Since they haven’t, maybe it’s them who have been drinking Zeke’s Kool-Aid.
Since it’s really cost that they are concerned about we should move forward with reform that has been proven repeatedly to slow the rate of health care inflation – a single payer national health program. Peter and Zeke need to abandon their false meme that single payer is “not feasible.” What isn’t feasible is expecting to fix our dysfunctional health care financing system with “bundled payments.”
Pricey Drugs Overwhelm Medicare Safeguard
By Ricardo Alonso-Zaldivar
Associated Press, July 25, 2016
A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.
The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary.
Medicare’s catastrophic coverage was originally designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.
Lawmakers who created Part D in 2003 also hoped added protection would entice insurers to participate in the program. Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most expensive patients.
Concerns about catastrophic costs undercut the image of Medicare’s prescription program as a competitive marketplace in which private insurers bargain with drugmakers to drive down prices.
“The incentive is to price it as high as they can,” said Jim Yocum, senior vice president of Connecture, Inc., a company that tracks drug prices. Medicare is barred from negotiating prices, “so you max out your pricing and most of that risk is covered by the federal government.”
When the Medicare Part D program covering drugs was designed, conservatives were in control of the government. As a result it was decided that the ideology of competition in the marketplace should be used to improve value rather than using government administered pricing. Today’s message demonstrates once again that markets do not work in health care.
Congress knew that they would have to protect the private insurers from adverse selection – that patients with multiple chronic conditions could place an extra burden on the insurers with whom they enrolled. Thus they established catastrophic coverage with the government (taxpayers) paying 80 percent of the costs over a given threshold. This was not to protect the patients, but rather it was to protect the insurers. That is, it was not to protect the taxpayers who finance much of the program, but rather it was to protect the participants in the marketplace – the drug manufacturers, insurers, and pharmacy benefit managers – using our taxpayer funds.
Under the catastrophic coverage, insurers pay 15 percent, patients pay 5 percent, and the taxpayers pay 80 percent. This allows the drug companies to drive their prices sky high. The 15 percent paid by the insurers is closer to the reasonable price of drugs and so they have less incentive to negotiate better prices, since most of it is being paid by the government anyway. The 5 percent paid by the patient is accepted as a necessary “skin in the game” contribution so patients will not fill prescriptions that they allegedly “do not really need” (a flawed policy concept). The 80 percent paid by taxpayers perpetuates the highly dysfunctional, fragmented financing system in the U.S. – using government money for private solutions – that has driven our health care spending up to levels much higher than all other nations.
The magic of the marketplace in health care is a fraud. Taxpayers pay far less for drugs purchased by the government for Medicaid and the VA system. Other nations with greater government oversight of their health care systems also pay much less.
With a well designed single payer national health program, our nation’s pharmacy bill would be fair, and everyone would get the drugs they need. With the price of many drugs now exceeding median household income, you would think there would be a demand to fix our health care financing system. You would think so, but where’s the action?
It is a common misperception that the U. S. has the best health care in the world, another example of “American exceptionalism.” By constant repetition over many years, this myth has become a meme, a part of our language without regard to its merit. It is assumed by many that our rapid adoption of high technology and high spending on health care must bring us the best health care. However, as Drs. Elliott Fisher and Gilbert Welch of the Center for the Evaluative Clinical Sciences at Dartmouth Medical School pointed out early on, there are diminishing returns to many of these technological “advances”. (1)
Lewis Thomas, a leading analyst of medical progress, saw this coming as early as 1975 when he described these three useful ways of looking at medical technologies:
Unfortunately, most of our technological advances are of the halfway non-curative type. Since they are often overused at great expense, this presents society a challenging task to manage their adoption in a cost-effective way.
How More Technology Does NOT Bring Us Better Health Care
These are some of the factors that undermine the quality of care in our profit-driven corporatized health care system:
Although many technological advances have been of great benefit to individual patients and society, such as replacement of hips and knees, coronary bypass surgery, and cataract surgery with prescription intra-ocular lens replacement, there are downsides to the rapid adoption of new technologies as well.
Despite our emphasis on technology, comparative studies of eleven health care systems around the world show how poorly we rank in terms of access and quality of care. (Table1) (7)
Can Health Care Technologies Be Managed in the Public Interest?
We have to ask why we haven’t been more effective over the years in evaluating and regulating the adoption and use of medical technologies. The answer, not surprisingly, is the economic and political power of corporate stakeholders in our market-based system. Two national organizations were established by Congress in the 1970s—the Office of Technology Assessment (OTA) in 1975 and the National Center for Health Care Technology (NCHCT) in 1978. Both were later abolished after a strong backlash from vested interests, especially the medical device industry and several professional medical societies. (8-10)
The FDA, as our major regulator for evaluation and approval of new health care technologies, has long been handcuffed by political forces preventing comparative evaluations of competing technologies based on required evidence for positive long-term outcomes. It has been underfunded, lacks sufficient authority, and is dependent on the industries it attempts to regulate through recurrent authorizations of user fees—a fox in the henhouse situation. There are many conflicts of interest among reviewers on its panels, and it is not permitted to use cost-effectiveness in its approval process. Health care industries collectively spent $489 million on lobbying in 2014, about one-half of which was spent by the drug industry in its ongoing effort to gain more rapid FDA approval based on weaker evidence. (11) As just one example, the FDA allowed expanded marketing of off-label cancer drugs in 2009 despite the lack of clinical evidence of their effectiveness. (12)
These problems can be fixed when we come to understand their adverse impacts on patients, families and taxpayers, develop the political will to confront the power of corporate interests in the status quo, and enact legislation for universal access through single-payer national health insurance, together with a stronger science-based regulatory system free from lobbying and political interference.
John Geyman, M.D. is the author of The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans
Fisher, ES, Welch, HG. Avoiding the unintended consequences of growth in medical care: How might more be worse? JAMA 281: 446-453, 1999.
Thomas, L. The Lives of a Cell: Notes from a Biology Watcher. New York. Bantam Books, 1975.
Brenner, DJ, Hall, EJ. Computed tomography—an increasing source of radiation exposure. N Engl J Med 357: 2277-2285, 2007.
Jensen, MC, Brant-Zaawadzki, MN, Obuchowski, N et al. Magnetic resonance imaging of the lumbar spine in people without back pain. N Engl J Med 331: 669-673, 1994.
Alemzadeh, H, Iyer, RK, Kalbarczyk, Z et al. Adverse events in robotic surgery; a retrospective study of 14 years of FDA data. Cornell University Library, July 21, 2015.
Thompson, D. FDA warns against procedure for uterine fibroids, hysterectomy. CBS News, April 18, 2014.
U. S. health system ranks last among eleven countries on measures of access, equity, quality, efficiency and healthy lives. New York. The Commonwealth Fund, June 16, 2014.
Perry, S. The brief life of the National Center for Health Care Technology. N Engl J Med 307: 1095-1100, 1982.
Mervis, J. Technology assessment faces ax. Science 266: 1636, 1994.
Leary, RL. Congress’s science agency prepares to close its doors. New York Times, September 24, 1995.
Demko, P. Healthcare’s hired hands: When the stakes rise in Washington, healthcare interests seek well-connected lobbying firms. Modern Healthcare, October 6, 2014.
Abelson, R, Pollack, A. Medicare widens drugs it accepts for cancer care: More off-label uses. New York Times, January 27, 2009.
By Joanna Haugen, Jordan Rosenfeld
Medical Economics, July 25, 2016
The Affordable Care Act (ACA) has been a lightning rod for criticism from various healthcare stakeholders, including physicians, since the law’s passage six years ago.
With the upcoming presidential election likely to alter the landscape of “Obamacare”—from simple tweaks by Democrats to outright attempted repeal by Republicans—Medical Economics asked healthcare policy experts and our readers to debate the law’s effect on U.S. physicians.
Our editorial staff, with the assistance of our physician advisers, selected eight provisions and consequences (both intentional and unintentional) stemming from the law. Policy analysts provided their thoughts on how Obamacare has shaped the last six years. Then we asked physicians from our editorial advisory board, our 200-member Reader Reactor Panel (comprised of physician readers nationwide who help direct our content), and our e-newsletter subscribers to grade the various elements based on their own experiences. Each physician ranked each element in terms of how it assisted their day-to-day work as physicians on a score from 0 (not at all) to 10 (extremely helpful). The average of all respondents was used to derive the letter grade. Physicians also offered short justifications for their ranking.
Medicare bonus for primary care physicians
Grade: 33 = F
Grade: 34 = F
Increased coverage through healthcare insurance exchanges
Grade: 35 = F
Grade: 29 = F
Accountable care organizations
Grade: 29 = F
Grade: 28 = F
Physician ratings via the Physician Compare website
Grade: 26 = F
Expansion of health IT
Grade: 31 = F
Celebrations of the success of the Affordable Care Act have to be tempered by the knowledge that it leaves too many uninsured, that health care is still not affordable for far too many, and that the benefits of tighter insurance regulation were largely offset by the insurance design changes of excessive cost sharing and restrictive narrow networks. One other goal was to improve payment systems so that patients would receive greater quality at lower costs. So what do physicians think about the implementation and effectiveness of the design changes in the payment system?
In this survey, physicians gave a grade of F to all eight of the design features evaluated. In trying to improve payment systems, the legislators and bureaucrats have certainly botched things up. Not only have they failed to achieve any improvement, they have made things worse. Not only that, they have compounded physician burnout, now affecting over half of all physicians. Having an unhappy physician negatively impacts patient care.
Much blame can be attributed to the focus of the policy community and the MBAs that guide them. Medicine is about taking care of patients, but the policy community approaches it as a business that can be improved by incentives.
Would a single payer system fix this? It would provide a more equitable, efficient and effective financing system, but it would still be subject the whims of legislators and bureaucrats who do not seem to appreciate the sanctity of the physician-patient relationship. Once we have in place a national single payer system, our work is not done.
Obamacare’s Other Success, Under Threat
By Editorial Board
Bloomberg View, July 20, 2016
Obamacare has made great strides toward its signature goal: to reduce the number of Americans without health insurance. Unfortunately, another important goal — ensuring that everyone’s insurance policy provides adequate coverage — remains under siege in the courts and Congress.
Before the Affordable Care Act, private health insurers were free to exclude coverage for all sorts of care.
Moreover, if anyone’s medical expenses grew too high, insurers could cut them off. A serious or complicated illness or injury could leave people essentially uninsured.
Obamacare changed things by establishing 10 categories of benefits that most insurance plans must cover — including hospitalization, prescription drugs, laboratory services and mental health care — and prohibiting annual or lifetime limits on those benefits.
This month, however, a federal appeals court ruled that people can buy plans with far more limited coverage. Yet those who buy such plans risk being surprised twice — first when they’re saddled with the tax penalty for not carrying adequate insurance, and then when they need care and find their coverage doesn’t go as far as they thought.
Republicans in Congress have likewise targeted Obamacare’s minimum coverage requirements, arguing that consumers, not the government, should determine what services they want insurers to provide.
The majority of Americans believe that everyone should have the health care that they need when they need it, and that we need a financing system that will pay for it. Others believe that they should take care of their own health care needs and not be required to pay into a risk pool that covers the health care of others. So should the health insurance system provide comprehensive coverage for all, or should it allow individuals to purchase coverage for only those benefits they perceive they might need?“As a man, why should I have to pay for maternity benefits I’ll never use?” “As a woman, why should I have to pay for treatment of prostate cancer – a disease that I’ll never have?” “I take good care of myself; why should I have to pay for care of disorders of others due to their smoking, illicit drug use, reckless driving, sexual promiscuity or whatever?” “I’m healthy so why can’t I wait until I will likely need health care instead of wasting money on insurance now?”
“I want to take care of myself by buying only the insurance I need now, and everyone else can buy whatever they feel they need.” But what about that unexpected disorder that racks up medical bills of $350,000? “Well, I didn’t mean that. Nobody can pay those bills, so the government should pay it instead.”
So we’re divided between “we’re all in this together” and “I’ll take care of myself, and you’re on your own.” But medical care doesn’t work that way. The twenty percent of people who use eighty percent of health care are reliant on pooled funds to pay for their health care. Most of the eighty percent who are relatively healthy will someday shift into the high health care needs group and likewise also be dependent on pooled funds.
Although the Affordable Care Act was a step forward in pooling health care risk, there is a campaign to move us in the other direction. An effort to shut down inadequate plans was reversed by the Supreme Court, even though those plans will unfairly shift costs to others when they do not adequately cover expensive diseases and injuries. Also many politicians want to ensure that people will be able to “buy only the insurance they need” through gimmicks such as private insurance exchanges offering the choice of low benefit plans, purchases out of state to avoid regulatory oversight of insurers, reliance on health savings accounts — usually underfunded, etc.
As a group, those individuals who want to take care of themselves include many individuals who will have high medical expenses. Whatever way they set funds aside – spartan insurance plans, health savings accounts, personal savings – collectively they will not have enough funds set aside to pay for the expensive care some members of their group will need. Besides, they have fragmented much of their funds such that only a limited amount would be available for others, largely through catastrophic plans that have intolerably high deductibles. Whereas those of us who support universal pooling of risk would cover our costs equitably, those who are on their own will dump costs onto the rest of us through taxes we pay for public programs or through higher medical bills due to shifting to us the costs of care provided to those who do not pay their bills.
When people sign up for Medicare, they do not ask for only the Medicare that they need. They expect that they will get essentially the same Medicare that everyone else has (though some may receive similar benefits through the private Medicare Advantage plans). It should be that way not for just Medicare beneficiaries, but for everyone. We should improve Medicare and then make it universal. That will satisfy the majority of us who believe that we are all in this together, and for those who want to be on their own, they will accept the benefits of a Medicare for all program just as they now accept Medicare in their retirement years. Also, they will have paid in their equitable share, based on ability, just like the rest of us.
Covered California Health Plan Rates To Jump 13.2 Percent In 2017
By Chad Terhune and Pauline Bartolone
Kaiser Health News, July 19, 2016
California’s Obamacare premiums will jump 13.2 percent on average next year, a sharp increase that is likely to reverberate nationwide in an election year.
The Covered California exchange had won plaudits by negotiating 4 percent average rate increases in its first two years. But that feat couldn’t be repeated for 2017, as overall medical costs continue to climb and two federal programs that help insurers with expensive claims are set to expire this year.
Some health-policy experts were surprised by the magnitude of the increase in California. Others said it was inevitable the rates would catch up to the rest of the country after insurers determined their coverage had been priced too low.
Blue Shield of California said its premiums were going up 19.9 percent, the highest statewide increase. Anthem Inc., the nation’s second largest health insurer, said it had an average increase of 17.2 percent in its Covered California plans. HMO giant Kaiser Permanente, in contrast, posted an average increase of 6 percent.
“While these rates hikes aren’t as bad as the annual double-digit increases before the Affordable Care Act, that’s not much comfort to consumers who don’t see their paychecks increase by the same percentage,” said Anthony Wright, executive director of Health Access, a consumer advocacy group.
These rate increases apply to people who purchase their own coverage in the individual market, not the majority of Americans who get their health insurance through work or government programs such as Medicare and Medicaid.
California has been a leader in establishing and implementing the health insurance exchanges authorized by the Affordable Care Act. Although they did hold down premium rate increases in the first two years to 4 percent (still above the rate of inflation), the higher costs of health care have caught up with them. That requires an average of a 13.2 percent premium increase for the next year (though other regulatory and market factors cause greater year to year fluctuation in the premiums). What does this mean for those enrolled in those plans and for the rest of us who obtain our health care coverage elsewhere?
Some of those enrolled in the Covered California plans will find the premium increases to be beyond their means. Many of them will be able to shop for plans with lower premiums, but they will likely have to pay higher deductibles, though those who are eligible for government subsidies may find that the burden is not too great. In changing plans, many will have to disrupt their current care since their new plans will have different provider networks. The effort to make the insurance premiums more affordable clearly has detrimental effects in physician choice and affordability of actual access to health care.
In California those people purchasing plans in the individual market will have very similar experiences except that they are not eligible for government subsidies that could reduce the impact of the premium increases.
The employee contribution to employer-sponsored plans has been more stable, although that is beginning to change. Starbucks is the latest of employers who are using private insurance exchanges in which the employees use a voucher or equivalent to purchase their plans. The impact will be very similar to the ACA exchanges – less choice in health care providers and greater out-of-pocket costs merely because eventually the voucher will not be enough to cover plans with wider networks and less cost sharing.
Even Medicare may eventually be impacted. The push to private Medicare Advantage plans is succeeding because of government overpayment to these plans. The conservative and neoliberal coalition is advocating for the establishment of a voucher program for private Medicare plans (premium support), crowding out the traditional Medicare program.
Politicians will likely respond to inevitable protests of intolerable increases in the beneficiaries’ portion of the Medicare premium by allowing insurer innovations in coverage that will reduce the premiums. We already know what some of these will be: larger deductibles and other cost sharing, narrower provider networks, or intrusive prior authorization designed to limit access to expensive drug products and procedures. But this will be nothing compared to what the insurance industry will likely do once it is granted a free rein to innovate. It’s in the DNA of this industry.
ACA supporters are assuring us that we don’t have to worry about these high premium increases in the exchange plans because patients are free to shop for cheaper plans. But they have left out the rest of the story.
NHS – on life support
By Alex Scott-Samuel
Politics of Health Group POHG Blog, July 17, 2016
I want to give a broad political overview of what’s happening in the NHS in England and of the background to the current situation.
As you’ll know, the English NHS is in a bad way, with practically every part of the country in financial deficit. Many hospitals and many services are being closed down, cut back or rationed. At the same time, many long term contracts for the provision of NHS services are being awarded to private sector companies – though often people are unaware of this because the likes of Virgin, Carillion and SpecSavers are allowed to operate under the NHS logo.
By definition, these arrangements are wasteful, because private companies have a duty to make profits and to give those profits to their shareholders. That means that public money is haemorrhaging out of the NHS – whereas when a public provider of NHS services makes a surplus it is reinvested in the NHS.
There is also a substantial legacy of (mainly Labour initiated) private finance initiative (PFI) funded hospitals, whose exorbitant loan interest payments have to be made before NHS funds can be spent on routine services. And it’s no coincidence that people’s inboxes are filling up with adverts for health insurance, with their invitations to jump the NHS queues. Everything I’ve described forms part of what in my view is an intentional strategy by the Conservative government to create financial, managerial, professional and public chaos throughout the NHS, so that private provision of NHS services, alternative private health services, health insurance, and NHS co-payments and ultimately charges will be seen as inevitable.
This ‘cultural revolution’ takes many different and apparently unrelated forms whose destructive nature is denied by the government – which continues to assert that it has the public interest at heart and that it is factors like the ongoing impact of the credit crash, the increasing costs of drugs and medical equipment, the ageing population and our unhealthy lifestyles which are the true problems facing the NHS. The building blocks for privatisation to which I have referred currently include: the aforementioned awarding of NHS contracts to private bidders – often asset strippers who provide poor quality services, fragment and undermine the cohesive public ethos of the NHS; the creation by the Treasury of NHS deficits and of regulations which forbid them; enforced rationing of services to extend waiting lists and encourage patients to seek private alternatives; manufactured confrontations with doctors and other members of the NHS workforce; the imposition of ‘new models of care’ which undermine NHS hospitals and create community based healthcare structures ripe for privatisation; personal health budgets, designed to link with health insurance. There are many more and I can provide documented evidence for all of them. It is a national scandal.
What is to be done? Until we have a government committed to tackling and reversing this appalling onslaught on our beloved NHS, we must continue to expose what is happening, to challenge it and to campaign loudly and widely in order to increase public awareness and action.
The phased privatization of England’s National Health Service is taking a toll in undermining “the cohesive public ethos of the NHS.” This brief description by Dr. Alex Scott-Samuel will give you a hint of the disaster that is taking place. Their political leaders apparently have learned nothing from the dysfunction that characterizes our system in the U.S., nor are we learning anything from them.
At a time that we need to be converting our fragmented public and private insurance system into a single public program, we are going in the opposite direction. Our public Medicare program is being privatized through similar cognitive processes as are taking place in England.
Just as the Conservative and Labor parties have conspired in these changes, here in the U.S. the Republicans and Democrats, the latter now dominated by the neoliberals, are damaging the traditional Medicare program through neglect while pushing on with fiscal and regulatory policies that have expanded enrollment in the private Medicare Advantage plans. When you read the paragraph above on the “cultural revolution” you cannot help but note the similar ethic of the two nations driving this insane march to rent-seekers nirvana at a cost of compromising patient care.
We can learn something from this, can’t we?
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