How US health care reform will affect employee benefits

By Shubham Singhal, Jeris Stueland, and Drew Ungerman
McKinsey Quarterly, June 2011

US health care reform sets in motion the largest change in employer-provided health benefits in the post–World War II era. While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits following the 2010 passage of the Affordable Care Act.

Many of the law’s relevant provisions take effect in 2014. Our research suggests that when employers become more aware of the new economic and social incentives embedded in the law and of the option to restructure benefits beyond dropping or keeping them, many will make dramatic changes. The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.

Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.

Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.

A transformed employer market

Health care reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation. The new law guarantees the right to health insurance regardless of an individual’s medical status. In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market. Reform preserves the corporate tax advantages associated with offering health benefits—except for high-premium “Cadillac” insurance plans.

Starting in 2014, people who are not offered affordable health insurance coverage by their employers will receive income-indexed premium and out-of-pocket cost-sharing subsidies. The highest subsidies will be offered to the lowest-income workers. That reduces the social-equity advantage of employer-sponsored insurance, by enabling these workers to obtain coverage they could not afford on today’s individual market. It also significantly increases the availability of substitutes for employer coverage. As a result, whether to offer ESI after 2014 becomes mostly a business decision.

What the law says

Reform requires all employers with more than 50 employees to offer health benefits to every full-timer or to pay a penalty of $2,000 per worker (less the first 30). The benefits must provide a reasonable level of health coverage, and (except for grandfathered plans) employers will no longer be able to offer better benefits to their highly compensated executives than to their hourly employees. These requirements will increase medical costs for many companies. It’s important to note that the penalty for not offering coverage is set significantly below these costs.

The subsidies will cap the amount lower- and middle-income individuals and families will have to spend on health coverage, to 9.5 percent of household income for those at 400 percent of the federal poverty level and less for those at lower income levels. The subsidies will keep the cost of insurance coverage from the exchanges below what many employees now pay toward employer-sponsored coverage, especially for those whose earnings are less than 200 percent of the federal poverty level.

A bigger effect than expected

As we have seen, a Congressional Budget Office report estimated that only 9 million to 10 million people, or about 7 percent of employees, currently covered by ESI would have to switch to subsidized exchange policies in 2014. Most surveys of employers likewise show relatively low interest in shifting employees from traditional ESI.

Our survey found, however, that 45 to 50 percent of employers say they will definitely or probably pursue alternatives to ESI in the years after 2014. Those alternatives include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certain employees. More than 30 percent of employers overall, and 28 percent of large ones, say they will definitely or probably drop coverage after 2014.

Our survey shows significantly more interest in alternatives to ESI than other sources do, for several reasons. Interest in these alternatives rises with increasing awareness of reform, and our survey educated respondents about its implications for their companies and employees before they were asked about post-2014 strategies. The propensity of employers to make big changes to ESI increases with awareness largely because shifting away will be economically rational not only for many of them but also for their lower-income employees, given the law’s incentives.

https://www.mckinseyquarterly.com/How_US_health_care_reform_will_affect_employee_benefits_2813

And…

Getting Insurance at Work

Posted by Nancy-Ann DeParle
The White House Blog, June 8, 2011

You might have seen reports about a study from McKinsey and Company claiming that a significant number of employers will stop offering insurance to their workers in 2014. Unfortunately, the study misses some key points and doesn’t provide the complete picture about how the Affordable Care Act will strengthen the health care system and make it easier for employers to offer high quality coverage to their employees.

The McKinsey Study is an Outlier

The Rand Corporation: “The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges.”

The Urban Institute: “Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. A new study finds that overall ESI coverage under the ACA would not differ significantly from what coverage would be without reform.”

Mercer: “In a survey released today by consulting firm Mercer, employers were asked how likely they are to get out of the business of providing health care once state-run insurance exchanges become operational in 2014 and make it easier for individuals to buy coverage. For the great majority, the answer was ‘not likely.'”

The Bottom Line

A central goal of the Affordable Care Act is to reduce the cost of providing health insurance and make it easier for employers to offer coverage to their workers. We have implemented the law at every step of the way to minimize disruption and maximize affordability for businesses, workers, and families.  And we agree with experts who project that employers will continue to offer high quality benefits to their workers under the new law.  This one discordant study should be taken with a grain of salt.

(Nancy-Ann DeParle is the Assistant to the President and Deputy Chief of Staff.)

http://www.whitehouse.gov/blog/2011/06/08/getting-insurance-work

Republicans contend that this new McKinsey study shows that the provisions of the Affordable Care Act (ACA) will cause a massive transfer of employee health coverage from employer-subsidized plans to new government-subsidized plans that will be made available through the state insurance exchanges. Democrats contend that the ACA program design will prevent this shift. This either/or debate misses the point. The massive shift to government-subsidized private plans will occur under ACA. The uncertainty is only in how fast that will be.

This discussion is important because one of the main strategies was to establish policies that would ensure the perpetuation of the employer role in funding health care, thereby avoiding the necessity of infusing yet more taxpayer funds into health care. Ultimately, a taxpayer-financed system would be more equitable and efficient, but, until we have that, the employer funds are an important transitional resource to help fund our health care.

As the financing responsibility shifts more to the government, there is also a responsibility for the government to demand greater value in its health care purchasing. That will be difficult under ACA since a government-managed exchange of private health plans does not provide effective means of eliminating the administrative and clinical waste that typifies our dysfunctional U.S. system of financing health care.

The rate of employer-sponsored coverage continues to decline. The quality of employer-sponsored health plans continues to deteriorate as more and more costs are shifted to employees, making the plans less desirable. The opportunity offered to employers by the safety-valve of the state insurance exchanges will cause an acceleration in the decline of employer-sponsored coverage as employers realize that shifting to a government-financed program simply represents a wise business decision for them.

Once the government is stuck with the bill for these private exchange plans, maybe the light will finally go on. Why are we paying so much for these inadequate and wasteful plans when we could have a more efficient and effective program with better benefits – a single payer national health program? Fortunately, the emergence of this epiphany will not be a matter of whether, but how soon.

Barbara Starfield

Posted by on Monday, Jun 13, 2011

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.

Barbara Starfield, M.D., Focuses on Primary Care and Health Care Reform

By James Arvantes
American Academy of Family Physicians, September 2, 2009

Barbara Starfield, M.D., M.P.H., is a renowned researcher, scholar and author. A distinguished professor with appointments in the departments of Health Policy and Management and Pediatrics at the Johns Hopkins University Bloomberg School of Public Health and School of Medicine in Baltimore, she is known throughout the world for her work in demonstrating the value of primary care.

Starfield, who also is the director of the Johns Hopkins University Primary Care Policy Center, has repeatedly presented evidence demonstrating how primary care can enhance health care access, improve quality and outcomes, and reduce costs. Her efforts have served to strengthen and solidify the argument for a primary care-based health care system in this country.

Q. What, in your view, is wrong with our current health care system?

A. The thing that is wrong with our current health care system is that it is not designed to produce the best effectiveness, efficiency and equity in health services because it is too focused on things that are unnecessary and of high cost rather than arranging services so that the most needed services are provided when needed and with high quality.

Q. Why is that the case?

A. It is the case because the country has not put sufficient emphasis during the past 50 years on a good infrastructure of primary care. Primary care everywhere in the world is most of the care, for most of the people, most of the time. We have done a reasonably good job at making (sub)specialty care available, but a lot of (sub)specialty care is not necessary if you have good primary care. So we end up with a very expensive system that does things unnecessarily. If we followed what the evidence shows, we could do a whole lot better with a much better infrastructure of what we call primary health care.

Q. What must health care reform accomplish for it to be successful?

A. For health care reform to be successful, the system must focus on providing more primary care to more people. We know exactly what we mean when we say primary care. It is not just having a family physician or internist. It is providing services that achieve four functions. First of all, care has to be accessible, and we know that our care is not very accessible compared to countries that do much better than we do on health.

Second, care has to be person-focused over time. Now, instead of focusing care on meeting peoples’ needs, professionals define the needs — usually in terms of having a specific disease — and then forget about the people while dealing with the disease. We know from evidence that if you don’t deal with people’s problems, people are much less likely to get better. We are focusing on diseases that are professionally defined needs. We are not focusing on people-defined needs. Unless we address people-defined needs, we are not going to get good health outcomes.

The third characteristic is comprehensiveness. Instead of referring so much unnecessarily to (sub)specialists, we have to reserve (sub)specialist care for things that (sub)specialists are really needed for — the less common and complicated things — and take much better and more care of most health needs within a primary care setting.

The fourth characteristic is coordination. People have to go elsewhere for (sub)specialized services every now and then and that is good care, not bad care. When they do go, the care they receive elsewhere has to be coordinated with their ongoing care.

We know exactly what primary care is, we know exactly why systems organized around it do a better job. It is not a secret, it is not rocket science, but we don’t do it.

Q. If this obvious, why isn’t it done?

A. It is not done because there are enormous numbers of people and organizations who profit from the way health care is organized now. A lot of health policy is explicitly made by medical academia. Medical academia and teaching hospitals decide what to teach, and that is often not what the needs are in the community. Most graduates leave their training thinking that the biggest needs in the population are complicated diseases. They don’t appreciate the way problems present in the community, and they really don’t know how to deal with them because they have been trained in institutions that focus on relatively unusual problems. We are not doing a good job of training a cadre of professionals to provide the infrastructure for health services.

In addition, powerful, vested interests are keeping the system the way it is, and … they don’t want to change the system because they believe they have too much to lose. As health needs change in populations, providers should be changing to adapt their mission to the new realities of disease management and health promotion.

http://www.aafp.org/online/en/home/publications/news/news-now/professional-issues/20090902starfield-q-a.html

And…

Email
June 12, 2011

Dear colleagues,

I have very sad news. Barbara Starfield, professor of Health Policy and Management, died Friday evening of an apparent heart attack while swimming — an activity that she dearly loved.

Our School has lost one of its great leaders. Barbara was a giant in the field of primary care and health policy who mentored many of us. Her work led to the development of important methodological tools for assessing diagnosed morbidity burden and had worldwide impact. She was steadfast in her belief that a quality primary care system is critical to the future of health care in this country and worldwide and received numerous accolades for her work in this important area…

Michael J. Klag, MD, MPH
Dean, Johns Hopkins Bloomberg School of Public Health

Barbara Starfield made a difference. The momentum she created is so intense that it cannot be broken, but will carry us forward until we finally bring to reality our dream of a high-performance health care system based on a patient-oriented primary care infrastructure. We’ll all be better off for her efforts.

N.Y. Times misreads Massachusetts health reform

Posted by on Thursday, Jun 9, 2011

The following letter was submitted to The New York Times on May 25. Although the Times did not publish it, the comments of the writer, a Massachusetts neurologist, will undoubtedly be of interest to PNHP members and the general public. Hence its publication here.

Not So True on Massachusetts

Your editorial proclaiming the success of the Massachusetts health care reform (“Health reform in Massachusetts,” May 21) is off the mark. The U.S. Census Bureau, the Massachusetts Health Reform Survey and the Massachusetts Department of Revenue find that the number of uninsured has fallen by only about half, to around 5 percent.

This modest result has not been achieved with “minimal fiscal strain.” The reform has been propped up by the infusion of federal dollars and use of the state’s “rainy day funds.” The state has had to cut some Medicaid benefits, allow further cost-shifting onto patients to keep premiums down, and shift some legal immigrants off the state subsidized insurance into an inadequate, but cheaper, for-profit plan.

The reform has done much more to increase access to insurance than to increase access to care. This may explain the Harvard School of Public Health poll finding that among those actually affected by the reform, more believed the reform had hurt than helped the uninsured.

As you acknowledge, the reform has done nothing to address health care costs, which continue to escalate at alarming rates. Although the governor’s hope that accountable care organizations and other payment reforms will solve this problem, this is based more on faith than solid policy evidence.

As a physician who cares for some of the Massachusetts residents who remain without insurance, I see the needless suffering that persists here. I struggle to provide care in a fragmented system in which access is dictated by the financial interests of competing insurers. I want better for our nation. Single-payer health care reform, with truly universal coverage and proven mechanisms to control costs, is our best hope.

Dr. Rachel Nardin

Chief, Division of Neurology, Cambridge Health Alliance; Assistant Professor of Neurology, Harvard Medical School

What? Increased Medicare spending improves health status?

Posted by on Friday, Jun 3, 2011

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.

Medical Spending and the Health of the Elderly

By Jack Hadley, Timothy Waidmann, Stephen Zuckerman, Robert A. Berenson
HSR, May 24, 2011

Abstract

Objective. To estimate the relationship between variations in medical spending and health outcomes of the elderly.

Data Sources. 1992–2002 Medicare Current Beneficiary Surveys.

Study Design. We used instrumental variable (IV) estimation to identify the relationships between alternative measures of elderly Medicare beneficiaries’ medical spending over a 3-year observation period and health status, measured by the Health and Activity Limitation Index (HALex) and survival status at the end of the 3 years. We used the Dartmouth Atlas End-of-Life Expenditure Index defined for hospital referral regions in 1996 as the exogenous identifying variable to construct the IVs for medical spending.

Data Collection/Extraction Methods. The analysis sample includes 17,438 elderly (age >64) beneficiaries who entered the Medicare Current Beneficiary Survey in the fall of each year from 1991 to 1999, were not institutionalized at baseline, stayed in fee-for-service Medicare for the entire observation period, and survived for at least 2 years. Measures of baseline health were constructed from information obtained in the fall of the year the person entered the survey, and changes in health were from subsequent interviews over the entire observation period. Medicare and total medical spending were constructed from Medicare claims and self-reports of other spending over the entire observation period.

Principal Findings. IV estimation results in a positive and statistically significant relationship between medical spending and better health: 10 percent greater medical spending over the prior 3 years (mean=U.S.$2,709) is associated with a 1.9 percent larger HALex value (p=.045; range 1.2–2.2 percent depending on medical spending measure) and a 1.5 percent greater survival probability (p=.039; range 1.2–1.7 percent).

Conclusions. On average, greater medical spending is associated with better health status of Medicare beneficiaries, implying that across-the-board reductions in Medicare spending may result in poorer health for some beneficiaries.

http://onlinelibrary.wiley.com/doi/10.1111/j.1475-6773.2011.01276.x/abstract;jsessionid=14960293163E6619EF2994F69320629A.d03t01

Does spending more on Medicare beneficiaries improve health status? This study concludes that, on average, it does. This is an important finding because current innovative efforts to control Medicare spending are based on the Dartmouth studies that conclude that variations in Medicare spending are not correlated with improved health outcomes.

As the authors of this new study indicate, arbitrary across-the-board reductions could result in poorer health for some beneficiaries. Even arbitrarily reducing spending in high cost areas could have detrimental effects if that higher spending were appropriate for the health status of the local population.

Medicare funds belong to all of us, so there is a responsibility for our stewards to spend those funds wisely and properly. They should pay for beneficial care but not pay for detrimental care nor for outrageously expensive care that is of no benefit. That means that we need more information about the benefits and risks of health care. We need comparative effectiveness studies and, yes, cost effectiveness studies. We need the type of information that is being collected, organized and disseminated by the British National Institute for Health and Clinical Excellence (NICE). We need scientific input free of commercial interests such as that provided by our National Institutes of Health.

It is not only Medicare that needs this input.  All care provided by our entire health care delivery system should benefit from this input. Obviously a single payer monopsony would have the ability and power to move funds from detrimental care to beneficial care.

What is Washington doing about this? The Republicans want to give up on government control of Medicare spending and instead shift more of that responsibility to individual Medicare beneficiaries through a defined contribution scheme (premium support). Medicare beneficiaries of limited means and with limited medical sophistication do not make good health care shoppers. The Democrats want to show the Republicans that they can be tough on deficit reduction by including Medicare in the negotiations for budgetary spending cuts – trying to find cuts that inflict the least pain, though painful nevertheless.

Come on. Put away the guillotines, machetes, axes and cleavers. Let’s start spending the right way. Let’s direct our resources to quality care that benefits us all.

About NICE
http://www.nice.org.uk/aboutnice/

About NIH
http://www.nih.gov/about/

About Single Payer
http://www.pnhp.org/facts/single-payer-resources

Means testing Medicare

Posted by on Thursday, Jun 2, 2011

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.

Ryan Says Rich Should Pay More as Sanders Defends Entitlements for Wealthy

By Brian Faler
Bloomberg, May 30, 2011

Bernie Sanders, the U.S. Senate’s only avowed socialist, may be the chamber’s fiercest advocate of taxing the rich to cut the federal deficit. That doesn’t mean he wants to reduce their Social Security and Medicare benefits.

Representative Paul Ryan, the Republican chairman of the House Budget Committee, wants to give the wealthy big tax breaks to encourage them to invest and create jobs. He also wants to take away many of their retirement benefits.

Democrats say Social Security and Medicare have endured because they offer benefits to people of all incomes, and accuse Republicans of trying to kill the programs by stripping away their beneficiaries, beginning with the rich. Republicans say the fairest way to curb the deficit is to scale back the programs for those who need them least.

With polls showing the public supports limiting benefits to the wealthy, and some Democratic leaders signaling a willingness to consider the idea, the rich may face cuts as lawmakers debate how to curb the national debt.

Sanders, 69, said the debate isn’t just about numbers.

“The strength of Social Security and Medicare is that everybody is in,” the Vermont independent said in an interview. “Once you start breaking that universality and you say that if you’re above a certain income, two years later that income goes down and 10 years later it becomes a welfare program.”

Republicans say the waves of retiring baby boomers, as well as increasing health-care costs, are the real threats to the programs because the benefits are unsustainable.

“The thing that tears the social contract is insolvency,” said Ryan, 41, a Wisconsin Republican. “Means-testing is an obvious solution to our fiscal problems,” he said. “The alternative is everybody gets cut, so why don’t we put the money where it should go — to the people who need it.”

Representative James McDermott, a Washington Democrat, said providing benefits to those who don’t need them is a small price to pay to ensure the programs are available to everyone else.

“I don’t worry about paying a few benefits to Warren Buffett or Bill Gates,” he said. “As long as we make absolutely sure we got public support” for the programs.

http://www.bloomberg.com/news/2011-05-31/ryan-says-rich-should-pay-more-as-sanders-defends-entitlements-for-wealthy.html

Paying for health care and receiving health care are two different issues.

Under an ideal system, everyone should receive all essential health care services that they need without having to face financial barriers that might prevent them from accessing that care.

Since health care now has become so expensive that many cannot afford it, an ideal system would also finance that care based on the ability to pay. Those with greater means would pay more. Also, since the need for health care is very unevenly distributed, an insurance function of pooling the costs is absolutely essential.

Assuming that everyone gets the care that they need, there are two fundamental ways of paying for it. You can fund the entire costs in advance through a single risk pool. That is the simplest administratively and certainly would be the most equitable if each person contributed a given amount based on their means – most easily accomplished through progressive taxes.

The other way would be to establish a catastrophic risk pool through taxes or premiums that only partially fund care, and then assess cost-sharing payments (deductibles, co-payments, coinisurance) based on services received, at the time they are received. Since ability to pay remains an issue, to ensure access each individual would have to be means tested to determine what subsidies would be required (as in the Affordable Care Act). This greatly increases the administrative complexity and costs of financing care. The health care provider, the payer, and the patient each must account for each and every service and the allocation of responsibility for payment.

Although insurance premiums are normally thought of as a method of financing the risk pool, they have taken on a new twist in Medicare Part B (physician services) and Part D (drug benefit). Although these programs are partially funded through the tax system, the additional Part B and Part D premiums assigned to the individual beneficiaries are now means tested. In a sense, they are now accounted for as a means tested but negative benefit. The greater one’s means, the less the benefit. This is an important strategy  of the opponents of Medicare because it weakens the support of the more affluent members of our society and risks converting Medicare into a welfare program.

If all health care has already been prepaid by taxes paid into into a common risk pool, then none of this is necessary. The patient simply receives needed care, and that’s it.

Professor Leonard Rodberg, from Queens College/CUNY, has described this concept in these insightful comments (personal communication):

“The central feature of the Canadian health care system is not that it is a single payer system; it is that financial considerations do not enter into the patient’s decision to seek medical care, nor in the doctor’s decision on what treatment to recommend for the patient. It is not only that there is no exchange of money between patient and doctor; the patient has to pay no money for the visit at any time. There is no fighting with the insurance company to get a claim paid, and no complicated bookkeeping on the part of either the patient or the doctor.”

“We in PNHP have often observed that the term ‘single payer’ is not helpful in explaining what we mean by a national health program. I learned in Canada that it also doesn’t describe the essence of what we are seeking. We tend to treat the absence of cost-sharing as simply a feature of the single payer plan we want. I am now convinced that, instead, we should view the removal of financial barriers to care as the core of what we advocate: no billing of patients, no cash exchange between patient and provider, no checking with insurance companies, etc.

“Too often, we speak as if our goal is a single payer system. I believe that is a mistake. Our goal should be the removal of all financial barriers to care; a single payer system is simply a means, and not the only means, to that goal. What makes the Canadian system, and others, work so well is not its single payer character, but the fact that funding of the system is completely separated from the delivery of care. That should be what we seek through a national health program.”

Des Moines Register: VA health system for everyone?

Posted by on Wednesday, Jun 1, 2011

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.

Why don’t we expand VA health system?

Editorial
DesMoinesRegister.com, May 29, 2011

The Register recently editorialized that it doesn’t make sense to operate a multi-billion VA health care system that runs parallel to the nation’s vast private health care system of hospitals and clinics. It serves only one segment of the population. A better option would be providing veterans health insurance, similar to Medicare for seniors. Then they would be allowed to go to any hospital or clinic, rather than having to travel long distances for care. The thousands of health care workers currently employed by the government could work in the private sector and treat more Americans.

On the opposite page (excerpt and link below), Donald Cooper, director of VA Central Iowa Health Care System, takes issue with that idea. He suggests instead that Americans should learn from the VA. It certainly does have a record of providing good care. For example, it does a better job preventing hospital-acquired infections than private hospitals. A “connected” system of facilities allows for easy access to comprehensive medical records, which can prevent unnecessary tests and medical errors.

He makes good points. And he got us thinking: Maybe the VA shouldn’t be dismantled. Maybe it should be available to everyone. What if the VA’s hospitals and clinics became THE health care system in this country?

After all, a single system would make more sense than the hodgepodge of thousands of private and public hospitals, clinics and insurer plans. The VA is wildly popular with politicians of both political parties. The program pays a fraction of what private insurance companies pay for prescription drugs, and the VA provides not only hospital care but also nursing home care. It’s comprehensive.

Perhaps it should be expanded.

Of course once some politicians figure out that is “socialized” medicine, the idea would go over like a lead balloon. The VA is truly socialized health care. The workers are employed by the government. The buildings are owned by Uncle Sam. The entire operation and all the care is funded with tax money.

This newspaper has supported a taxpayer-financed system of health insurance. Pool tax money to provide everyone with government insurance that helps pay for services offered by private hospitals, clinics and doctors. That’s what some other countries do.

We never have argued the government should also own facilities and employ workers who provide care.

But Cooper — as well as the experts and studies he refers to — certainly should give all of us something to think about. They agree “consistent, safe, high quality care requires a reliable delivery system that sets high standards of clinical practice, monitors clinical performance indicators, and employs systematic use of process improvement tools and practices.” That “best care comes from systems just like VA health care.”

What about the rest of us?

We’ll take it.

http://www.desmoinesregister.com/article/20110531/OPINION03/105310334/Why-don-t-we-expand-VA-health-system-

And…

VA offers lessons for U.S. health care

By Donald C. Cooper, Director of VA Central Iowa Health Care System
DesMoinesRegister.com, May 29, 2011

As your (prior May 9) article infers, it is widely recognized that our nation is facing a growing health care crisis with a fragmented delivery system, escalating costs, and highly variable quality and financing systems that create an excessive administrative burden and incentives for overutilization of diagnostic procedures and specialized care.

Health care leaders have consistently observed that the best care requires an integrated health care system, one that treats the whole patient and coordinates care across the full continuum of services from primary care to acute specialized care, from post-surgery rehabilitation to nursing home and end-of-life care. We know that the best care comes from comprehensive integrated delivery systems – systems just like VA health care.

Health care experts also agree that consistent, safe, high quality care requires a reliable delivery system that sets high standards of clinical practice, monitors clinical performance indicators, and employs systematic use of process improvement tools and practices. The evidence shows that consistent, high quality care comes from the rigorous application of evidence-based medicine supported by a comprehensive, easily accessible, electronic patient health record. We know that the best care comes from systems just like VA health care, an integrated health system with an award winning lifetime electronic patient record that improves patient safety, enhances coordination of care, and supports consistent application of clinical guidelines and monitoring of quality indicators across 153 medical centers and over 800 community based clinics across the country.

http://www.desmoinesregister.com/article/20110531/OPINION01/105310331/1036/opinion01/VA-offers-lessons-U-S-health-care

Wow! The Des Moines Register previously has supported single payer reform, but now they seem to be broadening their position by supporting a publicly owned and operated national health service – socialized medicine! Not only should everyone be covered by a universal, taxpayer-financed risk pool, but that pool should be used to pay for integrated health care – a system “just like VA health care.”

Currently there is considerable interest in integrated health care systems. The concept of accountable care organization (ACO) has been advanced as a model for integrating health care delivery. Unfortunately, ACO was narrowly defined in the Affordable Care Act (ACA) which led to a proposed set of rules that have been largely rejected by the health care community. This stumbling block should not prevent us from moving forward with efforts to establish integrated health care that is designed specifically to benefit patients, much like the VA health care system.

H.R. 676, single payer legislation sponsored by John Conyers, calls for conversion of for-profit institutions of the health care delivery system into non-profit, eliminating passive investors, while being run by boards representing the public interest. The VA system would remain independent for the first ten years, at which time merging it with the single payer system would be considered. Could H.R. 676 be an incremental step towards a national health service?

Unfortunately, ACA has left our health care system highly fragmented. The first attempt to form integrated health systems through the ACO model has demonstrated that organizing within such a fragmented system is about like herding cats. Obviously a properly designed single payer system would provide the guidance and incentives to encourage patient-oriented integrated systems. What the VA system has shown us is that government ownership can much more readily facilitate health system integration. It’s already been done – by the government!

The nation most often cited for an example of a national health service is the United Kingdom. For less than half of what we are spending ($3129 vs. $7538 per capita, PPP adjusted), they have achieved most of the goals of a high-performance system that have remained elusive in the United States. Just imagine what an integrated national health service in the United States would be like at our current level of spending.

As the editorial board of the Des Moines Register says, “We’ll take it.” Anyway, it’s definitely something worth thinking about.

Changing physicians’ politics

Posted by on Tuesday, May 31, 2011

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.

As Physicians’ Jobs Change, So Do Their Politics

By Gardiner Harris
The New York Times, May 30, 2011

Doctors were once overwhelmingly male and usually owned their own practices.

But doctors are changing. They are abandoning their own practices and taking salaried jobs in hospitals, particularly in the North, but increasingly in the South as well. Half of all younger doctors are women, and that share is likely to grow.

There are no national surveys that track doctors’ political leanings, but as more doctors move from business owner to shift worker, their historic alliance with the Republican Party is weakening from Maine as well as South Dakota, Arizona and Oregon, according to doctors’ advocates in those and other states.

Because so many doctors are no longer in business for themselves, many of the issues that were once priorities for doctors’ groups, like insurance reimbursement, have been displaced by public health and safety concerns, including mandatory seat belt use and chemicals in baby products.

“It was a comfortable fit 30 years ago representing physicians and being an active Republican,” said Gordon H. Smith, executive vice president of the Maine Medical Association. “The fit is considerably less comfortable today.”

But doctors in Maine have abandoned the ownership of practices en masse, and their politics and points of view have shifted dramatically. The Maine doctors’ group once opposed health insurance mandates because they increase costs to employers, but it now supports them, despite Republican opposition, because they help patients.

Dr. Nancy Cummings, a 51-year-old orthopedic surgeon in Farmington… went to work for a hospital, sees health care as a universal right and believes profit-making businesses should have no role in either insuring people or providing their care. She said she was involved with the Maine Medical Association, for the most part, to increase patients’ access to care.

Dr. Lee Thibodeau, 59, a neurosurgeon from Portland, still calls himself a conservative but says he has changed, too. He used to pay nearly $85,000 a year for malpractice insurance and was among the most politically active doctors in the state on the issue of liability. Then, in 2006, he sold his practice, took a job with a local health care system, stopped paying the insurance premiums and ended his advocacy on the issue.

“It’s not my priority anymore,” Dr. Thibodeau said. “I think Gordon and I are now fighting for all of the same things, and that’s to optimize the patient experience.”

Dr. Cecil B. Wilson, the president of the A.M.A., said that changes in doctors’ practice-ownership status do not necessarily lead to changes in their politics. And some leaders of state medical associations predicted that the changes would be fleeting.

Dr. Kevin S. Flanigan, a former president of the Maine Medical Association, described himself as “very conservative” and said he was fighting to bring the group “back to where I think it belongs.” Dr. Flanigan was recently forced to close his own practice, and he now works for a company with hundreds of urgent-care centers. He said that in his experience, conservatives prefer owning their own businesses.

“People who are conservative by nature are not going to go into the profession,” he said, “because medicine is not about running your own shop anymore.”

http://www.nytimes.com/2011/05/30/health/policy/30docs.html?_r=1&emc=eta1&pagewanted=all

Anecdotes and hearsay are not the same as scientifically conducted surveys, but most of us who have been around for a while have seen the trends described in this article. Many physicians seem to be less concerned about personal involvement in the business of medicine and are seeking out approaches that “optimize the patient experience,” and in so doing are optimizing their own professional practice experiences.

Dr. Kevin Flanigan, a former president of the Maine Medical Association, represents the old guard. He says that conservatives prefer owning their own businesses and “are not going to go into the profession because medicine is not about running your own shop anymore.”

AMA President Cecil Wilson doesn’t believe that physicians will change their politics simply because of a change in practice ownership status. That view may be held by the old guard, but those now entering the profession who care more about patients than they do about running a business may well align themselves politically with those who believe in health care justice.

This reminds me of another personal anecdote. When I was interviewed for my application to UCSF by revered pediatrician Moses Grossman, he asked me what I would do if I wasn’t accepted into medical school. I told him that I was confident that I would be accepted somewhere, but, if not, I would most likely become a school teacher. He asked me why I thought he asked that question. I said that I assumed that he wanted to be sure that I had the practical sense to consider other options since realistically many did not make it into medical school. He then said something I’ve never forgotten. He said, “Suppose you told me that instead you would take over your uncle’s fur business… ”

The old guard can have their fur business equivalencies, and hopefully they eventually will go the way of that heartless industry. Let’s welcome the new guard who have decided that they would prefer to join our growing ranks of compassionate, humanitarian stewards of the healing arts.

AMA supports Medicare balance billing

Posted by on Friday, May 27, 2011

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.

Medicare Patient Empowerment Act

American Medical Association

Rep. Tom Price, MD (R-GA) introduced H.R. 1700, the Medicare Patient Empowerment Act, on May 3, 2011. This bill, in line with AMA policy, would allow Medicare patients and their physicians to enter into private contracts without penalty to either party. It would enable beneficiaries to use their Medicare benefits to see physicians who do not accept Medicare, as opposed to paying for the entire cost of their care out-of-pocket as required under current law. On May 22, Sen. Lisa Murkowski (R-AK) introduced S. 1042, the Medicare Patient Empowerment Act, in the Senate.

http://www.ama-assn.org/ama/pub/advocacy/current-topics-advocacy/practice-management/medicare-patient-empowerment-act.page

AMA letters expressing “strong support for this legislation”:

To Rep. Tom Price:
http://www.ama-assn.org/resources/doc/washington/hr1700-ama-letter-of-support.pdf

To Sen. Lisa Murkowski:
http://www.ama-assn.org/resources/doc/washington/s1042-ama-letter-of-support.pdf

Medical organizations supporting this legislation:
http://www.ama-assn.org/resources/doc/washington/medicare-patient-empowerment-sign-on-letter.pdf

And…

Existing law (excerpts):

Sec. 1802.

Use of Private Contracts by Medicare Beneficiaries.—
(1) In general.—Subject to the provisions of this subsection, nothing in this title shall prohibit a physician or practitioner from entering into a private contract with a medicare beneficiary for any item or service—
A) for which no claim for payment is to be submitted under this title, and
(B) for which the physician or practitioner receives—
(i) no reimbursement under this title directly or on a capitated basis, and
(ii) receives no amount for such item or service from an organization which receives reimbursement for such item or service under this title directly or on a capitated basis.

(B) Items required to be included in contract.—Any contract to provide items and services to which paragraph (1) applies shall clearly indicate to the medicare beneficiary that by signing such contract the beneficiary—
(i) agrees not to submit a claim (or to request that the physician or practitioner submit a claim) under this title for such items or services even if such items or services are otherwise covered by this title;
(ii) agrees to be responsible, whether through insurance or otherwise, for payment of such items or services and understands that no reimbursement will be provided under this title for such items or services;
(iii) acknowledges that no limits under this title (including the limits under section 1848(g)) apply to amounts that may be charged for such items or services;
(iv) acknowledges that Medigap plans under section 1882do not, and other supplemental insurance plans may elect not to, make payments for such items and services because payment is not made under this title; and
(v) acknowledges that the medicare beneficiary has the right to have such items or services provided by other physicians or practitioners for whom payment would be made under this title.

(B) Affidavit.

(ii) the affidavit provides that the physician or practitioner will not submit any claim under this title for any item or service provided to any medicare beneficiary (and will not receive any reimbursement or amount described in paragraph (1)(B) for any such item or service) during the 2–year period beginning on the date the affidavit is signed

http://www.ssa.gov/OP_Home/ssact/title18/1802.htm

And…

Proposed law

H.R. 1700 and S. 1042 (excerpts):

Section 1802 of the Social Security Act is amended to read as follows:

(b) Freedom To Contract by Medicare Beneficiaries-
`(1) IN GENERAL- Subject to the provisions of this subsection, nothing in this title shall prohibit a Medicare beneficiary from entering into a contract with a participating or non-participating physician or practitioner for any item or service covered under this title.

(B) ITEMS REQUIRED TO BE INCLUDED IN CONTRACT- Any contract to provide items and services to which paragraph (1) applies shall clearly indicate to the Medicare beneficiary that by signing such contract the beneficiary–
`(i) agrees to be responsible for payment to such physician or practitioner for such items or services under the terms of and amounts established under the contract;
`(ii) agrees to be responsible for submitting claims under this title to the Secretary, and to any other supplemental insurance plan that may provide supplemental insurance, for such items or services furnished under the contract if such items or services are covered by this title, unless otherwise provided in the contract under subparagraph (C)(i); and
`(iii) acknowledges that no limits or other payment incentives that may otherwise apply under this title (such as the limits under subsection (g) of section 1848 or incentives under subsection (a)(5), (m), (q), and (p) of such section) shall apply to amounts that may be charged, or paid to a beneficiary for, such items or services.

SEC. 3. PREEMPTION OF STATE LAWS LIMITING CHARGES FOR PHYSICIAN AND PRACTITIONER SERVICES.

(a) In General- No State may impose a limit on the amount of charges for services, furnished by a physician or practitioner, for which payment is made under section 1848 of the Social Security Act (42 U.S.C. 1395w-4), and any such limit is hereby preempted.

http://thomas.loc.gov (enter either H.R.1700 or S.1042)

Sadly, the American Medical Association is showing once again whom they really represent – physicians, but not their patients. This legislation would greatly enhance physician revenues at a considerable cost to their Medicare patients. It would allow physicians to require their patients to pay the full balance of their unrestricted fees, even if far in excess of Medicare allowable charges.

Current law prohibits physicians from billing the patient for any charges other than deductibles and coinsurance that are applied to allowable charges only. All fees beyond the allowable amount must be adjusted off. The only exception is that a physician may enter into a private contract with a patient who agrees to pay the full amount, but only if the physician and patient agree to not bill Medicare for even the allowed charges, and the physician agrees to not bill Medicare for any other patient for a minimum of two years.

Even though we often hear threats that physicians will stop seeing Medicare patients, most really can’t afford to give up their Medicare revenues, and, besides, too many Medicare beneficiaries do not have adequate resources to pay large medical bills in full. The current law provides leverage to ensure that physicians will be there when Medicare patients need them.

The Price/Murkowski legislation would no longer require physicians to exit the Medicare program entirely should they enter agreements to independently bill the patients for the balance of their fees. Also Medicare would still have to pay the allowed charges. As a further insult, the physician can require the patient to do their own Medicare billing. The physician gets the full fee, in cash, including the disallowed charges, and the patient has to do the paperwork. Nice guys, AMA!

If physicians were allowed to bill for the balance of the charges, Medicare as we know it would be destroyed. It is a more direct and more powerful method of shifting payment from the government to individual patients – far worse than the cost shift that would occur with the Ryan premium support proposal for Medicare. Since the greatest contributor to our excessive health care spending is our high prices, the Price/Murkowski legislation would cause health care spending to skyrocket because there would be no limits on physician pricing.

If you check the list of endorsing medical organizations at the link above, it is an embarrassment to those of us who have always thought that the patient comes first, but there is one consolation. Conspicuously absent from the list are the American Academy of Family Physicians and the American College of Physicians. Thankfully, our nation’s primary care physicians still believe that our patients really do come first.

Joe Jarvis and Brent James on Intermountain Healthcare

Posted by on Thursday, May 26, 2011

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.

A recent Quote of the Day (May 19) discussed Intermountain Healthcare as an example of how an integrated health care system can help to control costs by emphasizing quality improvement. A co-author of the Health Affairs article cited, Dr. Brent C. James of Intermountain Healthcare, has discussed this topic with Dr. Joe Jarvis of the Utah Healthcare Initiative. Although their views on single payer differ, their discussion is a welcome addition to this dialogue.

Utah Health Care Initiative

IHC: A Quality Story
By Dr. Joe Jarvis
May 21, 2011
http://www.utahhealthcareinitiative.com/blog/2011/05/21/ihc-quality-story/

Dr. Brent James Responds
By Dr. Joe Jarvis
May 23, 2011
http://www.utahhealthcareinitiative.com/blog/2011/05/23/dr-brent-james-responds/

Brent James: Senate Testimony on quality
April 29, 2009
http://www.utahhealthcareinitiative.com/blog/2009/04/29/brent-james-md-senate-testimony/

Although Brent James has demonstrated that quality is attainable independently of the financing system for health care, his approach requires a degree of altruism which he posses but which has not permeated the entire health care delivery system.

Quality and financing are two different considerations, but there is a tremendous amount of overlap. A well designed single payer system provides tools and incentives for quality enhancement, just as a high quality system provides efficiencies for the financing system.

Dialogues such as this between Dr. Jarvis and Dr. James move the process forward bringing us closer to the day that we can experience a high quality health care system for all that is truly affordable – a financing system that is universal and equitable, and a high quality delivery system that makes it work.

Dr. Quentin Young to Rep. Paul Ryan: Thank you

Posted by on Wednesday, May 25, 2011

PNHP National Coordinator Dr. Quentin Young sent the following letter to Rep. Paul Ryan (R-Wisc.) earlier today.

Representative Paul Ryan
1233 Longworth HOB
Washington, D.C. 20515

May 25, 2011

Dear Rep. Paul Ryan,

Our organization, Physicians for a National Health Program, is strongly supportive of Medicare, recognizing it as one of the premier legislative achievements in the history of the United States. Therefore, I am writing to express our gratitude for your role in eliciting the overwhelming support that the people of our country extend to this important social justice program.

Since you succeeded in securing virtual unanimous support from the Republican majority in the House of Representatives for your voucher program, the rejection of your plan has been demonstrated nationwide. The spectacular defeat of Ms. Corwin in the 26th district of New York on May 24, 2011, is clearly the earliest expression of the vital importance our nation attaches to a single-payer comprehensive health plan for the elderly, Medicare.

I can think of no other political act that could match your voucher program “reform” in mobilizing public support for Medicare going forward. The collateral damage to the Republican aspirations for power is immeasurable.

Thank you very much,

Quentin Young, M.D., M.A.C.P
National Coordinator
Physicians for a National Health Program

cc: President Barack Obama
Speaker John Boehner

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