By Drs. David Himmelstein and Steffie Woolhandler
The proposed Vermont health reform legislation includes two distinct elements: clear plans to rapidly implement the deeply flawed federal health reform (PPACA) in Vermont; and a vague outline of a single-payer plan that might be implemented six years hence if the feds were to allow it.
In contrast to the bill’s detailed prescription for implementing PPACA, the sections on the single-payer plan leave much to the imagination, punting decisions on critical issues to a board appointed by the governor. It seems that the board is to determine whether critical services like long-term care are included in the benefits package; whether co-payments will be affordable or daunting; how hospitals, home care agencies, nursing homes and doctors will be paid; and whether capital funds are to be allocated separately from operating funds (the sine qua non of effective health planning). And the bill includes no plan for funding the single-payer program.
Happily, the legislation would enroll all Vermont residents (regardless of immigration status) in the single-payer plan. In one critical area the bill seems to come down on both sides of the fence. While it would proscribe the sale of private coverage that duplicates the public plan if the single-payer program is implemented, it would also allow employers to opt out of the plan.
Finally, its uncritical embrace of the latest health policy fad – Accountable Care Organizations (ACOs) – would bolster the role of private insurers, at least in the short run. The bill calls for pilot projects in which an ACO would receive capitation payments which would cover all care for a defined population, including long-term care, prescription drugs, etc. Insurers are the only organizations in Vermont with the financial muscle to take on such “full risk” contracts.
In sum, the Vermont bill evidences good intentions and bold promises, but leaves the make-or-break decisions about restructuring health care financing for a later date. This “kick the can down the road” approach is worrisome in a state where the governor and Legislature change every two years, and where multi-stage health reforms have been enacted in the past, only to see the planned reforms abandoned without being implemented. In this context, ongoing mobilization of a broad-based single-payer movement will be critical. Such a mobilization can bolster the governor’s evident enthusiasm for the single-payer project and maintain the courage of the Legislature as they face the inevitable onslaught of corporate opposition to real health care reform.
Drs. Himmelstein and Woolhandler are co-founders of Physicians for a National Health Program.
By Vermont Health Care for All members Dr. Deb Richter, Ethan Parke, Marilyn Mode, Ellen Oxfeld and Marjorie Power
The following suggestions have been submitted to members of the Vermont Legislature.
1. Order of elements in bill: Put single payer at the front of the bill – this is the goal. Make clear that the goal is for Green Mountain Care to be up and running as soon as waivers are attained and that the exchanges (the next part of the bill) are an intermediary step that will last only as long and until waivers are obtained.
2. Emphasis: Need stronger language in the single-payer section that the goal is to attain waivers at the earliest date possible. This will also make more political sense, and it will be easier to and simpler to sell to the public.
3. Board: More support staff will be needed for this board. Think about the Public Service Board that has been operating for decades and all the support staff that they have. The consumer rep on the board will be especially in need of support staff because he/she does not already have an association (such as the hospital association) at his or her disposal to help when an issue comes up.
4. What if the federal law is repealed, amended, defunded, or struck down by the U.S. Supreme Court? It should be made clear that Green Mountain Care is contingent on the federal law only to the extent that it might be federally preempted. If the federal law is repealed or changed in such a way that states have more latitude to innovate, then the bill should make clear that we will move more quickly to Green Mountain Care (since no exchange stage would be necessary). H. 202 should also be clear that if the federal government does not fund states under the federal health reform bill, then Vermont must take immediate steps to create a single-payer system with whatever resources are at hand.
5. Principles: Section on principles at the beginning should include health care as a public good as well as health care as a human right.
6. Global budgets: Hospitals should receive global revenue budgets for cost containment and administrative savings. These revenue budgets are not for capital expansion. Hospital capital budgets should be allocated separately from their global revenue budgets. For instance, all things that will generate ongoing operating expenses, such as monies for a new parking lot or an additional MRI scanner, are part of capital budgets and should be allocated separately.
7. Role of for-profit entities: Although we recognize that there are already some for-profit entities within the Vermont health care system, the bill should consider a future moratorium on any for-profit health entities.
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.
The Library of Congress
To provide for comprehensive health insurance coverage for all United States residents, improved health care delivery, and for other purposes.
Sponsor: Rep Conyers, John, Jr. [MI-14] (introduced 2/11/2011)
Rep Baldwin, Tammy [WI-2] – 2/11/2011
Rep Capuano, Michael E. [MA-8] – 2/11/2011
Rep Christensen, Donna M. [VI] – 2/11/2011
Rep Chu, Judy [CA-32] – 2/11/2011
Rep Cohen, Steve [TN-9] – 2/11/2011
Rep Dicks, Norman D. [WA-6] – 2/11/2011
Rep Doyle, Michael F. [PA-14] – 2/11/2011
Rep Ellison, Keith [MN-5] – 2/11/2011
Rep Farr, Sam [CA-17] – 2/11/2011
Rep Filner, Bob [CA-51] – 2/11/2011
Rep Frank, Barney [MA-4] – 2/11/2011
Rep Green, Al [TX-9] – 2/11/2011
Rep Grijalva, Raul M. [AZ-7] – 2/11/2011
Rep Hinchey, Maurice D. [NY-22] – 2/11/2011
Rep Jackson, Jesse L., Jr. [IL-2] – 2/11/2011
Rep Lee, Barbara [CA-9] – 2/11/2011
Rep Lofgren, Zoe [CA-16] – 2/11/2011
Rep Maloney, Carolyn B. [NY-14] – 2/11/2011
Rep Meeks, Gregory W. [NY-6] – 2/11/2011
Rep Nadler, Jerrold [NY-8] – 2/11/2011
Rep Pingree, Chellie [ME-1] – 2/11/2011
Rep Roybal-Allard, Lucille [CA-34] – 2/11/2011
Rep Scott, Robert C. “Bobby” [VA-3] – 2/11/2011
Rep Tonko, Paul [NY-21] – 2/11/2011
Rep Weiner, Anthony D. [NY-9] – 2/11/2011
(The text of the bill has not yet been received from the Government Printing Office, but will be posted very soon.)
The “Expanded and Improved Medicare for All Act,” H.R. 676, sponsored by Rep. John Conyers Jr., D-Mich., would replace today’s private health insurers – and the Obama law’s individual mandate, which is being challenged as unconstitutional – with a single, streamlined public agency that would pay all medical claims, much like Medicare works for seniors today. (From a PNHP statement to be released later today at www.pnhp.org)
The immediate task for all of us who support an expanded and improved Medicare for all is to begin to recruit more cosponsors. Remind your Representatives that this does not eliminate the important beneficial measures of the Affordable Care Act. What it does instead is it replaces the highly flawed financing structure of ACA with a proven model that both makes health care affordable and includes everyone – the paramount goals of health care reform that have remained elusive until now.
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.
CBO: Health law to shrink workforce by 800,000
By J. Lester Feder and Kate Nocera
February 10, 2011
CBO Director Douglas Elmendorf told the House Budget Committee on Thursday that the health care law will reduce employment by 0.5 percent by 2021 because some people will no longer have to work just to afford health insurance.
“That means that if the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage, that there would be a reduction of 800,000 workers,” Elmendorf said in an exchange with Rep. John Campbell (R-CA).
The report, published in August, said, “The Congressional Budget Office estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply … That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more.”
Republicans gleefully seized on the admission, eagerly promoting it as evidence of what they call the law’s job-killing effect.
“More bad news for American families,” was how Budget Committee Chairman Paul Ryan’s office described the report in a release.
“Since day one Republicans have opposed Obamacare for a simple reason: it would destroy jobs. Minority Leader Pelosi, Leader Reid and others said we were wrong. Guess not,” said John Murray, deputy chief of staff for Majority Leader Eric Cantor.
The Budget and Economic Outlook: An Update
Congressional Budget Office
Effects of Recent Health Care Legislation on Labor Markets
The Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care Education Reconciliation Act of 2010 (P.L. 111-152) will affect some individuals’ decisions about whether and how much to work and employers’ decisions about hiring workers. The Congressional Budget Office (CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply. That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more. Moreover, many people will be unaffected by those provisions and will face the same incentives regarding work as they do under current law.
The net reduction in the supply of labor is largely attributable to the substantial expansion of Medicaid and the provision of subsidies that will reduce the cost of insurance obtained through the newly created exchanges, beginning in 2014. In particular:
* The legislation extends Medicaid eligibility to most nonelderly residents whose income is below 138 percent of the federal poverty level (FPL) — including childless adults who are currently ineligible for Medicaid in most states. (The FPL in 2010 is $10,830 for a single person and $22,050 for a family of four.)
* People who purchase insurance through the new exchanges will generally be eligible for tax credits to help them pay their health insurance premiums if their income is between 138 percent and 400 percent of the FPL and they are not offered coverage through an employer. (They may also be eligible for reductions in their cost-sharing requirements.) Those subsidies decline in value as income rises and can, under some circumstances, drop sharply to zero when income exceeds 400 percent of the FPL.
The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market. In addition, the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work. But because most workers who are offered insurance through their jobs will be ineligible for the exchanges’ subsidies and because most people will have income that is too high to be eligible for Medicaid, those effects on financial resources and marginal tax rates will apply only to a small segment of the population.
Other provisions in the legislation are also likely to diminish people’s incentives to work. Changes to the insurance market, including provisions that prohibit insurers from denying coverage to people because of preexisting conditions and that restrict how much prices can vary with an individual’s age or health status, will increase the appeal of health insurance plans offered outside the workplace for older workers. As a result, some older workers will choose to retire earlier than they otherwise would.
Some other provisions of the legislation may also affect decisions regarding work, but their net effect on the total labor supply will probably be small.
The Republicans in Congress have been using this report from the Congressional Budget Office (CBO) to claim that the Patient Protection and Affordable Care Act (ACA) is a “job killer,” even naming the bill that they passed to repeal health reform the “Repealing the Job-Killing Health Care Law Act.” But on reading the report from the CBO on which this claim is made, it is clear that this is not taking jobs away from the workforce; rather it is removing the shackles of job lock from these workers.
Until ACA many individuals who wanted to and were otherwise able to retire early, or wanted to pursue other less structured jobs or avocations, were unable to because they would lose their employer-sponsored health insurance and would be unable to replace it either because it was too expensive or was not available because of preexisting medical disorders. Thus this job lock was one more major defect that the reform bill was designed to correct, and it partially will once fully implemented.
The CBO explicitly states that “the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply.” Note that word “choose.” These workers will not be terminated. In contrast, they will celebrate freedom, much as the Egyptians are doing today. These 800,000 jobs are not being killed, they are being abandoned voluntarily.
Which leads to a very important point that was left out of the CBO report, and certainly left out of the Republican rhetoric. These are 800,000 jobs that have been opened up to the labor market. Once these 800,000 individuals have stepped aside because they no longer need their jobs, 800,000 new jobs will have been created, not killed. And aren’t the Republicans, the Democrats and the nation at large claiming that job creation is one of our most urgent priorities?
This does not end the problems inherent in a largely employer-sponsored system. Employers are shifting more of the costs to their employees for purely business considerations, trying to control overhead expenses. Under-insurance is becoming the standard. The private plans that will be available through the exchanges will be overpriced and inadequately subsidized. Waste will be perpetuated because of administrative excesses and the lack of an efficient system of financing health care.
We should relieve employers of their employee health benefits burden, while ending job lock forever. Employees would never again have to worry about health insurance and the costs of it if we had an improved Medicare that covered everyone.
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.
Plans steer patients to lower-cost hospitals
By Liz Kowalczyk
The Boston Globe
February 10, 2011
Hundreds of small businesses have signed up in the past month for a new Blue Cross Blue Shield health insurance plan that charges employees hefty fees for seeking care at more expensive hospitals, in an effort to steer them to lower cost care.
The popularity of the plan — Blue Cross Blue Shield of Massachusetts says it is the fastest launch ever of a new product — is the latest sign that the once radical idea has been embraced as a way to control soaring health care costs, even as pricier hospitals warn of a possible backlash and cuts in services.
Other Massachusetts insurers also report brisk business in plans that offer lower premiums in exchange for limits on use of high-cost care. The plans either charge consumers extra for receiving care from popular but expensive hospitals or doctors, or bar them altogether from seeking treatment at those institutions and practices.
The Blue Cross Hospital Choice plan, which went on sale last month, charges members, for example, an extra $1,000 for an inpatient stay or outpatient surgery, and $450 more for an MRI, at 15 higher-cost hospitals, including Massachusetts General and Brigham and Women’s hospitals, Children’s Hospital Boston, and UMass Memorial Medical Center in Worcester.
In Massachusetts, insurers traditionally have offered wide-open networks, meaning members can check into a pricey teaching hospital to deliver a baby rather than go to a less expensive community hospital, and can schedule MRIs in a hospital outpatient department, even when freestanding clinics provide similar service for less money. But amid intense scrutiny into why health care costs in Massachusetts are climbing 7.5 percent a year, “tiered” and “limited” networks have emerged as an immediate way to control costs.
But executives at Partners HealthCare, the parent organization of Massachusetts General and Brigham and Women’s, said that while these new policies are making providers more sensitive to price, they have pitfalls.
Dr. Thomas Lee, head of Partners’ physician group, said some people will become seriously ill and realize they can’t go to, or can’t afford, their first-choice hospital.
Although private insurers in California have led the way in innovative product changes in an attempt to keep insurance premiums competitive (at the great cost of impairing the protection afforded by their products), Massachusetts is now serving as the laboratory for what we might expect under the Affordable Care Act (ACA), since Massachusetts got a jump start on the ACA model.
What determines which insurance policy people will select for themselves or for their families? The premiums or the benefits? If they are relatively healthy, which most people are, they may look at both, but the decision will most likely come down to choosing a plan with a premium that they can barely afford over a plan with a premium that is totally beyond their means. They are less likely to study the fine print on the benefits that states, for instance, the less expensive plan uses “tiered” or “limited” networks.
As this Boston Globe article indicates, the financial penalties for using a higher tiered facility can be very severe. And limited networks? The plan pays nothing outside of the network. Plan-approved provider networks have been used by the insurers as a tool to leverage the negotiations for provider rates. The expansion in the use of tiered or limited networks now uses the patient as a tool – contrary to their own interests – in an attempt to reduce spending so that premiums remain affordable, if only barely so.
Tiered and limited plans are growing rapidly in Massachusetts. Some of the most prestigious academic medical centers in the nation are being targeted and could face serious budget constraints. In using these tools of the marketplace, financial decisions are not being made based on what services should be provided and paid for; instead they are being made on the basis of what will best support the market of private insurance plans. As a result, serious damage could be inflicted on the infrastructure of our health care delivery system.
Imagine Medicare engaging in this behavior. You really can’t. Although always a work in process, Medicare includes the entire health care delivery system as its network, and reimburses at rates that have some semblance of maintaining the financial viability of the delivery system, while reining in waste. It can do better, and would do so if it were purchasing essentially all care provided in the United States, through an improved Medicare for all. The multiple tools of a single payer system would dramatically improve the efficiency of our health care purchasing.
Some insurance companies pushing plans with Mayo Clinic out of network
By Christopher Snowbeck
February 5, 2011
Bloomington-based HealthPartners last year started marketing health plans that feature a network of hospitals and doctors that doesn’t include the Mayo Clinic. In exchange for not having access with low co-payments to the iconic Rochester, Minn., clinic, subscribers pay lower premiums when they select a HealthPartners plan with Mayo as an out-of-network option.
Last year, Eagan-based Blue Cross and Blue Shield of Minnesota also started emphasizing health insurance products for individuals in which Mayo isn’t in the network of providers.
Mayo has been celebrated nationally for providing high-quality and low-cost health care, but health insurance brokers say the local reputation is different as far as cost goes.
“Mayo is cheap only compared to other national care centers, but in general is a higher-cost center when compared to its Minnesota peers,” said Christopher Schneeman, a health insurance broker with SevenHills Benefit Partners in St. Paul.
“The Mayo Clinic is world-class,” said Greg Sailer of Sailer Benefit Services in Lake Elmo. “But it’s expensive, and you’re going to pay for it.”
Mayo Clinic officials argue that the Rochester center offers greater value by providing comprehensive care that steers patients to the most-effective treatments. That ultimately adds up to lower overall cost, the clinic says.
“When we looked at Mayo’s total cost of care — the combination of price and utilization — they, on average, have a higher total cost of care than other health systems that are seeing comparable groups of patients,” said (Andrea Walsh, chief marketing officer of HealthPartners).
For many years, the most common example given of the variations in the costs of health care demonstrated by the Dartmouth Atlas was the high costs of health care in Boca Raton, Florida when compared to Rochester, Minnesota, home of the Mayo clinic. These observed variations throughout the nation have led to the recommendation – now enacted in the Affordable Care Act (ACA) – to establish accountable care organizations (ACOs).
Although the precise details of what constitutes an ACO have not yet been released by HHS, the law states that the ACO will be “accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it.” Payment will be based on a “Medicare Shared Savings Program,” in which the ACO shares with the government the savings for which it is accountable. It is a program designed to reduce health care spending.
Since Mayo Clinic certainly has the capability of providing overall care of the patient, it would seem to be an ideal institution to serve as an ACO. In fact, the authors of the legislation had in mind institutions such as Mayo as important models that could provide high quality care at a lower cost.
But will Mayo deliver at a lower cost? Not according to the current experience in Minnesota. Mayo argues that they provide greater value because they provide “comprehensive care that steers patients to the most-effective treatments,” even if that care is more expensive than elsewhere in Minnesota. (Time for a little soft shoe?)
The point is that the cost savings in ACA, such as the ACOs, are not much more than a fantasy at this point. And for this we gave up universal coverage and have established under-insurance as the new standard. We can still reach our goals of comprehensive, affordable care for everyone by replacing ACA’s financing system with an improved Medicare for all.
Lack Of Access Due To Costs Remains A Problem For Some In Massachusetts Despite The State’s Health Reforms
By Cheryl R. Clark, Jane Soukup, Usha Govindarajulu, Heather E. Riden, Dora A. Tovar and Paula A. Johnson
Did the Massachusetts health reforms, which provided near-universal insurance coverage, also address problems of unmet need resulting from the cost of care and of inadequate preventive care for diverse patient groups? We found that nearly a quarter of adults who were in fair or poor health reported being unable to see a doctor because of cost during the implementation of the reforms. We also found that state residents earning less than $25,000 per year were much less likely than higher earners to receive screening for cardiovascular disease and cancer.
More get waivers of health insurance
By Kay Lazar
The Boston Globe
February 7, 2011
Massachusetts regulators granted more exemptions last year to residents who said they could not afford the health insurance required by the state, waiving the tax penalty for more than half of those who appealed, according to state data.
That is prompting regulators to take a fresh look at how Massachusetts defines affordable when it comes to mandatory health insurance.
Massachusetts residents with the lowest family incomes, less than $33,075 for a family of four, make up the largest share — 43 percent — of the uninsured, according to state data.
“We may want to let them in [to government subsidized health insurance], but it would cost money, and we would have to decide if the state wants to spend money that way,” said committee member Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology.
Does an individual mandate to purchase private insurance with cost-sharing requirements ensure that citizens will have health care access and be able to afford it? It hasn’t in Massachusetts, and it will not throughout the United States because it is an irreparably flawed mechanism of financing health care.
The literature is replete with policies that would nudge us a little bit closer to the goals of affordability and expanded coverage, but, as Jonathan Gruber, an advocate of the private insurance mandate model, says, “we would have to decide if the state wants to spend money that way.”
But it’s the model, stupid! Dump it and replace it with an improved Medicare for all and then health care will be affordable for everyone. Why does Gruber and the others insist on separating state money from personal money, as if state money is sacred and personal money isn’t? It all belongs to us anyway.
Well here we are. Super Bowl weekend! Hurrah! What could be more American than this? Billions of dollars and the nation’s full attention directed to a couple dozen men playing a game. And this is no sandlot game. No. This is our nation at its finest – honoring in unparalleled splendor those great Americans who prevail and are declared winners of this historic rough-and-tumble fracas. And what more could our nation be than about winners?
Let me digress for a moment. I have a little story to tell.
I was still in practice during the Clinton effort to reform health care. Although practicing in an affluent community, I was experiencing great frustrations in trying to obtain specialized health care services for not only our indigent patients, but also for our insured patients who were facing increasing managed-care barriers to care.
Previously, in 1989, a life-changing event had occurred for me. It was simply that I read an article in The New England Journal of Medicine titled “A National Health Program for the United States,” written by a team led by David Himmelstein and Steffie Woolhandler, representing a group called Physicians for a National Health Program. I was stoked! I joined PNHP.
Then Bill Clinton was elected, and the nation was ready for a national health program. As masters of health policy science, PNHP was there and ready to help guide the process. But President Clinton decided that they would follow the path of political expediency and build reform based on the existing private insurers/managed care entities. Thus, in a political maneuver, to be repeated years later, PNHP was denied a seat at the table.
I watched the process closely. I listened as the opposition proposed a model almost identical to that of the Patient Protection and Affordable Care Act. I saw the effort go down in flames. I decided that we couldn’t just walk away.
I felt then that a pure single payer program, as much as I wanted it, could never pass. But I thought that there was enough agreement on fundamental principles that almost everyone would be able to support some model of social insurance, if we just had the right one. So I crafted a model. It was brilliant – just the right balance to achieve our goals while pleasing everyone.
I sent it in to PNHP. The task of reviewing it was handed to PNHP’s new president, Claudia Fegan. It required more postage to return it to me, because it was newly laden with red ink.
My lesson? I was passionate about reforming our system so that everyone would have the health care that they need, but I knew nothing about health policy science. I am forever indebted to Claudia for showing me the light, and resetting my course in my advocacy for reform. The principle she taught me is that you change policy recommendations only when policy science has demonstrated that there are better policies available. You do not ever change policy recommendations simply to conform to politics.
Claudia has continued to be a great inspiration to me. And that brings us to a crystal stair. On this glittering Super Bowl weekend, we should take a look at that crystal stair. You will understand what I mean when you read the Claudia’s remarks that she delivered to the Louisville, Kentucky Urban League on January 15, 2011. After reading her comments maybe we can think about what it really takes to make winners in America.
Cladia Fegan’s remarks to the Louisville Urban League:
Issues In Health Reform: How Changes In Eligibility May Move Millions Back And Forth Between Medicaid And Insurance Exchanges
By Benjamin D. Sommers and Sara Rosenbaum
The Affordable Care Act will extend health insurance coverage by both expanding Medicaid eligibility and offering premium subsidies for the purchase of private health insurance through state health insurance exchanges. But by definition, eligibility for these programs is sensitive to income and can change over time with fluctuating income and changes in family composition. The law specifies no minimum enrollment period, and subsidy levels will also change as income rises and falls. Using national survey data, we estimate that within six months, more than 35 percent of all adults with family incomes below 200 percent of the federal poverty level will experience a shift in eligibility from Medicaid to an insurance exchange, or the reverse; within a year, 50 percent, or 28 million, will.
Income fluctuation raises issues for all subsidy-eligible individuals or families up to 400 percent of the federal poverty level, which includes those whose incomes place them squarely within the exchange system. For those purchasing coverage with subsidies through exchanges, income changes may trigger the obligation to repay some or all subsidies received; the amounts subject to repayment were significantly increased recently by Congress. But income fluctuations pose a particular challenge for individuals and families who cross the Medicaid-exchange divide, because this change may trigger a shift between plans and provider networks. In short, for this group, income fluctuation carries both financial and health care consequences.
Our multivariate analyses show that income fluctuations were common even among adults initially with incomes below the poverty level. This is particularly troubling because many of these people will often have incomes low enough to exempt them from the federal insurance mandate, which means that fatigue with frequent coverage changes may lead them to simply stop signing up for insurance over time. This is a problem on two fronts. First, it is uninsured low-income adults who have the most to gain from health reform. Second, this group includes millions of healthy adults whose participation in the exchanges is crucial to robust risk pools. We found that income changes were more common among adults who were younger, more educated, and white—characteristics that correlate with a lower burden of illness. Indeed, these results are consistent with previous findings on changes in Medicaid coverage among adults.
We have previously made the point that fluctuations in eligibility for Medicaid and for the income-related subsidies in the exchange plans create instability in coverage. Impaired outcomes occur because of gaps in coverage, and disruptions in provider networks. This new study puts a number on the degree of instability. Within one year, over 50 percent of adults with a family income under 200 percent of the federal poverty level (FPL) will experience a shift in eligibility from Medicaid to an insurance exchange, or vice versa.
The article discusses some of the implications of this, including problems with shifting eligibility levels for exchange subsidies for those with incomes over 200 percent of the FPL. Though eligible for one program or another, many individuals will have incomes that exempt them from the mandate to purchase insurance, and, assuredly, the healthier ones who are needed to round out the risk pools will go without coverage as a result of fatigue over multiple ejections by one program or another.
The authors offer policy options that might reduce this instability in coverage, but these options can never eliminate it. Our fragmented financing system of various private and public programs will never ensure that everyone is covered at all times, and it will continue to waste funds on administrative excesses such as trying to keep up with eligibility shifts due to income fluctuations.
A policy option that would work, not mentioned by the authors, would be to dump our dysfunctional multi-payer system and enact an improved Medicare that includes everyone. The problem of fluctuating incomes is greatly simplified because it impacts only the contribution through the tax system, without moving the individual in or out of Medicare.
Berwick Indicates CMS Still Plans To Mix Private Payers, Medicare In ACO Demo
By John Wilkerson
Inside Health Reform
February 3, 2011
CMS Administrator Donald Berwick indicated on Feb. 1 that CMS still plans to use a demonstration to let accountable care organizations include Medicare beneficiaries and patients with private insurance. Specifically, he said the CMS innovation center will make room for the “vanguards” of accountable care organizations so CMS can test ACO models that go beyond what is called for under the ACO program.
Sources say CMS had been planning to announce a demonstration program late last year to assign Medicare and possibly Medicaid beneficiaries to existing clinically integrated entities in the private insurance market. That announcement was delayed, they said, leaving them to wonder whether CMS had backed off the plan – but Berwick seemed to say at a Brookings Institution conference that the plan is still in the works.
CMS is talking to private payers about public-private partnerships and about how clinically integrated organizations can align what they are doing for patients with private insurance with the goals of ACOs, Berwick told reporters after his presentation. (The Federal Trade Commission has warned that broad-based ACOs involving private payers could raise antitrust concerns, but the FTC has been working out those matters with CMS.)
Berwick said the proposed rule on the ACO program should be published soon, but when asked by Inside Health Policy whether a demonstration would be announced before the proposed rule, Berwick said only that the innovation center would move “quickly” on ACO demonstrations. The health reform law created an ACO program, which is permanent and separate from the temporary demonstrations that the innovation center approves. However, CMS could approve ACO demonstrations that would later be wrapped into the ACO program, sources say.
Brookings Institution Conference: ACHIEVING BETTER CARE AT LOWER COSTS
THROUGH ACCOUNTABLE CARE ORGANIZATIONS (transcript – 110 pages):
This Brookings Institute conference on accountable care organizations (ACOs) provides important insights as to what we might be facing. These experts, including Donald Berwick, Elliott Fisher and Mark McClellan, provide abstractions as to policies that might achieve the quality and cost-containment goals of the ACOs that are mandated by the Patient Protection and Affordable Care Act (PPACA).
The Medicare Shared Savings Program will begin on January 1, 2012, less than one year from now. At that time, “groups of providers of services and suppliers meeting criteria specified by the Secretary may work together to manage and coordinate care for Medicare fee-for-service beneficiaries through an accountable care organization” (PPACA). Details as to the requirements can be found in Sec. 3022 and Sec. 10307 of PPACA.
If you read the transcript of the Brookings presentations of the experts and the panel discussions following, you should be concerned – very concerned. Within months, these somewhat nebulous abstractions are to be transformed into real life organizations of health professionals and facilities that supposedly will deliver higher quality care at a lower cost, while splitting the savings with the government.
Obviously, these ACOs will not spring up de novo; there isn’t enough time. We already know that the early demonstration projects are using existing entities that can best be categorized as managed care organizations. According to the report from Inside Health Reform, “CMS is talking to private payers about public-private partnerships and about how clinically integrated organizations can align what they are doing for patients with private insurance with the goals of ACOs, Berwick told reporters after his presentation.”
As recorded in the transcript of the Brookings conference, CMS Administrator Donald Berwick stated, “Now, I’m in a little bit of an awkward moment, aren’t I? The Notice of Proposed Rulemaking isn’t out yet. It will be out very soon, but I can’t tell you what’s in it yet because I guess I’m not supposed to, but you’ll see it soon. And then there’ll be a comment period, which I hope you’ll all take seriously.”
Be ready. When the Notice of Proposed Rulemaking is released for public comment, peruse it to determine if Medicare is going to be turned over to private insurer/managed care organizations in the name of higher quality and lower costs through accountable care organizations. We need to find out if this is merely new rhetoric that will mask the further privatization of Medicare, intended or not. If so, we cannot let it stand.
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