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.
Almost No Existing Health Plans Meet New ACA Essential Health Benefit Standards
By Kev Coleman
HealthPocket, March 7, 2013
Given that health insurance plans will have to meet new minimum coverage standards starting in 2014, HealthPocket examined the current marketplace of individual health plans to measure the market disruption that will occur as these plans are replaced by plans compliant with the new standards.
Our research took the Affordable Care Act’s Essential Health Benefits as our starting point. The Essential Health Benefits are the minimum categories of health insurance coverage that every qualified health plan must have starting January 1, 2014. HealthPocket then examined 11,100 individual health plans across the United States to see how many plans had coverage in each of the Essential Health Benefit categories.
The data shows that there will be a near complete transformation of the individual and family health insurance market starting in 2014. Less than 2% of the existing health plans in the individual market today provide all the Essential Health Benefits required under the Affordable Care Act (ACA).
On average, the health plans provided 76% of the ACA’s Essential Health Benefits. Benefits such as hospitalization, emergency care, and ambulatory services (such as visits to a primary care doctor or specialist) were covered by almost all plans in one form or another. A more detailed analysis of our results revealed that the missing 24% of Essential Health Benefits were concentrated around a few categories.
Dental and vision care for children was the least likely of the Essential Health Benefits to be provided in base benefits for a health insurance plan. Only one out of four plans nationally had these benefits within their base coverage. Looking at these benefits at a more granular level revealed that only 8% of plans provided coverage for dental check-up services. Maternity coverage was nearly as infrequent as pediatric dental and vision coverage. Two thirds of health plans did not offer their beneficiaries prenatal, delivery, and postnatal healthcare coverage. Substance Use Disorder Coverage was frequently absent in health insurance coverage as well. Only half of plans covered inpatient and outpatient services for substance use issues (e.g. alcohol or drug addiction). Mental health coverage was slightly better with six out of ten plans covering inpatient and outpatient treatment.
Implications for Health Insurance Premiums?
One of the questions raised by the results of this study is whether the coverage expansion required by the ACA will cause premiums to rise in 2014. Although the answer to that question is beyond the scope of this study, premiums could rise due to a combination of factors, including:
* The closing of the coverage gap as described in this study
* Guarantee issue provisions that will allow people with pre-existing medical conditions to enroll in health plans
* ACA actuarial value requirements on the maximum out-of-pocket costs that can be charged to beneficiaries
One of the problems that needed to be addressed by the Affordable Care Act (ACA) was the fact that health plans in the individual market have very skimpy benefits – benefit packages that were designed by private insurers who were attempting to keep their premiums competitive. This study confirms the extent of the inadequacies of these plans.
In response, ACA included a mechanism to require a minimum basic level of essential health benefits (EHB). The expansion of the benefits to be covered, along with guaranteed issue to those with preexisting disorders, and placing a maximum on out-of-pocket costs, will all result in significantly higher premiums for plans offered in the individual market. That is in spite of the fact that many will still find the benefits to be deficient, and will still face large out-of-pocket costs because of the low actuarial values of the plans that most people will select.
Even with subsidies, these plans will be expensive. And for those who do not qualify for subsidies? Maybe those potential purchasers would finally see the wisdom of establishing an equitable public system of financing health care through progressive taxes – a single payer national health program. They certainly aren’t going to like what they are going to get under ACA.
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.
Blue Shield and Aetna to raise healthcare rates over state objections
By Chad Terhune
Los Angeles Times, March 6, 2013
Despite objections from regulators, health insurers Blue Shield of California and Aetna Inc. are proceeding with double-digit rate increases that state officials said were unreasonable.
Officials at the California Department of Managed Health Care said increases that average more than 11% for about 47,000 individual and small-business policyholders of Blue Shield and Aetna were unreasonable. But state officials don’t have the authority to reject changes in premiums, and increasingly health insurers refuse state demands to lower rates.
“I am disappointed that after lengthy negotiations, Blue Shield and Aetna were unwilling to bring their proposed health plan increases down to a reasonable level,” said Brent Barnhart, director of the Department of Managed Health Care.
Last year, Aetna led the way for the industry’s more defiant stance by proceeding with an 8% rate hike on some small-business policyholders despite objections from the state insurance department. In January, California Insurance Commissioner Dave Jones scolded Anthem for proceeding with an 11% premium hike for small businesses that he determined was excessive.
It is no surprise that in California – a state that can review insurance premium increases but has no power to control them – private insurers are proceeding with premium increases deemed to be unreasonable. The surprise is that our elected representatives continue to keep in charge of our health care spending an industry that uses us as instruments to achieve their own business ends.
Imagine a scenario in which Medicare would demand unreasonable increases in premiums. It would never happen. Medicare is a service model designed to serve us, the people. Private insurers are business models designed to serve their own business interests.
Did anyone ever think that it might be a good idea to dismiss the private insurers and provide Medicare for all of us?
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.
Coming up with “A Bitter Pill”
By Steven Brill
Reuters, March 5, 2013
For the past 10 days I’ve been interviewed on various television and radio shows about the article I wrote for the March 4 issue of Time, called “A Bitter Pill.” It’s all about how exorbitant prices and profits are at the core of the crisis America uniquely faces when it comes to financing healthcare, the cost of which now accounts for roughly a fifth of our gross domestic product.
Invariably a question has come up in these interviews about how I thought of that approach. So, since this is supposed to be a column about good story ideas, I think I’ll use it to explain the genesis of “A Bitter Pill” in more detail than I’ve been able to on the talk show circuit.
During the long debate over President Barack Obama’s health insurance reform proposals, a question kept nagging at me: Everyone on all sides seemed to accept as a given that healthcare was wildly expensive, and the only debate seemed to be over who should pay for it. I wondered: Well, why is it so expensive in the first place?
I had no idea what the answers were. But it seemed obvious that there was only one way to find out: If you want to know why something is so expensive, figure out every element of its costs. In other words, follow the money.
As those who have read the article or heard about it now know, I found that all my initial suspicions were wrong. By following the money, I discovered that our healthcare prices are out of whack for a reason that was hiding in plain sight — a reason that should be obvious to anyone who has ever been a healthcare consumer, which means all of us: There is no such thing as a free market in healthcare, if one defines a free market as a place where there is some balance of power between the buyer and the seller. Instead, healthcare is – except when Medicare is the buyer – a lopsided seller’s market. That became clear at both ends of the money trails I followed – from the patients’ lack of any knowledge of what they were buying or its prices, much less any leverage to bargain over it, to the sellers’ ability and willingness to charge absurdly high prices on everything from gauze pads to ambulance services to cancer wonder drugs.
In other words, everyone along the supply chain – from hospital administrators (who enjoy multimillion-dollar salaries) to the salesmen, executives and shareholders of drug and equipment makers ‑ was reaping a bonanza. The only exceptions, I found, were those actually treating the patients ‑ the nurses and doctors (unless the doctors were gaming the system by reaping consulting fees from drug or device makers or setting up diagnostic clinics in their practices in order to steer patients there for expensive tests).
These excepts from Steven Brill’s explanation of how he came to write “Bitter Pill,” his TIME special report on exorbitant prices and profits in U.S. health care, reveal that there are two elements that come out untarnished: 1) most of the doctors and nurses actually treating the patients, and 2) Medicare.
The first point is very reassuring, but the second point should be a call to action. As Brill writes, “healthcare is – except when Medicare is the buyer – a lopsided seller’s market.” We really do need to make Medicare, in an improved version, a buyer for all of us.
For those who have not yet read the 36 page report, “Bitter Pill,” it can be downloaded at the following link. The point to glean from the article is how well Medicare works, which should lead you to the conclusion that we need an improved Medicare for all of us, as opposed to merely accepting the relatively ineffectual tweaks that he suggests at the end of the article.
Gaps in Oversight of Conflicts of Interest in Medicare Prescription Drug Decisions
Office of Inspector General
Department of Health and Human Services, March 2013
1. To assess sponsors’ Pharmacy and Therapeutics (P&T) committees’ conflict-of interest-definitions.
2. To determine whether sponsors’ P&T committees established objective processes to determine and manage committee members’ conflicts of interest.
3. To determine whether the Centers for Medicare & Medicaid Services (CMS) oversee sponsors’ P&T committee compliance with conflict-of-interest requirements.
Most sponsors’ P&T committees had limited definitions of conflicts of interest, which could prevent them from identifying conflicts
* Half of P&T committees’ definitions did not address conflicts prohibited by Federal regulations
* P&T committees’ definitions did not always address relationships with other entities that could benefit from formulary decisions
* More than two-thirds of P&T committees’ definitions did not address employment
Many sponsors’ P&T committees allowed members to determine and manage their own conflicts of interest
* Nearly two-thirds of P&T committees relied on members to determine whether financial interests constituted conflicts
* More than three-quarters of P&T committees relied on members to recuse themselves from discussions and votes
CMS does not adequately oversee sponsors’ P&T committee compliance with Federal conflict-of-interest requirements
* CMS does not review P&T committee conflict-of-interest information
* Data discrepancies would prevent CMS from identifying with certainty the members of each P&T committee
Conclusion and Recommendations
Our findings reveal that both sponsors and CMS conduct limited oversight of P&T committee conflicts of interest, compromising their ability to ensure that financial interests do not influence formulary decisions. Specifically, we found that without direction and oversight from CMS, many sponsors’ P&T committees have limited oversight of members’ conflicts of interest. Additionally, we found that CMS does not adequately oversee compliance with the Federal requirement that at least one physician and at least one pharmacist on each committee be free of conflict.
To address limitations in how P&T committee members’ conflicts are defined, determined, and managed, we recommend that CMS:
* Define PBMs as Entities That Could Benefit From Formulary Decisions
* Establish Minimum Standards Requiring Sponsors To Ensure That Safeguards Are Established To Prevent Improprieties Related to Employment by the Entity That Maintains the P&T Committee
* Establish Minimum Standards Requiring Sponsors To Ensure That an Objective Process Is Used To Determine Whether Disclosed Financial Interests Are Conflicts
* Establish Minimum Standards Requiring Sponsors To Ensure That an Objective Process Is Used To Manage Recusals Because of Conflicts of Interest
* Oversee Compliance With Federal P&T Committee Conflict-of-Interest Requirements and Guidance
Agency Comments and Office of Inspector General Response
CMS did not concur with our first and second recommendations, concurred with part of our third and fourth recommendations, and concurred with our fifth recommendation.
CMS maintained that it is not necessary to conduct additional P&T committee conflict-of-interest oversight because current formulary reviews and P&T committee audits appropriately protect beneficiaries from any adverse effects of potential conflicts of interest.
If conflicts of interest among P&T committee members are not addressed, beneficiaries may receive inferior therapies when safer or more effective therapies are available, limited Medicare dollars may be wasted to pay for inappropriate treatment, and public confidence in the Federal Government may be undermined. In contrast, CMS asserts that conflicts of interest would not disadvantage beneficiaries or the Federal Government because it believes that formulary decisions influenced by conflicts would result in higher premiums and the plan would be priced out of the marketplace.
When the conservatives enacted the Part D drug program for Medicare, they designed it as a private sector solution, using private insurer sponsors and private pharmacy benefit managers (PBMs), while specifically prohibiting any competing public drug plan.
An important function of these intermediaries is to select the drugs to be covered through their formularies, balancing the adequacy of drug selection with the opportunity for profit not only for the insurer sponsors and the PBMs, but also for the pharmaceutical firms supplying the drugs. This function is carried out by the sponsors’ own Pharmacy and Therapeutic (P&T) committees, and not by the government.
The potential for conflict of interest within these P&T committees is enormous. This is why this report from the Office of the Inspector General (OIG) is so important. The committee members are in a position to advocate for the interests of the insurer sponsors, or the PBMs, or the pharmaceutical firms. Decisions which benefit any or all of these would likely be detrimental to the patients who pay premiums and a portion of the Part D drug costs, and to the taxpayers who help fund the Part D program of Medicare.
But don’t worry. This program was set up to allow the free market to work its magic. Apparently this is not only the agenda of the conservatives who established this program, this laissez-faire approach is also being followed by the current “liberal” administration.
In her letter in response to the OIG report, acting CMS administrator Marilyn Tavenner wrote, “… if a P&T committee were to create a formulary while operating under a potential conflict of interest, because a discriminatory formulary would not be approved, the only potential impact would be that the bid could be more expensive and, therefore, less competitive. Beneficiaries could easily evaluate these higher premiums in the marketplace and choose a more efficient plan to meet their needs. As a result, we could expect that any authentic conflicts of interest, given our level of formulary review, would disadvantage the sponsor and not the beneficiary or Medicare program.” Note that this is the exact opposite of what is stated above.
Have you tried to shop for Part D plans? Though the premium might be the first feature you see, the complexity of the various benefits, and especially the differences in the formularies are very difficult to make sense of. How can you look up medications that may be prescribed for you next year when you don’t even know what those medications are? And are you really going to carry a formulary with you each time you see the doctor?
How nonsensical this dependency on the power of the market is can be understood by comparing the prices we get through the privatized version of the government Medicare Part D program, with the prices we get through the government purchases of drugs for the VA system. The VA pays about 40 percent less for drugs than paid under Medicare Part D (Austin Frakt). It seems that the only magic in the marketplace is the increased revenues that these intermediaries can glom off of us pathetic saps.
With HHS Secretary Kathleen Sebelius pushing private Medicare Advantage plans (yesterday’s message), and soon-to-be-confirmed CMS Administrator Marilyn Tavenner pushing private Medicare Part D drug benefits, we have the private sector pretty well covered. One more step to the defined contribution premium support proposal and the private sector will have it locked up.
Our love of the marketplace brings to mind Puck’s comment to Oberon, “Lord, what fools these mortals be!”
Medicare Advantage: Substantial Excess Payments Underscore Need for CMS to Improve Accuracy of Risk Score Adjustments
United States Government Accountability Office (GAO)
Report to Congressional Requesters, January 31, 2013
What GAO Found
GAO found that the cumulative impact of coding differences on risk scores increased from 2010 through 2012 and was greater than the Centers for Medicare & Medicaid Services’ (CMS) risk score adjustment of 3.4 percent for each of the 3 years. In updating the analysis from its January 2012 report, GAO estimated that cumulative Medicare Advantage (MA) risk scores in 2010 were 4.2 percent higher than they likely would have been if the same beneficiaries had been enrolled continuously in Medicare fee-for-service (FFS). For 2011, GAO estimated that differences in diagnostic coding resulted in risk scores that were 4.6 to 5.3 percent higher than they likely would have been if the same beneficiaries had been continuously enrolled in FFS. This upward trend continued for 2012, with estimated risk scores 4.9 to 6.4 percent higher.
CMS’s adjustment to risk scores for 2010 through 2012 to account for diagnostic coding differences was too low, resulting in estimated excess payments to MA plans of at least $3.2 billion. CMS’s annual 3.4 percent reduction in risk scores is equivalent to $2.8 billion in 2010, $3.0 billion in 2011 and $3.2 billion in 2012. According to GAO’s estimates, the amount of the excess payments to MA plans after accounting for CMS’s adjustments was $0.6 billion in 2010, between $1.1 billion and $1.6 billion in 2011, and between $1.5 billion and $2.9 billion in 2012. Cumulatively across the 3 years, this equals excess payments of between $3.2 billion and $5.1 billion.
For 2013, CMS continues to use the risk score adjustment of 3.4 percent it used in 2010, 2011, and 2012. To conduct its data-based analysis, CMS officials reported that they used the same methodology used in 2010, but they incorporated more recent data.
CMS officials stated that they believed there was policy discretion with respect to the most appropriate adjustment factor but did not identify the specific source of their authority to consider factors other than the required data analysis when determining the adjustment amount. While CMS did not change its risk score adjustment methodology for 2013, agency officials said they may revisit their methodology for future years.
Risk adjustment is important to ensure that payments to MA plans adequately account for differences in beneficiaries’ health status and to maintain plans’ financial incentive to enroll and care for beneficiaries regardless of their health status. Our work confirms that differences in diagnostic coding caused risk scores for MA beneficiaries to be higher than those for comparable beneficiaries in Medicare FFS in 2010, 2011, and 2012. CMS’s decision to use a 3.4 percent adjustment to risk scores for 2010 through 2012 instead of the higher adjustments called for by our analysis resulted in excess payments to MA plans. The existence of such excess payments indicates that CMS’s adjustment does not accurately account for differences in treatment and diagnostic coding between MA plans and Medicare FFS—the stated goal of the statute that required CMS to develop a diagnostic coding adjustment. In our January 2012 report, we recommended that CMS take steps to improve the accuracy of the adjustment to account for excess payments due to differences in diagnostic coding. We noted that CMS could, for example, account for additional beneficiary characteristics, include the most recent data available, identify and account for all the years of coding differences that could affect the payment year for which an adjustment is made, and incorporate the trend of the impact of coding differences on risk scores. CMS’s adjustment for 2013 is the same as it used in 2010, 2011, and 2012. However, given our finding that this adjustment was too low and resulted in estimated excess payments to MA plans of at least $3.2 billion, we continue to believe that it is important for CMS to implement our recommendation that it update its methodology to more accurately account for differences in diagnostic coding.
Medicare Advantage remains strong
U. S. Department of Health & Human Services (HHS), September 19, 2012
“Thanks to the Affordable Care Act, the Medicare Advantage and Prescription Drug programs have been strengthened and continue to improve for beneficiaries,” said (HHS Secretary Kathleen) Sebelius.
For the third year in a row, the Centers for Medicare & Medicaid Services (CMS) used authority provided by the Affordable Care Act to protect beneficiaries from significant increases in costs or cuts in benefits.
The private Medicare Advantage plans, offered as an option to traditional Medicare, have been cheating taxpayers by selectively enrolling healthier, lower-cost patients, though being paid at full rates, and more recently by coding patients as having more complicated conditions in order to qualify for higher, risk-adjusted payments. The GAO now provides us with further evidence that Secretary Sebelius and HHS/CMS have been complicit in this fraud.
The Affordable Care Act included provisions to reduce the overpayments to the private Medicare Advantage plans. This GAO report shows that HHS/CMS ignored GAO’s recommendations to improve their risk adjustment methodology, recommendations that should have reduced overpayments due to the embellished diagnostic codes being submitted by the Medicare Advantage plans. HHS/CMS refused to improve the accuracy of their adjustments, which has already resulted in overpayments to these private plans of between $3.2 billion and $5.1 billion.
Why would they do this? Secretary Sebelius has repeatedly touted the Medicare Advantage plans, and has made efforts to expand enrollment in them, even though they cost the taxpayers more money. Overpaying them allows the plans to offer greater benefits in order to entice individuals to enroll. This is leading to further privatization of Medicare, opening up opportunities for Paul Ryan and other members of Congress to push future Medicare beneficiaries into his “premium support” proposal – a voucher plan to privatize Medicare.
Although the Medicare Advantage programs are more expensive, the intent is to expand enrollment and then make a simple change – convert the financing to a defined contribution (premium support), shifting more of the costs to Medicare beneficiaries through higher premiums and then through greater cost sharing (higher deductibles, etc.) to keep the premiums from skyrocketing beyond the means of most seniors.
President Obama has said that he is quite willing to put Medicare on the table as part of the austerity program being advanced by the budget hawks. Secretary Sebelius is advising him on “strengthening” Medicare. Be afraid. Be very afraid.
Arkansas’s unusual plan to expand Medicaid
By Sarah Kliff
The Washington Post, February 28, 2013
The Medicaid expansion has emboldened Republican governors to strike all sorts of deals with the Obama administration. They’re willing to make the program larger, the thinking tends to go, only if they can make it more conservative in the process.
The most interesting deal though may be coming out of a state with a Democratic governor: Arkansas. There, Gov. Mike Beebe must get 75 percent of his legislature to sign off on any funds necessary for the Medicaid expansion — a tough sell when Republicans control both the state House and Senate.
What the legislature could be sold on, they told the governor, was this: Using billions in federal Medicaid dollars to buy private health insurance coverage for the state’s lowest income populations.
To the surprise of many — Beebe included — Health and Human Services has given that plan the go-ahead.
Keep in mind, this is really different from what Florida did. There, Gov. Rick Scott received a waiver to move nearly all of the state Medicaid recipients into a Medicaid health plan, run by a private company, to manage their care.
What Arkansas is doing is using Medicaid dollars and sending people to the private health insurance exchanges, where they will shop for a plan like millions of other Americans expected to receive subsidies.
A private insurance plan tends to be more expensive than Medicaid. The Congressional Budget Office estimates the difference between the two, for an individual, is $3,000.
Right now, that doesn’t matter for Arkansas: The federal government will pay 100 percent of the costs for the Medicaid expansion up until 2017. But after that, the match drops to 10 percent — and then the price tag for coverage does have an effect on the Arkansas budget.
I asked (Beebe spokesman Matt) DeCample why buy the more expensive health plans, which will ultimately cost their state, and the federal government, more money.
“These policies are going to be pricier than strictly through Medicaid expansion,” he replied, “But this is the kind of option that our legislature asked us to look for. Our primary hope is that, we can do this, and this is one way to pursue it.”
Did I get this right? Health and Human Services has granted Arkansas a waiver to allow Medicaid dollars to be used to purchase private health plans in the state insurance exchange, even though they are much more expensive (and have more limited benefits than Medicaid). And they are doing this only so that state legislators can brag about using private insurers for a public program.
By James G. Kahn, M.D.
In his recent Time magazine article, Steven Brill paints a vivid and rather depressing picture of the perverse malfunctioning of our health care system – overpriced and technology-addicted – and he acknowledges some of the advantages of Medicare.
Sadly, however, he shies away from an endorsement of the obvious solution: an improved Medicare for all, i.e. single-payer national health insurance.
I’ll come back to that a little later. However, let me first say that Brill masterfully illuminates much of what’s wrong with U.S. health care.
Take, for example, the “chargemaster” list: an archival, bizarrely hyper-inflated price list in each hospital based on some long-lost secret formulas and automatically inflated over time.
As a physician and health policy researcher, I’ve long known about the massive charges offered to non-contract payers (read: individuals not covered by a public or private insurer), charges that are completely meaningless for costing studies because they’re almost never paid in full and don’t represent the real resources used to provide care. However, what Brill lays out brilliantly (pun intended) is the following:
* Some very poor (lower-middle income) people actually do pay the sky-high chargemaster rates.
* There is a cottage industry (growing, I’m sure, if nothing else due to this article) to help those hapless souls negotiate steep discounts on these ridiculous bills.
* Hospital administrators either refuse to discuss the chargemaster list or offer up the most heinous, transparently nonsensical justifications for using it.
* Perhaps worst of all, the CEOs of large not-for-profit providers are paid literally millions of dollars (OK, not tens of millions like big for-profit companies, but still …), thereby introducing into a supposedly public-good-oriented setting the compensation (and marketing) tone of for-profit industry.
* When these not-for-profits list their “charity” care they value it at the price levels in the chargemaster, even though the cost to produce those services is less than 10 percent of the chargemaster price.
In these and other instances, Brill performs an outstanding public service. However, he regrettably stops short (or his editors stopped him short) of explaining why a single-payer health care system is the only effective remedy for the mess we find ourselves in today. This despite the fact that much of what he says would lead you directly to that conclusion.
He goes so far as to quote others, including John Gunn, Sloan-Kettering’s chief operating officer, who says, “If you could figure out a way to pay doctors better and separately fund research … adequately, I could see where a single-payer approach would be the most logical solution. … It would certainly be a lot more efficient than hospitals like ours having hundreds of people sitting around filling out dozens of different kinds of bills for dozens of insurance companies.”
Yet Brill characterizes the most logical solution as “unrealistic” and fraught with the danger of government overreach and intrusion, summarily dismissing it. Need we mention insurance-company overreach and intrusion in the doctor-patient relationship? Need we note the freedom of Medicare beneficiaries to choose their own doctor and hospital, something that would also characterize a single-payer system?
Incidentally, Brill sharply undervalues the government role in paying for health care. He says that the federal government pays $800 billion per year out of our $2.8 trillion health bill, with the remainder mainly picked up by private insurers and individuals.
The $800 billion federal spending on Medicare and the federal portion of Medicaid is right. However, when you add in other federal programs, the state portion of Medicaid, other state and local programs, health insurance for government employees, and tax subsidies, the total government contribution is over 60 percent of total health spending, and rising. Our government already spends enough to pay for universal single payer!
Single-payer health reform is clearly the answer. We need to create the meme and the momentum and the aura of inevitability to do the right thing — despite the opposition of individuals and organizations with massive vested financial interests in the private health industry. They can be overcome.
Think Lincoln and the 13th amendment. As he said (or at least Daniel Day-Lewis said in the movie), regarding prospects of passing the amendment out of Congress, despite doom-saying by his advisers — “I like our chances” (slight smile).
I like our chances on single payer because it’s now so obvious how irremediably broken our system is, and the house of cards will eventually fall. It’s all about perseverance and timing.
James G. Kahn, M.D., M.P.H., is a professor at the Philip R. Lee Institute for Health Policy Studies, Global Health Services, and the Department of Epidemiology and Biostatistics, all at the University of California, San Francisco. He is also past president of the California chapter of Physicians for a National Health Program.
Sunday Dialogue: The Future of Medicare
The New York Times, February 23, 2013
Readers weigh in on problems with the health care program:
Canada’s Medicare program — phased in at the same time as the American version — shows how we can make Medicare simpler and thriftier, while simultaneously upgrading its coverage. Canada’s program covers all Canadians (not just the elderly) under a single public program in each province, and bans co-payments and deductibles.
Patients can choose any doctor and hospital. Cutting out private insurers and the complexity and fragmentation they impose has simplified paperwork for patients, doctors and hospitals. Administrative costs are roughly half United States levels, saving more than $1,000 per capita.
Over all, Medicare spending on the elderly has grown three times faster in the United States than in Canada since 1980, while life expectancy (for the elderly, as for all age groups) has grown faster in Canada. If American Medicare costs had risen at Canadian rates, we’d have saved more than $2 trillion by now, and Medicare’s trust fund would show a healthy surplus.
DAVID U. HIMMELSTEIN
New York, Feb. 20, 2013
The writers, internists and professors at the CUNY School of Public Health at Hunter College, co-founded Physicians for a National Health Program.
Medicare is headed for bankruptcy because it depends largely on open-ended fee-for-service payment of almost any services providers choose to deliver, at prices mainly determined by the providers. Compounding the problem, most providers act like independent businesses seeking to increase their income, regardless of whether they are for-profit or investor-owned.
An effective Medicare fix would require a new payment system that prospectively pays providers for comprehensive care at a rate set by a single public payer. It would also need a not-for-profit medical care system based on multispecialty doctor groups that pay physicians by salary, thus minimizing incentives to deliver duplicative or unnecessary care.
The new system would have to be mandatory for all citizens, including legislators, and it would have to be financed by a progressive, earmarked health care tax.
Obviously, such reform would be slow and difficult, but so would any other change that threatened vested interests. All reform will depend on an aroused public opinion.
ARNOLD S. RELMAN
Tucson, Feb. 21, 2013
The writer is professor emeritus of medicine and social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine.
At a time when Congress and the Obama administration are contemplating a reduction in Medicare spending as a means of paring down our national budget deficit, it is important to remind the nation of the beneficial changes that we could be making to the Medicare program that would bring affordable, high quality care to everyone under a single payer Medicare budget that we could afford. The messages of Steffie Woolhandler, David Himmelstein and Arnold Relman need to drown out the messages of those who would send Medicare down the wrong path.
States Can Cut Back on Medicaid Payments, Administration Says
By Robert Pear
The New York Times, February 25, 2013
The Obama administration said Monday that states could cut Medicaid payments to many doctors and other health care providers to hold down costs in the program, which insures 60 million low-income people and will soon cover many more under the new health care law.
The administration’s position, set forth in a federal appeals court in California, has broad national implications as it comes as the White House is trying to persuade states to expand Medicaid as part of the new law.
In a brief filed with the United States Court of Appeals for the Ninth Circuit, in San Francisco, federal officials defended a decision by California to cut Medicaid payments to many providers by 10 percent.
Kathleen Sebelius, the secretary of health and human services, approved the cuts in October 2011 after finding that beneficiaries would still have “adequate access” to the wide range of services covered by Medicaid.
The Obama administration urged judges to uphold those cuts, which are being challenged by patients, doctors, dentists, hospitals, pharmacists and other health care providers in California.
Health care providers said California’s payment rates were inadequate even before the cuts. They pointed to a federal study that said, “California stands out because of its very low Medicaid payment levels.”
In an interview, Gov. Jerry Brown of California, a Democrat, said the Medicaid cuts were essential to his efforts to dig the state out of a budget hole.
Federal law says Medicaid rates must be “sufficient to enlist enough providers” so that Medicaid beneficiaries have access to care at least to the same extent as the general population in the same geographic area.
Moreover, the administration said, Congress gave states “wide discretion” to set Medicaid rates, and courts should not second-guess decisions by Secretary Sebelius on the adequacy of rates.
“There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs,” the administration said.
Healthcare overhaul may threaten California’s safety net
By Anna Gorman
Los Angeles Times, February 25, 2013
An estimated 3 million to 4 million Californians — about 10% of the state’s population — could remain uninsured even after the healthcare overhaul law takes full effect. The burden of their care will fall to public hospitals, county health centers and community clinics. And those institutions may be in jeopardy.
County health leaders and others say the national health law has had the unintended consequence of threatening the financial stability of the state’s safety net.
And under the federal law, some of the funding that goes to safety-net hospitals is also set to decrease.
Now, as the state scrambles to create the new healthcare infrastructure, Gov. Jerry Brown is proposing to take back another crucial pot of money that counties have depended on for more than two decades to care for the uninsured.
California has been a leader in setting national trends in health care financing. Two developments should have low-income patients very concerned. California’s Medicaid program is critically underfunded, and the state is reducing payment rates by another ten percent. Also, the state is reducing funding for local safety-net institutions which provide critical access for low-income populations.
Perhaps the most alarming of all is the official response of the Obama administration (in an appeals court filing): “There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs.”
We have said over and over again that Medicaid, as a welfare program, will never have the political support to fund it adequately. The burden of the additional load of Medicaid patients will surely find the health care resources strained beyond the capacity of willing providers, especially when you consider that California already is not meeting the costs of providing care to this vulnerable population. And the 3 to 4 million Californians who will remain uninsured will need to rely on the safety-net institutions, though those institutions also are in jeopardy – again because of the lack of political support for welfare programs.
If California is successful with its cruel budget trimming, it can be anticipated that many more states will follow.
Here’s an amazing fact: Low income patients do not have the money to pay for health care. (What an intuitive stroke of genius!) What they need is an affordable system that removes financial barriers to care while ensuring adequate financing of our entire health care delivery system, thereby removing health system disincentives to providing essential care for this vulnerable population. Make that for all of us.
Bitter Pill: Why Medical Bills Are Killing Us
By Steven Brill
TIME, February 20, 2013
The Way Out Of the Sinkhole
“I was driving through central Florida a year or two ago,” says Medicare’s (Jonathan) Blum. “And it seemed like every billboard I saw advertised some hospital with these big shiny buildings or showed some new wing of a hospital being constructed … So when you tell me that the hospitals say they are losing money on Medicare and shifting costs from Medicare patients to other patients, my reaction is that Central Florida is overflowing with Medicare patients and all those hospitals are expanding and advertising for Medicare patients. So you can’t tell me they’re losing money … Hospitals don’t lose money when they serve Medicare patients.”
If that’s the case, I asked, why not just extend the program to everyone and pay for it all by charging people under 65 the kinds of premiums they would pay to private insurance companies? “That’s not for me to say,” Blum replied.
In the debate over controlling Medicare costs, politicians from both parties continue to suggest that Congress raise the age of eligibility for Medicare from 65 to 67. Doing so, they argue, would save the government tens of billions of dollars a year. So it’s worth noting another detail about the case of Janice S., which we examined earlier. Had she felt those chest pains and gone to the Stamford Hospital emergency room a month later, she would have been on Medicare, because she would have just celebrated her 65th birthday.
If covered by Medicare, Janice S.’s $21,000 bill would have been deeply discounted and, as is standard, Medicare would have picked up 80% of the reduced cost. The bottom line is that Janice S. would probably have ended up paying $500 to $600 for her 20% share of her heart-attack scare. And she would have paid only a fraction of that — maybe $100 — if, like most Medicare beneficiaries, she had paid for supplemental insurance to cover most of that 20%.
In fact, those numbers would seem to argue for lowering the Medicare age, not raising it — and not just from Janice S.’s standpoint but also from the taxpayers’ side of the equation. That’s not a liberal argument for protecting entitlements while the deficit balloons. It’s just a matter of hardheaded arithmetic.
As currently constituted, Obamacare is going to require people like Janice S. to get private insurance coverage and will subsidize those who can’t afford it. But the cost of that private insurance — and therefore those subsidies — will be much higher than if the same people were enrolled in Medicare at an earlier age. That’s because Medicare buys health care services at much lower rates than any insurance company. Thus the best way both to lower the deficit and to help save money for people like Janice S. would seem to be to bring her and other near seniors into the Medicare system before they reach 65.
Meanwhile, adding younger people like Janice S. would lower the overall cost per beneficiary to Medicare and help cut its deficit still more, because younger members are likelier to be healthier.
If that logic applies to 64-year-olds, then it would seem to apply even more readily to healthier 40-year-olds or 18-year-olds. This is the single-payer approach favored by liberals and used by most developed countries.
Yet while Medicare may not be a realistic systemwide model for reform, the way Medicare works does demonstrate, by comparison, how the overall health care market doesn’t work.
Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.
Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.
Steven Brill’s TIME article, “Bitter Pill: Why Medical Bills Are Killing Us,” seems to be awakening those who have, until now, accepted the very high prices of health care as an inevitability for having a technologically advanced health care system here in the United States.
In his 36 page article – which will surely be required reading in many health policy courses – Brill makes it clear that we no longer need to take the “bitter pill” of medical bills that are killing us. Clearly, Medicare already has several tools to control costs and has the potential for further improving value in the nation’s health care purchasing.
At the end of his article, Brill seems to be advancing a non sequitur when he writes, “The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market… We don’t have to scrap our system and aren’t likely to.” This certainly does not follow from what he had to say as the central theme of his article.
He then recommends some tired or inadequate remedies that would have very little impact on the problems that we face in health care. What is ironic is that he has built a tremendous case for the logical solution – an improved Medicare for all – and then he seems to dismiss it. You cannot read his article and escape the conclusion that a single payer national health program is an absolute imperative, that is, if we really do want affordable care for everyone.
Download this article (the full 36 pages is available for free at the link above), and share it with others. But put a Post-it note on it that states: WARNING! For the health of our nation, ignore the section at the end titled “Changing Our Choices” (that’s the tired remedies section), but concentrate on what an improved Medicare system could do for all of us.
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