AHIP supports catastrophic plans as option

Posted by on Wednesday, Jun 11, 2014

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.

Continuing Our Commitment to Consumers: Solutions That Will Enhance Affordability, Stability and Accessibility in the New Health Care Marketplace

America’s Health Insurance Plans (AHIP), June 2014

Enhancing affordability by creating a new lower premium Catastrophic Plan option

While millions of Americans have the peace of mind that health insurance provides, more can be done to maximize choice and affordability for individuals and families. As a solution to bring more families into the marketplace:

Health plans support the creation of a new, lower-premium catastrophic plan.

Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury.

Under the ACA, plans offered in the marketplaces fall into several metal-level categories, based on their “actuarial value” (AV) standard – essentially, what percentage of health care costs the policy would cover for a standard population. Plans are labeled as platinum (90% AV), gold (80% AV), silver (70% AV), or bronze (60% AV). A limited number of individuals — including individuals under the age of 30 — also have the option to purchase a catastrophic, high-deductible plan, although it has an actuarial value that is comparable to the bronze plan.

The new catastrophic plan would offer an AV just below the current minimum requirement, allowing for lower premiums, but would still include coverage of the law’s mandated essential health benefits, have no annual or lifetime benefit limits, and cover all preventive health services with zero cost-sharing for consumers. This would allow individuals and families eligible for premium subsidies to use that financial assistance to purchase the new plan, an option currently unavailable to consumers purchasing the ACA catastrophic plan.

We believe a new catastrophic plan would further the public policy goal of affordability and call upon policymakers to expand consumer choices by allowing this lower-premium option to be offered.


One of the worst failures of the Affordable Care Act (ACA) is that, even with subsidies, the premiums and out-of-pocket expenses are unaffordable for far too many people. AHIP now proposes to make the premiums slightly more affordable by offering catastrophic plans with very high deductibles that would make accessing health care truly unaffordable for even more people (cost sharing subsidies are available only for silver plans, but coverage of the proposed catastrophic plans would fall even below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion of the market of the 31 million people who will still remain uninsured after ACA is fully implemented?

Who would actually select these plans with very high deductibles but lower premiums? Those with very low incomes who would struggle even with subsidized premiums might choose these plans if they consider their subsidized premiums to be “all that they can afford.” These are individuals who would be much more likely to forgo essential health care simply because they couldn’t afford their portion of the deductibles.

Very high income individuals might select these plans to insure against catastrophic losses while deciding to self insure against more modest medical costs. The problem with this is that this is a form of regressive financing of the insurance risk pools. Since average health care costs are well beyond the means of middle income families to pay for them, wealthier individuals need to contribute more to the collective insurance pools (as they would in a single payer financing system). The AHIP proposal for low-premium catastrophic plans would allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the tradeoff of lower premiums for higher-deductibles – an observation confirmed by behavior in the individual insurance market before the enactment of ACA. Families that remain healthy will come out ahead, but those families that later face significant health problems often find that they will face severe financial hardship as well – even bankruptcy.

So the insurance industry is taking a position that they can increase their market, that they will not have to pay for routine medical expenses, and that they can lower their medical losses by paying only for the comparatively few individuals with high medical expenses. Little does it matter that they have the health coverage function backwards in that the healthy and wealthy do very well but the sick and poor suffer. Limiting essential protection for the most vulnerable demonstrates again why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations that benefit themselves. This release by AHIP suggests that this is the beginning of another self-serving public campaign – this time to allow individuals to have (in marketing terms) “the choice of purchasing only the insurance they need” – a high-deductible catastrophic health plan.

Social solidarity takes another beating.

CBO microsimulation of demand for health insurance

Posted by on Tuesday, Jun 10, 2014

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.

Microsimulation of Demand for Health Insurance: A Method Based on Elasticities

By Jessica S. Banthin
AcademyHealth Annual Research Meeting, Congressional Budget Office, June 9, 2014

CBO’s Health Insurance Simulation Model (HISIM)

  • The first version was developed in 2002 to model various proposals for expanding coverage, including direct subsidies, changes to tax incentives, and insurance market reforms.
  • The model is updated regularly to incorporate new data, the most recent economic forecast, changes in law or regulations, and technical improvements.

Major Outcomes Modeled by CBO’s HISIM

  • Effects on the federal budget
  • Changes in coverage by source of coverage
    • Uninsured
    • Employment-based coverage
    • Medicaid
    • Exchange(Subsidized and unsubsidized)
    • Other(Including nongroup coverage outside of the exchanges, Medicare, and military health care)
  • Occasional analyses of premiums, individual out-of-pocket spending, and outcomes by relationship to the Federal Poverty Level

By simulating behavior for each individual and family unit, the estimates capture the distribution of responses rather than average response by cell or subgroup, as in a simpler spreadsheet-type approach.

By taking advantage of detailed information collected in household surveys such as the SIPP on individuals and families and the relationships between key variables such as income, health status, employment status, and coverage, the estimates better reflect outcomes under new policies.

Individual behavior is modeled using an elasticity approach, not an expected utility approach.

Estimated Effects of the Affordable Care Act on Health Insurance Coverage, 2024 (non-elderly people):


  • Without the ACA:  57 million
  • Under the ACA:  31 million


Without the ACA

  • 35 million – Medicaid and CHIP
  • 166 million – Employment-Based
  • 27 million – Nongroup and Other

Under the ACA

  • 25 million – Exchanges
  • 48 million – Medicaid and CHIP
  • 159 million – Employment-Based
  • 22 million – Nongroup and Other

Estimated Budgetary Effects of the Insurance Coverage Provisions of the Affordable Care Act, 2015 to 2024: ~ $1,400 billion


Imagine how complex it is trying to estimate who will be eligible for and how many will select each of the various sources of coverage, how many will end up uninsured, and what impact that will have on the federal budget. The few excerpts above from the CBO presentation, “Microsimulation of Demand for Health Insurance: A Method Based on Elasticities,” provide an inkling of the complexity of that task.

Now imagine how simple it would be to estimate coverage under a single payer system. To the total population, estimates of births and immigration would be added and estimates of deaths and emigration would be subtracted. The CBO microsimulation serves as a proxy for the profound unnecessary administrative complexity and waste in our system.

The CBO is tasked with making projections for our federal budget. They estimate that the increase in federal spending on health care over the next decade due solely to the insurance coverage provisions of the Affordable Care Act will be ~ $1.4 trillion! This does not include the fact that individuals will be paying more because of the decrease in actuarial value of plans within and outside of the exchange, including especially the declining actuarial value of the largest sector of all – employer-sponsored plans. Our total national health expenditures is a much more important number than is the portion in the federal budget.

As we’ve said repeatedly, the ACA model falls short on most of the goals and it is the most expensive of the comprehensive models of reform. In contrast, the single payer model meets essentially all goals and is the least expensive of comprehensive models.

Because of the great number of variables and interdependent complexity of our health care financing, the CBO has declared that in the future it can no longer give a reasonable estimate of the changes in the federal budget due to the implementation and perpetuation of the provisions of the Affordable Care Act. That should tell you something. It’s time for single payer.

Charity, but not for all

Posted by on Monday, Jun 9, 2014

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.

Shifts in Charity Health Care

By The Editorial Board
The New York Times, June 8, 2014

Health care reform was supposed to relieve the financial strain on hospitals that have provided a lot of free charity care to poor and uninsured patients. The reform law, known as the Affordable Care Act, was expected to insure most of those patients either through expanded state Medicaid programs for the poor or through subsidized private insurance for middle-income patients, thereby funneling new revenues to hospitals that had previously absorbed the costs of uncompensated care.

In return for the new income streams, hospitals that treat large numbers of the poor and get special subsidies to defray the cost would have those subsidies reduced on the theory that they would no longer need as much help.

But after the Supreme Court ruled that the reform law could not force states to expand their Medicaid programs, 20 or more states declined to do so. That failure has hurt some big urban hospitals, because their charity care burden remains essentially the same even as their federal aid has been cut. Even in California, which has expanded its Medicaid program, public hospitals that serve the poorest patients could face a big funding shortfall in future years, according to a study just published by researchers at the University of California at Los Angeles.

A recent report in The Times by Abby Goodnough found that some hospital systems have started tightening the requirements for charity care in efforts to push uninsured people into signing up for subsidized health plans on the insurance exchanges created by the reform law. In St. Louis, for example, Barnes-Jewish Hospital has started charging co-payments to uninsured patients no matter how poor they are. Those at or below the poverty level ($11,670 for an individual) are charged $100 for emergency care and $50 for an office visit.

But some medical centers have seen their charity care costs decline. A report late last month in Kaiser Health News and USA Today said that Seattle’s largest “safety net” hospital, run by the University of Washington, saw its proportion of uninsured patients drop from 12 percent last year to a surprisingly low 2 percent this spring, putting the hospital on track to increase its revenue by $20 million this year from annual revenues of about $800 million.

How all of this will shake out is still uncertain. Some vulnerable groups may find it even harder to get the care they need. Through a quirk in the reform law, residents below the poverty line in states that have failed to expand Medicaid are not eligible for either Medicaid or for subsidized coverage on the insurance exchanges. Undocumented immigrants are not eligible for Medicaid or the subsidized coverage. And some low-income people who have enrolled in subsidized health plans may have trouble paying their cost-sharing.

There are some ways to address these gaps. All states ought to expand their Medicaid programs since the federal government is offering very generous matching funds. Hospitals should move aggressively to help people enroll in Medicaid or in subsidized plans on the exchanges. And federal health officials need to review regularly whether health plan co-payments are actually affordable to those living on very modest incomes.

Reader Comments:

NYT Picks
paradocs2, San Diego

It has been little appreciated that one of the most important accomplishments of the Affordable Care Act was to create universal national health insurance for all poor legal residents of the United States who earned less than 138 percent of the federal poverty level. This magnificent and compassionate action of social innovation and national unity was frustrated by the insensitive, tragic and immoral decision of the Supreme Court. The consequences described in this editorial go beyond costs and inefficiencies to the persistence of the lack of medical services in many areas of our country with appallingly poor health statistics. The problem is more than “the financial strain on hospitals that have provided a lot of free charity care to poor and uninsured patients,” for it extends to the suffering of those millions of people excluded from ongoing medical care. In addition, the circumstances described in this editorial highlight the conundrum of our country’s health care system, based as it is on on a commercial market model and profit generating insurance companies. The best solution to these problems, both the economic inefficiencies and the human suffering, is the creation of a universal, national, single payer health system looking like Medicare expanded to cover all residents. It is profoundly upsetting that our individualistic contemporary culture and the politicians who represent it are blind to both the moral and economic consequences of their position.


PNHP’s Jeoffry Gordon, MD (paradocs2, above) stated it so well that no additional comment is being provided today.

Care of cancer in this country is outpacing other health care problems and is already pricing itself beyond the reach of many Americans unfortunate enough to contract the disease. In my 2009 book, The Cancer Generation: Baby Boomers Facing a Perfect Storm, this storm warning was included:

  • Cancer soon to be nation’s No. 1 cause of death
  • Costs soaring out of control
  • Decreasing access, increasing disparities
  • Widening gaps in quality of care
  • Insurance costs more and covers less
  • Profit-driven market-based system is unaccountable and unsustainable
  • Reform is blocked by powerful market stakeholders
  • 79 million Baby Boomers face increased risk of cancer as they age, and will confront this challenge with dwindling resources. (1)

Now, five years later, let’s see where we are with this gathering storm.

Here are markers that show that the situation worsens every year as costs and prices continue to escalate, access and affordability decline, and gaps in quality of care further widen:

  • In Massachusetts, out-of-pocket (OOP) costs for breast cancer treatment are as high as $55,250 for women with high-deductible health insurance. (2)
  • Typical yearly OOP expenses of 20 to 30 percent for cancer treatment often amount to one-half of the average annual household income. (3)
  • Many insured cancer patients are forced to reduce the frequency of their prescribed medications or cut their spending on food and clothing in order to make ends meet. (4)
  • Over the ten-year period from 2004 through 2014, the Consumer Price Index (CPI) has increased by about 2.3 percent a year while the Milliman Medical Index, which measures the actual cost of health care, has increased by an average annual rate of 7.6 percent. (5)
  • With some newer cancer drugs costing as much as $100,000 per round of treatment, there are still perverse financial incentives for many oncologiststo prescribe more expensive drugs. (6)
  • Insurers’ narrowed networks often exclude major cancer centers, often interrupting continuity of care by treating oncologists and burdening patients with much higher OOP costs. (7,8)
  • In other attempts to rein in their (not the patient’s!) costs, insurers are starting to adopt “reference pricing”, by which they just pay a portion of cancer drugs’ costs, leaving the rest to the patient.
  • Chemotherapy continues to be overused in terminally ill cancer patients,with little hope of extending life or adding to quality of life.
  • A recent report from the International Federation of Health Plans (IFHP) found that prices for medical procedures, tests, scans and treatments in the U.S. still have the highest prices among ten countries, are not related to patient outcomes, and “in some cases reflect a damaging degree of market failure.” (9)

All this represents an ominous trend, standing out more starkly all the time compared to other advanced countries around the world, where comprehensive cancer care is available to everyone, typically with little or no cost-sharing and often with better outcomes. The Affordable Care Act (ACA) has not contained costs and prices, but instead has allowed insurers and the drug industry to continue to profiteer at patients’ expense. Future developments in cancer care will certainly add to the cost and price problem, such as gene-based designer cancer drugs. (10)

Markets will never fix this kind of problem. Nor will most parts of the medical industrial complex, driven as they are to profits before service. As other countries have found many years ago, the government must become more involved in pricing and financing of health care services, together with a more rigorous process of assessing services based on scientific evidence, efficacy, and cost-effectiveness.

Fortunately, we are now seeing a major backlash from many oncologists, the cancer doctors who provide most of our cancer care. The American Society of Clinical Oncology (ASCO) has identified this top priority for its members:
For patients with advanced solid-tumor cancers who are unlikely to benefit, do not provide unnecessary anticancer therapy, such as chemotherapy, but instead focus on symptom relief and palliative care. (11)

More recently, leading oncologists have called on their colleagues, working with ASCO, to champion single-payer national health insurance as the only way to bring necessary cancer care to all Americans.

With ACA now the law of the land, and its retention of the private insurance industry at the center of the health system, the trend toward high-deductible health plans, underinsurance, and cost shifting to patients will almost certainly worsen. 59 years of private-sector solutions have failed. There needs to be a major paradigm shift in our approach to funding health care in the United States. . . . Because ACA will fail to remedy the problems of the uninsured, the underinsured, rising costs, and growing corporate control over caregiving, we cannot in good conscience stand by and remain silent. . . .  Life is short, especially for some patients with cancer; they need help now. . . All our patients deserve dignity. It is our moral and ethical obligation as physicians to advocate for universal access to health care. (12)

These words are right on target, and need to be heeded if we are ever going to redress increasing inequities and disparities in cancer care, and start to catch up with the rest of the world.

Original story posted at health Care Disconnects: http://blog.hc-disconnects.com/2014/06/09/cancer-care-in-the-usachilles-heel-of-a-profit-driven-system.aspx

Suggested Reading:

1. Geyman, JP. The Cancer Generation: Baby Boomers Facing a Perfect Storm. Monroe, ME. Common Courage Press, 2009.
2. National Center for Health Statistics. Financial burden of medical care: early release  of estimates from the National Health Interview Survey, January-June 2011. 2012.
3. Kantarjian, H, Steensma, D, Sanjuan, JR et al. High cancer drug prices in the United States: reasons and proposed solutions. Journal of Oncology Practice, May 6, 2014.
4. Zafarm, SY, Peppercorn, JM, Schrag, D et al. The financial toxicity of cancer treatment: a pilot study assessing out-of-pocket expenses and the insured cancer patient’s experience. Oncologist 18: 381-390, 2013.
5. Girod, C, Mayne, LW, Weltz, SA et al. 2014 Milliman Medical Index, Milliman, May 20, 2014.
6. Mathews, AW, Insurers push to rein in spending on cancer care. Wall Street Journal, May 28, 2014: A1.
7. Tozzi, J. Obamacare limits choices under some plans. Bloomberg Businessweek. March 20, 2014.
8. Andrews, M. Warning: opting out of your insurance plan’s provider network is risky. Kaiser Health News, March 18, 2014.
9. IFHP publishes 2013 price report. International Federation of Health Plans, 2014.
10. Wheelwritht, V. Adventures in personal genomics. The Futurist, May-June 2014, 43-45.
11. American Society of Clinical Oncology. Oncology “Top Five” list identifies opportunities to improve quality and value in cancer care. April 3, 2012.
http://www.asco.org/advocacy/oncology-top-five-list-identifies-    opportunities-improve-quality-and-value-cancer-care
12. Drasga, RE, Einhorn, LH. Why oncologists should support single-payer national health insurance. Journal of Oncology Practice, January 2014.

Insurer executive rolls her eyes over hokey ACOs

Posted by on Friday, Jun 6, 2014

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.

Doctors, hospitals and insurers team up

By Bernard J. Wolfson
Orange County Register, May 1, 2014

In an office building across the street from St. Joseph Hospital in Orange, midlevel managers from Blue Shield of California gathered around a conference table last week with representatives of St. Joseph Heritage Healthcare. The setting was unremarkable, but the conversation that took place was part of an increasingly common collaboration between a larger insurer and one of its key medical providers.

Christy Mokrohisky perked up when Nancy England, a senior pharmacist at Blue Shield of California, proposed a pilot program in which pharmacists would be parachuted into the clinics and physician offices of St. Joseph Heritage Healthcare to manage the prescriptions of sick patients for doctors who are too busy to do it.

For Mokrohisky, who oversees St. Joseph’s performance improvement efforts, the idea spoke directly to one of her driving ambitions: to keep chronically ill patients out of the hospital and away from the emergency room.

“We all know that issues around medication are the number one or close to the number one reason for trips to the ER or admissions to the hospital,” said Mokrohisky, giving voice to the consensus around the table.

The weekly meeting is only one manifestation of the huge upgrade in communication and information sharing between the two groups that has resulted from a 2-year-old alliance known, in the techno-jargon of the industry, as an accountable care organization, or ACO.

The main goal of the ACO is to improve the quality of patient care and save money through closer attention to patients’ needs, monitoring of their compliance with doctors’ orders and avoidance of unnecessary treatments.

Early signs indicate the Blue Shield-St. Joseph ACO is paying dividends. In its first year, it produced a sharp reduction in patient admissions, length of hospital stays, emergency room visits, outpatient surgeries and readmissions, according to in-house data from the insurance company. The group saved a total of $11.5 million, some of which the parties divvied up.

The financial windfall aside, people in both organizations say this kind of ongoing collaboration between an insurance company and a large medical group – virtually unheard of a few years ago – has changed the way they do business with each other.

“It sounds kind of hokey, and sometimes when I say it out loud I have to roll my eyes at myself, but it has created something I have never seen,” says Kristen Miranda, who oversees Blue Shield’s 15 ACOs statewide. “It absolutely has changed the way we interact with these providers and the way they interact with each other. We all now see ourselves as coming together to look at this population as if we are on the same side instead of just battling it out at the negotiating table every year.”

Blue Shield views the kind of orchestrated care it is offering through its ACOs as a competitive wedge against Kaiser Permanente, a health care giant in California that has a built-in advantage because its doctors, hospitals and insurance are integrated.

Some industry observers say ACOs are little more than traditional HMOs in new clothing.

(Glenn Melnick, a health economist at USC) worries that the ability of ACOs to save health care dollars may be time-limited.

“At some point, you are going to reduce inpatient days and other measures as low as they can possibly go,” he says. “Then the question becomes whether these ACOs will be able to generate additional savings from other areas that might be more difficult.”


So now with ACOs, insurers and providers are “coming together to look at this population as if we are on the same side instead of just battling it out at the negotiating table every year.” They are sharing a “financial windfall” by having accomplished “a sharp reduction in patient admissions, length of hospital stays, emergency room visits, outpatient surgeries and readmissions, according to in-house data from the insurance company.” The insurers and providers have conspired to split the gains from not providing care. No wonder the person overseeing Blue Shield’s 15 ACOs has to “roll my eyes” since it seems so “hokey.”

No more hokey. Let’s have a financing system geared to patients, not to insurers – a single payer national health program.

Center for Public Integrity on the Medicare Advantage Money Grab

Posted by on Thursday, Jun 5, 2014

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 Medicare Advantage Money Grab

The Center for Public Integrity, June 4, 2014

Why Medicare Advantage costs taxpayers billions more than it should

By Fred Schulte, David Donald and Erin Durkin

(Medicare Advantage) plans have sharply driven up costs in many parts of the United States — larding on tens of billions of dollars in overcharges and other suspect billings based in part on inflated assessments of how sick patients are, an investigation by the Center for Public Integrity has found.

Dominated by private insurers, Medicare Advantage now covers nearly 16 million Americans at a cost expected to top $150 billion this year. Many seniors choose the managed-care Medicare Advantage option instead of the traditional government-run Medicare program because it fills gaps in coverage, can cost less in out-of-pocket expenses and offers extra benefits, such as dental and eye care.

But billions of tax dollars are misspent every year through billing errors linked to a payment tool called a “risk score,” which is supposed to pay Medicare Advantage plans higher rates for sicker patients and less for those in good health.

Government officials have struggled for years to halt health plans from running up patient risk scores and, in many cases, wresting higher Medicare payments than they deserve, records show.

The Center’s findings are based on an analysis of Medicare Advantage enrollment data from 2007 through 2011, as well as thousands of pages of government audits, research papers and other documents.

Federal officials who run the Medicare program repeatedly refused to be interviewed or answer written questions.

Key findings:

  • Federal officials have made billions in “improper” payments to Medicare Advantage plans traced to risk score errors.
  • Medicare Advantage risk scores rose much faster than the national average in hundreds of counties nationwide between 2007 and 2011. That rise in risk scores cost taxpayers more than $36 billion; critics attribute that more to aggressive billing than sicker patients.
  • Though federal health officials have recently disclosed some Medicare billing data, key financial records of Medicare Advantage plans have been kept under wraps.
  • The failure to crack down on health plans that overbill doesn’t bode well for the Affordable Care Act, which relies on a similar risk scoring system.

Thomas Scully, who helped get the program running under President George W. Bush, said rates were generous in hopes of enticing insurers to expand their Medicare business and not shy away from people in poor health.

“We very intentionally tried to overpay them a little bit,” said Scully, now a Washington lobbyist with numerous health care industry clients.


“The Medicare Advantage Money Grab”:http://www.publicintegrity.org/health/medicare/medicare-advantage-money-…

Medicare Advantage is a program in which our government has conspired with insurers to privatize Medicare, even though it costs far more when private insurers are inserted as intermediaries than it does when Medicare is administered as a public program. This report from The Center for Public Integrity is just the latest that has exposed this outrageous use of our tax funds.

The program was set up to deliberately overpay the plans so that they could offer additional benefits that would entice Medicare beneficiaries into the private plans (see Scully’s comment above). Recognizing these overpayments, Congress included in the Affordable Care Act gradual reductions. Not to be outdone, the insurance industry has conspired with the Obama administration and has enlisted individual members of Congress to fight these reductions. In response, the Obama administration has used dishonest budgetary manipulations to offset a portion of the reductions for 2013, 2014 and 2015.

Even more outrageous is that the private insurance industry has used “innovations” to selectively enroll healthier beneficiaries, yet used “touch of illness” serious diagnostic codes to game risk adjustment, which has rewarded the insurers handsomely for claiming that their beneficiaries were much sicker than they really were. According to this report, federal Medicare officials refused to answer questions about these perverse practices.

The insurance industry has been very successful in framing this as “cutting payments for Medicare,” while mobilizing citizens to demand that these cuts be prevented. The cuts are not in Medicare, but they are a reduction of overpayments to private insurers. Yes, those who sign up with the private plans often have lower out-of-pocket costs, but the rest of us are paying for that through higher taxes and through our Part B Medicare premiums that are partially transferred to the private insurers.

Since we are paying for it, we should be receiving in the traditional Medicare program the same benefits of reduced out-of-pocket expenses. Let the people enrolled in Medicare Advantage keep the same level of benefits, but increase the benefits in the traditional Medicare program to the same level, then fire the private insurers that have been responsible for most of the cost overruns in the Medicare Advantage program.

The politicians seem to agree that we should be spending these excess funds on Medicare, so let’s be fair and spend them equitably on an improved Medicare, but not on insurer profits and waste. While we’re at it, let’s make that an improved Medicare for all.

Large variation in cost-sharing reductions in silver plans harms patients

Posted by on Wednesday, Jun 4, 2014

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.

Analysis of Benefit Design in Silver Plan Variations

By Kelly Brantly, Hillary Bray and Caroline Pearson
Avalere Health, June 2014

Both state-based and federally-facilitated exchanges offer financial assistance for low-income enrollees. The assistance takes two forms: advanced premium tax credits and cost-sharing reductions (CSRs). This report focuses on CSR plans, which are available to individuals and families earning between 100% of the federal poverty level (FPL) and 250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV) and lower cost-sharing for low-income exchange enrollees. Avalere Health conducted an analysis of the standard silver and CSR plans offered in the federally-facilitated exchange (FFE) that spans 34 states.

  • Cost-sharing reductions are more often applied across multiple types of benefits
  • in 94% and 87% AV plans compared to 73% AV plans.
  • Many CSR plans have MOOP (maximum out-of-pocket) limits lower than the amount required by law.
  • Almost all CSR plans feature lower deductibles than the standard silver plans, though wide variation remains.
  • Consistent with standard silver plans, copays for specialist visits are higher than those for primary care visits.
  • Low-income consumers may face very high coinsurance for drugs on tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles required by CSR plans may not be clear to exchange enrollees with limited income.

Across all CSR plans, there is broad variation in how issuers reduce cost-sharing across benefit categories relative to the standard silver plans. Because issuers have a high level of flexibility in designing these CSR plans, cost-sharing amounts vary across services and in some cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions across covered benefits may not be clear to consumers while they are shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest level of financial assistance (100% to 150% FPL) could encounter some 94% AV CSR plans with cost-sharing requirements for specific services that are identical to standard silver plans. Even for CSR plan cost-sharing that is reduced, out-of-pocket costs could still serve as a barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click “Download PDF” for full report:http://avalerehealth.com/expertise/managed-care/insights/avalere-analysi…

This report provides a highly technical explanation of the great variation in cost-sharing provisions for lower-income individuals insured by the various silver plans in the exchanges. This is just another example of the unnecessary increase in administrative complexity brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing required of low-income individuals who need higher-tier drugs. High cost drugs, such as those used to treat hepatitis C or those that meet the expanded recommendations for HIV prophylaxis, will be unaffordable for individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1) the cost sharing is so high that many lower-income individuals will not fill their prescriptions, saving the insurers those costs, and 2) those with chronic hepatitis C, those at high risk of HIV exposure, or the many others who have  disorders requiring expensive tier 4 drugs will likely select other insurers once they realize that the drugs that they need will be unaffordable (favorable selection). These are some of the newer innovations that the insurers are using since they are now prohibited from using medical underwriting to deny insurance to individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in the provision of health care. And this is because our politicians selected the most expensive model of health care reform – one that places insurers and pharmaceutical firms above patients. Many studies have shown that the most efficient and equitable model of comprehensive health care coverage – single payer – is also the least expensive of the comprehensive models of reform. Amongst other important measures, it would put pharmaceutical firms in their place, and it would dismiss the intrusive and wasteful insurers from the scene.

We can still do that.

Phillip Longman: VA health care is still the best

Posted by on Tuesday, Jun 3, 2014

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.

Poll: Confidence in veterans’ care plummets to new low

By Susan Page
USA TODAY, June 2, 2014

Americans’ confidence in the medical care provided for soldiers returning from Iraq and Afghanistan has plummeted to new lows in the wake of the VA scandal, a USA TODAY Poll finds. Most people see the problem as widespread and systemic.

Just one in five rate the job the government does in providing veterans with medical care as excellent or good, about half the percentage who said that in a Pew Research Center survey in 2011. Then, half rated the care as “only fair” or poor; now seven in 10 do.

42% have little or no confidence that the problems can be fixed.

Eight in 10 worry that the issue is turning into a political battle in which Democrats and Republicans are more interested in scoring points than solving the issue. On that question, there is almost no difference by party affiliation.



VA Care: Still the Best Care Anywhere?

By Phillip Longman
Washington Monthly, June 3, 2014

Last week, when I accepted an invitation to go on Hugh Hewitt’s nationally syndicated talk show, his first question to me was, “So how does it feel to be the author of a book about the VA that has been thoroughly discredited?”

Well, yes, as the author of the title Best Care Anywhere, Why VA Health Care would be Better for Everyone, it’s been dispiriting to have it confirmed by a preliminary inspector general’s report that some frontline VA employees in Phoenix and elsewhere have been gaming a key performance metric regarding wait times. But what’s really has me enervated is how the dominate media narrative of the VA “scandal” has become so essentially misleading and damaging to the cause of health care delivery system reform.

I don’t mean just the fulminations of the right wing press. It’s nothing new when Fox rolls out Ollie North to proclaim that any real or reported failure of the VA is proof of the case against socialized medicine.

I’m also talking about the work of hard-working and earnest reporters, who due to a combination insufficient background knowledge and the conventions of Washington scandal coverage, wind up giving the public a fundamentally false idea of how well the VA is performing as an institution. Over the next several days, I plan to make a series of posts here at Political Animal that I hope will be helpful to those covering the story, or for those who are just trying to get the full context for forming an opinion.

Today, let’s just start by scrutinizing the now almost universal assumption that there is a “systemic” problem at VA hospitals with excessive wait times. Even progressives, including the likes of Jon Stewart and Bill Maher, seem predisposed to believe this for their different reasons. Some voices, like my former colleague Brian Beutler of The New Republic, even speculate that the scandal may ultimately bounce in a way that harms the Republicans more than it does the Democrats.

But before we go there, can we get clear on just what the underlying reality is? There is, to be sure, a systemic backlog of vets of all ages trying to establish eligibility for VA health care. This is due to absurd laws passed by Congress, which reflect on all us, that make veterans essentially prove that they are “worthy” of VA treatment (about which more later). But this backlog often gets confused with the entirely separate issue of whether those who get into system face wait times that are longer than what Americans enrolled in non-VA health care plans generally must endure.

Just what do we know about how crowded VA hospitals are generally? Here’s a key relevant fact that is just the opposite of what most people think. For all the wars we’ve been fighting, the veterans population has been falling sharply (pdf). Nationwide, their number fell by 17 percent between 2000 and 2014, primarily due to the passing of the huge cohorts of World War II- and Korea War-era vets. The decline has been particularly steep in California and throughout much of New England, the Mid-Atlantic and industrial Midwest, where the fall off has ranged between 21 percent and 36.7 percent.

Reflecting this decline, as well a general trend toward more outpatient services, many VA hospitals in these areas, including flagship facilities, want for nothing except sufficient numbers of patients to maintain their long-term viability. I have visited VA hospitals around the county and often been unnerved by how empty they are. When I visited two of the VA’s four state-of-the-art, breathtakingly advanced polytrauma units, in Palo Alto and Minneapolis, there was hardly a patient to be found.

But at the same time there is a comparatively small countertrend that results from large migrations of aging veterans from the Rust Belt and California to lower-cost retirement centers in the Sun Belt. And this flow, combined with more liberal eligibility standards that allow more Vietnam vets to receive VA treatment for such chronic conditions as ischemic heart disease and Parkinson’s, means that in some of these areas, such as, Phoenix, VA capacity is indeed under significant strain.

This regional imbalance in capacity relatively to demand makes it very difficult to manage the VA with system-wide performance metrics. Setting a benchmark of 14 days to see a new primary care doc at a VA hospital or clinic in Boston or Northern California may be completely reasonable. But trying to do the same in Phoenix and in a handful of other sunbelt retirement meccas is not workable without Congress ponying up for building more capacity there.

Once you have this background, it becomes easy to understand certain anomalies in this scandal. If care is really so bad, for example, why did all the major veterans services remain unanimous in recent testimony before Congress in their long-stranding praise for the quality of VA health care? And why have they remained stalwart in defending the VA against its many ideological enemies who want to see it privatized? It’s because, by and large, VA care is as good, if not better than what vets can find outside the system, including by such metrics as wait times.

Similarly, if VA care were not generally very good, the VA would not continue to rank extraordinarily high in independent surveys of patient satisfaction. Recently discharged VA hospital patients for example, rate their experience 4 points higher than the average (pdf) for the health care industry as a whole. Fully 96 percent say they would turn to VA inpatient care again.

Now if you go out looking for vets who say they have been victimized by the VA, you will have no trouble finding them, and many will be justified in their complaints. But as I’ll argue further in future posts, the key question to ask when confronting the real deficiencies of the VA is “compared to what?” Once that context is established, it becomes clear that VA as a whole continues to outperform the rest of the American health system, making its true lessons extremely important to learn.

Phillip Longman is senior editor of the Washington Monthly.


Phillip Longman, as the author of “Best Care Anywhere, Why VA Health Care would be Better for Everyone,” is a person to whom we can turn to get the full story on the VA health care “scandal” and how representative it is of the system at large. According to him it is not only the right wing attacks claiming that this is proof of the case against socialized medicine, but it is also “hard-working and earnest reporters” who “wind up giving the public a fundamentally false idea of how well the VA is performing as an institution.”

The new USA Today poll confirms that the reporting has caused Americans’ confidence in the VA health system to plummet, with the perception that the problem is widespread and systemic. Americans do recognize that the politicians are more interested in scoring points than they are in solving the issues (Sen. Bernie Sanders being a notable exception). Nevertheless, the poll indicates that they now believe that the government is doing a poor job and 42% have little or no confidence that they can fix the problems.

Longman states, “it becomes clear that VA as a whole continues to outperform the rest of the American health system, making its true lessons extremely important to learn.” When individuals make the claim that the VA “scandal” proves that single payer would not work in the United States, refer them to this series being written by Phillip Longman where they can learn the truth.

VA: Do we awfulize, or do we fix it?

Posted by on Monday, Jun 2, 2014

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.

Chairman Sanders Lays Out Legislative Action Plan for Veterans

Senator Bernie Sanders, June 1, 2014

Senate Veterans’ Affairs Committee Chairman Bernie Sanders (I-Vt.) today outlined a comprehensive legislative package to address “reprehensible” behavior by VA officials and to correct underlying problems in access to medical care.

“There must be a culture of honesty and accountability within the VA and people who have lied or manipulated data must be punished. But we also have to get to the root causes of the problems that have been exposed. The simple truth is that with 2 million more veterans coming into the system in recent years there are many facilities within the VA that do not have the doctors, nurses and other personnel that they need to provide quality care in a timely way.”

Sanders said a Thursday hearing of the veterans committee will consider the Restoring Veterans’ Trust Act of 2014. The measure then could be put on a fast track for consideration by the full Senate. It would give the VA authority to immediately remove senior executives based on poor job performance while preventing wholesale political firings. It would provide veterans who can’t get timely appointments with VA doctors the option of going to community health centers, military hospitals or private doctors. It would authorize VA to lease 27 new health facilities in 18 states. It would authorize emergency funding to hire new doctors, nurses and other providers in order to address system-wide health care provider shortages and to take other steps necessary to ensure timely access to care.  To address primary care doctor shortage for the long-term, the bill would authorize the National Health Service Corps to award scholarships to medical school students and to forgive college loans for doctors and nurses who go to work at the VA.

Altogether, the bill would provide education, retirement security and other benefits for millions of veterans and their families. Virtually all of the provisions already have been approved by the Senate committee, many of them by unanimous votes, during previous legislative markup sessions.

Sanders said the need for congressional action was underscored last Wednesday when the VA’s independent Office of Inspector General found that officials had lied about wait times for appointments at the Phoenix VA and other medical facilities. A separate audit delivered to President Barack Obama on Friday disclosed attempts by VA employees at two-thirds of VA hospitals and clinics to cover up delays in providing patient care.


THE RESTORING VETERANS’ TRUST ACT OF 2014:http://www.sanders.senate.gov/download/restoringveteranstrustact2014?inl…


VA Scandal Gives Single-Payer Opponents Ammunition

By Brianna Ehley
The Fiscal Times, May 27, 2014

The ongoing scandal at the Veterans Affairs Department has forced the idea of government-managed health care into the spotlight, with opponents pointing to the VA’s failures as an example of what could happen if the country were to adopt government run health care or a single payer insurance policy on a larger scale.

Larry Kudlow of the Kudlow Report was quick to pounce on the VA scandal as testament to what goes wrong when you adopt socialized medicine. “This VA scandal is a reminder that government-run single-payer health care does not work.”

However, single payer advocates say what’s happening at the VA isn’t relevant to single payer at all, since the VA is completely government-run and in a single- payer system, the delivery of care would remain largely in the private sector’s hands.

Sen. Bernie Sanders, the independent Senator from Vermont and potential 2016 presidential contender, has been a leading advocate of a single-payer health care system for years. Last week, Sanders led a panel discussion on Capitol Hill over the future of single payer, since his home state of Vermont is expected to serve as a single payer guinea pig for other states.


To no surprise, opponents of government involvement in health care have jumped on the malfeasance exposed at the Veterans Health Administration as proof that the government can’t do anything right. Many have expanded that by saying that this is proof that a single payer health care system cannot work – a non sequitur if there ever was one. This nonproductive awfulizing that is taking place (imagining horrific situations and outcomes that don’t yet exist) is a totally inappropriate response when what we need is intervention to correct the deficiencies. Fortunately Sen. Bernie Sanders understands that.

The problem provoking the current furor is the tolerance and mismanagement of excessive queues. It is well within our capabilities to reduce queues to acceptable levels. More attention should be given to queue management (the process that reduced long lines at airports after 9/11). Capacities within the system need to be adjusted. Often small expenditures directed to increasing capacity can dramatically reduce queues. Reinforcing primary care has long been recognized as a priority, yet members of Congress sit on their duffs. Perhaps this will awaken some members to the need to fulfill their responsibilities to the people.

In February, Sen. Sanders submitted a bill to Congress designed to improve the functioning of the VA health system. It was blocked by the Republican Senators. Sen. Sanders is now using the political capital created by this mismanagement in an effort to enact The Restoring Veterans’ Trust Act of 2014. It not only addresses the queues, but it also establishes other important policies designed to improve the functioning of the VA health system. Although he may be able to gain enough Republican support to pass this bill in the Senate, some Republican members of the House this weekend said that we do not have the money required to implement the proposals. Of course that is nonsense. With midterm elections around the corner, the Republicans are going to have to decide whether they want to take the blame for refusing to act on behalf of our veterans.

This really is about what we are as a country. Do we take care of our veterans, or do we move forward with efforts to defund the government so it will drown in a bathtub? We have our choice of politicians who will align themselves with one side or the other. In a democracy, it is up to the voters to decide which politicians we want representing us. So, what do we support, social solidarity or trashing of our revered government institutions?


by John Geyman, M.D.


The V.A. scandal over access to care for our veterans is, of course, a betrayal of our government’s debt to our veterans and a national disgrace that needs fixing on an urgent basis. Typical of such scandals, there is piling on from all quarters about what should be done, although we still don’t know the full extent of the problems.

Some things we do already know, thanks to an expedited Interim Report by Richard J. Griffin, the Acting Inspector General for Veterans Affairs. That report tells us that:

  •     average waiting times for first primary care appointments at the Phoenix V.A. have been 115 days, nearly five times as long as what last year’s annual report acknowledged;
  •     1,700 patients were not placed on the official waiting list at Phoenix;
  •     scheduling data were being falsified and secret lists maintained, presumably to manipulate the data for more favorable performance reviews;
  •     these problems are probably systemic throughout the V.A. system, to the extent that the Inspector General will expand his investigation to 41 other V.A. facilities around the country and even involve the Department of Justice to investigate possible criminal conduct;
  •     and  the 35-page preliminary report found that scheduling problems have been found at both local and national levels by eighteen previous Inspector General reports since 2005.  (1,2)

At this early point, there is much that we don’t know as we await the IG’s full report, due in August. As the investigation expands to include clinical reviews of the consequences of these scheduling problems, we can also expect to learn examples of gross mismanagement and unethical behavior by some in charge.

Naturally, we are now seeing a firestorm of protest, casting blame in all directions. Some are calling for immediate action to include referral of veterans to the private sector, which raises still other questions, such as reimbursement levels and availability of primary care physicians. Many called for the resignation of General Eric Shinseki, Secretary of Veterans Affairs, which he did after so many years of meritorious service.

As this crisis unfolds and we get more information on what has occurred, we need to sort out disinformation and demagoguery from the facts. We will hear “lessons” being advanced from various perspectives. We should also ask ourselves what lessons we cannot learn from this failure. There is a political risk that once resignations have occurred, we will go on as usual without considering more fundamental problems.

Without knowing yet what the full IG’s report will find, we need to wonder if the V.A. has been underfunded by austerity budgets pushed especially by  Republicans. The V.A. has been facing large increases in demand as a result of several factors, including aging of the baby boom-era Vietnam veterans, the influx of wounded warriors from more than twelve years of combat in Iraq and Afghanistan, and recent changes in the law for veterans to qualify for benefits if they were exposed to Agent Orange or to hazardous substances in Iraq and surrounding areas. (3) The number of eligible veterans has more than doubled from 400,000 to 918,000 since 2009. (4)

These questions need to be asked and answered:

  •     Is the V.A.’s budget and primary care capacity adequate to meet its increased demands?
  •     How many veterans died or had preventable worse outcomes as a result of delayed appointments?
  •     How was it possible that the V.A., which played a leadership role in developing electronic medical records in years past, tolerated systems that didn’t talk to each other?
  •     What’s been happening in the V.A. culture that encourages gaming of performance reports as a means to seek bonuses and gloss over problems?
  •     Why wasn’t corrective action taken by the V.A. over the last nine years as these problems progressed?


As this situation evolves over coming months and even into the 2016 election cycle, we can expect to hear dispersions cast on the V.A. as an example of “the government can’t do anything right” and claims that the private delivery “system” is more efficient and less bureaucratic. These disproven claims are predictable from the right as the problems of the Affordable Care Act are further debated and alternatives considered. Meanwhile, we need to remember that the V.A. system has many successes to be proud of over the years. A good example is a 2006 report, based on studies by RAND and the Agency for Healthcare Research and Quality (AHRQ) comparing the quality of care in V.A. hospitals vs. non-V.A. hospitals (Table 1 (5) Superior quality of care in V.A. facilities has also been documented for the care of diabetes (6) and heart attacks (7).

Table 1

We can draw two parallels already between the V.A. system and our civilian counterpart. Both are challenged by increasing demands for primary care at a time when we have a national shortage of primary care physicians. And both are encouraged by various financial incentives to misrepresent performance and actual services delivered in an effort to increase funding. We know in the civilian sector that all efforts so far to “improve quality” through various financial incentives have not worked, are gamed in many ways, and even unfairly penalize doctors and hospitals that care for large numbers of lower-income, sicker people. (8) The highly respected Cochrane Collaboration, an international research body, has “found no evidence that financial incentives can improve patient outcomes.” (9)

The V.A.’s failures are a failure of its delivery system, not its financing system (except to the extent that it is probably underfunded to meet expanded needs}. Contrast that with our civilian health care system, based as it is not on service but ability to pay, which continues to be a failed system on both the financing and delivery sides. Its failures have been documented in my latest book Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans, and many of the posts from my fellow Health Care Disconnects panel members over the last year.

The health care debate will get more intense as the mid-term and general election cycles gain momentum. We will need to separate facts and evidence from ideology, disinformation and unproven claims. The current V.A. problems can and will be fixed. We need to remember the strengths of the V.A. system—especially its universal access for veterans, its not-for-profit and service ethic, and its cost containment successes, such as its bulk purchasing of prescription drugs with discounts down to about 58 percent of what civilians pay. On the civilian side, we can learn from the V.A.’s strengths as we debate how to achieve universal access to all necessary care for all Americans in a reformed system that is affordable, efficient, fair, of good quality, and sustainable in the long run. The only alternative that will do all that is a single-payer financing system of universal access, much like the V.A. accomplishes for almost 9 million veterans.

Suggested Reading:

1. Oppel, RA Jr, Shear, MD. Severe report finds V.A. hid waiting lists at hospitals. New York Times, May 28, 2014.
2. Herb, J. V.A. IG finds ‘systemic’ problems. Politico Pro, May 28, 2014.
3. Rovner, J. FAQ: V.A. and military care are different, but often confused. Kaiser Health News, May 29, 2014.
4. Blades, M. Inspector General’s interim report confirms long delays for patients at Phoenix V.A. hospital.
5. Arnst, C. The best medical care in the U.S. Business Week, July 17, 2006.
6. Kerr, EA, Gerzoff, RB, Krein, SL et al. Diabetes care quality in the Veterans Affairs Health Care System and commercial managed care: the TRIAD study. Ann Intern Med 141(4): 272-281, 2004.
7. Peterson, LA, Normand, SL, Leape, LL et al. Comparison of use of medications after acute myocardial infarction in the Veterans Health Administration and Medicare. Circulation 104(24): 2898-2904, 2001.
8. Pear, R. Health law’s pay policy is skewed, panel finds. New York Times, April 28, 2014.
9. Flodgren, G, Eccles, MP, Shepperd, S et al. An overview of reviews evaluating the effectiveness of financial incentives in changing healthcare professional behaviors and patient outcomes. Cochrane Collaboration, July 6, 2011.

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