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.
Build foundation for health care on Medicare: Johnathon Ross, M.D.
By Johnathon Ross, M.D.
The Plain Dealer (Cleveland)
May 30, 2010
Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I’ve worked decades for a national health plan that would benefit individuals and businesses alike.
“So what do you think of the reform bill, Doc?” she asked, hoping I’d be pleased.
I replied with a question of my own: “Would you add a third floor to a house that has a crumbling foundation?” Because that is what Congress just did.
The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.
Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy — their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.
The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.
In effect, health care has been overtaken by an army of bureaucrats whose “generals” — the CEOs — get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care — not deliver it. In our complex, multipayer system, chasing money is expensive work.
Does the new law remedy this? No. “Insurance exchanges” will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.
Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.
Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.
The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.
The exchanges are supposed to bring down prices by promoting “market competition” among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don’t control costs. In fact, Massachusetts now has the highest health care costs in the world.
As a rule, “market competition” doesn’t work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.
Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.
So what’s the alternative? It’s building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.
A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.
Conventional wisdom suggests we have to “wait and see” how the administration’s new law plays out. But we can’t afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.
It’s not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.
Johnathon Ross is past president of Physicians for a National Health Program (pnhp.org) and a leader of the Single Payer Action Network in Ohio (spanohio.org).
Also posted on the PNHP website:
Because of the complexity of the Patient Protection and Affordable Care Act (PPACA) and the intense attention that has been diverted to the details of the act, almost no consideration is being given to correcting the fundamental flaws in the health care financing structure of PPACA. The prevailing attitude is that the legislative task is finished, except for a few tweaks, and so this is the law that we are going to have to live with indefinitely.
Today’s qotd included Johnathon Ross’s piece in its entirety because it explains so well, in a single, easily read article, why we need to dismiss this idea that the legislative task has been completed, and why we must revise the financing system by getting rid of the private insurers and Medicaid, and replace the entire financing system with an expanded and improved Medicare for all.
The article can be downloaded to be used in your advocacy work by distributing it electronically or by printing it out to be distributed as handouts.
We must reopen the national dialogue on comprehensive reform, and this article can be used to initiate the requisite conversation. Failure to do so will result in more suffering, hardship, and even death. As a civilized society, we simply can no longer allow that.
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.
Financial Incentives for Health Care Providers and Consumers
By Jill Bernstein, Deborah Chollet, and Stephanie Peterson
Mathematica Policy Research, Inc.
Health reform will emphasize financial incentives for providers and consumers to promote the use of effective health services and discourage the use of marginally effective or inappropriate services. This brief looks at evidence on the impacts of financial incentives and draws lessons for policymakers.
Consumer Incentives Affect Their Choices
Most private and public insurance plans use financial incentives to constrain consumer demand for care. This strategy is premised on the idea that consumers will make better decisions about seeking care and using cost-effective services when they bear responsibility for a portion of the cost. So-called “consumer-directed” health plans attempt to extend this model, coupling high cost sharing with consumer information about treatment alternatives.
Indeed, research shows that cost sharing — including deductibles, coinsurance, and copayments — does affect health care use and expenditures. However, cost sharing can have important negative effects on health, and high cost sharing may ultimately have little impact on total costs.
When people respond to greater cost sharing by reducing their use of health services, they may forgo services that are necessary and effective as well as those that are more discretionary or ineffective. Forgoing care in response to higher cost sharing may not have significant health consequences for people with good overall health status and average income. But people with health problems and those with lower income and education enrolled in high-deductible health plans may suffer worse outcomes when they forgo or delay care. Vulnerable populations are especially likely to experience negative health outcomes related to cost sharing.
In addition, financial incentives may not significantly change the overall costs of care. Consumers with serious health problems account for most health care costs. Even if strong incentives induce these consumers to use care judiciously, most of their care is nondiscretionary, and costs that exceed their cap on out-of-pocket spending may account for most of the total cost of their care.
A growing number of private and public payers (including Medicare) use financial incentives targeted to providers, consumers, or both, and linked to measures of health care quality and efficiency. These strategies have come to be known generally as value-based purchasing.
Value-based purchasing efforts that focus on providers typically use evidence-based measures of quality, effectiveness, and efficiency to classify or select providers, and to determine how much they are paid. These payment strategies, generally known as “pay for performance” (P4P), may also take into account measures of consumer experience or satisfaction. Most commercial P4P systems use hybrid approaches that combine fee-for-service payment with payment bonuses or withholds that reflect provider performance on specific measures of quality or patient satisfaction.
Value-based systems have encountered various problems related to consumer education and continuity of care that have affected their ability to meet program goals. For example:
* Consumers sometimes associate higher prices with higher quality, leading them to select inefficient, lower-quality health plans with higher premiums.
* Adverse outcomes — and ultimately greater cost — may result when conversions to new evidence-based treatment protocols disrupt care. Disruptions may be especially problematic for patients with serious, chronic illnesses and close ties to their care providers. Although careful targeting of incentives can protect vulnerable patients by identifying those who would most benefit from specialized care, it may also entail additional costs for technical and clinical expertise and for educating and communicating with patients.
SOME LESSONS LEARNED
Evidence on the impacts of financial incentives in private and public insurance plans is limited, but we do know that:
* In general, financial incentives work best when carefully targeted to a specific population, set of services, or health condition. However, providing high quality, effective care can be expensive, even when it is targeted.
* Incentives that improve care and reduce cost present challenges. For plan administrators, designing and using effective incentives can be technically demanding and administratively expensive. For providers, performance reporting can be time consuming. For consumers, choosing among plan options, providers, and treatments can be difficult.
* If not carefully designed, financial incentives can have unintended adverse consequences, including poorer health outcomes and higher long-term costs.
Considerable attention has been paid to controlling health care costs through financial incentives to constrain consumer demand for care (e.g., consumer-directed health care, or CDHC) or to encourage value-based purchasing (e.g., pay for performance, or P4P). This is more than just a theoretical construct since the Patient Protection and Affordable Care Act (PPACA) “focuses on developing financial incentives to improve quality of care and constrain costs.”
A great many readers have told me that they often skip the excepts from the resource, and go straight to my comment. Today’s surprise is that I do request that you read the excerpts above so that you understand more clearly why CDHC and P4P are yet other diversions that will not save money and yet would risk adverse outcomes.
(I’ll omit the comment that a single payer financing system would bring all of us true consumer choice of health care, absent financial barriers, while providing us value-based purchasing though the power of our own public monopsony. Er… I guess I didn’t omit that after all.)
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.
Critics Question Study Cited in Health Debate
By Reed Abelson and Gardiner Harris
The New York Times
June 2, 2010
In selling the health care overhaul to Congress, the Obama administration cited a once obscure research group at Dartmouth College to claim that it could not only cut billions in wasteful health care spending but make people healthier by doing so.
But while the research compiled in the Dartmouth Atlas of Health Care has been widely interpreted as showing the country’s best and worst care, the Dartmouth researchers themselves acknowledged in interviews that in fact it mainly shows the varying costs of care in the government’s Medicare program. Measures of the quality of care are not part of the formula.
The mistaken belief that the Dartmouth research proves that cheaper care is better care is widespread — and has been fed in part by Dartmouth researchers themselves.
The debate about the Dartmouth work is important because a growing number of health policy researchers are finding that overhauling the nation’s health care system will be far harder and more painful than the Dartmouth work has long suggested. Cuts, if not made carefully, could cost lives.
A graphic comparing “The Dartmouth Atlas of Health Care” with Medicare’s “Hospital Compare”:
Monarch HealthCare, HealthCare Partners, and Anthem Blue Cross Chosen for Innovative National Healthcare Program
May 25, 2010
Two of Southern California’s leading physician-governed medical groups, along with Anthem Blue Cross, have been selected for participation in a new and innovative, nationally-recognized healthcare model that rewards providers for improving patient outcomes, while slowing cost growth.
Monarch HealthCare, an Irvine, California-based Medical Group and Independent Physician Association (IPA), and HealthCare Partners, a Torrance, California-based Medical Group and IPA, will collaborate with Anthem Blue Cross in an Accountable Care Organization (ACO) pilot project led by the Engelberg Center for Health Care Reform at Brookings and The Dartmouth Institute for Health Policy and Clinical Practice. The selection of the two California organizations furthers the nationwide demonstration project already underway in three other communities. The demonstration project expects to produce a successful model that will be replicable throughout the country.
Jay Cohen, M.D., president and chairman of the board at Monarch, believes “this is a very exciting development for anyone who supports innovative ideas designed to improve healthcare delivery in the communities we serve. Monarch has always been a leader in this regard and is delighted to have been selected as a pilot site for this project.”
The Dartmouth Atlas of Health Care has been an important contribution to the health policy literature because it demonstrates that regional variations in health care spending are very real. The reasons for these differences are complex and certainly not fully understood at this time.
In spite of the lack of adequate comprehension of the multiple factors involved, the Dartmouth researchers and the Washington politicians are pushing us into accountable care organizations (ACOs) that would arbitrarily reduce spending in high cost areas even though that spending might be medically appropriate and such reductions could impair health care outcomes.
Examples of other important factors that should be considered include the rates of poverty in the region, the population health status in the region, adequacy of health insurance and other financing programs, prices being charged for health care services, excess or deficient capacities in health care facilities especially for high-tech services, and whether or not the variations in frequency and intensity of services are medically appropriate. All potential factors should be well defined through further study, and then policy decisions should be made on the facts.
Unfortunately, moving forward with ACOs is not based on solid policy science. The prototype already initiated by the Dartmouth Institute and others, as mentioned in the Marketwire article above, is really not much different from the HMO concept.
Each year Jay Cohen, MD, MBA, the president and chairman of Monarch HealthCare, and I coach competing debate teams at the University of California at Irvine School of Medicine. The debate is on single payer versus managed care. I can assure you that the ACO under Monarch HealthCare will be structured based on markets and money, with “accountable” prioritized over “care.” Who in their right mind would ever believe that a new label for an old entity will somehow magically reduce our health care spending?
We do need to proceed with studies that could lead to promising efficiencies, but we should not allow the dubious ACO experiment to divert us from introducing proven efficiencies now. The most obvious would be to introduce a single payer national health program. That would provide us with much greater value in our health care purchasing while slowing the rate of cost growth throughout the future. And, oh yes, it would ensure that all of us would receive the care that we need – a mission not on the agendas of ACOs.
British Doctors Must Now Ask: Tell Us How Much You Drink
America’s Health Insurance Plans (AHIP)
(Source – Rebecca Smith, The Daily Telegraph)
June 2, 2010
Under new guidelines set by the National Institute for Health and Clinical Excellence (NICE), British healthcare providers are required to inquire about their patients’ drinking habits as a means to curb the nation’s problem with drinking. NICE recommends that doctors and pharmacists alike gauge patient-consumption tendencies through a series of “alcohol screening” questions – the line of interrogation including no less than 10 questions.
PH24 Alcohol use disorders: preventing harmful drinking: guidance
National Institute for Health and Clinical Excellence (NICE)
Recommendation 9: screening adults
Where screening everyone is not feasible or practicable, NHS professionals should focus on groups that may be at an increased risk of harm from alcohol and those with an alcohol-related condition. This includes people:
− with relevant physical conditions (such as hypertension and gastrointestinal or liver disorders)
− with relevant mental health problems (such as anxiety, depression or other mood disorders)
− who have been assaulted
− at risk of self-harm
− who regularly experience accidents or minor traumas
− who regularly attend GUM clinics or repeatedly seek emergency contraception.
Full report (100 pages):
The 10 questions used for screening (page 16 of 35 pages):
About NICE: “NICE produces guidance on public health, health technologies and clinical practice.”
Great Britain’s National Institute for Health and Clinical Excellence (NICE) produces guidance on public health, health technologies and clinical practice. Their efforts are directed at improving value in health care, especially reducing spending for ineffective or inappropriate services and products.
America’s Health Insurance Plans (AHIP) has repeatedly called for government policies that would help control spending. You would think that AHIP would be supportive of the NICE concept, but by distributing today’s release that falsely states, in essence, that British physicians are being required to invade the privacy of every one of their patients by submitting them to a questionnaire on alcohol use, it seems that AHIP is joining forces with the conservatives who have been condemning NICE as a program of socialistic government rationing. Nowhere in the 100 page NICE report does it state that universal alcohol screening is an absolute requirement. Also for a physician to discuss alcohol problems with a patient is no more an invasion of privacy than discussing any other factors that might influence the patient’s health.
The good news is that the United States has taken a step forward by expanding the role of comparative effectiveness research (CER). Although it is unclear as to whether CER would have much impact on total health care spending, there is no question but that it will provide greater value in our health care.
If we really do care about attaining greater value then we need to expand NICE-like policies while eliminating the profound waste of the superfluous insurance industry represented by AHIP.
Oregon agriculture industry sorts health care
By Harris Meyer
May 29, 2010
Unlike many agricultural employers, Ken Bailey of Orchard View Farms in The Dalles offers his 85 full-time workers health insurance. The orchard and packinghouse operator pays 80 percent of the premium for workers and their dependents.
But like nearly all growers, Bailey’s company does not offer coverage to the 600 to 700 seasonal workers it hires for about eight weeks each year to pick cherries and pears on its 2,080 acres. It’s estimated that as few as 10 percent of farmworkers nationally have health insurance.
Now, Bailey and other farmers in Oregon and Washington are nervous about the federal health reform law passed in March. It requires employers with 50 or more full-time equivalent workers to provide health coverage starting in 2014 or pay a $2,000 penalty per employee. Bailey, who favored health reform, said he’s comfortable with that. Industry groups say most Pacific Northwest growers are too small to fall under that mandate.
But the new law also may require larger farmers and packers like Bailey who meet the 50-employee threshold to offer insurance to seasonal workers or pay the penalty, depending on how the government writes the rules, according to the American Farm Bureau Federation in Washington, D.C. That would be a major new cost for growers already struggling with the bad economy and lower prices for their products.
“It’s almost impossible for individual growers to cover seasonals,” Bailey said. “It depends on whether there is a reasonable program with a reasonable price.” Farmers might even end up paying for coverage of undocumented workers, he said, since they have no reliable way of verifying their workers’ legal status because so many documents — even Social Security cards — can be faked.
For agricultural employers, though, the biggest concern is whether they’ll be required to cover seasonal workers, whom Pacific Northwest growers depend on heavily for their labor-intensive fruit and vegetable crops. The law excludes seasonals — defined as working 120 days or fewer in a calendar year — from being counted toward the threshold of 50 full-time-equivalent employees that brings employers under the insurance mandate. But a new Congressional Research Service analysis says the law requires employers over that threshold to cover seasonals during the months they are working full-time or pay the penalty.
The seasonal worker issue is just one of many uncertainties facing agricultural employers and workers as the complex new health care law is rolled out.
This is yet another of the endless examples of how the Patient Protection and Affordable Care Act (PPACA) is so flawed that it cannot ever result in accomplishing the primary reform goal of covering everyone. Seasonal agricultural workers do not fit into a neat slot in the dysfunctional, fragmented financing system that President Obama and Congress have selected for us.
The first question we might ask is should all seasonal agricultural workers in the United States have the health care that they need without having to suffer potentially severe financial consequences? If you support cultural narcissism and reject social solidarity, then go away. You really wouldn’t fit in with a group of people who believe that we should take care of each other, and our views are apt to only make you more angry.
Those who do believe that seasonal agricultural workers should have health care the year around, if they need it, understand how complex the rules will have to be to cover them with a system that includes an employer mandate, an individual mandate, and varying requirements based on previous, current and future employment, or unemployment, and based on the impact of vacillations in income as related to sliding-scale eligibility or ineligibility for various programs.
Just briefly touching on some of the policies inherent in PPACA: employers with over 50 full-time equivalent employees will have to purchase coverage for their seasonal employees or pay a $2000 penalty per employee, even though that may be a staggering bill because of a temporary ten-fold increase in the number of employees; since most seasonal employees are uninsured, moving in and out of coverage during the harvest season results in instability of coverage; many seasonal workers are undocumented and thus ineligible for purchase of plans in the exchanges, defeating the purpose of the individual mandate; seasonal workers might be able to obtain care through community health centers, though that depends on having clinics accessible and may mean that important specialized services may not be provided, and the mere existence of such clinics may not fulfill the mandate requirements anyway; though the workers and their families might be eligible for Medicaid on an income basis, that may conflict with the employer mandate; etc.
One of the structural problems is that this fragmented system attempts to assign an insurance product, whether employer-sponsored, privately purchased in the individual market, privately purchased in the exchange, provided by the government in the form of Medicaid, or provided as a safety-net function such as the community health centers, when the eligibility and ability to pay is highly variable between individuals and at different points in time. Fragmentation, disruptions, and voids in coverage are inevitable. We need to sever the individual link to a specific insurance product.
What would fix this would be a single payer national health program with automatic enrollment for everyone, financed separately though equitable tax policies. For purely ethical reasons, we can’t accept the new status quo of the highly dysfunctional PPACA. We need to dump it and move on with an improved Medicare for everyone.
For the cultural narcissists who read this far, we would hope to enact a system that would ensure that you will always be able to have the health care that you need, but we would also use the tax system to prohibit you from being a free rider, just as the tax system prevents us from not paying our share of the wars that we oppose.
Anthem Big Outlier In DMHC Actions
Payers and Providers
May 27, 2010
Since the California Department of Managed Health Care (DMHC) began its regulatory mission a decade ago, it has levied nearly 1,200 enforcement actions against health plans, providers and other entities for violating state laws and regulations. The DMHC typically issues penalties for not responding to member grievances or failing to pay claims in a timely fashion.
Among the 170 organizations that have been penalized by the DMHC, Anthem Blue Cross of California stands alone.
The Indianapolis-based Anthem has racked up a remarkable 479 enforcement actions, or more than 40% of the statewide total, according to DMHC records. Some 275 of those actions have been levied against Anthem since early 2009 – including a $2.5 million fine the agency issued last November but has yet to publicize.
Anthem’s overall number is more than quadruple the 102 enforcement actions levied against San Francisco-based Blue Shield of California, the second-largest total.
Anthem Blue Cross equated the number of enforcement actions to its size: “As the state’s largest health benefits company serving more than 8 million people in California each year, it is not surprising that we might have the largest number of inquiries from the DMHC,” the insurer said in a prepared statement. Yet the only insurer of similar size to Anthem in California, Oakland-based Kaiser Foundation Health Plan, has received just 84 enforcement actions from the DMHC. It has 6.7 million enrollees statewide.
“The failure to timely respond to member grievances appears to be due to the lack of administrative capacity,” stated (DMHC spokeswoman Lynne Randolph).
A unique characteristic of the U.S. health care system is the profound administrative waste, in a large part due to the administrative excesses of the private insurers and the administrative burden that they place on the providers of health care. The administrative component of just the private insurers alone is so large that Congress has codified the policy that 15 to 20 percent of health insurance premiums will be allocated for the insurers to use for their own intrinsic administrative services.
Currently outrage is being expressed over the very high insurance premium increases which the insurers attribute to increased health care costs. But the insurers are retaining the same high percentages of these ever higher premiums even though their marginal costs for administrative services should not be increasing at the same rate as health care prices. The increased spending on health care has provided a windfall for the private insurers.
So what are we getting for the massive amount of dollars being retained by the private insurers? Administrative services, and in great excesses at that. Yet why has WellPoint’s Anthem Blue Cross had so many enforcement actions levied against it? As the Department of Managed Care’s spokeswoman states, “The failure to timely respond to member grievances appears to be due to the lack of administrative capacity.”
Lack of administrative capacity?! With what we’re paying them for their administrative services?! And President Obama and Congress want to keep this industry in charge?!
This is not the time to sit back and see how the reform plays out. PPACA cannot ever insure everyone, and it cannot control the intolerable increases in spending. Now, more than ever, is the time for activism! Let’s demand a health care program that we can believe in – an improved Medicare for all!
Health Coverage for the High-Risk Uninsured: Policy Options for Design of the Temporary High-Risk Pool
By Mark Merlis
National Institute for Health Care Reform
May 27, 2010
Among the first tasks required by the recently enacted health reform law is creation of a temporary national high-risk pool program to provide subsidized health coverage to people who are uninsured because of pre-existing medical conditions. While as many as 5.6-million to 7-million Americans may qualify for the program, the $5 billion allocated over four years will allow coverage of only a small fraction of those in need, potentially as few as 200,000 people a year. Policy makers will need to tailor eligibility rules, benefits and premiums to stretch the dollars as far as possible. Another consideration is how the new pool will fit with existing state high-risk pools or other state interventions in the private nongroup, or individual, health insurance market. Policy makers also will need to consider how to manage the transition of enrollees from high-risk pools to the new health insurance exchanges scheduled to be operational in 2014 to prevent adverse selection and encourage insurer participation.
The Patient Protection and Affordable Care Act (PPACA) allocates $5 billion over four years for a temporary high-risk pool to insure those individuals who have problems obtaining coverage because of preexisting conditions. Although about 7 million Americans fall into this category, this report indicates that only about 200,000 people will be covered by this program, thereby meeting only about 3 percent of the need.
You need to read the full 14 page report to understand the multitude of policy interactions that will result in the failure of this one program. It serves as a proxy for the multitude of other policies contained in PPACA. We haven’t seen anything yet.
This is what happens when members of Congress insist on building health care reform on our dysfunctional, inefficient, highly fragmented system of health care financing. By insisting that we give first priority to protecting and enhancing the role of private insurers, the policy compromises have resulted in a system that will cost more while leaving far too many with inadequate coverage or no coverage at all.
Again, it doesn’t have to be this way. We can still enact a single payer national health program, ensuring all essential health care for everyone.
The Impact of Health Care Reform on Employers
May 25, 2010
Although U.S. employers view controlling health care costs as their highest health care reform priority, few believe that the recently enacted Patient Protection and Affordable Care Act (PPACA) will stem the tide of rising costs, according to a May 2010 survey by Towers Watson.
In order to cope with anticipated cost increases, many employers plan on:
* Passing on increases to employees (88%)
* Reducing health benefits and programs (74% )
* Absorbing costs in the business (33%)
* Passing on increases to customers (20%)
More than three in four employers (85%) believe that health care reform will reduce the number of large organizations offering employer-sponsored retiree medical benefits. And 43% of employers that currently offer retiree medical plans plan to reduce or eliminate them.
Fifty-eight percent of employers surveyed believe health care reform will drive large employers to adopt total replacement consumer-driven health plans (CDHP) for their active employees.
Although we have seen many employer surveys in the past, this one is especially important because it represents the views of employers’ human resources professionals who face the reality that the Patient Protection and Affordable Care Act (PPACA) is now law. Since PPACA was designed to perpetuate the role of employer-sponsored health plans, we need to look at the likely responses of employers.
Most employers (90 percent) believe that PPACA will increase their organization’s health care benefit costs. What is alarming is that employers do not intend to pass those cost increases on to their customers as they would with any other overhead increases, but instead they intend to pass them on to their employees in the form of increased premiums and cost sharing, and a reduction in benefits (which also results in higher out-of-pocket expenses for the employees).
More specifically, 58 percent of employers believe that large employers will adopt total replacement consumer-driven health plans (CDHP) for their active employees. “Total replacement” means that employees would be offered no option other then the high-deductible consumer-driven health plans. That could be disastrous for employees with modest incomes who develop significant health problems.
And future retirees can pretty much forget about receiving any retiree health benefits. Employers indicate that they are likely to take advantage of the fact that retirees under age 65 will be able to purchase plans in the exchanges without being excluded because of preexisting conditions.
This is the insurance that President Obama, during his campaign, promised that you could keep if you wanted to. What he didn’t tell you is that, in most instances, you will not be permitted to drop that plan and select another one in the state insurance exchanges. As long as the employer’s plan has an actuarial value of 60 percent (you pay an average of 40 percent of the medical bills), you are prohibited from selecting a better plan in the exchanges.
Once again, we can still fix this. We can enact a single payer national health program – health care for everyone, without financial barriers.
Antitrust and Healthcare
Remarks by Christine A. Varney, Assistant Attorney General, Antitrust Division, U.S. Department of Justice
American Bar Association/American Health Lawyers Association
May 24, 2010
The Patient Protection and Affordable Care Act (the Affordable Care Act), called for by the President and enacted by Congress on March 21, relies, in part, on the belief that robust competition and expanded choice will expand coverage while containing cost.
Yet, like many reforms driven by the power of competition to create consumer welfare, the success of these legislative and regulatory efforts will depend as much upon healthy competitive markets free from undue concentration and anticompetitive behavior as it will upon regulatory change. In short, enactment of the Affordable Care Act makes effective antitrust policy more important than ever.
The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own health care choices by promoting greater insurance competition and outlawing anticompetitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans.
Two significant aspects of the Affordable Care Act are the establishment of new competitive marketplaces — known as Exchanges — for individuals and small employers to purchase health insurance, and the formation of Accountable Care Organizations (ACOs) and other initiatives to provide for more efficient delivery and payment of Medicare services and Medicaid pediatric services. There can be no doubt that the success of the Exchanges and the ACOs will depend, in large part, on effective competition, both among health care insurers and providers.
The ultimate goal of health care reform is to harness the power of competition, together with regulation, to expand coverage, improve quality, and control the cost of health care for all Americans. The role of antitrust is to ensure that competition is preserved and protected, so that it is there to be harnessed.
The goals of health care reform cannot be achieved if mergers between significant insurers in a particular market substantially reduce competition; nor can those goals be realized if dominant insurers use exclusionary practices to blockade entry or expansion by alternative insurers. The same is true if health care providers use supposedly quality-improving or cost-reducing measures simply to raise prices.
Over the last ten years in numerous investigations across the country, the Division has found that many providers give the best discounts only to insurers with significant market share. Thus, new entrants cannot negotiate for competitive provider discounts because they have few enrollees, and they cannot win new enrollees because they do not have competitive discounts. This situation makes it difficult for insurers to enter new geographic areas or for insurers with small enrollment to expand within existing markets.
The Division is committed to vigorously, but responsibly, scrutinizing mergers in the health care industry that appear to present a competitive concern. If we determine that our initial concerns were well founded, we will not hesitate to block the merger or to require the settlement concessions necessary to protect consumers. On the other hand, if we find that the merger may not substantially lessen competition, we will promptly close the investigation and allow the parties to try to show, through the competitive process, that better business methods can deliver more efficient medical care and medical insurance to American consumers.
II. Competition Advocacy
It is important to keep in mind that successful antitrust enforcement also includes effective competition advocacy. (Examples of DOJ competition advocacy are given for Michigan and California.)
III. Entry Project
First, and foremost, we confirmed that the biggest obstacle to an insurer’s entry or expansion in the small- or mid-sized-employer market is scale. New insurers cannot compete with incumbents for enrollees without provider discounts, but they cannot negotiate for discounts without a large number of enrollees. This circularity problem makes entry risky and difficult, helping to secure the position of existing incumbents.
Second, we concluded that it may be easier to enter less concentrated markets, with competition between several large but relatively equal-sized insurers, than it is to enter a market with one or two dominant plans. This is a vitally important finding because it illustrates that a critical economic assumption in antitrust analysis — namely, that the higher profits often associated with concentrated markets will attract new entrants who will help restore competitive pricing — is sometimes made without an adequate evidentiary basis. Indeed, this assumption fails to account for barriers to entry, including barriers based on the inability of entrants to achieve economies of scale that will allow them to compete with incumbents.
One partial explanation for the presence of this phenomenon in health insurance markets comes from our third finding, which is that new entrants or niche players are more likely to receive provider discounts comparable to their competitors’ in less concentrated markets than they are in markets dominated by one or two plans.
Finally, our interviews reconfirmed that brokers typically are reluctant to sell new health insurance plans, even if those plans have substantially reduced premiums, unless the plan has strong brand recognition or a good reputation in the geographic area where the broker operates.
IV. Innovation and Efficiency in Health Care Delivery
It is important to keep in mind that not all provider networks involve sufficient financial, clinical, or other economic integration to apply the rule of reason to joint price negotiations with payers. For example, an arrangement among competing providers simply to engage in joint billing, joint collection services, or even joint purchasing of medical supplies or services is generally not the type of economic integration needed to allow providers jointly to set their reimbursement rates under the rule of reason. Rather, such steps simply reflect an effort to coordinate and share some administrative expenses or to receive volume purchasing discounts.
The economic integration that justifies application of the rule of reason to joint price negotiations with payers requires the sharing of some form of financial risk, such as an agreement by providers to accept a capitated rate, a predetermined percentage of revenue from a health plan, or sufficient clinical integration to induce the group’s members to improve the quality and efficiency of the care they provide. While there is no particular formula that can cover all types of legitimate clinical integration, the key is that there must be sufficient clinical integration to motivate the kinds of changes that can achieve real cost-containment or other performance benchmarks.
The Affordable Care Act’s development of ACOs is a good example of how providers might work together to deliver more efficient, high-quality care without inhibiting competition, so long as their collaborations are properly constructed. For example, the ACO encourages competing physicians, and possibly other providers, to coordinate care for a defined Medicare population through redesigning care protocols, utilizing health IT, investing in infrastructure, and meeting quality targets. If the ACO meets quality-of-care and cost targets, it can share the savings with HHS.
Properly constructed, ACOs have the potential to improve health care delivery and drive down costs. Thus, as reform moves forward, the Justice Department will work closely with HHS and providers to offer whatever guidance may be needed to ensure that providers pursue beneficial integrated ACOs without running afoul of the antitrust laws.
In conclusion, let me say that I hope I have made clear that the Justice Department believes that antitrust has — and will continue to have — an essential role to play in health care. If health care reform is to harness the power of competitive markets to produce more and more efficient systems, then we must be up to the challenge of ensuring that our health care markets are, in fact, as competitive as possible — protected from undue concentration or anticompetitive conduct with vigorous but responsible enforcement and effective competition advocacy. In this dynamic environment, a successful effort will require more than “business as usual.” It will require that we provide clear and accessible guidance to health care consumers, providers, and payers so that there is the predictability needed for health care reform to succeed. I think you will find the Department of Justice generally, and the Antitrust Division specifically, up to the task of ensuring that reform is achieved, competition is maintained, and consumers are benefited.
According to Christine Varney, “The Patient Protection and Affordable Care Act (the Affordable Care Act), called for by the President and enacted by Congress on March 21, relies, in part, on the belief that robust competition and expanded choice will expand coverage while containing cost.”
This is a remarkable statement. Think about it. The President and Congress believe that competition between private health plans will contain costs when decades of experience with the private insurance industry has proven that this is a false belief. Competing private plans have failed miserably in controlling costs.
And the promise of competition within the state insurance exchanges? Private insurers currently have free rein of the markets with virtual unlimited ability to compete. Yet we’ve seen consolidation and concentration within markets, as less dominant companies withdraw. It is likely that only a few major players will be interested in participating in the exchanges. A small player would be unlikely to attract an adequate number of physicians and hospitals to be included in their networks, and consequently would be unable to attract enough individuals to sign up with a plan with such sparse networks. The belief that the state exchanges will promote robust competition between private insurers, which the free market hasn’t done, is a pipe dream.
Now think about costs under the Medicare program. Although a non-competitive government program, Medicare has been far more effective in controlling costs than have the private insurance plans. In fact, the private insurance industry has often followed Medicare’s lead in innovations in the financing of health care.
The attempt to introduce private competition into the Medicare program has been a dismal failure. The care covered by the private plans (Medicare plus Choice, and then Medicare Advantage) has cost more than care provided in the traditional Medicare program for individuals with comparable health care needs. The private plans have been totally unsuccessful in their efforts to compete on a cost basis with our public program – Medicare.
Now back to that remarkable statement – the one that says that the President called for and Congress enacted the Affordable Care Act on the belief that robust competition would contain costs. What a sham! President Obama has known all along that the private insurance industry has failed and that it would take a single payer national health program to cover everyone while controlling costs. He has said as much. The members of Congress know that as well. Why else would they keep saying that if this doesn’t work (which policy science tells us it can’t) then we’ll have single payer?
The last thing we need is the Department of Justice providing antitrust oversight of a dysfunctional private insurance market when the obvious solution is to establish our own public monopsony which controls costs through global budgeting and other proven single payer mechanisms. A monopsony eliminates the need for competition to control costs. That would be detrimental in the private sector, but it would be highly beneficial when it is our own public program.
If we get rid of the private, anti-competitive insurance trusts, then we don’t even need the Department of Justice trust busters on the scene.
NRA partners with UnitedHealthcare
By Paul Frumkin
Nation’s Restaurant News
May 21, 2010
The National Restaurant Association said it has partnered with insurance giant UnitedHealthcare in an effort to make health care coverage more accessible and affordable for foodservice operators and their employees.
The initiative, called “Restaurant Health Care Alliance,” could help provide coverage for the 4 million to 6 million restaurant employees who currently are without insurance, according to Dawn Sweeney the NRA’s president and chief executive. The industry employs about 13 million people.
While details of the plans have not been hammered out, the NRA and UnitedHealthcare said they intend to provide a range of options that will be tailored to the restaurant industry.
“We’re looking at developing a continuum of products,” Sweeney said Friday during a press conference in Chicago announcing the alliance. She said plans could range from discount cards for those employees “who aren’t ready to purchase full health insurance all the way to comprehensive coverage.” Prices could start as low as $100 a month, she added.
Mike Gibbons, the NRA’s chairman of the board, noted that the partnership with UnitedHealthcare would help alleviate the financial burden that national health care reform will put on the restaurant industry.
“The cost of health care reform could be potentially devastating,” he said. “The alliance will give lower cost health care alternatives.”
You would think that now that the Patient Protection and Affordable Care Act (PPACA) is law, UnitedHealthcare, the nation’s largest insurer in terms of revenues, would shape up its act by offering expansions of coverage compliant with the alleged intent of the law to provide adequate health insurance for everyone. That’s what you might think, but you’d be wrong.
The National Restaurant Association (NRA) actively opposed PPACA. It’s not too difficult to understand why. There are close to a million businesses in the restaurant industry, most of which operate on fairly narrow profit margins. Because of their sensitivity to overhead expenses, they have left millions of their food services workers with out any health care coverage whatsoever.
Congress recognized that requiring small businesses to offer all employees insurance coverage would create a significant financial burden for many of them. Thus they exempted businesses with less than 50 employees from the penalty for not providing coverage. But those with 50 or more employees will have to provide “minimum essential coverage” to avoid the penalty. That is defined in the law as providing an actuarial value of 60 percent, though NRA is continuing to lobby for regulations that would keep the more specific requirements to a minimum.
With the potential of gaining millions of new insurance customers from the restaurant industry alone, UnitedHealthcare is quite willing to craft the inexpensive products that the restaurant industry is seeking in response to the requirements imposed by PPACA. But discount cards? That’s not even insurance! The other “lower cost health care alternatives” at best would be underinsurance products that will not protect restaurant employees nor their families who may develop health problems. Junk insurance is what they’re selling!
This is UnitedHealthcare in action after PPACA has become law. It is clear that they have no intent to follow any other path than business as usual. Let’s not go that route, but instead let’s blaze a path to a single payer national health program. Then all restaurant workers (and everyone else) would have the health care that they and their families might need.
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