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.
Swiss Experiment Shows Physicians, Consumers Want Significant Compensation To Embrace Coordinated Care
By Peter Zweifel
Policy makers in several industrial countries are seeking to limit the rise in health care cost growth by supporting coordinated or integrated care programs, which differ from most prevailing forms of medical organization in how physicians are paid and how they work in groups. However, as long as fee-for-service payment systems remain an option, general practitioners will be reluctant to embrace coordinated care because it would give them less autonomy in how they practice. A study in Switzerland indicates that general practitioners will require a pay increase of up to 40 percent before they are willing to accept coordinated care, and a similar study found that Swiss consumers wanted a substantial reduction in premiums to accept it. These findings suggest that provisions of US health care reform designed to encourage the growth of coordinated care — such as accountable care organizations and medical homes — may face a challenging future.
This Swiss discrete choice experiment, evaluating willingness to pay, indicates that both physicians and patients want greater compensation if they are to shift from the traditional fee-for-service arrangement to a coordinated care program.
Although HHS has not yet released the proposed rules for accountable care organizations, they will be coordinated care entities. The release of the regulations has been delayed because of internal disagreements. The question is, will accountable care organizations be such a turnoff that physicians and patients will want to be compensated if they have little choice but to participate in them?
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.
Reducing the Deficit: Spending and Revenue Options
Congressional Budget Office
This volume — one of several reports that CBO produces regularly for the House and Senate Committees on the Budget — presents more than 100 options for altering federal spending and revenues.
The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees.
You do not have to read this entire 254 page report to have a good idea of some of the options to be considered to reduce our federal budget deficit. Pages viii-xiv of the Table of Contents lists the options for reducing mandatory spending, reducing discretionary spending, and increasing revenues. You can then proceed to read about any of the specific options that you my find intriguing to see what impact they might have on the deficit.
This is important. Right now measures are being advanced that would reduce discretionary spending, partially or completely defunding highly valued programs. Yet there seems to be a consensus that we must proceed next with reductions in mandatory spending, which includes Medicare, Medicaid and Social Security, since these programs constitute a larger and growing component of our federal spending.
As you review the list of options for health spending, it becomes obvious that these proposals are aimed at reducing government spending, but would do so by shifting more costs to patients, especially Medicare beneficiaries who already often bear excessive costs of their health care. We need better coverage for Medicare beneficiaries, not worse.
What almost no one is talking about, but should be our primary consideration for deficit reduction is improving revenues. Quoting from the report:
“Relative to the size of the economy, federal revenues are currently at their lowest level in 60 years. In both 2009 and 2010, revenues equaled 14.9 percent of gross domestic product (GDP). By comparison, they averaged about 18 percent of GDP between 1971 and 2010, peaking at 20.6 percent of GDP in 2000.”
That places us near the bottom of all industrialized nations in tax revenues. Yet we are cutting funding of programs at the same time that we are reducing taxes even further (e.g., failure to end the temporary tax cuts for the rich, or to restore reasonable estate taxes). We don’t have a spending problem; we have a revenue problem!
That said, there is one glaring deficiency in this report, and that is that there is no mention of the efficiencies that are characteristic of a single payer system. Single payer tools would slow future growth in health care spending to sustainable levels, and hasn’t that been what all of the Sturm und Drang has been about?
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.
Aetna and Carilion Clinic Announce Accountable Care Collaboration
March 10, 2011
Aetna (NYSE: AET) and Carilion Clinic, the largest health care provider in southwest Virginia, today announced their intention to collaborate in an accountable care organization (ACO) initiative. The new model of health care delivery will help lower costs through more effective patient outreach and engagement and a new payment model that rewards providers for the collective outcomes of patients.
“Working together with a shared vision, we believe we can develop a continuum of care that will be a game-changer in the industry and a great benefit to our patients,” said R. Wayne Gandee, M.D., Carilion Clinic’s chief medical officer.
The Aetna-Carilion relationship is ultimately expected to encompass the following key areas:
* co-branded commercial health care plans for businesses and individuals available later this year;
* joint opportunities to better meet the personalized care needs of patients, including Medicaid beneficiaries in Virginia; and
* new payment models that encourage providers to share accountability to improve patients’ health, including rewards for meeting quality targets and shared costs savings.
“Aetna is exploring new ways to work with health care providers, and we’ve found that these discussions are positively received as we collectively seek to improve the health care system,” said Thomas Grote, president of Aetna’s Maryland, Virginia and Washington, D.C., markets. “Our arrangement with Carilion will provide a foundation to grow these new models of care.”
The patient service mission of not-for-profit Carilion Clinic would seem to have little in common with the for-profit insurance business of investor-owned Aetna. With the pressure on to beat the market by forming accountable care organizations called for in the Affordable Care Act, partnerships such as this that blur the distinction between health care delivery systems and private insurers were fully predictable.
Thank goodness we avoided “government-run” health care by rejecting up front the single payer model of reform. Now we can kick back and relax while we enjoy our “Aetna-run” health care. Or maybe “WellPoint-run.” Or “UnitedHealthcare-run.” Or “Cigna-run.” But we do lose that promise of “choice” since no region will be able to support a broad selection of these organizations accountable to the mega-insurance corporations.
What was it that health care reform was all about? I seem to have forgotten.
Plan with low rate hikes for health coverage has fewer choices
By Sean P. Murphy
The Boston Globe
March 8, 2011
At a time when most health insurance companies are raising premiums by 10 percent or more, the Group Insurance Commission, which insures about 185,000 state employees and their families, last week showed them all up by limiting 2011 increases to just an average 2.4 percent.
But to achieve that goal, the GIC is counting on thousands of subscribers to give up their present plans for much cheaper ones that limit their choices of doctors and medical facilities.
The GIC has offered limited-network plans for years, but fewer than 10,000 of GIC’s 350,000 members have joined so far. Last year, the GIC added new limited-network plans offered by Harvard Pilgrim Community Health and Tufts Health Plan, but those plans, too, attracted limited interest.
To help jump-start migration to the less costly plans, the GIC, beginning April 9, will require every subscriber to pick from among the GIC’s 19 plans, which include preferred-provider organizations (PPO) that allow wide choice and health maintenance organizations that allow moderate choice but charge higher premiums than the more restrictive limited-network plans.
Any subscriber who fails to designate a plan in the one-month period ending May 9 will be dropped from their present plan and automatically enrolled in the cheapest — and most limited — plan on the GIC menu.
We keep looking at Massachusetts since it serves as a prototype for national reform under the Affordable Care Act. Under this latest development in Massachusetts, state employees are being shoved into limited-network plans – significantly limiting their choices of health care professionals and institutions.
One of the primary defects with the insurance exchange model of reform is that emphasizing affordability of health plans rather than health care itself results in a transformation to ever more inferior insurance products.
The goal of reform should not be to take away choices in actual health care, nor to shift more of the costs to those who need health care. Yet those are precisely the trends that we are seeing and will continue to see under a model of competition between private health plans.
Under a single payer national health program we would have free choice of our health care professionals and hospitals, and financial barriers to care would be removed. No wonder that we keep hearing that if (whatever) we’re going to end up with single payer. Can hardly wait.
Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?
By David U. Himmelstein, MD, Deborah Thorne, PhD, Steffie Woolhandler, MD, MPH
The American Journal of Medicine
Despite a marked declined in the uninsurance rate in Massachusetts since the implementation of health reform, the proportion of bankruptcies that occurred in the wake of medical problems has not decreased significantly, and the absolute number of medical bankruptcies has actually increased by one third.
What accounts for the seemingly paradoxical trends of increasing coverage yet stable, or even increasing (on a per capita basis), medical bankruptcy rates? Health costs in the state have increased sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts, as in other states, affected middle-class families with health insurance. High premium costs and gaps in coverage — copayments, deductibles, and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.
The recently enacted national health reform law closely mirrors Massachusetts’ reform. That reform expanded the number of people with insurance but did little to upgrade existing coverage or reduce costs, leaving many of the insured with inadequate financial protection. Our data do not suggest that health care reform cannot sharply reduce the number of medical bankruptcies. Indeed, medical bankruptcy rates appear lower in Canada, where national health insurance provides universal, first dollar coverage. Instead, these data suggest that reducing medical bankruptcy rates in the United States will require substantially improved — not just expanded — insurance, as well as better disability insurance programs to provide income support to ill individuals and family caregivers.
“Unaffordable underinsurance” is rapidly becoming the new standard in the United States. Even with subsidies, insurance premiums are ever less affordable, and for those who need health care, out-of-pocket spending creates significant financial hardships. Since reform under the Affordable Care Act closely mirrors that of Massachusetts, their current experience with medical bankruptcy portends the future of medical bankruptcy throughout the United States.
The Massachusetts experience shows that merely providing insurance coverage to the majority of the population is not enough. The quality of the insurance coverage is crucial. In 2009, 89% of Massachusetts debtors and all their dependents had health insurance at the time of filing, yet the insurance was not effective in reducing the rate of medical bankruptcy below levels that already existed before the full implementation of the Massachusetts health reform program.
Other nations with first dollar coverage do not see medical bankruptcies, even though they cover everyone at a much lower cost. We could do the same here. In fact, we most likely will once the nation understands that “unaffordable underinsurance” is rapidly becoming the new national norm – now carved in stone by the Affordable Care Act. We just need more highly skilled artisans to rework that stone.
Neat, Plausible, and Wrong: The Myth of Health Care Unsustainability
Canadian Doctors for Medicare
The “Sustainability” Myth
Critics of Medicare assert that the cost of our public health care system is growing at an alarming pace. They are joined by provincial Premiers who are concerned that health care is taking up an increasing proportion of provincial budgets. They claim that the cost of health care is rising faster than the pace of inflation and taking up an increasing share of provincial budgets.
Any crisis in health care funding has nothing to do with Medicare. The costs of Medicare – medically necessary hospital and physician services – are not growing significantly and can easily be sustained.
Over the last 35 years, Medicare costs have remained remarkably stable at 4 to 5% of Canada’s gross domestic product (GDP).
Total government health care spending, which includes costs that are not part of Medicare, such as public health, publicly funded dental care and prescription drugs, have risen faster than Medicare spending alone so that total public spending on health care has increased from about 5% of GDP in 1980 to about 7% in 2009. But still, this hardly reflects spending that should be considered “unsustainable.”
None of this is meant to imply that health care is not making up an increasing portion of provincial budgets. It clearly is. The change in the share of provincial budgets however, is not primarily due to increased health care spending. It is the result of decreases in other provincial spending to accommodate political decisions to cut taxes.
… almost all of the growth in health care’s share of provincial budgets can be attributed to the simple arithmetic of an essentially constant numerator and a decreasing denominator. Deep cuts in federal transfers to the provinces in the mid‐1990s were compounded by provincial tax cutting policies in the latter part of the decade, causing significant reductions in total provincial budgets. Provincial revenues have fallen almost $30 billion since 1997, causing decreases in other government program spending through cuts to education, social services, and municipalities.
But it is tax cuts that have “crowded out” these priorities, not Medicare. Medicare spending has remained stable for more than three decades. That stability, in an environment of shrinking budgets, means Medicare inescapably makes up a larger share of that smaller total budget, but Medicare costs are not the part of the equation that is changing at an alarming pace. If the “runaway” growth of Medicare’s share of provincial spending is of genuine concern to provinces, they could simply address the real cause of that development by choosing not to reduce their total tax revenues each year.
Which Costs Are Rising?
While the cost of Medicare has not grown as a percent of GDP over the last 35 years, there have been significant increases in total health care system costs over the same period, and those increases have accelerated in the last decade. Overall health spending in Canada has risen from about 7% of GDP in 1975 to about 10.7% in 2008. In 2010, health care spending was estimated to be about 12% of GDP.
If Medicare costs are stable, and public sector costs are rising slowly, why are total health care costs increasing rapidly? The real cost driver is precisely the thing that critics of Medicare tout as the solution: private health care.
Currently 30% of all health spending is in the private sector, up from 24% in 1975. That growth is a result of significant increases in costs in the private health care sector, including out‐of‐pocket spending and the costs of private insurance. Pharmaceuticals and private prescription drug insurance are the most significant driver of these costs, followed by dental care and private dental insurance.
The Private Funding Option
Those “concerned about sustainability” recommend breaking the “monopoly” Medicare has on insuring medically necessary hospital and physician services and allowing private health insurance for these services. But increased private financing offers no relief to Canadians concerned about the rising costs of health care. The private insurance market, if anything, makes the system less sustainable, as well as less equitable.
Canada’s private insurance system has seen some sharp increases in costs. Private health insurance spending has grown rapidly since the late 1980s, rising from $139 per capita in 1988 to $591 per capita in 2007. Even adjusted for inflation, (giving a per capita constant dollar cost of $377) this represents an impressive 369% increase, outpacing almost all other categories of health care. It is hard to see how this increasingly costly system can be expected to reduce cost in health care overall.
Competing private sector insurance providers have not been able to achieve the same efficiencies as the public insurance system because they are burdened by the inefficiencies of redundant administrative infrastructure, lack of coordination, fragmented purchasing power, personnel costs and corporate profit.
More Effective Options Within Medicare
a) Curb the growth of pharmaceutical costs
Regulating the prices of prescription drugs more effectively is one such opportunity.
Policy makers can also institute more effective assessment systems to identify the best and most cost effective drugs.
The rising costs are also due in part to the fact that private sector drug plans impose unnecessary administrative costs on the health care system.
The relative efficiency of single‐payer health care financing, whether for medical care or pharmacare, is well documented internationally, and benefiting from that efficiency would certainly play a role in reversing the rise in costs that the growth of private drug plans has caused.
b) Ensure more appropriate use of resources
The Health Council of Canada suggests clinical practice guidelines and more effective rules for ensuring the appropriateness of tests and prescriptions would be an effective remedy for overuse, again indicating that more coordinated management may be more useful to reducing costs.
c) Continue to make the delivery of Medicare services more efficient
More fruitful are the many opportunities to improve our Medicare system by drawing on its strengths and building the changes that advance it. To name but a few, such reforms include: greater emphasis on primary prevention and health promotion; integrated patient‐centred primary care by multi‐disciplinary teams; enhanced scope of practice for allied health professionals; shared care with increased coordination between family doctors and specialists; national pharmacare including national procurement processes; better uptake of evidence‐based guidelines for diagnosis and treatment; stronger patient safety protections; and deployment of the long‐awaited electronic health record.
Health System Transformation
Reforms, such as the ones outlined in this paper, would foster healthy partnerships between physicians, other health practitioners, public policy decision‐makers and the public, regardless of their political outlooks, focused not on rehashing the public/private debate that Canadians have settled countless times, but on improving the public health care system. The distraction caused by recycling the old debates has taken up far too much of our policy efforts. It’s time we got down to the real process of improving health care.
Full report (9 pages):
Conservatives in Canada have been fairly successful in disseminating the concept that their Medicare program is unsustainable, and that only privatization can save it. Their campaign has been downright dishonest.
This report from Canadian Doctors for Medicare shows that Medicare has been very stable through the decades and that the increasing cost pressures have occurred in the private sector. The Canadian health care system clearly needs more government involvement, not less.
There are lessons here for the United States. Our much higher costs have been due to unconstrained pressures in the private sector. Our health care prices are by far the highest, and our private insurers have been ineffective in constraining these escalating costs. Since our Medicare program covers only selected populations (elderly, long-term disabilities, end-stage renal disease) it has not had the leverage to control spending as effectively as the Canadian Medicare system. Also, being only a part of a highly fragmented financing system, Medicare is forced to deliver within a system steeped with wasteful administrative excesses.
In the United States, we need a Medicare system that administers financing for our entire health care delivery system, while eliminating the privatizers who continue to drive up health care pricing to unsustainable levels. Canada has shown us that a single payer system works just fine, as long as you don’t give free rein to the privatizers.
By Margaret Flowers, M.D.
President Obama announced at the National Governors Association on Monday that he supports an amendment to the health law that would allow states some flexibility to innovate with their own models of health reform beginning in 2014, rather than waiting until 2017, as is currently required by law. The president’s concession comes as the current federal health law is deteriorating and states are complaining that the financial burden of complying with the law are too onerous in the face of serious budget deficits.
The president’s endorsement of the Wyden-Brown amendment, known as the “Empowering States to Innovate Act” or S.248, allows states to apply for waivers from the health insurance exchange beginning in 2014 and would give them some federal dollars to experiment with alternative ways of providing health coverage. The federal health bill requires that any state seeking a waiver from the health insurance exchange must at a minimum provide coverage comparable to that specified by the federal bill (Section 1332). It is left to the discretion of the secretary of health and human services to determine if a state meets this requirement.
States that put in place a single-payer health system will surpass the coverage of federal law. A single-payer health system, improved Medicare for all, would be universal and would provide the necessary cost controls and savings that would fund comprehensive coverage, including much-needed mental health, dental and vision care.
States such as Vermont and California, which appear to be closer than any others to enacting a state single-payer health system, welcomed the president’s support for the Wyden-Brown amendment because it would remove one of the many barriers they face. The amendment will still need to be passed by Congress before it arrives at the president’s desk, which may in itself be a formidable feat in the current political climate.
In addition, for states that want to take the path of single payer, even with the amendment, there will still be many hurdles before they can implement such a plan. The amendment only moves up the date when waivers can be applied for. It does not guarantee federal approval of the many waivers a state single-payer system would need, such as being allowed to roll their Medicaid and Medicare populations into their single-payer system.
Of concern is that the president is signaling a greater willingness to allow states to opt out of the health reform bill not because states want to provide better coverage but because governors in some states are opposed to the federal health law altogether. Beginning shortly after passage of the law last year, there has been an effort to undermine it through court challenges to its constitutionality and more recently through efforts to repeal it entirely or in part by the House. Additionally, hundreds of waivers have been issued excusing businesses, union health plans and health insurers from having to comply with parts of the law. The Department of Health and Human Services now has a 24-hour turnaround time on such waivers.
Vigilance will be required to ensure that some states do not use the amendment, if it is passed, to gut important public health programs such as Medicaid and SCHIP and further privatize health care, which would be harmful to patients. According to a White House fact sheet released around the time of the president’s statement, “The law also allows states to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in [health insurance] exchange plans.” A change such as this would undermine Medicaid and shift more people into more expensive and less protective private insurance plans.
Efforts are already underway in Wisconsin to take control of the state’s Medicaid programs away from the state Legislature and end the public’s ability to have a voice in the process and instead give full authority over the program to the governor’s office. Gov. Scott Walker appointed Dennis Smith, a former Heritage Foundation fellow who has written about moving people out of Medicaid and raising co-pays for those still in Medicaid, as his secretary of health.
Wisconsin is not alone in challenging Medicaid. According to the Wall Street Journal, more than half the states want permission to remove hundreds of thousands of people from Medicaid. Other states like New York and Arizona are cutting benefits of health programs that already provide insufficient coverage.
Decades of experience in the United States shows that the market model fails when it comes to financing health care. Health is a necessity, not a commodity. A system based on the purchase of private insurance results in higher costs and poorer outcomes. Patients who cannot afford necessary care get sick, defer treatment and develop preventable complications, sometimes fatal ones. Families experience personal bankruptcy when a serious illness or accident occurs. With increased political pressure and Secretary Sebelius already issuing hundreds of waivers, can further privatization of health care be prevented?
While some welcome the president’s support for the amendment and hope that if it passes a state will be able to demonstrate the benefits of a single-payer system, as happened in Saskatchewan (and which led to Canada’s national Medicare system), it is possible that the actual outcome of such an amendment will be a further attack on our necessary public health programs. For this reason, it is imperative that we continue to push for a national health program, improved Medicare for all in the U.S.
“It would require fewer waivers and be simpler to enact improved Medicare for all at the national level,” says Dr. Garrett Adams, president of Physicians for a National Health Program. “Not only is it simpler, but it would save lives and end personal bankruptcy caused by medical illness. We would like to see a national Medicare-for-all system enacted sooner rather than later. Every day that we wait, hundreds of Americans die of preventable causes.”
Physicians for a National Health Program advocates for a national publicly financed and privately delivered health system: an improved Medicare for All as embodied in H.R. 676, the “Expanded and Improved Medicare for All Act.” Among the benefits of such a program are that it is a simpler system for patients and health professionals, recaptures about $400 billion annually in unnecessary paperwork and bureaucracy and directs that money into care, allows freedom to choose one’s health provider and more control over one’s treatment, is universal and provides comprehensive health benefits while at the same time effectively controlling our soaring health care costs. In this time of fiscal and health crises, national Medicare for all is more important than ever.
The HMO in Your Future
By John Goodman
National Center for Policy Analysis, John Goodman’s Health Policy Blog
February 28, 2011
(Brief excerpts only)
… you are likely to be in an ACO (accountable care organization) at some point in the future and it’s probably going to happen sooner than you think.
ACOs are sometimes said to be the brain child of Elliott Fisher, who heads the Dartmouth Atlas Project. But as Uwe Reinhardt pointed out the other day, the idea is actually an old idea. It’s called Kaiser Permanente.
… the non-evidence based approach of the Obama administration will force everybody into the same model.
So how do we explain the administration’s commitment to ACOs? Whether they raise or lower costs, whether they raise or lower quality, there is one thing that ACOs will indisputably accomplish. They will drive doctors into organizations where their behavior can be controlled. For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control.
ACOs are the portal through which we will all march toward a truly nationalized health care system.
Use this link to access John Goodman’s full blog entry:
Will accountable care organizations (ACOs) provide the portal that will lead us to a nationalized health care system?
There is a sharp contrast between ACOs as defined under the Medicare Shared Savings Program in the Affordable Care Act (ACA) and the commercial ACOs that already exist or are being formed throughout the nation.
Commercial ACOs are primarily an extension of private sector managed care models of health care financing and delivery, except with the hope of less regulatory oversight of the market concentration that they hope to gain. These organizations are largely entrepreneurial in nature (even if non-profit) with the primary goal of making money. Since virtually all stakeholders are driven by profits, these will be the predominant models of ACOs.
The government version of Medicare shared savings ACOs is merely a model to discount Medicare services and then split the savings between the providers and the government (i.e., half of a discount). Who in their right mind would want to corner that market? The government version will be a dud.
It is not the federal government through the Affordable Car Act that is going to bring us ACOs. It is the private sector. This is hardly a portal to nationalized health care, but it is a reincarnation – on steroids – of the models from the age of managed care that caused us so much distress in the fairly recent past. Any hope of cost containment will vanish as these organizations drive prices ever higher.
Our only hope to slow our outrageous health care cost escalation is to do what all other industrialized nations have done. We need to establish some form of a public monopsony through the application of a universal social insurance program. A publicly-financed and publicly-administered single payer system would be the most efficient and most equitable model.
Comment originally posted at John Goodman’s Health Policy Blog: http://healthblog.ncpa.org/the-hmo-in-your-future/comment-page-1/#comment-86801
Letter from Secretary Kathleen Sebelius replying to Republican governors
U.S. Department of Health and Human Services
February 24, 2011
As a former governor, I can appreciate your interest in having flexibility to establish an exchange that meets the unique needs of your state and its residents.
Your letter identified four areas for greater state flexibility. Specifically, you called for the ability to (1) exercise maximum flexibility to operate exchanges, and in particular to select the insurers that will participate in the exchange, (2) give states authority to determine essential health benefits that participating plans must offer, (3) waive provisions that might inhibit the availability of consumer-driven plans and health savings accounts (HSAs), and (4) enroll Medicaid beneficiaries into private plans without HHS approval. In each of these areas, the Affordable Care Act offers better opportunities than the current marketplace and gives governors and legislatures broad flexibility to capitalize on those opportunities in reshaping state marketplaces for the 21st century.
* Selection of Qualified Plans in the Exchanges. In a majority of states today, a small number of health insurance issuers dominate the market, sometimes offering only a single plan or product. In implementing their exchanges, states have the option to allow all insurers to participate in the exchanges (the Utah model), or they can be more active purchasers in shaping available choices (the Massachusetts model). Either way, the exchanges will stimulate broader competition, and consumers will end up with more and better choices.
* Essential Health Benefits. In today’s market, many individuals and families have limited health insurance options available to them. The number and quality of options typically depend on applicants’ age and health status, and employees of small businesses often have only a single choice. Exchanges will expand consumer choice and give consumers the information they need to comparison shop among their expanded choices. All plans in the individual and small group markets – inside or outside of the exchanges – will provide essential health benefits, which, by law, will be modeled after what a typical employer currently provides today in the private sector. But the law and how states implement it allow a diversity of plan types and benefit designs in exchanges, and states continue to have the option to require coverage of specific, additional benefits.
* Consumer-Driven Plans. Low-cost, high-deductible plans, including those coupled with HSAs, are growing in popularity. The cost sharing limits required by the essential health benefits package mirror the current out-of-pocket maximum for HSAs under the Internal Revenue Code. Exchanges will offer new choices for consumers because health insurance issuers may offer a variety of plans with broad parameters; consumers who are willing to accept higher cost-sharing in exchange for lower premiums may purchase different levels of coverage. The “bronze” plans and catastrophic coverage for young adults will provide opportunities for expanding enrollment in consumer-driven plans coupled with HSAs. At the same time, exchanges will also improve consumer awareness of options by making it easier to compare plans.
* Medicaid Flexibility. The Affordable Care Act expands and simplifies Medicaid coverage and provides states with more opportunities to align Medicaid with private health insurance. More specifically, the law permits states to restructure Medicaid coverage to look more like typical private employer coverage, as Medicaid managed care organizations and commercial insurers move into each other’s markets and create new opportunities to enhance continuity of care across Medicaid and commercial populations.
NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties
Centers for Medicare and Medicaid Services
February 18, 2011
Section H. End of Medicare Advantage Medical Savings Account (MSA) Plan Demonstration Program
In a July 13, 2006, Federal Register Notice (CMS-4123-N) we announced the availability of an opportunity to participate in an MA MSA demonstration project. In the Federal Register notice we said that waivers provided under our demonstration authority would allow interested entities to offer products that more closely resemble high deductible health plans that are offered in conjunction with health savings accounts to the non-Medicare population. We initially established a deadline of July 21, 2006, for applicants that wanted to participate in the MA MSA demonstration program for 2007. We also asked applicants that wanted to participate in the program in 2008 to submit a notice of intent to us as soon as possible.
Overall we had one applicant that participated in the MSA demonstration program in calendar year 2007. There has been no activity under this demonstration program since then. We are not seeking extension of this demonstration program and will not accept applications for participation in this program for plan years 2012 and thereafter.
Nearly Half Of Families In High-Deductible Health Plans Whose Members Have Chronic Conditions Face Substantial Financial Burden
By Alison A. Galbraith1, Dennis Ross-Degnan, Stephen B. Soumerai, Meredith B. Rosenthal, Charlene Gay and Tracy A. Lieu
High-deductible health plans — typically with deductibles of at least $1,000 per individual and $2,000 per family — require greater enrollee cost sharing than traditional plans. But they also may provide more affordable premiums and may be the lowest-cost, or only, coverage option for many families with members who are chronically ill. We surveyed families with chronic conditions in high-deductible plans and families in traditional plans to compare health care–related financial burden — such as experiencing difficulty paying medical or basic bills or having to set up payment plans. Almost half (48 percent) of the families with chronic conditions in high-deductible plans reported health care–related financial burden, compared to 21 percent of families in traditional plans.
To appease the Republican governors, HHS Secretary Kathleen Sebelius has attempted to reassure them that they will have considerable flexibility in qualifying insurance plans for the exchanges, in defining optional benefits for the plans, and in privatizing Medicaid. Perhaps the most alarming flexibility being granted to the governors is the ability to offer consumer-driven plans within the exchanges. Why is that a problem?
In her letter, Kathleen Sebelius offers up the bronze plans in the exchanges and the catastrophic plans for young adults as providing opportunities for expanding enrollment in consumer-driven plans. The bronze plans have an actuarial value of only 60 percent, meaning that an average of 40 percent of health care costs must be paid out of pocket. (The inadequate subsidies for silver plans is another topic not addressed here.) The way that both bronze plans and catastrophic plans achieve lower premiums is by requiring very high deductibles. That is a serious problem.
The current issue of Health Affairs has yet one more article adding to the great body of policy studies on high-deductible plans showing, once again, why they are an inappropriate method of financing health care. This study demonstrates that half of families with chronic conditions in high-deductible plans report health care related financial burdens.
The fact that these plans can be offered with a health savings account (HSA) does not improve the individual’s financial security since these funds still must come from the individual who either funds the HSA to draw on later, or draws the funds from other savings, or, more likely, simply doesn’t have the funds when needed to pay the deductible. An unfunded or depleted HSA is of no value.
Although Republicans have been supportive of the consumer-directed approach of high-deductible plans with HSAs, there is almost unbelievable irony when we look at another favorite of theirs – the privatized Medicare Advantage plans that replace traditional Medicare coverage. Under the Bush administration a Medicare Advantage Medical Savings Account demonstration project was established, duplicating this consumer-directed approach within the Medicare program. Last week HHS announced that this program was being terminated because of a lack of activity. Obviously consumer-directed does not equate with consumer-demanded.
High-deductible plans are under-insurance products that create financial hardships for people who develop health care needs. It is disappointing that Secretary Sebelius is presenting them as an “opportunity.” They’re an opportunity to lose your shirt if you get sick.
We could have done so much better… and still can.
Originally published in the Berkshire Eagle.
Let me pose two riddles I will answer at the end of this column. Which health care reform program for Massachusetts won a non-binding referendum last November? Which health care reform legislation is co-sponsored by all five Berkshire County legislators?
We are now at the time of year when businesses, towns and families are faced with sticker shock as they pay their health insurance premiums for 2011. Town employees find they will have to pay a larger percentage of their health insurance as municipalities deal with escalating costs and limited budgets. There is a push for towns to join the GIC (the Group Insurance Commission) to attempt to reduce town expenses by limiting the choice of private insurance policies and increasing out-of pocket costs for employees.
Businesses are also being forced to require increased cost sharing from their employees. Individuals have to buy insurance plans that cover less even as they cost more, for high deductible plans with larger co-payments for both medical services and prescription drugs.
But there is a solution to these runaway costs: a single-payer health insurance program. In Massachusetts, single-payer legislation, the “Medicare for All Massachusetts Bill,” has been filed for 2011. This legislation guarantees first class, comprehensive coverage for every Massachusetts resident, while reducing costs to the state, towns, businesses and individuals.
Under this legislation, residents of Massachusetts would have a health insurance card to present whenever they received medical care, dental care or prescription drugs. They would pay nothing out-of-pocket, and receive no medical bills.
Businesses would pay a stable payroll tax of 7.5-8 percent instead of rising premiums. Towns would pay the same payroll tax for their employees. Middle and low-income employees would pay a 2.5 percent payroll tax, and take home 7.3-15 percent more income than with their current health insurance program.
In addition to saving money for businesses, towns and families, a single-payer health care program would save money for the state, money needed for other services like education, police and fire protection. Insurance companies, with their high profits and administrative costs, would be supplanted by a “single-payer” that would administer the health care money at a much lower cost than the many private insurance companies. By eliminating the insurance middlemen who provide no health care services, Massachusetts would save $9.7 billion per year. Administrative costs would also decrease for doctors and hospitals with a single-payer program.
The covered benefits would include:
* Prevention, diagnosis and treatment of medical injury and illness, both inpatient and outpatient, laboratory and radiology services, mental health care, dental care, acupuncture, physical therapy, and chiropractic and podiatric services.
* Rehabilitation treatment
* Prenatal and maternity services.
* Home health care.
* Long term care.
* Hospice care.
* Medical transportation.
* Vision and hearing treatment.
* Medical equipment.
* Prescription drugs.
There would be no deductibles, co-payments or co-insurance. Patients would have free choice of health care providers. And an added benefit would be the long term care insurance, especially important for baby boomers now coming of an age where they may need that benefit.
The current Massachusetts health care bill has not been able to control costs, nor do private health insurance policies provide adequate coverage for health care. People want health care reform that works.
So here are the answers to the riddles.
Fourteen districts in Massachusetts voted in favor of a non-binding referendum for a single payer health program in the November election.
All five state legislators in the Berkshires have signed on to co-sponsor the Medicare for All Massachusetts Bill. We praise their leadership, vision, commitment and caring: Senator Benjamin Downing and Representatives Gail Cariddi, Paul Mark, “Smitty” Pignatelli and Chris Speranzo. Our Berkshire delegation is leading the way: no other county in Massachusetts has the support of all their legislators for single-payer health care.
It is time for everyone who supports the Medicare for All Massachusetts Bill to become even more active for the establishment of a state health insurance program that works for everyone, at a cost that is affordable for the state, towns, businesses and families.
Call or write our governor. In his heart, he may be a secret single-payer supporter.
Susanne L. King, M.D. is a Lenox-based practitioner.
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