Proposed Rule on Medicaid Premiums and Cost Sharing

Posted by on Wednesday, Jan 23, 2013

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.

A Proposed Rule by the Centers for Medicare & Medicaid Services

Federal Register, January 22, 2013

Medicaid, Children’s Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing

This proposed rule would implement provisions of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act), and the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA).

IV. Medicaid Premiums and Cost Sharing

A. Background

Section 1916 of the Act describes long-standing requirements for cost sharing, which apply broadly to all individuals who are not specifically exempted. Such cost sharing is limited to “nominal” amounts. Section 1916 of the Act also establishes authority for states to impose premiums on specific groups of beneficiaries with family income above 150 percent of the federal poverty level (FPL). The Deficit Reduction Act of 2005 (DRA) established a new section 1916A of the Act, which gives states additional flexibility, allowing for alternative premiums and cost sharing, beyond what is allowed under section 1916 of the Act, for somewhat higher income beneficiaries. Such alternative cost sharing may be targeted to specific groups of beneficiaries and payment may be required as a condition of providing services. Alternative premiums and cost sharing imposed under section 1916A of the Act, cannot exceed five percent of family income.

B. Provisions of Proposed Rule

2. Update to Maximum Nominal Cost Sharing (§ 447.52)

Under the authority granted under sections 1916(a)(3) and (b)(3) of the Act for the Secretary to define nominal cost sharing, at § 447.52(b) we propose to revise the maximum amount of nominal cost sharing for outpatient services, which may be imposed on beneficiaries with incomes below 100 percent of the FPL.

To simplify the rules, we propose to remove the state payment as the basis for the cost sharing charge and replace it with a flat $4 maximum allowable charge for outpatient services.

Current rules permit cost sharing for institutional care, up to 50 percent of the cost for the first day of care, for individuals with incomes below 100 percent of the FPL. We are not proposing a change but are considering alternatives for the maximum allowable cost sharing related to an inpatient stay because this is a relatively high cost for very low income people and not a service that consumers have the ability to avoid or prevent. Options under consideration include the $4 maximum applied to outpatient services, $50, or $100, which would encompass the majority of hospital cost sharing currently in effect

3. Higher Cost Sharing Permitted for Individuals With Incomes Above 100 Percent of the FPL (§ 447.52)

Proposed § 447.52 consolidates the requirements for cost sharing established under sections 1916 and 1916A of the Act. Under the statute, states may impose cost sharing at higher than nominal levels for nonexempt individuals with incomes at or above 100 percent of the FPL. Section 1916A provides that states may establish cost sharing for nonexempt services, other than drugs and ED services, up to 10 percent of the cost paid by the state for such services, for individuals with incomes between 100 and 150 percent of the FPL.

4. Cost Sharing for Drugs (§ 447.53)

To provide additional flexibility to states, and to further encourage the use of preferred drugs, we are proposing to define nominal for this purpose so as to allow cost sharing of up to $8 for non-preferred drugs for individuals with income equal to or less than 150 percent of the FPL or who are otherwise exempt from cost sharing. States will have the flexibility to apply differential cost sharing for preferred and non-preferred drugs in whatever manner they consider most effective. For example, a state may charge $2 for preferred and $6 for non-preferred drugs or $0 for preferred and $8 for non-preferred drugs.

For individuals with family income above 150 percent of the FPL, per section 1916A(c) of the Act, cost sharing for non-preferred drugs may not exceed 20 percent of the cost the agency pays for the drug.

5. Cost Sharing for Emergency Department Services (§ 447.54)

In order to make it easier for states to utilize existing flexibilities to reduce non-emergency use of the ED, at § 447.54(a) we propose to allow cost sharing of up to $8 for non-emergency use of the ED no waiver will be required.

For individuals with family income above 150 percent of the FPL, per section 1916A(e) of the Act, there is no limit on the cost sharing that may be imposed for non-emergency use of the ED.

If an emergency condition does not exist, § 447.54(d) includes the requirements for hospital screening and referral currently codified at § 447.80(b)(2), to ensure that beneficiaries have appropriate access to other sources of care, before cost sharing is imposed. Hospitals must assess the individual clinically, identify an accessible and available alternative provider with lesser cost sharing, and establish a referral to coordinate scheduling. Examples of accessible alternative providers are those that are located within close proximity, accessible via public transportation, open extended hours, and able to serve individuals with LEP and disabilities.

5. Premiums (§ 447.55)

At proposed § 447.55, we consolidate and simplify the requirements for premiums established under sections 1916 and 1916A of the Act. Proposed § 447.56(a) describes the option to impose premiums on individuals with family income above 150 percent of the FPL, as established under section 1916A of the Act, while paragraphs (a)(1) through (a)(5) describe the options to impose premiums for specific populations as established under section 1916 of the Act. Except for the minor revisions described below, we are not seeking to change current policy related to premiums.

At § 447.55(a)(5), we propose to revise requirements related to premiums imposed on medically needy individuals whose income is under 150 percent of the FPL. We removed the current income-related scale currently at § 447.52(b) and instead would provide states with the flexibility to determine their own sliding scale for establishing premiums for the medically needy up to maximum of $20 instead of the $19 in current regulation.

VII. Regulatory Impact Analysis

C. Estimated Impact of the Medicaid Premiums and Cost Sharing Provisions

1. Overall Impact

Based on our policy analysis, we do not anticipate significant costs or savings from these proposed changes at the program level given the targeted nature of the cost sharing. We believe these proposed policies would encourage less costly care and decreased use of unnecessary services, which may reduce state and federal costs for the specified services.

2. Anticipated Effects

As states better understand their options for imposing premiums and cost sharing, more states may take advantage of existing flexibilities, such as cost sharing of up to 20 percent of the cost of the service, and the option of allowing providers to deny services for unpaid cost sharing, both of which are targeted to somewhat higher income beneficiaries. Research has shown that higher-than-nominal cost sharing on very low-income individuals can have an adverse impact on access to services by discouraging or preventing such individuals from seeking needed care. However, such impacts are not likely to result from the changes proposed here as they are largely focused on services where there are more appropriate and less costly alternatives. Increased cost sharing may have a negative impact on providers, as uncollected cost sharing reduces provider reimbursement, to the extent that the beneficiary cannot or does not pay the cost sharing and services are nonetheless provided. Under the DRA provisions and this proposed rule, however, states may minimize this impact by allowing providers to deny services for failure to pay the required cost sharing in certain circumstances.…

Why do patients go on the Medicaid program? Because they’re dirt poor, that’s why. To even bring up a discussion of premiums and cost sharing on these down-and-out people represents the ultimate of bureaucratic insensitivity.

Admittedly, there was some effort to target the cost sharing to encourage more appropriate and less costly alternatives, but permitting states to require up to five percent of family income for out-of-pocket costs is truly unaffordable for most of these families.

This shows how much traction the make-them-shop-with-their-own-money crowd has gained – the moral hazard freaks who are hazardous to our health care morals. There are more effective and humane means of controlling health care costs, single payer being the most obvious. We do not need to erect financial barriers that can impair access to beneficial services, for the poor or for anyone else.

Perhaps the most disturbing statement in this Proposed Rule is the following: States may allow providers “to deny services for failure to pay the required cost sharing in certain circumstances.” Deny services for failure to pay “nominal” cost sharing?! What does that say about health care justice in America?

Baucus/Hatch taxpayer gift to Amgen

Posted by on Tuesday, Jan 22, 2013

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.

Fiscal Footnote: Big Senate Gift to Drug Maker

By Eric Lipton and Kevin Sack
The New York Times, January 19, 2013

Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world’s largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the “fiscal cliff” bill that did not mention the company by name but strongly favored one of its drugs.

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company’s chief executive quickly relayed it to investment analysts. But it is projected to cost Medicare up to $500 million over that period.

Supporters of the delay, primarily leaders of the Senate Finance Committee who have long benefited from Amgen’s political largess, said it was necessary to allow regulators to prepare properly for the pricing change.

But critics, including several Congressional aides who were stunned to find the measure in the final bill, pointed out that Amgen had already won a previous two-year delay, and they depicted a second one as an unnecessary giveaway.

Amgen has deep financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators Max Baucus, Democrat of Montana, and Orrin G. Hatch, Republican of Utah, who hold heavy sway over Medicare payment policy as the leaders of the Finance Committee.

Amgen’s success also shows that even a significant federal criminal investigation may pose little threat to a company’s influence on Capitol Hill. On Dec. 19, as Congressional negotiations over the fiscal bill reached a frenzy, Amgen pleaded guilty to marketing one of its anti-anemia drugs, Aranesp, illegally. It agreed to pay criminal and civil penalties totaling $762 million, a record settlement for a biotechnology company, according to the Justice Department.

Amgen, whose headquarters is near Los Angeles and which had $15.6 billion in revenue in 2011, has a deep bench of Washington lobbyists that includes Jeff Forbes, the former chief of staff to Mr. Baucus; Hunter Bates, the former chief of staff for Mr. McConnell; and Tony Podesta, whose fast-growing lobbying firm has unusually close ties to the White House.

In some cases, the company’s former employees have found important posts inside the Capitol. They include Dan Todd, one of Mr. Hatch’s top Finance Committee staff members on health and Medicare policy, who worked as a health policy analyst for Amgen’s government affairs office from 2005 to 2009. Mr. Todd, who joined Mr. Hatch’s staff in 2011, was directly involved in negotiating the dialysis components of the fiscal bill, and he met with “all the stakeholders,” Mr. Hatch’s spokeswoman said, not disputing when asked that this included Amgen lobbyists.

Aides to the senators said some heavy donors had won and others had lost in the Medicare negotiations — proof that the legislative outcome was based on the merits. “What is the best policy for Montanans and people across the country lies at the heart of every decision Chairman Baucus makes,” said Meaghan Smith, a spokeswoman for Mr. Baucus. “It’s as simple as that.”…

With appropriate anger, we can point our fingers toward Sen. Baucus and his colleagues for their involvement in this corrupt half billion dollar taxpayer gift to Amgen, a biotechnology company that has already paid over three-quarters of a billion dollars in penalties for prior criminal acts to which they pled guilty. Sen. Baucus especially deserves our ire since he led the process in bringing us the Affordable Care Act – an act that was designed specifically to serve the financial interests of the private insurance and pharmaceutical industries, at a consequential cost to patients and taxpayers.

Of course, Sen. Baucus is not alone in accepting payment in exchange for favorable legislation. All members of Congress have fundraising challenges. If you check, you will find that most members of Congress are tainted, though they vary in their egregiousness.

Who is ultimately to blame? We elect these people. Health care justice doesn’t stand a chance when displaced by the power of greed and corruption, and we simply turn our backs on it.

Second Inaugural of President Barack Obama

Posted by on Monday, Jan 21, 2013

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.

Second Inaugural Speech

President Barack H. Obama, January 21, 2013

We, the people, still believe that every citizen deserves a basic measure of security and dignity. We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future. For we remember the lessons of our past, when twilight years were spent in poverty, and parents of a child with a disability had nowhere to turn. We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.

ACA administrative costs escalating

Posted by on Friday, Jan 18, 2013

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.

State’s health insurance exchange gets $674-million federal grant

By Chad Terhune
Los Angeles Times, January 18, 2013

Federal officials awarded California’s new health insurance exchange a $674-million grant, providing money for a crucial marketing campaign aimed at millions of uninsured consumers.

The state-run insurance exchange, Covered California, is seeking to fundamentally reshape the health insurance market by negotiating with insurers for the best rates and helping consumers choose a plan.

In addition to “top down” advertising, Lee said, the exchange will be giving grants to religious groups and other community organizations for education at the grass-roots level.

The exchange also has the task of helping millions of Californians determine whether they qualify for an expansion of Medi-Cal, the state’s Medicaid program for the poor, or federally subsidized private coverage.

In addition to marketing, Covered California will use the federal grant money to help fund operations through January 2015, when the online marketplace will rely on fees assessed on health policies sold through the exchange.

Separately Thursday, the California Endowment said it would spend $225 million over the next four years to help implement the federal healthcare law in the state.,0,…

The administrative waste in our health care system far exceeds that of any other nation. During the political process of crafting the Affordable Care Act, we warned that this model would greatly add to this administrative waste. We are now beginning to see the extent of that expanded waste.

On just California’s insurance exchange alone, taxpayers are having to foot additional costs of two-thirds of a billion dollars just for administration and marketing of the exchange plans. In the future, these additional administrative costs will be downloaded to us through new fees assessed on the health policies sold through the exchange. Just think of all of the other administrative expenses for the multitude of other features of the Affordable Care Act, not just in California but throughout the nation. And not one cent of this additional administrative spending goes to health care. Sick!

Although taxpayers have already invested way too much in this wasteful program, we can still cut our losses and move on with an administratively efficient single payer system – an improved Medicare for all.

Business Roundtable attacks Medicare and Social Security

Posted by on Thursday, Jan 17, 2013

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.

Social Security Reform and Medicare Modernization Proposals

Business Roundtable, January 2013

Business Roundtable (BRT) is an association of chief executive officers of leading U.S. companies with more than $7.3 trillion in annual revenues and nearly 16 million employees. BRT member companies comprise nearly a third of the total value of the U.S. stock market.

“Medicare and Social Security were not designed to cope with America’s new demographic realities. CEOs are calling for gradual changes that will modernize these programs and preserve the safety net for future generations of retirees.”
– Gary W. Loveman, Ph.D., Chairman, CEO & President, Caesars Entertainment Corporation, and Chair of BRT’s Health and Retirement Committee

Essential Elements of a Medicare Modernization Proposal

• Protect Medicare for Those Approaching Retirement: Medicare’s age of eligibility should be moved to age 70. However, this will not affect those age 55 or older today.

• Expand Competitive Models of Care: By 2015, Medicare should offer seniors the opportunity to choose among competing and comprehensive private plans and traditional Medicare. The private plans would offer a benefit similar to the existing Medicare program with the flexibility to innovate, sell across state lines, and create greater value strategies. Plans would be required to accept all applicants and would risk adjust the premium to take into account age and health status. The traditional fee-for-service program would compete for enrollment with private plans on cost, quality and a more innovative benefit structure. We believe that competition in the provision of health care to America’s seniors will bring substantial benefits, as it has to most all other categories of personal expenditure. The recent experience of competition in the Medicare Part D program serves as a persuasive indication of the potential savings and improvement in care available through the provision of choice to well-informed seniors.

• Reduce Taxpayer Costs for Upper-Income Beneficiaries: Today, the Part B premium (physician services) and the Part D premium are means-tested and other types of means testing should be explored. By 2015, additional means testing for Medicare services should be considered.

• Protect the Safety Net for Low-Income Americans: Low-income beneficiaries should retain the existing financial support received today. Improvements should be made in care-coordination and a focus on wellness and chronic care management.

(Social Security recommendations available at this link.)…


Doctoring Health Care, I

By Barbara Dreyfuss
The American Prospect, December 17, 2006

In early 2006, Glen Barton, the retired CEO of Caterpillar and former head of the Business Roundtable’s health-care task force, said the solution to the health-care crisis is a single-payer system, citing Medicare as a model.

Although the slick brochure from these wizards of industry at the Business Roundtable might make it look like these gentlemen are doing us a great favor by showing us how to save Medicare and Social Security from bankruptcy, their recommendations are, in fact, taking a supercilious approach to diminishing the effectiveness of America’s highly regarded social insurance programs.

This cavalier attitude is expressed in a comment by Caesars’ Gary Loveman, chairman of Business Roundtable’s Health and Retirement Committee that released this report. “Those of us who are in the BRT are paid to try to solve very difficult problems effectively. I would tell you that most of them are a lot harder than this, frankly” (Politico Pulse, Jan. 17).

What do they have in mind for Medicare? They would increase eligibility age to 70 – a disaster for future retirees. They would privatize the traditional Medicare program by throwing it into a market of private plans – a devious scheme to shift health care costs onto the backs of those with greater health care needs. They would also means-test benefits, losing the support of the wealthier individuals who have the strongest political voice, threatening to convert Medicare into a welfare program.

And Social Security? They would also increase Social Security retirement age to 70. And in a stroke of genius, they recommend that Americans simply save more for their retirement. Why didn’t we think of that before?

A word needs to be said about their recommendation to reduce future Social Security cost of living adjustments by converting to the chained-CPI. When individuals are forced into a frugal existence they learn to cut back and do without just so that they will have enough money for basic food and housing at the end of the month, if that. Under chained-CPI, the government assumes that this frugality represents the new, lower consumer price index for this sector, and so they adjust out the savings that the Social Security beneficiaries have accrued merely for the purpose of getting them all of the way through to the end of the month. Pretty cruel.

A decade ago, Glen Barton, Chairman and President of Caterpillar, led the BRT Health and Retirement Committee, currently headed by Gary Loveman. What a contrast. Glen Barton’s experience motivated him to become an advocate of “a single-payer system, citing Medicare as a model.” Lovemen? Well, you read it above. What a difference a decade made.

Class warfare? Ugly label, but…

Can we control costs through checkups and wellness programs for the healthy?

Posted by on Wednesday, Jan 16, 2013

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.

General Health Checks in Adults for Reducing Morbidity and Mortality From Disease

By Allan V. Prochazka, MD, MSc; Tanner Caverly, MD
JAMA Internal Medicine, January 14, 2013

The concept of general health checkups to identify disease at a stage at which early intervention could be effective has been promoted for nearly 100 years. Both patients and primary care physicians are interested in such examinations, which can include detailed history taking, physical examination, extensive laboratory testing, and imaging.

General health checks do not improve important outcomes and are unlikely to ever do so based on the pooled results of this meta-analysis spanning decades of experience. We should be clear about what a general health check is. A general health check is a visit dedicated solely to preventive counseling and screening tests. Other names, such as annual physical, preventive health examination, or periodic health evaluation, are often used. These terms exclude preventive care that occurs during visits for other reasons, such as during chronic care or acute care visits. In other words, we are talking about screening and counseling in addition to the prevention measures that occur during routine medical care.

General health checks are one of the most common reasons adults seek medical care, with an estimated 44 million seeing a physician for this reason each year from 2002 through 2004. During these health checks, an estimated $322 million is spent annually on laboratory tests that no guideline groups recommend. The costs of downstream testing and overtreatment are likely to be much larger. For example, the costs of mammography might be $4 billion a year assuming biennial screening. The cost of follow-up biopsies of normal breasts triggered by false-positive mammogram results alone is probably in the range of $14 to $70 billion annually. It is likely that follow-up testing from general health checks substantially contributes to the estimated $210 billion in annual spending on unnecessary medical services.


Is It Time To Re-Examine Workplace Wellness ‘Get Well Quick’ Schemes?

By Al Lewis and Vik Khanna
Health Affairs Blog, January 16, 2013

Virtually unheard of thirty years ago, workplace wellness is now embedded in large self-insured companies. These firms pay their workers an average of $460/year to participate in worksite wellness programs. Further, wellness is deeply enough engrained in the public policy consciousness to have earned a prominent place in the Affordable Care Act, which allows large employers to tie a significant percentage of health spending to employee health behavior and provides direct subsidies for small businesses to undertake these workplace wellness programs.

Yet the implausible, disproven, and often mathematically impossible claims of success underlying the “get well quick” programs promoted by the wellness industry raise many questions about the wisdom of these decisions and policies. In this post, we lay out the evidence demonstrating that the industry consistently mis-measures and overstates the direct healthcare cost savings. We suggest several strategies to prevent this and to re-allocate wellness dollars from “get well quick” schemes to the much more challenging, but ultimately more rewarding, task of truly creating a culture of wellness, a workplace that can attract and retain healthier, presumably more productive, people than competitors do. There is no guarantee that strategy would work and no easy way to implement it, but clearly the easy approach isn’t working.

While we do not believe that employers need to adopt military-style standards, we do propose that it is illogical to expect sustainable reductions in medical care spending if corporate leaders treat their environments, personnel policies, practices, and procedures with the insouciance of people who believe that they can just wish something into existence.

HR departments need to reconfigure their benefits consulting relationships, since with few exceptions the latter have not provided critical thinking about wellness (and other “value-added” programs) on a par with that of insurers, who have universally shunned these programs for their fully insured members. (Most insurers will happily sell them to self-insured employers even so, because they clearly understand that “invalid” is not the same as “unprofitable,” especially when you do not bear risk for the outcomes and the customer’s consultants are demanding the service.)…

In discussions of our exorbitant health care spending, we frequently hear that we need to change from a system that treats disease to a system that promotes prevention and wellness, as if prevention and wellness programs would displace disease and injury.

First, let’s be clear that the benefits of effective prevention programs are undeniable. But much of prevention is out in the community at large and not so much within the health care delivery system. Examples are public health services, community planning for safety and to promote physical activity, the promotion of healthy food choices, industry design of safer products such as automobiles, public policies to reduce hazards such as the ubiquitous accessibility of firearms, and innumerable other measures that are or should be promoted through both public and private efforts.

So what about routine preventive health checkups? The comprehensive meta-analysis published in the current JAMA Internal Medicine reveals that “general health checks do not improve important outcomes and are unlikely to ever do so,” but “it is likely that follow-up testing from general health checks substantially contributes to the estimated $210 billion in annual spending on unnecessary medical services.”

However, specific examples of preventive care that are a part of and integrated within the provision of care for acute and chronic disorders have been shown to be of some benefit and should not be abandoned  until new evidence demonstrates that there are compelling reasons to do so. Nevertheless, we cannot look to the medical practice environment to find the health care paradise that will displace sick care with well care.

Which brings us to employer-sponsored wellness programs. Simply stated, they fall into the spectrum between naivete and outright fraud. As stated in the Health Affairs Blog article briefly excerpted above, “Even the iconic Safeway story of achieving a zero medical cost trend through wellness – the inspiration for the wellness provisions in the Affordable Care Act – turns out to be made up.”

If you wish to know the shocking truth on wellness programs (yes, shocking), you should read the entire article available at the link above. The fact that insurers promote these programs, but only for their non-risk bearing contracts with self-insured employers, certainly is revealing.

Pretending that we can control health care spending with checkups and wellness programs no longer cuts it. We need to tackle costs with proven methods that would ensure quality care for everyone. We should begin by enacting an improved Medicare for all.

Life disruptions from high out-of-pocket health expenditures

Posted by on Tuesday, Jan 15, 2013

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.

Life Disruptions for Midlife and Older Adults With High Out-of-Pocket Health Expenditures

By David Grande, MD, MPA, Frances K. Barg, PhD, Sarah Johnson, BA and Carolyn C. Cannuscio, ScD
Annals of Family Medicine, January/February 2013


PURPOSE  Out-of-pocket cost sharing for health care expenses is a growing burden. Prior research has emphasized the medical consequences of cost sharing. This study investigates the range of social, medical, financial, and sometimes legal disruptions from high out-of-pocket health expenses.

METHODS  We conducted open-ended, semistructured interviews with 33 insured patients (two-thirds covered by Medicare). All had chronic illnesses and sought philanthropic financial assistance.

RESULTS  We found that high levels of cost sharing precipitated considerable anxiety and substantial debt problems, as well as disruptions of medical care. Participants described various borrowing strategies (eg, credit cards), legal problems (eg, debt collections), and threats to their nonmedical household budgets (eg, food, housing). Participants described explicit and rank-ordered strategies for coping with new medical expenses. Participants understood their health benefits with exceptional detail but described considerable anxiety about changes to those benefits that could easily disrupt carefully managed household budgets. Benefit designs that resulted in large variations in financial liability from month to month (eg, large deductibles or coverage gaps) imposed considerable financial challenges.

CONCLUSIONS  As health care cost sharing grows, policy makers will need to consider the consequences of high cost sharing for families facing strained household budgets. Although the generosity of health insurance is important, continuity of benefits and month-to-month stability of financial liability are also important and may be undervalued in policy discussions.


From the Results:

Four issues figured prominently. First, the structure of health insurance—especially gaps in coverage, such as the Medicare Part D “doughnut hole” — powerfully affected financial well-being. Second, financial stress and debt from medical expenditures had a strong influence on day-to-day personal, financial, and medical decision making. Third, participants turned to family and other sources to help manage the costs of their illnesses, which resulted in financial, emotional, and social challenges for all family members. Fourth, participants managed high out-of-pocket health care costs using a range of strategies that were potentially disruptive to their medical care.

We have plenty of studies which demonstrate that out-of-pocket cost sharing for health care can expose patients to significant financial burdens and impair their access to care. This study provides a valuable addition to our knowledge base because it demonstrates just how disruptive these expanding innovations in cost sharing can be.

This study does not quantify the problem, nor was it intended to. Rather it provides us with a qualitative assessment of those who do face insurance-induced financial barriers to care, including, significantly, cost sharing in the Medicare program (part of the reason we want an improved Medicare).

Read the last paragraph in the excerpts above, under “From the Results.” These insurance innovations that supposedly are designed to make patients better shoppers of health care are causing severe financial stresses, unwise but unavoidable choices in forging health care, while fostering “financial, emotional, and social challenges for all family members.”

How well will the Affordable Care Act address these problems? First, the design of the essential health benefits required of the plans, although fairly broad, allows important benefits to be excluded as long as there is token representation of each general category of benefits. Also most exchange plans will penalize patients for obtaining care outside of their networks – again impairing affordability and access to important services that may be available only outside of the networks.

Probably the most significant disruptive element in the exchange plans is that most people will be enrolled in plans with either 60 or 70 percent actuarial value. Most of the plans will achieve these low actuarial values by requiring high deductibles and perhaps co-payments or coinsurance – some of the very tools that result in the disruptions described in today’s article. Although the Affordable Care Act does provide subsidies for both premiums and out-of-pocket expenses, for many individuals these subsidies will not be adequate to prevent the disruptions described.

Many nations with far lower total health care costs than ours are able to provide comprehensive health care for everyone – with first dollar coverage! They do not need to use disruptive out-of-pocket cost sharing to keep their level of spending sustainable. It is no secret how they do it. So why do our policy makers seem to want to keep it a secret here in the Unites States?

For patients or profits?

Posted by on Monday, Jan 14, 2013

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.

Health Care and Profits, a Poor Mix

By Eduardo Porter
The New York Times, January 8, 2013

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.…

Eduardo Porter’s NYT article on the poor mix of health care and profits resonated with PNHP members, and appropriately so. It reminds us that our mission is not only to provide an efficient health care financing system that would cover everyone equitably, but also to ensure that health care be provided as “a public service rather than bought and sold as a commodity” (from PNHP Mission Statement). Including passive investors in health care has moved the bottom line up as the top priority while relegating patient service to a footnote.

Policy consequences of low growth in Medicare spending

Posted by on Friday, Jan 11, 2013

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.

Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows

By Richard Kronick and Rosa Po
U.S. Department of Health and Human Services, January 7, 2013

Medicare spending per beneficiary grew just 0.4% per capita in fiscal year 2012, continuing a pattern of very low growth in 2010 and 2011. Together with historically low projections of per capita growth from both the Congressional Budget Office and the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary, these statistics show that the Affordable Care Act has helped to set Medicare on a more sustainable path to keep its commitment to seniors and persons with disabilities today and well into the future. The success in reducing the rate of spending growth has been achieved without any reduction in benefits for beneficiaries. To the contrary, Medicare beneficiaries have gained access to additional benefits, such as increased coverage of preventive services and lower cost-sharing for prescription drugs.

At a time when politicians are ready to attack Medicare spending, this report on the projected slow growth in Medicare spending per beneficiary might seem to be useful in helping to keep the wolves away. But there are some very serious concerns behind these projections.

There has been some debate about whether the slowing is due to the recession and slow recovery, or if it is due to the implementation of some of the features of the Affordable Care Act, or if it simply due to changes in practice patterns related to evolving efforts of health care professionals to improve the practice of medicine. It is likely that all play some role.

Beyond dispute, however, is the fact that Medicare has been very effective in slowing the growth in spending though various forms of administered pricing, such as DRGs. The S&P Healthcare Economic Indices have shown that Medicare has been far more effective than the private commercial insurers in slowing the rate of growth in health care spending.

As this and other reports have shown, spending controls have not been at the cost of a reduction in benefits to Medicare beneficiaries; in fact benefits have expanded, though only modestly. Spending controls have been limited to slower payment growth for health care professionals and institutions. Although the Affordable Care Act has introduced measures to allegedly improve quality while controlling spending, the current efforts at implementation indicate that the emphasis is on spending restraint, with only token attention to quality measures – measures which are of dubious effectiveness anyway.

Thus there are two major fronts of attack over which we should be acutely concerned:

1) The  government, under the banner of the Affordable Care Act, will continue to selectively ratchet down growth in Medicare spending while largely leaving the private sector plans alone. The expanding differential between lower public payment through the Medicare and Medicaid programs and higher private payments through the private insurance plans will cause more health care providers to abandon the public programs, with a consequent threat of impaired access for the beneficiaries of the public programs. As long as private insurers are there to provide a relief valve, there is a very real risk that the public programs will be underfunded. If private plans were eliminated, as a single payer the government would be obligated to ensure the solvency of the health care delivery system.

2) The current political push for austerity measures has made these public programs vulnerable to the “we-have-a-spending-problem-not-revenue-problem” cranks that populate our nation’s capitol. There is a genuine fear that some of the critical thinkers negotiating with the cranks will plea pragmatism as they trade away important features of our social programs.

We need the opposite approach. We need to reinforce Medicare and then expand it to cover everyone. Complacency with the current politically-expedient implementation of Affordable Care Act will lead us further down the path of no return, that is unless we’re ready for a revolution.

U.S. Health in International Perspective: Shorter Lives, Poorer Health

Posted by on Thursday, Jan 10, 2013

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.

U.S. Health in International Perspective: Shorter Lives, Poorer Health

Institute of Medicine, January 2013

The United States is among the wealthiest nations in the world, but it is far from the healthiest. Although Americans’ life expectancy and health have improved over the past century, these gains have lagged behind those of other high-income countries. This health disadvantage prevails even though the United states spends far more per person on health care than any other nation.

To gain a better understanding of this problem, the National Institutes of Health (NIH) asked the National Research Council and the Institute of Medicine to convene a panel of experts to investigate potential reasons for the U.S. health disadvantage and to assess larger implications. The panel’s findings are detailed in its report, U.S. Health in International Perspective: Shorter Lives, Poorer Health.

The panel was struck by the gravity of its findings. For many years, Americans have been dying at younger ages than people in almost all other high-income countries. This disadvantage has been getting worse for three decades, especially among women.

When compared with the average of peer countries, Americans as a group fare worse in at least nine health areas:

* infant mortality and low birth weight

* injuries and homicides

* adolescent pregnancy and sexually transmitted infections

* HIV and AIDS

* drug-related deaths

* obesity and diabetes

* heart disease

* chronic lung disease

* disability

Many of these conditions have a particularly profound effect on young people, reducing the odds that  Americans will live to age 50. And for those who reach age 50, these conditions contribute to poorer health and greater illness later in life.

The United States does enjoy a few health advantages when compared with peer countries, including lower cancer death rates and greater control of blood pressure and cholesterol levels. Americans who reach age 75 can expect to live longer than people in the peer countries. With these exceptions, however, other high-income countries outrank the United States on most measures.

Why are Americans so unhealthy?

The panel’s inquiry found multiple likely explanations for the U.S. health disadvantage:

* Health systems.  Unlike its peer countries, the United States has a relatively large uninsured population and more limited access to primary care. Americans are more likely to find their health care inaccessible or unaffordable and to report lapses in the quality and safety of care outside of hospitals.

* Health behaviors.  Although Americans are currently less likely to smoke and may drink alcohol less heavily than people in peer countries, they consume the most calories per person, have higher rates of drug abuse, are less likely to use seat belts, are involved in more traffic accidents that involve alcohol, and are more likely to use firearms in acts of violence.

* Social and economic conditions.  Although the income of Americans is higher on average than in other countries, the United States also has higher levels of poverty (especially child poverty) and income inequality and lower rates of social mobility. Other countries are outpacing the United States in the education of young people, which also affects health. And Americans benefit less from safety net programs that can buffer the negative health effects of poverty and other social disadvantages.

* Physical environments.  U.S. communities and the built environment are more likely than those in peer countries to be designed around automobiles, and this may discourage physical activity and contribute to obesity.

The tragedy is not that the United States is losing a contest with other countries, but that Americans are dying and suffering from illness and injury at rates that are demonstrably unnecessary. Superior health outcomes in other nations show that Americans can also enjoy better health.…

“U.S. Health in International Perspective: Shorter Lives, Poorer Health” – Full 405 page report can be downloaded for free at this link:…

The United States is sick, literally and figuratively. We have the most expensive health care system, yet the worst health outcomes of the wealthier nations. The failures are not only with our health system but with much broader sociopolitical institutions.

In response to these glaring deficiencies, this NRC/IOM report places an emphasis on further research to better define the problem and identify interventions that would help. Research is fine, but we do not need to wait any longer when so many of the deficiencies our already in our face.

The brief paragraph above on health systems confirms the pressing need for an effective universal insurance system, along with an expansion of our primary care infrastructure. Enacting the PNHP single payer model would finally set us in the right direction toward a high-performance health care system.

The social and economic conditions, physical environments, and health behaviors demonstrate a crying need for much more effective sociopolitical public policies. Not only do we need a reinforcement of our public health system, we also need greater public action in education, community planning, and especially responsible government policies to correct the gut-wrenching social and economic injustices that permeate our society.

From the opponents of reform we continue to hear that we have the greatest health care system in the world and that we have the very best health outcomes. Download this highly credible report so that you will have it readily available to expose these liars for what they are. Also use it to educate politicians on the broad spectrum of urgent public policies that we so desperately need.

And while we’re at it, we need to fire the politicians who are promulgating these cruel lies.

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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