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 Of Consumer-Directed Health Plans To One-Half Of All Employer-Sponsored Insurance Could Save $57 Billion Annually
By Amelia M. Haviland, M. Susan Marquis, Roland D. McDevitt and Neeraj Sood
Health Affairs, May 2012
Enrollment is increasing in consumer-directed health insurance plans, which feature high deductibles and a personal health care savings account. We project that an increase in market share of these plans — from the current level of 13 percent of employer-sponsored insurance to 50 percent — could reduce annual health care spending by about $57 billion. That decrease would be the equivalent of a 4 percent decline in total health care spending for the nonelderly. However, such growth in consumer-directed plan enrollment also has the potential to reduce the use of recommended health care services, as well as to increase premiums for traditional health insurance plans, as healthier individuals drop traditional coverage and enroll in consumer-directed plans. In this article we explore options that policy makers and employers facing these challenges should consider, including more refined plan designs and decision support systems to promote recommended services.
From the Study Results
Consumer-directed enrollees in these large employer plans spent less on health care than enrollees in traditional plans even in the year prior to their enrollment, and the estimates above controlled for this favorable selection into the consumer-directed plans. In particular, the diagnosis-based prospective risk scores predicted 25 percent lower spending per capita for those who selected a consumer-directed health plan.
Thus, continued growth in enrollment in consumer-driven health plans implies premium increases in traditional plans that will retain somewhat sicker enrollees.
From the Discussion
Consumer-directed plans raise concerns about out-of-pocket spending because deductibles are high, and federal regulations allow health savings account plans to impose family out-of-pocket maximums of up to $12,100 in 2012. Out-of-pocket maximums for health reimbursement arrangements are not constrained by law until 2014, when all exchange plans must comply with the health savings account limit.
There is particular concern regarding health care access for vulnerable families—those with low incomes or family members with high-cost chronic conditions—which might face higher costs under consumer-directed plans.
The use of all six of the preventive treatments examined in this article was negatively affected in the first year of consumer-directed plan enrollment, despite plan provisions that reimbursed some of these preventive services at 100 percent of allowed charges.
Our findings that reductions in spending occur through lower spending per episode, more use of generic versus brand-name drugs, less use of specialists, and lower inpatient hospitalization suggest that these plans do induce changes in treatment choices and not just access. Further research is required to determine whether these are appropriate changes, and our findings concerning preventive care demonstrate that more information is needed to improve consumer decision making.
Choice of Plans
When employers offer a new consumer-directed plan as an option, it typically attracts employees and families who are healthier and whose health care costs are less than those of people who enroll in other plans. Left unchecked, this can produce adverse selection and higher premiums in traditional plans.
Risk selection and consequent increases in premiums for traditional plans could destabilize the health insurance exchanges, where diverse plan offerings will be encouraged.
Enrollment in consumer-directed health plans probably will grow in the coming years, motivating enrollees to cut back on spending and producing savings for employees, employers, and the nation as a whole. But we need better information to help enrollees and their health care providers identify high-value care, and we need more refined plan designs and decision support systems to promote the use of such care. Promising developments include the investment in comparative effectiveness research by the Affordable Care Act and employers’ efforts to develop value-based insurance designs that reduce enrollee cost sharing for certain high-value services.
Existing research does not adequately address the long-term effects of consumer-directed health plans on health care spending and recommended care. Current evidence about reductions in preventive care is a concern, and it will be important to monitor indicators of care quality in consumer-directed and other plans. In the individual and small-group markets, it will be important to adopt effective risk-adjustment methods to maintain a broad choice of plans that includes both higher cost-sharing and lower cost-sharing options.
Growth of Consumer-Directed Health Plans to One-Half of All Employer-Sponsored Insurance Could Save $57 Billion Annually
California HealthCare Foundation
This link is to a press release on the Health Affairs article above. It also includes a link which allows free access to the full article.
The title of this Health Affairs report seems to encourage the widespread adoption of consumer-directed health plans (CHDPs) – a theme repeated in the press coverage of this article. Yet much has been written about the adverse consequences of these plans, especially their impact in reducing the use of beneficial preventive, diagnostic, and therapeutic health care services.
Even if it were true that putting half of all employees and their dependents into CHDPs would reduce spending by $57 billion, that is only two percent of our national health expenditures. Reducing spending by causing harm is terrible policy, especially when other measures such as single payer would reduce harm instead, while controlling costs more effectively.
The California HealthCare Foundation release (link above) included a Reader Comment by Betty Hillman. Her insightful words express our concerns:
“CDHPs only work well for the healthy. Speaking for someone who works for a top 100 company that offers ONLY CDHPs, and has chronic health issues of genetic origin, I am officially defined as ‘underinsured’, because my out-of-pocket costs are very high; they have nearly bankrupted me, even while working in a professional position.
“It is yet another way for corporations to reduce spending on employees and give it to investors. Welcome [back] to the 19th century. The almighty dollar continues to reign supreme. It is sad that so many do not understand that there is no way that corporations, inc insurance companies, will ever provide low-cost insurance without being forced to — by the government or the people, take your choice.”
Even if efforts were made to force them to, the insurance companies can no longer provide low-cost insurance that provides adequate financial protection for those who need health care. Ms. Hillman would be served best if we were to adopt an Improved Medicare for All.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
The Growing Power Of Some Providers To Win Steep Payment Increases From Insurers Suggests Policy Remedies May Be Needed
By Robert A. Berenson, Paul B. Ginsburg, Jon B. Christianson and Tracy Yee
Health Affairs, May 2012
In the constant attention paid to what drives health care costs, only recently has scrutiny been applied to the power that some health care providers, particularly dominant hospital systems, wield to negotiate higher payment rates from insurers. Interviews in twelve US communities indicated that so-called must-have hospital systems and large physician groups — providers that health plans must include in their networks so that they are attractive to employers and consumers — can exert considerable market power to obtain steep payment rates from insurers. Other factors, such as offering an important, unique service or access in a particular geographic area, can contribute to provider leverage as well. Even in markets with dominant health plans, insurers generally have not been aggressive in constraining rate increases, perhaps because the insurers can simply pass along the costs to employers and their workers. Although government intervention — through rate setting or antitrust enforcement — has its place, our findings suggest a range of market and regulatory approaches should be examined in any attempt to address the consequences of growing provider market clout.
From the Discussion
More concretely, increased recognition of the role of provider pricing in rising health spending could stimulate both market-oriented and regulatory responses. Market-oriented approaches are generally based on benefit designs that make consumers more aware of costs and give them direct incentives to select low-cost options. However, these approaches, such as tiered networks, have been discussed for many years and are proceeding slowly. Nevertheless, renewed employer willingness to support choice-limiting networks with few providers could help balance negotiating leverage between providers and health plans.
Alternatively, in the face of rising premiums, employers unwilling to adopt more restrictive benefit designs might support more direct regulation of provider rates, perhaps setting upper bounds on permissible rates negotiated between health plans and providers in relation to Medicare rates.
Further Acceleration in US Healthcare Costs in February 2012 According to the S&P Healthcare Economic Indices
April 19, 2012
The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.75% over the 12-months ending February 2012.
Specific S&P Healthcare Economic Indices:
7.73% – S&P Healthcare Economic Commercial Index
6.78% – S&P Professional Services Commercial Index
8.41% – S&P Hospital Commercial Index
2.72% – S&P Healthcare Economic Medicare Index
3.55% – S&P Professional Services Medicare Index
1.94% – S&P Hospital Medicare Index
This Health Affairs article explains how health care providers – particularly dominant hospital systems – through consolidation and other market manipulations, have been able to position themselves as “must-have” hospital and physician group systems that health plans must include in their networks so that they are attractive to employers and consumers. This “must-have” status allows these providers to demand steep payment increases from the private insurers.
Note that this leverage is applied through private insurers. Government programs such as Medicare are not intimidated by the market clout of these provider systems. Medicare simply pays rates that are enough to keep the provider systems from dropping out of the government program.
How much difference is there between the administered rates of Medicare and the market negotiated rates of the private insurers? Look at the most recent S&P Healthcare Economic Indices.
The latest twelve month per capita increase in the S&P Hospital Medicare Index was 1.94%. For the same twelve months, the per capita increase in the S&P Hospital Commercial Index – the rate increase for private insurers – was an astonishing 8.41% – more than four times the increase in the Medicare Index!
The highly respected authors of the Health Affairs article state that “a range of market and regulatory approaches should be examined in any attempt to address the consequences of growing provider market clout.” Fine. The health policy literature is replete with data that will explain why Medicare is so much more effective than the private insurers in controlling health care costs. Have another look at the literature. Then let’s reject the private insurers and their market manipulations, and move forward with adopting an improved Medicare for all.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
A Decade Of Health Care Access Declines For Adults Holds Implications For Changes In The Affordable Care Act
By Genevieve M. Kenney, Stacey McMorrow, Stephen Zuckerman and Dana E. Goin
Health Affairs, May 2012
Over the past decade, access to health care deteriorated among nonelderly adults. The likelihood of having a usual source of care, having seen a dentist, and having had an office visit all declined. In addition, the likelihood of having had an emergency department visit rose slightly.
Consistent with other sources, the National Health Interview Survey data pointed to significant increases in rates of Medicaid coverage and uninsurance and decreases in rates of private coverage for adults between 2000 and 2010.
The declines in access found among all adults are also reflected within each coverage category. Among the privately insured, significant declines occurred for half of the access measures. There was improvement in one measure — a 1.6-percentage-point increase in the likelihood of having an office visit. However, privately insured adults were more likely to have unmet medical and unmet dental needs in 2010 compared to 2000, and they were more likely to have delayed needed care because of cost and noncost reasons.
Similarly, adults with public coverage experienced reductions in receiving an office visit and increases in unmet medical needs from 2000 to 2010. Especially striking were the increases in unmet dental need and delayed care for noncost reasons (increases of 9.1 and 4.7 percentage points, respectively) among adults with public coverage.
We also found that people with public coverage were less likely to have a usual source of care, to have received an office visit, and to have received a dental visit in 2010 compared to 2000.
Although the above indicates that the deterioration in access was not limited to uninsured adults, it was particularly pronounced for this population. Access to care worsened for uninsured adults for all eight access measures.
From the Discussion
This analysis revealed a noticeable deterioration in access to care among nonelderly US adults during the first decade of the twenty-first century. Access declined for adults in every category, but the most dramatic declines occurred among the uninsured.
More fundamental systemic problems may be reflected in the increased likelihood of delays in care for noncost reasons that we observed among both children and adults. These increases were particularly large among publicly insured adults during the past decade — a time of substantial increases in Medicaid enrollment. This may have strained providers’ capacity or willingness to serve Medicaid patients in some areas of the country.
In addition, despite increased funding for community health centers and continued supplemental payments through Medicare and Medicaid, the safety net has not been able to fully meet the increased need for care among the nation’s growing uninsured and publicly insured population.
Experience also indicates that there is no guarantee providers could adapt quickly to meet the needs of an influx of a large number of newly insured adults. When reforms similar to the Affordable Care Act were implemented in Massachusetts, overall access to care improved; however, some measures of unmet need for care also increased as more people sought care.
The US health care system could respond similarly under the Affordable Care Act, meaning that both the newly insured and those who already have coverage could have problems getting timely appointments or could experience long waits at the doctor’s office. This could be especially true in areas that experience large increases in coverage relative to provider capacity. If these problems with access emerge, they could dampen the potential benefits of the Affordable Care Act.
This study from the Urban Institute provides further confirmation of what we already knew. Uninsured individuals have impaired access to health care. What should be particularly alarming to us about this report is that the two coverage expansions in the Affordable Care Act – private insurance and Medicaid – have also been associated with further impaired access over the past decade.
Medicaid’s problem is that it is chronically underfunded. As it expands, health care professionals and institutions are finding that they are less able to serve this population as their losses escalate.
Private insurance also has been associated with a decline in access resulting in greater unmet medical needs. This is most likely due to the unique nature of private insurers competing in the marketplace. To slow the increases in premiums, insurers have shifted more costs to patients, especially through high deductibles, which impairs access because of lack of affordability. They also have reduced access to providers through the use of network contracting. The actuarial values of their plans are declining, leaving greater financial exposure to patients in need of health care. The business model of private insurance works better for the insurers when barriers are erected to care.
This study is receiving wide coverage in the press today, with headlines to the effect that health care access will decline if the Affordable Care Act is overturned. What needs to be emphasized is that health care access has been declining under the two programs to be expanded by the Affordable Care Act – private insurance and Medicaid.
What should be covered in these articles is that if we want to improve access, we can do it by removing financial barriers for everyone, simply by adopting a single payer national health program – an improved Medicare for all.
A New Approach To Cutting MA’s Health Costs: Throw Spaghetti
By Rachel Zimmerman
WBUR, May 4, 2012
When Massachusetts passed sweeping health insurance reform in 2006, a crucial piece was missing from the landmark legislation: how to control rising medical costs.
Today, state lawmakers unveiled an ambitious new proposal to do just that.
Here are some details of the House bill, officially the Health Care Quality Improvement and Cost Reduction Act of 2012, presented today by lawmakers. The state Senate is expected to introduce its own version of the plan next week.
1. Oversight: A new, quasi-governmental agency called the Division of Health Care Cost and Quality would oversee the transition to the new payment and delivery system with a board including consumer, government and industry representatives.
2. Cost-Cutting: To curb the increase in medical spending, the plan establishes a cap for health-care spending linked to the local economy, the Gross State Product, minus one-half a percent (years 2016 through 2026, then plus 1 percent).
3. Leveling The Field: The state could impose a 10 percent “luxury tax” on pricey hospitals that charge more than 20 percent of the state median price for a given service without being able to justify that higher price. (Two earlier reports by Attorney General Martha Coakley found that certain hospitals exploited their market clout and charged higher prices without offering better quality care.) Hospitals would pay this penalty into a “distressed hospital” fund for institutions that serve a high proportion of poor and vulnerable patients.
4. Accountable Care Organizations would take on greater prominence, though the bill stresses that joining an ACO would be voluntary for patients and providers. The bill defines the size of an ACO as bigger than 15,000 people and no larger than 400,000. Patients would have the right to appeal decisions made by their ACO doctors, and have the right to a second opinion.
5. Shifting Payments: The state’s medical establishment would continue its shift toward global payments and away from fee-for-service systems. The measure would “transition the industry to adopt alternative payment methodologies such as global payments and bundled payments for acute and chronic conditions.”
6. Technology: Electronic health records would be required for all providers by 2017.
7. Greater transparency would be attained through detailed pricing available to consumers on the Web, as well as greater disclosure of out-of-pocket costs to patients up front.
8. Streamlining Care: The measure stresses greater coordination of care through primary care, and the establishment of “patient-centered medical homes” so that patients could have a single point of coordination for all types of care.
9. MedMal: New rules on medical malpractice would create a 180-day cooling off period while both side try to negotiate a settlement. Also, the measure would allow providers to freely offer an apology to a patient.
10. Tiering: Under a provision called “smart tiering” patients might pay more for more expensive services.
11. Upping The Rates: The bill would make several changes to Medicaid, including increasing MassHealth rates paid to providers.
12. Training: Funding for workforce training and development are included in the measure, and a provision would forgive loans to primary care doctors who practice in rural or underserved areas.
MIT economics professor Jonathan Gruber, an architect of the state’s 2006 health law and an advisor to President Barack Obama on the national Affordable Care Act calls the new House proposal “aggressive, broad and visionary.”
“This is an incredibly hard problem,” said Gruber, speaking on WBUR’s Radio Boston today. “What I like about this…is that it’s really taking the spaghetti approach to cost control; let’s throw a bunch of things against the wall and see what sticks. They’re doing a bunch of different things all of which might work.”
Health Care Quality Improvement and Cost Reduction Act of 2012:
When the Massachusetts reform act was about to be enacted in 2006, MIT economist and Romney consultant Jonathan Gruber acknowledged that the issue of rising costs was not adequately addressed in the legislation, saying that the bill should be passed to get people covered and then the cost problem could be fixed later. So now, the cost fix, he says, is to throw spaghetti against the wall and see what sticks.
If you look at the spaghetti in the new bill being introduced, you will see that there is not much there to stick, as far as costs are concerned. The measures summarized above, and described in detail in the bill available at the link, really do very little to control costs. Several of them are simply reiterations of some of the measures in the Affordable Care Act.
Massachusetts desperately needs reinforcement of its primary care infrastructure (as does the entire nation), and this legislation takes strides in that direction. But most of the rest of the bill is a diversion from what Massachusetts really needs to do – replace their antiquated, fragmented financing system with an efficient and equitable single payer program. Once in place, it would be much easier and less costly to make the necessary improvements in the infrastructure of their health care delivery system.
The topic of yesterday’s Quote of the Day message: “Should a single payer system include complementary and alternative therapies?”
Martha Livingston, Ph.D., Professor of Health and Society, SUNY College at Old Westbury, responds:
May 4, 2012
I am deeply troubled both by the JAMA piece you cite here and by your comment. The author – and you – have lumped together a world of different treatment modalities and individual treatments, and you have further characterized them all as “quackery.” Not all CAM treatments are the equivalent of “drugs.” And there is good science demonstrating the efficacy of many treatments referred to as CAM. The JAMA author has chosen to cite only studies that did not show a therapeutic effect of a particular single treatment, and you have apparently decided that there are therefore no rigorous scientific studies showing the efficacy of any alternative treatment.
The term CAM itself is problematic, suggesting that all such treatments complement “regular” medicine. Lumped under the heading of CAM are not only various herbal and other non-PhRMA-manufactured products, but “alternative,” that is, “non-M.D.” practitioners, and entire methods of treatment. So the issues really must be distinguished and analyzed, e.g.,
1. Who gets to research various treatments?
2. Who gets to practice medicine or, more broadly, healing?
3. Who gets to decide who’s right?
Briefly, there is a long, convoluted history inextricably tied to issues of power, class and racism, e.g., the suppression of midwifery and continuing suppression of the superior woman-centered model of childbirth; the dismissal of traditional healing systems, e.g., the 4000 years of Traditional Chinese Medicine (TCM).
Further, proponents of (some) “alternative” modalities argue that a huge proportion of what is practiced in “regular” or “scientific” medicine has no scientific basis whatever, and only the weight of generations of apprenticeship behind it.
I doubt that you are prepared to defend that all that is practiced in “regular” medicine is supported by good science, yet you aren’t dismissive of all regular doctors as quacks. If you’d like to learn more about the science of other-than-standard medical practice, I refer you to the terrific body of work by Dr. Adriane Fugh-Berman of Georgetown, a longtime PNHP member.
Finally, I think it’s really important not to toss grenades into our coalition, Don. Many PNHP members, both physicians and non-physicians, are supportive of some of the practices lumped together under the umbrella of CAM. We need each other, and must agree to disagree about many issues, this one included.
qotd: Should a single payer system include complementary and alternative therapies?
Martha Livingston’s message reflects the tenor of many of the anticipated responses to my biased opinions expressed in yesterday’s Quote of the Day – views that I made clear were my own and did not represent the policy position of PNHP.
When the views are expressed as support or opposition to complementary and alternative medicine (CAM), passions run high and conflict is inevitable. That is the way I framed the message – quite deliberately to carry my point. But the real issue is not CAM. It is where do we draw the line on where our collective tax funds in a single payer national health program should be distributed?
There should be very little disagreement with a framing that all reasonable, beneficial, affordable, effective, preventive, diagnostic and therapeutic health care services should be covered under a single payer system. There should also be agreement that blatant quackery such as the Hoxsey cancer treatment should not be covered, though some still disagree with this.
Merriam-Webster defines “medicine” as “the science and art dealing with the maintenance of health and the prevention, alleviation, or cure of disease.” “Science” is defined as “the state of knowing; knowledge as distinguished from ignorance or misunderstanding.” “Art” is defined as “skill acquired by experience, study, or observation.”
Medicine is science combined with art, but it is not not art alone. If we are going to pay for the health care of other people, this is the standard that we should meet.
As you read the following quote from my comment yesterday, dismiss from your mind the arbitrary categories of “traditional medicine” and “complementary and alternative medicine.” Simply read carefully what I wrote:
“The application of science to medicine is a dynamic. Many older approaches prove to be ineffective or even harmful. As we gain new evidence, those approaches should be denied payment from our collective health funds, whether private or government. Beneficial new approaches should be added. These decisions should continue to be based on science.”
In medicine, we need to dump the bad and bring in the good – some of which may arise from CAM. CAM was chosen for discussion yesterday because it is a rich resource of unscientific and sometimes artless interventions of the type that we should not be asking our fellow countrymen to fund. If we want those services, we should pay for them ourselves.
For those who insist that the art of medicine is all we need and that we do not need the science, I can only say that our health care financing system cannot bear paying for extravagances such as the $120 million paid for “The Scream,” or $120 billion to be allocated for “scream therapy.”
Studying Complementary and Alternative Therapies
By Paul A. Offit, MD
JAMA, May 2, 2012
In 1992, with an initial budget of $2 million, Congress created the Office of Alternative Medicine (OAM). Based on legislation sponsored by Iowa politicians Tom Harkin and Berkeley Bedell, OAM’s mission was “to explore complementary and alternative healing practices in the context of rigorous science.”
In 1999, OAM became the National Center for Complementary and Alternative Medicine (NCCAM), a center within the National Institutes of Health (NIH). Funding has steadily increased; by 2012, NCCAM’s annual budget had reached $130 million. Since their inception, OAM and NCCAM have spent $1.6 billion. US taxpayers have a right to ask whether money appropriated for NCCAM—like money appropriated for all centers within NIH—has been well spent.
In support of NCCAM’s mission, proponents argue that one century’s folk medicine can be the next century’s mainstream medicine… Indeed, most drugs on today’s hospital formularies were originally derived from plants.
However, unlike studies of drugs derived from plants, many studies funded by NCCAM lack a sound biological underpinning, which should be an important requirement for funding. For example, NCCAM officials have spent $374 000 to find that inhaling lemon and lavender scents does not promote wound healing; $750 000 to find that prayer does not cure AIDS or hasten recovery from breast-reconstruction surgery; $390 000 to find that ancient Indian remedies do not control type 2 diabetes; $700 000 to find that magnets do not treat arthritis, carpal tunnel syndrome, or migraine headaches; and $406 000 to find that coffee enemas do not cure pancreatic cancer. Additionally, NCCAM has funded studies of acupuncture and therapeutic touch. Using rigorously controlled studies, none of these therapies have been shown to work better than placebo. Some complementary and alternative practitioners argue reasonably that although their therapies might not work better than placebos, placebos may still work for some conditions.
Although studies funded by NCCAM have failed to prove that complementary or alternative therapies are anything more than placebos, some proponents—pointing to studies of vaccine safety—argue that negative studies of biologically implausible hypotheses are worthwhile.
Does the same value of rigorously conducted negative studies hold for studies of complementary and alternative therapies? Have negative studies changed behavior? The answer is probably best found in NCCAM-funded studies of dietary supplements and megavitamins. Several studies have shown that garlic does not lower low-density lipoprotein cholesterol, St John’s wort does not treat depression, ginkgo does not improve memory, chondroitin sulfate and glucosamine do not treat arthritis, saw palmetto does not treat prostatic hypertrophy, milk thistle does not treat hepatitis, and echinacea and megavitamins do not treat colds. Moreover, some studies have found that megavitamins increase the risk of cancer and heart disease. Because the vitamin and supplement industry is not regulated by the US Food and Drug Administration (FDA), negative studies have not precipitated FDA warnings or FDA-mandated changes on labeling; as a consequence, few consumers are aware that many supplements have not delivered on their claims. In 2010, the vitamin and supplement industry grossed $28 billion, up 4.4% from the year before. “The thing to do with [these studies] is just ride them out,” said Joseph Fortunato, chief executive of GNC Corp. “We see no impact on our business.”
Although evaluating the research portfolio of any institute at the NIH is difficult, social and political pressures may influence area-of-interest funding, and decisions should be based on science. For complementary and alternative medicine, it seems that some people believe what they want to believe, arguing that it does not matter what the data show; they know what works for them. Because negative studies do not appear to change behavior and because studies performed without a sound biological basis have little to no chance of success, it would make sense for NCCAM to either refrain from funding studies of therapies that border on mysticism such as distance healing, purgings, and prayer; redefine its mission to include a better understanding of the physiology of the placebo response; or shift its resources to other NIH institutes.
THINGS GET HOTTER FOR HOXSEY
U.S. Food and Drug Administration posts warning against man who makes millions from cancer victims
LIFE, April 16, 1956
Caption of a photograph of Harry Hoxsey:
HARRY HOXSEY holds the book he wrote which touts his cancer treatment. Beside him on a plaque is his motto: “The world is made up of two kinds of people – dem that takes and dem that gets took.”
Complementary and alternative medicine (CAM) is a topic frequently brought up in discussions, forums, and in the medical and lay literature. When confronted on this topic, I usually respond by saying that anyone should be able to spend their own funds as they desire, but when the rest of us are paying the bills, whether through premiums for private insurance or through taxpayer-financed public programs such as Medicare, there is a responsibility for the administrator of the funds to prevent wasteful cost overruns by limiting spending to health care that is compliant to well accepted standards of mainstream medicine, which includes promising new diagnostic and therapeutic options that adhere to the rigors of science.
The application of science to medicine is a dynamic. Many older approaches prove to be ineffective or even harmful. As we gain new evidence, those approaches should be denied payment from our collective health funds, whether private or government. Beneficial new approaches should be added. These decisions should continue to be based on science.
What is different about the scientific evaluation of existing and innovative medical interventions and the evaluation of CAM? Why is CAM segregated, as, for example, in the National Center for Complementary and Alternative Medicine (NCCAM)? Quite simply, complementary and alternative therapies do not arise from inductive scientific reasoning. They are based on faith exclusively and have no basis in the scientific disciplines. If new discoveries suggest that there could be a scientific basis warranting further evaluation of a complementary or alternative therapy – an exceedingly rare event – then it is no longer classified as CAM but is moved into the arena of bone fide scientific research.
Should the government have any role in oversight of CAM? Yes, for two reasons. Most important, some CAM therapy is harmful, and the government has an legitimate role in protecting us from harm by removing from the market truly dangerous products with no redeeming value. The other role of government is to ensure that the producers and sellers of these ineffective products are providing honest disclosure to the consumers. Such disclosure is not required today. If the product is crap, the producers should be required to tell us that it is crap.
What the government should not be doing is wasting our tax dollars on this phony research strictly for the purpose of pleasing the eccentrics who have political influence.
My concerns go back to my teenage years when I had several discussions with my father – a physician – over these topics now classified as CAM though more appropriately referred to then as quackery. I remember very clearly reading a LIFE magazine article on the cancer quack Harry Hoxsey. I have repeated to myself over an over again throughout the years Hoxsey’s motto that appeared in the photograph of him in that article (which I was amazed that I could find today with a Google search – link above):
“The world is made up of two kinds of people – dem that takes and dem that gets took.”
Until now, I have been reserved in my comments on CAM, partly because so many sincere, dedicated individuals in our single payer coalitions are supportive of CAM – including some members of PNHP who should know better. But dammit! Quackery is quackery! The smug CAM producers who retreat to their mansions are “dem that takes,” and the uninformed patient/victims lacking an adequate scientific background are “dem that gets took.”
When I was a teenager, I wanted to become a physician like my father and help clean house of these unscrupulous thieves. Alas, they are still with us, and now they have been joined by their brethren in the insurance industry who don’t have a tangible product to sell us but rather simply expropriate our money directly out of our collective health funds in exchange for taking away our choices in health care. That’s worse than quackery!
(This is not a PNHP policy statement, but is a cathartic release of pent up emotions of the author.)
From: Khati Hendry
To: Don McCanne
Date: Tue, May 1, 2012 at 10:56 PM
Subject: Re: qotd: Lack of retiree plans can cause job lock
This article reinforces one of the things that really impressed me when I first moved from the US to practice in Canada 7 years ago–I started seeing all these patients who were retiring way before age 65. What was up? They didn’t all seem independently wealthy. Some were taking up other avocations, running B&Bs, but others were, well, just retired. Of course the big difference is that they don’t have to take into account health insurance. They are covered working, retired, laid-off, in transition, in school, married, single, rich, poor–you understand completely. What a difference it makes to a life when you don’t have the angst of health financial disaster looming, and you can make your decisions on all the other things important to you.
MiniProfile: Khati Hendry
qotd May 1, 2012: “Lack of retiree plans can cause job lock”
If you read Khati Hendry’s MiniProfile (link above) you will see that she is indeed an expert, but her credibility stems not just from what she has done in her career. Much more, it is her dedication to making the health care system work for her patients and for all patients that most qualifies her when she speaks out on health care justice.
For more on her views, this link provides access to a transcript of a radio broadcast featuring Dr. Hendry on “Demystifying the Canadian Health System”
Providing Retiree Health Insurance Encourages Early Retirement
By Claire Brunel
National Bureau of Economic Research (NBER), Digest, May 2012
Employees under the age of 65 have substantially higher turnover rates at firms that offer subsidized retiree health coverage than at firms that do not.
The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such benefits need not wait until age 65 to retire with group health coverage.
In Does Retiree Health Insurance Encourage Early Retirement (NBER Working Paper No. 17703), authors Steven Nyce, Sylvester Schieber, John Shoven, Sita Slavov, and David Wise use employee-level data from 64 diverse firms that are clients of TowersWatson, a leading benefits consulting firm, to investigate the impact of retiree health insurance on early retirement. After controlling for individual characteristics and pension incentives, they find that employees under the age of 65 have substantially higher turnover rates at firms that offer subsidized retiree health coverage than at firms that do not. Subsidized retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 21 percent increase in the probability of turnover at age 62 and a 32 percent increase in the probability of turnover at age 63.
Moreover, higher subsidy rates are associated with greater turnover than lower subsidy rates. For example, an employer contribution of 50 percent or more of the cost of health insurance raises turnover by nearly 34 percent at age 62, and by nearly 44 percent at age 63. The authors estimate that a subsidy of 50 percent or more lowers the expected retirement age by 9 months overall, and by more than a year for workers with 15 or more years of experience.
NBER Working Paper – “Does Retiree Health Insurance Encourage Early Retirement?”:
Implementation of the Early Retiree Reinsurance Program
GAO (U.S. Government Accountability Office)
September 30, 2011
During the last decade the number of large employers offering health benefits to retirees – including early retirees not eligible for Medicare – has declined. Among all large firms that offered health benefits to active employees from 2001 to 2010, the percentage that offered health benefits to retirees decreased from 39 percent in 2001 to 28 percent in 2010. According to the Agency for Healthcare Research and Quality, individuals age 55 to 64 who lack health insurance are vulnerable to high health care costs associated with serious and chronic illnesses. The Early Retiree Reinsurance Program (ERRP) was established pursuant to the Patient Protection and Affordable Care Act (PPACA) to provide reimbursement to participating employment-based health plans. The reimbursements provided by the program are intended to cover a portion of the cost of providing health benefits to early retirees – individuals age 55 and older who are not eligible for Medicare.
The largest share – about 46 percent – of the $2.7 billion in ERRP reimbursements approved as of June 30, 2011, went to government entities. In general, this distribution of reimbursements is consistent with the provision of retiree health benefits in the marketplace. In particular, government entities are more likely than other types of employers to provide health benefits to their retirees. HHS projects that the $5 billion appropriated for ERRP will be expended by the end of fiscal year 2012 – before the January 1, 2014, end date for the program.
Job lock is one of the problems with using a system of financing health care that is heavily dependent on employer-sponsored coverage. Individuals who might otherwise consider other options to their current employment are locked into their jobs under the threat of losing their coverage if they leave. Amongst the forgone options, those who could and would want to retire early may have to wait until eligible for Medicare at age 65 if they have to give up their employer-sponsored plan.
There continues to be an erosion in retiree health benefits offered by employers, and this NBER study shows that it makes a difference. The data show that close to 10 percent of individuals at ages 56 to 64 will exit their jobs only if they receive a retiree health plan with an employer contribution of 50 percent or more.
The framers of the Affordable Care Act recognized this problem. Although there are numerous technical complexities, theoretically the state insurance exchanges would provide individuals not qualified for other programs with private insurance plans that were intended to be affordable based on generous pensions or based on income-indexed subsidies. Congress even authorized a transitional program – the Early Retiree Reinsurance Program – which would provide subsidies to encourage employers to continue coverage until the exchanges were up and running. Unfortunately this program will run out of funds by the end of this year.
Should we want people to retire early? With our high rates of unemployment, it would be great to open up employment opportunities for individuals desperate for work. Even if we return to a vibrant economy, many economists recommend that we still need policies to keep unemployment high enough to ensure a competitive labor market, lest the employers would have to pay higher wages or salaries for their employees. So we should establish policies that discourage early retirement? Nonsense.
Some of these economists have suggested that we should not ever allow unemployment rates to drop below 4 percent, in order to prevent labor costs from increasing. Yet these are often the same economists – and politicians – who helped to “end welfare as we know it,” and even now are recommending further reductions in unemployment compensation and in the supplemental nutrition assistance program (food stamps). These market ideologues are supporting an agenda of keeping them unemployed so we can get cheap labor, but starve the individuals we don’t need. Heartless.
If you read the excerpts from the GAO report above, you will see that the government has been more responsible than the private sector. The government is more likely to provide health benefits to their retirees, and more likely to use the Early Retiree Reinsurance Program to benefit them.
But we really don’t all need to become government employees to increase the likelihood of having health coverage should we retire early. We need only to establish an improved Medicare for everyone, then employment and retirement decisions would never have to be based on the availability of health benefits. Everyone would have health care – forever.
Implementing Health Reform: Amidst Turbulence, Federal Work Goes On
By Timothy Jost
Health Affairs Blog, April 27, 2012
Stop-Loss Coverage And Self-Insured Plans
On April 27, 2012, HHS, Treasury, and Labor published a Request for Information Regarding Stop Loss Insurance. The concern that drives this is the potential of stop loss-insured self-insured employer plans destabilizing the small group insurance market post-2014.
Employers have always had reasons to self-insure. Plans that are self-insured escape state regulation, including state mandates, and can be less expensive than commercial insurance for low-risk groups. The Affordable Care Act (ACA), however, increases these incentives dramatically. Insurers understand this, and are actively marketing “self-insured” products to small groups. These products offer administrative services and “stop-loss” coverage that shields small employers from the risk that would otherwise make self-insured status unattractive. They often have very low “attachment points,” which define when the employer ceases to bear risk and the stop-loss insurer takes over. Some stop loss plans are almost indistinguishable from high deductible health plans, except that the risk remains nominally with the employer rather than the employee.
Self-insured plans become more attractive to small groups under the ACA for two reasons. First, they are subject to fewer regulatory requirements than are insured plans. Whether in or out of the exchange, small group plans must offer the essential benefits package, include their members in a single risk pool, participate in the risk adjustment program, offer the same premiums without regard to health status, and offer the precious metal tiers. Self-insured plans are not, however, subject to these requirements. Moreover, neither self-insured plans nor the stop-loss coverage that makes self-insurance possible for small groups are subject to the ACA’s minimum medical loss ratio requirements. Self-insured plans are also exempt from a fee imposed on insurers under ACA section 9010 and stop-loss plans do not need to justify unreasonable rate increases.
Second, once the ACA establishes guaranteed issue and bans health status underwriting and pre-existing condition exclusions for small groups in 2014, the risk to small employers of self-insuring will be dramatically reduced. Under current law in most states, a self-insured small employer faces the prospect of significantly increased stop-loss rates or lack of affordable access to conventional insurance if the group’s risk profile deteriorates (e.g. an employee or dependent gets cancer or needs an organ transplant). But, beginning in 2014, insurers (in or out of the exchange) will not be able to refuse to insure higher-risk small groups or exclude preexisting conditions, and will have to insure them at standard rates. SHOP (small employer) exchanges cannot have open enrollment periods for employers but must admit small employers whenever they apply for coverage. The threat of adverse selection to the exchanges could be substantial. Healthy small groups will be able to self-insure with stop-loss coverage and then leave that coverage and enter the exchange at standard rates the moment an employee or dependent suffers a serious illness or accident.
Without stop loss insurance, however, self-insured small group plans become much less viable. Few small groups can fully take on the risk of self-insuring without stop-loss. As of this point, stop loss insurance for small groups is not regulated at the federal level and largely unregulated at the state level. The term “self-insured” is not defined in the ACA, and the agencies clearly have the authority to define when a plan with stop-loss coverage is in fact so fully-insured that it ceases to be self-insured. In the request for information, the agencies are seeking to determine how common stop-loss coverage is, how it operates, how insurers decide which employers to insure and how much they charge, and how stop loss insurance is regulated. Presumably regulations will follow.
The Affordable Care Act offers Mack-truck-size loopholes for small businesses that decide to self-insure – loopholes that defeat many of the noble intentions of health care reform. Timothy Jost describes these loopholes above.
In his full article available at the link above, Professor Jost also describes 1) several technical considerations for the medical loss ratio, 2) some of the complexities in determining whether individuals have access to employer-sponsored plans, which in turn can affect eligibility for exchange plans, and 3) technicalities that determine whether or not employer-sponsored plans meet minimum value requirements.
A quick read of the full article will reinforce two points that we already know: 1) the Affordable Care Act significantly increases the administrative complexity of health care financing when our system is already weighted down with expensive administrative excesses, and 2) the Act opens up further the opportunity for gaming the system thereby perpetuating and expanding the inequities and injustices of our uniquely American system that already uses gaming that drives up costs and diverts our finite funds away from health care.
As Professor Jost says, more regulations should follow. Great. Each loophole patch seems to create multiple additional loophole opportunities.
It is astounding that we continue to make such an intense effort to try to get this turkey to fly when we could have a health care system that would soar like an eagle. (If only metaphors could send us off in the right direction, but alas… )
Patient Cost-Sharing Under the Affordable Care Act
Kaiser Family Foundation
To provide a more tangible picture of what coverage people would be required to buy, the Kaiser Family Foundation commissioned Aon Hewitt, a prominent benefit consultant, to estimate dollar values for several illustrative cost-sharing structures for non-group bronze and silver level plans when the ACA is fully implemented in 2014. Bronze plans are the least comprehensive of the four tiers, and represent the minimum coverage people purchasing non-group coverage could buy to satisfy the individual mandate. Silver plans are likely to be the most common level of coverage because premium tax credits are based on silver plan premiums and only people enrolled in silver plans will be eligible for cost-sharing subsidies.
These estimates update previous work and better reflect the federal guidance on essential health benefits and actuarial value.
We present two illustrative cost-sharing designs that were applied to each tier: one with a deductible and 20 percent patient coinsurance up to an out-of-pocket limit of $6,350 for an individual, and a second with a smaller deductible and higher patient coinsurance of 40 percent up to the same out-of-pocket limit. The deductible and coinsurance were assumed to apply to all services except preventive services, which are available under the ACA without patient cost-sharing. This means that for most services covered by the plan under these designs, the patient would pay all of the cost until the deductible is reached, and either 20 percent or 40 percent (depending on the option) of any additional costs until total patient cost-sharing reaches the out-of-pocket limit. Under the ACA, out-of-pocket limits for health plans are subject to the limit that currently applies to health savings account-qualified health plans, which is $6,050 for single coverage in 2012, and we estimate it to be $6,350 in 2014.
The ACA seeks to standardize coverage options available in the non-group and small group markets, making it easier for consumers to compare plans and focusing competition on premium levels.
Coverage with cost-sharing levels comparable to current employer-based plans will be available through gold (actuarial value of 80 percent) and platinum (actuarial value of 90 percent) plans. The estimated actuarial value of typical employer-sponsored coverage is over 80 percent, with coverage offered by small employers generally less comprehensive.
However, the minimum coverage people will be required to buy starting in 2014 will have much higher cost-sharing than typical employer-based coverage and than the average purchased now in the non-group market. With standard 20 percent coinsurance, a bronze plan would have an estimated deductible of $4,375 for a single individual and double that for a family. This compares with an average single deductible of $2,498 in 2010 in the non-group market and an average of $675 in employer-sponsored PPO plans with deductibles in 2011. Deductibles in employer plans paired with tax-preferred savings accounts averaged $1,908 in 2011.
With much of the controversy over the ACA focusing on the individual mandate, it is noteworthy that the minimum coverage requirement is for insurance that is significantly less generous (and with a lower premium) than what most people have today. It is a level of coverage that most would consider catastrophic, providing protection in the event of an expensive illness while subjecting routine expenses (except for preventive care) to a relatively high deductible.
People will have the option of buying more generous coverage than the minimum required, and lower-income enrollees will be eligible for cost-sharing subsidies that decrease their out-of-pocket costs. But, some may still find themselves with insurance that requires substantial cost-sharing.
One of the major flaws of the Affordable Care Act is that underinsurance will become the new standard for health insurance in the United States. This new analysis demonstrates how the most common plans that will be purchased in the state insurance exchanges will fall well below the coverage that most people have today.
The cheapest plans in the exchanges – bronze plans with an actuarial value of 60% (patient pays an average of 40% of covered costs) – will have deductibles of $4,375 for an individual ($8,750 for families) with coinsurance of 20% (the patient pays 20% of the amount over the deductible). The deductible can be reduced to $3,475 for an individual but then the patient faces a staggering coinsurance of 40%.
Because of the availability of income-indexed subsidies, it is likely that silver plans with an actuarial value of 70% will be the most commonly selected plans. These are still well below the typical employer-sponsored plans which have an average actuarial value of 82%. The deductible for the silver plans would be $2,050 for an individual with a 20% coinsurance rate. The deductible could be reduced to $650 but, again, the coinsurance rate would increase to 40%.
Subsidies would assist those with lower incomes, but for this population even the most modest out-of-pocket cost sharing expenses can create financial barriers to care. As income increases, the subsidies diminish and eventually phase out altogether. The 2014 limit for maximum out-of-pocket spending will be $6,350 for an individual or $12,700 for a family (on top of the portion of the premium that that must also be paid). These income-adjusted increases in cost sharing will still be excessive for most individuals and families with significant health problems and with all of the other financial problems that often are associated with ill health.
This is what we mean by underinsurance. The new standard plans to be offered by the state insurance exchanges will not offer enough protection to prevent financial hardship for those with health care needs.
A properly designed single payer system would remove all financial barriers to essential health care services for everyone. The Affordable Care Act won’t do that.
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