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.
Perspectives on Health Care Reform in the U.K.: A dialogue with UK Secretary of State for Health Andrew Lansley
Brookings, Engelberg Center for Health Care Reform
November 9, 2011
Mark McClellan, Director of the Engelberg Center: Another point (that you mentioned) was the availability of care at a low or at really no cost to patients, to consumers. That is a big difference from the United States, obviously, where not just the more conservative members of our legislatures, but others as well believe that patients should have some accountability, some responsibility for some of the costs, and, conversely, if they make decisions to stay healthier, if they make decisions to use care more effectively, that they should get some of the savings. You put a big emphasis on how these reforms are going to lead to more patient choice in terms of GPs, in terms of hospital care, in terms of specialist teams, and so on. As you said, money following the patient. Is that going to be enough? There are a lot of people here who believe that you really need even more consumer involvement, consumer stake in care to drive real reforms in care.
UK Health Minister Andrew Lansley: Well, I understand the view that says if people pay directly for something, they value it more. I actually think, in the British context, where health care is concerned, people understand the value of the health care that is provided to them. They don’t need to have it itemized in a bill sent to them and pay for it out of their own pocket to realize that the National Health Service provides them something that they should attach enormous value to. I think, generally speaking, it isn’t the case that people in Britain consume large amounts of health care, that they don’t need to, because it’s free. And in particular, I think through the intermediation process with general practitioners the relationship that is built up between the British public and their general practitioners is instrumental to the process of managing demand in a way that is responsible and effective. Now I think it’s not perfect, and I think that’s one of the central reasons why I think we need to give patients a greater say in decision making. I don’t think, in a free system, as a consequence of that we are going to see irresponsible or excessive demand. I think patients themselves, given good information and opportunities to make choices, on balance, will make decisions that are probably less costly, less invasive, less interventionist because they want to have care that supports them at home and very often they don’t want to be in the hospital. So issues like avoiding admissions to hospitals, I think patients are with us on this. They’re not conflicting with us. See, the one thing I would say is important in terms of access, that we don’t necessarily achieve, where we do need to act is to ensure that patients do have access to the latest and most effective treatments and medicines. And there, particularly, we acted, since the election, in the creation of the Cancer Drug Fund because we knew that, in Britain for example, there was a very low take-up of cancer medicines within five years of their being introduced. And I think that is absolutely an area where the public have an expectation and a right to expect that they should have access to whatever their clinicians regard as the most effective treatment available. Some of it’s cost effective but, you know, on that basis, with clinical judgement, they should be able to get access to it. I have to say, when you look at the cost, literally the transaction cost alone, of moving away from a taxpayer funded service as the NHS is, in the way in which we’re organized, at the moment we have something like five percent of NHS costs consumed in administration. I’m planning to bring that down to about three to three and a half percent over the course of the next four years. That alone will save us about one and one-half billion pounds a year. But that is very modest administration costs relative to the costs of administration of insurance systems in the United States. So on that basis alone I think there is, in a constrained financial bound, there’s no intrinsic merit in moving away from the structure of the system we have.
Health Minister Andrew Lansley of the United Kingdom is currently at the center of a storm of controversy over his efforts to further privatize their health care on the theory that expanding market competition for the National Health Service will improve quality and reduce costs. So it is instructive to ask if his views extend to include the U.S. concept of empowering consumers by requiring an even greater financial stake “to drive real reforms in care,” as former CMS Secretary Mark McClellan phrases it.
Although holding very conservative political views, Lansley almost scoffs at the suggestion that British citizens would consume large amounts of care merely because it is free. When you think about it, the suggestion that patients need price sensitivity to prevent over-consumption of health care is almost an insult. Patients want to consult with their physicians to obtain the most appropriate care for their medical circumstance, in an environment removed from financial considerations. They are not looking for bargain basement deals.
This is about health care, for Pete’s sake. It’s not like deciding whether you are going to purchase a garment at Walmart or at Nordstrom. The assumption in the United Kingdom and in all other wealthier nations, except the United States, is that public stewards will ensure that health care will always be there for you when you need it. It is not a commodity that wise shoppers will follow and then purchase only after it goes on sale.
The advocates of consumer-directed health care are going to have to do a better job of explaining how requiring patients to pay out of their pockets or savings accounts when they access care is an answer to a problem, when that problem doesn’t seem to even exist. As Minister Lansley states, “it isn’t the case that people in Britain consume large amounts of health care… because it’s free.” Further, “the relationship that is built up between the British public and their general practitioners is instrumental to the process of managing demand in a way that is responsible and effective.”
How about that! The traditional physician-patient relationship works!
The per capita health care spending in the United Kingdom is less than half that of the United States. The British did not have to use consumer empowerment through price sensitivity to control their health care spending.
It appears that the only significant impact of increasing the financial stake of the health care consumer has been to erect financial barriers to beneficial health care services. So this detrimental intervention is being offered as a solution to the problem of high health care costs that other nations effectively manage using a responsible relationship between patients and their physicians? Talk about a disconnect between a problem and a solution!
McClellan says, “There are a lot of people here who believe that you really need even more consumer involvement, consumer stake in care to drive real reforms in care.” We could scoff at those people, but they’re in charge now. That’s tragic!
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 Fight to Save Britain’s NHS: Luncheon address by Jacqueline Davis, M.D.
Physicians for a National Health Program
National Meeting, Washington, D.C., October 29, 2011
First I want to thank you for inviting me here. I bring greetings from the land of socialized medicine and death panels, to the land of “islands of excellence in a sea of misery.”
I’ve never been to this city before and when I told family and friends about my invitation to Washington they assumed I was off to meet the president. I told them it was much more important than that. But just in case he’s listening – I could be free for tea tomorrow….
Of course the NHS faces the challenges that all health systems do, i.e. changing demographics, increased range and cost of treatments, rising patient expectation and the global financial crisis. But in the face of all these the NHS still manages to be one of the most cost-efficient and equitable health services in the world. And the public love it. At the end of the Labour government’s 13 years in power it had the highest satisfaction ratings ever, and it still is the most popular institution in the UK bar none, and that includes the royal family.
So if it’s so good, why are we having to fight for it? Because there’s another big challenge which all public services face and that is the neoliberal agenda which still has the upper hand despite its current manifest failures on a global scale.
A successful public service is an affront to the free marketeers. They simply won’t let the facts get in their way. Despite all evidence to the contrary they continue to insist anything the public sector can do the private sector can do better and more cheaply, and no evidence to the contrary will persuade them otherwise.
So the politicians for ideological reasons, and the private sector for financial reasons, have had the NHS – traditionally publicly funded, publicly delivered and publicly accountable – in their sights for some time. They have acted together, beneath the radar, to turn the NHS from a cost-effective integrated public service into a kite mark attached to a ragbag of competing private providers.
Up till now you trusted your GP to give advice on clinical grounds. But now – if your GP says no to treatment and/or referral is it because they want to pocket the money that is saved – which the bill allows them to do? Or if they refer you to Hips R Us down the road, is it because their wife has a financial interest in it? 25 percent of GPs already have a direct interest in the private sector. This suspicion will be very corrupting, and most GPs are worried about it.
We fear NHS services being reduced to a core of poor services for poor people, with those who can afford it topping up their personal health budgets with insurance or out-of-pocket payments and those who can’t afford it going without.
And we really fear the arrival of the private companies, many of them from the U.S., whose behavior leaves much to be desired. They want to “cherry pick.” leaving the NHS to pick up the complex expensive patients as well as providing the expensive emergency care and the training that is not attractive to the private sector. We fear they will behave in a fraudulent way as they do already in the USA.
Our organization was vociferous from day one, saying that the bill spelled the end of the NHS, and of course we were accused of shroud waving and gross exaggeration. But we stuck in there and joined together with other campaigning organizations and the pressure has built up over the last year. How did we do it?
We produced analyses and simple 10-point critiques of the bill in our regular campaign newspaper as well as special pamphlets and postcards. We wrote doggedly – all of us would take it in turns – to national and local papers and had a lot of articles and letters published.
We offered to do public talks, to our own groups and also to anyone from medical students to pensioners, and in fact those two groups turned into some of our most outspoken supporters. We helped organize online petitions. We put a lot of energy into lobbying politicians.
We have helped expose the scandals of the revolving door between government and the private sector and the infiltration of government by corporate interests. We have questioned the neutrality of so called think tanks and helped expose the strength of the health lobbying industry in Westminster.
We marched, we used social media to spread our message and some of us even got elected to the Council of the British Medical Association so that we could begin to change our union from within.
The problem we have come to realize is that we aren’t just fighting the Tory government; we are fighting the global medical industrial complex with all its power, influence and money. And its cozy relationship with today’s politicians.
It’s easy to lose hope but we mustn’t. We have to take on this cozy configuration of politicians and giant corporations which have come to a “comfortable accommodation” at our expense. We must change the tone of the debate with these people who know the price of everything and the value of nothing.
We must say that the market should serve society rather than society serving the market, that there are public goods and goals for which the market is not suited and that what matters is not how affluent a country is but how unequal it is. We must collect evidence and use it to criticize and expose. We must create the strong voice of civil society and we doctors have a particular duty to be that voice and we must organize and use it.
Firstly because – and we must never lose sight of the fact – we are right. Secondly, we are the patients’ true advocates and our patients are depending on us. And finally Aneurin Bevan, the great founder of the NHS, said, “The NHS will last as long as there are folk left with the faith to fight for it.”
We must be those folk because, personally, I am not prepared to let him down.
(Dr. Jacqueline Davis is a consultant radiologist working in a hospital in London. She is co-chair of the NHS Consultants’ Association, a nationwide group of distinguished physicians representing all specialties, and a member of the Keep Our NHS Public campaign.)
(You may have to cut and paste this link for it to work.)
We share with the British concerns about the neoliberal attack on our health care services. In their case it is an attack on their public National Health Service, whereas in our case it is an attack on Medicare and other public programs and, even greater, a virtual blockade – a dysfunctional private financing construct that often uses public money – that prevents us from bringing comprehensive health care services to all of our people.
This luncheon address by Dr. Jacqueline Davis was a highlight of PNHP’s recent annual meeting in Washington, DC. You may want to take a moment this weekend to read the entire address, available at the link above, and then savor it. You’ll then understand clearly why we gave her a standing ovation, not to mention that it will reinforce your dedication to the cause of health care justice 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 Many Different Prices Paid To Providers And The Flawed Theory Of Cost Shifting: Is It Time For A More Rational All-Payer System?
By Uwe E. Reinhardt
Health Affairs, November 2011
In developed nations that rely on multiple, competing health insurers — for example, Switzerland and Germany — the prices for health care services and products are subject to uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care. In the United States, some states — notably Maryland — have used such all-payer systems for hospitals only. Elsewhere in the United States, prices are negotiated between individual payers and providers. This situation has resulted in an opaque system in which payers with market power force weaker payers to cover disproportionate shares of providers’ fixed costs — a phenomenon sometimes termed cost shifting — or providers simply succeed in charging higher prices when they can. In this article I propose that this price-discriminatory system be replaced over time by an all-payer system as a means to better control costs and ensure equitable payment.
This is an important contribution to the health policy literature. It is intended to be a seminal paper designed to displace the useless discussion of cost shifting between public programs and private insurers with a discussion of reducing price discrimination (charging individuals, private insurers or government programs different prices for the same services) by shifting to an all-payer system that would better control costs and ensure equitable payment.
An all-payer system simply establishes “uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care.”(1) Why is this important?
Although there is considerable variation in prices throughout the health care system, high prices, on average, have been a major contributor to our very high per capita spending on health care.(2) As Uwe Reinhardt explains, much of this excessive pricing has resulted from private insurers, with a weak market presence, negotiating with health care providers, especially hospitals, that dominate their respective markets. The health care provider consolidation that is taking place can only compound the impact of this market distortion.
Although private insurers also are consolidating, competing plans are still not in a position to extract major price concessions from dominant health care providers. All-payer price setting through government or association negotiation is designed to displace the ineffectual private insurers as price negotiators while establishing both better cost control and more equitable payments for health care.
(In some areas, private insurers have been able to hold prices down at Medicare rates for physicians where the physicians have a very weak negotiating clout. This is less true of hospitals that have a weaker clout.)
Price discrimination – charging different prices for the same services – hits especially hard those who have the weakest bargaining power: individual patients who are now bearing more of the costs of health care. Contrary to widely held ideological beliefs, here it is price discrimination in the private insurance market and not the government that has created the perversity of rationing based on the ability to pay.
In his article, Reinhardt explains, “It should be recognized that the higher the fraction of health care spending that individuals and families must bear out of their own resources, the more heavily the model relies on rationing health care by price and the patient’s ability to pay — that is, rationing by income level. It may surprise some readers that anyone would associate markets with rationing. But as economists tell their students, free markets represent just one of many styles of rationing. Relying on price and ability to pay is precisely how markets in general manage to ration scarce resources among unlimited ends.”(1)
One of the reasons that this article on all-payer systems is so important is that we are at a crossroads in the reform process. He writes, “At this time, the US health system appears to stand at a clearly delineated crossroads. On one road, Americans would seek better control over national health spending through an all-payer system, such as the one operated by Maryland for the hospital sector. On the other road, Americans would seek better control of health care prices and national health spending through greater reliance on market forces for most of the health system. Depending on how that road is traveled, it could entail more pronounced rationing of health care by income class, meaning less health care for those who cannot afford it. The battle over US health policy in the coming decades is likely to be over which road to take.”(1)
Since an all-payer system would correct only a portion of the flaws in our health care financing, why shouldn’t we go full bore and enact a single payer system? Reinhardt brings up the political feasibility argument, as follows, “In any event, an all-payer system with multiple private insurers would be likely to be more broadly politically feasible than a government-run single-payer system, such as Canada’s provincial, government-run single-payer insurance systems. A single-payer system, of course, would be another alternative that would eliminate price discrimination and any cost shifting.”
Reinhardt discusses the effectiveness of all-payer for hospitals in the state of Maryland. In a previous response to the Maryland all-payer system, I stated, “If we can succeed in reestablishing a public service role for government, then wouldn’t it be reasonable to simply enact an all-payer system for hospitals? The problem is that it only makes one change in our fragmented, dysfunctional system of financing care, and not a complete change at that. Under all-payer, only the rates are controlled, but each service still must be accounted for and paid for independently, and the hospitals would still have multiple public and private payers with which they would have to interact.”(3)
So what about Switzerland? Reinhardt mentions it as having successfully applied an all-payer system. In another previous message on the OECD/WHO report on Switzerland, I stated, “It is not clear why so many in the U.S. are enamored of the Swiss health insurance system when this OECD/WHO report confirms that it is highly inefficient and fragmented, with profound administrative waste, inequitably funded, with regressive financing and with wide variations in premiums, has the highest out-of-pocket costs, has an increasing prevalence of managed care intrusions, and is controlled by a private insurance industry that has learned how to game risk selection at significant cost to those on the losing end.”(4)
Uwe Reinhardt is to be highly commended for moving us in the right direction, but…
We’ve said it before and we’ll say it again. If political feasibility is the barrier to enacting a single payer system, let’s not simply jettison single payer; let’s change the political feasibility instead! All-payer might be a modest incremental improvement (modest when compared to what needs to be done), but why settle for that when we can have it all through an improved and expanded Medicare for all?
Healthcare Reform 2.0
By Steffie Woolhandler, MD, MPH and David Himmelstein, MD
CUNY School of Public Health, Social Research, Fall 2011
So while the American people want an expanded and improved Medicare for All — that is, a single-payer system — corporations dead-set against single-payer reform have come to dictate the agendas of both political parties. Hence, the only way to win national health insurance is to build a popular movement to counter corporate power.
Healthcare Reform 2.0 (12 pages):
This brief primer (9 short pages plus references) on Healthcare Reform 2.0 will provide little new information for those who have followed the research and educational efforts of the leadership of Physicians for a National Health Program. Nevertheless, it should be downloaded to be used as an advocacy piece to explain to others why Healthcare Reform 1.0 (Affordable Care Act) will remain a failure, and why we have to move on to Healthcare Reform 2.0 (expanded and improved Medicare for All). By distributing this, electronically or in hard copy, you can become a part of the popular movement to counter corporate power.
Census Bureau measures more Americans living in poverty
By Michael A. Fletcher
The Washington Post, November 7, 2011
The Census Bureau on Monday released a new, comprehensive poverty measure that painted a more dismal picture of the nation’s economic landscape than the official measure from September.
The report found that 49.1 million Americans — 16 percent of the population — lived in poverty in 2010, which is higher than the 46.2 million Americans found to live in poverty by the official measure released in September.
The new report marked the culmination of a years-long effort by the Census Bureau to come up with a poverty measure that takes into account the huge amounts of money in social services benefits provided to the needy, as well as their expenses for things such as medical care and payroll taxes.
The increased level of poverty revealed by the supplemental measure is at odds with what some poverty experts expected. The increased level of poverty was fueled by the sharply higher levels of poverty among senior citizens found by the alternative measure.
The poverty rate for those 65 and older was 15.9 percent based on the supplemental measure, much higher than the 9 percent rate for the elderly when using the official poverty yardstick.
The Research SUPPLEMENTAL POVERTY MEASURE: 2010
Current Population Reports
United States Census Bureau, November 2011
The National Academy of Sciences (NAS) established the Panel on Poverty and Family Assistance, which released its report titled Measuring Poverty: A New Approach in the spring of 1995. Based on its assessment of the weaknesses of the current poverty measure, this NAS panel of experts recommended having a measure that better reflects contemporary social and economic realities and government policy.
SPM (Supplemental Poverty Measure) family resources should be defined as the value of cash income from all sources, plus the value of in-kind benefits that are available to buy the basic bundle of goods (FCSU) minus necessary expenses for critical goods and services not included in the thresholds. In-kind benefits include nutritional assistance, subsidized housing, and home energy assistance. Necessary expenses that must be subtracted include income taxes, social security payroll taxes, childcare and other work-related expenses, child support payments to another household, and contributions toward the cost of medical care and health insurance premiums, or medical out-of-pocket (MOOP) costs.
Official Poverty Measure: Gross before-tax cash income
Supplemental Poverty Measure: Sum of cash income, plus in-kind benefits that families can use to meet their FCSU needs, minus taxes (or plus tax credits), minus work expenses, minus out-of-pocket medical expenses
For children, not accounting for the EITC (Earned Income Tax Credit) would result in a poverty rate of 22.4 percent, rather than 18.2 percent. The inclusion of each of the listed in-kind benefits results in lower poverty rates for children. Not subtracting MOOP (medical out-of-pocket expenses) from the income of families with children would have resulted in a poverty rate of 15.4 percent. Findings are similar for the other two age groups shown. For the 65 years and older group, however, WIC (Women, Infants, and Children program) has no statistically significant effect while SPM (Supplemental Poverty Measure) rates increase by about 7.3 percentage points with the subtraction of MOOP from income. Clearly, the subtraction of MOOP has an important effect on SPM rates for this group.
From the Summary
Results showed a higher proportion of several groups were poor using the SPM. These groups were adults aged 18 to 64 and 65 and over, those in married-couple families or with male householders, Whites, Asians, the foreign born, homeowners with mortgages, and those with private health insurance.
Since in-kind benefits help those in extreme poverty, there were lower percentages of individuals with resources below half the SPM threshold for most groups. The effect of benefits received from each program and expenses on taxes and other non-discretionary expenses on SPM rates were examined. It was shown that medical out-of-pocket expenses had an important effect on SPM rates and on the well-being of those 65 years and older, in particular.
Many have believed that our poverty rates would not be so dismal if more factors were considered such as the value of social services benefits, thus the supplemental poverty measure was created. The shocking result is that poverty rates are actually greater, especially because of the additional drain on resources of out-of-pocket medical expenses – a measure even worse for those over 65.
PNHP’s version of single payer would provide first dollar coverage, eliminating out-of-pocket expenses such as deductibles, co-payments, and coinsurance. This would not only reduce financial barriers to health care, it would also reduce U.S. poverty levels. This is partly what we mean by “improved” in “an improved Medicare for all.”
Temperatures Rise Over Costs Of Care: Polls Find Public, Doctors Favor More Government Involvement
By Livia Gershon
Worcester Business Journal, November 7, 2011
Presumably, doctors are more familiar than the general public with the pressures driving up health care costs, and an overwhelming majority of them also say there needs to be some government involvement in the health care system. A survey by the Massachusetts Medical Society this fall found that 41 percent of doctors thought the best option for health care reform in the U.S. would be to adopt a single-payer system like Canada’s. That number was up from 34 percent in 2010.
(Another survey by the Blue Cross Blue Shield of Massachusetts Foundation) found that 88 percent of Massachusetts residents think it’s important for the state government to take major action on health care costs.
Physician Workforce Study
Massachusetts Medical Society
September 28, 2011
6.1. Practicing Physicians Opinions on U.S. Health Care System Reform
A question was added to the Practicing Physician Survey in 2010 to document how physicians view upcoming system changes in national health care reform. The following question was asked again this year of each of the respondents:
Which of the following would you choose as the best option for the U.S. health care system?
The percent of practicing physicians choosing each response is outlined below:
1. Both public and private plans with a public buy-in option (allow businesses and individuals to enroll in a public Medicare-like health insurance plan that would compete with private plans) — 23%
2. Keep the existing mix of public and private plans, but allow insurers to sell plans with limited benefits and high deductibles to keep premiums low. State subsidies would help low-income individuals buy insurance. Individuals could choose to buy a less expensive catastrophic plan, more expensive comprehensive coverage, or no insurance at all — 15%
3. The recent national plan (Patient Protection and Affordable Care Act) passed by Congress in 2010 (modeled after the Massachusetts health reform law of 2006). This plan includes an individual mandate, expansion of public programs, American Health Benefit Exchanges, changes to private insurance including prohibiting the denial of coverage for preexisting conditions, and employer requirements —- 17%
4. Single-payer national health care system offering universal health care to all U.S. residents — 41%
5. Other (please specify) — 4%
While more physicians prefer single payer as the best option for U.S. heath care reform compared to last year’s survey results (41% in 2011 and 34% in 2010), the majority of physicians prefer other options (59% in 2011 and 66% in 2010).
Of five options for the U.S. health care system presented to Massachusetts physicians, far more – 41 percent – preferred single payer to any other option. That was almost twice as many as those who preferred the second choice option. The single payer choice jumped from 34 percent last year, likely representing further dissatisfaction with their current system based on a design very similar to that of the Affordable Care Act.
The leadership of the Massachusetts Medical Society is not very supportive of single payer, pointing out in this report that 59 percent of Massachusetts physicians prefer other options to single payer. But if they were more objective, they would have pointed out that when offered a choice of “The recent national plan (Patient Protection and Affordable Care Act) passed by Congress in 2010 (modeled after the Massachusetts health reform law of 2006),” 83 percent of physicians prefer other options.
Presenting the remaining data in the same manner, 85 percent of physicians prefer other options to high deductible plans, 77 percent prefer other options to a “public option,” and 96 percent prefer one of the listed options (including single payer) to any other undefined option that they might otherwise prefer.
From this we can conclude that a clear plurality of Massachusetts physicians, who have direct experience with the Affordable Care Act model, would prefer single payer, and that support is increasing. By a large majority, they reject any other option, including their current system based on the model of the Affordable Care Act.
By Julian Pecquet and Sam Baker
The Hill, November 3, 2011
Consumer advocate and law Professor Tim Jost on Thursday urged the National Association of Insurance Commissioners to take a “leadership role” in pressing states to address potential gaps in the healthcare law’s applicability. The law’s consumer protections don’t apply to all types of plans, and Jost said those gaps pose problems for both consumers and insurers.
Self-insured plans are exempt from most of the law’s regulations, and policies offered by large employers also don’t have to meet certain requirements. Jost said small businesses are shifting toward self-insurance, so employees will be stuck without benefits Congress intended to provide. There’s also a risk to insurers, he said, because small businesses could drop their self-insured policies and move into the exchanges as soon as one of their workers gets sick.
Self-Insurance and the Potential Effects of Health Reform on the Small-Group Market
By Kathryn Linehan
National Health Policy Forum, December 21, 2010
Self-insured employer plans are explicitly exempted from some requirements, though “self-insured” is a term not defined in PPACA (or elsewhere). The exemptions are described below.
• Self-insured plans are not required to provide coverage with minimum essential benefits.
• Individual and small-group plans are required to participate in a risk-adjustment system, but self-insured plans are exempt.
• Self-insured plans are not subject to provisions (specifically, medical loss ratio requirements and review of premium increases) that are intended to limit insurer earnings.
• Starting in 2014, health insurers are required to pay an annual fee to be calculated by the Secretary, but self-insured plans do not have to pay this fee.
In a September 2010 paper, Timothy Stoltzfus Jost described the “threat” of self-insuring to exchanges:
If small businesses with healthy employees can remain “self-insured” until the health of their pool deteriorates and then join the exchange, premiums within the exchange will increase and the exchange will become less viable. If a state opens its exchange to groups above 100, the threat is even greater, as legitimate self-insured plans will seek to insure their employees through the exchange when their experience deteriorates. Moreover, the self-insured plans that have proven most adept at providing high-quality benefits to their employees at low cost (which exist at many large firms) are likely to remain independent of the exchange, while less successful self-insured plans turn to the exchange for coverage.
Well over half of all employees who obtain their health insurance through their work are enrolled in self-insured plans – plans in which health care bills are paid by the employer rather than by a private insurer (except for stop-loss insurance). By self-insuring, employers escape state insurance regulation, and they are exempt from many of the provisions of the Affordable Care Act.
These exemptions may benefit the employers, but they expose the employees and their families to greater risks, potentially impairing health care access and increasing the cost sharing burden, including costs for care that the plan is not required to cover.
Some say that employers will not compromise their self-insured plans since they would be used to attract better qualified employees, but we are already seeing a shift of risk from employers to employees through greater cost sharing and other plan innovations. As mentioned in a message earlier this week, there has been an increase in the sale of deceptive “self-insured packages” which are merely stop-loss plans that look like health insurance, but that are exempt from the regulatory oversight of private health plans. As health care costs continue to rise, employers surely will continue to leverage lax self-insured rules to accrue to their own benefit, at a cost to their employees.
For those employers who end up facing higher costs in their self-insured plans resulting from deterioration in the average health status of their employee pools, they have the out of transferring their employees to the new state insurance exchanges. Of course, subjecting the exchanges to adverse selection (enrolling more costly patients) will drive up premiums for everyone else enrolled in the exchange plans.
As we have said many times before, the fundamental flaw in the reform process was that Congress elected to build on our highly dysfunctional, fragmented system of financing health care. It wasn’t working before, and the tweaks in the Affordable Care Act are not near enough to make it work now.
We need to start over with an improved Medicare that covers everyone.
Health Net set to offer discounted insurance
By Ken Alltucker
The Arizona Republic, November 3, 2011
Health Net of Arizona is teaming with Banner Health to offer a new health-maintenance-organization insurance plan that allows businesses and their workers access to discounted care if they agree to limit their network of health providers.
The Health Net ExcelCare HMO plan offers customers a network exclusively made up of Banner Health Network medical providers and Banner Health hospitals.
Although it’s Health Net’s initial foray into “narrow networks” in Arizona, the health insurer said that it has had success enticing both large and small employers in California to choose similar plans with slimmed-down networks.
Health Net has been among the most aggressive in promoting HMO plans with narrow networks, but other insurance companies such as Aetna and UnitedHealth Group have also offered such plans.
“Narrow networks” – sharply limiting the network of physicians and hospitals that the insurer will cover – is yet another example of private insurer innovation in their marketed products. Only in the private sector can taking away patients’ choices in their health care professionals and institutions be considered an improvement in product design. A public single payer system would be designed to enhance access, not restrict it.
Plain Talk: Health care solution is simple: single-payer
By Dave Zweifel
The Capital Times, November 2, 2011
The answer to the nation’s health care crisis is staring everyone in the face, yet as a country we continue to refuse to come to grips with it.
It is far from rocket science. What this country simply needs is a single-payer national health insurance program that covers all American citizens from the day they’re born to the day they die — just as other advanced countries have done for decades.
We could finance health care coverage for every American by taking the resources that employees and employers are pumping into the current broken system and still have money left over for a substantial tax cut, not to mention that it would put U.S. employers back on a level playing field with their competitors in the world market.
Yet we refuse to even put that debate on the front burner where it belongs, plodding along with a system that with each passing year continues to hurt more and more Americans in many different ways.
(Dave Zweifel is editor emeritus of The Capital Times.)
As the implementation of the Affordable Care Act unfolds, it becomes ever more evident that it won’t accomplish our goals and that we will need to enact a single payer national health program.
How much are you worth to HMOs?
By Carol Gentry
Health News Florida, October 28, 2011
Medicare health plan members are worth more than any other category of enrollee in a merger or acquisition deal, Wall Street analysts say.
In fact, they’re worth four times as much as members of employer-based plans and five times as much as members of Medicaid plans, according to a report from Goldman Sachs researchers Matthew Borsch and Samuel Wass.
By their calculations, Medicare Advantage (HMO or similar managed-care plan) enrollees have a “value per member” of $6,000 in a merger or acquisition.
That compares with $1,500 for commercial plans – the ones that employers offer but in which the insurer takes the financial risks – and $1,200 per member for Medicaid plans.
The researchers prepared the analysis in the wake of Monday’s announcement that Cigna will buy HealthSpring, a holding company that includes Medicare plans in 11 states and Washington, D.C. that encompass 340,000 members.
Other analysts have also noted the mega-insurers’ growing desire to acquire Medicare customers. As Carl McDonald of CitiGroup wrote today in a note about Universal American: “It’s hard to overstate how much the attitude of the largest plans …has changed toward the Medicare business in just the last six months.”
United Health Group was first to discover the pot of gold Medicare plans offered and bought PacifiCare in 2005, as McDonald notes, but now WellPoint, Cigna and Aetna are waking up.
Bet you didn’t realize that by signing up with a taxpayer-financed, private Medicare Advantage plan you can command a price of $6000 for the sale of yourself when your plan is acquired by another plan. Well, actually you don’t get the $6000. Neither does it revert to Medicare and the taxpayers. No, it goes to the top 1 percent, while leaving the 99 percent of us once again dumbfounded.
What price does a person in the traditional Medicare program command? What a ridiculous question. Medicare doesn’t buy and sell patients. That happens only when Medicare patients are privatized. Selling patients is a function limited to private plans, not public social insurance programs.
When are we finally going to say that we are not for sale to the 1 percent? Since it was Congress that arranged the sale, let’s Occupy Congress!
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