Life disruptions from high out-of-pocket health expenditures

Posted by on Tuesday, Jan 15, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

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

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

ABSTRACT

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

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

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

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

And..

From the Results:

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

http://annfammed.org/content/11/1/37.full.pdf+html

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

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

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

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

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

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

For patients or profits?

Posted by on Monday, Jan 14, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health Care and Profits, a Poor Mix

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

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

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

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

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

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

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

http://www.nytimes.com/2013/01/09/business/health-care-and-pursuit-of-pr…

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

Policy consequences of low growth in Medicare spending

Posted by on Friday, Jan 11, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Growth In Medicare Spending Per Beneficiary Continues To Hit Historic Lows

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

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

http://aspe.hhs.gov/health/reports/2013/medicarespendinggrowth/ib.cfm

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

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

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

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

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

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

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

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

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

Posted by on Thursday, Jan 10, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

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

Institute of Medicine, January 2013

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

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

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

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

* infant mortality and low birth weight

* injuries and homicides

* adolescent pregnancy and sexually transmitted infections

* HIV and AIDS

* drug-related deaths

* obesity and diabetes

* heart disease

* chronic lung disease

* disability

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

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

Why are Americans so unhealthy?

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

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

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

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

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

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

http://sites.nationalacademies.org/xpedio/groups/dbassesite/documents/we…

“U.S. Health in International Perspective: Shorter Lives, Poorer Health” – Full 405 page report can be downloaded for free at this link:
http://www.iom.edu/Reports/2013/US-Health-in-International-Perspective-S…

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

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

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

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

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

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

Joshua Freeman on the shortage of rural family physicians

Posted by on Wednesday, Jan 9, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Retention of Rural Family Physicians After 20–25 Years: Outcomes of a Comprehensive Medical School Rural Program

By Howard K. Rabinowitz, MD, James J. Diamond, PhD, Fred W. Markham, MD and Abbie J. Santana, MSPH
Journal of the American Board of Family Medicine, January-February 2013 vol. 26 no. 124-27

“The shortage of primary care physicians in rural areas, especially family physicians, has been a serious problem for decades, with major implications in access to health care for a substantial proportion of the US population….Retention is a key component of the rural physician supply, in part because it has a multifold impact on the rural workforce; for example, one physician practicing in the same rural area during a 35-year career has a similar impact as 5 physicians who practice for an average duration of 7 years…”.

The authors describe the impact of the Physician Shortage Area Program (PSAP), a special program at the Jefferson Medical College of Pennsylvania that “…recruits and selects medical school applicants that have grown up or lived in a rural area or small town for a substantial portion of their life after college and who were committed to practicing family medicine in a similar area” and provides them with other experiences during medical school. “Of the 37 PSAP graduates [from 1978-86] who originally entered rural family medicine, 26 (70.3%) were still practicing family medicine in the same rural area in 2011 (including 5 in adjacent counties). Comparable data for non-PSAP graduates showed that 24 of 52 (46.2%; P = .02) were in the same rural area (including 5 in adjacent counties).”

These are really good results, demonstrating that the PSAP at Jefferson is effective in training students who not only enter rural practice but remain in it over time. And, they indicate, “PSAP outcomes are similar to those of the 5 other RPs with published outcomes.”

http://www.jabfm.org/content/26/1/24.full

And…

The Redistribution Of Graduate Medical Education Positions In 2005 Failed To Boost Primary Care Or Rural Training

By Candice Chen, Imam Xierali, Katie Piwnica-Worms, and Robert Phillips
Health Affairs, January 2013, 32(1):102-110

ABSTRACT Graduate medical education (GME), the system to train graduates of medical schools in their chosen specialties, costs the government nearly $13 billion annually, yet there is little accountability in the system for addressing critical physician shortages in specific specialties and geographic areas. Medicare provides the bulk of GME funds, and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 redistributed nearly 3,000 residency positions among the nation’s hospitals, largely in an effort to train more residents in primary care and in rural areas. However, when we analyzed the outcomes of this recent effort, we found that out of 304 hospitals receiving additional positions, only 12 were rural, and they received fewer than 3 percent of all positions redistributed. Although primary care training had net positive growth after redistribution, the relative growth of nonprimary care training was twice as large and diverted would-be primary care physicians to subspecialty training. Thus, the two legislative and regulatory priorities for the redistribution were not met. Future legislation should reevaluate the formulas that determine GME payments and potentially delink them from the hospital prospective payment system. Furthermore, better health care workforce data and analysis are needed to link GME payments to health care workforce needs…

http://content.healthaffairs.org/content/32/1/102.abstract

Note:  Today’s message on the shortage of rural family physicians was prepared by Joshua Freeman, MD, Professor and Chair of the Department of Family Medicine at the University of Kansas Medical Center. He also writes a highly commendable weekly blog on Medicine and Social Justice, accessible at: http://www.medicinesocialjustice.blogspot.com/

What is wrong with this picture? Taken together, these studies show us that despite the fact that we know what strategies work to increase the number of rural family physicians, they are not being truly embraced by policymakers at either the medical student or resident level. The PSAP and similar programs are effective, but are far too small. Twenty percent of Americans live in rural areas, but over the 9 year period studied in which 37 PSAP graduates entered rural practice, Jefferson Medical College, which has an enrollment of over 250 students a year, thus graduated over 2200 students. This is at a school with one of the nation’s most successful programs; at many schools it is much worse. At the graduate training (residency) level, only 3% of redistributed positions went to rural training, despite that being a primary intent of the policy.

The problem is that there are powerful forces whose interests conflict with these goals. Medical schools and their faculties are often more interested in replicating themselves by recruiting students with high grades who will enter medical subspecialties or research than they are in recruiting students who will meet the most urgent healthcare needs of our nation. The same motivation affects graduate medical education, where most training positions are not in primary care, and the vast majority are in urban centers. In addition, hospitals, which are the main sponsors of residency training, tend to be more focused on their own interests than the community’s. They therefore prefer residents and fellows in specialties that can make them more money or lower their costs rather than those training to be rural primary care providers.

At the medical student level, programs like PSAP need to be dramatically increased, even if taking more students committed to rural practice decreases the number admitted who have more “traditional” strengths. At the residency level, loopholes must be closed so that new residency positions intended to create more rural primary care doctors are not instead used for other, more popular or more financially desirable, specialties. To the extent that medical schools and hospitals can “game” the system, they will, so policymakers must recognize these tendencies and explicitly block them.

Idaho Gov. Otter’s health care solution for the poor

Posted by on Tuesday, Jan 8, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Idaho governor: Eliminate personal property tax

By The Associated Press
The Examiner, January 7, 2013

(Idaho Gov. C.L. “Butch”) Otter is… not immediately endorsing the expansion of Idaho’s Medicaid coverage to include more than 100,000 additional low-income residents whose bills would largely be paid for with funding from Washington.

Instead, Otter now plans to spend the next year studying how Idaho’s federal-state funded health care system for the poor can be revamped to make it less focused on paying fees for services and more on requiring Medicaid beneficiaries to take more responsibility for their health.

http://washingtonexaminer.com/idaho-governor-eliminate-personal-property…

Wow! What a great idea! Instead of paying for essential health care services for Medicaid patients, let’s make those people “take more responsibility for their health.” We could expand the same concept to everyone, including Gov. Otter, and then our health care spending problem would be solved.

Please excuse the abject frivolity of this comment, but what I really want to know is, what has happened to compassion in America?

Growth of national health expenditures, 2011

Posted by on Monday, Jan 7, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

National Health Spending In 2011: Overall Growth Remains Low, But Some Payers And Services Show Signs Of Acceleration

By Micah Hartman, Anne B. Martin, Joseph Benson, Aaron Catlin, the National Health Expenditure Accounts Team
Health Affairs, January 2013

Abstract

In 2011 US health care spending grew 3.9 percent to reach $2.7 trillion, marking the third consecutive year of relatively slow growth. Growth in national health spending closely tracked growth in nominal gross domestic product (GDP) in 2010 and 2011, and health spending as a share of GDP remained stable from 2009 through 2011, at 17.9 percent. Even as growth in spending at the national level has remained stable, personal health care spending growth accelerated in 2011 (from 3.7 percent to 4.1 percent), in part because of faster growth in spending for prescription drugs and physician and clinical services. There were also divergent trends in spending growth in 2011 depending on the payment source: Medicaid spending growth slowed, while growth in Medicare, private health insurance, and out-of-pocket spending accelerated. Overall, there was relatively slow growth in incomes, jobs, and GDP in 2011, which raises questions about whether US health care spending will rebound over the next few years as it typically has after past economic downturns.

Out-Of-Pocket Spending

Faster growth in 2011 reflects higher cost sharing for group health insurance plans and increased enrollment in consumer-directed health plans that have higher deductibles, copayments, or both. Additionally, increases in the number of uninsured people over the past few years had resulted in more direct out-of-pocket spending than might otherwise have been the case.

Medicaid

Slower growth in Medicaid spending reflected states’ efforts to control expenditure growth as the enhanced federal matching rates expired and state revenues continued to increase at a slow rate. With fewer federal matching dollars and continued pressure on their budgets, some states implemented cost-control measures that included provider reimbursement reductions, eligibility restrictions, benefit reductions, and increased cost sharing.

Medicare

Medicare spending for physicians’ services also accelerated in 2011, increasing 7.6 percent compared to 3.2 percent growth in 2010, even as the increase in physicians’ fees was lower in 2011. Faster fee-for-service spending growth for physician services, therefore, is attributable to a rebound in the volume and intensity of services after unusually slow growth in 2009 and 2010.

Conclusion

In 2011 national health spending increased 3.9 percent—the same rate of growth experienced in 2009 and 2010. The recent recession had an immediate and noticeable effect on the health sector because of high unemployment, loss of private health insurance coverage, and a reduction in the resources available to pay for health care. All of these factors contributed to historically low growth in aggregate health spending during 2009–11.

In 2011, however, there were some signs of change, evident in faster growth in nonprice factors such as the use and intensity of health care goods and services. Additionally, insurance coverage expanded in 2011 for dependents under age twenty-six, and overall private health insurance coverage did not decline as had been experienced in the prior three years.

Nonetheless, economic, income, and job growth in 2011 was modest and less than might normally be expected during an economic recovery. This fact raises questions about whether the near future will hold the type of rebound in health care spending typically seen a few years after a downturn. Data for the years 2012 and 2013 will provide important indications of the state of the US health system as the major insurance expansions associated with the Affordable Care Act grow nearer on the horizon.

http://content.healthaffairs.org/content/32/1/87.abstract

National Health Expenditures (NHE), 2011

$2,700.7 – NHE, billions

17.9 – NHE as percent of GDP

$8,680 – NHE per capita

In 2011, health care costs grew at the same rate as the growth in the gross domestic product (GDP). Thus the recent severe recession and slow recovery, plus the initial phase of implementation of the Affordable Care Act, have not had a major impact on the growth of health care spending.

At a time when Medicare spending is under close scrutiny, especially for potential opportunities to reduce the federal deficit, the fact that the volume and intensity of services have increased disproportionately warrants scrutiny. Physician behavior may drive reforms that could have other consequences, favorable, or more likely unfavorable.

Shifts in Medicaid spending should raise red flags. More of the costs are being shifted to states at a time that they are facing budget crises. States are responding with measures such as provider reimbursement reductions, eligibility restrictions, benefit reductions, and increased cost sharing. These changes can result in greater impairment of access just at a time when massive enrollment increases are anticipated. This can have very serious consequences for a welfare program that is already critically underfunded.

Out-of-pocket spending is increasing, especially due to an increase in enrollment in consumer-directed health plans with high deductibles – a market strategy to reduce health care spending by erecting financial barriers to care.

Although reducing the increase in health expenditures down to the rate of increase in the GDP sounds like good news, the trends behind the numbers should have us all deeply concerned.

Need I say, a single payer…

Uwe Reinhardt explains the complexities in pricing of Medicare Advantage plans

Posted by on Friday, Jan 4, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

The Complexities of Comparing Medicare Choices

By Uwe E. Reinhardt
The New York Times, January 4, 2013

The roughly 50 million Americans covered by the federal Medicare program have a choice of receiving their benefits under the traditional, free-choice, fee-for-service Medicare program or from a private, managed-care Medicare Advantage plan. The private plans have a steadily increasing number of enrollees — currently 13 million, or 27 percent of beneficiaries.

A fundamental question that has engaged health-policy researchers and commentators for some time is whether coverage of Medicare’s standard benefit package under Medicare Advantage plans is cheaper or more expensive than it is under traditional fee-for-service Medicare.

The answer is yes.

At the risk of going over ground already covered in Economix and in the scholarly literature on the subject, this answer may warrant some explanation.

(At this point, Professor Reinhardt provides an excellent explanation, with numerous helpful links, of the complexities in pricing of the Medicare Advantage plans. If you wish to understand this topic better, and understand why his answer is “yes,” the full article is well worth reading. DMc)

The only correct “yes” is that Medicare Advantage plans are more expensive. The extra cost is invisible to beneficiaries because it is borne by taxpayers. The plans can be considered less expensive only if you believe that it is fair for taxpayers to provide the private plans with extra funds for their ability to cheat through well documented favorable selection (HSR DOI: 10.1111/1475-6773.12006) and the gaming of risk adjustment (GAO 12-51, Jan 12, 2012 and NBER Working Paper No. 16977).

While we’re at it, we should also mention the profound administrative waste of not only the Medicare Advantage plans but also the private Medigap plans (the latter paid by excessive premiums), and the administrative burden that they place on the health care delivery system.

Congress should stop wasting our public funds in these efforts to push us into private plans. If they took the same public and private funds already being spent and used those to improve the benefits of the traditional Medicare program (especially reducing cost sharing and capping out-of-pocket spending), then we would have an even better Medicare program. In fact, it could become the basis of the Improved Medicare for All that many of us long for but has remained elusive to a large extent because of the elevated stature that the private insurance industry holds in the Halls of Congress.

http://economix.blogs.nytimes.com/2013/01/04/the-complexities-of-compari…

Sen. Mark Kirk’s lesson for us

Posted by on Thursday, Jan 3, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Sen. Kirk returns to Senate after year-long recovery from stroke

By Emily Goodin
The Hill, January 3, 2013

Sen. Mark Kirk (R-Ill.) returned to the Senate on Thursday after nearly a year’s absence.

Kirk, who had a stroke in January 2012, walked up the Capitol steps holding a cane and with the help of Vice President Biden and Sen. Joe Manchin (D-W.Va.).

Cheers rang out as Kirk began his climb. He walked into the Capitol shortly before noon, when the 113th Congress was gaveled into session.

http://thehill.com/capital-living/275411-sen-kirk-returns-to-cheers-appl…

And…

Sen. Mark Kirk’s message to stroke victims: ‘Don’t give up’

By Natahsa Korecki
Chicago Sun-Times, January 2, 2013

(Sen. Mark Kirk) spoke with the Sun-Times in a sit-down interview in the U.S. Capitol one day before he plans his dramatic climb up the Capitol steps. He offered a new perspective on the Illinois Medicaid program and what it offers to those with low incomes.

He does plan to take a closer look at funding of the Illinois Medicaid program for those with no income who suffer a stroke, he said. In general, a person on Medicaid in Illinois would be allowed 11 rehab visits, he said.

“Had I been limited to that, I would have had no chance to recover like I did,” Kirk said. “So unlike before suffering the stroke, I’m much more focused on Medicaid and what my fellow citizens face.”

Kirk has the same federal health-care coverage available to other federal employees. He has incurred major out-of-pocket expenses, which have affected his savings and retirement, sources familiar with Kirk’s situation said.

http://www.suntimes.com/news/metro/17348299-418/mark-kirk-says-he-would-…

It was quite moving watching the live C-SPAN broadcast of Sen. Mark Kirk today, climbing the Capitol steps to the resounding ovation given to him by his colleagues in the Senate. After his severely debilitating stroke, his message to other stroke victims is, “Don’t give up,” and he didn’t.

He has had a year to think about stroke victims on Medicaid in Illinois and what the limit of a total of eleven rehabilitation visits must mean to them. This is clearly an inhumane public policy that must be changed.

But what about all of the other patients with major medical problems who do not get the care that they need because they are uninsured, or Medicaid doesn’t provide adequate access, or private insurance…

What about private insurance? Sen. Kirk has coverage through the Federal Employees Health Benefits Program (FEHBP) – a menu of private health plans. That is about as good coverage as you can get today, yet with the major out-of-pocket expenses, it has not protected his savings and retirement.

We have a much bigger problem in health care other than simply trying to figure out how we can get Medicaid patients adequate rehabilitative services after a stroke.

If only Sen. Kirk’s colleagues in the Senate and House could learn from his travails. They might begin to consider that we really do need a comprehensive health care system that takes care of all of us – an Improved Medicare for All.

In the battle for reform, remember Sen. Kirk’s words, “Don’t give up.”

Overweight, and our health care system

Posted by on Wednesday, Jan 2, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Association of All-Cause Mortality With Overweight and Obesity Using Standard Body Mass Index Categories

By Katherine M. Flegal, PhD; Brian K. Kit, MD; Heather Orpana, PhD; Barry I. Graubard, PhD
JAMA, January 2, 2013

In this study, we used the National Heart, Lung, and Blood Institute’s terminology with categories of underweight (BMI of <18.5), normal weight (BMI of 18.5-<25), overweight (BMI of 25-<30), and obesity (BMI of ≥30). Grade 1 obesity was defined as a BMI of 30 to less than 35; grade 2 obesity, a BMI of 35 to less than 40; and grade 3 obesity, a BMI of 40 or greater.

The most recent data from the United States show that almost 40% of adult men and almost 30% of adult women fall into the overweight category with a BMI of 25 to less than 30.

In the United States and Canada, more than half of those who are obese fall into the grade 1 category (BMI of 30-<35).

According to the results presented herein, overweight (defined as a BMI of 25-<30) is associated with significantly lower mortality overall relative to the normal weight category with an overall summary HR (hazard ratio) of 0.94.

The summary HRs were 0.94 (95% CI, 0.91-0.96) for overweight, 1.18 (95% CI, 1.12-1.25) for obesity (all grades combined), 0.95 (95% CI, 0.88-1.01) for grade 1 obesity, and 1.29 (95% CI, 1.18-1.41) for grades 2 and 3 obesity.

http://jama.jamanetwork.com/article.aspx?articleid=1555137

And…

Obesity Update 2012

OECD

Obesity rates

16.9% – All OECD nations

33.8% – United States

http://www.oecd.org/health/49716427.pdf

And…

NIH Body Mass Index (BMI) calculator:

http://nhlbisupport.com/bmi/

If you are amongst the 30 to 40 percent of Americans who are overweight, you likely are resolving at the beginning of this year to finally do something about your weight. The good news is that you don’t have to. Being overweight (BMI 25->30) is associated with a mortality rate that is 6 percent lower than that for normal weight. Happy New Year.

In fact, even you fall into the category of grade 1 obesity (BMI 30->35), you still have no increase in mortality due to your weight alone. (You can use the BMI calculator at the NIH link above to determine where you fall.)

This, of course, does not mean that you are free to abandon healthy habits. Good nutrition and regular exercise are still important. To increase compliance, just be sure that the exercise program that you select is enjoyable and that it is easily integrated into your daily regimen. Same for selecting nutritious food.

Nevertheless, grade 2 and 3 obesity (BMI 35 or greater) are associated with increased mortality, so prevention and intervention are important. But is that primarily a responsibility of providers in the health care delivery system? Telling people to exercise and eat well is great advice, but it is not very effective, especially since everyone already knows that.

Prevention of obesity is more a function of society at large. Health education, school nutrition programs, responsible food product design by the industry, planning of communities to promote physical activity such as walking, biking or hiking, and including breaks for physical activity for those in sedentary occupations are types of measures that would take place out in the community rather than within the health care delivery system.

However, Grade 2 and 3 obesity do place a burden on the health care delivery system because of their association with chronic diseases. The policy community correctly emphasizes that the delivery system must provide chronic disease services. But that isn’t new. That is what primary care professionals have been doing all along.

What is a problem is that there has been a misplaced emphasis on chronic disease management as if that were a new solution to health care cost and quality issues. This has led to ineffectual tinkering by promoting nebulous models such as accountable care organizations. The efforts would be better directed toward reinforcing the primary care infrastructure.

If we really do want to improve the management of health care spending while improving quality we need to implement fundamental structural reform of our health care financing system by enacting a single payer, improved Medicare for all. It’s a system that would work great for all of us, even for those of us who are overweight.

Correction: “Overweight”

In today’s qotd message, “Overweight,” I wrote, “Being overweight (BMI 25->30) is associated with a mortality rate that is 6 percent lower than that for normal weight.”

The study demonstrated that the summary hazard ratio (HR) for overweight compared to normal weight was 0.94. Thus, “The researchers found that the summary HRs indicated a 6 percent lower risk of death for overweight.” (The JAMA Network, January 1, 2013).

http://www.digitalnewsrelease.com/?q=jama_3867

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