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.
Administrative Compensation for Medical Injuries: Lessons from Three Foreign Systems
By Michelle M. Mello, Allen Kachalia, and David M. Studdert
The Commonwealth Fund, July 2011
Medical malpractice reform is a perennial issue for state legislatures and, more recently, for the U.S. Congress. The American medical liability system is widely acknowledged to perform poorly in several important respects. Few patients with injuries due to negligence file claims, in part because of the difficulty of obtaining attorney representation and the arduousness of the litigation process. Many meritorious cases do not result in compensation to the patient, while many non-meritorious cases do lead to settlements or jury awards. The amounts awarded are highly variable across similar injuries, inadequate in some cases and excessive in others. The highly adversarial litigation process destroys physician–patient relationships and involves considerable emotional strain for both plaintiffs and defendants. Fear of litigation chills open discussion about medical errors, resulting in missed opportunities for learning and patient safety improvement, and leads physicians to order extra tests, referrals, and other services primarily for the purpose of reducing their liability exposure. Such defensive medicine, together with the high cost of malpractice insurance premiums that increases providers’ overhead costs and the prices they charge, contributes to the upward growth of health care expenditures.
The United States requires patients injured by medical negligence to seek compensation through lawsuits, an approach that has drawbacks related to fairness, cost, and impact on medical care. Several countries, including New Zealand, Sweden, and Denmark, have replaced litigation with administrative compensation systems for patients who experience an avoidable medical injury. Sometimes called “no-fault” systems, such schemes enable patients to file claims for compensation without using an attorney. A governmental or private adjudicating organization uses neutral medical experts to evaluate claims of injury and does not require patients to prove that health care providers were negligent in order to receive compensation. Information from claims is used to analyze opportunities for patient safety improvement. The systems have successfully limited liability costs while improving injured patients’ access to compensation. American policymakers may find many of the elements of these countries’ systems to be transferable to demonstration projects in the U.S.
Our medical liability system is very expensive, highly inefficient, extremely adversarial thereby inflicting much emotional pain on all involved, and leaves most individuals with medical injury uncompensated. It is a very lousy system. This report describes far better systems in three other nations, providing very valuable lessons for the United States.
There are two important stumbling blocks if we were to decide to adopt a more rational liability system based on these models. First, these nations demonstrate greater social solidarity than the United States, such as having other social insurance programs (health care, disability, unemployment) obviating the need for for filing as many medical injury claims.
Second, just as we seem to be incapable of displacing our wasteful, inefficient, highly expensive private insurance industry, we would likely find similar resistance in displacing our wasteful, inefficient, highly expensive legal system. Health insurers and tort attorneys have the ear of Congress.
What can we do? Citizen activism. It’s empowering.
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.
Insurers Will Share Revenue Under U.S. Health Market Rules
By Alex Wayne and Drew Armstrong
Bloomberg, July 11, 2011
Insurers with healthier, lower-cost patients would share revenue with rivals whose customers run up higher bills under U.S. rules to stabilize insurance markets within the 2010 health-care law.
Insurers such as UnitedHealth Group Inc. (UNH) would also qualify for $20 billion in subsidies from 2014 to 2016 when they take on the sickest patients, according to the regulations. The money would come from fees levied on the insurance industry.
Rules issued by the Obama administration today attempt to make good on the law’s goal of discouraging private health plans from cherry-picking patients while easing market disruptions when top changes in the medical system take effect in 2014.
The rules create a “risk-adjustment” program that would take money from insurers in a state with low-cost patients and give it to plans whose customers run up the highest bills. The policy applies both to insurers selling coverage within the exchanges and those operating independently.
Affordable Insurance Exchanges: Standards Related to Reinsurance, Risk Corridors and Risk Adjustment
July 11, 2011
The Affordable Care Act provides for a program of risk adjustment for all non-grandfathered plans in the individual and small group market both inside and outside of the Exchange. Under this provision, the Secretary of Health and Human Services, in consultation with the States, will establish criteria and methods to be used by States in determining the actuarial risk of plans within a State. The risk adjustment program serves to level the playing field, both inside and outside of the Exchange. Risk adjustment ends the incentive for issuers to avoid the sick and market only to the healthy by transferring excess payments from plans with lower risk enrollees to plans with higher risk enrollees. For this reason, plans will have to compete on the basis of price, quality and service. This allows consumers the ability to pick the plan that best meets his or her needs. The proposal suggests that a constant set of data for risk adjustment be considered, preventing a health insurer that offers qualified health plan in different States from having different reporting requirements. It proposes that risk adjustment calculations occur at the State, rather than plan or Federal level, given States’ role in the system. And while a Federal risk adjustment methodology would be developed, States could use an approved alternative. We welcome comments on the risk adjustment program design.
Patient Protection and Affordable Care Act; Standards Related to Reinsurance, Risk Corridors and Risk Adjustment
Department of Health and Human Services
§153.320 Federally-certified risk adjustment methodology.
(a) General requirement. Any risk adjustment methodology used by a State, or HHS of behalf of the State, must be established as a Federally-certified risk adjustment methodology. A risk adjustment methodology may become Federally-certified by one of the following processes:
(1) A risk adjustment methodology developed by HHS, with its use authorized and published in a forthcoming annual Federal notice of benefits and payment parameters; or
(2) An alternative risk adjustment methodology submitted by a State in accordance with §153.330, and reviewed and certified by HHS. After HHS approves a State alternative risk adjustment methodology, that methodology is considered a Federally-certified risk adjustment methodology.
(b) Publication of methodology in notices. A State must use one of the Federally-certified risk adjustment methodologies that will be published by HHS in a forthcoming annual Federal notice of benefits and payment parameters or that has been published by the State in the annual State notice described in §153.110(b). Each methodology will include:
(1) A complete description of the risk adjustment model, including –
(i) Factors to be employed in the model, including but not limited to demographic factors, diagnostic factors, and utilization factors if any;
(ii) The qualifying criteria for establishing that an individual is eligible for a specific factor;
(iii) Weights assigned to each factor; and
(iv) The schedule for collection of risk adjustment data and determination of factors; and
(2) Any adjustments made to the risk adjustment model weights to determine average actuarial risk.
(c) Use of methodology for States that do not elect an Exchange. HHS will specify in the forthcoming annual Federal notice of benefits and payment parameters the Federally-certified risk adjustment methodology that will apply in States that do not elect to operate an Exchange.
Proposed rule (103 pages):
Private insurers have been gaming the system for many decades. They have been selectively marketing their products to the healthy workforce, their young, healthy families, and to healthy individuals who purchase their coverage in the individual market. The costs of higher needs patients have been shifted to the taxpayers through programs such as Medicare end-of-life care, Medicare long-term disability care, Medicaid nursing home and other care, and safety-net institutions for the uninsured. So what has changed that requires us to now look at risk adjustment?
Congress and the President decided to cover a larger percentage of our population by expanding the market of private health plans, plus expanding Medicaid for low-income individuals. It is the expansion of private insurance that has forced the realization that these plans now will have to include individuals with higher health care costs.
Since the model chosen for reform is a market of private plans competing within and outside of the exchanges, insurers have great incentives to market to the healthy while dumping the more costly patients onto their competitors. The higher costs that their competitors would face would have to be reflected in higher premiums, causing a plunge in market share and an eventual exit from the market – a process known as the death spiral. Pro-market enthusiasts certainly understand the consequences of this anti-competitive behavior.
The solution that has been promoted is risk adjustment. Those insurers that have been successful in enrolling a healthier population are required to take some of the savings and pass that on to insurers who have had to cover the higher costs of less healthy beneficiaries. This transfer of funds penalizes insurers who have deliberately avoided covering those with greater needs, while protecting the insurers who have included in their rolls a disproportionate share of these high cost patients. The alleged advantage is that it preserves a competitive market, even if not through a true laissez-faire free market.
There is some controversy over the effectiveness of risk adjustment. Most proposals do not transfer the full difference in spending caused by the variation in risk exposure, still leaving those insurers with higher risks at a disadvantage. Also, the insurers who find that their gaming operations are under attack can be quite innovative in finding new games to play. One of the more common is to upcode to make their patient population appear sicker than they really are. Although auditing can be used in an attempt to discover such chicanery, it is an expensive and not very effective process. Proving that each patient was not as sick as the insurer claimed is arduous and very frequently does not exceed the benefit-of-the-doubt threshold.
Because of these problems, we have been anxiously awaiting HHS’s proposed rule on how they were going to approach risk adjustment that would be fair to all and not cause yet further increases in health care costs. Unfortunately, the proposed rule doesn’t help much. They have not yet presented their model for actuarial risk adjustment, merely stating that “a Federal risk adjustment methodology would be developed.”
Regarding costs, the transfer would be budget neutral (the amount taken from some insurers and given to others would not change total spending on actual health care), but the costs of administering the program, including extensive data collection and the high costs and complexity of the auditing processes, would be assessed against the insurers and passed on to patient/consumers in the form of higher insurance premiums.
Risk adjustment is yet one more expensive, administratively burdensome, and often inequitable consequence of insisting on using private insurers to provide health care coverage. Nefarious risk gaming would not occur in a single payer national health program. But games the private insurers play, and with our money!
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.
Patient Protection and Affordable Care Act: Establishment of Exchanges and Qualified Health Plans
Department of Health and Human Services
In paragraph (d)(1), we propose that the Exchange permit a qualified individual and any dependents to enroll in a QHP (Qualified Health Plan) due to loss of other minimum essential coverage. We interpret loss of coverage to include any event that triggers a loss of eligibility for other minimum essential coverage. We further propose that a dependent of a current enrollee in a QHP and the enrollee are each eligible for a special enrollment period if the dependent loses other minimum essential coverage. Examples of loss of coverage include decertification of a QHP that occurs outside of the annual open enrollment period. In such cases, an enrollee would be allowed to select and enroll in a new QHP upon notification of plan decertification. If the enrollee does not select a new QHP before the effective date of plan termination, he or she would be provided 60 days from the date of plan termination, which is the triggering event, to select a new QHP.
Other examples of events that would qualify as loss of coverage include but are not limited to the following: legal separation or divorce ending eligibility of a spouse or step-child enrolled in other minimum essential coverage as a dependent; end of dependent status (such as attaining the maximum age to be eligible as a dependent child under the plan); death of an individual enrolled in minimum essential coverage ending eligibility for covered dependents; termination of employment or reduction in the number of hours of employment necessary to maintain coverage; or relocation outside of the service area of the QHP. Examples of relocation include relocation to the United States (US) in the case of a US citizen, national, or lawfully present individual who was not previously eligible for Exchange participation while residing outside of the US; release from incarceration; moving from the jurisdiction of one Exchange to another; or relocating outside of the individual’s QHP’s service area.
In accordance with section 9801(f) of the Code, we propose that loss of coverage also include: termination of employer contributions for a qualified individual or dependent who has coverage that is not COBRA continuation coverage by any current or former employee, exhaustion of COBRA continuation coverage, reaching a lifetime limit on all benefits in a grandfathered plan, and termination of Medicaid or CHIP.
HHS News Release:
Proposed Rule (244 pages):
The excerpt above from today’s HHS release of the proposed rule for the insurance exchanges to be established under the Patient Protection and Affordable Care Act was selected to make a point. The fragmentation and instability of coverage is only one of the great many highly flawed features of the model of reform foisted off on us by our politicians.
I have little more to say now. Having just skimmed through these 244 pages and those of other supporting documents, I am thoroughly depressed. We could have had health reform that would be so much better than this. (But my inner voice says, “Don, don’t waste your time moping. We can still have a system that will work for all of us, but that will take a lot of work, and we need to move on to fulfill our role as a major driving force in that effort.”
Utah Health Exchange Is Geared To Small Business Employees
By Juan E. Gastelum
Kaiser Health News, July 6, 2011
Utah’s exchange is one of only two operating in the country; Massachusetts has the other. Utah’s approach has been called the conservative “bookend” of the two because it favors a free-market in which multiple insurers compete with minimal intervention from the state.
(Utah), which had experimented with public programs to expand coverage to low-income adults, created its exchange in 2007 through state legislation signed by former Gov. John Huntsman, a Republican who is now seeking the party’s nomination for president. The exchange was designed to insure small business employees, who make up the majority of Utah’s workers. It launched to a limited group in 2009, and then opened to all small employers at the start of this year. It now provides coverage for about 3,583 people working for 139 employer groups.
Utah’s state health insurance exchange is now in full operation. It is a very loosely regulated system organized as what they call a “defined contribution market.” It is designed to cater especially to small businesses which include the majority of Utah’s workers. How successful has this program been?
Currently 3,583 people have been insured through the exchange. With a population of 2.9 million people, that amounts to a mere 0.12 percent who are covered by through the exchange. Though Utah does not yet have a mandate to have insurance coverage, it still raises the question, if states build insurance exchanges, will people come?
The Oregon Health Insurance Experiment: Evidence from the First Year
By Amy Finkelstein, Sarah Taubman, Bill Wright, Mira Bernstein, Jonathan Gruber, Joseph P. Newhouse, Heidi Allen, Katherine Baicker, The Oregon Health Study Group
The National Bureau of Economic Research, July 2011
NBER Working Paper No. 17190
In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides a unique opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group.
Although innumerable studies have shown that health insurance provides both health security and financial security, some have contended that insurance is not necessary, especially for low income individuals, since they can find care through our safety-net institutions. As President George W. Bush stated, “After all, you just go to an emergency room.” This study, the Oregon Health Insurance Experiment (Oregon HIE), puts an end to that contention. Low income Oregon residents who were selected by a random lottery to be enrolled in Medicaid fared significantly better than those who were randomly excluded.
The Oregon Medicaid lottery provided a great if disconcerting opportunity for policy researchers. It would be unethical for them to have designed and carried out a study that randomly provided health care benefits to one group while leaving uninsured another group serving as a control. This unique opportunity arose when Oregon received more funds for their Medicaid program, but not nearly enough to cover everyone eligible. They decided to randomly select by lottery those whom they could fit into the program while leaving many more out in the cold.
It is ironic that politicians created a study opportunity that is clearly unethical by policy research standards, yet doesn’t seem to violate the ethical standards of the politicians. If you need any more proof of that, just look at the Affordable Care Act (ACA) where policy decisions were made that will leave 23 million individuals without any health care coverage, but they can go to the emergency room.
Although much of the media coverage of the Oregon HIE implies that it was a wise decision to include in ACA the expansion of coverage under Medicaid, there are many other factors not covered in this study. Two important considerations stand out.
Having Medicaid is better than having no coverage at all, but access is still impaired under the program because of a lack of willing providers, especially for specialized services. Bringing millions more into the program will certainly exceed the already inadequate capacity. With the low level of funding for this program, it is unlikely that funds will be available in the near future to expand capacity. Adequate capacity for everyone does exist within our entire health care delivery system, but not when providers are allowed to opt out of an underfunded component of it.
Another important element in this study is that Medicaid eliminates most cost sharing by the patients. If the patients are able to find providers who will accept them then they do not have to face financial barriers that would prevent them from receiving recommended care, tests, prescriptions, and preventive services that they should have. This is one of the major advantages of the Medicaid program (though some states are now considering cost sharing as a means of reducing Medicaid spending).
Supposedly the RAND Health Insurance Experiment (RAND HIE) demonstrated that cost sharing did not have a major impact on health care outcomes, except for low income individuals, even though health care utilization decreased. The problem with the RAND HIE conclusions is that they have only intrinsic validity for a healthy workforce and their young, healthy families for only a brief, healthy interval in their lives. It is inappropriate to expect the same result for a cross section of our population including a fair sampling of those with greater health care needs. Had greater cost sharing been used in the Oregon HIE, utilization certainly would have been less, and it is likely that outcomes would have been worse.
Before we start celebrating the fact that Medicaid is better than nothing at all, let’s keep in mind the facts that Medicaid lacks the capacity to meet the expanded coverage through ACA, that eliminating cost sharing does improve access, and that expanding Medicaid will do nothing for the 23 million remaining uninsured and the tens of millions more who will be underinsured through low actuarial value plans with very high cost sharing.
There is a far better way – a single payer national health program that provides comprehensive benefits for everyone with no cost sharing barriers to care. Other nations have adopted such programs at a far lower cost than our dysfunctional system. We can do it too. (You’ve heard this before.)
MEDICAID AND CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care
Report to Congressional Committees
On the basis of its 2010 national survey of physicians, GAO estimates that more than three-quarters of primary and specialty care physicians are enrolled as Medicaid and CHIP providers and serving children in those programs. A larger share of primary care physicians (83 percent) are participating in the programs — enrolled as a provider and serving Medicaid and CHIP children — than specialty physicians (71 percent). Further, a larger share of rural primary care physicians (94 percent) are participating in the programs than urban primary care physicians (81 percent). Nationwide, physicians participating in Medicaid and CHIP are generally more willing to accept privately insured children as new patients than Medicaid and CHIP children. For example, about 79 percent are accepting all privately insured children as new patients, compared to about 47 percent for children in Medicaid and CHIP. Nonparticipating physicians — those not enrolled or not serving Medicaid and CHIP children — most commonly cite administrative issues such as low and delayed reimbursement and provider enrollment requirements as limiting their willingness to serve children in these programs.
Physicians experience much greater difficulty referring children in Medicaid and CHIP to specialty care, compared to privately insured children. On the basis of the physician survey, more than three times as many participating physicians — 84 percent — experience difficulty referring Medicaid and CHIP children to specialty care as experience difficulty referring privately insured children — 26 percent.
This highly credible report from GAO provides more evidence that access remains a problem within the Medicaid and CHIP programs. Less than half of physicians are willing to accept children in these programs as new patients, and over four-fifths experience difficulty referring Medicaid and CHIP children to specialty care. Instead of trying to expand this chronically underfunded program, we should replace it and all other programs with a single comprehensive program for everyone that eliminates financial barriers to care. No one would ever have to ask again if a physician accepts whatever program. They would simply get the care they need, no questions asked.
By Pippa Abston MD, PhD, FAAP
Every year around the Fourth of July, amid the flag waving and fireworks, I come across an article or two blaming patriotism for the ills of civilization. I agree with much of the criticism. A constant obsession with being “the best in the world” makes us both arrogant and unrealistic. Believing we can be truly healthy—economically, environmentally, or otherwise—without considering the roles and needs of other nations is not only immature but dangerous.
As I often do when confronted with a loaded word, I looked up “patriot” in my old Merriam Webster dictionary. I was struck right away by the short, simple definition: “love for or devotion to one’s country.” I’m sure you know it came originally from the Latin for father, pater. Interesting, since the earth parent is usually a maternal one. The paternal face of country has more to do with the political structure, historically a masculine creation, than the land itself.
What if we imagined our country, in both earthy and political nature, as a parent? I don’t mean to invoke the over-protective helicopter version. I’m talking about our formation as persons—the various influences that eventually make us who we will be. And how about our reciprocal duty to our parents, as they age and sometimes need us to care for them? Could we consider how we are serving in that role to our nation, now well over 200 years old?
I’ve worried sometimes, while advocating strenuously for Medicare for All (including visitors and immigrants), that I’m taking a sort of parochial view. It seems a little selfish to spend so much effort lobbying for my fellow country-people, when much of the world fares far worse in life expectancy. I wonder if I should be doing something more globally relevant instead.
But all this thinking about land and politics, fathers and mothers, and caring for one another took me in an unexpected direction. We aren’t patriotic enough. If we were more patriotic (loving, devoted), and followed the principle of loving other (countries) as ourselves, maybe we’d do better. There’s no need to hold back our love for this land, its history or its people. We don’t have to be blind about it either. In fact, we owe a special duty to address the errors of those we love. I have a deep love for my state, Alabama, despite its sometimes recalcitrant and difficult ways. It’s ok to love a city, a certain neighborhood, a particular tree. We can all start where we are, then extend ourselves outwards, as in the spiritual practice of lovingkindness meditation.
Let’s love our country more. Tell Congress we want to pay for our nation’s healthcare and not be forced to give protection money to private insurers. With the savings, we will be in better condition to bring resources to those other (also beloved) lands in need. We don’t have to limit the borders of our patriotism. Everybody in. Nobody out.
Managed Care Enters The Exam Room As Insurers Buy Doctor Groups
By Christopher Weaver
Kaiser Health News/Washington Post, July 1, 2011
Even if UnitedHealth Group isn’t your insurance company, there’s a good chance it touches you in some way. The $100 billion behemoth sells technology to hospitals and other insurers, distributes drugs, manages clinical trials and offers continuing medical education, among other things, through the growing web of firms it owns.
Now, that touch could get a lot more personal. United’s health services wing is quietly taking control of doctors who treat patients covered by United plans in several areas of the country — buying medical groups and launching physician management companies, for example.
It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling. Other large insurers, including Humana and WellPoint, have announced deals involving doctors in recent months, part of a strategy to curb rising health costs that could cut into profits and to weather new challenges to their business arising from the federal health law. But United is the biggest insurer by revenue, making the trend much more significant.
Many patients insured by these companies are going to see much tighter management of their care.
“Health care costs are still going to rise,” said Wayne DeVeydt, chief financial officer of WellPoint, which entered the business of running clinics in June with the announcement that it would acquire CareMore, a health plan operator based near Los Angeles that owns 26 clinics. “But the only way to stem those costs in the long term is to manage care on the front end.”
That means enlisting doctors. Their orders drive most health care spending, including the wasteful share: treating heart patients with expensive stents when cheaper drugs might work, or overusing high-tech imaging devices, for example. By managing doctors directly, insurers believe they can reshape the practice of medicine – and protect their profits.
For instance, CIGNA, another large insurer, saves 9 percent on patients treated by doctors in a Phoenix medical group it controls, said Stephanie Gorman, president of CIGNA Arizona. CIGNA has expanded the group over the last 18 months in response to the health law, and it now serves patients at 32 locations.
Insurance companies are pursuing doctors in response to increasing financial pressure. The health law cuts government spending on private Medicare plans that many insurers offer, imposes rules that could limit profits, and increases scrutiny of their rates. Adding to the pressure, the insurers’ customers are tired of rising prices.
Employers and other customers “are saying, I want more value for the dollars I spend in health care,” said Dawn Owens, chief executive officer of OptumHealth, United’s health services subsidiary. But, “there’s also a realization that the delivery system isn’t ready for that kind of change. That’s where we come in.”
The tools needed to control costs and improve care are things insurers have “invested in over the years,” she said. “The provider community doesn’t have those tools.”
Dr. Amir Bacchus, chief medical officer of HealthCare Partners of Nevada, a large physician group, said he learned about United’s plans in a phone call from a United recruiter. He was asked if he’d be interested in joining the company to manage 500 doctors at a network of clinics United planned to build around the country, one part of its physician strategy.
By adding physicians in some places, United “can definitely control the health system” in those areas, said Bacchus, who declined United’s overture. “It’s a threat for us,” he added. “They are going to compete directly with our business model.”
United’s OptumHealth subsidiary, meanwhile, is buying doctors’ groups, building management companies to organize physicians, fostering new partnerships with medical groups and hiring doctors at a group it already controls.
Insurers managed physician practices before, especially in the 1990s. But customers rejected those tightly managed plans. Some local plans, and larger insurers such as Kaiser Permanente, continue to employ practicing doctors. But the biggest national insurers shed such arrangements.
One reason the strategy makes sense now is that the health law could reward such arrangements. The law envisions so-called accountable care organizations, groups of doctors and hospitals that take responsibility for patients and the financial risk that comes with them. If they cut spending, they would keep some of the savings.
While hospitals are widely seen as the natural leaders of ACOs, United’s strategy positions it to lead the new systems, too, a company executive acknowledged.
Some observers watching the developments say the health law, which in part was sold as a way to rein in insurers, has had the opposite result, opening the door for the companies to take control of even more parts of the health system.
“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a California-based health care consultant who does some work for United, as well as most of its competitors. “The very people who were the demons in all of this, that the public can’t stand” – managed-care firms – “are the big winners.”
In the push towards integrated health systems, hospitals have been consolidating within markets in order to gain leverage in the negotiation of insurance contracts. Physicians have been consolidating within medical groups, also giving them greater market leverage. Leading the way, virtually all metropolitan insurance markets are now highly concentrated. In this power play between the health care giants, who is winning and who is losing?
Although the Medicare Shared Savings version of accountable care organizations is not gaining much traction, the underlying concept of integrating physicians and hospitals is. We are witnessing a power play by physician groups that want to be the entry point for health care through primary care medical homes and integrated specialty services. Many of these medical groups are establishing associations with hospitals in order to be able to contract with insurers as providers of comprehensive health care services.
On the other hand, hospitals would like to be in control, so they are not only consolidating but they are also purchasing physician practices. Is it the hospitals or the physicians who are winning this game?
Think back on how health care reform played out. Hospitals and physicians meekly supported the process mostly out of fear that their lot would be much worse off if they weren’t there during the process. But who was placed in control, with representatives actually writing the Affordable Care Act? The insurance industry! Everyone will be required to purchase their products, Medicaid is being converted to managed care organizations, and Medicare Advantage private health plans have been expanding. The private insurers are being given control of much of our national health care spending.
Look what the insurers are doing with that control. In the full version of the article provided at the link above and in many other information resources, you will see that the insurers are very busy trying to buy up enough of the health care delivery system to gain control of the health care markets. They will not only be the money managers for health care, but they will replace the current owners of the health care delivery system. In the worst possible outcome imaginable, they will be the actual providers of our health care!
Karen Ignagni of Americas Health Insurance Plans stated repeatedly during the reform process that the measure must provide effective mechanisms of controlling costs. It doesn’t. But now that the insurers are gaining total control, they will be able to bring us cost containment, but on their terms. How? As the CFO of WellPoint states, by owning the delivery system, they will be able to “manage care at the front end.” They will use their own doctors to prevent “overuse” and “protect their profits.”
A single payer system would be designed to macromanage dollars but would leave micromanagement of health care to the physicians and their patients. Once the insurers become the owners, the insurers will move in as the micromanagers of health care. Patients not only lose choice of their health care providers, but they also lose choice of their health care services and products.
So between the hospitals and the physicians, who comes out the winners? Neither. It’s the insurers who win. You can argue about whether or not the hospitals and physicians would be losers (or rather how much they would lose), but the tragedy of all of this is that the real losers would be those for whom the health care system should be designed – the patients.
For those who support a single payer Medicare for all system and believe that it will only be a matter of time before we’re there, think about this. When we have enacted a single payer system, the government will then negotiate with the providers of health care for delivery of health care services. That will not be with the physicians nor the hospital administrators, but it will be with the owners of the health care delivery system – the private insurers!
Unless we can enlist an outraged public to fight this thing, we will not end up with a single payer health care nirvana for all, but a single payer health care inferno from hell. Never have we had a greater imperative to inform and activate the public than right now. Let’s do it!
Universal Health Care: Can We Afford Anything Less?
By Gerald Friedman
Dollars and Sense, July/August 2011
America’s broken health-care system suffers from what appear to be two separate problems. From the right, a chorus warns of the dangers of rising costs; we on the left focus on the growing number of people going without health care because they lack adequate insurance. This division of labor allows the right to dismiss attempts to extend coverage while crying crocodile tears for the 40 million uninsured. But the division between problem of cost and the problem of coverage is misguided. It is founded on the assumption, common among neoclassical economists, that the current market system is efficient. Instead, however, the current system is inherently inefficient; it is the very source of the rising cost pressures. In fact, the only way we can control health-care costs and avoid fiscal and economic catastrophe is to establish a single-payer system with universal coverage.
In short, the question is not whether we can afford a single-payer health-insurance system that would provide adequate health care for all Americans. The real question is: can we afford anything else?
(Gerald Friedman is a professor of economics at the University of Massachusetts-Amherst.)
It is great to have on board another economist from the academic community who understands the imperative of the single payer model. We should be hearing more from Professor Gerald Friedman.
Orszag sees legislative gridlock ahead
By Melanie Evans
ModernHealthcare.com, June 28, 2011
Peter Orszag, former director of the Office of Management and Budget, speaking before health finance executives in Orlando, said an overhaul of U.S. healthcare payment to reward value cannot succeed without Medicare, yet policymakers face gridlock in what is a highly politicized environment.
Commercial insurers are too fragmented to change healthcare payments, but Medicare has the clout, he explained. Options under consideration to address the nation’s rising healthcare costs, which Orszag called the primary source of the U.S. fiscal woes, won’t accomplish much, Orszag said. Cuts to Medicare provider payments are “blunt” and “temporarily effective” but not a “long-term answer.” He dismissed rationing care as politically unviable. Proposals to increase household financial liability for healthcare are least effective among the most costly patients, which policy makers must address to slow spending, he said.
Healthcare Financial Management Association
According to Peter Orszag, “commercial insurers are too fragmented to change healthcare payments, but Medicare has the clout.” Though he didn’t expand on that with the obvious extrapolation, we can. Let’s get rid of the commercial insurers and improve and expand Medicare so that it covers everyone.
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