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.
Columnist: If ‘Obamacare’ implemented, single-payer is next
By Don Finley
San Antonio Express-News, March 9, 2012
If President Obama’s health care reform act is fully implemented over the next two years, it will evolve into a Canadian-style single-payer system that will forever change the social contract between Americans and their government, a nationally syndicated columnist and physician predicted.
“It will change the country. If it is not repealed, we will be a different country when ‘Obamacare’ is fully implemented,” (Washington Post columnist and Fox News commentator Charles) Krauthammer said in an interview after speaking Thursday to a receptive crowd of mostly physicians and other health care professionals at a breakfast sponsored by the San Antonio Medical Foundation.
In his speech, Krauthammer predicted the complexity of the law eventually would doom it to failure, which would lead to a single-payer system within a decade.
“This is a new reform that when it kicks in within a couple of years will make the practice of medicine a nightmare,” he said. “If it’s not repealed, I guarantee you that within a decade we will have a single-payer system. And if I had to choose between Obamacare and a Canadian or British system, I’d choose the single-payer system. At least it would be rational.”
On the $1,000 Genome and the Future of Health Systems
By Reihan Salam
National Review Online, March 8, 2012
Back in 2009, I wrote a column that pivoted off of a really good 2007 column by economist Stephen Cecchetti which argued that the genomics revolution made single-payer inevitable. At the time, I argued that while the genomics revolution didn’t make single-payer inevitable, it would push health systems in the advanced market democracies towards a more coherent system for protecting against chronic illnesses and catastrophic medical expenditures.
Razib Khan, my go-to writer on these matters, adds the following: (Comments on the $1000 genome available at the link below)…
That is, the $1,000 genome will accelerate the growth of a broader innovative ecology that will transform medicine. Razib, incidentally, is a rare right-of-center supporter of single-payer health systems, and I’d love to hear his thoughts on the subject.
Many conservatives have a good understanding of the beneficial features of the single payer model of health care financing, and several believe that it may be an inevitable imperative. As Charles Krauthammer states, “And if I had to choose between Obamacare and a Canadian or British system, I’d choose the single-payer system. At least it would be rational.”
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.
Medical bills can wreck credit, even when paid off
By Carla K. Johnson
Associated Press, March 4, 2012
The Commonwealth Fund, a private foundation that sponsors health care research, estimates that 22 million Americans were contacted by collection agencies for unpaid medical bills in 2005. That increased to 30 million Americans in 2010.
Surprisingly, even after the bills have been paid off, the record of the collection action can stay on a credit report for up to seven years, dragging down credit scores and driving up the cost of financing a home. An estimated 3.4 million Americans have paid-off medical debt lingering on their credit reports, according to the Access Project, a research group funded by health care foundations and advocates of tougher laws on medical debt collectors.
Medical bills make up the majority of collection actions on credit reports, and most are for less than $250, according to Federal Reserve Board research.
Matt Ernst, a vice president at Mortgage Lenders of America in Overland Park, Kan., said medical collections frequently turn up on credit reports.
“We see a ton of them,” Ernst said. They have an impact on financing, he said, but even he didn’t realize how much until he learned that someone with a FICO score of 680 — which is considered good, but not excellent — will see their score drop up to 65 points because of a medical collection.
“I didn’t know a medical collection would hammer it that hard,” Ernst said.
It’s a problem for insured and uninsured alike. Outright billing mistakes, confusion over whether a claim will be paid by insurance and disputes between insurance companies and doctors — all can lead to medical bills being sent to collection agencies.
In 2010, 30 million Americans were contacted by collection agencies for unpaid medical bills. Even if paid off, the resulting reduction in scores on credit reports often have serious negative financial consequences because of the perceived lower level of creditworthiness.
Imagine this occurring with a health care financing system that provides first dollar coverage, as with a single payer national health program. It wouldn’t. Bill collectors would be joining insurance administrators in trying to find more productive occupations that would provide greater value for our nation.
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.
Financial Burden of Medical Care: Early Release of Estimates From the National Health Interview Survey, January–June 2011
By Robin A. Cohen, Ph.D.; Renee M. Gindi, Ph.D.; and Whitney K. Kirzinger, M.P.H.
CDC, National Center for Health Statistics, March 2012
Previous work has shown that in 2010, more than one in five Americans were in families reporting problems paying medical bills. In 2011, three new questions addressing financial burden of medical care were added to the National Health Interview Survey (NHIS) Family component. These questions addressed problems paying medical bills, paying medical bills over time, and having medical bills that cannot be paid at all.
In the first 6 months of 2011, one in three persons was in a family experiencing financial burden of medical care. One in 5 persons was in a family having problems paying medical bills, 1 in 4 persons was in a family paying medical bills over time, and 1 in 10 persons was in a family that had medical bills they were unable to pay at all.
This new report adds to the profusion of policy studies confirming that Americans continue to experience financial burdens in paying their medical bills. Unfortunately, this problem will not go away after the Affordable Care Act is fully implemented.
Well over 20 million people will remain uninsured, and perhaps a third or more of our population will be under-insured, due to the low actuarial value plans to be offered in the exchanges, and especially due to the increasing prevalence of high-deductibles in employer-sponsored plans. In fact, under-insurance likely will soon be the norm.
Contrast that with John Conyers’ HR 676, the “Expanded and Improved Medicare for All Act,” which states, “The health care benefits under this Act cover all medically necessary services… No deductibles, copayments, coinsurance, or other cost-sharing shall be imposed with respect to covered benefits.”
For those who say we can’t afford this, many other nations provide all of their people comprehensive care with no out-of-pocket expenses, at an average cost of only half of what we are spending on health care.
We can’t afford not to do it.
Giving Office-Based Physicians Electronic Access To Patients’ Prior Imaging And Lab Results Did Not Deter Ordering Of Tests
By Danny McCormick, David H. Bor, Stephanie Woolhandler and David U. Himmelstein
Health Affairs, March 2012
Policy-based incentives for health care providers to adopt health information technology are predicated on the assumption that, among other things, electronic access to patient test results and medical records will reduce diagnostic testing and save money. To test the generalizability of findings that support this assumption, we analyzed the records of 28,741 patient visits to a nationally representative sample of 1,187 office-based physicians in 2008. Physicians’ access to computerized imaging results (sometimes, but not necessarily, through an electronic health record) was associated with a 40–70 percent greater likelihood of an imaging test being ordered. The electronic availability of lab test results was also associated with ordering of additional blood tests. The availability of an electronic health record in itself had no apparent impact on ordering; the electronic access to test results appears to have been the key. These findings raise the possibility that, as currently implemented, electronic access does not decrease test ordering in the office setting and may even increase it, possibly because of system features that are enticements to ordering. We conclude that use of these health information technologies, whatever their other benefits, remains unproven as an effective cost-control strategy with respect to reducing the ordering of unnecessary tests.
Through the Affordable Care Act and through the Health Information Technology for Economic and Clinical Health (HITECH) provisions of the the American Recovery and Reinvestment Act of 2009, Congress wished to bring under control the ever escalating costs of health care in the United States. This study of physicians’ electronic access to prior imaging and lab results adds to other data that indicates that the cost containment measures were merely a wish list that have failed to improve value in our health care purchasing.
As an another example, a recent report of the Congressional Budget Office on Medicare’s demonstration projects on disease management, care coordination, and value-based payment revealed that “the evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program.”
Instead of simply wishing that these ideas would control costs, we should adopt policies that we already know are effective. We know that the financing model of the Affordable Care Act – building on our fragmented system of private plans and public programs – is the most expensive model of financing health care, and yet a model that falls far short on universality, comprehensiveness and equity.
In contrast, single payer and health service models are the least expensive, and are the most successful in achieving universality, comprehensiveness and equity. Establishing a health service model through government takeover of our entire health care delivery system is not a model that is likely to gain political traction in the foreseeable future. On the other hand, improving Medicare and converting it into a single payer national health program is much more consistent with American views of equity, justice, and choice.
We should certainly encourage the continued evaluation and development of potentially beneficial measures such as the use of health information technology. Improvement in quality and efficiency should always be our goals. But in the overall picture, such efforts would amount to mere tweaks compared to a comprehensive overhaul of the health care financing system. Let’s move forward with an improved Medicare for all.
High health-care costs: It’s all in the pricing
By Ezra Klein
The Washington Post, March 2, 2012
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.
There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”
“The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”
On Friday, the International Federation of Health Plans — a global insurance trade association that includes more than 100 insurers in 25 countries — released more direct evidence. It surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more.
“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.
“In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.”
And others point out that you also need to account for the innovations and investments that our spending on health care is squeezing out. “There are opportunity costs,” says Reinhardt, an economist at Princeton. “The money we spend on health care is money we don’t spend educating our children, or investing in infrastructure, scientific research and defense spending. So if what this means is we ultimately have overmedicalized, poorly educated Americans competing with China, that’s not a very good investment.”
It’s The Prices, Stupid: Why The United States Is So Different From Other Countries
By Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan
Health Affairs, May/June 2003
The data show that the United States spends more on health care than any other country. However, on most measures of health services use, the United States is below the OECD median. These facts suggest that the difference in spending is caused mostly by higher prices for health care goods and services in the United States.
International Federation of Health Plans iFHP 2011 Comparative Price Report
The study aims to help plans better understand why health care costs are so much higher in some countries than others. The survey data showed that average US prices were once again the highest of those in the countries surveyed for nearly all of the common services and procedures reviewed.
Determining the Level of Payments in Health Care
By Uwe E. Reinhardt
The New York Times, Economix Blog, March 2, 2012
In my previous post, I presented the following menu of payment systems for health care and discussed the various bases (the columns in the chart) upon which payment could be made. Now I’d like to discuss the rows in this chart – the methods by which the level of payments are determined. (The chart is available at the link below.)
The first row represents what one might call the free-market method, with payment levels negotiated between individual health insurers or self-paying patients on the one hand, and individual providers of health care (doctors, hospitals, and so on) on the other. It is the system long used in the private insurance sector and for uninsured patients.
As I have pointed out in a paper, “The Pricing of U.S. Hospital Services: Chaos Behind a Veil of Secrecy,” and in several earlier posts on this blog, however, this approach to setting prices for health care has had several consequences:
1. On average, the prices for health care goods and services negotiated by private health insurers in the United States tend to higher — about double or more — than prices for identical services and goods in other countries of the Organization of Economic Cooperation and Development.
2. It is in good part so because insurers do not seem to have sufficient market power, especially vis à vis hospitals, to resist very rapid price increases.
3. The varying degrees of market power among private insurers in the United States have led to pervasive price discrimination among payers, with prices for identical goods or services varying among payers by factors as high as 10.
Price-Setting in Quasi-Markets:
To avoid these consequences of individual negotiations over prices, I had recommended in a recent post a so-called “all-payer” system for health care in the United States.
Under such a system, associations of health insurers within a region (e.g., states) would negotiate with corresponding associations of hospitals, doctors and of other providers of health care uniform fee schedules (whether fee for service or bundled payments) that then would apply to all payers and providers in that region.
Unilateral Administrative Price-Setting:
Unilateral price-setting by government is the third distinct method of determining the level of the prices paid for health care. It typically is used by tax-financed, government-run, single-payer health-insurance systems, such as those of Taiwan, South Korea, Japan, Canada and the Medicare and Medicaid programs in the United States.
Unilateral, administrative price-setting shares with an all-payer system the advantage of simplicity in claims processing and, thus, lower administrative costs. Both methods furnish the ideal platform for common claims forms and electronic billing.
A major disadvantage of unilateral price-setting is clear from its name: providers may feel that they do not have sufficient say in determining the level of prices at which they are compensated for their services or products, even though they may be able to influence those fee levels by lobbying Congress.
A further disadvantage is that any administrative mechanism operated by government tends to be less flexible than would be negotiations among insurers and providers. It is not that people working in government agencies are inherently less capable than are their private-sector counterparts. It is so because governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.
While I am on record as favoring the quasi-market approach to setting fee levels on health care, I recognize that honorable people can differ honorably in their evaluation of these approaches.
I am persuaded, however, that the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual negotiations over fees has not served Americans well during in the last few decades.
March 3, 2012
“Single-payer” means one fund, administered by a non-profit entity accountable to the public would make payment for all medical services.
The private health insurance bureaucracies disappear as middle men. The choice of provider and decisions about care would be made by you and your doctor, not an insurer interested only in the bottom line. Medicare is one example of a functioning successful single-payer plan.
Hospitals receive monthly operating budgets creating huge administrative savings as no individual bills are necessary. Capital budgets cover new buildings and equipment, etc. New capital spending requires approval by local and state oversight boards avoiding duplicate expensive technology. Care givers jointly negotiate a single fee schedule for services lowering their billing overhead and eliminating bad debt. Malpractice costs drop as medical expenses would no longer be part of legal settlements.
Single-payer is about empathy, the soul of democracy, caring for, protecting and empowering each other including freedom to receive lifetime, comprehensive health care and to choose your own caregivers, freedom from fear of denied care, causing unnecessary suffering and death, freedom from worrying about payment if you are a health care provider, freedom to focus on preventive care and well-being, freedom from financial ruin due to medical expenses and freedom to choose any employer, or be your own employer, because everyone receives care. Let’s just do it.
Yes, it is the prices, but why, and what do we do about it?
As to why, it is often said that health care prices are high in wealthier nations, and with our great wealth in the United states, we do have the highest prices. But that really isn’t so much of an explanation as it is an observation. In fact, much of the wealth is at the top, and median incomes are quite modest and are no longer able to support our very high health care prices. We are not spending a lot more on health care simply because that’s where we want to spend it.
So why are our prices higher? As Uwe Reinhardt explains, much of the pricing decision process has remained under control of the private insurance industry – classed as “free-market determination” in that the government has had little input in influencing these prices. As he states, “the opaque, price-discriminatory and administratively unwieldy – and hence very expensive – payment system of individual (private insurer) negotiations over fees has not served Americans well during in the last few decades.”
Besides “free-market determination,” other options for pricing include “quasi-markets” and “unilateral administrative price setting.”
Within quasi-markets prices are set by negotiations between associations of insurers and associations of providers, such as with all-payer systems. Although this can improve fairness of pricing and provide nominal administrative savings, it still leaves in place the most expensive model of financing health care – a combination of a multitude of private plans with public programs.
Unilateral publicly-administered price-setting is by far the most effective method achieving fair prices. It is used by single payer systems through different bases such as fee-for-service, evidence-based bundling, capitation, and institutional budgets with salaried personnel. Again quoting Uwe Reinhardt, “… governments must above all seem fair to all parties in its decisions and also fully transparent. Private parties do not labor under these constraints.”
The reason that publicly-administered price-setting is vastly superior is not simply because prices are more fair, but it is because of the innumerable other advantages of the single payer model of health care financing and delivery.
Former PNHP president Johnathon Ross, in his response to Uwe Reinhardt’s blog (posted above), explains precisely why we should use the single payer model to get our pricing right – not only achieving fair prices, but achieving that previously elusive goal of health care justice for all.
Troubled Kodak moves to drop health coverage for Medicare-eligible, post-1991 retirees
The Washington Post, February 28, 2012
Eastman Kodak Co., looking to whittle expenses as it reorganizes under bankruptcy protection, wants to end health care benefits for about 16,000 retirees who are over age 65 and thus eligible for Medicare.
The possibility of losing their health care benefits has been a primary worry among Kodak’s 38,000 retirees. A letter Monday to Kodak retirees unaffected by the current proposal — those not yet 65 or who retired before October 1991 — did little to reassure them.
“This change …. will not apply to you,” the letter said. “However, Kodak continues to review its retiree medical, dental and survivor benefits and may in the future request court authority to modify or terminate additional benefits.”
America’s Biggest Companies, Then and Now (1955 to 2010)
By Douglas A. McIntyre
24/7 Wall St., September 21, 2010
Today’s corporate America is dominated by service companies, tech firms, and huge retailers which have thousands of locations and hundreds of thousands of workers. At the end of the decade following WWII, corporate America looked very different from it does now. Fifty five years ago, most of the largest corporations in the US built cars, supplied car parts, or provided fuel for America’s vehicles.
The decades-long movement away from a United States dominated by smoke stacks to one dominated by computers and malls has also caused a shift in the geographic placement of the country’s better-paid workers. In the 1920s, they migrated to the North – places like Pennsylvania, Ohio, and Michigan – where blue-collar jobs were abundant. Eight decades later their descendants are out of work in numbers that total well into the millions.
Think back to half a century ago. If you worked for a great American company like Eastman Kodak you were assured of having very generous health benefits for the rest of your life. Things change.
One thing that should not change is the ability to receive health care whenever you need it. Tying health insurance to employment is not a sound policy, especially in these days in which full careers are almost never with a single employer with a stable health benefit program.
Your eligibility for health care should be determined simply by the fact that you exist. The Affordable Care Act will never get us there, but a single payer national health program certainly would.
Financing the Maryland Health Security Act
By Gerald Friedman, Professor of Economics, The University of Massachusetts at Amherst
This policy memo explores the economic implications of enacting the Maryland Health Security Act (MHSA) and establishing the Maryland Health System Trust (MHST) a single-payer system to finance health care in Maryland. The proposed trust would finance virtually all necessary medical care including hospital care, doctor visits, dental care, mental health, prescribed occupational and physical therapy, prescription drugs, medical devices as well as medically necessary nursing home care and home health care. Medical care would be financed through the MHST without co-payments or deductibles.
The MHST will finance medical care with substantial savings compared with the existing multi-payer system of public and private insurers. Some of these savings would be used to extend coverage to the 15 percent of nonelderly adults in Maryland without insurance and to improve coverage for the growing number with inadequate coverage. In addition to improving access to health care, the MHST would reduce economic inequality by replacing the current regressive system of health insurance finance with progressive and proportional taxes. By reducing administrative and other waste, the MHST would increase real disposable income for most Maryland residents while reducing the burden of health care on Maryland businesses.
Financing the Maryland Health Security Act (31 pages):
House Bill 1035 – Maryland Health Security Act of 2011:
Many proposals have been advanced and bills introduced for single payer programs. Perhaps the most frequent question asked is, “How would you pay for it?” The general answer is easy. You simply use progressive tax policies to fund a universal risk pool that pays for all appropriate care for everyone. Most people want specifics. In this report, Professor Gerald Friedman describes a financing proposal for the Maryland Health Security Act of 2011, a single payer model of reform.
As with all other single payer proposals, he reaches the conclusion that the substantial savings of the single payer model could be used to extend coverage to the uninsured and to improve coverage for the growing number with inadequate coverage. This would increase disposable income for most residents and reduce the burden of health care costs on Maryland businesses.
Friedman also provides a graph projecting three scenarios for Maryland health expenditures for the next decade: 1) the existing health care finance system, which we all know is terribly inflationary, 2) growth under the Affordable Care Act, which is much worse (since this is the most expensive model of reform), and 3) growth under single payer, which is dramatically reduced – bringing cost escalation down to tolerable levels – truly “bending the curve.”
One important footnote in his report should be mentioned: “We assume that all necessary federal waivers are granted and legislation is enacted to allow the incorporation of existing federal programs into the MHST (Maryland Health System Trust), including Medicare, Medicaid, and the Veteran’s Administration.” We might add to that legislation addressing the preemption clause for self-insured, employer-sponsored plans under the federal Employee Retirement and Income Security Act of 1974 (mentioned in the fiscal and policy note for HB 1035).
Activists should continue to support state efforts for single payer reform while simultaneously supporting enabling federal legislation, for the reasons mentioned. The former is not possible without the latter. A far better option would be to enact a national single payer program, but until we can bring sanity to our political process, state single payer reform should be pursued.
Insurer Battles Physician Group
By Anna Wilde Mathews
The Wall Street Journal, February 29, 2012
A clash between health insurer Blue Shield of California and a doctor group that sold its operations to UnitedHealth Group Inc. highlights emerging tensions as lines blur between health insurers and medical providers.
On Tuesday, the health insurer filed a demand for at least $10.5 million in damages from Monarch HealthCare, a 2,300-physician association based in Irvine, Calif., that last fall sold its management arm to UnitedHealth’s Optum health-services unit.
Among the allegations: that Monarch sought to steer Blue Shield members away from Blue Shield and toward competing health plans, and that its doctors started declining to see some Blue Shield members. The complaint says these moves violated Blue Shield’s contract with Monarch, which the insurer has previously said will end on May 1.
“It seems crazy to be contracted with someone who’s a direct competitor, and share everything you design with them,” said Juan Davila, senior vice president for network management at Blue Shield, which has 3.3 million members. Blue Shield felt its “worry was proved true” by Monarch’s alleged actions, he said.
At the root of the clash is the deal unveiled last fall for Monarch’s operations arm to be acquired by Optum, the unit of UnitedHealth Group, which is also the parent of UnitedHealthcare, the nation’s biggest insurer. Because California law bans most entities from directly employing practicing doctors, acquisitions involving independent-practice associations like Monarch often have complex structures.
The dispute raises issues for both sides. Blue Shield says in its complaint that it lost existing and prospective members. Also, its provider network will soon lack one of Orange County’s biggest doctor groups. Monarch risks losing some patients who are Blue Shield members.
In its complaint, Blue Shield said it had around 19,200 members in commercial and Medicare Advantage plans last September who used Monarch doctors. In May, Blue Shield’s members have to pay more to keep seeing Monarch doctors, who would become out-of-network providers.
Similar static is beginning to surface elsewhere as health plans have begun buying medical providers, and some providers have started making insurer-style moves, with some considering direct approaches to employers and even seeking to launch their own health plans.
WellPoint Inc.’s Anthem Blue Cross broke off a deal with Monarch to create a cooperative “accountable-care organization” and also said in a letter to doctors that it will discontinue its health-maintenance organization relationship with Monarch in the future. In the letter last October, an Anthem official said the ACO move came as “a result of the group’s pending transaction” with Optum.
These disputes between UnitedHealth’s Monarch HealthCare, Blue Shield of California, and WellPoint’s Anthem Blue Cross not only impose a great disservice on their patients, but also should outrage all of us over the fact that these health care intermediaries act as if they regard patients to be their chattel – jerking them around in order to fulfill their own business goals. How long are we going to continue to tolerate this reprehensible industry? They may need us, but we don’t need them.
Actuarial Value: Why It Matters And How It Will Work
By Lynn Quincy
Health Affairs Blog, February 28, 2012
On February 24, 2012, the Department of Health and Human Services (HHS) released guidance describing a proposed method for estimating the actuarial value of health plan benefit designs in 2014. The actuarial value measures the percentage of expected medical costs that a health plan will cover. It can be considered a general summary measure of health plan generosity. As such, it can help consumers make sense of their health plan options by providing an overall measure of coverage in addition to discrete information on deductibles, copayments, and coinsurance, etc.
A Trade-Off Between Simplicity And Accuracy
The bulletin highlights — but doesn’t resolve — a tension between simplicity and accuracy in the estimation of actuarial value. HHS initially proposes to use a “practical and easy-to-use” calculator that would utilize the “handful” of cost-sharing features that have a large impact on a plan’s actuarial value, such as deductible, co-insurance, and maximum out-of-pocket. This approach may not take into account more subtle features of a plan, such as service specific deductions or exceptions to the out-of-pocket limit.
There are trade-offs, however, from taking this “practical” approach. First, cost-sharing features that may be only worth a few points of actuarial value can have a big impact on an individual consumer’s cost-sharing obligations. Second, high level plan features like the maximum out-of-pocket can vary in how reliably they reflect patient cost-sharing. One study found that plans with similar reported out-of-pocket maximums actually differed by thousands of dollars in the final cost to patients due to exceptions to the maximum.
Third, by opting for a simple calculator, HHS envisions insurers using supplementary methods to calculate actuarial value if their plan design doesn’t fit neatly into the calculator. This could greatly undermine the goal of using a common method of calculating actuarial value to ensure that plan comparisons are truly “apples to apples.” A recent study demonstrated that the same plan design can yield different actuarial value estimates, if different methods are used to calculate it.
Addressing A Tension Between Actuarial Value And Out-Of-Pocket Maximums
Depending on the actuarial model being used, some researchers have found it impossible to hit the required actuarial value targets and the lower out-of-pocket limit requirements simultaneously. While it may seem counter-intuitive, allowing for a higher out-of-pocket maximum means lower deductibles can be offered while still hitting the required actuarial value target. As many consumers will not hit their out-of-pocket maximum, flexibility to use higher out-of-pocket limits benefits a greater number of consumers.
In a nutshell, HHS proposes to let actuarial value targets trump maximum out-of-pocket rules if this conflict arises. HHS intends to publish an annual notice providing guidance as to the out-of-pocket levels that would be consistent with the actuarial value targets for households with incomes from 100 percent to 250 percent of FPL, presumably reflecting the types of estimates being produced by the federal calculator. For households with incomes of 250 percent to 400 percent of FPL – which are also entitled to lower out-of-pocket maximums under the ACA but remain tied to the standard actuarial value benchmark of 70 percent – HHS proposes to do away with the requirement for lower out-of-pocket maximums altogether.
CMS: Actuarial Value and Cost-Sharing Reductions Bulletin (16 pages):
The actuarial value of a health plan represents the average percentage of covered services that a plan is expected to pay for, the balance being paid by the patient. The Affordable Care Act calls for four levels of plans, ranging from 60 percent to 90 percent actuarial values. Cost sharing, such as deductibles, coinsurance, and maximum out-of-pocket amounts, is an important consideration in determining the actuarial value of the plan.
The excerpts above include only two of many complex considerations in trying to standardize rules for establishing actuarial values and associated cost sharing. For instance, in trading off simplicity and accuracy, “plans with similar reported out-of-pocket maximums actually differed by thousands of dollars in the final cost to patients due to exceptions to the maximum.” Also, “For households with incomes of 250 percent to 400 percent of FPL – which are also entitled to lower out-of-pocket maximums under the ACA but remain tied to the standard actuarial value benchmark of 70 percent – HHS proposes to do away with the requirement for lower out-of-pocket maximums altogether.”
By selecting this model of reform, not only do we compound the administrative excesses in health care financing, we also compound some of the inequities in our system. Policy wonks will want to read the full CMS Bulletin covering these complex issues (link above).
It is hoped that those who continue to push for implementation of ACA will finally realize the futility of their efforts and join us in advocating for equitable, efficient reform for all of us through a single payer national health program.
Key Facts on Health Coverage for Low-Income Immigrants Today and Under Health Reform
Kaiser Commission on Key Facts
As of 2010, there were 38 million immigrants residing in the United States, accounting for 12.5 percent of the total population. They include 16.7 million naturalized citizens and 21.4 million non-citizens, including both lawfully present and undocumented individuals. The Pew Hispanic Center estimates there were 11.2 million undocumented immigrants in the United States as of 2010, accounting for about 3.7 percent of the total population.
In 2010, the median annual household income for non-citizens was $25,000, roughly half the amount for citizen households.
Health coverage for naturalized citizens is very similar to that of U.S.-born citizens, with the majority covered through employer-sponsored or other private coverage. However, non-citizens are three times as likely as U.S.-born citizens to be uninsured due to lower rates of both public and private coverage.
Coverage Options for Immigrants Under Health Reform
Almost all uninsured non-citizens have household incomes that would qualify for Medicaid or tax credits for exchange coverage under reform, but many will continue to face immigrant eligibility restrictions.
The Medicaid expansion will make many lawfully present immigrants newly eligible for the program, particularly low-income adults who have very limited eligibility for Medicaid today. However, the five-year wait for coverage will remain in place, limiting eligibility for many lawfully present immigrants, although states will maintain the option to eliminate the waiting period for lawfully residing children and pregnant women.
Lawfully present immigrants without access to affordable employer based coverage will be able to purchase health coverage in the new exchanges, and those with incomes up to 400 percent of poverty will be eligible for tax credits. This will include lawfully present immigrants with incomes below 133 percent of poverty who are unable to enroll in Medicaid due to the five-year waiting period.
Undocumented immigrants will remain ineligible for Medicaid and will be ineligible for tax credits and prohibited from purchasing coverage through an exchange, even at full cost.
Safety-net providers will remain a major source of care for immigrants. Today, uninsured individuals, including many uninsured immigrants, often rely on community health centers and clinics for their care. Safety-net providers are seen as a trusted source for care and are able to offer culturally and linguistically appropriate services that meet the needs of diverse populations. Under reform, these providers will likely remain a primary source of care for millions of newly insured individuals, including lawfully present immigrants, as well as citizens and non-citizens who remain uninsured after 2014.
Everyone should have health care. How well will the Affordable Care Act (ACA) work for our immigrant population? It depends partly on immigration status.
The ACA provisions apply to naturalized citizens just as they would for native-born citizens. Thus their barriers will be the same as for most of the rest of us. They will face the same issues of whether or not the subsidies will be adequate to purchase private plans, and whether or not they will be exposed to excessive cost sharing with inadequate subsidies when accessing care.
Non-citizen immigrants are faced with the additional problem of having household incomes that average only half that of the U.S. median. Those who are lawfully present also must wait for five years before they are eligible for the Medicaid program. They will be eligible to purchase programs in the new exchanges, though the subsidies will likely be inadequate for those with incomes that already don’t cover other essential needs.
For immigrants who are undocumented, Congress decided to yield to the forces of anti-immigrant politics, and not only make them ineligible for tax credits for the exchange plans, but also to prohibit them from purchasing the plans with their own funds, even at full cost. It is very unfortunate that Congress co-mingled heath care justice with immigration policy. The sanctity of human life should always prevail over the politics of ideology.
Yes, some will receive excellent care from our safety-net providers, but many will not. Community health centers cannot possibly fill in the full void in coverage.
Most undocumented workers are productive individuals, just like our citizens, and there is no reason that they should not contribute to and participate in a single payer national health program that covers everyone – absolutely everyone.
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