Throwing Darts: Americans’ Elusive Search for Health Care Cost Control

By Jonathan Oberlander
Journal of Health Politics, Policy and Law, June 2011

During the 2009 – 2010 health reform debate, secretary of Health and Human Services Kathleen Sebelius contended that “every cost-cutting idea that every health economist has brought to the table is in this bill” (Gregory et al. 2010).

That assertion had considerable merit. The Patient Protection and Affordable Care Act (ACA) contained numerous items on health services researchers’ and health economists’ wish lists, including policies to promote accountable care organizations (ACOs), primary care medical homes, bundled payment, pay for performance (P4P), comparative effectiveness research (CER), and health information technology (HIT). Even economists’ longtime holy grail — limiting the tax exclusion for employer-sponsored insurance — made it, against the political odds, into the ACA. So too did proposals to create an independent Medicare commission and an innovation center, while the Obama administration additionally promised to authorize an Institute of Medicine study on reducing the geographic disparities in Medicare payment made (in)famous by Dartmouth researchers (Wennberg, Fisher, and Skinner 2002).

Not surprisingly, many policy analysts lavished praise on the new law’s promise to “bend the cost curve.”

Is there, then, reason to believe that the ACA will decisively rein in U.S. medical care spending? Alas, probably not. The enthusiasm for the cost-containment provisions in health reform is striking precisely because so many of those provisions are tepid. Put simply, the Affordable Care Act lacks systemwide, reliable cost control. It is in fact a retreat from the cost-control ambitions of the 1993 – 1994 Clinton plan, which had, whatever one thinks of managed competition, a serious theory of how to slow health care spending, and, beyond that, a National Health Board and a budget to enforce expenditure targets. That some analysts believe the new law encompasses all available cost-containment ideas says more about the parochialism of U.S. health policy and its inattention to international experience than it does about the robustness of the ACA’s spending limits.

But slowing federal expenditures on Medicare is not the same as controlling spending in the broader U.S. health care system that encompasses private insurance and other public programs (Marmor and Oberlander 2009). Outside of asserting Medicare’s powers, the ACA has three major policies that purport to control costs. The establishment of health insurance exchanges is expected to generate savings by concentrating purchasing power, reducing administrative costs, and promoting competition among health insurers. Yet the scope of the exchanges, and consequently their likely impact on national health expenditures, is limited: the Congressional Budget Office (CBO 2010) projects 24 million Americans will participate in them by 2019 (though enrollment could expand significantly over time). Moreover, Massachusetts’s experience to date with its Health Connector program provides little ground for believing that the exchanges will slow spending in the broader health system.

The second major cost-control instrument is the 40 percent marginal tax that will be imposed on high-cost insurance plans (policies exceeding $10,200 for individuals and $27,500 for families). The so-called Cadillac tax reflects many economists’ deeply held belief that insulating patients from costs leads to overconsumption of and higher spending on medical care (Vladeck and Rice 2009). That other nations spend much less than the United States on health care despite having comprehensive benefits and, in some cases, no cost sharing has so far not disturbed the view that moral hazard is the root of our high costs. Tax health insurance, advocates believe, and insurers and employers will trim overly generous benefits, patients will consume less medical care, and national health spending will slow.

The final piece of the ACA’s cost-control strategy is delivery system reform. Here the idea is to “modernize” U.S. medical care (Buntin and Cutler 2009) by providing better information and new incentives (CER, HIT), reorganizing how care is delivered (ACOs, medical homes), and changing how it is paid for (bundled payment, P4P). In addition, the law embraces prevention, including a new requirement that insurers must cover recommended preventive services without any cost sharing.

However, little evidence exists that any of these reforms — as politically appealing as their promise to improve health outcomes and health care delivery may be — will generate sizable savings in the short term (Marmor, Oberlander, and White 2009; Tanenbaum 2009). Moreover, in many cases the reforms are initially envisioned only as Medicare pilots and demonstrations, with the hope that they would spread throughout the program and then to the rest of the health system. This strategy for controlling costs is akin to throwing darts. Evidently, the idea is that since we don’t know how well any of these policies will work, we should try them all at once and see which ones actually stick.

There is good reason to be skeptical that delivery system reform will by itself provide reliable cost control. After all, other Organisation for Economic Co-operation and Development nations that spend less on medical care than the United States do so largely through concentrated purchasing, budgeting, and price regulation (Jost, Dawson, and den Exter 2006; Marmor, Oberlander, and White 2009; Vladeck and Rice 2009; White 1995, 2010). The ACA does not move the United States closer to that international standard (White 1995) as much as it maintains the American tradition of searching for technical fixes to the fundamentally political problem of slowing the flow of income to the health care industry (Barer and Evans 1992; Morone 1990; Reinhardt 1990; Vladeck and Rice 2009).

Thus many American policy analysts continue to lament fee-for-service payment and argue for the “necessity” of switching to a “fee-for-value” system if costs are to be controlled — never mind that other nations that pay doctors fee-for-service, including Canada, control costs much better than we do. The American debate has lost sight of a crucial fact: it is not just about how you pay for medical care, but how much you pay for services. Rather than emulating policies that actually work to constrain spending abroad (e.g., global budgets, fee schedules) the United States seems intent on reinventing and reorganizing its way out of the cost crisis. Yesterday’s conviction that capitation and integrated delivery systems held the key to stemming medical costs has been resurrected in the current fad for accountable care organizations and bundling, with scant acknowledgment that we have been down this road before. An ever-increasing list of abbreviations (HMOs, HSAs, HIT, P4P, and so on) bear witness to Americans’ elusive, and now four-decade-long, search for magic bullets.

Proponents of the ACA have attempted to turn the absence of reliable cost control into a strength. The law is, they contend, diverse and flexible. By trying many approaches, “it does not rely on just one policy for effective cost control” (Orszag and Emanuel 2010: 603). Yet combining a series of potentially ineffective reforms does not make them any more effective. Moreover, the rationale for experimenting with an array of delivery systems and payment reforms reflects a sort of policy agnosticism, since, as Jon Gruber argues, “health policy experts can’t really say for sure how governments should best go about slowing cost growth” (Gruber 2010: 189). But international experience suggests that other nations do know how to slow medical spending; the United States is simply unable or unwilling to adopt those policies. Americans are, in other words, determined to try all available cost-control options — except those that actually succeed elsewhere. Ultimately, the insistence that the United States has to try everything because nothing is certain to contain medical costs sounds less like agnosticism or intellectual curiosity and more like ignorance.

http://jhppl.dukejournals.org/cgi/reprint/36/3/477

Read these excerpts from Jonathan Oberlander’s article, and you’ll understand much better why the Affordable Care Act will fail to control health care costs. Has our reform been driven by ignorance, as he suggests? With the great body of health policy literature available to us, how could that be? It seems more likely that ego and greed are much more powerful policy drivers.

HHS Scales Back Rules On Health Insurance Appeals

By Susan Jaffe
Kaiser Health News, June 23, 2011

The Obama administration announced Wednesday that it is scaling back some of its earlier rules under the 2010 health law that governed consumers’ right to appeal denials by health plans, disappointing patient advocates and earning praise from industry groups.

The health overhaul gives members in group and individual health plans the right – many for the first time — to appeal the denial of coverage to an independent review panel. But the administration’s new rules provide beneficiaries less time to prepare their appeal, less information about why their claim was denied and limit what type of denials can be challenged.

A spokesman for America’s Health Insurance Plans, which had pressed the administration for changes, said the trade group was still reviewing the 95-page document, but the group’s overall impression was positive.

“The new regulations take important steps to simplify and streamline the appeals process so that patients can receive the most accurate and timely decision about their medical claims,” said the spokesman, Robert Zirkelbach.

Stephen Finan, senior policy director at the American Cancer Society Cancer Action Network, said Wednesday’s announcement would have the opposite effect. “Transparency and independence are critical to ensure that a fair and objective appeal is conducted,” he said. “Unfortunately, there are numerous barriers and burdens placed on the consumer that could prevent a timely and objective resolution to a denial.”

http://www.kaiserhealthnews.org/Stories/2011/June/22/External-Appeals-Reg-Jaffe.aspx

And…

Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes

Department of the Treasury
Department of Labor
Department of Health and Human Services

SUMMARY: This document contains amendments to interim final regulations implementing the requirements regarding internal claims and appeals and external review processes for group health plans and health insurance coverage in the group and individual markets under provisions of the Affordable Care Act. These rules are intended to respond to feedback from a wide range of stakeholders on the interim final regulations and to assist plans and issuers in coming into full compliance with the law through an orderly and expeditious implementation process.

(Following is one example of the revised rules)

II. Overview of Amendments to the Interim Final Regulations
A. Internal Claims and Appeals
1. Expedited notification of benefit determinations involving urgent care (paragraph
(b)(2)(ii)(B) of the July 2010 regulations).

The July 2010 regulations provided that a plan or issuer must notify a claimant of a benefit determination (whether adverse or not) with respect to a claim involving urgent care (as defined in the DOL claims procedure regulation) as soon as possible, taking into account the medical exigencies, but not later than 24 hours after the receipt of the claim by the plan or issuer, unless the claimant fails to provide sufficient information to determine whether, or to what extent, benefits are covered or payable under the plan or health insurance coverage. This was a change from the DOL claims procedure regulation, which generally requires a determination not later than 72 hours after receipt of the claim by a group health plan for urgent care claims. The preamble to the July 2010 regulations stated that the Departments expected electronic communication would enable faster decision-making than in the year 2000, when the DOL claims procedure regulation was issued.

While some commenters supported the 24-hour rule (particularly consumer advocates and medical associations, including mental health providers who noted the 24-hour standard was especially important for people in psychiatric crisis), concerns were raised by many plans and issuers regarding the burden of a 24-hour turnaround. Some commenters argued that some of the claims constituting “urgent care” and thus qualifying for the expedited timeframe really do not need to be made within 24 hours. Moreover, a number of commenters highlighted that the 72-hour provision was intended only to serve as a “backstop”; as the general rule under both the July 2010 regulations and the DOL claims procedure regulation requires a decision as soon as possible consistent with the medical exigencies involved, making the change to a 24-hour timeframe unnecessary for the most serious medical cases. Some commenters cited the Emergency Medical Treatment and Labor Act (EMTALA), which generally requires hospitals to provide emergency care to individuals with or without insurance or preauthorization and, therefore, mitigates the need for expedited pre-service emergency claims determinations in many situations. Finally, some commenters stated that a firm 24-hour turnaround for urgent care claims will adversely affect claimants, as plans and issuers will not have sufficient time to properly review a claim, adversely affecting the quality of the review process in cases where the provider cannot be consulted in time, and leading to unnecessary denials of claims.

After considering the comments, and the costs and benefits of an absolute 24-hour decision-making deadline for pre-service urgent care claims, this amendment permits plans and issuers to follow the original rule in the DOL claims procedure regulation (requiring decision making in the context of pre-service urgent care claims as soon as possible consistent with the medical exigencies involved but in no event later than 72 hours), provided that the plan or issuer defers to the attending provider with respect to the decision as to whether a claim constitutes “urgent care.” At the same time, the Departments underscore that the 72-hour timeframe remains only an outside limit and that, in cases where a decision must be made more quickly based on the medical exigencies involved, the requirement remains that the decision should be made sooner than 72 hours after receipt of the claim.

http://www.ofr.gov/(X(1)S(jsllnf4ps0f4ieewh0fb4pee))/OFRUpload/OFRData/2011-15890_PI.pdf

Was reform intended to benefit patients or insurers? As the reform process evolved, the insurers were dictating the policies. Understandably, they took care of their own interests first. Their lack of concern for patients is confirmed by the fact that their policies will leave 23 million people without any coverage and tens of millions more with inadequate coverage.

Officials of the Obama administration, along with leaders in Congress, were complicit with the insurers during the legislative process that led to the Affordable Care Act. You might think that they would show some remorse by tailoring the provisions of the act to better benefit patients. No.

The example of the rule change for determinations involving urgent care shows where their heart is. If a patient requires urgent care, the system should be designed to ensure that the necessary care is provided immediately. Yet read the contorted explanation leading to the revised rule above. It is being revised to ensure that the insurers are allowed three days instead of one to make a decision. That might even save them money should the patient die in the interim.

The administration’s rule: first do no harm – to the insurance company. And the patients? Who’s making these rules anyway? The patients need to butt out.

What would be the appeals process for a determination of urgent care under a single payer national health program? Appeals? What are you talking about? If the patient urgently needs care, the patient gets care – now! Period.

By Laura Boylan, M.D.

It was December. I got a dismaying e-mail from the American Academy of Neurology.

The AAN was conducting a membership survey to inform the Academy’s 2011 advocacy agenda. “We want to hear from you about the challenges you and your patients are facing,” the message read.

To my chagrin, I did not feel that my priorities or values were represented in the choices presented on the questionnaire. The items on the menu were all decidedly “thinking INside the box” of business-as-usual health care:

From the list below, please select up to three issues that you believe should be top legislative priorities for the AAN in 2011:

* Adoption of guidelines to minimize concussive injury during sporting activities
* Inclusion of neurology in the E/M bonus (created by the 2010 health reform law)
* Medical liability reform
* Neuroimaging practice issues
* Reimbursement for telemedicine
* Remedy for the loss of Medicare consult codes
* Right to privately contract with and balance-bill Medicare beneficiaries

I felt sure many other neurologists would feel the same way as I did about the limitations of this list. I appealed to my colleagues at Physicians for a National Health Program for help and was quickly supplied with a list of e-mail addresses of PNHP neurologists.

I e-mailed this group and suggested they send a “write-in” vote for single-payer national health insurance. I wrote to 113 members and, though I did not ask for any response, got back 14 personal replies from neurologists in eight states, all of whom “wrote in” votes for single-payer health reform to the AAN.

After this heartening response, I had a series of conference calls and e-mail exchanges with several of my colleagues, including Drs. Rachel Nardin and Deborah Leiderman, to discuss how we might put additional pressure on the AAN to take up our issue.

We did not expect the Academy to take a stance in support of single payer. We decided that a more sensible “ask” would be to request that the AAN poll its members about their views on health care reform.

Citing polling data showing robust, majority support for national health insurance, we wrote a letter to the Academy suggesting it conduct such a survey “so as to faithfully be able to represent its members’ voices in the national health care debate.”

Over 30 neurologists from 14 states signed the letter, which we sent to the president of the AAN, Dr. Bruce Sigsbee, and other key members of AAN leadership.

Dr. Sigsbee replied to our letter, saying that “AAN members have diverse views ranging across the spectrum of the government involvement in the health care system,” adding, “We recognize and respect the differing views and feel it best to focus on those issues where a majority of our members feel we can have the most impact.”

In short, he did not agree to our request.

Nonetheless, we believe efforts such as ours will keep pressure on bodies of organized medicine and keep single-payer advocacy “on the map.” Furthermore, the sign-on letter allowed a disparate group of neurologists to raise our voices together for what we believe in: health care as a human right, with everybody in and nobody out.

Laura S. Boylan, M.D., is clinical associate professor of neurology, New York University School of Medicine; attending neurologist, Department of Veterans Affairs; and board member, Physicians for a National Health Program – N.Y. Metro chapter. Dr. Boylan’s institutional affiliations are provided for identification purposes only; the views expressed are hers alone.

Obama’s Health Reform in European Perspective

By Kieke G. H. Okma
Journal of Health Politics, Policy and Law, June, 2011

It is hard to understand the European perspective on the current health reform debate in the United States without calibrating the left-right “scale” of politics in the two continents. If we were to rank political parties in Europe from, say, 1 to 10, the similar scale in America would run from 5 to 15. Thus, Europe’s middle is located at or close to America’s (extreme) left; likewise, America’s far right is way off the European chart. (That also explains why Europeans have a hard time understanding or taking seriously the Tea Party Movement.)

That political convergence of the main political parties in Europe, combined with “corporatist” policy making where governments share the responsibility for social policy making with organized stakeholders, explains why there is much less political polarization than in the United States — particularly on health care issues. European citizens, in the last quarter of the twentieth century, expected and accepted government intervention to make sure everyone has access to health care via state- sponsored or state provided arrangements. They still do. Once in place, welfare programs tend to create their own constituencies. It is hard, politically speaking, to reduce entitlements of existing programs. Even in times of economic downturn and fiscal strains, few European politicians have proposed serious cutbacks in public health spending. Leveling of growth rates of health expenditure, yes, perhaps. Experiments with a modest degree of “markets” based on consumer choice and much government regulation, maybe. But a substantial delisting of entitlements or major increases in user fees are not seriously on the agenda anywhere, especially not when such cuts would affect the elderly or people with chronic illness.

The vast majority of Europeans warmly embraced Obama’s election promise to enact universal health financing. They see universal access to health care as a social right, a crucial element of a decent society.

Two common misperceptions have generated disappointment, however. It is now clear that the 2010 health reform legislation will leave substantial numbers of Americans uninsured. The first error arose from applying the wrong political scale. The U.S. “middle of the road” is much more conservative than that in Europe, and no U.S. president can afford to be seen at the far left of the American scale. The second misunderstanding concerns the power of the American presidency. Surely, Europeans believe, the president of the most powerful country in the world can do what he sets out to do (and surely, no one could be against universal health care either). They find it hard to accept that the president’s power is bound by political institutions that make major change very difficult if not impossible.

The Patient Protection and Affordable Care Act signed by Obama on March 23, 2010, takes on many problems. The health reform law will reduce the number of uninsured by expanding access to Medicaid and imposing restrictions on private insurers (the law also contains many other provisions that only weakly relate to health insurance reform). The step toward universal coverage, however, with effective cost control that would require a form of collective action, was one bridge too far.

http://jhppl.dukejournals.org/cgi/reprint/36/3/577?etoc

Policy is easy. Politics isn’t. For the United States, the politics of collective action on health reform has been one bridge too far. Let’s now build that bridge.

New AMA Health Insurer Report Card Finds Increasing Inaccuracy in Claims Payment

AMA
June 20, 2011

According to the AMA’s latest findings, commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of two percent compared to last year. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year, and added an estimated $1.5 billion in unnecessary administrative costs to the health system. The AMA estimates that eliminating health insurer claim payment errors would save $17 billion.

Physicians received no payment at all from commercial health insurers on nearly 23 percent of claims they submitted. There are many reasons a legitimate claim may go unpaid by an insurer. Claims may be denied, edited or deferred to patients. During Feb. and March of this year, the most common reason insurers didn’t issue a payment was due to deductible requirements that shift payment responsibility to patients until a dollar limit is exceeded.

Metric 6: First ERA accuracy:

This metric measured the percentage of claim lines where the payer’s allowed amount was equal to the physician practice’s expected allowed amount. For this metric, it was necessary to obtain the actual contracted allowed amounts (i.e., fee schedule) for each claim line.

81.08% – Aetna
61.05% – Anthem Blue Cross/Blue Shield
83.02% – CIGNA
87.04% – Health Care Services Corporation
81.99% – Humana
88.41% – Regence
90.23% – UnitedHealthcare
96.19% – Medicare

AMA press release:
http://www.ama-assn.org/ama/pub/news/news/ama-health-insurer-report-card.page

2011 National Health Insurer Report Card:
http://www.ama-assn.org/resources/doc/psa/2011-nhirc-results.pdf

Methodology:
http://www.ama-assn.org/resources/doc/psa/2011-nhirc-methodology.pdf

The private health insurance industry’s primary product that they are selling us is administrative services. How well are they doing? One-fifth of the claims that they process are in error. Medicare does better, but in using private billing contractors, their claims are still incorrect 4 percent of the time. We’re sure paying a lot to an industry that is doing such a lousy job.

Another finding that is buried in this report is that physicians received no payment at all from commercial health insurers on nearly 23 percent of claims they submitted. Think of the amount of administrative hassle involved here that is producing… nothing! The supposedly legitimate reasons for nonpayment include failure to meet the deductible, insurance policy has been cancelled, employer changed health plans, failure to use a network physician, services are not an included benefit, etc.

Under our current dysfunctional system of financing health care such denied claims are expected, as is the administrative waste entailed. But think of how it would be under a single payer system. None of these would be reasons to deny a claim. With everyone covered under one set of single payer rules, claims payment rate would be close to 100 percent.

Our current health care financing system is highly flawed, and the commercial insurers are incompetent. And we want more of this?!

Oncologists confront “financial toxicity” of cancer care

By Pamela Lewis Dolan
American Medical News, June 20, 2011

The toxicity of chemotherapy and other drug treatments for cancer has extended beyond side effects such as nausea and nerve pain. It has now extended to a patient’s ability to pay the mortgage and buy groceries while undergoing care, said the author of a study looking at the financial impact of cancer treatment.

Amy Abernethy, MD, associate professor in the Division of Medical Oncology at Duke University Medical Center, helped write one of a handful of studies presented at the June meeting of the American Society of Clinical Oncology that found the rising cost of cancer care could impact treatment decisions and even lead to patients forgoing treatment because they cannot afford it.

The growing financial burden on those undergoing cancer treatment could put physicians in the position of prescribing treatments that could save their patients’ lives but force them into bankruptcy, poverty or even homelessness — if they could scrape up the money to receive the treatment in the first place. This is especially troubling given the fact that advancements are being made in cancer treatments that could lead to much higher survival rates.

Another study presented at the ASCO meeting was published online June 5 in The New England Journal of Medicine. It found that the experimental drug vemurafenib and the newly approved Yervoy (ipilimumab) can improve survival rates for patients with advanced melanoma, a population that hasn’t had many treatment options in the past. Yervoy will cost $120,000 for a four-dose treatment at $30,000 per dose.

“The move toward increased cost-sharing in high-deductible health plans, increased premiums and tiered formularies all shift the cost burden to patients and force them to make day-to-day decisions on how to integrate health care costs with other discretionary spending,” said (Neal Meropol, MD, chief of the Division of Hematology and Oncology at Case Western Reserve University School of Medicine).

A study conducted by researchers at the Fred Hutchinson Cancer Research Center in Seattle found that as cancer patients’ survival time increases, so do the chances they will declare bankruptcy. Researchers compared U.S. Bankruptcy Court records to cancer registry data from nearly 232,000 adult cancer survivors in western Washington over 14 years. They found that, on average, bankruptcy rates quadrupled within five years of a cancer diagnosis.

http://www.ama-assn.org/amednews/2011/06/20/bil20620.htm

And…

Effective Health Care Program

Agency for Healthcare Research and Quality

The Effective Health Care (EHC) Program partners with networks of researchers and clinical teams across North America, using input from stakeholders throughout the process of comparative effectiveness research, translation, dissemination, and implementation of research findings.

In 2010, AHRQ used funding from the American Recovery and Reinvestment Act of 2009 (ARRA) to establish two important Program initiatives:

* Community Forum to improve and expand public and stakeholder engagement in AHRQ’s comparative effectiveness research and EHC Program.
* Healthcare Horizon Scanning System to identify new and emerging issues for comparative effectiveness review investments.

These initiatives contribute to the work of these Program components:

* Individual investigators and their research groups at academic institutions and other research centers generate new evidence from original research.
* The Evidence-based Practice Centers (EPCs) perform in depth reviews of existing evidence.
* The DEcIDE (Developing Evidence to Inform Decisions about Effectiveness) Research Network gathers new knowledge on specific treatments and health care services.
* The Centers for Education & Research on Therapeutics (CERTs) conduct research and educate clinicians and consumers about drugs, biologicals, and medical devices.
* The Scientific Resource Center provides scientific support for the EHC Program.
* The John M. Eisenberg Center for Clinical Decisions and Communications Science organizes the research results into guides and tools that are useful to clinicians, health care policymakers, and patients.
* The Stakeholder Group provides different perspectives on the EHC Program from individual members of the Group.

http://effectivehealthcare.ahrq.gov/index.cfm/who-is-involved-in-the-effective-health-care-program1/

Having cancer and facing the agony of treatment is bad enough without also having to face the financial burdens of treatment. As this and many other reports show, “financial toxicity” can seriously impair the ability to meet other basic needs, and may even result in personal bankruptcy.

We do need some reassurance that the costs and adverse effects of the treatments are worth the benefits provided. We shouldn’t use as our sole source of information an industry that might be reluctant to communicate the full downside of their treatments when that information might reduce their very lucrative profits.

Fortunately, we do have a good start on becoming more informed in our choices for health care. The Effective Health Care Program of the Agency for Healthcare Research and Quality (AHRQ) is providing us with comparative effectiveness and evidence-based research that can be very useful in our clinical decision making. However, we do need to move further forward and use this information to make coverage decisions, certainly to eliminate coverage of detrimental health care, and also to eliminate coverage of care that the overwhelming preponderance of information reveals is not beneficial.

We also need to negotiate the best pricing based on legitimate costs and fair profits, and begin to make decisions on tolerance thresholds for health care payments. Everyone would agree that we can’t use our collective funds to pay say $10 million for a treatment program that would extend the life of one person by three weeks, but with the very high prices that are being introduced, we will have to begin to struggle with cost-effectiveness determinations at levels that we find to be tolerable.

Once we are armed with the very best information, we should use that to obtain the highest quality care that’s feasible for each and every individual with health care needs. We should eliminate “financial toxicity” by providing first dollar coverage for not just cancer patients but for all patients who already have enough burdens heaped upon them without having to face onerous financial burdens as well.

Most of you are aware of the important role that Deb Richter has played in advancing health care reform in the state of Vermont, where every effort is being made to bring Vermont in compliance with the policies and goals of a single payer system. The road in that direction has been rough and challenging, but that has not stopped the dedicated advocates of reform from moving forward.

Deb Richter is a member of the nominating committee for the Green Mountain Care Board. She has asked me distribute the following notice. Many members of this list either are or know people who are highly qualified to serve on this board. Applicants do not have to be Vermonters.

This is a great opportunity for qualified, dedicated individuals to contribute to these groundbreaking efforts to advance health care justice.

GREEN MOUNTAIN CARE BOARD MEMBER

State of Vermont

The State of Vermont is seeking candidates for the independent, five-member, Green Mountain Care Board that was established by Vermont’s landmark health care health reform law. The Board consists of a full-time Chair and four members.

Vermont’s health care reform law (Act 48, 2011 Session) sets out a process to move the state through several stages of health care system change leading to a publicly financed, universal health benefits program, Green Mountain Care, by 2017. When completed, the program will provide affordable access to high quality health care for all Vermonters, separate from their employment.

Board members will be exempt state employees. The Chair, who will be responsible for leading the process, will be a full time employee and will be paid $122,866. Side members will be .8 FTE (32 hours) and will be paid $81,910. Required qualifications can be found in the job description below. The Governor will make appointments to the Green Mountain Care Board by October 1, 2011 from a list of qualified candidates submitted to him by the Nominating Committee.

How to Apply
To obtain a complete job description, application form and find complete details about the application process, please visit:
http://humanresources.vermont.gov/GMCB_Search

Completed applications must be received no later than 2:00 p.m. on July 11, 2011.

Green Mountain Care Board Member Search:
http://humanresources.vermont.gov/GMCB_Search

Green Mountain Care Board Member Job Description:
http://humanresources.vermont.gov/sites/dhr/files/pdf/GMCB%20Job%20Description.pdf

Application for Candidates for Green Mountain Care Board:
http://humanresources.vermont.gov/sites/dhr/files/pdf/APPLICATION%20FOR%20GMCB%20CANDIDATES.pdf

(Although this is not an official message from PNHP, it is being distributed nevertheless because the Vermont effort represents significant progress towards the goal of achieving health care justice for all – a goal we share with the Vermont organizers. PNHP will continue its mission of advocating for a single payer national health program, without compromise.)

Managed Competition for Medicare? Sobering Lessons from the Netherlands

By Kieke G.H. Okma, Ph.D., Theodore R. Marmor, Ph.D., and Jonathan Oberlander, Ph.D
The New England Journal of Medicine, June 15, 2011

Discussions about U.S. health care reform are often parochial, with scant attention paid to other countries’ experiences. It is thus surprising that in the ongoing debate over Medicare, some U.S. commentators have turned to the Netherlands as a model of regulated competition among private insurance companies. The Dutch experience is particularly relevant given the proposal by Congressman Paul Ryan (R-WI) to eliminate traditional Medicare and instead provide beneficiaries with vouchers to purchase private insurance.

It is easy to understand why Dutch health care — which does rely on regulated private insurance — would appeal to advocates of Medicare vouchers. Indeed, U.S. ideas about managed competition helped to shape health care reform in the Netherlands. But careful examination of the Dutch experience shows that insurance competition has not produced the expected benefits and in fact has created new problems, calling into question the merits of this reform model and its suitability for Medicare.

Before 2006, the Netherlands had a mixed health insurance system, with more than 60% of the population covered by mandatory social insurance, administered by nonprofit sick funds. The remaining population had private insurance, voluntarily purchased, and the uninsured rate was about 1.5%.

In 2006, the Netherlands replaced this arrangement with a mandated private insurance system similar to Switzerland’s. Under this reform, all legal residents of the Netherlands are required to purchase basic insurance from private insurers. Private plans are heavily regulated. They cannot turn down applicants, regardless of health status, and must charge community-rated premiums. A risk-equalization scheme varies payment to health plans according to their enrolled populations’ risk profiles. The aim is to reduce plans’ incentives to select profitable patients and ensure that plans with sicker, higher-cost populations are not financially penalized. Insurance plans are expected to compete on the basis of price and quality by selectively contracting with networks of hospitals, physicians, and other medical care providers.

Advocates of this system argued that competition among private insurers would reduce health care spending, enhance consumer choice, and improve the quality of care and the health system’s responsiveness to patients — arguments that are being repeated in the U.S. debate over Medicare. The reality of managed competition in the Netherlands, however, has not matched the rhetoric.

Four key points emerge from the Dutch experience. First, competition has not sharply slowed the rate of growth in health care spending. Health care expenditures continue to outpace general inflation, having increased at an average annual rate of 5% since 2006. At the same time, the total costs of health insurance for Dutch families, including premiums and deductibles, increased by 41%.

Reforms aimed at increasing and managing competition also produced high administrative costs and complexity. Administering premium subsidies for low-income people has proven expensive.

Second, some Dutch people remain uninsured, and there has been a substantial increase in the number of insured persons failing to pay their insurance premiums.

Third, the expansion of consumer choice has not worked as envisioned. Since 2007, only about 4% of the Dutch population, on average, has changed plans each year. Moreover, accelerating consolidation of the health insurance market has restricted meaningful choice of insurance plan. Currently, four insurance conglomerates control about 90% of the Dutch health insurance market. Recent polls suggest public dissatisfaction with private insurers, with 65% of insured people reporting that they have low or very low levels of trust in private plans.

Fourth, notwithstanding the rhetoric of competition, the Netherlands still relies heavily on regulation. Indeed, the Dutch case shows that competitive systems that seek to escape supposedly centralized, bureaucratic control of medical care paradoxically require sophisticated regulation and government intervention in order to work.

The comprehensiveness of health insurance in the Netherlands provides a critical contrast to the Ryan Medicare plan, which would erode the U.S. government’s contribution to the point that 65-year-old beneficiaries would pay about two thirds of medical costs themselves.

The myth that competition has been key to cost containment in the Netherlands has obscured a crucial reality. Health care systems in Europe, Canada, Japan, and beyond, all of which spend much less than the United States on medical services, rely on regulation of prices, coordinated payment, budgets, and in some cases limits on selected expensive medical technologies, to contain health care spending. Systemwide regulation of spending, rather than competition among insurers, is the key to controlling health care costs. The Netherlands, after all, spent much less on medical care than the United States with virtually universal insurance coverage long before it began experimenting with managed competition in 2006.

The Dutch experience provides a cautionary tale about the place of private insurance competition in health care reform. The Dutch reforms have fallen far short of expectations — a reminder that policy intentions should not be confused with outcomes and that managed competition is hardly a panacea. The idea that the Dutch reforms provide a successful model for U.S. Medicare to emulate is bizarre. The Dutch case in fact underscores the pitfalls of the casual use (and misuse) of international experience in U.S. health care reform debates.

http://healthpolicyandreform.nejm.org/?p=14712

The authors of this NEJM Perspective on lessons from the Netherlands – Kieke G.H. Okma, Ph.D., Theodore R. Marmor, Ph.D., and Jonathan Oberlander, Ph.D. – are highly credible authorities on comparative studies and the politics of health care reform. The facts they present are well documented, and the conclusion is so obvious that it is essentially a restatement of the facts: “Systemwide regulation of spending, rather than competition among insurers, is the key to controlling health care costs.”

To no surprise, some of the published responses in the NEJM have challenged the credibility of these noted authorities, and instead have chosen to reframe the discussion – presenting “free markets,” “competition” and “consumer choice” as if these were the facts. These critics dismiss the results in the Netherlands because their “managed competition” system failed to use free market principles.

Which is it? Do we adopt Netherlands-style managed competition because it allows private insurers to compete, even though that hasn’t been proven to be of benefit? Or do we reject all existing models and adopt a truly free market wherein patients pay for all health care with their own cash? Of course, that can’t work either because of the necessity of pooling funds, and as soon as you have introduced the insurance function, you have suppressed the “price-based signals” and distorted the market.

Of course, neither of these choices – framed in terms of “markets” – will work. What does work – framed in terms of thoroughly documented studies of functioning health systems – is “regulation of prices, coordinated payment, budgets, and in some cases limits on selected expensive medical technologies.” That requires a major role for government, as the Netherlands is rediscovering.

Although the authors present this as a lesson for Medicare, it is actually a lesson for our entire health care system. Perhaps they anticipate when Medicare will be improved and then expanded to cover everyone. Let’s hope so.

Auditing Access to Specialty Care for Children with Public Insurance

By Joanna Bisgaier, M.S.W., and Karin V. Rhodes, M.D.
The New England Journal of Medicine, June 15, 2011

Expansions of Medicaid and the Children’s Health Insurance Program (CHIP) are designed to extend access to high-quality medical care to all U.S. children. However, evidence suggests that the 37 million children covered by Medicaid–CHIP are less likely to receive specialty care than children covered by commercial insurance.

We designed an audit study in which research assistants posing as mothers made paired calls to the same clinic and attempted to schedule an appointment for a child needing specialty care. The calls were separated by 1 month and varied only by insurance status (private vs. Medicaid–CHIP insurance).

With the use of an experimental study design involving simulated requests for specialty care, we measured real-world scheduling behavior in an urban area with a high density of medical specialists. The results showed significant disparities in children’s access to needed outpatient specialty care, attributable to specialists’ reluctance to accept public health insurance. These results held across all audited specialties. (66% of the callers reporting Medicaid–CHIP coverage were denied an appointment for specialty care, as compared with 11% of the callers reporting Blue Cross Blue Shield insurance.) Moreover, even when children with Medicaid–CHIP were not denied appointments outright, the appointments were, on average, 22 days later than those obtained for privately insured children with identical health conditions (even though the clinical scenarios represented urgent situations).

Overall, we found considerable disparities in access to outpatient pediatric specialty care that were attributable to providers’ nonacceptance of public insurance.

http://healthpolicyandreform.nejm.org/?p=14707&query=TOC

A well functioning health care system removes barriers to the care that patients need. It is sad commentary that the United States has a program for the most needy that instead crates a barrier to care. As this study shows, merely being covered by Medicaid disqualifies many children from being able to access the specialized care that they need.

This doesn’t happen in other nations. If a person needs care, access is automatically provided without any thought given to the mechanism of payment.

In the United States, even though we have more than enough money already in the system to pay for all essential care, we have erected a wasteful, fragmented, dysfunctional financing system that creates barriers that must be negotiated before appropriate care can be obtained. It’s not the money; it’s the flawed financing system.

We need to cast aside these barriers and create an equitable financing system that is automatic – a single payer national health program. We have the money. Now all we need is the political will.

Assessing the Financial Health of Medicaid Managed Care Plans and the Quality of Patient Care They Provide

By Michael J. McCue, D.B.A., and Michael H. Bailit, M.M.
The Commonwealth Fund, June 15, 2011

In many states, Medicaid programs have contracted out the delivery of health care services to publicly traded health plans that are focused on managing the care of Medicaid members. Under the health reform law, states will be expanding the enrollment of their Medicaid programs and these publicly traded companies are expected to capitalize on this growing market. This study examined how publicly traded health plans differ from non–publicly traded ones in terms of administrative expenses, quality of care, and financial stability and found publicly traded plans that focused primarily on Medicaid enrollees paid out the lowest percentage of their Medicaid premium revenues in medical expenses and reported the highest percentage in administrative expenses across different types of health plans. The publicly traded plans also received lower scores for quality-of-care measures related to preventive care, treatment of chronic conditions, members’ access to care, and customer service.

Under health care reform, the Medicaid market is expected to increase by 16 million members by 2019. Given recent patterns in state contract awards to managed care plans, it is reasonable to anticipate that plans operated by publicly traded companies will enroll the majority of the expanded Medicaid population.

Overview:
http://www.commonwealthfund.org/Content/Publications/Issue-Briefs/2011/Jun/Financial-Health-Medicaid-Managed-Care.aspx?omnicid=20

Issue Brief (18 pages):
http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Jun/1511_McCue_assessing_financial_hlt_Medicaid_managed_care_plans_ib_FINAL.pdf

How many times does it have to be said? Publicly traded, investor owned, for-profit health plans pay out a lower percentage of revenues for medical care, waste more on administrative excesses, and provide lower quality care. This study confirms that this is true as well for publicly traded Medicaid managed care plans. Under the Affordable Care Act, this flawed Medicaid model will be expanded to include another 16 million individuals. Since it is our tax funds paying for these programs, we should all be communicating our outrage in the most obtrusive manner that is tenable. Wait. Forget tenable. Let’s start a rampage!