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.
Medicare Data Show Wide Differences In ACOs’ Patient Care
By Jordan Rau
Kaiser Health News, February 21, 2014
Networks of doctors and hospitals set up under the Affordable Care Act to improve patients’ health and save money for Medicare are having varying rates of success in addressing their patients’ diabetes and heart disease, according to government data released Friday.
About 4 million Medicare beneficiaries are being cared for by one of the more than 250 ACOs that Medicare has approved. Each ACO is responsible for taking care of a group of at least 5,000 Medicare beneficiaries; although patients can go to any doctor they choose. Medicare counts as part of an ACO the patients who mostly go to doctors and facilities within that coalition. Patients generally do not choose an ACO.
The release is the first public numbers from Medicare of how patient care is being affected by specific networks. These accountable care organizations, or ACOs, are among the most prominent of Medicare’s experiments in changing the ways physicians and health care facilities work together and are paid.
To make sure the ACOs are not stinting on care in their quests to earn bonuses, Medicare is tracking 33 different quality measures.
On Friday, the Centers for Medicare & Medicaid Services (CMS) released data on five of these measures for 141 ACOs during 2012. Four evaluate how well the ACOs helped patients with diabetes. The fifth examined how many patients with arteries packed with plaque received appropriate medicines to relax their blood vessels. Medicare said it did not release more measures because it did not think some of them could be easily understood by consumers or would be useful. Other measures, such as ones about cholesterol levels, were not released because the clinical standards have changed.
Single payer reform continues to be dismissed in favor of insurer-friendly reform – reform led by accountable care organizations (ACOs) initiated by the Affordable Care Act (ACA). This new report should make it clear that we are following the wrong path.
Of tens or hundreds of thousands of potential measurements to determine quality, only thirty-three were selected. Of those thirty-three, only five are being reported because the other twenty-seven were not useful, or could not be understood, or were measuring out-of-date standards.
It is an outrage that our government continues to take us down this expensive ACA pathway that wastes our resources while impairing access for far too many people with health care needs. They keep promising us that ACOs will improve efficiency and quality, when they have already proven otherwise. Five lousy measures! Is that all that we have to show for it!?
We need to dismiss our politicians and have them take with them their ACA with its ACOs so that we can bring in leaders who will establish for us a truly American program – an improved Medicare single payer program that covers everyone.
Five measurements, and four of them are for only one disease! Get outta here!
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.
Strong Enrollment Numbers Released by Covered California and Department of Health Care Services
Covered California, February 19, 2014
Covered California™ and the California Department of Health Care Services (DHCS) announced today that as of Jan. 31, 2014, more than 1.6 million Californians have signed up for either Covered California health insurance plans or for low-cost or no-cost Medi-Cal.
Nearly half of those covered — 728,410 Californians — selected a Covered California health insurance plan.
Most subsidy-eligible consumers who enrolled — 451,074, or about 62 percent — signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86 percent of consumers across all tiers received some sort of financial assistance.
Metal Level of Individuals Enrolled: Oct. 1 to Jan. 31:
Subsidy eligible (626,210):
0.4% – Minimum Coverage
21.1% – Bronze
67.3% – Silver
6.0% – Gold
5.1% – Platinum
5.5% – Minimum Coverage
33.8% – Bronze
28.7% – Silver
14.4% – Gold
17.7% – Platinum
40 Percent Of Enrollees Through eHealth Website Are Young Adults
By Julie Appleby
Kaiser Health News, February 21, 2014
During a call with Wall Street analysts Thursday, eHealth CEO Gary Lauer said 40 percent of the 169,000 consumers who used the site to obtain insurance from October through December were in the young adult category (18-34), “a highly sought-after demographic.”
Private exchange sees surge in health care enrollment
By Kelly Kennedy
USA TODAY, February 20, 2014
Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012.
Premium rates, (eHealth v.p. Brian) Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.
Of the 728,000 people already enrolled in Covered California – California’s insurance exchange established under the Affordable Care Act – over two-thirds of those who were eligible for subsidies purchased silver plans, whereas well less than one-third who were not eligible for subsidies also selected silver plans. Why might that be?
(First, a clarification on subsidies: The Covered California report includes both premium tax credits and cost-sharing subsidies under their definition of subsidies. However, the type of subsidy can influence whether or not an individual chooses a silver plan. Anyone with an income below 400 percent of the federal poverty level [FPL] can receive a premium tax credit if the plan is purchased through the exchange. Those with incomes below 250 percent of the FPL can also qualify for cost-sharing subsidies when they use their plans, but only if they purchase a silver plan through the exchange.)
(Clarifying metal tiers: The actuarial value of a plan is the percent that the plan pays for for health care services provided within the insurer-selected networks, leaving the rest to be paid by the patient, sometimes with subsidies. Bronze covers 60 percent, silver 70, gold 80 and platinum 90 percent. The standard for the exchanges is silver, whereas the standard for Congress is gold.)
It is likely that the conservatives are right in one regard with their consumer-driven health care in that people will shop prices when purchasing health plans. For the Covered California purchasers who were not eligible for any subsidies, more chose the lower priced bronze or minimal coverage plans (plans with very high deductibles) – 39 percent combined. Since the unsubsidized group included wealthier plan purchasers, it is no surprise that 32 percent chose the high end gold and platinum plans. Since only 29 percent of the unsubsidized purchasers selected the intermediate silver plans, it appears that these purchasers were more interested in either lower prices or better coverage, but not so much both. Consumer shopping seemed to play a role.
What about those who were eligible for subsidies – those below 400 percent of FPL? It is likely that the majority were eligible for both premium and cost-sharing subsidies, but would have to purchase silver plans to receive both. Since the spreads between the premiums for the silver and bronze plans were not that great after the premium credits were applied, most shoppers likely decided that the additional cost-sharing subsidies were well worth the small differences in the premiums. So 67 percent of this group were smart shoppers and bought the silver plans. Only 21 percent bought the bronze or minimum coverage plans, and likely many of those were above 250 percent FPL that disqualifies them from receiving cost-sharing subsidies. Only 11 percent sprung for the gold or platinum plans – not surprising that it was this low since members of this group all fall under 400 percent FPL.
Now let’s look at purchases of health plans through private exchanges that are not eligible for any subsidies, using eHealth as our example. We do not have a breakdown of the precise numbers that chose the various tiers, but the price shopping impact had to be very great. eHealth reports that their average premiums dropped 25 percent because so many individuals chose the cheap bronze-level plans. The percentage has to be huge. With no subsidies to consider, these shoppers chose price.
What can we make of all of this? Everyone should have essential health care coverage automatically. Instead we have inserted shopping decisions that are not a problem for the wealthy because they can buy the best, but they are a problem for the majority who will buy lower actuarial value plans because their personal finances are limited. Our policymakers have selected a plan with the relatively low actuarial value of only 70 percent (silver plan) to serve as the benchmark, especially for those with incomes below 250 FPL. They reduce the impact with subsidies, but this does not correct what is a fundamentally flawed policy in health care financing.
Wait until those shoppers who chose bronze plans start accessing health care. When they’re left broke, maybe they will finally understand our message – that we all can have essential health care, and we can pay for it easily through equitable taxes. Nobody has to shop plans, everyone gets care, and nobody goes broke.
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.
Employers Turn to Private Health Exchanges to Cut Costs
By Caroline Chen
Bloomberg, February 19, 2014
One-third of U.S. employers plan to move their workers’ health-care coverage to a private exchange in the next few years, a survey found, following the lead of companies like Walgreen Co. seeking to reduce costs.
While 95 percent of employers said they would continue to offer health care in the next three to five years, 33 percent may use a private exchange to provide the benefit up from 5 percent currently, according to a survey released today by a unit of Aon Plc.
Traditionally, most large employers are self-insured, meaning they take on the financial risk of their employees’ health costs. Under a private exchange, workers are given a subsidy to pick from a limited number of health plans and the insurer takes on the risk.
“Employers are telling us they are losing confidence in their traditional approaches, like vendor changes or employee cost-sharing,” which only deliver “incremental” improvement, Jim Winkler, Aon’s chief innovation officer for health benefits, said in a telephone interview. “Employers are saying, ‘I need to do something different.’”
About 38 percent of the companies surveyed by Aon said they would offer no benefits to part-time workers within the next three to five years.
Retiree benefits are also being reworked. International Business Machines Corp. (IBM) said last year that it would send 110,000 retirees to Towers Watson’s Extend Health, the largest private Medicare exchange.
The Aon survey found that two-thirds of employers who wanted to make changes in retiree benefits were looking to follow IBM’s lead.
Only 25 percent of large employers offer subsidized retiree health benefits, Aon said, down from about 50 percent in 2004.
Aon Hewitt Research: Employers Will Continue Sponsoring Health Benefits for Employees and Retirees, but Deliver Those Benefits in New Ways
Aon, February 19, 2014
According to Aon Hewitt’s soon-to-be-released Health Care Survey of more than 1,230 employers covering more than 10 million employees, 95 percent of employers say they plan to continue providing health care benefits to active employees in the next three-to-five years. However, a growing number plan to move away from their traditional “managed trend” approach, which includes aggressively managing costs through vendor management and employee cost sharing.
Thirty-three percent said offering group-based health benefits to active employees through a private health exchange will be their preferred approach in the next three-to-five years.
Despite having the ability to direct part-time employees to purchase health coverage through the public marketplaces, Aon Hewitt’s survey shows very few employers plan to do so in the near future. Almost two-thirds plan to continue to offer the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38 percent plan to offer no benefits to part-time workers in the next three-to-five years.
According to Aon Hewitt’s annual Retiree Health Care survey of 424 employers covering 3.8 million retirees, 20 percent said they are favoring moving all or a portion of their pre-65 retiree population to the individual market/state exchanges to purchase coverage in the next three-to-five years. Today, just 3 percent of employers do so.
According to Aon Hewitt, the number of employers offering subsidized retiree health benefits has slowly declined over the past decade, with just 25 percent of large employers doing so today, compared with approximately 50 percent in 2004.
Of those companies that offer health benefits to post-65 retirees, a growing number of organizations now provide or are seriously considering providing health benefits coverage through the individual Medicare plan market. Aon Hewitt’s annual Retiree Health Care Survey found that 30 percent of companies have already sourced benefits through the individual market―most through a multi-carrier private health exchange. Of those companies contemplating future changes to their post-65 retiree strategies, two-thirds are considering this approach.
“A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries because they see the value in both the competitive mix of plans offered and the Medicare-specific navigation and advocacy offered by these private exchanges,” said John Grosso, leader of Aon Hewitt’s Retiree Health Care Task Force.
OneExcahnge (previously Extend Health)
OneExchange has helped more than 300,000 retirees find the perfect Medicare plan for their needs and budget. We are the trusted leader in private Medicare exchanges.
Private exchange sees surge in health care enrollment
By Kelly Kennedy
USA TODAY, February 20, 2014
The number of customers on the nation’s largest private health insurance exchange increased by 50% in the final three months of 2013, a direct result of demand created by the Affordable Care Act, the company’s CEO said Thursday.
Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012, from 113,600 applications in the last three months of 2012 to 169,800 in 2013.
The site operates much like the federal and state exchanges, and now that people have a better understanding of what “exchange” means, they’re drawn to the private sites, as well. In fact, many employers offer private exchange coverage, so employees may pick a plan, and many insurers are creating their own private “exchange” sites, so they can offer more products to consumers.
Those shopping on private exchanges might include business owners who make more than 400% of the federal poverty level, but who couldn’t get insurance before; retirees who are not eligible for Medicare; or people who simply disagree with the Affordable Care Act and choose to find insurance outside the federal and state exchanges — even if those plans are also through private insurers.
Premium rates, Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.
The activity around the implementation of the Affordable Care Act and the initiation of federal and state insurance exchanges has seemed to stimulate much interest in private insurance exchanges, in all of their various forms. While some may praise the private sector for coming to the fore, we should take a closer look at what this means for patients.
Perhaps the greatest concern is the fact that this Aon survey shows that about 33 percent of employers will be eliminating their own health benefit programs within the next three to five years and start sending their employees to private exchanges to shop for their plans. This gives their employees greater choices in health care coverage, so why should we be concerned?
By providing their employees with what amounts to a voucher, employers are able to control their future health benefit costs by limiting the rate at which the value of the voucher increases. As health care costs continue to increase at rates greater than inflation, the employees will have to bear the additional costs, either through higher premiums or through further cost sharing and limitations in benefits offered by the plans.
This extends the national trend of converting employee benefit programs from defined benefit to defined contribution programs in which both risk and higher costs are shifted from employers to employees. The nation’s workforce is being left behind while the productivity gains are now all going to the top.
eHealth is the largest private insurance exchange, and many are now turning to it to purchase their plans now required by the individual mandate, but there is an important difference between the public and private exchanges. Most people purchasing plans in the federal and state exchanges are purchasing silver plans to qualify for the cost-sharing government subsidies – subsidies which are not provided for bronze plans. But what are people purchasing in the private exchanges?
Silver plans have an actuarial value of 70 percent, leaving 30 percent of costs to be paid by the patient (though adjusted down for credits and out-of-pocket caps, but up for out-of-network care). Bronze plans have an actuarial value of only 60 percent, but these are the plans selected by those shopping the eHealth market simply because they are the cheapest (i.e., they have the lowest premiums). So the concern about the surge in eHealth sales is that far too many individuals will be underinsured – having a plan that will leave them with excessive medical debt should they need significant amounts of health care.
Another form of private exchanges is represented by Towers Watson’s OneExchange – the largest private Medicare exchange – which has found a great market created by employers’ termination of employee retirement health benefit programs. Employers can now send their over-65 retirees to OneExchange where they can select from a variety of Medigap, Medicare Advantage and Part D Medicare drug plans. If you go to their website (link above) you will find that most Medigap plans charge a significant premium whereas most of the Medicare Advantage plans have no premium at all. Just as eHaelth shoppers buy the cheapest plans, no doubt the Medicare shoppers on the private Medicare exchanges will buy the cheapest plans as well – forgoing traditional Medicare and buying the private Medicare Advantage plans instead. Privatization of Medicare marches on.
So these various private exchanges are shifting us to defined contributions, to lower actuarial value plans with greater exposure to health costs, to privatization of Medicare, and to compounding the great divide between the few super-wealthy and the rest of us. This is what we want out of the private market!?
When you think about it, all of this is because we continue to insist that we have a health care financing system in which each individual is shoved into a slot with a given insurance program – a system that has proven to be so expensive and complex that the sources of the funds to pay for health care are looking for ways out. They are taking what deceptively appear to be the cheapest exits when, in reality, total costs just keep going up.
How about getting rid of the concept of a separate plan for each individual. It would be less wasteful, far less complex, and would provide us with much greater value if we had just one comprehensive plan for everyone – an improved Medicare for all. And it would actually work.
Value-based insurance design program in North Carolina increased medication adherence but was not cost neutral
By Matthew L. Maciejewski et al.
Health Affairs, February 2014
Value-based insurance design (VBID) … is based on the premise that higher medication and administrative expenses incurred by insurers will be offset by lower nonmedication expenditures that result from better disease control. This article examines Blue Cross Blue Shield of North Carolina’s VBID program, which began in 2008. The program eliminated copayments for generic medications and reduced copays for brand-name medications. Patient adherence improved 2.7–3.4 percent during the two-year study period. Hospital admissions decreased modestly, but there were no significant changes in emergency department use or total health expenditures. The insurer incurred $6.4 million in higher medication expenditures; total nonmedication expenditures for the study population decreased $5.7 million. Our results provide limited support for the idea that VBID can be cost-neutral in specific subpopulations…..
[S]tatistically insignificant short-term changes in expenditures fall short of demonstrating that VBID can bend the cost curve as anticipated by its proponents.
In the space of a decade and a half, the concept of “value-based insurance design” has undergone a rapid transformation: from an idea few had heard of; to the latest health policy fad; to the subject of some very good research that refuted claims that VBID will cut costs. It is not unusual for unproven health policy notions to leap onto center stage. It is unusual, however, to see them subjected to unbiased, rigorous analysis so soon after they have been loosed on the public. For cultural anthropologists who like to study the mores of the US health policy community, the VBID fad provides an interesting case study because its treatment has to date proven to be the exception to the rule.
At the turn of this century, the label “value-based insurance design” had not been invented, and discussion of the underlying concept was limited to a few professional journals. Judging from several of the early papers on the concepthttp://www.ncbi.nlm.nih.gov/pubmed/11570020, its advocates were motivated by a desire to counteract the destructive effects of yet another health policy fad – the “consumer-driven” health policy.
In 2004, thanks largely to an article in the Wall Street Journal, the VBID idea burst out of obscurity and quickly became another hyped nostrum in the managed care pharmacopeia. The article described a successful experiment by Pitney Bowes, a self-insured Fortune 500 company, designed to reduce its total health care spending on employees with asthma and diabetes by reducing copayments on asthma and diabetes drugs. http://www.sph.umich.edu/vbidcenter/news/pdfs/2004_WSJ%20article%20%20(2).pdf
By 2005 the VBID label had been invented and a VBID “center” had been created at the University of Michigan. By 2006 the VBID label was appearing regularly in the professional literature. For the next several years the lay and professional literature published claims that VBID was not just good for patients but would also lower spendinghttp://content.healthaffairs.org/content/26/2/w204.full By 2009 congressional Democrats had incorporated VBID into legislation that would become the ACA and, when the ACA was enacted in March 2010, VBID was engraved into US law. (The phrase appears in the third full paragraph of the ACA under a paragraph entitled, “Coverage of preventive services.” http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf It reads: “The Secretary [of Health and Human Services] may develop guidelines to permit a group health plan and a health insurance issuer … to utilize value-based insurance designs.”)
But at about the time the ACA was enacted, research was beginning to demonstrate that VBID, at least as it applied to drugs, did not save money. A paper co-authored by, among others, people affiliated with Pitney Bowes concluded that Pitney Bowes’ VBID program did not cut costs http://content.healthaffairs.org/content/29/11/1995.full?ijkey=V1BuR15ZD…. A literature review published in Health Affairs in 2013 concluded VBID programs “were consistently associated with improved adherence (average change of 3.0 percent over one year),” but they did not lead to “significant changes in overall medical spending for patients and insurers.” http://www.ncbi.nlm.nih.gov/pubmed/23836741 The study by Maciejewski et al. quoted above, which examined the first VBID program run by an insurance company (as opposed to a self-insured company), reached the same conclusion. The insurance company, Blue Cross Blue Shield of North Carolina, lowered copayments for medications prescribed for hypertension, hyperlipidemia, diabetes, and congestive heart failure. Adherence rates rose 3 percent over the first two years (2008-2009), but total spending did not fall.
It is instructive to ask at this point what it is about the VBID proposal that distinguishes it from other long-lived managed care fads such as the HMO, “coordination,” utilization review, report cards, and electronic medical records, all of which were and still are promoted as cost-containment ideas. A closer look at the VBID’s evolution suggests three features account for VBID’s different treatment:
• It was clearly defined;
• its costs, including the indirect costs, were much easier to measure; and
• the great majority of all costs were paid by the same payer (a self-insured employer and, more recently, an insurance company).
By contrast, many managed care fads are poorly defined, their indirect costs (for example, the administrative costs that utilization review imposes on providers) are harder to track, and the costs (as opposed to the savings) are absorbed by multiple parties.
A few payers have recently begun to experiment with applying the VBID concept beyond prescription drugs and using the “stick” approach (higher copayments for “lower valued” services) rather than the “carrot” approach (lower copayments for “higher valued” services). If that practice becomes widespread, the VBID concept may become more amorphous and its costs more difficult to track. In that event, we may see a resurgence in evidence-free claims about the potential for VBID to cut costs. If that happens, researchers should insist that analyses of VBID must continue to include an examination of all costs generated by VBID, including patient out-of-pocket expenses and higher medical costs caused by any damage to patient health.
Regulatory Redistribution in the Market for Health Insurance
By Jeffrey Clemens
National Bureau of Economic Research, Working Paper 19904, February 2014
In the early 1990s, several U.S. states enacted community rating regulations to equalize the health insurance premiums paid by the healthy and the sick. Consistent with severe adverse selection pressures, their private coverage rates fell by around 8 percentage points more than rates in comparable markets over subsequent years. By the early 2000s, following substantial public insurance expansions, coverage rates in several of these states had improved significantly. As theory predicts, recoveries were largest where public coverage expanded disproportionately for high cost populations. The analysis highlights that the incidence of public insurance and community rating regulations are tightly intertwined.
This paper studies the relationship between two instruments of health-based redistribution: tax-financed public insurance and premium regulations that generate within-market transfers. The economic incidence of these policies is tightly intertwined. Community rating regulations risk substantial adverse selection when large numbers of unhealthy individuals remain on the private market. When targeted at the unhealthy, Medicaid expansions can relieve this adverse selection. Public coverage of the unhealthy can thus reduce the size of the subsidies and/or tax penalties required to stabilize community-rated insurance markets. It can similarly be viewed as a complement to risk adjustment programs.
The 2010 Patient Protection and Affordable Care Act (PPACA) contains regulatory measures including community rating rules, guaranteed issue requirements, and an individual mandate to purchase insurance. Three of PPACA’s features are designed to go farther than previous regulations to induce pooling of the healthy and sick. First, it taxes healthy individuals who forego insurance. Second, it limits adjustment along the intensive margin of insurance generosity. Specifically, it expands minimum coverage requirements and tightens limits on out-of-pocket spending. Third, its guaranteed issue requirements are more stringent than those typically in place across the states.
PPACA’s regulations may result in significant pressure to shift the cost of unhealthy individuals out of the insurance exchanges. The law would generously finance such efforts, as the federal government will reimburse more than 90 percent of the cost of its associated Medicaid expansions. Both the implementation of these expansions and their impact on states’ insurance markets remain uncertain. These issues will be ripe for study as PPACA’s implementation unfolds.
A major problem with financing health care through private insurers is that they will always do whatever they can to avoid insuring people who might need more health care. To prevent insurers from chasing less healthy patients away by charging them much higher premiums, community rating was established in several states. Each person would be charged the same premium regardless of health status. How has that worked out?
In fact, it did not work very well. As high-cost patients enrolled in private plans in greater numbers, premiums went up, and healthier patients dropped out because of the high premiums, which drove premiums even higher because of the concentration of sicker patients (the death spiral of insurance premiums). The net number of people enrolled in the private insurers’ risk pools quite understandably declined.
In some of these states, Medicaid programs were designed to target these high-cost patients, siphoning them off from the private insurers’ risk pools. To no surprise, with the taxpayers picking up the costs of these expensive patients, the private insurers retained the healthier enrollees, and the plans’ membership rates recovered.
This NBER paper notes that the Affordable Care Act contains regulations that “may result in significant pressure to shift the cost of unhealthy individuals out of the insurance exchanges. The law would generously finance such efforts, as the federal government will reimburse more than 90 percent of the cost of its associated Medicaid expansions.”
Why should we support a system that uses a very expensive, administratively complex form of financing health care – private insurers – to cover those with fewer health care needs, while transferring the higher costs of less healthy patients to us, the taxpayers? The issue here is not that taxpayers shouldn’t be financing our health care, but rather that we are retaining a private industry that wastes resources on insuring a less costly, heather population with fewer needs, when a public system would do that more efficiently and at lower cost – simply by placing everyone in the same risk pool.
Community rating is one of those policies in a large complex of inefficient health policies that are designed specifically to keep private insurers in business. Under a single payer system, we wouldn’t need community rating since we wouldn’t break up the financing into individually assigned insurance premiums. With single payer, instead of using individual premiums each of us would be taxed equitably based on ability to pay.
We are overburdened with the costs and workload of endless health policies that are designed to make the highly flawed model of private insurers sort of work for us, though certainly not very well and at an outrageous cost. Let’s dump those flawed policies and enact more efficient and equitable policies that are designed first and foremost to take care of patients. A single payer national health program would do just that.
Apprehensive, Many Doctors Shift to Jobs With Salaries
By Elisabeth Rosenthal
The New York Times, February 13, 2014
American physicians, worried about changes in the health care market, are streaming into salaried jobs with hospitals.
Last year, 64 percent of job offers filled through Merritt Hawkins, one of the nation’s leading physician placement firms, involved hospital employment, compared with only 11 percent in 2004.
Today, about 60 percent of family doctors and pediatricians, 50 percent of surgeons and 25 percent of surgical subspecialists — such as ophthalmologists and ear, nose and throat surgeons — are employees rather than independent, according to the American Medical Association.
Many of the new salaried arrangements have evolved from hospitals looking for new revenues.
Health economists are nearly unanimous that the United States should move away from fee-for-service payments to doctors, the traditional system where private physicians are paid for each procedure and test, because it drives up the nation’s $2.7 trillion health care bill by rewarding overuse. But experts caution that the change from private practice to salaried jobs may not yield better or cheaper care for patients.
“In many places, the trend will almost certainly lead to more expensive care in the short run,” said Robert Mechanic, an economist who studies health care at Brandeis University’s Heller School for Social Policy and Management.
Dr. Joel Jacowitz, a cardiologist in New Jersey, and his 20 or so partners decided to sell their private practice to a hospital.
Dr. Jacowitz said that the economics drove the choice and that the only other option would have been to bring in more revenue by practicing bad medicine — ordering more heart tests on patients who did not need them or charging exorbitant rates to people with private insurance.
“Some people are operators and give the rest of us a bad name,” he said, adding that he had changed his opinion about America’s fee-for-service health care system. “I’m fed up — I want a single-payer system.”
Follow the money. Hospitals consolidate to increase market power, moving more patients into higher priced hospital outpatient services. Doctors have joined hospitals because “economics drove the choice.” Current national policies encourage physicians and hospitals to organize in order to provide “accountability,” but this oligopolistic power grab results in “accountability” that only their chief financial officers would admire, certainly not the people who pay the medical bills.
Under a well designed single payer system, excess spending would diminish by improving pricing and by reducing incentives to use worthless or harmful health care services. Many physicians have grown weary of having to attend to the business side of their practices when what they really want is simply to take care of their patients.
More and more physicians will be echoing the words of Dr. Jacowitz, “I’m fed up — I want a single-payer system.” When the patients start repeating those words, the politicians will have to follow.
Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006–2013
By Paul Fronstin, Ph.D.
Employee Benefit Research Institute, January 2014
Employers first started offering account-based health plans in 2001, when a handful of employers began to offer health reimbursement arrangements (HRAs), employer-funded health plans that reimburse workers for qualified medical expenses. In 2004, employers were able to start offering health plans with health savings accounts (HSAs), tax-exempt trusts or custodial accounts that individuals can use to pay for health care expenses. The theory behind these accounts is that giving individuals more control over funds allocated for health care services will cause them to spend the money more responsibly, especially once they become more educated about the actual price of health services.
Number of HSA accounts
2013: 7.2 million
2012: 6.6 million
Total assets in HSAs
2013: $16.6 billion
2012: $11.3 billion
Average HSA balance
Average rollover (HSA and HRA)
(10% had no rollover in 2013)
HSAs (health savings accounts) have been with us for a decade, preceded by Archer MSAs. They supposedly reduce health care spending by incentivizing the account owners to spend their health care dollars more responsibly. Let’s do a couple of calculations to see how much impact they really have.
National Health Expenditures (NHE)
2013: $2,915 billion
2012: $2,807 billion
(from CMS – Office of the Actuary)
HSA assets in 2013 as % of NHE: 0.57%
HSA assets rolled over in 2013: $7.16 billion
HSA assets spent in 2012: $4.14 billion
HSA assets spent in 2012 as % of NHE: 0.15%
(Calculations are approximate since they are based on extrapolations from incomplete data.)
Clearly only a small fraction of one percent of our national health expenditures comes from health savings accounts. Since most people with HSAs will go ahead and get the care that they need, their diligent shopping can only have had an impact on maybe ten percent of the HSA spending, meaning that HSAs may have reduced spending by only about one one-hundredth of one percent of our NHE. For those who say that shopping would reduce HSA spending by 30 percent (a dubious contention since so much care is not price shopped) then that would still be only about three one-hundretdths of one percent of our NHE. So why should we even care if those people want to play that game?
The important issue is not the health savings account. That money could have come from any other savings the person had. HSAs merely grant tax expenditures (our tax money) to the owners of HSA accounts that regressively favor the wealthy – lousy, inequitable tax policy, but it doesn’t have a very big impact on the three trillion dollars we spend on health care.
What really is important is the high-deductible insurance plan that is coupled with the HSA. That is what makes the patient a “diligent” shopper, except that it really doesn’t since most of our health expenditures are not amenable to shopping. What it does do is cause the patient to decline some care even though it is usually quite appropriate. Statistics showing that the patient doesn’t die or have other serious adverse outcomes by declining care that is unaffordable miss the point. Most studies are not powered to detect rare outcomes (e.g., deaths), and they do not bother measuring more subtle but important benefits of receiving care, even if it is as simple as being reassured that the presenting symptoms do not represent a serious problem.
The tragedy is that this concept of consumer driven health care – making patients informed shoppers by requiring that they pay maybe a couple thousand dollars before their insurance kicks in – doesn’t impact only those HSA account holders who want to be price shoppers, but it has extended to impact an ever larger percentage of us. Exchange plans were deliberately designed with low actuarial values which require high deductibles that shift spending from the insurers to patients. Employers are now greatly expanding their use of high-deductible plans, which, of course, shifts more responsibility for up-front health care spending to their employees.
The subsidies for the silver plans in the exchanges help a little bit, but they are not enough. Middle-income families are particularly hard hit by cost sharing. That is really tough in this age of growing income inequality that has left working families so far behind.
Instead of continuing with these HSA games that benefit the rich, indirectly hurt lower- and middle-income families, and fail to deliver on their promise of controlling our national health expenditures, we should adopt a program that benefits everyone and does contain costs – a single payer national health program. HSAs should not even be a part of the conversation. Besides, they should be done away with because their primary function is to provide an unfair tax-preference for the rich.
For Many, Few Health-Plan Choices, High Premiums on Online Exchanges
By Timothy W. Martin and Christopher Weaver
The Wall Street Journal, February 12, 2014
Hundreds of thousands of Americans in poorer counties have few choices of health insurers and face high premiums through the online exchanges created by the health-care law, according to an analysis by The Wall Street Journal of offerings in 36 states.
Consumers in 515 counties, spread across 15 states, have only one insurer selling coverage through the online marketplaces, the Journal found. In more than 80% of those counties, the sole insurer is a local Blue Cross & Blue Shield plan. Residents of wealthier, more populated counties in the U.S. receive lower-priced choices than those living in counties with a single insurer.
The price differences reflect the strategy of insurers to pick markets where they believe they can turn a profit—and avoid areas of high unemployment and a concentration of unhealthy residents they deem more risky.
Aetna Inc. and UnitedHealth Group Inc., for instance, have limited their participation in the new health-insurance marketplaces, where consumers shop for coverage, to a much smaller map than their traditional business. They offer coverage in more counties outside of the marketplaces, where plans are sold directly to consumers and federal subsidies aren’t available.
Aetna targeted areas with stable levels of employment and income to attract desirable customers to its marketplace offerings, Chief Executive Mark Bertolini said last fall. “We were very careful to pick the markets” where the insurer could succeed, he said.
Reversing the trend presents a challenge because low-population areas are unlikely to draw more insurers, said Glenn Melnick, a health-care economist at RAND Corp: “I don’t think the health law can overcome those economics.”
We’ve always know that insurers market their plans in areas where there is the greatest potential for business success. As USC Health Finance Professor Glen Melnick explains, the Affordable Care Act cannot overcome those economics.
Clearly we have the wrong model for reform. Private insurers respond to business opportunities. Public insurance, such as a single payer national health program, simply enrolls everyone; there are no market decisions to be made.
So is it going to continue to be about private insurance markets, or will it be about patients – all patients? An improved Medicare for all would be about the latter.
Physician outcry on EHR functionality, cost will shake the health information technology sector
By Daniel R. Verdon
Medical Economics, February 10, 2014
Despite the government’s bribe of nearly $27 billion to digitize patient records, nearly 70% of physicians say electronic health record (EHR) systems have not been worth it. It’s a sobering statistic backed by newly released data from marketing and research firm MPI Group and Medical Economics that suggest nearly two-thirds of doctors would not purchase their current EHR system again because of poor functionality and high costs.
* Nearly 45% of physicians from the national survey report spending more than $100,000 on an EHR.
* Nearly 79% of respondents in practices with more than 10 physicians said their EHR investment was not worth the effort, resources and cost.
* 73% of the largest practices would not purchase their current EHR system. The data show that 66% of internal medicine specialists would not purchase their current system. About 60% of respondents in family medicine would also make another EHR choice.
* 67% of physicians dislike the functionality of their EHR systems.
* 45% of respondents say patient care is worse since implementing an EHR.
* 65% of respondents say their EHR systems result in financial losses for the practice.
* About 69% of respondents said that coordination of care with hospitals has not improved.
The national survey underscores the major disconnect between the current state of EHR software and the needs of physicians.
Congress keeps coming up with schemes to try to control health care costs. Establishing financial incentives for electronic health records (EHRs) appears to be just one more example where Congress has again fallen short, based on this report of physician outcry over EHR functionality and costs.
It’s too bad. Members of Congress have before them a model that has been proven to be effective in controlling costs – a single payer national health program or “Improved Medicare for All.” If we had such a system in place then other improvements such as a health information technology system (HIT) could be developed in a coordinated manner that would better serve patients and their physicians.
The Office of the National Coordinator for Health Information Technology was established under President George W. Bush, but existed primarily to only encourage the private sector to work together to coordinate their systems. That is asking a lot of competitors that each want to have the dominant system in the market while making sure that competitors’ systems would not be compatible, so they could have the whole thing. The profit incentives in the private, fragmented EHR marketplace are considerably different from the patient care incentives that led to the successful VistA EHRs for the VA Health system – a concept developed by the National Center for Health Services Research and Development of the U.S. Public Health Service (now AHRQ).
Some may cite the boondoggle with the startup of the ACA insurance exchanges as an example of the incompetence of the government in such matters, but it was the government’s reliance on the private sector that resulted in the problems that we saw and are still seeing. Congress should enact a single payer system now so that we’ll have something to work with for the betterment of efficient patient care.
The political origins of health inequity: prospects for change
By Ole Petter Ottersen and 23 other co-authors
The Lancet—University of Oslo Commission on Global Governance for Health, The Lancet, February 11, 2014
Despite large gains in health over the past few decades, the distribution of health risks worldwide remains extremely and unacceptably uneven. Although the health sector has a crucial role in addressing health inequalities, its efforts often come into conflict with powerful global actors in pursuit of other interests such as protection of national security, safeguarding of sovereignty, or economic goals. This report examines power disparities and dynamics across a range of policy areas that affect health and that require improved global governance: economic crises and austerity measures, knowledge and intellectual property, foreign investment treaties, food security, transnational corporate activity, irregular migration, and violent conflict.
Global health inequities
* About 842 million people worldwide are chronically hungry, one in six children in developing countries is underweight, and more than a third of deaths among children younger than 5 years are attributable to malnutrition. Unequal access to sufficient, safe, and nutritious food persists even though global food production is enough to cover 120% of global dietary needs.
* 1·5 billion people face threats to their physical integrity, their health being undermined not only by direct bodily harm, but also by extreme psychological stress due to fear, loss, and disintegration of the social fabric in areas of chronic insecurity, occupation, and war.
* Life expectancy differs by 21 years between the highest-ranking and lowest-ranking countries on the human development index. Even in 18 of the 26 countries with the largest reductions in child deaths during the past decade, the difference in mortality is increasing between the least and most deprived quintiles of children.
* More than 80% of the world’s population are not covered by adequate social protection arrangements. At the same time, the number of unemployed workers is soaring. In 2012, global unemployment rose to 197·3 million, 28·4 million higher than in in 2007. Of those who work, 27% (854 million people) attempt to survive on less than US$2 per day. More than 60% of workers in southeast Asia and sub-Saharan Africa earn less than $2 per day.
* Many of the 300 million Indigenous people face discrimination, which hinders them from meeting their daily needs and voicing their claims. Girls and women face barriers to access education and secure employment compared with boys and men, and women worldwide still face inequalities with respect to reproductive and sexual health rights. These barriers diminish their control over their own life circumstances.
The overarching message of the Commission on Global Governance for Health is that grave health inequity is morally unacceptable, and ensuring that transnational activity does not hinder people from attaining their full health potential is a global political responsibility. The deep causes of health inequity are not of a technical character, devoid of conflicting interests and power asymmetries, but tied to fairness and justice rather than biological variance. Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments. We urge policy makers across all sectors, as well as international organisations and civil society, to recognise how global political determinants affect health inequities, and to launch a global public debate about how they can be addressed. Health is a precondition, outcome, and indicator of a sustainable society, and should be adopted as a universal value and a shared social and political objective for all.
The political origins of health inequity: prospects for change (38 pages):http://download.thelancet.com/pdfs/journals/lancet/PIIS0140673613624071.pdf
In reviewing the enormity of the global health inequities and the problems that perpetuate them, our compromised status in the United States seems to be minuscule in comparison. Yet when you think of the difficulties that we do have with addressing our own health inequities, it is mind-boggling to contemplate the international scene.
In a related Lancet article, Professor Ole Petter Ottersen is noted to be at pains to point out that this is far from “a doom and gloom report.” Yet they conclude, “Health equity should be a cross-sectoral political concern, since the health sector cannot address these challenges alone. A particular responsibility rests with national governments.”
Judging from the difficulties that we have had with merely tweaking some of our injustices without addressing effectively the major problems, it is difficult to see how nations will be able to work together in making real progress in improving the health of all – but we have to try.
As this is being written, Prof. Ottersen, in closing remarks in a live webcast from the University of Oslo at which this report was presented, reemphasized that that the improvement in global health will require the involvement of national political systems. And we thought single payer was tough.
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