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.
Department of Health and Human Services, June 19, 2014
This proposed rule would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015.
In paragraph (j)(1), we propose that if an enrollee remains eligible for enrollment in a QHP through the Exchange upon annual redetermination, and the product under which the QHP in which he or she was enrolled remains available for renewal, consistent with 45 CFR §147.106, such enrollee will have his or her enrollment in a QHP under the product renewed unless he or she terminates coverage, including termination of coverage in connection with voluntarily selecting a different QHP, in accordance with §155.430. In this situation, we propose that the QHP in which the enrollee will be renewed will be selected according to the following order of priority: first, in the same plan as the enrollee’s current QHP, unless the current QHP is not available; second, if the enrollee’s current QHP is not available, the enrollee’s coverage will be renewed in a plan at the same metal level as the enrollee’s current QHP; third, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan at the same metal level as the enrollee’s current QHP, the enrollee’s coverage will be renewed in a plan that is one metal level higher or lower than the enrollee’s current QHP; and fourth, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan that is at the same metal level as, or one metal level higher or lower than the enrollee’s current QHP, the enrollee’s coverage will be renewed in any other plan offered under the product in which the enrollee’s current QHP is offered in which the enrollee is eligible to enroll.
Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases in 2015 Unless They Switch Plans
By Elizabeth Carpenter
Avalere, June 26, 2014
Under the Affordable Care Act, federal premium assistance is tied to the second lowest cost silver plan (“benchmark plan”) in a given region. Subsidized exchange enrollees who select a more expensive plan must pay the difference—dollar for dollar—between the benchmark plan premium and their selection. In six of nine states analyzed by Avalere, the 2014 benchmark silver plan will lose benchmark status in 2015. Further, in seven of the nine states, the lowest cost silver plan will also change in 2015.
“Most enrollees in 2014 chose a plan based on the monthly premium. However, the lowest cost plans in 2014 may no longer be low cost in 2015,” said Elizabeth Carpenter, director at Avalere Health. “Before consumers renew their 2014 plan, they should consider the tradeoff between continuity of care and lower monthly premiums.”
“Two-thirds of people enrolling in silver plans are choosing one of the two lowest cost silver options,” said Caroline Pearson, vice president at Avalere. “The competitive landscape for plans is changing in 2015. However, the premium subsidies are tied to the benchmark plan and a percentage of income. Consumers have to pay the difference if they enroll in a plan more expensive than the benchmark. Those receiving federal premium subsidies may need to switch plans in 2015 to avoid paying more than the limits established by the ACA, and the impact will be more profound for lower-income consumers.”
Acknowledging the complexity of the administration of the exchanges under the Affordable Care Act, HHS has decided to simplify the process by making renewal of plan enrollment automatic unless the enrollee decides on a different option. It is estimated that about 95 percent of enrollees will qualify for automatic renewal, and undoubtedly many will passively accept this hassle-free option. That may not be a wise choice.
The Avalere report indicates that the benchmark silver tier plan – the plan with the second lowest premium in the silver tier – will change in many of the exchanges since premium bids are changing for most plans. Since the enrollee is responsible for the full balance of the premium above the benchmark plan, net premiums for the enrollees could increase significantly unless the person opted to change to next year’s benchmark plan or a plan close to it.
As Avalere director Elizabeth Carpenter states, “(consumers) should consider the tradeoff between continuity of care and lower monthly premiums.” This means that those current enrollees who do not passively accept higher premiums will be forced to choose between higher premiums or a change in their narrow provider networks, the latter likely resulting in disruption of continuity of care.
Further, according to the HHS rule, the individual could be transferred to a different metal tier, thereby losing eligibility for the subsidies for cost sharing, though that would likely occur only in exchanges that have few choices.
Even something as simple as “automatic renewal” becomes complex when you try to rely on market dynamics to satisfy private insurers. Imagine if at renewal time you didn’t have to make a decision on what premiums you could afford, or on what provider networks you would choose when none of them quite fit, or where you might fall based on subsidy eligibility redetermination.
Imagine instead if the concept of renewal did not even exist – you were simply automatically enrolled for life. We really do need to replace this boondoggle with a single payer national health program – quality health care for everyone at a price we can afford.
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.
Shifting toward Defined Contributions — Predicting the Effects
By Kevin A. Schulman, M.D., Barak D. Richman, J.D., Ph.D., and Regina E. Herzlinger, D.B.A.
The New England Journal of Medicine, June 26, 2014
When Representative Paul Ryan (R-WI) attracted national attention by joining Senator Ron Wyden (D-OR) in proposing a sweeping privatization of Medicare, he was variously vilified and praised for suggesting that Medicare should be converted from a defined-benefit program to a defined-contribution program. Although there has been little congressional action to advance the Wyden–Ryan plan, defined-contribution programs are becoming increasingly prevalent in employer-sponsored health insurance and may ultimately bring about substantial changes in U.S. health care.
A defined-benefit program provides specific benefits to enrollees when those benefits are needed. For example, a defined-benefit pension program provides payments of specified amounts to retirees. Defined-benefit health insurance, such as Medicare and most private plans, pays for specific health care services when eligible beneficiaries demand such services. In contrast, a defined-contribution program — like most typical 401(k) retirement plans — provides certain financial support to beneficiaries before any benefits are consumed, and beneficiaries then spend those funds to meet their eventual expenses. In defined-contribution pension plans, only the financial contribution is defined, and the extracted benefits are determined by the payment and investment preferences of the beneficiary.
Economists have posited that defined-contribution health insurance plans offer two key benefits. First, enrollees in such plans receive more choice than they would in the one-size-fits-all plans typically offered by employers. They can thus consider the quality of plans and express their preferences for various features of benefits packages, such as open or limited provider networks and low or high deductibles. Second, defined-contribution plans can give employers greater certainty about costs, insulating them from unpredictable health care inflation. Such plans might also curb or reverse the trend toward employees’ passively shouldering the growing costs of employer-based defined-benefits plans. (Between 2003 and 2013, employer spending increased by 77%, while employees’ costs increased by 89%.1) In a competitive labor market, with the transparency of a defined-contribution plan, employers would have to compensate employees through higher wages for any shifting of additional health care costs, although increased compensation might only need to match employees’ perceptions of the value of the lost benefits.
One largely overlooked attraction of defined-benefit plans is related to the political economy of firms. Because the tax exemption for employer-provided health insurance often hides what employers pay for employees’ health insurance, many employees demand costly plans without realizing that the employer’s contribution ultimately reduces their own take-home pay. A defined-contribution plan, in contrast, makes insurance premiums more transparent, thereby inducing employees to demand more affordable health plans because they are aware of the full amount they pay. For example, when human resources consultancy Aon Hewitt helped companies implement insurance plans under a defined-contribution system in 2013, 42% of employees purchased less expensive plans, 32% purchased coverage similar to what they had previously had, and only 26% bought more expensive coverage.
The intellectual appeal of the Wyden–Ryan plan rested on this logic. Its supporters argued that because the risk of higher-than-expected health care inflation would be shifted onto Medicare enrollees, who would be empowered to exercise consumer choice, the market dynamics would change. On one hand, there would be greater cost consciousness behind consumer demand; on the other hand, supply would reflect greater competition for consumers’ premium dollars.
If Medicare reforms do not adequately address the excessive costs of health care, converting the program to a defined-contribution plan could leave many seniors uninsured or exposed to unaffordable health care bills, thereby undermining one of the fundamentals of the Medicare program — protection against financial risk — while leaving providers with major revenue shortfalls.
Although Medicare seems unlikely to be transformed into a defined-contribution program in the immediate future, the private insurance market is shifting toward defined contributions. Many large companies — including IBM, Duke Energy, and Time Warner — are now pursuing defined-contribution strategies for their retirees; others, including Walgreens, are doing so for current workers. Some companies have designed private insurance exchanges through which workers and retirees can purchase insurance plans, and others may encourage retirees to purchase insurance through private exchanges or the public exchanges established under the Affordable Care Act. A recent survey suggests that 58% of employers have confidence in private exchanges as a viable alternative to the plans they currently offer employees and that “employers are intrigued by the potential of private exchanges to control cost increases, reduce administrative burdens and provide greater value.”
Some observers have expressed legitimate concerns that employers could limit their payments for health benefits by increasing wages by amounts less than those of employees’ medical costs. In theory, a competitive labor market would ensure that total employee compensation remained at competitive levels, thereby preventing employers from using defined-contribution mechanisms in this way. But competitive labor markets require compensation to reflect productivity. In rigid sectors of the economy, defined-contribution strategies could burden employees disproportionately with the weight of medical inflation.
Yet the appeal of defined-contribution plans — whether as part of Medicare reform or in the form of changing benefits for retirees and workers — remains potent. Defined-contribution strategies reveal to employees and health insurance customers any cost increases that exceed the growth of wages, and individuals purchasing insurance on exchanges have shown a growing preference for lower-priced plans that increase cost sharing for health expenditures. In 2013, for example, Aon Hewitt found that the proportion of employees who selected high-deductible plans (most of which included a contribution to a health savings account) increased from 12% to 39%, while enrollment in preferred provider organizations decreased from 70% to 47%.
Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.
Whether or not providers and consumers are ready, defined-contribution benefit plans are growing in popularity. They will unquestionably have both short- and long-term consequences for providers. They will bring greater transparency to health care costs and health care inflation, and they will probably give insurance purchasers greater motivation to attend to insurance prices, stimulating the provision of lower-cost insurance.
Because insurance premiums are ultimately the primary source of revenue for providers, cost consciousness among consumers will impose new fiscal constraints on providers. For some highly leveraged providers — especially those who expanded costly infrastructures that relied on lucrative fee-for-service revenue models — even small changes in the private health insurance market could have substantial financial effects. In this world, providers’ future success will depend on their ability to sustain themselves on a flattening allowance.
Over the long term, greater consumer sensitivity to insurance premiums will affect all providers. It is a truism that the growth of health care costs — or, phrased differently, the growth of provider resources — will be bounded by the growth of health care revenue. A dramatic shift in the revenue available to providers will impose strong cost pressure. And such pressure, in turn, can be seen as a new opportunity for developing more cost-efficient delivery mechanisms.
This article from the prestigious New England Journal of Medicine should alarm anyone who cares about ensuring that everyone has access to health care. We are now seeing a rapid conversion of health care financing from defined benefit (paying for appropriate health care) to defined contribution (paying a specific dollar amount while placing upon the beneficiary the responsibility of using those funds to find affordable care, if possible). This places the burden of health care inflation most heavily on those who have the greatest health care needs when these individuals and families are already over-burdened with our deficient system of health care financing.
Look at the explanation that these authors give as to why defined contribution is a superior method of financing health care:
Perhaps there is a limit to what the employee/patient/beneficiary/consumer may support in this transition to defined contribution financing of health care. According to these authors, “Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.”
Ah ha! We need to switch to defined contribution financing because it will make health care inflation “visible and painful to consumers.” Clearly there had to be more advantages than just those listed above. There ain’t no gain if there ain’t no pain.
Regina Herzlinger is an icon in the consumer-directed policy community. They are winning the battle, and the people are losing. If you like the policies listed above, you don’t need to do anything. Regina and her friends will take care of it for you.
For the rest of you, get over the lousy satire and go out and fight the battle for health care justice for all.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Medical Cost Trend: Behind the Numbers 2015
PwC Health Research Institute, June 2014
PwC’s Health Research Institute (HRI) projects 2015’s medical cost trend to be 6.8% — a modest increase over our 2014 projection of 6.5%. This projection is based on HRI’s analysis of medical costs in the large employer insurance market, which covers about 150 million Americans. By comparison, Medicare serves 52 million beneficiaries and a little over 8 million Americans enrolled in the public exchanges this year.
The net growth rate in 2015, after accounting for benefit design changes such as higher deductibles and narrow provider networks, is expected to be 4.8%. Benefit design changes typically hold down spending growth by shifting costs to consumers, who often choose less expensive healthcare options.
Although total US health spending will likely increase as more people gain insurance under the Affordable Care Act (ACA), it may have little effect on employer health spending. The increase in utilization under the ACA will likely drive up total national health expenditures without changing prices for those with employer coverage.
High-deductible plans will continue to tamp down use of services
The popularity of high-deductible health plans continues to rise as employers attempt to manage their benefit costs. According to PwC’s 2014 Touchstone Survey, 44% of employers across all industries are considering high-deductible plans as the only insurance option for their employees during the next three years. In addition, according to the same survey, 33% of employers are considering moving their active employees to a private exchange in the next three years, and this strategy tends to accelerate employee adoption of higher deductible plans.
Now more than ever, consumers are experiencing increased financial responsibility and are evaluating and rethinking how and when to spend.
Consumers become cost-conscious healthcare shoppers
The ongoing growth in high-deductible plans ultimately influences consumer behavior on the number and type of health services purchased. Eighty-five percent of employers in PwC’s 2014 Touchstone Survey have already implemented or are considering an increase in employee cost-sharing through plan design changes over the next three years, and 44% of employers are considering offering high-deductible plans as the only insurance option for their employees over the next three years.
While increased cost sharing and high-deductibles do not affect medical inflation directly, consumer behavior does. Cost remains a top concern for consumers and affects the health choices they make. According to a December 2013 HRI survey, 40% of consumers said that healthcare expenses put a strain on their budget. And a recent study in the journal Health Affairs about families with high-deductible health plans observed deliberate changes in those families’ use of health services. Families enrolled in high-deductible plans used fewer brand name drugs, had fewer doctor visits, and spent less per visit.
Risk-based contracts are beginning to reduce costs
Insurers and employers are increasingly using risk-based payments in their physician and hospital contracts to reduce costs. Risk-based contracts can include quality bonuses and penalties, shared savings programs that encourage physicians to cut costs, and patient-centered medical homes (PCMH), which pay physicians to manage and coordinate care. Most health plan actuaries interviewed by HRI reported that these strategies are starting to reap cost savings.
Employers: What are they doing now?
Employers continue to pursue a range of cost-cutting strategies with a fresh emphasis on shifting more responsibility onto workers. According to PwC’s 2014 Touchstone survey, 26% of employers have a high-deductible health plan as their highest enrolled medical plan in 2014—the highest percentage ever. Controlling costs through high-deductible plans is not the only strategy employers are trying. Offering plans with narrow provider networks, investing in wellness programs, contracting directly with centers of excellence, or even participating in private exchanges, may save employers money. Consumer behavior is also beginning to impact the spending growth rate.
This PwC medical cost trend applies to the large employer health insurance market, covering about 150 million Americans. The increase in costs for 2015 is anticipated to be 6.8%, again well in excess of the rate of inflation. Perhaps most alarming is the estimate of net growth – 4.8% – a reduction accomplished by “benefit design changes such as higher deductibles and narrow provider networks.”
We have discussed repeatedly the perversities of higher deductibles and narrower provider networks – reducing spending by impairing access and making health care less affordable for patients in need – yet that is the direction where the mainstay of health care coverage – employer-sponsored plans – is headed.
We need to remove employers and private insurers from the health care equation. A single payer national health program would eliminate the need for deductibles and would provide unlimited choice of health care professionals and institutions, while actually controlling health care spending. Its time is now.
Marital Disruption and Health Insurance
By H. Elizabeth Peters, Kosali Simon, and Jamie Rubenstein Taber
National Bureau of Economic Research, NBER Working Paper No. 20233, June 2014
Despite the high levels of marital disruption in the United States, and substantial reliance on family-based health insurance, little research is available on the consequences of marital disruption for insurance coverage among men, women, and children. We address this shortfall by examining patterns of coverage surrounding marital disruption. We find large differences in coverage across marital status groups in the cross-section. In longitudinal analyses that focus on within-person change, we find small overall coverage changes but large changes in type of coverage following marital disruption. Both men and women show increases in private coverage in their own names, but offsetting decreases in dependent coverage tend to be larger. Dependent coverage for children also declines after marital dissolution, even though children are still likely to be eligible for that coverage. Children and, to a lesser extent, women show increases in public coverage around the time of divorce or separation. The most vulnerable group appears to be lower-educated women with children because the increases in private, own-name, and public insurance are not large enough to offset the large decrease in dependent coverage.
New provisions in the Affordable Care Act (ACA) will increase availability of health insurance, especially through Medicaid expansions and subsidized exchange-based private coverage, and may mitigate some of the detrimental impacts of marital disruption. However, because employers are expected to remain the main source of coverage for the nonelderly population (Congressional Budget Office 2012) and because of lingering uncertainty regarding state compliance with expansions (Kaiser Family Foundation 2013), marital disruption is likely to remain a cause of instability in insurance coverage.
To no surprise, this study confirms that divorce is disruptive to health insurance coverage, especially for spouses and dependent children. That disruption is worse for more vulnerable lower-educated women with children. Since employer-sponsored coverage is expected to remain the most dominant form of insurance and most susceptible to changes due to divorce, and since many states are avoiding compliance with the intentions of improving coverage through the expansions authorized in the Affordable Care Act, and since many divorced individuals and their dependents will qualify for hardship exemptions allowing them to remain uninsured, marital disruption will remain a significant cause of being uninsured.
We are now inundated with reports about how well the Affordable Care Act is working – the glass half-full argument. What about those who will be left out because their share is in the empty half of the glass? We need a full glass – a single payer national health program – but we didn’t get it. Many divorcees and their children will be victims of our mediocre, half-assed effort (excuse me, half-glass). Well, it was half-assed and it’s time we said it.
Dr. Arnold Relman, Outspoken Medical Editor, Dies at 91
By Douglas Martin
The New York Times, June 21, 2014
In a provocative essay in the New England journal on Oct. 23, 1980, Dr. Relman, the editor in chief, issued the clarion call that would resound through his career, assailing the American health care system as caring more about making money than curing the sick. He called it a “new medical-industrial complex.”
His targets were not the old-line drug companies and medical-equipment suppliers, but rather a new generation of health care and medical services — profit-driven hospitals and nursing homes, diagnostic laboratories, home-care services, kidney dialysis centers and other businesses that made up a multibillion-dollar industry.
“The private health care industry is primarily interested in selling services that are profitable, but patients are interested only in services that they need,” he wrote. In an editorial, The Times said he had “raised a timely warning.”
In 2012, asked how his prediction had turned out, Dr. Relman said medical profiteering had become even worse than he could have imagined.
His prescription was a single taxpayer-supported insurance system, like Medicare, to replace hundreds of private, high-overhead insurance companies, which he called “parasites.” To control costs, he advocated that doctors be paid a salary rather than a fee for each service performed.
Dr. Relman recognized that his recommendations for repairing the health care system might be politically impossible, but he insisted that it was imperative to keep trying. Though he said he was glad that the health care law signed by President Obama in 2010 enabled more people to get insurance, he saw the legislation as a partial reform at best.
The health care system, he said, was in need of a more aggressive solution to fundamental problems, which he had discussed, somewhat philosophically, in an interview with Technology Review in 1989.
“Many people think that doctors make their recommendations from a basis of scientific certainty, that the facts are very clear and there’s only one way to diagnose or treat an illness,” he told the review. “In reality, that’s not always the case. Many things are a matter of conjecture, tradition, convenience, habit. In this gray area, where the facts are not clear and one has to make certain assumptions, it is unfortunately very easy to do things primarily because they are economically attractive.”
The Arnold Relman Memorial Fund
Physicians for a National Health Program (PNHP)
From “Physicians and Politics” by Arnold S. Relman, M.D., in JAMA Internal Medicine, June 2, 2014:
“A new health care system that provides universal access and is affordable and efficient will be difficult to achieve. The private insurers and all the other businesses that profit from the current commercial system will resist it. Major reform will need wide public support, which in turn will rely on advocacy by the medical profession. But I believe that reform will nevertheless be eventually enacted because it meets a widely shared and growing public desire for more fairness in an American society pervaded by inequality in access to good health care and many other social benefits.
“Physicians have a unique power to reshape the medical care system. They are what makes it work and are best qualified to use and evaluate its resources. But if they never unite to press for major reform, the future of health care in the United States will indeed be bleak. We will end up either with a system controlled by blind market forces or with a system entangled in complicated and intrusive government regulations. In either case it would be impossible to practice good patient-centered medicine, and the quality and effectiveness of our health care system would sink even lower among the ranks of developed countries. It is up to the medical profession to see that this does not happen.”
Dr. Arnold S. Relman, professor emeritus of medicine and social medicine at Harvard Medical School, and past editor-in-chief of The New England Journal of Medicine, died on June 17, 2014. He was 91.
Dr. Relman was one of the most distinguished figures in U.S. medicine, and he leaves a rich legacy of research and writing on the economic, ethical, legal and social dimensions of health care.
An important part of this legacy is embodied in his influential book, “A Second Opinion: A Plan for Universal Coverage Serving Patients Over Profit,” in which he makes an impassioned case for establishing “a single-payer system sponsored by the federal government” coupled with “a reorganized medical care system based on independent multispecialty group practice with salaried physicians.”
Among Dr. Relman’s many achievements during his tenure as editor-in-chief at the NEJM, he oversaw the journal’s publication of “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. At the time, in 1989, the article’s appearance in the NEJM represented a major breakthrough for the mainstream discussion of single payer in the medical profession. It also served as a seminal article in the establishment of Physicians for a National Health Program.
In addition to Dr. Relman’s numerous awards and honors from professional societies, scientific academies, and universities, in November 2013 he was presented with PNHP’s Dr. Quentin D. Young Health Activist Award for his unswerving advocacy for a more just and equitable health care system in the United States.
Dr. Relman leaves his wife, Dr. Marcia Angell; two sons, Dr. David Relman and John Relman; a daughter, Margaret Batten; six granddaughters; and two stepdaughters, Lara and Eliza Goitein.
Shortly before his death, Dr. Relman asked that in lieu of flowers, donations in his memory be directed to PNHP.
Physicians for a National Health Program is honoring Dr. Relman’s legacy by establishing The Arnold Relman Memorial Fund, dedicated to expanding PNHP’s special outreach programs to the medical profession, including to medical residents and fellows, to advance the understanding and realization of Dr. Relman’s vision.
The Arnold Relman Memorial Fund:https://org.salsalabs.com/o/307/p/salsa/web/common/public/content?conten…
Although some have described Dr. Relman’s 1980 New England Journal of Medicine essay on the medical-industrial complex as controversial, it would better be described as a release of the medical profession from the shackles of the old conservative guard of organized medicine. Although always exercising editorial independence, the NEJM was a publication of the Massachusetts Medical Society – the state chapter of organized medicine. For those of us on the West Coast who were somewhat removed from Boston and Chicago medical politics, Dr. Relman became and remained a beacon of hope for the future of a health care system that would be wholly dedicated to the patient rather than to vested interests.
Perhaps the greatest breakthrough was in 1989 when he published in NEJM “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. That signaled the start of a movement coming from within the medical profession in support of health care justice for all.
Although Dr. Relman had requested that donations be made to PNHP in lieu of flowers, the paramount action that we should take is to honor his legacy by intensifying our efforts to transform our health care system from a medical-industrial complex into a nirvana of the healing arts. That does require that we become more thoroughly enmeshed in technical details such as enacting an Expanded and Improved Medicare for All. But Bud Relman wouldn’t have it any other way.
Survey of Non-Group Health Insurance Enrollees
By Liz Hamel, Mira Rao, Larry Levitt, Gary Claxton, Cynthia Cox, Karen Pollitz and Mollyann Brodie
Kaiser Family Foundation, June 19, 2014
The Kaiser Family Foundation Survey of Non-Group Health Insurance Enrollees is the first in a series of surveys taking a closer look at the entire non-group market. This first survey was conducted from early April to early May 2014, after the close of the first ACA open enrollment period. It reports the views and experience of all non-group enrollees, including those with coverage obtained both inside and outside the Exchanges, and those who were uninsured prior to the ACA as well as those who had a previous source of coverage (non-group or otherwise).
- The ACA motivated many non-group enrollees to get coverage, and nearly six in ten Exchange enrollees were previously uninsured
- Enrollees in ACA-compliant plans report somewhat worse health than those in pre-ACA plans
- Majority gives positive ratings to their new insurance plans and says they are a good value, though four in ten find it difficult to afford their monthly premium
- Among plan switchers, as many report paying less as paying more for their new plans, but survey shows some signs of a trend toward narrower provider networks
- Plan switchers are less likely to be satisfied with plan costs, maybe because half of them report having their previous plan cancelled
- Half got help with enrollment; most say the shopping process was easy, but a third say it was difficult to set up a Marketplace account
- In the non-group market, those most likely to feel they have benefited from the ACA are people getting subsidies, those most likely to feel negatively impacted are those who had their plans cancelled
As a whole, non-group enrollees are more likely than the public overall to have a favorable view of the ACA – they are roughly evenly split between positive and negative views (47 percent favorable, 43 percent unfavorable), while views among 18-64 year-olds nationally are more negative than positive (38 percent favorable, 46 percent unfavorable1. Like it is nationally, opinion of the ACA among non-group enrollees is strongly divided along party lines. About equal shares of non-group enrollees feel their families have benefited (34 percent) and been negatively affected (29 percent) by the ACA. However, these averages mask substantial differences within the non-group market. Those who are most likely to feel they have benefited from the law are people receiving government financial assistance for Exchange plan premiums (60 percent benefited), while those most likely to feel they have been negatively affected by the law are people who experienced a plan cancellation in the past year (57 percent negatively affected).
Does the Affordable Care Act Cover the Uninsured?
By Drew Altman
The Wall Street Journal, June 19, 2014
Among the facts: 57% of those who bought coverage from the new marketplaces during the first ACA open-enrollment period were previously uninsured, and seven out of 10 of them had been uninsured for two years or more.
The number of uninsured people covered through the exchanges is far higher than critics of the ACA have suggested. On the other hand, the number is probably a little lower than supporters of the health-care law would like. As is typical in the highly polarized debate about the ACA, the facts are not what either side would want them to be.
It is ironic that we have a health reform program that satisfies neither proponents nor opponents. On the question of how effective has the Affordable Care Act been in insuring those who were previously uninsured, supporters are concerned that it was not enough and critics are disappointed to see that more people became insured under the program than had been insured under prior plans (since that refutes their argument that the exchanges are ineffective because it only shifted previously insured individuals into the exchanges).
WSJ’s Drew Altman makes the point that “in the highly polarized debate about the ACA, the facts are not what either side would want them to be.”
So is this a balanced debate between two sides with legitimate views? Opponents would like to see much of the Act repealed, but the few recommendations they do have, they can’t even agree on. Besides, most of their recommendations would not repair the flaws in our health care system, and some would make them worse.
Supporters at least want to see improvements in coverage, access and affordability, not to mention quality, but they realize that ACA is falling far short of goals (though they may not want to admit it) and has actually had a negative impact in lowering the actuarial value of plans – making health care less affordable for many by increasing out-of-pocket costs – while also reducing access by paring down the numbers of physicians and hospitals in the insurers’ provider networks.
We can reject the views of those polarized against reform as not being responsive to our overpriced and underperforming health care system.
Although we support the views of those who would repair the flaws, we can reject the policies they have selected as being cruelly inadequate. Those who really do want reform should join us in supporting single payer – a model that would be truly universal, accessible, affordable, and, properly designed, would improve the quality of health care in the United States. In fact, many of the current opponents might consider supporting a program that actually would work, especially if they see that it would not increase overall spending. We should tell them about it.
Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law
By Louise Radnofsky
The Wall Street Journal, June 18, 2014
Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching.
That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings. That percentage represents the average rate increases for all individual health plans offered by that carrier.
At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.
The rate proposals reflect a combination of big carriers stepping back from initial aggressive pricing, rising medical costs and increased competition during the second year of President Barack Obama’s health law.
With dominant market share now, analysts say, carriers feel they have room to raise rates. Nine of the carriers are proposing average increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to 22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these large carriers’ proposed rate increases hover around 10%.
Erin Shields Britt, a spokeswoman for the Department of Health and Human Services, said the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors, which is a trend we are already seeing accelerate in a number of states, with new plans entering the market.”
Aetna CEO says 2015 Obamacare rates increase less than 20 pct
By Caroline Humer
Reuters, June 11, 2014
Health insurer Aetna Inc is submitting premium rates to regulators for 2015 Obamacare insurance plans that generally increase less than 20 percent from 2014, Chief Executive Officer Mark Bertolini said on Wednesday.
Bertolini said that customers are disenrolling from exchange plans on a regular basis but that the company still expects to have 450,000 exchange customers at year end. He said that while he did not know the reason for these customers leaving, he suspected that it was due to the out-of-pocket costs before members reach their deductibles.
Because of uncertainty of claims experience and instability in enrollment, it is difficult for insurers to set their 2015 premiums to match market conditions. But what is projected so far is that the dominant insurers intend to raise their premiums about 10 percent, ranging between 8.5 and 22.8 percent, according to this WSJ report. Aetna’s Mark Bertolini assures us that increases will be “less than 20 percent.” What a relief.
Our Department of Health and Human Services is thoroughly sold on the concept of using markets to price insurance products. As their spokeswoman, Erin Britt, says, the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors.” Let’s look a little bit closer at what this market competition means.
The insurance underwriting cycle is a phenomenon in which insurers enter the market with low premiums in an effort to gain a larger share of the market. Once they have that share, they increase their premiums to the maximum tolerated. In the meantime, competitors with a smaller share of the market lower their premiums in an attempt to increase their share. Because their premiums are too low and their volume is too small, they fail and shut down. That leaves the dominant insurers in a position to charge even higher premiums than their costs would warrant. Patient/consumers end up being the losers.
That is precisely what is happening now, according to this report. The dominant insurers are raising their rates significantly (but “under 20%”) and “insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.”
These sick market dynamics are part of the reason that we have the least effective health care financing system in the world. Nobel laureate Kenneth Arrow explained to us decades ago why markets do not work in health care. While it is true that they do not work for the patient/consumer, market distortions work very well in moving our financial resources into the hands of those controlling the markets.
Mark Bertolini, who is keeping Aetna’s premium increases below 20 percent, for 2013 received an executive compensation of $30,712,565. Works pretty well for him.
Each day I write these comments, this is the point at which my blood pressure goes up and I have to restrain myself from using inappropriate language. I don’t know how much longer I can do that. Using the democratic process, we need to take over our government by electing representatives who serve us, the people, rather than serving those whose “r” is greater than our “g.”
At the following link, Paul Krugman explains Thomas Piketty’s r>g. It is very wonkish, but skim on through to the end and you’ll get the point.
Calif. Court Rules Insurer Payments Should Reflect Value of Care
California Healthline, June 16, 2014
An appellate court ruling in Fresno last week could change the way California hospitals and health insurers enter into contracts and negotiate payments for services, the Sacramento Business Journal reports.
Background on Case
The lawsuit between Children’s Hospital Central California and Anthem Blue Cross involved a dispute over insurer reimbursement rates for hospital services.
In 2007, the hospital and insurer for about 10 months were unable to reach an agreement to renew a contract setting reimbursement rates for hospital services. During that time, federal and state laws required that Children’s Hospital continue to provide emergency care to Anthem beneficiaries.
The hospital later billed Anthem for post-stabilization emergency medical care that took place during the 10-month contract gap. In the billing, the hospital listed the full rate of services included in its “chargemaster” document instead of the usual discounted rate based on volume. In total, the hospital charged Anthem $10.8 million for care provided to 896 beneficiaries.
Anthem paid the hospital about $4.2 million based on Medi-Cal rates. Medi-Cal is California’s Medicaid program.
Children’s Hospital filed a lawsuit over the difference, and a jury awarded the hospital $6.6 million. Anthem then filed an appeal.
Details of Ruling
On Tuesday, the Fifth District Court of Appeals ruled that insurers are not required to reimburse hospitals for amounts that are more than the actual value of services.
The ruling states that the hospital “rarely received payment based on [their] published chargemaster rates.” Therefore, the trial court should have allowed Anthem to present evidence of the value of post-stabilization emergency services.
The appeals court ordered a new trial between Children’s Hospital and Anthem to establish damages that reflect the “reasonable value” of services, as opposed to the higher costs included on hospital’s bill to the insurer.
Dan Baxter, an attorney representing Anthem, said, “This ruling will absolutely change the landscape between hospitals and health plans in litigation going forward.” He added, “It’s a clear-cut California case we didn’t have until now — finally — that says in no uncertain terms you can consider a full body of information, not just billed charges.”
However, Glenn Solomon, an attorney representing Children’s Hospital, said the ruling could result in insurers paying contract rates for health care services without actually establishing a contract.
Solomon said, “If a health plan can get the benefit of contracted rates without actually engaging in a contract themselves, there’s less incentive for them to enter into a contract in the first place,” adding, “That’s not just bad for hospitals. It’s bad for all of California” (Robertson, Sacramento Business Journal, 6/13).
This case centers around a dispute on whether an insurer pays list rates (chargemaster prices) or prior contracted rates during an interval in which the insurer/hospital contract had lapsed. But there is a much more important issue here: Should an insurer be able to dictate unilaterally to a hospital what rates will be paid during a time in which there is no contract with the hospital?
Regarding the particulars of this case, hospital chargemaster rates are usually pie-in-the-sky rates that nobody pays. The insurer, Anthem Blue Cross Medi-Cal managed care, should be able to negotiate rates down. On the other hand, Medicaid (Medi-Cal) rates in California are the lowest in the nation and result in a loss for most providers, so Children’s Hospital Central California should be able to negotiate up the rates for “post-stabilization emergency services” when it has no contract with the insurer. It appears that the intent of this court ruling was to prevent unreasonably high, binding rates from being set arbitrarily by hospital chargemaster programmers.
Although other laws apply, this ruling seems to be a step towards allowing private insurers to dictate rates when no contract is in force. It would be untenable if private insurers could enforce provisions of a contract that they would like to have without the necessity of formally contracting with the providers.
This is no way to set payment rates. Control should be completely removed from the private insurers. They should be dismissed from the health care financing scene anyway since they waste resources diverted to their intrusive exploitations. We also know that providers should not be allowed to set their own rates. During the implementation of Medicare, physicians were paid based on usual, customary and reasonable fees, and they responded by driving fees up exponentially. No, we know from the experience of other countries that the government must be involved if we expect fair pricing.
Under a single payer system, whether setting global budgets for hospitals or negotiating rates for professional services or health care products, including pharmaceuticals, our own government stewards would be there to represent us as patients and as taxpayers. As public servants, they would not be representing their own personal interests. Payments would be based on legitimate costs and fair margins.
Besides receiving greater value, we would be eliminating the costs and grief of the profound administrative waste of our current fragmented, dysfunctional financing system. That alone should be enough for us to decide to make the change.
Successes and failures of pay for performance in the United Kingdom
By Martin Roland and Stephen Campbell
The New England Journal of Medicine, May 15, 2014
In 2004, the United Kingdom introduced one of the world’s largest pay-for-performance programs, the Quality and Outcomes Framework. … The Quality and Outcomes Framework was originally designed in part to give family practitioners a substantial pay increase. … However, the amount of program-associated money (25% of family practitioners’ income) became increasingly regarded as a distraction, diverting their gaze onto limited parts of clinical practice and reducing the focus on the patient’s agenda during the consultation. …
In 2004, when the Quality and Outcomes Framework was introduced, much changed overnight. Family practitioners and practice staff started using full electronic medical records. …They also changed the structure and staffing of their practices in two key respects. First, there was an increase in nursing staff. … Second, there was an increase in administrative staff so that family practitioners could have rapid access to their performance… …
Over time however, the program became more intrusive into regular consultations with family practitioners. … [P]ractitioners resented constant electronic reminders of “boxes to be ticked” which led to a more biomedical focus on consultations with less attention being paid to patients’ concerns. …
Clinical care probably [italics added] improved after the introduction of the Quality and Outcomes Framework, though the effects were not compelling. …
There is clearly a problem in trying to include more and more conditions into a pay-for-performance program. … Progressively, the burden of the recording of data mounts, with consultations becoming increasing disrupted by the need to respond to requests or prompts for information.
Two months ago I commented on the Medicare Payment Advisory Commission’s aimless debate about whether to alter the hazy definition of “medical home.” I began with this question: “If you endorse a vague plan based on conventional wisdom rather than evidence and it doesn’t work, how do you revise it? Upon what evidence, by what logic, do you alter this or that part of the plan?”
Advocates of another hot managed care fad, pay-for-performance (P4P), are facing the same dilemma. The P4P fad struck the U.S. and the U.K. simultaneously in the early 2000s, approximately five years before the “medical home” fad arrived. Like “medical home” proponents, P4P proponents hyped P4P without any evidence that it would work. In an introduction to a 2006 supplement to Medical Care Research and Review devoted entirely to the emerging P4P fad, Peggy McNamara with the U.S. Agency for Healthcare Research and Quality attributed the P4P fad to the actions of “visionaries.” She then presented excerpts from nine papers which stated there is no scientific evidence for P4P (“Forward: Payment Matters?” February 2006, pp.7S-8S). The three guest editors for that supplement agreed. They stated, “P4P programs are being implemented in a near-scientific vacuum.” (Dan Berlowitz et al., “Introduction,” 10S).
The U.K.’s giant experiment with P4P is 10 years old, and the evidence indicates it is not working. It therefore presents students of the managed care movement a golden opportunity to study how movement activists cope with failure. How do you revise a P4P program that isn’t working when you had no logical or evidentiary basis for setting up the program in the first place?
The Quality and Outcomes Framework (QOF), the U.K.’s P4P scheme, was implemented in 2004 by the Tony Blair administration. The program applies to family practitioners – “half of the medical work force in the National Health Service (NHS).” Its implementation in 2004 was accompanied by a 25 percent increase in funding for primary care doctors.
The evidence that the QOF is not working is substantial. Much of that evidence is cited in the article quoted above by British experts Martin Roland and Stephen Campbell. Roland and Campbell are clearly sympathetic to the QOF. But the best they can say about this richly endowed P4P scheme is that it “probably” improved quality for patients whose care was measured, but the evidence is “not compelling,” and it might not have improved quality overall because the QOF encourages “gaming” by physicians (which may have exaggerated the apparent improvements) and has had negative side effects including “adverse effects on the quality of care for medical conditions that are not included in the incentive program” (p. 1947).
A 2012 literature review by Gillam et al. produced an even more negative assessment. Here are excerpts:
“Both groups [doctors and nurses] believed that the person-centeredness of consultations and continuity were negatively affected. Patients’ satisfaction with continuity declined, with little change in other domains of patient experience.
“Observed improvements in quality of care for chronic diseases in the framework were modest, and the impact on costs, professional behavior, and patient experience remains uncertain….. Health care organizations should remain cautious about the benefits of similar schemes.” (“Pay-for-Performance in the United Kingdom,” Annals of Family Medicine, 2012)
What do QOF proponents do now? Do they reduce the number of measures that allegedly measure quality? Do they leave the measures in place but reduce the size of the bonuses? Do they do nothing? And for any of the above, upon what basis?
If Blair and his fellow advocates of P4P had laid out a clear rationale for P4P – a diagnosis of the problem, an explanation of how P4P addresses the diagnosis, and at least some empirical evidence for their diagnosis and solution – QOF proponents might now be in a better position to adjust the QOF intelligently. But precisely because the QOF was introduced in a scientific vacuum, QOF proponents are flying blind, just as Medpac and “home” proponents are now flying blind in their attempts to redefine the “home” concept.
Those who want a firsthand sense of how blind the pilots at the QOF are should examine the QOF’s latest list of diseases and conditions that are subject to P4P. You can find them listed in the table of contents of the British Medical Association’s guide here [p. 2]. There you find 18 diseases plus “mental health,” “palliative care,” “obesity,” “smoking,” and “contraception.” Which of these categories would you like to remove? On what basis? Should we pull the “learning disability” measure because the only action required of doctors is to keep a list of patients with learning disabilities? Why was that measure put there in the first place?
Or would you like to add more measures to the existing two dozen?
If doctors were spending much of their time loafing outside their clinics listening to rock ’n’ roll music and cracking jokes, these question about which knobs on the QOF dashboard to twiddle would not be so serious. But research (never mind common sense) tells us that’s not true. Research in the U.S. indicates that doctors would need to work 22 hours a day to “deliver recommended primary care” (preventive, acute and chronic). This means that any P4P scheme imposed on primary care doctors must inevitably induce doctors to focus on “limited parts of clinical practice” and reduce their “focus on the patient’s agenda,” to quote Roland and Campbell.
Those facts – the unalterable fact that doctors simply don’t have enough time to honor all guidelines, and that P4P usurps patient authority to set their own agenda – are determinative for me. Patient autonomy (assuming the patient is of sound mind) should be the paramount value guiding all health policy.
The QOF has had 10 years to demonstrate it creates so much value that the damage it does to patient autonomy can be justified. It has not done that. The Cameron administration should pull the plug on the QOF.
Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.
Narrow Provider Networks in New Health Plans: Balancing Affordability with Access to Quality Care
By Sabrina Corlette, JoAnn Volk, Robert Berenson and Judy Feder
Urban Institute, Georgetown University Center on Health Insurance Reforms, May 2014
New network configurations offer trade-offs for consumers. Many insurers were able to lower their overall costs by reducing the prices they pay participating providers, which in turn allowed them to lower their premiums to attract price-conscious shoppers. However, in many cases, consumers have been surprised to discover that their new plan offers a more limited choice of providers. Some others willing to pay more to purchase a plan with broader access to providers have found that only limited-network plans are available in their area.
It is not yet clear whether these new, narrower network plans can effectively deliver on the benefits promised under the plan. If policyholders opt to seek medically necessary care out-of-network, it could expose them to significant financial liabilities. If policyholders delay or forgo care because in-network providers can’t meet their needs, it could put their health at risk.
Consequently, state and federal policy-makers are taking another look at the Affordable Care Act (ACA) requirement that plans participating on the new health insurance marketplaces maintain an adequate provider network. In doing so, they must strike a delicate balance. If they overly constrain insurers’ ability to negotiate with providers, consumers could face significant premium increases. On the other hand, consumers must be able to choose among plans with confidence that they have a sufficient network to deliver the benefits promised and that they will not be exposed to unanticipated health and financial risks because of an inadequate network. Insurers also need incentives to take provider quality into account (in addition to prices).
There is no perfect approach to the oversight of health plan networks. In the absence of other government policies to constrain provider prices, insurers’ ability to exclude or threaten to exclude providers from the network is important to their ability to negotiate reimbursement rates and offer more affordable premiums to consumers. On the other hand, if insurers narrow their networks too much, consumers could be harmed if forced to go out-of- network or to a less-preferred provider tier to meet their needs. Policy-makers therefore need to strike a balance between consumer protection and insurer flexibility.
Our proposed approach sets minimum quantitative standards, with waivers for certain providers based on price and quality; improves transparency and consumer information to give consumers better tools to make informed choices; gives insurers the flexibility to develop more value-oriented network designs so long as they maintain a provider network that can meet people’s needs; and — to assure effective consumer protection — calls for continuous monitoring of consumers’ use of out-of-network services, complaints and appeals, and more active oversight of plan behavior.
Full report (10 pages):http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf413643
This report provides an excellent discussion of the tradeoffs between affordability and access to care when insurers use networks of providers, especially the trendy narrow networks in many of the ACA exchange plans. Unfortunately, the authors’ approach to trying to achieve an optimal balance misses an opportunity both to totally avoid the impaired access characteristic of narrow networks, and to make health care even more affordable.
The flaw is that they assume that private health plans are a given. With that, they then try to achieve a compromise between avoiding excessively reduced access to providers and reducing insurance premiums by restricting patients to providers who agree to lower contracted rates. A single payer system would have full choice of providers and would be more affordable because of the efficiencies of a government administered program, including its power as a monopsony. Compared to single payer, patients enrolled in narrow network plans have less choice of providers and pay more. They lose on both counts.
Even broader networks found in the majority of private plans still compromise between these choices, though not to as great of a degree. But they still do compromise.
The remedial proposals in this report are designed to support the superfluous private insurer intermediaries, while compromising access and cost for patients. Our health care system should be about patients, not insurers.
It is not as if the authors of the report do not understand this. They write, “In the absence of other government policies to constrain provider prices…” If they are going to change policy, why don’t they move to policies that actually benefit patients? Like a single payer national health program – full access to all health care professionals and institutions, in an equitably funded system that all of us can afford.
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