National Partisan Debate Elbows in on California

By David Gorn
California Healthline
April 5, 2011

A Field Poll on attitudes toward health care reform in California had some interesting results — including a much more positive feeling about reform among Californians than is found in national polls.

One of the main results this year and last, according to Field pollster Mark DiCamillo, is that opinions on health care are highly partisan.

“The data were very partisan last year, and the reality of the data is, we haven’t had that much of a change since then. The amount of knowledge people have about reform is not greater than last year, but there’s so much heat on this issue, so much of a partisan divide — it’s here, it has been here and I don’t expect it to go away anytime soon.”

That partisan element has not only influenced opinions, he said, but has reinforced factual misconceptions, as well. “The dissonance that’s going on is just amazing to me,” DiCamillo said. “The predispositions people have about health care are coloring what’s going on in reality.”

For instance, he said, 36% of Californians believe that undocumented residents will be better off from the health care reform law, despite the fact that the law specifically excludes undocumented residents from participating.

“We actually see the highest degree of confusion among people who say they have more knowledge [about health care reform issues],” DiCamillo said. “That’s consistent with Tea Party voters and Republicans,” he said, “and they’re also more likely to believe that illegal immigrants will benefit. So that self-reported knowledge, you have to take it with a grain of salt.”

http://www.californiahealthline.org/capitol-desk/2011/4/secretary-dooley-on-partisan-politics-poll.aspx

And…

California Voters Remain Supportive of Health Care Law

By Mark DiCamillo and Mervin Field
The Field Poll
April 4, 2011

Table 2b
Opinions of the health care law by stated level of knowledge about the law

Oppose
57% – Very knowledgeable
39% – Somewhat knowledgeable
29% – Not too/not at all knowledgeable

Support
41% – Very Knowledgeable
56% – Somewhat knowledgeable
50% – Not too/not at all knowledgeable

Table 3b
Opinions of the health care law by media source
TV news source

Oppose
35% – CNN
73% – Fox News
37% – NBC
33% – ABC
31% – MSNBC
36% – CBS
14% – Univision/Telemundo
34% – Other TV/Local news

Support
56% – CNN
22% – Fox News
52% – NBC
55% – ABC
63% – MSNBC
51% – CBS
66% – Univision/Telemundo
52% – Other TV/Local News

http://www.field.com/fieldpollonline/subscribers/Rls2374.pdf

Those of us who are quite knowledgeable about health policy are often astounded by not only the amount of misinformation about health reform, but also by the self-confidence of those who are often the least well informed. This new California Field Poll provides some interesting observations in this regard.

As Field pollster Mark DiCamillo explains, 36% of Californians believe that undocumented residents will be better off from the health care reform law even though that is untrue and is spelled out in the law, and yet, “We actually see the highest degree of confusion among people who say they have more knowledge [about health care reform issues],” and “That’s consistent with Tea Party voters and Republicans.” The poll numbers confirm that those who oppose the Affordable Care Act claim to be more knowledgeable about the law whereas those who support it do not have the same level of confidence in their knowledge.

Look at the sources of their information. For those who oppose the law, many more rely on Fox News and not on the other television news sources. In contrast, those who support the law do not rely on Fox News but are fairly evenly distributed amongst the networks and CNN, with greater dependency on MSNBC and Univision/Telemundo. Considering the large Hispanic population in California, the last observation is particularly relevant.

In a land that values free speech so highly and has an abundance of information resources, how did we end up with such a large sector of our population so heavily reliant on a source so lacking in credibility? Even more perplexing, why do they rigidly insist that they are highly knowledgeable and that our very credible, well documented facts are wrong even when all of the objective data is presented to them? Is it just that these people are incapable of critical thinking, or is it that Fox News has discovered the secret of mass mesmerization? Either way, it’s scary.

The Path to Prosperity

Fiscal Year 2012 Budget Resolution
Chairman Paul Ryan of Wisconsin
House Committee on the Budget

Premium support – a better way to deliver secure benefits

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health care program that members of Congress enjoy. Future Medicare recipients will be able to choose from a list of guaranteed coverage options, and they will be given the ability to choose a plan that works best for them. This is not a voucher program, but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.

The premium-support model would operate similar to the way the Medicare prescription-drug benefit program works today. The Medicare premium-support payment would be adjusted so that wealthier beneficiaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened, and lower-income seniors would receive additional assistance to cover out-of-pocket costs.

This approach to strengthen the Medicare program ensures security and affordability for seniors now and into the future. First, it ensures security by setting up a tightly regulated exchange for Medicare plans. Health plans that choose to participate in the Medicare exchange must agree to offer insurance to all Medicare beneficiaries, to avoid cherry-picking and ensure that Medicare’s sickest and highest-cost beneficiaries receive coverage.

While there would be no disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible in the next ten years, all seniors would have the choice to opt into the new Medicare program once it begins in 2022. No senior would be forced to stay in the old program. This budget gives seniors the freedom to choose a plan that works best for them and guarantees health security throughout their retirement years.

http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

Under Republican control, the House Budget Committee proposes phasing out the traditional Medicare program and replacing it with an insurance exchange offering a variety of private plans with the government’s role limited to offering a premium support (same mechanism as a voucher) to apply toward the purchase of a plan. This converts Medicare from a defined benefit (specified benefits are covered) to a defined contribution (the premium support being a specified dollar amount contributed toward the purchase of a private plan).

This proposal treats the budget as the patient, curing the budget problems with the trade off of further burdening the Medicare beneficiaries who are already paying too much out of pocket. It shifts future increases in health care costs from the government to the beneficiaries. It is much easier for Congress to control federal spending by limiting the value of the premium support rather than trying to reduce the benefit package.

The proposal would adjust the premium support for those with greater health care needs, but that is very difficult to do in a timely manner in that an adjustment next year doesn’t help to relieve this year’s increased costs. Also risk adjusting is very difficult in that it requires having a precise assessment of each individual’s health status and anticipated needs. It is a profound change from the current Medicare program in which equitable funding through the tax system is divorced from the uniform benefit package which everyone shares.

The proposal also would reduce premium support for wealthier Medicare beneficiaries, requiring them to pay more for exchange plans. Actually this principle of progressive financing already exists. Although the current standard premium for Medicare Part B is $96.40 for most individuals ($115.40 for new beneficiaries), it is indexed to income. Those with an income of $214,000 pay $438.20 (including an added Part D premium only for higher-income individuals).

Although progressive financing is an equitable concept, it belongs over on the tax revenue side for funding of the entire Medicare risk pool. By having it as a progressive premium on the benefit side, it fractures solidarity by creating a desire for the wealthy to obtain their own coverage and care independently of Medicare, since they are paying higher premiums anyway. Once they are on their own, they would look upon Medicare as a welfare program, not unlike Medicaid except with much fewer benefits, and chronic underfunding would be inevitable.

The debate that we should be having is over an improved Medicare for everyone. The sad state of politics today is certainly exemplified by the fact that those supporting the transfer of wealth from the masses to our plutocracy have been able to reframe the debate as a need to save our federal budget by cutting back on our social programs, especially Medicare and Medicaid (while reducing the tax rate on the wealthy from 35% down to 25%). What ever happened to common decency?

By Jonathan Starr

If public opinion polls alone determined political outcomes, we would have single-payer public health insurance already, or at least some “robust public option.” But, unfortunately, some political actors have more influence on policy decisions than others.

Experience has shown that business leaders have exceptionally strong influence on legislative decision making. As such, pursuing the support of business leaders for single-payer health insurance could greatly advance its chances for implementation.

Fortunately, there are good reasons why businesses could benefit from single payer. Providing health insurance to employees is a substantial financial and administrative burden, especially for companies with large numbers of employees. In contrast, competitor companies from countries that already have single-payer health insurance are free of this disadvantage. Meanwhile, startups and small businesses find it particularly difficult to obtain health insurance at reasonable rates, especially upon annual renewal if an employee has begun drawing substantial amounts of benefits.

Consequently, having health insurance publicly and universally provided could be a huge boon to business viability, competitiveness, and profitability.

There is evidence of increasing recognition of this in the business community. For example, the new president of Health Care for All Pennsylvania is a Republican business owner named David Steil. He commented, “My commitment to a single-payer health care system has its roots in my 35 years of experience at the senior management level in several manufacturing companies. We must solve the health care dilemma if our businesses are going to compete in the international marketplace.”

The rising cost to employers of providing employee health insurance is an increasingly frequent topic of the business-related press, from the Wall Street Journal to online blog entries. Here in Silicon Valley, I am in communication with policy staff of a large and influential business-membership organization that is initiating preliminary evaluations of the business advantages/disadvantages of single payer.

The appeal of single payer to businesses will depend heavily on how such a program is financed. As I have argued here, supporting single payer through progressive corporate and individual income taxes, scaled by ability to pay, should be much more appealing to businesses (as well as to individuals) than using payroll taxes. And, bills that attempt to apply special financial burdens to particular areas of commerce (e.g. H.R. 1068, which would impose an excise tax on securities and commodities transactions) have been politically stillborn. A fair, reasonable, and viable financing mechanism will be critical to gaining business community support.

Gaining the support of some significant portion of the business community for single-payer public health insurance could make the political difference towards getting such a program enacted. Interest in the potential financial and competitive advantages of single payer for businesses seems to be increasing. As such, advocates for single payer could advance the cause by pursuing new, effectively designed outreach to the business community.

Jonathan Starr resides in Santa Clara, Calif.

The following is a selection of the speeches delivered to a rally of medical and other health-professional students who support single-payer health reform that was held in the Vermont Statehouse in Montpelier, Vt., on March 26. Some of the remarks have been shortened for space considerations. A video about the rally, which was attended by more than 200 people and which also heard speeches from Sen. Bernie Sanders (I-Vt.) and Vermont Gov. Peter Shumlin, is available here. To get more involved with student activism for single payer, write to organizer@pnhp.org.

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Rishi Rattan

Surgery resident, Tufts Medical Center

Despite what is portrayed on “Grey’s Anatomy,” as a training surgeon in an academic medical center in Boston, I spend much of my day filling out paperwork.

Recently, our oncology team fought to obtain approval for a 35-year-old mother of two to receive an operation that would quadruple her life expectancy. On the day of surgery, dressed in her gown, she was denied. When we finally received approval some months later, her aggressive tumor had spread. Her life expectancy dropped to months.

When we broke the news to her and her family, she asked us, gaze averted as if she knew the answer, whispering quietly so we had to lean in to hear her, “Doctor, would it have been different if you operated sooner?”

I have seen the cost in dollars and in life that a fractured health care system wreaks upon us. I have felt the power to heal wrested away from me by an incomplete infrastructure hampered by inequality and ever-expanding expenses.

Most of us follow the rhetorical battles on health care reform with fervor and interest. But I am rudely reminded daily of the tangible effects of our hopelessly inadequate, costly health care system. Health care spending here has doubled in less than a decade. Do you suppose this will get better without intervention from Vermont’s citizens?

As physicians sworn to advocate for patients, we are obligated to find a solution to this unsustainable and unjust status quo. This bureaucratic structure prevents me from being bedside in my patients’ time of need. Instead of spending more time with our patients under a simplified health system with a single payer, we rush out of the clinic rooms, knowing that our true battle will not be against the parasitic disease eroding away at life inside our patients, but against the parasitic insurance companies eroding away at our ability to fight disease.

Vermont is on the cusp of living up to its motto: freedom and unity. Freedom to choose a comprehensive system that provides all Vermonters the highest level of health. To obtain this, we need unity. All under one single-payer system. Unity here. Now.

You, me, doctor, patient, we must unite and rise up from under foot. We must throw off our bloated, wasteful system and cry out in one voice that thunders through these halls of power. We must unite against a system that forces us to struggle out of arm’s reach of a cure. We must unite against a system that siphons our hard-earned money to for-profit coffers. We must unite against a system that forces physicians to tell our patients that they cannot receive the same treatment as their next door neighbor because of their insurance! We, united, must fight for a single-payer system that treats all of us equally.

Just as I have a duty as a physician to fight for the best possible health for all my patients, you, Vermonters, have a duty to fight for freedom and unity, under one plan that covers all!

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Connie Yip

Columbia University School of Nursing

I am honored to be with such a committed group of medical students, nursing students, health care professionals, and supporters of single payer. The fact that we have people who traveled across state lines, to stand up for single payer, in the cold, freezing, is a testament to our determination to change the current U.S. health care system. This is where you cheer. Whooo!

Okay, so why am I here? My parents owned a Chinese restaurant while I was growing up. We didn’t have health insurance. Team sports were discouraged because my parents didn’t want my siblings and me to get hurt. When I was 5, I dropped a 5 lb. can of bamboo shoots on my thumb. The gash across my thumb reached my bone and instead of getting stitches, my parents used rubbing alcohol and a Q-tip to clean my wound and I healed “naturally.”

So yes, I believe that health care is a human right. As a nursing student and future nurse and nurse practitioner, it would be tremendously gratifying for me to take part in changing the health care system and providing families like mine with health care.

Currently, U.S. health care is for-profit and focuses on the bottom line. We are the only industrialized nation to have a health care system that has a for-profit business model. Why don’t other countries follow our example? Hmmm, let me think about that. Well, for starters, patient care is compromised when you have a system that answers to stockholders instead of the public. For instance, insurance companies avoid the sick, expensive people, cover the healthy, and deny paying for expensive procedures, etc. When health care is run like a business, profits come first and patients come later. A for-profit health care system discriminates and is only accountable to stockholders, not to anyone else.

So what’s the answer? You all know the answer; let’s say it together at the count of three: 1-2-3, single payer!

Thank you Vermont!

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George ‘Bud’ Vana

University of Vermont College of Medicine

Welcome to Vermont. On behalf of all of my fellow Vermont Med students here, I want to say thank you for caring about what is happening in Vermont as much as we do. It is great to know that this small state can attract this much attention once again!

We have had a lot of firsts in the history of Vermont to be proud of. Along with being an independent Republic for a few years before becoming the first new state to join the United States, we also have many firsts related to social justice: we were the first state to outlaw slavery, the first state to allow civil unions, and now Vermont is the first state to truly take on health care reform, moving toward making access to affordable health care a civil right.

These ready-to-be-first-kind-of-Vermonters are the ones who hired Dr. William Hsiao to analyze our health care system and propose a single-payer option, and they are the ones who elected Governor Shumlin on the platform of enacting a single-payer system.

Forty to fifty years ago, young Americans from all over the East Coast trickled into Vermont to escape the negative social values which they saw developing in their respective cities and states, to come back-to-the-land here in Vermont, where they saw the potential to live alongside people who shared this independent and socially conscious mindset.

When Vermont passes a single-payer system, I believe we will see energetic young physicians and nurses like you come back-to-the-patient as they move to our small state. This back-to-the-patient generation of health care professionals will replace the retiring baby-boomers and take care of them, and bring with them the same kind of exciting new ideas which helped energize Vermont in the 1970s.

I predict that in 10 years’ time, our back-to-the-patient movement will show the rest of the country that when you take the administrative and payment mess out of health care and enable better coordination of care among health providers — people will be healthier and it will cost you much less money.

I’m putting on this hard-hat in order to say that right now this single-payer bill is under construction. It’s not perfect and probably won’t take effect for a few years. But it does represent one of the many exciting changes to health care in this state.

This hard-hat also symbolizes the fact that there will be obstacles — falling objects, ladders, bricks — in our way. Albert Schweitzer once said: “Those who do good should not expect people to clear the stones from their path on this account. They must expect the contrary: that others will roll great boulders down upon them. Such obstacles can be overcome only by the kind of strength gained in the very struggle. Those who merely resent obstacles will waste whatever force they have.”

There will be boulders in our path to change, but we are the ones who will inherit what is now a broken even more-boulder-filled system. We must applaud and support what these Vermont citizen-legislators are doing right now and remember that when you, who have made the pledge to practice here, come back to Vermont, you are not coming back to Vermont because of a single-payer system – you have come to get back-to-the-patient.

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Desiree Otenti

Boston University School of Public Health

Hello, my name is Desiree Otenti. I am a nurse practitioner and a student of public health in Boston.

I am here today to talk about health care as a right, not as a commodity. When we realize that health care is a right, we also realize that health insurance is a business — a business that maximizes profits by denying you health care, a business with a track record of calling pregnancy a pre-existing condition, of paying their CEOs multimillion-dollar salaries, and of bankrupting people when they are at their sickest.

My patient Bob learned this lesson firsthand.

Bob is a hard working man who joined a union right out of high school and once went seven years without taking a single week of vacation. But Bob also contracted hepatitis C. Now, 20 years later, he is dying of cirrhosis and was told that he has two more months to live. He was also told by his insurance company that he has no place to die.

Because of his illness, Bob hasn’t been able to work for the past few years. Because he’s not working, he no longer has private health insurance. Because he’s only 42, he isn’t old enough for Medicare — the system he paid into all his life through his taxes. And instead he only has basic Medicaid which does not pay for end-of-life care.

Clearly Bob does not benefit from this situation, so who does?

Bob’s old insurance company. While Bob was young and healthy he paid thousands of dollars for years to this insurance company through his union. They have made a substantial profit on Bob because once he lost his job his insurance company relinquished all responsibility. It could not have worked out better for them.

I am here today to talk about health care as a right, not as a consumer product. When we realize that health care is a right, we also realize that lives matter more than profit margins.

Right now the market controls what care we receive. Does the market care about bankrupting elders? Does the market care that only large corporations can afford to buy health insurance for their employees? Does the market care if Bob dies homeless on the street? No. The market only cares about making money — as the insurance industry has proven decade after decade.

But we the people care. We care about our communities, our elders, those struggling to make ends meet. And because we care about lives instead of profit margins, we should be in control, not market forces.

Single payer gives us that control. Single payer acknowledges that the market cannot meet the needs of the people, that human lives are not the same as flat screen TVs or cars or any other consumer product. When insurance companies control the money for health care, that money can end up in someone else’s pocket, like we saw in Bob’s situation. When single payer controls the money for health care, that money will continue to work for you, even if you lose your job. That money will never turn into million-dollar salaries, wasteful marketing or departments with the sole purpose of issuing denials.

Let’s take back control of our health care through single-payer reform!

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Stanton Shek

Dartmouth Medical School

Hello my fellow, future, health care professionals,

I am in awe of this amazing demonstration of support for Vermont’s initiative to pass single payer. We’ve come from all over the country, traveled hundreds of miles, and missed out on precious studying time to send a message to Vermonters and their government representatives. Lead the country in establishing health care for all and choose to enact single payer!

Show us how health care is done right! Show us a health care system that is equal! Show us an uncomplicated health care system.

End the confusion of which procedure or medication is covered or not covered under which plan. End the headaches that providers get when they are navigating their patients through the labyrinths of their health insurance plans. End the concern that people feel that they might not make it through with their health, financial security and sanity.

When we all graduate from our respective schools within the next few years, we will inherit this health care system. We will inherit all the patients of America. We will inherit their problems whether that is sicknesses or their inability to pay for medical care. I support single payer now as medical student, and I’m sure everyone else in this room too, because we’re taking ownership of our future responsibility now. We are giving the signal that this is how we want to practice our medicine!

So Vermont: Set the example and raise the bar on health care in America by passing single payer. You have our support and also the support of the hundreds of other future health care providers back at our homes.

Make Vermont the best state to practice medicine! Thank you!

Department of Health and Human Services
Centers for Medicare and Medicaid Services

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR Chapter IV by adding part 425 to read as follows:

SUBCHAPTER B–MEDICARE PROGRAM

PART 425–MEDICARE SHARED SAVINGS PROGRAM

Subpart A–General Provisions

§425.2 Basis and scope.

(a) Basis. This part implements section 1899 of the Act by establishing a shared savings program that promotes accountability for a patient population, coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient services. Under this program, groups of providers of services and suppliers meeting criteria specified by the Secretary may work to together to manage and coordinate care for Medicare fee-for-service beneficiaries through an accountable care organization (ACO). ACOs that meet quality performance standards established by the Secretary are eligible to receive payments for shared savings. During years in which the ACO is participating in a two-sided model, the ACO may be required to share losses.

(b) Scope. This part sets forth the following:
(1) The eligibility requirements for an ACO to participate in the Medicare Shared Savings Program (Shared Savings Program).
(2) Program requirements, including quality and other reporting requirements.
(3) The method for assigning Medicare fee-for-service beneficiaries to ACOs.
(4) Payment criteria and methodologies (one-sided model and two-sided model).
(5) Compliance monitoring and sanctions for noncompliance.
(6) Reconsideration of adverse determinations.

Proposed rule (429 pages):
http://www.ofr.gov/OFRUpload/OFRData/2011-07880_PI.pdf

Accountable care organization (ACO) is a concept that grew out of concerns over excessive levels of spending for health care that is often only mediocre. It was thought that health care professionals and facilities could organize themselves into integrated organizations through which they would become accountable for both the cost and the quality of health care.

The Affordable Care Act established the Medicare Shared Savings Program which would use ACOs to achieve savings in the Medicare fee-for-service program, and the savings would be split between the ACOs and the government. The proposed rule for ACOs has now been released. I’ll try to reduce the 429 pages down into a few salient comments.

* The ACO would be composed of professionals arranged in networks or in group practices, and may partner with or be employed by hospitals.

* The ACO is accountable for the quality, cost, and overall care of the Medicare fee-for-service (FFS) beneficiaries assigned to it.

* The ACO shall include primary care ACO professionals that are sufficient for the Medicare FFS beneficiaries assigned to the ACO (minimum 5000 beneficiaries).

* The ACO shall have in place a leadership and management structure that includes clinical and administrative systems.

* The ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies.

* A benchmark will be established based on recent spending in the fee-for-service Medicare program.

* If spending for patients assigned to the ACO falls below the benchmark, the ACO will be rewarded with a portion of the amount saved, and the government keeps the rest.

* If spending for patients assigned to the ACO is more than the benchmark, then the ACO must pay a penalty of a portion of the excess (with a maximum two-year exemption for ACOs participating as a “one-sided” model with lower rewards but no penalty).

* The ACO must meet detailed quality requirements to qualify for the shared savings, but also may be terminated for failure to meet minimum standards.

* Patients will have free choice of any physician at all times, but will be assigned to an ACO based on plurality use of primary care services, for the purpose of assigning accountability for savings and quality. The ACO, which theoretically controls cost and quality for the patient assigned to it and will be rewarded or punished for the results, will have no control of the cost and quality of care delivered outside of the ACO.

* And over 400 pages of etc., etc.

Under the proposed rules, ACOs are not simple organizations formed on just a handshake. They require a formal legal structure with management, a specified governance board, a medical director, a quality assurance program, and more. They must implement evidence-based clinical guidelines.  The required documentation of quality is particularly onerous. They must have an infrastructure, such as information technology, to collect and evaluate data, and provide feedback. They must comply with extensive legal, business, and clinical documentation requirements. Since ACOs often involve consolidation within the health care delivery system, they must coordinate with antitrust agencies.

Obviously, considerable time, effort and expense is involved, so the reward must be worthwhile. And what is that reward? If they can improve their productivity while meeting quality standards, the financial benefit accrues to the government, but the reward is that the government lets them have a fraction of their productivity gains, providing that they are compliant with the complex set of rules. Since it’s almost impossible to continue to improve productivity in health care year after year, the reward would dry up soon.

With the trend of increasing frequency and intensity of services, there is a risk that the ACO may exceed the benchmark and have to pay back to the government a portion of the higher spending as a penalty.

What would happen if a group of professionals who were considering forming an ACO decided not to? First, they wouldn’t have all of the extra expenses and effort that establishing an ACO would require. They certainly would not have an incentive to reduce Medicare’s spending (i.e., reduce their income) since they would keep all revenues and not have to share them with the government. And if their spending for Medicare exceeded the benchmark? They would still keep it all, and wouldn’t have to pay a penalty.

Since most people with any business sense would never participate in such a scheme, why is it that there seems to be such a rush to form ACOs? In my opinion, they are not looking for the Medicare fee-for-service business. They are forming commercial ACOs in the private sector, looking for the private insurance business that will expand greatly in the new insurance exchanges. They are taking advantage of the prevailing attitude that we must back off on enforcing antitrust regulations in order to provide flexibility for the ACOs. They are consolidating to gain greater market control. Many are using “accountable care organization” as a deceptive label for expanded managed care oligopolies and monopolies.

The notion of accountable care organization was originated as a well meaning, altruistic, aspirational concept by individuals who really care about the health care that all of us receive. To be successful in improving quality and reducing costs the concept would have to be dependent on patients and health care professionals and administrators who were determined to do the right thing regardless of pecuniary or other self-interests. Yet health care, as the business that it is – like it or not – cannot afford to embrace altruism, for it would fail in its business responsibilities to maximize market opportunities.

Does it have to be this way? Do we really need to depend upon private stewards devoted to the amoral business ethic to administer the financing of health care? Well, when you think about it, a single payer system is an automated system of financing health care that does not depend on the altruism of its players. That’s because the single payer model is structured as an altruistic, aspirational system that, quite automatically, actually does, in itself, improve quality and control costs. It just works.

The Synthesis Project, Policy Brief No.20

Robert Wood Johnson Foundation
December 2010

Cost-sharing: Effects on spending and outcomes
By Sarah Goodell, M.A. and Katherine Swartz, Ph.D., based on a research synthesis by Swartz

This brief examines how cost-sharing affects the use of services, whether some patients are more sensitive to cost-sharing than others, and whether reduced use of services as a result of cost-sharing has an effect on health outcomes. All of these issues factor into whether and how cost-sharing could be used to reduce the rate of growth of health care spending.

Policy Implications

Recent studies of patient cost-sharing confirm the primary conclusion of the HIE — demand for most health care services is price sensitive. When people have to pay more, they reduce their use of health care. The HIE’s exclusion of the elderly, the increase in the prevalence of chronic conditions, and changes to medical care and insurance design since the 1970s, however, make it important to re-examine the role of cost-sharing. Findings from more recent research highlight important implications for policy-makers, including:

*  Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending. Most people are healthy and cost-sharing would only modestly affect their health care spending. People who are very sick or who have serious chronic health conditions are typically deferring to their physicians rather than making choices about medical care based on cost-sharing. Moreover, by itself, cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.

*  Cost-sharing is not well-targeted on low-value services. Patient cost-sharing generally has been organized in broad categories (e.g., outpatient care, inpatient care, emergency department care). These broad categorizations do not help people distinguish between essential and nonessential services. Comparative effectiveness research could help insurers and government programs better target cost-sharing to improve value.

*  Caution should be used when increasing cost-sharing for low-income populations or the chronically ill. Not only are low-income populations disproportionately affected by increased cost-sharing, but they also are more price sensitive than other income groups. Unless the cost-sharing increases are concentrated on services that are ineffective or unnecessary, low-income groups may avoid necessary medical care as a result. Increased cost-sharing for people with chronic conditions may result in higher expenditures for hospitalizations and other adverse outcomes if necessary care is reduced.

Policy Brief:
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.brief.pdf

Full Research Synthesis Report by Katherine Swartz, Ph.D. (40 pages):
http://www.rwjf.org/files/research/121710.policysynthesis.costsharing.rpt.pdf

This is a very important report. Let me tell you why.

Conservatives have framed the problem of our very high health care costs as being due to a lack of sensitivity of health care prices by patient-consumers who are simply demanding too much care. This is been repeated so many times that moderates and liberals are now parroting the same message. They profess that patients must face large deductibles, co-payments and coinsurance if we are ever going to get our health care costs under control.

It is true that these forms of cost-sharing do reduce health care spending, but is the savings significant? And is there any downside, any unintended consequences, to applying these price sensitizers to health care shopping?

Too much care?

When is the last time that you went to your health care professional and demanded too much care? If it isn’t you who is guilty of this transgression, then who is? I didn’t see these people in my very busy practice. Sure, you can find a few anecdotes, but most people simply are not motivated to use their time and money to seek out care that they don’t need.

Reduction in spending

The healthier one-half of our population uses only three percent of health care. They may be price sensitive shoppers when they have significant cost-sharing, but even if they reduced spending by ten percent, the savings of three-tenths of one-percent would represent only a negligible decline in our national health expenditures.

Twenty percent of us use eighty percent of the nation’s health care. These are people with very significant problems who are preoccupied with accessing the health care that they need, and are no longer concerned about the deductibles that they’ve already gone through. Cost-sharing is not intended to apply to individuals with significant illnesses or injuries anyway. So cost-sharing has very little impact on eighty percent of our national health expenditures.

The remaining thirty percent of us use about sixteen percent of health care. Some of this is urgent care, over which we have little choice, so price shopping isn’t an issue. But suppose that we could actually reduce spending in this group by about ten percent; that would still be only about 1.6 percent of our national spending. Combined with the 0.3 percent above, that’s still under two percent.

If you read the report, you will find that it is common for people to make unwise decisions as to which care they decline because of the out-of-pocket costs involved. These studies show that the net costs are sometimes higher because forgoing treatment can result in a greater incidence of emergency department visits and hospitalizations, and can sometimes intensify their chronic problems, making them more expensive to manage. Much of the relatively paltry savings from creating price sensitivity is lost due to the offset of the higher costs of deferred medical management.

As this report states, “cost-sharing is highly unlikely to slow the growth in spending unless the expected increases in the costs of appropriate care for the very sick also slow.” We need to consider more effective options than cost-sharing if we want to tame health care costs.

Unintended consequences

Cost-sharing has been demonstrated to result in adverse outcomes in two particularly vulnerable groups: low-income individuals and families, and individuals with chronic disease.

Although Medicaid selectively covers the low-income sector with more generous benefits and usually without significant cost-sharing, as a chronically underfunded welfare program, access is often impaired because of a lack of willing providers. Also, as states struggle with their budgets, some are introducing more cost-sharing into their Medicaid programs in order to reduce spending.

For those with incomes just above the level at which they would qualify for Medicaid, the standard plan in the exchanges will have an actuarial value of only 70 percent, which can be achieved only by including cost-sharing in the plan design.

Creating financial barriers to care for this vulnerable sector clearly reduces their access to beneficial health care services – the opposite of what a well functioning health care system should be doing.

The same applies to the chronically ill. The health care financing system should be designed to help them get the care that they need. Cost-sharing does the opposite. Also it is in this sector that cost sharing has often been shown to result in the opposite of its intent. Instead of reducing health care spending, the financial barriers of cost sharing have often resulted in higher costs because of more expensive emergency department and in-hospital care that must be rendered due to the financial barriers that result in inadequate chronic disease management.

Prevention of financial hardship

A prevalent concept is that the purpose of insurance is to protect against catastrophic loss, but individuals should be personally responsible for routine medical expenses. That has been repeated so often that it is widely accepted. Yet many studies have confirmed that so-called routine expenses can be very burdensome financially. When medical debt contributes to personal bankruptcy, the routine expenses of cost-sharing have defeated this purpose of preventing catastrophic loss since the necessity of filing bankruptcy is, in itself, catastrophic.

We need to abandon the glib definition of insurance as being only for the purpose of covering catastrophic loss, and replace it with the definition that a health care financing system is for the purpose of removing financial barriers to the care that a patient should have. Cost-sharing does the opposite by creating financial barriers that should be removed.

Solidarity

Another prevalent attitude is that the government should stay out of our lives, and we should each tend to our own needs. As an abstraction, that concept has a certain appeal, and, consequently, a wide following. But there are very few of us who are not offended when we hear real-life stories of people who suffer when they fail to receive the medical care that they should have. We are particularly offended when we hear that the individuals’ insurance failed them in their times of need.

Insurance should be designed to help people get the care they need. Yet, as we all know, it is frequently designed to reduce spending on health care for the business purposes of keeping insurance premiums competitive and enhancing profits. One of the most important tools used by the insurers is cost-sharing. At times it seems as if they are a business set up more for the purpose reducing health care spending than helping us get health care.

Traditional private insurance has represented a form of social solidarity in which we join together to pool our risks so that none of us would have to suffer financial hardship in the face of medical need. But the interests of private insurers are very different from the interests of patients. The tool of cost-sharing serves the interests of the private insurers very well, but it fractures the solidarity that was intended to bring those with needs the health care that they need.

Other nations have expressed solidarity in a more effective manner. The people join together, through their governments, to finance their universal pools to serve as a resource for funds to pay for health care that people need. Many of those nations have rejected the concept of cost-sharing because of its perversities. They provide first dollar coverage for health care.

Those nations that do eliminate the barriers of cost-sharing still provide comprehensive benefits for everyone at a cost much lower than what we spend here in the United States. That’s the kind of solidarity that we need and that we would have if people weren’t confused by prevailing misperceptions that our goal should be to stop people from demanding too much care, and that we can do that by assessing the penalties of cost-sharing on people who attempt to access the care that they need.

You should consider downloading the RWJF brief for future use. We need to change the national discourse from that of using the consumer-directed tools of cost-sharing – tools that save very little money and impair outcomes – that are being used to address the alleged but fictional excess patient demand for care. Instead we need to have a national dialogue on how we can improve access to the care that patients need, and do it in an affordable manner (i.e., single payer).

Blue Cross investigation is expanded

The Baltimore Sun
March 29, 2011

A probe of alleged anti-competitive agreements between Blue Cross Blue Shield companies and hospitals has been expanded by the U.S. Justice Department beyond Michigan, where an antitrust lawsuit that alleged the agreements raised hospital prices was filed last year.

CareFirst BlueCross BlueShield, Maryland’s largest insurer, confirmed to the Wall Street Journal that it received a civil investigative demand from the Justice Department but declined to comment further.

Federal and state investigators also have sent civil subpoenas to Blue Cross Blue Shield units in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia, a person familiar with the matter said.

The expansion of the Blue Cross Blue Shield investigation is important because “they’re using exclusionary practices to hold competitors at bay,” said David Balto, an antitrust attorney and senior fellow at the Center for American Progress, a Washington-based policy group that generally favors Democratic initiatives.

The department’s Michigan complaint said Blue Cross negotiated contracts with 70 of the state’s 131 general acute- care hospitals that led to higher prices for the insurer’s competitors. In some cases, the hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the department said at the time.

http://www.baltimoresun.com/business/bs-bz-carefirst-justice-20110329,0,7272326.story

And…

One state’s hospital cost solution: regulated prices

By Christine Vestal
The Pew Center on the States
March 29, 2011

The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.

In one state, however, monopoly pricing won’t be a problem. The state sets the prices.

For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals.  And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.

Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500.  The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.

Whether other states will emulate Maryland’s system is an open question.  Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, (Maryland’s chief regulator Robert) Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

http://www.stateline.org/live/details/story?contentId=562689

Because of market dominance, Blue Cross Blue Shield plans have been able to negotiate lower hospital prices in many regions throughout the nation. Hospitals, in turn, have been able to negotiate higher prices for insurers that do not dominate the markets, resulting in higher premiums and consequently less ability for the smaller insurers to penetrate these markets. The U.S. Justice Department quite appropriately is investigating these agreements.

The Blue Cross Blue Shield plans competing unfairly in the private market have proven once again that private insurers are not capable of providing equitable financing of our health care.

If instead of using market dynamics to price hospital services, what would happen if the government regulated the rates? We have an example of that in Maryland which uses an “all-payer” system. The state sets the prices. All insurers, including Medicare and Medicaid, pay the same.

How well has that worked? Maryland’s hospital prices are the lowest in the nation – only 40 percent of the national average. That has resulted in insurance premiums that also are amongst the lowest in the nation.

Although the all-payer system has had a very favorable impact on pricing, there are still many other inefficiencies and inequities in a financing system that depends on private insurers. A single payer system would eliminate the private insurers and establish global budgets for hospitals – funding them just as you would police, fire, libraries, and other public or quasi-public institutions.

As Maryland’s chief regulator stated, “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different.”

Given that we have a finite though generous amount of funds available to pay for health care, we can get the best value if we do that within a government budget, administered efficiently through a single payer system.

Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans

By Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
The American Journal of Managed Care
March 2011

The effect of enrollment in high-deductible health plans (HDHPs) or consumer-directed health plans (CDHPs) on healthcare spending and on the use of preventive care was assessed across multiple employers, insurance carriers, and plans in a 2-year retrospective study.

* Families enrolling in HDHPs or CDHPs and firms offering HDHPs or CDHPs spent less on healthcare.

* Significant savings were realized only for enrollees in plans with deductibles of at least $1000, and savings decreased with generous employer contributions to healthcare accounts.

* Enrollment in HDHPs or CDHPs was associated with moderate reductions in the use of preventive care, despite the fact that these plans waived the deductible for preventive care.

http://www.ajmc.com/publications/issue/2011/2011-3-vol17-n3/AJMC_11mar_Buntin_222to230

The Affordable Care Act has established silver or bronze plans, with low actuarial values of 70 or 60 percent respectively, as the new standard for plans to be offered in the insurance exchanges. Since the plans will have to provide a mandated basic level of benefits, it is inevitable that they will have to include high deductibles since an average of 30 to 40 percent of the costs of health care will to be shifted to the patients to pay out of pocket. Is the wholesale adoption of high-deductible health plans a wise policy decision?

This new RAND study of over 800,000 families with employer-sponsored health plans showed that deductibles of $1000 or more do result in lower total spending, but also result in lower use of important preventive services, specifically immunizations and cancer screening. (As an aside, this study also shows how commonplace high-deductible plans have become in the employer-sponsored market as well.)

This study does have limitations. It was a two year study of the healthy workforce and their young healthy families during a healthy period in their lives. It was too short to measure differences in outcomes, and no attempt was made to do so. For our purposes, we can assume that the reduction in the use of preventive services serves as a proxy for what might be predicted when patients are not taking full advantage of the health care opportunities available to them.

The landmark RAND Health Insurance Experiment (RAND HIE) had previously shown that cost sharing resulted in a decline of both beneficial services and services of questionable value. In a press release announcing this new RAND study, co-author Amelia Haviland stated, “We discovered that costs go down dramatically during the first year people are enrolled in high-deductible health plans, as long as the deductible is at least $1,000 per person. But we also found concerning reductions in use of preventive care. This suggests people are cutting both necessary and unnecessary care.”

We do need to be concerned about costs, but there are many different policies that can control costs. Any policy that reduces spending by reducing beneficial services that patients should be receiving is bad policy. High-deductible health plans represent bad policy. They should be eliminated.

It is particularly annoying to hear policy experts say that we can’t control costs unless we put patients in charge of spending their own health care dollars, as if that were the only cost reduction tool available. Here’s what the authors of this study have to say:

“Employers often make contributions to personal medical accounts to provide incentives to employees to switch to high-deductible plans, as high enrollments are necessary to capture substantial cost savings. Some have posited that such contributions would reduce the cost savings of HDHPs (high-deductible health plans) or CDHPs (consumer-directed health plans which are HDHPs with health savings accounts) by undermining consumer cost sensitivity. However, this was not the case for HDHPs or CDHPs with moderate employer contributions. These HDHPs or CDHPs seem to reduce spending as much as plans with similar deductibles but no employer account contribution.” (High employer contributions also reduced spending, but not as much.)

Instead of erecting financial barriers to beneficial health care services, we need to erect a financing infrastructure that blocks spending on wasteful administrative excesses and non-beneficial services, while promoting access to appropriate health care. The single payer model is designed specifically to get patients the care that they need while eliminating wasteful spending.

I belong to the Public Employees Federation, AFL-CIO, the union that organizes and represents public employees who perform scientific, professional and technical services for New York. About 56,000 people belong to our union and statewide we perform literally thousands of essential roles.

When I was hired at my present position I welcomed the opportunity to join PEF. Our union provides an important way to stand up for our communities, our environment, our patients and each other. For example, thanks to unions, ours with others, registered nurses in New York are no longer subject to mandatory overtime, something proven to be vital for patient safety.

We need to nurture our society and our environment toward health and with science. This is the proper role for all public employees, from hospital caregiving to environmental conservation to engineering to taxation and finance to schools to the maintenance and development of our infrastructure.

With these things in mind I ran for union office, first as a steward. Then, when our Council Leader retired last year, I decided to seek the role of leader of the stewards for our division. This year I was also elected a member of the statewide Executive Board of PEF.

What a time to take up the union cause!

We now face the bared fangs of a major political offensive against public employees.

The offensive is really a defense. A defense of the indefensible.

It is a defense of three decades of tax cuts for the wealthy, with steep tax breaks and huge taxpayer subsidies for profitable corporations during a period of accelerating income inequality, a time of spectacular concentration of great wealth, a time in which the poor have grown even poorer.

Thirty years ago the wealthiest 1 percent of New Yorkers won about 10 percent of total income. Today the wealthiest 1 percent take more than 35 percent of the total income in New York state. In New York City they take 45 percent of the total.

In 1980 the “poorer” one half of New Yorkers had an average income of $16,074. By 2007 this figure declined to $14,045! (Both figures in 2007 dollars: see the report by economist James Parrott.)

Not only have the rich gotten richer and the poor poorer, such yawning income inequality leads to poor health for the state as a whole. Convincing epidemiology shows that states and nations with greater income inequality are less healthy and have more social problems than those with more income equality. (See The Equality Trust.)

This month Forbes reported that New York is home to 68 billionaires.

68 billionaires!

New York is NOT broke!

Yet to close the state budget deficit our elected leaders have taken aim not at billionaires but at public employees. They blame the public sector for a crisis it did not create and have launched an assault upon public education, safety and health.

Will cutbacks and layoffs nurture a better future? Layoffs in the public sector will cause layoffs in the private sector. Will layoffs, closures and cuts strengthen or weaken our frayed social safety net, our weather-beaten infrastructure, our schools, our already-weakened environmental protections and our beleaguered economy?

We have experienced a time when the rich have grown so much richer than ever, especially here in New York. During the same period the wealthy have received tax break after tax break after tax break, with billions and billions of dollars in state revenue forfeited annually.

It is now time to tax the rich. But alas, not for our leading politicians. Their mission is to defend the millionaires’ and billionaires’ money, the bankers’ bonuses and the corporations’ profits from taxation.

Against the defense of the indefensible, and in the interest of community health and social medicine, I’m sticking to the union.

Originally published at the Albany Times-Union.

The Model of the Future?

By Avery Johnson
The Wall Street Journal
March 28, 2011

The 2010 health-care law encourages the development of accountable-care organizations as a way to improve care and reduce costs.

So what exactly are accountable-care organizations, anyway?

In broad outline, these entities propose to unite doctors and clinics or hospitals in groups that pool their resources with the goal of trimming spending while boosting the quality of care. When the group can show that it is improving care and delivers it for less than the cost projected—arrived at by crunching historical patient data for that market—a share of the savings goes to the ACO’s bottom line.

ACOs exist more on paper than in reality, for now.

“An ACO is like a unicorn; everyone thinks they know what one is, but no one has ever seen one,” says Gene Lindsey, president and chief executive of Atrius Health.

Elliott Fisher, the Dartmouth Medical School professor who helped coin the term ACO, and who worked with members of Congress to draft the ACO concept into the health-care law, concedes that “there are some really important questions about whether this will work.”

But, Dr. Fisher adds: “I think it’s the best hope we have.”

http://online.wsj.com/article/SB10001424052748703300904576178213570447994.html

And…

Cost control the next step for Massachusetts health reform

By Tanya Albert Henry
American Medical News
March 28, 2011

In February, Massachusetts Gov. Deval Patrick unveiled his cost-containment plan to follow up on the landmark 2006 coverage expansions. If approved by legislators, it would define and encourage accountable care organizations within the state; give the state insurance commissioner the ability to scrutinize insurers’ rates, including underlying physician pay, and disapprove rates that are excessive; and revamp the medical liability system to try to resolve disputes more quickly and curb defensive medicine.

Accountable care organizations

* Mandates that ACOs provide patient-centered primary care coordination and referral services.

* Requires ACOs to share financial risk, distribute savings and meet quality measures.

* Expects ACOs to be competent in population health management, financial and contract management, quality measurements, and communication.

* Charges ACOs with providing behavioral health services, either internally or by contract.

* Makes physician participation voluntary.

* Allows primary care physicians to belong to only one ACO but places no limits on specialists.

* Requires MassHealth, the Group Insurance Commission, the Commonwealth Connector and all other state-funded insurance programs to implement ACOs and alternative payments by January 2014.

http://www.ama-assn.org/amednews/2011/03/28/gvsb0328.htm

Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth’s Elliott Fisher, who was one of the first to promote the concept, now says that “there are some really important questions about whether this will work.”

Nevertheless, Massachusetts, which is serving as a prototype for the now-enacted ACA, is intending to move forward with its version of ACOs. Their model not only measures quality and distributes savings, but it also shares financial risk. Also it includes exclusive primary care networks, limiting patient choices. The intent of Dr. Fisher and his colleagues is very noble, but it appears that we may be opening up the process to enable a return to the worst of the managed care era.

Quoting from a personal communication from Steffie Woolhandler and David Himmelstein, “Universal, geographically-based, non-profit ACOs are called a national health service, a reform we would heartily endorse. Unfortunately, the ACOs actually being pursued are profit-driven recreations of full-risk capitated HMOs.”

Very soon HHS will be releasing their guidelines for ACOs. The question we need to ask then is will these organizations be designed specifically to provide patients higher quality care at more reasonable costs, as Dr. Fisher envisions, or will they be designed by businessmen to… well, you know.