Plan with low rate hikes for health coverage has fewer choices

By Sean P. Murphy
The Boston Globe
March 8, 2011

At a time when most health insurance companies are raising premiums by 10 percent or more, the Group Insurance Commission, which insures about 185,000 state employees and their families, last week showed them all up by limiting 2011 increases to just an average 2.4 percent.

But to achieve that goal, the GIC is counting on thousands of subscribers to give up their present plans for much cheaper ones that limit their choices of doctors and medical facilities.

The GIC has offered limited-network plans for years, but fewer than 10,000 of GIC’s 350,000 members have joined so far. Last year, the GIC added new limited-network plans offered by Harvard Pilgrim Community Health and Tufts Health Plan, but those plans, too, attracted limited interest.

To help jump-start migration to the less costly plans, the GIC, beginning April 9, will require every subscriber to pick from among the GIC’s 19 plans, which include preferred-provider organizations (PPO) that allow wide choice and health maintenance organizations that allow moderate choice but charge higher premiums than the more restrictive limited-network plans.

Any subscriber who fails to designate a plan in the one-month period ending May 9 will be dropped from their present plan and automatically enrolled in the cheapest — and most limited — plan on the GIC menu.

http://www.boston.com/news/local/massachusetts/articles/2011/03/08/plan_with_low_rate_hikes_for_health_coverage_has_fewer_choices/

We keep looking at Massachusetts since it serves as a prototype for national reform under the Affordable Care Act. Under this latest development in Massachusetts, state employees are being shoved into limited-network plans – significantly limiting their choices of health care professionals and institutions.

One of the primary defects with the insurance exchange model of reform is that emphasizing affordability of health plans rather than health care itself results in a transformation to ever more inferior insurance products.

The goal of reform should not be to take away choices in actual health care, nor to shift more of the costs to those who need health care. Yet those are precisely the trends that we are seeing and will continue to see under a model of competition between private health plans.

Under a single payer national health program we would have free choice of our health care professionals and hospitals, and financial barriers to care would be removed. No wonder that we keep hearing that if (whatever) we’re going to end up with single payer. Can hardly wait.

Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?

By David U. Himmelstein, MD, Deborah Thorne, PhD, Steffie Woolhandler, MD, MPH
The American Journal of Medicine
March 2011

Despite a marked declined in the uninsurance rate in Massachusetts since the implementation of health reform, the proportion of bankruptcies that occurred in the wake of medical problems has not decreased significantly, and the absolute number of medical bankruptcies has actually increased by one third.

What accounts for the seemingly paradoxical trends of increasing coverage yet stable, or even increasing (on a per capita basis), medical bankruptcy rates? Health costs in the state have increased sharply since reform was enacted. Even before the changes in health care laws, most medical bankruptcies in Massachusetts, as in other states, affected middle-class families with health insurance. High premium costs and gaps in coverage — copayments, deductibles, and uncovered services — often left insured families liable for substantial out-of-pocket costs. None of that changed.

Conclusions

The recently enacted national health reform law closely mirrors Massachusetts’ reform. That reform expanded the number of people with insurance but did little to upgrade existing coverage or reduce costs, leaving many of the insured with inadequate financial protection. Our data do not suggest that health care reform cannot sharply reduce the number of medical bankruptcies. Indeed, medical bankruptcy rates appear lower in Canada, where national health insurance provides universal, first dollar coverage. Instead, these data suggest that reducing medical bankruptcy rates in the United States will require substantially improved — not just expanded — insurance, as well as better disability insurance programs to provide income support to ill individuals and family caregivers.

http://www.pnhp.org/sites/default/files/docs/2011/AJM_Mass-Reform-hasnt-stopped-med-bankruptcies.pdf

“Unaffordable underinsurance” is rapidly becoming the new standard in the United States. Even with subsidies, insurance premiums are ever less affordable, and for those who need health care, out-of-pocket spending creates significant financial hardships. Since reform under the Affordable Care Act closely mirrors that of Massachusetts, their current experience with medical bankruptcy portends the future of medical bankruptcy throughout the United States.

The Massachusetts experience shows that merely providing insurance coverage to the majority of the population is not enough. The quality of the insurance coverage is crucial. In 2009, 89% of Massachusetts debtors and all their dependents had health insurance at the time of filing, yet the insurance was not effective in reducing the rate of medical bankruptcy below levels that already existed before the full implementation of the Massachusetts health reform program.

Other nations with first dollar coverage do not see medical bankruptcies, even though they cover everyone at a much lower cost. We could do the same here. In fact, we most likely will once the nation understands that “unaffordable underinsurance” is rapidly becoming the new national norm – now carved in stone by the Affordable Care Act. We just need more highly skilled artisans to rework that stone.

Neat, Plausible, and Wrong: The Myth of Health Care Unsustainability

Canadian Doctors for Medicare
February 2011

The “Sustainability” Myth

Critics of Medicare assert that the cost of our public health care system is growing at an alarming pace. They are joined by provincial Premiers who are concerned that health care is taking up an increasing proportion of provincial budgets. They claim that the cost of health care is rising faster than the pace of inflation and taking up an increasing share of provincial budgets.

The Facts:

Any crisis in health care funding has nothing to do with Medicare. The costs of Medicare – medically necessary hospital and physician services – are not growing significantly and can easily be sustained.

Over the last 35 years, Medicare costs have remained remarkably stable at 4 to 5% of Canada’s gross domestic product (GDP).

Total government health care spending, which includes costs that are not part of Medicare, such as public health, publicly funded dental care and prescription drugs, have risen faster than Medicare spending alone so that total public spending on health care has increased from about 5% of GDP in 1980 to about 7% in 2009. But still, this hardly reflects spending that should be considered “unsustainable.”

Provincial Budgets

None of this is meant to imply that health care is not making up an increasing portion of provincial budgets. It clearly is. The change in the share of provincial budgets however, is not primarily due to increased health care spending. It is the result of decreases in other provincial spending to accommodate political decisions to cut taxes.

… almost all of the growth in health care’s share of provincial budgets can be attributed to the simple arithmetic of an essentially constant numerator and a decreasing denominator. Deep cuts in federal transfers to the provinces in the mid‐1990s were compounded by provincial tax cutting policies in the latter part of the decade, causing significant reductions in total provincial budgets. Provincial revenues have fallen almost $30 billion since 1997, causing decreases in other government program spending through cuts to education, social services, and municipalities.

But it is tax cuts that have “crowded out” these priorities, not Medicare. Medicare spending has remained stable for more than three decades. That stability, in an environment of shrinking budgets, means Medicare inescapably makes up a larger share of that smaller total budget, but Medicare costs are not the part of the equation that is changing at an alarming pace. If the “runaway” growth of Medicare’s share of provincial spending is of genuine concern to provinces, they could simply address the real cause of that development by choosing not to reduce their total tax revenues each year.

Which Costs Are Rising?

While the cost of Medicare has not grown as a percent of GDP over the last 35 years, there have been significant increases in total health care system costs over the same period, and those increases have accelerated in the last decade. Overall health spending in Canada has risen from about 7% of GDP in 1975 to about 10.7% in 2008. In 2010, health care spending was estimated to be about 12% of GDP.

If Medicare costs are stable, and public sector costs are rising slowly, why are total health care costs increasing rapidly? The real cost driver is precisely the thing that critics of Medicare tout as the solution: private health care.

Currently 30% of all health spending is in the private sector, up from 24% in 1975. That growth is a result of significant increases in costs in the private health care sector, including out‐of‐pocket spending and the costs of private insurance. Pharmaceuticals and private prescription drug insurance are the most significant driver of these costs, followed by dental care and private dental insurance.

The Private Funding Option

Those “concerned about sustainability” recommend breaking the “monopoly” Medicare has on insuring medically necessary hospital and physician services and allowing private health insurance for these services. But increased private financing offers no relief to Canadians concerned about the rising costs of health care. The private insurance market, if anything, makes the system less sustainable, as well as less equitable.

Canada’s private insurance system has seen some sharp increases in costs. Private health insurance spending has grown rapidly since the late 1980s, rising from $139 per capita in 1988 to $591 per capita in 2007. Even adjusted for inflation, (giving a per capita constant dollar cost of $377) this represents an impressive 369% increase, outpacing almost all other categories of health care. It is hard to see how this increasingly costly system can be expected to reduce cost in health care overall.

Competing private sector insurance providers have not been able to achieve the same efficiencies as the public insurance system because they are burdened by the inefficiencies of redundant administrative infrastructure, lack of coordination, fragmented purchasing power, personnel costs and corporate profit.

More Effective Options Within Medicare

a) Curb the growth of pharmaceutical costs

Regulating the prices of prescription drugs more effectively is one such opportunity.

Policy makers can also institute more effective assessment systems to identify the best and most cost effective drugs.

The rising costs are also due in part to the fact that private sector drug plans impose unnecessary administrative costs on the health care system.

The relative efficiency of single‐payer health care financing, whether for medical care or pharmacare, is well documented internationally, and benefiting from that efficiency would certainly play a role in reversing the rise in costs that the growth of private drug plans has caused.

b) Ensure more appropriate use of resources

The Health Council of Canada suggests clinical practice guidelines and more effective rules for ensuring the appropriateness of tests and prescriptions would be an effective remedy for overuse, again indicating that more coordinated management may be more useful to reducing costs.

c) Continue to make the delivery of Medicare services more efficient

More fruitful are the many opportunities to improve our Medicare system by drawing on its strengths and building the changes that advance it. To name but a few, such reforms include: greater emphasis on primary prevention and health promotion; integrated patient‐centred primary care by multi‐disciplinary teams; enhanced scope of practice for allied health professionals; shared care with increased coordination between family doctors and specialists; national pharmacare including national procurement processes; better uptake of evidence‐based guidelines for diagnosis and treatment; stronger patient safety protections; and deployment of the long‐awaited electronic health record.

Health System Transformation

Reforms, such as the ones outlined in this paper, would foster healthy partnerships between physicians, other health practitioners, public policy decision‐makers and the public, regardless of their political outlooks, focused not on rehashing the public/private debate that Canadians have settled countless times, but on improving the public health care system. The distraction caused by recycling the old debates has taken up far too much of our policy efforts. It’s time we got down to the real process of improving health care.

Full report (9 pages):
http://www.canadiandoctorsformedicare.ca/images/stories/Neat_Plausible_and_Wrong.pdf

Conservatives in Canada have been fairly successful in disseminating the concept that their Medicare program is unsustainable, and that only privatization can save it. Their campaign has been downright dishonest.

This report from Canadian Doctors for Medicare shows that Medicare has been very stable through the decades and that the increasing cost pressures have occurred in the private sector. The Canadian health care system clearly needs more government involvement, not less.

There are lessons here for the United States. Our much higher costs have been due to unconstrained pressures in the private sector. Our health care prices are by far the highest, and our private insurers have been ineffective in constraining these escalating costs. Since our Medicare program covers only selected populations (elderly, long-term disabilities, end-stage renal disease) it has not had the leverage to control spending as effectively as the Canadian Medicare system. Also, being only a part of a highly fragmented financing system, Medicare is forced to deliver within a system steeped with wasteful administrative excesses.

In the United States, we need a Medicare system that administers financing for our entire health care delivery system, while eliminating the privatizers who continue to drive up health care pricing to unsustainable levels. Canada has shown us that a single payer system works just fine, as long as you don’t give free rein to the privatizers.

The president supports state innovation in health care, but vigilance is required to ensure state reforms improve health as we continue to call for national reform

By Margaret Flowers, M.D.

President Obama announced at the National Governors Association on Monday that he supports an amendment to the health law that would allow states some flexibility to innovate with their own models of health reform beginning in 2014, rather than waiting until 2017, as is currently required by law. The president’s concession comes as the current federal health law is deteriorating and states are complaining that the financial burden of complying with the law are too onerous in the face of serious budget deficits.

The president’s endorsement of the Wyden-Brown amendment, known as the “Empowering States to Innovate Act” or S.248, allows states to apply for waivers from the health insurance exchange beginning in 2014 and would give them some federal dollars to experiment with alternative ways of providing health coverage. The federal health bill requires that any state seeking a waiver from the health insurance exchange must at a minimum provide coverage comparable to that specified by the federal bill (Section 1332). It is left to the discretion of the secretary of health and human services to determine if a state meets this requirement.

States that put in place a single-payer health system will surpass the coverage of federal law. A single-payer health system, improved Medicare for all, would be universal and would provide the necessary cost controls and savings that would fund comprehensive coverage, including much-needed mental health, dental and vision care.

States such as Vermont and California, which appear to be closer than any others to enacting a state single-payer health system, welcomed the president’s support for the Wyden-Brown amendment because it would remove one of the many barriers they face. The amendment will still need to be passed by Congress before it arrives at the president’s desk, which may in itself be a formidable feat in the current political climate.

In addition, for states that want to take the path of single payer, even with the amendment, there will still be many hurdles before they can implement such a plan. The amendment only moves up the date when waivers can be applied for. It does not guarantee federal approval of the many waivers a state single-payer system would need, such as being allowed to roll their Medicaid and Medicare populations into their single-payer system.

Of concern is that the president is signaling a greater willingness to allow states to opt out of the health reform bill not because states want to provide better coverage but because governors in some states are opposed to the federal health law altogether. Beginning shortly after passage of the law last year, there has been an effort to undermine it through court challenges to its constitutionality and more recently through efforts to repeal it entirely or in part by the House. Additionally, hundreds of waivers have been issued excusing businesses, union health plans and health insurers from having to comply with parts of the law. The Department of Health and Human Services now has a 24-hour turnaround time on such waivers.

Vigilance will be required to ensure that some states do not use the amendment, if it is passed, to gut important public health programs such as Medicaid and SCHIP and further privatize health care, which would be harmful to patients. According to a White House fact sheet released around the time of the president’s statement, “The law also allows states to submit a single application that includes Medicaid waiver requests which could, for example, seek to give people eligible for Medicaid the choice of enrolling in [health insurance] exchange plans.” A change such as this would undermine Medicaid and shift more people into more expensive and less protective private insurance plans.

Efforts are already underway in Wisconsin to take control of the state’s Medicaid programs away from the state Legislature and end the public’s ability to have a voice in the process and instead give full authority over the program to the governor’s office. Gov. Scott Walker appointed Dennis Smith, a former Heritage Foundation fellow who has written about moving people out of Medicaid and raising co-pays for those still in Medicaid, as his secretary of health.

Wisconsin is not alone in challenging Medicaid. According to the Wall Street Journal, more than half the states want permission to remove hundreds of thousands of people from Medicaid. Other states like New York and Arizona are cutting benefits of health programs that already provide insufficient coverage.

Decades of experience in the United States shows that the market model fails when it comes to financing health care. Health is a necessity, not a commodity. A system based on the purchase of private insurance results in higher costs and poorer outcomes. Patients who cannot afford necessary care get sick, defer treatment and develop preventable complications, sometimes fatal ones. Families experience personal bankruptcy when a serious illness or accident occurs. With increased political pressure and Secretary Sebelius already issuing hundreds of waivers, can further privatization of health care be prevented?

While some welcome the president’s support for the amendment and hope that if it passes a state will be able to demonstrate the benefits of a single-payer system, as happened in Saskatchewan (and which led to Canada’s national Medicare system), it is possible that the actual outcome of such an amendment will be a further attack on our necessary public health programs. For this reason, it is imperative that we continue to push for a national health program, improved Medicare for all in the U.S.

“It would require fewer waivers and be simpler to enact improved Medicare for all at the national level,” says Dr. Garrett Adams, president of Physicians for a National Health Program. “Not only is it simpler, but it would save lives and end personal bankruptcy caused by medical illness. We would like to see a national Medicare-for-all system enacted sooner rather than later. Every day that we wait, hundreds of Americans die of preventable causes.”

Physicians for a National Health Program advocates for a national publicly financed and privately delivered health system: an improved Medicare for All as embodied in H.R. 676, the “Expanded and Improved Medicare for All Act.” Among the benefits of such a program are that it is a simpler system for patients and health professionals, recaptures about $400 billion annually in unnecessary paperwork and bureaucracy and directs that money into care,  allows freedom to choose one’s health provider and more control over one’s treatment, is universal and provides comprehensive health benefits while at the same time effectively controlling our soaring health care costs. In this time of fiscal and health crises, national Medicare for all is more important than ever.

The HMO in Your Future

By John Goodman
National Center for Policy Analysis, John Goodman’s Health Policy Blog
February 28, 2011

(Brief excerpts only)

… you are likely to be in an ACO (accountable care organization) at some point in the future and it’s probably going to happen sooner than you think.

ACOs are sometimes said to be the brain child of Elliott Fisher, who heads the Dartmouth Atlas Project. But as Uwe Reinhardt pointed out the other day, the idea is actually an old idea. It’s called Kaiser Permanente.

… the non-evidence based approach of the Obama administration will force everybody into the same model.

So how do we explain the administration’s commitment to ACOs? Whether they raise or lower costs, whether they raise or lower quality, there is one thing that ACOs will indisputably accomplish. They will drive doctors into organizations where their behavior can be controlled. For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control.

ACOs are the portal through which we will all march toward a truly nationalized health care system.

Use this link to access John Goodman’s full blog entry:
http://healthblog.ncpa.org/the-hmo-in-your-future/

Will accountable care organizations (ACOs) provide the portal that will lead us to a nationalized health care system?

There is a sharp contrast between ACOs as defined under the Medicare Shared Savings Program in the Affordable Care Act (ACA) and the commercial ACOs that already exist or are being formed throughout the nation.

Commercial ACOs are primarily an extension of private sector managed care models of health care financing and delivery, except with the hope of less regulatory oversight of the market concentration that they hope to gain. These organizations are largely entrepreneurial in nature (even if non-profit) with the primary goal of making money. Since virtually all stakeholders are driven by profits, these will be the predominant models of ACOs.

The government version of Medicare shared savings ACOs is merely a model to discount Medicare services and then split the savings between the providers and the government (i.e., half of a discount). Who in their right mind would want to corner that market? The government version will be a dud.

It is not the federal government through the Affordable Car Act that is going to bring us ACOs. It is the private sector. This is hardly a portal to nationalized health care, but it is a reincarnation – on steroids – of the models from the age of managed care that caused us so much distress in the fairly recent past. Any hope of cost containment will vanish as these organizations drive prices ever higher.

Our only hope to slow our outrageous health care cost escalation is to do what all other industrialized nations have done. We need to establish some form of a public monopsony through the application of a universal social insurance program. A publicly-financed and publicly-administered single payer system would be the most efficient and most equitable model.

Comment originally posted at John Goodman’s Health Policy Blog: http://healthblog.ncpa.org/the-hmo-in-your-future/comment-page-1/#comment-86801

Letter from Secretary Kathleen Sebelius replying to Republican governors

U.S. Department of Health and Human Services
February 24, 2011

As a former governor, I can appreciate your interest in having flexibility to establish an exchange that meets the unique needs of your state and its residents.

Your letter identified four areas for greater state flexibility. Specifically, you called for the ability to (1) exercise maximum flexibility to operate exchanges, and in particular to select the insurers that will participate in the exchange, (2) give states authority to determine essential health benefits that participating plans must offer, (3) waive provisions that might inhibit the availability of consumer-driven plans and health savings accounts (HSAs), and (4) enroll Medicaid beneficiaries into private plans without HHS approval. In each of these areas, the Affordable Care Act offers better opportunities than the current marketplace and gives governors and legislatures broad flexibility to capitalize on those opportunities in reshaping state marketplaces for the 21st century.

*  Selection of Qualified Plans in the Exchanges. In a majority of states today, a small number of health insurance issuers dominate the market, sometimes offering only a single plan or product. In implementing their exchanges, states have the option to allow all insurers to participate in the exchanges (the Utah model), or they can be more active purchasers in shaping available choices (the Massachusetts model). Either way, the exchanges will stimulate broader competition, and consumers will end up with more and better choices.

*  Essential Health Benefits. In today’s market, many individuals and families have limited health insurance options available to them. The number and quality of options typically depend on applicants’ age and health status, and employees of small businesses often have only a single choice. Exchanges will expand consumer choice and give consumers the information they need to comparison shop among their expanded choices. All plans in the individual and small group markets – inside or outside of the exchanges – will provide essential health benefits, which, by law, will be modeled after what a typical employer currently provides today in the private sector. But the law and how states implement it allow a diversity of plan types and benefit designs in exchanges, and states continue to have the option to require coverage of specific, additional benefits.

*  Consumer-Driven Plans. Low-cost, high-deductible plans, including those coupled with HSAs, are growing in popularity. The cost sharing limits required by the essential health benefits package mirror the current out-of-pocket maximum for HSAs under the Internal Revenue Code. Exchanges will offer new choices for consumers because health insurance issuers may offer a variety of plans with broad parameters; consumers who are willing to accept higher cost-sharing in exchange for lower premiums may purchase different levels of coverage. The “bronze” plans and catastrophic coverage for young adults will provide opportunities for expanding enrollment in consumer-driven plans coupled with HSAs. At the same time, exchanges will also improve consumer awareness of options by making it easier to compare plans.

*  Medicaid Flexibility. The Affordable Care Act expands and simplifies Medicaid coverage and provides states with more opportunities to align Medicaid with private health insurance. More specifically, the law permits states to restructure Medicaid coverage to look more like typical private employer coverage, as Medicaid managed care organizations and commercial insurers move into each other’s markets and create new opportunities to enhance continuity of care across Medicaid and commercial populations.

http://www.kaiserhealthnews.org/Stories/2011/February/25/~/media/Files/2011/HHS%20Gov%20Letter%20Feb%2024.pdf?wpisrc=nl_wonk

And…

NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and Other Interested Parties

Centers for Medicare and Medicaid Services
February 18, 2011

Section H. End of Medicare Advantage Medical Savings Account (MSA) Plan Demonstration Program

In a July 13, 2006, Federal Register Notice (CMS-4123-N) we announced the availability of an opportunity to participate in an MA MSA demonstration project. In the Federal Register notice we said that waivers provided under our demonstration authority would allow interested entities to offer products that more closely resemble high deductible health plans that are offered in conjunction with health savings accounts to the non-Medicare population. We initially established a deadline of July 21, 2006, for applicants that wanted to participate in the MA MSA demonstration program for 2007. We also asked applicants that wanted to participate in the program in 2008 to submit a notice of intent to us as soon as possible.

Overall we had one applicant that participated in the MSA demonstration program in calendar year 2007. There has been no activity under this demonstration program since then. We are not seeking extension of this demonstration program and will not accept applications for participation in this program for plan years 2012 and thereafter.

http://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Advance2012.pdf

And…

Nearly Half Of Families In High-Deductible Health Plans Whose Members Have Chronic Conditions Face Substantial Financial Burden

By Alison A. Galbraith1, Dennis Ross-Degnan, Stephen B. Soumerai, Meredith B. Rosenthal, Charlene Gay and Tracy A. Lieu
Health Affairs
February 2011

High-deductible health plans — typically with deductibles of at least $1,000 per individual and $2,000 per family — require greater enrollee cost sharing than traditional plans. But they also may provide more affordable premiums and may be the lowest-cost, or only, coverage option for many families with members who are chronically ill. We surveyed families with chronic conditions in high-deductible plans and families in traditional plans to compare health care–related financial burden — such as experiencing difficulty paying medical or basic bills or having to set up payment plans. Almost half (48 percent) of the families with chronic conditions in high-deductible plans reported health care–related financial burden, compared to 21 percent of families in traditional plans.

http://content.healthaffairs.org/content/30/2/322.abstract

To appease the Republican governors, HHS Secretary Kathleen Sebelius has attempted to reassure them that they will have considerable flexibility in qualifying insurance plans for the exchanges, in defining optional benefits for the plans, and in privatizing Medicaid. Perhaps the most alarming flexibility being granted to the governors is the ability to offer consumer-driven plans within the exchanges. Why is that a problem?

In her letter, Kathleen Sebelius offers up the bronze plans in the exchanges and the catastrophic plans for young adults as providing opportunities for expanding enrollment in consumer-driven plans. The bronze plans have an actuarial value of only 60 percent, meaning that an average of 40 percent of health care costs must be paid out of pocket. (The inadequate subsidies for silver plans is another topic not addressed here.) The way that both bronze plans and catastrophic plans achieve lower premiums is by requiring very high deductibles. That is a serious problem.

The current issue of Health Affairs has yet one more article adding to the great body of policy studies on high-deductible plans showing, once again, why they are an inappropriate method of financing health care. This study demonstrates that half of families with chronic conditions in high-deductible plans report health care related financial burdens.

The fact that these plans can be offered with a health savings account (HSA) does not improve the individual’s financial security since these funds still must come from the individual who either funds the HSA to draw on later, or draws the funds from other savings, or, more likely, simply doesn’t have the funds when needed to pay the deductible. An unfunded or depleted HSA is of no value.

Although Republicans have been supportive of the consumer-directed approach of high-deductible plans with HSAs, there is almost unbelievable irony when we look at another favorite of theirs – the privatized Medicare Advantage plans that replace traditional Medicare coverage. Under the Bush administration a Medicare Advantage Medical Savings Account demonstration project was established, duplicating this consumer-directed approach within the Medicare program. Last week HHS announced that this program was being terminated because of a lack of activity. Obviously consumer-directed does not equate with consumer-demanded.

High-deductible plans are under-insurance products that create financial hardships for people who develop health care needs. It is disappointing that Secretary Sebelius is presenting them as an “opportunity.” They’re an opportunity to lose your shirt if you get sick.

We could have done so much better… and still can.

Originally published in the Berkshire Eagle.

Let me pose two riddles I will answer at the end of this column. Which health care reform program for Massachusetts won a non-binding referendum last November? Which health care reform legislation is co-sponsored by all five Berkshire County legislators?

We are now at the time of year when businesses, towns and families are faced with sticker shock as they pay their health insurance premiums for 2011. Town employees find they will have to pay a larger percentage of their health insurance as municipalities deal with escalating costs and limited budgets. There is a push for towns to join the GIC (the Group Insurance Commission) to attempt to reduce town expenses by limiting the choice of private insurance policies and increasing out-of pocket costs for employees.

Businesses are also being forced to require increased cost sharing from their employees. Individuals have to buy insurance plans that cover less even as they cost more, for high deductible plans with larger co-payments for both medical services and prescription drugs.

But there is a solution to these runaway costs: a single-payer health insurance program. In Massachusetts, single-payer legislation, the “Medicare for All Massachusetts Bill,” has been filed for 2011. This legislation guarantees first class, comprehensive coverage for every Massachusetts resident, while reducing costs to the state, towns, businesses and individuals.

Under this legislation, residents of Massachusetts would have a health insurance card to present whenever they received medical care, dental care or prescription drugs. They would pay nothing out-of-pocket, and receive no medical bills.

Businesses would pay a stable payroll tax of 7.5-8 percent instead of rising premiums. Towns would pay the same payroll tax for their employees. Middle and low-income employees would pay a 2.5 percent payroll tax, and take home 7.3-15 percent more income than with their current health insurance program.

In addition to saving money for businesses, towns and families, a single-payer health care program would save money for the state, money needed for other services like education, police and fire protection. Insurance companies, with their high profits and administrative costs, would be supplanted by a “single-payer” that would administer the health care money at a much lower cost than the many private insurance companies. By eliminating the insurance middlemen who provide no health care services, Massachusetts would save $9.7 billion per year. Administrative costs would also decrease for doctors and hospitals with a single-payer program.

The covered benefits would include:

* Prevention, diagnosis and treatment of medical injury and illness, both inpatient and outpatient, laboratory and radiology services, mental health care, dental care, acupuncture, physical therapy, and chiropractic and podiatric services.

* Rehabilitation treatment

* Prenatal and maternity services.

* Home health care.

* Long term care.

* Hospice care.

* Medical transportation.

* Vision and hearing treatment.

* Medical equipment.

* Prescription drugs.

There would be no deductibles, co-payments or co-insurance. Patients would have free choice of health care providers. And an added benefit would be the long term care insurance, especially important for baby boomers now coming of an age where they may need that benefit.

The current Massachusetts health care bill has not been able to control costs, nor do private health insurance policies provide adequate coverage for health care. People want health care reform that works.

So here are the answers to the riddles.

Fourteen districts in Massachusetts voted in favor of a non-binding referendum for a single payer health program in the November election.

All five state legislators in the Berkshires have signed on to co-sponsor the Medicare for All Massachusetts Bill. We praise their leadership, vision, commitment and caring: Senator Benjamin Downing and Representatives Gail Cariddi, Paul Mark, “Smitty” Pignatelli and Chris Speranzo. Our Berkshire delegation is leading the way: no other county in Massachusetts has the support of all their legislators for single-payer health care.

It is time for everyone who supports the Medicare for All Massachusetts Bill to become even more active for the establishment of a state health insurance program that works for everyone, at a cost that is affordable for the state, towns, businesses and families.

Call or write our governor. In his heart, he may be a secret single-payer supporter.

Susanne L. King, M.D. is a Lenox-based practitioner.

Massachusetts General Hospital settles potential HIPAA violations

U.S. Department of Health and Human Services
February 24, 2011

The General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

http://www.hhs.gov/news/press/2011pres/02/20110224b.html

And…

Report details health care reform theft

By Susan R. Miller
South Florida Business Journal
February 23, 2011

As the nation moves toward growing use of electronic medical records, data vulnerability becomes increasingly evident.

A new report released on Wednesday by Kaufman, Rossin & Co., showed 4.9 million patients had their personal health information compromised as a result of 166 data breaches that occurred during the first year of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

All of the breaches occurred between Sept. 21, 2009 and Sept. 21 2010, the first year when breach incidents were publicly reported to the Secretary of the Department of Health and Human Services.

http://www.bizjournals.com/southflorida/news/2011/02/23/report-details-health-care-reform-theft.html

And…

athenahealth

An increasing majority of physicians finds that EHRs slow them down during the exam.

Sixty percent of physicians agree with the statement that the EMR/EHR “slows down the doctor during patient exams.”

http://www.athenahealth.com/index.php?open=26

Although Congress gave up on trying to provide health insurance coverage for everyone, they did try to deliver on the promises of higher quality, fewer errors, greater efficiency, increased security of patient health information, and lower costs through measures designed to expand the use of IT (information technology), especially through EMRs (electronic medical records). Are these promises being fulfilled?

Before delivering on the other promises, a health IT system must first, above all, ensure confidentiality of patient information. Today the Department of Health and Human Services released a report confirming that perhaps the most prestigious medical institution in the nation – Massachusetts General Hospital – is being fined $1,000,000 for violation of patient privacy rules. The documents were left on a subway train. Though this was not directly an IT breach, read on.

Yesterday a report was released by Kaufman, Rossin & Co., an accounting firm, that showed that, in the last year alone, almost five million patients had their personal health information compromised due to various other unrelated data breaches.

In this age of cloud computing, personal electronic data can easily be transmitted into cyberspace for all the world to see forever. Sure, the various vendors and stewards of the systems can show you their great security safeguards so there is no need to be concerned. Then how in the… did these 4.9 million patients have their personal health information compromised?

And the other IT promises? We covered this in a qotd last month (Jan. 21) in reviewing an article from PLoS Medicine. Quoting from that article:

“Our systematic review of systematic reviews on the impact of eHealth has demonstrated that many of the clinical claims made about the most commonly deployed eHealth technologies cannot be substantiated by the empirical evidence. Overall, the evidence base in support of these technologies is weak and inconsistent, which highlights the need for more considered claims, particularly in relation to the patient-level benefits, associated with these technologies. Also of note is that we found virtually no evidence in support of the cost-effectiveness claims.”

The highly touted accountable care organizations (ACOs) called for in the Patient Protection and Affordable Care Act are a variety of ill-defined health delivery organizations having only one thing in common: an integrated IT system using EMRs. Not only are these systems expensive and vulnerable to security breaches, the report from athenahealth shows that EMRs also slow down patient care. Why are we placing all our bets on ACOs?

This has all been a distraction that has diverted us from doing what we really need to do – establish affordability and universality through an improved Medicare that covers everyone. Can’t we get on with that task now?

Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney
Boston Herald
February 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

It is no surprise that so many individuals are suggesting that we may be heading toward a single payer system. It is becoming more obvious that the federal reform effort and the Massachusetts plan on which it was based have proven to be the most expensive model of reform while falling short on the goals of universality, efficiency and equity, as was predicted by those of us at PNHP and others. But these words from Terry Dougherty, director of the Medicaid program for Massachusetts, are of paramount significance since he has first hand experience with one of the cornerstones of reform – expansion of the Medicaid program.

When someone who really knows what we’re actually doing within this expensive, dysfunctional model of reform says that single payer has “got to be better,” we should listen. Listen, and then act.

Calif. Assembly, Senate Budget Committees Pass Spending Plans

California Healthline
February 22, 2011

On Friday, California’s Assembly Committee on Budget and Senate Budget and Fiscal Review Committee passed nearly identical state budget plans.

Changes to Medi-Cal

Both budget committees approved a plan to establish mandatory copayments for Medi-Cal beneficiaries, which would reduce state spending by about $584 million, according to a Senate analysis.

The plan calls for copays of:
$3 and $5 for some prescription drugs;
$5 for physician and dentist visits;
$50 for emergency department visits; and
A maximum of $200 for hospital stays.

The plan also calls for the state to reduce Medi-Cal payments to health care providers by the amount of the copays.

Health care providers have expressed concern that they will face higher costs if Medi-Cal beneficiaries are unable to afford the higher copays.

http://www.sacbee.com/2011/02/20/3416369/browns-countdown-day-42-medi-cal.html

Although California has been at the bottom of the states in Medicaid payment rates, the state legislative committees recently passed another 10 percent cut in those rates. Now they have also approved legislation to reduce rates further by the amount of these copayments, amounts that will surely be absorbed by the providers since the Medicaid population lives in poverty or near-poverty and will not be able to pay these copayments. That’s understandable when you consider that the federal poverty level for 2011 is an annual income of $10,890 for an individual.

Yet the Patient Protection and Affordable Care Act will greatly expand the Medicaid population. The losses faced in the Medi-Cal program cannot be made up by an increase in volume. The additional load displaces privately insured patients, and the losses to the providers increase. The physicians who refuse to see Medi-Cal patients thrive, whereas those overloaded with Medi-Cal patients are threatened with insolvency. Let me emphasize that, based on my own personal experience, this is no exaggeration.

As a welfare program representing a population without an adequate political voice, Medicaid will always be underfunded. Simple common decency dictates that we should eliminate this program and replace it and the rest of the dysfunctional financing system with an improved Medicare for all program that serves everyone well.