BC Calif creates dual networks to cheat patients and physicians

Posted by on Tuesday, Sep 16, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Physicians Urged to Carefully Review Blue Cross Contract Amendment

California Physician
September 15, 2008

Physicians contracted with Blue Cross of California were recently notified of the insurer’s intent to amend its Prudent Buyer contract to include Anthem’s Select PPO product, effective January 1, 2009.

The addendum in question requires contracted physicians to always refer Anthem Select PPO Members to other participating Select PPO providers, unless they have obtained authorization to refer out of network. Physicians should be aware that the underlying Prudent Buyer contract authorizes Blue Cross to unilaterally lower the physicians’ fee schedule as a penalty for referring to out of network providers. For this reason, it is important for physicians to determine if colleagues you frequently refer to and those who refer to you participate in the Select PPO network.

http://www.calphys.org/html/cc763.asp

Addendum:
http://www.calphys.org/assets/applets/bc_addendum_091508.pdf

Those supporting health care reform based on the model of private health plans competing in the marketplace have looked to Blue Cross of California (BCC) as the nation’s leader in innovative market solutions. BCC has been very effective in providing insurance products with competitive premiums by using these innovations to limit what is paid for health care benefits, in an environment of ever-increasing health care costs.

By far the most important innovation was to establish preferred provider lists of physicians and hospitals that agreed to accept contracted reimbursement rates. The providers accepted lower rates, and patients were financially penalized if they used providers outside of the contracted networks. No attempt will be made to address here the many other innovations that allowed BCC to reduce what it pays for health care, but more does need to be said about this new innovation in its preferred provider networks.

Largely because of its competitive premiums made possible by its leverage in being able to sign up physicians and hospitals in its Prudent Buyer PPO plans, BCC has been one of the most successful programs in California, success being defined from a business perspective. Its success has been so great that it is now in a position to be able to make itself its own competitor, but, as we’ll see this is not competition that is designed to benefit the patient/consumer, but rather to benefit the Anthem/WellPoint shareholders of which BCC is a subsidiary.

In addition to its well established Prudent Buyer PPO, it now also has established Anthem Select PPO, a product designed to be more competitive by offering even lower premiums. The Anthem Select PPO has established a separate contract with a much smaller number of physicians and hospitals who have agree to even lower reimbursement rates (presumably lower, though that is proprietary information). Besides lower rates, BCC also benefits by making access more difficult for patients by sharply limiting the number of Select providers available.

Patients may not realize it, but they are penalized when they continue to use their Blue Cross Prudent Buyer providers if those providers have not also signed up to be part of Anthem Select PPO. They may think they have access to the Prudent Buyer PPO list, but if the corner of their card says “A Select Network Product,” they are restricted to a much more limited choice if they expect to receive the full benefits of their plan (that is, full underinsurance benefits).

The new BCC innovation spelled out in the addendum and in the underlying Prudent Buyer contract establishes financial penalties for physicians who continue to refer to their established Prudent Buyer colleagues and hospitals without first checking to be certain that they are on the much more exclusive Anthem Select PPO list.

BCC has provided a potential out. Physicians can obtain prior authorization to refer Select patients to the Prudent Buyer providers. But talk about abusive administrative excesses! BCC is requiring the burdensome prior authorization process merely to cross refer within its own two artificially segregated networks!

The process is hardly transparent. Most physicians and their staff members will not notice “A Select Network Product” on the corner of the card. They will make the Prudent Buyer referrals as usual. When the claim is paid, the disallowed amount will be adjusted off, without the staff realizing that the adjustment is greater than it would have been had a referral been made within the more restricted Select list. The patient will receive a statement of benefits with a larger amount listed as their own responsibility, not realizing that they are being penalized for using a Prudent Buyer provider who did not also have a Select contract.

Thus Blue Cross of California has set up within its own Prudent Buyer program two separate PPO lists that it uses to play against each other for the purpose of cheating the patient, cheating the physician, and cheating the hospital. Only the shareholders benefit.

Some may feel that “cheat” is too strong of a word, but cheating is depriving by trickery, and that is exactly what BCC is doing.

For those who still believe that we can patch together reform by using private insurance plans, please read John Geyman’s “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It” (Common Courage Press).

F. A. Hayek on social insurance

Posted by on Monday, Sep 15, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

The Road to Serfdom

By Friedrich A. Hayek

Quote from the condensed version as it appeared in the April 1945 edition of Reader’s Digest

There is no reason why, in a society which has reached the general level of wealth ours has, (the certainty of a given minimum of sustenance) should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.

http://www.iea.org.uk/files/upld-publication43pdf?.pdf

The Road to Serfdom
http://www.press.uchicago.edu/presssite/metadata.epl?mode=synopsis&bookkey=206047

“The Road to Serfdom,” the work of Nobel Laureate F. A. Hayek, has been one of the most influential books of the last century. It has been an inspiration to those who are opposed to socialism and who support free markets and libertarianism. The teachings of Hayek are frequently cited by those opposing government involvement in health insurance markets. But what did Hayek actually say?

He acknowledges that there are “common hazards of life against which few can make adequate provision.” All other nations have decided that the potential need for health care is one of those common hazards.

He recognizes that such hazards can be provided for by “a comprehensive system of social insurance.” Although the specifics of social insurance programs for health care can vary, they have in common a fund that provides for the payment of health care, an equitable source of payments made into that fund, and automatic inclusion of the individuals for which the fund was designed. It appears from his statement that Hayek would include all members of a society except perhaps those who are capable of making adequate provision for themselves.

He recognizes that the state should help organize such a comprehensive system of social insurance. Hayek was quite familiar with social insurance since his country of birth, Austria, had social insurance programs dating back to the nineteenth century.

Although an avid supporter of free markets, Hayek understood that even in a wealthy society the state should help organize a comprehensive system of social insurance.

Perhaps we should ask the free market advocates opposed to comprehensive social insurance to retrieve from their libraries their copies of “The Road to Serfdom,” and read them again. Although they don’t listen to us, just perhaps they may listen to Friedrich Hayek.

Market theorists have been telling us for years that the competitive marketplace will keep prices under control, as well as fix problems of access and quality of health care.  This statement by senior fellows of the Hoover Institution in 2006 reflects market ideology which has framed health care policy for three decades:

“Greater reliance on individual choice and free markets are the solutions to what ails our health care system . . . A handful of policy changes that harness the power of markets for health services have the potential to give patients and their physicians more control over health-care choices, create more health insurance options, lower health costs, reduce the number of uninsured persons—and give workers a pay increase to boot.”

If competitive markets are so effective in controlling health care costs, how is it that these costs continue to soar at rates three or four times the rates of cost of living or median family incomes?  Here are five reasons why markets fail, and can never succeed, to control health care costs.

There is little actual competition in health care markets.  Instead, we find widespread consolidation, whether among hospitals, pharmaceutical companies, other suppliers, nursing homes, dialysis centers, or insurers.  As examples, Tenet, the second largest hospital chain in the country, controls 80 percent of hospital beds in El Paso, Texas, while private insurers have near-monopolies in 95 percent of HMO/PPO metropolitan markets (raising antitrust concerns by the U. S. Department of Justice). One-half of Americans live in areas that are too sparsely populated to have any real competition.  And of course, when people are seriously ill and require the most costly care, they find it difficult or impossible to comparison-shop for physicians or hospitals.

On the supply side, providers and suppliers have wide latitude to set prices.
Much of the health care industry is investor-owned, from insurers to hospital chains and drug companies. As such, they are obligated to their shareholders to maximize profits and have wide latitude to set prices independently. In California, for example, Tenet hospitals have set charges for drugs ten times higher than state averages, while Ovation Pharmaceuticals hiked its price for Cosmegen, a chemotherapy drug for a kidney cancer in children, by more than 3,400 percent (not a typo!) in 2006.  So-called not-for-profits can also set their own prices, as illustrated by a recent Wall Street Journal report that the “nonprofit” Carillion Health System in southwestern Virginia charges $4,727 for a colonoscopy and $1,606 for a CT scan of the neck, levels three to ten times higher than charged by other local facilities.

Our fragmented system works against bulk purchasing.

In such a fragmented multi-payer system as we have, there is little opportunity to achieve sizable discounts through bulk purchasing.  Indeed, bulk purchasing of drugs was specifically prohibited by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.  That legislation was crafted by conservative legislators and lobbyists to protect the pricing prerogatives of the drug and insurance industries and to avoid discounts on drugs of 40 percent or more as are achieved by the Veterans Administration.
Distorted reimbursement policies favor gaming of the system.

We have entrenched policies with a wide gap between physician reimbursement for procedures and cognitive services (ie., the face-to-face listening and talking part of medicine as is typical in primary care, geriatrics, and psychiatry).  Procedures are over-reimbursed while time-intensive cognitive services, including coordination and continuity of comprehensive care, are under-reimbursed.  It is well documented that higher-reimbursed areas of the country attract larger numbers of specialists with more specialist visits, more hospitalizations and ICU use, more inappropriate and unnecessary care, and worse outcomes than are seen in lower reimbursed parts of the country with fewer specialists and more generalist physicians.  Other providers game the system as well.  For example, HCA, the largest hospital chain in the country, has inflated its revenues by “upcoding” the severity of patients’ diagnoses, falsifying billing ledgers, and bouncing patients among its hospitals, sub-acute facilities, and home care agencies in order to bill multiple times for each episode of illness.

Demand for health care is not very sensitive to prices.

Although conservative theorists tell us that patients overuse health care if they are insured (moral hazard), that premise has been discredited as a major cause of health care inflation.  We don’t see runs by patients to unnecessary care.  Most medical care is ordered by physicians, who themselves are largely responsible for an estimated one-third of health care services that are either inappropriate or unnecessary.  As for price sensitivity, a  2005 RAND report found that spending dropped by only 17 cents for every dollar increase in price.

What can we conclude from all this?   Based on three decades’ experience with our deregulated marketplace, we have to conclude that markets cannot control health care costs, and in fact are themselves a big contributor to health care inflation.  Market ideology in other kinds of markets do not apply in health care.  Managed care of the 1980s and 1990s not only failed to contain costs, but also brought further complexity and turmoil to the marketplace while disrupting relationships between patients and physicians.  It has become obvious that reining in the costs of health care and at the same time increasing access and quality of care will require major reform, including a larger role for government.  Joseph Stiglitz, Nobel laureate in economics and former chief economist of the World Bank, puts it this way:

“Markets do not lead to efficient outcomes, let alone outcomes that comport with social justice.  As a result, there is often good reason for government intervention to improve the efficiency of the market.  Just as the Great Depression should have  made it evident that the market often does not work as well as its advocates claim, our recent Roaring Nineties should have made it self-evident that the  pursuit of self-interest does not necessarily lead to overall economic efficiency.”

In our next post, we will look at how inflating health care costs driven by market forces
cause financial insecurity and economic hardship for a large and growing part of our population.

____________________________________________________________________

Adapted from Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press.

Buy This Book: http://www.commoncouragepress.com/index.cfm?action=book&bookid=376

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10 Excellent Reasons for National Health Care

Posted by on Friday, Sep 12, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

10 Excellent Reasons for National Health Care

Edited by Mary O’Brien and Martha Livingston

From the Foreward by Representative John Conyers Jr.:

This insightful book will provide you with the information you need to be an informed participant in the public debate about how to achieve health care for all. This information is especially important now, during this election year.

Within the chapters of this book and in the resource guide in the back, you will find cutting-edge information to help you work toward the only sensible solution to our health care crisis: a single-payer national health insurance program. Contributors to this book include doctors, nurses, patients, and an international union leader. They discuss the benefits of a single-payer plan: that it is cost-effective; will provide choice, quality, and better health for Americans; will help to reduce health care disparities; will make doctors and nurses better able to do their jobs; and will benefit both workers and businesses. They also explain why single-payer universal health care is the only approach that can guarantee Americans the health care that they need when they need it, and explain how, by working together, we can achieve the goal of health care for all.

The New Press: 10 Excellent Reasons for National Health Care
http://www.thenewpress.com/index.php?option=com_title&task=view_title&metaproductid=1711

This compact, easy to read book should be circulated widely so that all Americans can understand that there is an effective and equitable solution to our health care crisis. Read it. Then recommend it to the various organizations and grassroots coalitions with which you are now associated, and initiate efforts to expand activism to yet more individuals and organizations.

The threshold required for reform will be met once the public understands that there really is a solution.

Health policy expertise and presidential politics

Posted by on Thursday, Sep 11, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Speaking Truth to Power — The Need for, and Perils of, Health Policy Expertise in the White House

By Jacob S. Hacker, Ph.D.
The New England Journal of Medicine
September 11, 2008

The adviser is the president’s ally — in the lingo of organizational economics, an “agent” serving the interests of a “principal.” Yet as a bearer of specialized knowledge, the adviser is also responsible to a larger profession, to its values and commitments, and ultimately to the ideal of expertise itself.

The adviser, in short, must both “speak truth to power” and aid in the exercise of power, both offering unbiased intelligence and acting as a very biased assistant. It is fashionable to pretend these two roles are the same, but they are not. An expert adviser has special knowledge, training, and skills — all of which are needed more than ever in the White House. The question is whether these talents can really be used, or be useful, in the bare-knuckles world of American politics — and, more important, whether the values they embody can be upheld when science, advocacy, and democracy collide.

Politics is about power more than truth, about winning more than being right. But expertise is about truth more than power, and being right is the whole point.

Health policy experts can do more sophisticated analyses than ever, and there are more of them than ever, too — in policy schools, departments of economics, schools of public health, think tanks, private foundations, and government. But the progress in quality of expertise has not been matched by progress in thinking about the role of the expert or about how policy advice can and should be adapted to the political realities that those receiving advice inevitably confront. Policy experts are brilliant when it comes to designing proposals but often horrible at thinking through the ways in which their proposals will be refracted through the political prism. Subtle visions of policy are wedded to crude caricatures of politics, and, not surprisingly, those visions all too often either fail to become reality or fail to work.

Worse, the expert’s claim to authority can undercut the more important wellspring of democratic leadership: the demands and wishes of the people. Experts are habitually disdainful of what ordinary citizens believe. People have opinions; experts have facts. When a well-regarded economist complains that democratic policy choice should be restricted because “irrational” voters endorse all sorts of harmful nostrums — whether trade protection or farm price supports (he might have added health insurance with low deductibles, drug price controls, and free choice of doctors) — he may be out on a limb. But the tree is one that many policy experts climb.

We badly need health care experts in the White House who offer advice based on evidence and analysis, not prejudice. But even the best experts need to know when to defer to the political process, to see the purpose of their craft as facilitating democratic debate rather than providing final answers once Americans have decided on the questions.

Winston Churchill once said that “scientists should be on tap, not on top.” That is a good starting point. But sometimes presidential policy experts should also have the good sense to get out of the way.

http://content.nejm.org/cgi/content/full/359/11/1085

“… expertise is about truth more than power, and being right is the whole point.”

In deciding whether policy is right or wrong, it is essential first to decide what goals are to be achieved by the policy decisions. In reforming health care financing, most of us would agree that the goal is to provide everyone with access to all necessary health care without having to be exposed to financial hardship.

We have available a wide range of expertise within the policy community. When you look at the various policy recommendations, some of them, if enacted, would achieve this specific stated goal, but most of them would not. Those that would not are policies that are designed to achieve other less beneficial or even detrimental goals (ownership society: own your own debts). Stated in other terms, those supporting the few policies that would work are right, and those supporting policies that fall short are wrong.

In policy, being right is the whole point.

“Politics is about power more than truth, about winning more than being right.”

Politics is represented by the great legislative battles that we are witnessing wherein one side advocates for policies that are wrong, largely because they’re inadequate, and the other side advocates for policies that are completely wrong because they make matters worse.

Without the continual involvement of members of the policy community who emphatically support that which is right, we’ll continue to witness politics that results in wrong, wronger and wrongest policies.

Is the window for reform really open?

Posted by on Wednesday, Sep 10, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Drop in Uninsured Unlikely to Influence Health Care Overhaul, Experts Say

By Neda Semnani
CQ HealthBeat
September 5, 2008

While new government figures show that a greater enrollment in public health programs has helped reduce the number of Americans without health insurance, experts said the data are unlikely to help make the case for expanding those programs as part of broader health care legislation next year.

David S. Johnson, the Census Bureau’s chief of Housing and Household Economics Statistics, which published the new figures, credits public programs like Medicaid and SCHIP for the increase in the insured, a trend experts believe may continue as employer-based coverage falls.

Analysts said the drop in the uninsured rate will have little influence in the broader discussion of health care legislation expected next year when a new president and Congress take office. The economic downturn and other budget priorities make it difficult for health care overhaul–a costly endeavor–to take center stage, they said.

“How much flexibility does the federal government have, given the declining economy and vast array of other problem areas? We have a lot of policy priorities. Health is an important one, but it’s not the only one,” said Joseph Antos, a health care scholar with the American Enterprise Institute, a conservative think tank. “Some kind of reform needs to happen . . . eventually. Gigantic reforms cost money. So ‘eventually’ may not happen in the first year or even in the first ten years of a new administration.”

Mark McClellan, director of the Engelberg Center for Health Care Reform with the non-partisan Brookings Institution, said, “With the fiscal outlook so tight, the challenge will be finding new ways to get costs down and coverage up, while filling gaps in quality.”

Judith Solomon, a senior fellow at the left-leaning Center on Budget and Policy Priorities, said the report examines the period just before the economic downturn and “doesn’t change what is the case for reform, it doesn’t change the case for reauthorizing strong public programs,” said Solomon, who specializes in Medicaid and the State Children’s Health Insurance Program (SCHIP).

The trend of greater enrollment in public health programs may continue in the current economic slowdown, said Karen Davenport, director of health policy with the liberal Center for American Progress. “On the one hand, we’re likely to see a greater insecurity in health coverage; on the other, a further up-tick in public coverage … The report points out just how effective these programs are in catching people when they fall. It shows that the individual market alone doesn’t work.”

http://www.commonwealthfund.org/healthpolicyweek/healthpolicyweek_show.htm?doc_id=704405

All we need to achieve comprehensive health care reform is to elect a new Congress and a new administration, and use the momentum of the first 100 days to push through Congress the voters’ mandate for reform. Right? Hmmm.

If we are going to have new legislation ready by January or February, the specifics of the proposals need to be precisely defined now so that they are ready to be converted into legislative language ASAP.

Is the McCain proposal ready? It would not be too difficult to write legislation that would diminish employer contributions to health plans by eliminating the tax advantages. It also would be fairly easy to allow sale of plans across state borders thereby creating a competitive market of the lowest common denominator of underinsurance plans. Tearing down programs that aren’t working very well and replacing them with programs that are much less effective is certainly not the reform we need.

What about creating a universal market of private plans like the members of Congress have: an FEHBP-like program? To be effective, these plans would have to cover essentially all necessary health care, and include individuals with greater health care needs. Those plans would be very expensive, certainly more than the $12,000 average premium charged for employer-sponsored plans covering healthy employees and their healthy families. Our current business-based private plans would require massive transformation to convert them into private social insurance plans characteristic of some of the European nations. Can you imagine the complexity of the legislation that would be required? Has anyone seen any serious specifics of such an approach that could be converted into legislative language within the first 100 days?

What about allowing the purchase of a Medicare-like option to complement the private insurance market? It wouldn’t be simply a provision to allow a buy-in to the current Medicare program simply because the Medicare risk pool is composed of very high-cost populations (elderly, chronically disabled, and chronic renal disease), and the premiums could never be affordable. Then what would a separate Medicare-like option look like? Good question. How comprehensive would the benefits be? How could cost-sharing be kept at a reasonable level? How much of the premium would the individual be responsible for? Would the balance be paid by the government? Would the private insurers who benefit from favorable selection be required to transfer funds to the public program? Has anyone seen any serious specifics that could be converted into legislative language in the first 100 days?

We do have legislative language for a proposal that actually would work, and it is already in a bill before Congress, with about 90 cosponsors in the House of Representatives: John Conyers’ HR 676. Oh, wait a minute; that’s not feasible, they tell us.

So what do the Democrats have in mind for the first 100 days, should they have control? Easy. They are going to expand the children’s health insurance program – SCHIP – certainly a good thing. They are going to look at the damage done to Medicare by the privatizers, but significant repairs will be too complex to enact right away; they’ll get to that later. Comprehensive reform? Not now; there are too many other important issues. Next year? Well, that’s an election year, so we can’t do it then. But we should be able to get to it possibly before the end of the president’s first term, and certainly by the end of the second.

Window slammed shut!

But don’t anyone start working on these issues now. We have more important decisions to make. Do we support the moral high ground of lipstick on a pit bull, or the moral low ground of lipstick on a pig?

In the face of all of our shameful societal problems, surely someone will come up with this answer to this most pressing problem of the day: the lipstick needs to go on the figurehead of the Swift Boat.

Doctors pressured by the intrusion of private insurers

Posted by on Tuesday, Sep 9, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Survey Reveals that Doctors Feel Pressured by Health Insurers to Alter the Way They Treat Patients

The Medical Society of the State of New York
September 2, 2008

The Medical Society of the State of New York just released survey results, which indicate that health insurer rules often force New York State physicians to alter the way they treat patients — and not necessarily for the benefit of patients. Instead, the rules appear to have been developed to increase insurer profits at the expense of the best health practices and patients’ health.

The survey results indicate: Ninety percent (90%) of the physicians surveyed said that they have had to change the way they treat patients based on restrictions from an insurance company, and 92% said that insurance company incentives and disincentives regarding treatment protocols “may not be in the best interest of the patients.”

Physicians’ most common complaint was that health insurers required them to change prescription medications; 93% of the physicians voiced this complaint. Over three-fourths (78%) said that an insurance carrier has restricted their ability to refer patients to the physicians they believed would best treat their patients’ needs.

A majority (87%) of physicians said that they sometimes feel that they are pressured to prescribe a course of treatment based on cost rather than on what may be best for the patient. Over half (62%) of the physicians surveyed, however, are either somewhat concerned or very concerned that they may be cut out of an insurance network if they do not follow the policies requested by insurance companies.

http://www.mssny.org/mssnyip.cfm?c=i&nm=Insurance_Carrier_Rules

Complete survey results:
http://www.mssny.org/mssnycfm/mssnyeditor/File/2008/In_the_News/Press_Releases/inscarrierrules.pdf

No person disputes the fact that it is wise to use a less expensive generic medication when a newer product on patent is more expensive, has not been shown to be a better therapeutic agent, and has not been in use long enough to identify potential adverse effects that only post-marketing surveys could demonstrate.

A public insurance program would be designed with incentives to provide the best care possible, with secondary incentives to avoid more expensive options that have no advantage over less expensive options. For example, a $100,000 cancer drug that has not been demonstrated to be any more effective than established agents, and which has a 100 percent incidence of toxic side effects, may not be covered by a public program except perhaps as part of an approved research protocol.

This survey once again confirms that private insurers are intrusive in the patient-physician relationship. We know that their interventions are based on business contracts that they have with pharmacy benefit managers and pharmaceutical manufacturers. Their business interests take precedence over the interests of the patients. In some instances, recommended changes may incidentally benefit patients, but they are made only after the insurers first have made a determination that the change will benefit their bottom line.

Moreover, insurers usually dictate which specialists and which hospitals can be used without the patient incurring significant financial penalties. These authorized referrals are based on provider contracts that accrue to the benefit of the insurer without regard to the wishes of the patient and the advice of the physician. In a well designed public program, patients would have choices within the full range of provider options.

Before we adopt reform based on the private insurance model, we should think about what that means. Amongst the great multitude of problems, we would be adopting a system that allows businessmen to intrude between the patient and the physician and take away with them whatever money they can. That doesn’t seem wise when we could have our own public program that is designed to provide the best care for all of us with the resources that we have.

Libertarian supports single payer

Posted by on Friday, Sep 5, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Libertarians face off on issues

By Andy Steinke
wiscnews.com
September 5, 2008 (date accessed)

Third Congressional District Libertarian candidates Ben Olson III and Kevin Barrett faced off in a debate Sunday night aboard Captain Chris Soma’s boat in Wisconsin Dells.

The two are the first Libertarians to face each other in a primary in the state as they seek the seat held by Ron Kind, a Democrat.

The two called the debate to give the public an opportunity to hear their perspectives on the health care system, Social Security, the war in Iraq and more.

Barrett and Olson agreed in principle on many Libertarian ideals, but it appears the main dissenting point in their campaigns will be their view of the nation’s health care system.

While the acknowledged Libertarian viewpoint is to keep the government from accruing more power than it already has, Barrett, 49, said he was in favor of a single payer health care system run by the government. Barrett said he could flip-flop on the issues, however, if he was offered a better alternative.

“I do think that single payer health care is the best solution to our current problem,” Barrett said, “that doesn’t mean that I believe in it philosophically. Actually I would prefer a non-government run health care system.”

Olson, 55, is running against Barrett in what may be the nation’s first Libertarian primary Sept. 9, because he doesn’t support Barrett’s stance on the health care issue and because he wants a “true Libertarian” on the November ballot.

“In regards to health care,” Olson said, “with our country already heading down a path towards bankruptcy, the last thing that I would want to give the government is the power to run our national health care system.” However, Olson failed to give a different solution to the nation’s health care problem.

“There are a lot of problems and I’m not sure that I have the answer,” Olson said. “But I do know that I firmly believe that the government administering health care in this country is not the answer.”

http://www.wiscnews.com/wde/news/302742

Everyone agrees that our health care system is not performing adequately for far too many of us, especially considering how expensive it is. Currently the nation is debating a spectrum of reform proposals to improve the performance of our system, though many proposals would actually compound the deficiencies.

A major confounding problem is that almost all of us do care about the health of our fellow Americans; even most Libertarians do. Though Libertarians support free market solutions that keep the government out of our lives, anyone who studies the health care system understands that reliance on markets alone cannot ever be effective in ensuring that everyone receives the health care that they need.

What is unprecedented about this debate is that one Libertarian has decided that the single payer model is the “best solution to our current problem.” The other Libertarian doesn’t have an answer but believes that the Libertarian anti-government ideology should have precedence over a solution that would work, merely because effective solutions include a role for government.

No serious student of health policy would contend that a free market of competing private health plans would ever be effective in ensuring affordable health care for everyone. Even the current political proposals touting market competition of private plans support a major role of government through large tax subsidies (such as Sen. McCain’s proposals for a $5000 tax credit for family insurance, and for federally-supported high-risk pools). Effective reform is impossible without a major role for government.

At least one Libertarian who distrusts government has looked at the options and has decided that, if his fellow Americans are going to receive the health care that they need, and the government will have to be involved, then we might as well go ahead and chose the option that is the most efficient and most effective: “a single payer health care system run by the government.”

Now that’s a man who cares about the rest of us.

Employers shift to underinsurance

Posted by on Thursday, Sep 4, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health benefit cost growth predicted to ease slightly in 2009 as employers shift cost

Mercer
September 4, 2008

After three years of double-digit growth in the first half of the decade, annual health benefit cost increases slowed to about 6 percent in 2005 and have stayed there ever since.

Mercer’s complete survey results won’t be released until later in the year, but for the 1,317 employer health plan sponsors that have responded so far, the total cost to renew their current health plans — if they were to make no changes — would grow by nearly 8 percent on average. Small employers (those with 10-499 employees) would see an even higher increase, of about 10 percent. However, the majority of respondents say they will take action to lower their actual cost increases.

“It’s a relief to see cost growth trending down, even slightly,” said Blaine Bos, a senior Mercer health and benefits consultant based in Minneapolis. “But this is not an unqualified success story. While some employers are holding down cost growth with innovative methods of improving health care quality and efficiency, more typically employers struggling with increases they can’t handle resort to the tried and true method of shifting cost to employees.”

Well over half (59 percent) of employers taking action to reduce their 2009 cost increase will raise deductibles, copayments, coinsurance or employee out-of-pocket spending limits. Employee cost-sharing has risen sharply over the past five years.

http://www.mercer.com/summary.htm?idContent=1319885

Is it good news that employers’ health benefit cost growth is easing slightly? No. If you look at the full picture, it’s terrible news. Health care costs are continuing to increase at an unsustainable rate, but employers are dumping the problem onto the backs of their employees by “the tried and true method of shifting cost to employees.”

Products available in the individual insurance market are no longer providing adequate protection because of increases in deductibles, copayments and coinsurance that trade off affordable premiums for unaffordable access to health care – the very definition of underinsurance.

Employers are now seeking relief from the costs of their health benefit programs by following the lead of the individual market and converting their programs into underinsurance plans.

Reform proposals that would expand competition of plans in the individual market won’t work because most of the plans will be underinsurance products if the premiums are to be competitive. Reform proposals that would expand on employer-sponsored coverage won’t work if that sector becomes saturated with similar underinsurance plans.

If we regulate the markets to prevent the sale of underinsurance products, then the increase in health care costs will continue to make premiums unaffordable for either employers or individuals.

If we really do want everyone to have affordable access to all necessary health care, we have no option but to establish a universal risk pool that is equitably funded, and then to take advantage of our own monopsony to provide us with greater value in our health care purchasing. We are already at that point, and there is nowhere else to turn.

Supreme Court acknowledges insurers' conflict of interest

Posted by on Wednesday, Sep 3, 2008

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

MetLife V. Glenn: The Court Addresses A Conflict Over Conflicts In ERISA Benefit Administration

by Timothy Stoltzfus Jost
Health Affairs
September 3, 2008

In its June 2008 decision in MetLife v. Glenn, the Supreme Court held that federal courts reviewing claim denials by Employee Retirement Income Security Act (ERISA) employee benefit plan administrators should take into account the fact that plan administrators (insurers or self-insured plans) face a conflict of interest because they pay claims out of their own pockets and arguably stand to profit by denying claims.

As a practical matter, the cost of health benefits to employers and their value to employees are first determined when the employer settles on a benefit, cost-sharing, and premium package for a benefit year. But it is also determined daily as plan administrators (either insurers, self-insured plans, or third-party administrators) make benefit determinations. Although plan coverage is sometimes clear, claims adjudication often involves application of vague terms such as “medically necessary” or “experimental” care to specific situations. Approximately 1.9 million claims are denied by employee benefit plans each year. Each denial potentially decreases the cost of coverage–immediately for self-insured and prospectively for insured employers (which usually pay an experience-rated premium). But denials also potentially decrease the value of coverage to the individual employee.

Claim determinations are ultimately reviewable in the federal courts. The courts’ approach to reviewing these determinations could, therefore, affect the cost of employee benefits. If, on the one hand, courts routinely overturn claim denials, the cost of coverage will increase, not just because plans will lose more appeals, but also because plans will have to litigate more appeals of adverse determinations as members see their chances of appeal improve. Moreover, plans will likely approve more claims initially instead of risking litigation. An increase in the cost of coverage may in turn lead to more employers’ abandoning coverage. On the other hand, if courts routinely defer to plan determinations, upholding most, plans will in all likelihood be more aggressive and confident in denying claims. This could make coverage more affordable but also put employees at risk.

Interpreting an earlier ERISA decision, the Court articulated the question as to what extent courts should defer to the decision of the plan administrator when the administrator faces a conflict of interest because it is essentially paying the claim out of its own pocket and stands to profit if the claim is denied. The Court decided that this conflict must be taken into account as a “factor” in judicial review. This paper analyzes the Court’s decision, the background of the decision, and its potential effect on American health policy.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.5.w430

In this important decision the Court affirmed the obvious. Employer-sponsored plans and their administrators, whether private insurers or self-insured plans, have a conflict of interest when making benefit decisions. Denial of claims benefit the employers and/or insurers, and approval of claims benefit the employees. On this, the justices were in unanimous agreement.

Much of the criticism of private insurance has been directed toward the flagrant, egregious abuses in the individual insurance market. Far more is wasted on administrative services that are designed to weight the conflict of interest heavily in favor of the insurer at the cost of patient-beneficiary. Those who support reform based on private insurance acknowledge that the individual plans would have to be replaced with options that more closely resemble employer-sponsored plans. Is that wise from a health policy perspective?

An important implication of this Supreme Court decision is that costs for employer-sponsored plans will likely increase. Legal costs may rise because of an increase in challenges to claims decisions, which may cause an increase in benefit costs because of employer/insurer decisions to avoid the effort and legal costs of challenging claims for non-beneficial and non-contract services.

Would a single payer national health program eliminate the conflict of interest between the payer of benefits (the government) and the recipient of benefits (the patient)? Of course not. But, as a society, this conflict should work to our benefit.

Our own public program would have a mission to finance all necessary care for all of us. At the same time, it would have a responsibility as stewards of our tax funds to not waste money on non-beneficial services and products. Although disputes would be inevitable in marginal circumstances, the decisions would be based on balancing the needs of the patient with efficiency in the use of our public funds.

Employers would no longer have to face the awkward decisions of saving money by denying care for their employees.

In contrast, private insurers welcome the opportunity to reduce their overhead by denying care to patients. That might be good business, but it’s terrible health policy.

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