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.
Why Many Medicare Beneficiaries Cling to an Allegedly Worse Deal
By Uwe Reinhardt, PhD
JAMA Forum, June 1, 2016
Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress granted private Medicare Advantage health plans more money per Medicare beneficiary than it granted traditional, government-run Medicare. In other words, the per beneficiary cost paid by the US taxpayers was higher for those enrolled in the private plans than for those enrolled under the traditional, government-run Medicare program.
In addition to these extra payments from government, the private Medicare Advantage plans are able to cut costs through tactics forbidden to traditional Medicare, such as conducting cost-effectiveness analysis for coverage decisions and offering limited networks of health care providers. As a result, the Medicare Advantage plans have been able to offer Medicare beneficiaries more benefits at lower premiums than what is available to them under traditional Medicare–evidently a better deal.
So it’s not surprising, as a recent JAMA Forum post noted, that the Medicare Advantage program has grown in popularity. Currently, about 30% of approximately 55 million beneficiaries are enrolled in a Medicare Advantage plan compared with only 6% a decade ago.
But even so, about 70% of the approximate 55 million Medicare beneficiaries still prefer the “worse” deal, traditional, government-run Medicare. What can explain this revealed preference?
Freedom of Choice
One answer, as the JAMA Forum post hinted, is that traditional Medicare still offers beneficiaries complete freedom of choice among physicians, hospitals, and other professionals or facilities providing health care. In contrast, under Medicare Advantage, beneficiaries are confined to the limited network of such health professionals and facilities chosen by their insurer. Concerns have been raised about the adequacy of networks in the plans, and a September 2015 report from the US Government Accounting Office recommended that the Centers for Medicare & Medicaid Services increase its oversight of Medicare Advantage networks.
Does the general US public actually share the idea that freedom of choice among insurers is more important than freedom of choice among physicians, hospitals, and others who offer health care or is that merely the preference of a policy-making elite that forces the public to accept more limited choice for the sake of cost containment? It is an important question in light of the endless debate over restructuring Medicare.
The Issue of Trust
Another factor that may explain the revealed preference among Medicare beneficiaries for traditional Medicare might be the issue of trust.
It is said that in the eyes of US public, government is incompetent and cannot be trusted. But is that really so?
The strong revealed preference for traditional, government-run Medicare suggests quite the opposite. So does the tenacity with which US veterans defend the existence of the Veterans Health Administration health care system, the purest form of socialized medicine in the world; the public’s staunch opposition to privatizing Social Security, their government-run pension system; or even the most conservative state governor’s swift solicitation of assistance from the Federal Emergency Management Agency whenever natural disaster strikes. Would these same governors have the same trust in, say, an emergency management system operated by a consortium of private casualty insurers?
Enrolling in traditional Medicare can be likened to being married to a spouse who, if not generally thrilling, is an always faithful and reliable companion. The social contract under traditional Medicare is not easily changed and can be changed only after much open debate.
By contrast, by their very nature, private enterprises cannot be more than ephemeral companions. They may be acquired by another company with different ideas of management and social obligations, and their contracts with customers are easily changed, at the behest of boards and managers who make those decisions in secret. The limited networks of physicians, hospitals, and other health care professionals and facilities under Medicare Advantage can easily change over time, as can be the benefit packages they offer.
It is good that older adults in the United States have a choice between traditional, government-run Medicare and the private Medicare Advantage plans. Ideally, US veterans would be offered the same choice. But policy makers should think twice before writing off traditional, government-run Medicare, which evidently has served the elderly well enough to remain their most popular choice.
Congress has elected to overpay private Medicare Advantage plans in a scheme to entice Medicare beneficiaries out of the public plan and eventually privatize the full program through premium support (vouchers). With the extra funds the private plans are able to bribe patients with lower premiums and supplementary benefits. So why have two-thirds of Medicare beneficiaries refused to fall for this scheme since it would appear to be a better deal for them (though worse for the taxpayers)? Uwe Reinhardt gives us an astute answer, having to do with trust in our government.
Reinhardt ends with the conclusion that it is good to have the choice between the government program and the private plans, especially since it allows beneficiaries to specifically select the trusted government option. In Canada that choice is not allowed for the same reasons that it should not be allowed here. The private version costs taxpayers more, especially because of extra administrative costs due to the more complex private bureaucracies. The private sector also shamelessly manipulates the system to the detriment of those in the public program, a prime example being the ability to enable private patients to jump the queue, leaving the public patients behind. The private sector also is adept at subjecting the public sector to adverse selection, passing more health care costs onto the taxpayers. And so on.
As an interim measure, what we need to do is demand that Congress provide the same level of funding for the traditional program as they do for the private plans so that premiums and benefits can be comparable (actually better since private plan spending is less efficient). They also need to inflict greater penalties on the private plans for their transgressions in unfairly manipulating the system to their benefit. That is, Congress should provide us with an improved Medicare so that it can become the benchmark for a single payer national health program.
A recent article in the New York Times highlighted a proposal by Hillary Clinton to bring back the public option as part of the Affordable Care Act, described as a move to the left toward Bernie Sanders’ Medicare for All proposal. Her further suggestion was to consider voluntary buy-in to Medicare for people 50 or 55 years of age and up. Beyond the headline, there was no substance to her proposal. (1)
Although she claims expertise in the health care area, Hillary Clinton has never developed a health care plan that would work to assure access to affordable quality health care. The Clinton Health plan in 1993-1994 was byzantine in its complexity and never got out of a House committee to a vote on the floor. Speaking to a group at Lehman Brothers Health Corporation in 1994, she called single-payer national health insurance inevitable if health care reform was not effective by 2000. (1) Now she opposes that and maintains support for the Affordable Care Act (ACA), enacted in 2010, but with her suggested “improvements.”
As the ACA was being put together in 2008 and 2009, the public option was conceived as a way to inject more competition into the health insurance industry. As a not-for-profit option on the exchanges, it was thought that it would provide greater value of coverage at lower cost. Although initially part of the ACA as it worked its way through congressional committees, it was bitterly opposed and soon killed by private insurers and other corporate stakeholders in the medical-industrial complex. It was also opposed by the American Medical Association, even though most physicians and health professionals supported the idea. An expanded Medicare also drew intense opposition from organized medicine and hospitals, mostly due to fears of inadequate reimbursement.
Now enter Hillary’s 2016 claim that a public option and expanded Medicare buy in could improve the ACA and advance health care reform. Any chance of success? No way, if we look at evidence and experience!
For openers, both would again be fiercely opposed by the same opponents as before. A public option would not have worked before and will not work now by virtue of being too small and administratively more complex. It would be subject to adverse selection of sicker enrollees as private insurers continue to game the system in their own self-interest. Most of the not-for-profit co-ops started under the ACA have already died for these reasons. It is just a make-believe idea to think that a public option could increase competition today now that the industry has grown and consolidated to a point that just four or five insurers control most of the market. The insurance industry and its lobbyists would also kill early buy-in to Medicare without any trouble. Any thought that either a public option or early Medicare buy-in could be a transitional step toward single-payer is likewise out of the question.
We have to recognize soon that our present for-profit multi-payer financing system is actually a huge obstacle to reform. It is unsustainable become of its high costs and inefficiencies, its lack of price or cost controls, its restrictions on patients’ choices of physicians and hospitals, and its increasing unaffordability for a growing part of our population. We still have 30 million Americans uninsured six years after the passage of the ACA, with a similar number underinsured. Hillary’s proposals are unrealistic and naïve, as well as being inconsistent with her 1994 prediction of the need for single-payer financing by 2000 if reform had not been accomplished by then. Her latest proposal to resuscitate the public option as part of the ACA lacks any credibility, and she just seems to be posturing as an advocate for “reform.” Adding a public option to the ACA today would just put one more ineffective Band-Aid on an already flawed multi-payer financing system.
As early as 2009, when the public option was being debated and killed as part of the ACA, Drs. Himmelstein and Woolhandler, internists and professors of public health at the City University of New York gave us two reasons why the public option can never work in this country:
1. It forgoes at least 84 percent of the administrative savings available through single-payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians’ offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs of current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single-payer—not enough to make reform affordable.
2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health-spending differences to their advantage. They have progressively undermined the public plan—which started as the single-payer for seniors and has now become a funding mechanism for HMOs—and a place to dump the unprofitably ill. A public plan option does not lead toward single-payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan. (3)
In the current important debate over the future of health care in this election season, we need a well-informed electorate on the issues. The media are derelict in not drilling down on the advantages and disadvantages of the three major alternatives to health care financing: (1) continuation of the ACA with improvements as necessary; (2) a Republican replacement plan, still in the works, after the ACA is repealed; and (3) single-payer national health insurance, Medicare for All, as proposed by Bernie Sanders, coupled with a private delivery system. We need integrity in proposals and fairness and accuracy in reporting to the public if we are to achieve the goal of universal access to affordable health care for all Americans.
1. Rappeport, A, Sanger-Katz, M. Hillary Clinton takes a step to the left on health care. New York Times, May 10, 2016.
2. Clinton, H. speaking to a group at Lehman Brothers Health Corporation, June 15, 1994. As reported by Health Care for All-WA Newsletter, Winter, 2015, p. 9.
3. Himmelstein, DU, Woolhandler, S. Public plan option in a market of private plans, March 26, 2009. Physicians for a National Health Program, Chicago, IL. www.pnhp.org
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.
Patient-Centered Outcomes Research Institute (PCORI)
The Patient-Centered Outcomes Research Institute (PCORI), an independent nonprofit, nongovernmental organization located in Washington, DC, was authorized by Congress in 2010.
Our mandate is to improve the quality and relevance of evidence available to help patients, caregivers, clinicians, employers, insurers, and policy makers make informed health decisions. Specifically, we fund comparative clinical effectiveness research, or CER, as well as support work that will improve the methods used to conduct such studies.
The goal of our work is to determine which of the many healthcare options available to patients and those who care for them work best in particular circumstances. We do this by taking a particular approach to CER called Patient-Centered Outcomes Research, or PCOR, research that addresses the questions and concerns most relevant to patients, and we involve patients, caregivers, clinicians, and other healthcare stakeholders, along with researchers, throughout the process.
From the 2015 Financial Report
The Patient-Centered Outcomes Research Institute was authorized in 2010 by the Patient Protection and Affordable Care Act (42 U.S.C. 1301 et seq.) (Act) to “assist patients, clinicians, purchasers, and policy- makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis.” It does this by supporting comparative clinical effectiveness research (CER) projects designed to answer questions most important to patients. PCORI is also charged with disseminating the results of that research, focusing on “health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items” studied.
PCORI is a 501(c)(1) tax-exempt, nonprofit corporation, governed by a 21-member multi-stakeholder Board of Governors, including 19 members appointed by the Comptroller General of the United States. By law, the Comptroller General must appoint three members representing patients and healthcare consumers; seven members representing physicians and providers; three members representing private payers; three members representing pharmaceutical, device and diagnostic manufacturers or developers; one member representing quality improvement or independent health services researchers; and two members representing the federal government or the states (including at least one member representing a federal health program or agency). The Act also provides that the Directors of the Agency for Healthcare Research and Quality (AHRQ) and the National Institutes of Health (NIH), or their designees, be members of the Board.
How We’re Funded
PCORI is funded through the Patient-Centered Outcomes Research Trust Fund (PCOR Trust Fund), which was established by Congress through the Patient Protection and Affordable Care Act of 2010. The PCOR Trust Fund receives income from three funding streams: appropriations from the general fund of the Treasury, transfers from the Centers for Medicare and Medicaid trust funds, and a fee assessed on private insurance and self-insured health plans (the PCOR fee).
PCORI receives 80 percent of the monies collected by the PCOR Trust Fund to support its research funding and operations. The Department of Health and Human Services (HHS) receives the other 20 percent of trust fund monies to support dissemination and research capacity-building efforts (the majority of HHS’s share goes to the Agency for Healthcare Research and Quality).
For government fiscal years (FYs) 2010 through 2012, the PCOR Trust Fund received a total of $210 million total in appropriations from general fund revenues. For FYs 2013 through 2019, the PCOR Trust Fund will receive $150 million from the general fund annually.
Re-evaluating the Patient-Centered Outcomes Research Institute
By Zeke Emanuel, Topher Spiro, Thomas Huelskoetter
Center for American Progress, May 31, 2016
The ACA established PCORI with a clear mandate to carry out the “funding of comparative clinical effectiveness research” over 10 years. PCORI was to focus distinctly on CER and not duplicate the types of research funded by the Agency for Healthcare Research and Quality, the National Institutes of Health, or other entities. However, a Center for American Progress analysis in 2014 found that only one-third of PCORI’s funding was going toward CER.
PCORI studies should have the potential to change clinical treatment decisions or insurers’ coverage determinations. Yet to date, this potential impact on the nation’s health care system has not been fully realized. With PCORI only authorized through 2019, the institute is running out of time to make a significant impact on CER.
Cumulatively since its inception, PCORI has invested 51 percent of its almost $1.4 billion in grant funding in CER, totaling $716 million.
To evaluate whether PCORI’s funding was directed toward high-impact research areas, CAP examined how many of its awards addressed research questions that the Institute of Medicine identified as the top 25 highest-priority CER topics. In fairness, this is not the only relevant ranking of CER needs, and priorities may have evolved since the IOM list was published in 2009. However, the IOM list serves as an authoritative, independent rubric by which to judge whether PCORI is focusing on the most critical evidence gaps in medicine.
In its previous analysis, CAP found that only 12 percent of PCORI’s grants and 14 percent of its grant funding went toward research topics in the IOM’s top quartile. In the new CAP analysis, this first figure declined to 4 percent of grants. However, the percentage of funding allocated to the IOM topics increased to 18.5 percent. IOM top-quartile priority topics cumulatively represent 16 percent of PCORI’s funding to date, representing relatively little change from CAP’s previous analysis.
In response to this analysis, PCORI asserts that 72 percent of the IOM’s top 25 topics have been addressed by a PCORI-funded study, along with 62 percent of the IOM’s top 100 topics. Yet this alternate framing of the issue still leaves almost 30 percent of the top quartile and almost 40 percent of the top 100 unaddressed after several years. Furthermore, this metric explains nothing about whether these studies involved significant or merely minimal funding. Many of these research topics concern broad areas of medicine where many studies are needed; as a result, CAP feels it is important not only that high-impact research topics be addressed but that a significant percentage of PCORI’s funding be connected to such topics.
Thus far, PCORI has not made the impact on the health care system that the drafters of the Affordable Care Act envisioned. The need for CER remains urgent, and PCORI still has the potential to help reduce health care costs and improve the quality of care.
Report: Federally funded institute avoids comparing drugs, other treatments
By Jane O’Donnell
USA Today, May 31, 2016
An institute that pays researchers to compare medical treatments has spent only half of its more than $1.4 billion in available federal money on what is called comparative effectiveness research and has largely ignored prescription drugs, despite their role in driving up health care costs, according to a study released Tuesday by a Washington-based policy group.
PCORI has been criticized since it first appeared in the legislation that became the ACA. Although CER had bipartisan support, the institute got caught in the politics surrounding what Republican former vice presidential candidate Sarah Palin called “death panels” that could decide who received medical treatment.
Now despite widespread concerns about rising drug costs, CER is being attacked by patient groups supported by the pharmaceutical industry that claim the research could limit access to some life-saving drugs.
Congress limited the ability of PCORI to consider costs when comparing health care, drugs or prioritizing research studies.
Patient groups, which are nearly always backed by pharmaceutical companies, are major players in what PCORI decides to research. That can limit the focus on finding lower-cost options, which could hurt the profitability of the companies that pay for the patient groups.
The Patient-Centered Outcomes Research Institute (PCORI) is an independent, nonprofit, nongovernmental organization authorized by the Affordable Care Act and funded predominantly by the federal government. They in turn fund comparative clinical effectiveness research (CER), especially through Patient-Centered Outcomes Research (PCOR). The purpose is to determine the relative effectiveness of various clinical approaches, including the comparison of drug therapies. But Congress specifically prohibited a comparison of costs.
Some readers of yesterday’s report on the ICER (Institute for Clinical and Economic Review) were concerned about the potential conflict of interest that could result from the involvement of various stakeholders. The same concern could be expressed about PCORI. Although we have no reason to doubt the integrity of the individuals involved in these organizations, it would be preferred that their organizations have an infrastructure that did not include the influence of vested interests.
An additional concern regarding PCORI is the interference by Congress in preventing crucial determinations about cost effectiveness. Transparency in pricing is essential if we are to ensure value in our health care purchasing.
Another unique feature of PCORI is that it is only a ten year program, scheduled to end in 2019. It is astonishing that members of the policy community, working with Congress, could ever think that we could complete all important comparative effectiveness research by 2019, and that future drugs and technology would not require such reviews.
Just as with ICER, PCORI is under attack by conservatives and by stakeholders, motivated by ideology and by greed. Once again, it appears that, with their influence, the patient is not always being kept foremost in our policy decisions.
We want health care that is the most effective and with the fairest prices. We don’t want health care that gives the most powerful stakeholders a greater advantage in the health care marketplace while also ensuring them a maximum return on their investments. ICER and PCORI seem to be above that, but 100 percent public funding without stakeholder involvement in governance could give us further assurance that their work product is strictly in the patients’ best interests.
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.
Institute for Clinical and Economic Review (ICER)
ICER is a trusted non-profit organization that evaluates evidence on the value of medical tests, treatments and delivery system innovations and moves that evidence into action to improve the health care system. To accomplish this goal ICER performs analyses on effectiveness and costs; develops reports using innovative methods that make it easier to translate evidence into decisions; and, most distinctively, fills a critical gap by creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy. Through all its work, ICER seeks to play a pivotal role in creating a future in which collaborative efforts to move evidence into action provide a foundation for a more effective, efficient, and just health care system.
An example: Treatment Options for Relapsed or Refractory Multiple Myeloma:
Evidence report: Multiple Myeloma:
Health insurers find back door to limit choice
By Jeff Stier
USA Today, May 26, 2016
Lost in the noise of political posturing over health care, there’s one widely accepted principle: the importance of the doctor-patient relationship in medical decision-making.
Yet we’ve all heard stories where insurance companies won’t fully cover a drug that both the doctor and patient believe is the right medical choice. Why not? It’s pretty simple: the insurance companies don’t want to pay.
As cutting edge drugs come to market, insurance companies are scrambling to find ways to justify not paying for them.
Insurers will tell you (if you can get them on the phone) the drug isn’t covered because it’s not on their formulary, their own list of preferred medicines. Kids have a term for this: “Sorrynotsorry.” Don’t let the circular reasoning fool you.
Almost as bad, doctors often have to get pre-authorization before prescribing something that is on the formulary. (Because we all need more paperwork.)
The flawed justification was normalized by President Obama in 2009, when he oversimplified pharmacoeconomics, saying, “If there’s a blue pill and a red pill, and the blue pill is half the price of the red pill and works just as well, why not pay half price for the thing that’s going to make you well?”
Insurance companies are using this concept to cut costs by excluding the red pills. To do so, they’ve cooked up a clever way to justify exclusions from formularies by founding and funding a group called the Institute for Clinical and Economic Review, or ICER.
ICER does a version of something called “comparative effectiveness” to determine whether, across the population, the drugs are worth the cost compared to other treatments. It releases the findings around the same time drugs come to market, just in time for insurance companies, who, not coincidentally, serve on ICER’s governing board, to justify excluding FDA approved drugs from the formulary based, in part, on ICER’s “independent” math.
ICER’s approach appears to be modeled on the United Kingdom’s National Institute for Health and Clinical Excellence (NICE) model, which tries to judge the cost-effectiveness of therapies, in order to help determine which health services the government should provide. ICER and NICE share more than just three letters; ICER’s president, Steven Pearson, was awarded an Atlantic Fellowship by the British Government and acted as Senior Fellow at NICE.
If insurers get to play the role the British government does, determining which pills are cost-effective, we’ll have taken a huge step not only toward rationing, but toward stifling innovation.
The Center for Medicine in the Public Interest Says ICER’s Proposed Value Assessment for New Cancer Medications Would Cost Thousands of Lives and Stifle Innovation
Business Wire, May 25, 2016
The Center for Medicine in the Public Interest (CMPI) – a not-for-profit organization that advocates for consumer access to medical innovation – today challenged so-called value frameworks being proposed by the Boston-based Institute for Clinical and Economic Research (ICER). A white paper authored by Robert Goldberg, Ph.D, vice president and co-founder of CMPI, concludes that under ICER’s plan, 44,000 fewer patients with the cancer multiple myeloma will be alive within the next five years than if access to new medicines continues to grow at historical levels. At the same time, the CMPI report projects a serious drain on the U.S. economy from this loss of life, costing more than $12 billion in health expenditures and lost productivity.
The CMPI report, Not at Any Price: How ICER Robs Myeloma Patients of their Hope, challenges ICER’s assessment of the value of recently approved therapies for multiple myeloma, a rare cancer of cells in the bone marrow. ICER has also announced plans to conduct similar assessments of new treatments for lung cancer, multiple sclerosis and other serious diseases in the coming months.
Based on a thorough review of ICER’s assessment and its calculations, the CMPI report questions ICER’s evaluation on a number of grounds. One major concern is that ICER applies a measure called the QALY, quality adjusted life year, to determine how much insurers and health systems should pay for additional years of life relatively free of disease. Therapeutics that exceed the QALY threshold are considered too expensive to be used unless prices are lowered.
“In practice, QALYs lead to rationing,” Dr. Goldberg stated. “Due to the reliance on QALYs, ICER ignores the value patients place on novel medicines that extend their lives when they are faced with certain death.”
ICER (Institute for Clinical and Economic Review) is a non-profit organization that analyzes effectiveness and costs of medical tests, treatments (including drugs) and delivery system innovations thereby “creating sustainable initiatives with all health care stakeholders that can align efforts to use evidence to drive improvements in both practice and policy.” These collaborative efforts “provide a foundation for a more effective, efficient, and just health care system.”
The majority of ICER’s funding is from private, non-profit foundations. Stakeholders do provide input and feedback in developing the reports, but they are not responsible for the final contents of the reports nor should they be assumed to support any part of the reports which are “solely the work of the ICER team and its affiliated researchers.” As an example of the integrity of the organization, two of the panel members are our esteemed friends, Aaron Carroll, MD and Harold Pollack, PhD (though Pollack still has concerns about single payer feasibility).
The function that ICER is attempting to fulfill is desperately needed in the United States. We spend far more on health care than other nations yet have a system that is noted, on average, for its mediocrity. We need objective evaluation of old and new technology and the comparative effectiveness of various options for medical management. We also need to better understand whether the prices we are paying are commensurate with the health care value we are receiving. We have to end the U.S. model of paying too much for inferior technology – a model that is made possible by pretending that the markets will automatically improve value though that is nearly impossible when vested interests are preventing transparency. It’s time to turn on the lights.
NICE, the National Institute for Health and Care Excellence in England and Wales, is a leader in providing guidance on efficiency and cost effectiveness. Although an excellent source of such information, it has been under continual attack in the United States by anti-government conservatives and by stakeholders who profit from the dysfunction in our system. We frequently see claims that the British National Health Service is killing people by withholding life saving drugs or procedures. In fact, NICE recommendations are resulting in better care at lower prices.
We are now seeing this attack replicated on ICER. The USA Today article excerpted above is from the National Center for Public Policy Research, a conservative think tank founded by Amy Ridenour. The Business Wire article is from The Center for Medicine in the Public Interest, an organization co-founded by Robert Goldberg from the Manhattan Institute and Peter Pitts from the Pacific Research Institute, conservative and libertarian organizations. Their expressed opinions are driven by right-wing ideology and by greedy stakeholder interests, not by the public good.
Other similar articles are appearing now, and we will see many more telling us that ICER is rationing our health care. What they will not tell us is that ICER will help us select the most beneficial care while preventing outrageous price gouging. If that is rationing, then bring it on.
Association between the Value-Based Purchasing pay for performance program and patient mortality in US hospitals: observational study
By Jose F Figueroa, Yusuke Tsugawa, Jie Zheng, E John Orav, Ashish K Jha
BMJ, May 9, 2016
From the Introduction
Healthcare systems around the world are striving to deliver high quality care while controlling costs. One compelling strategy is the use of financial incentives to reward high value care. The US federal government has made substantial efforts to shift towards value based payments since the passage of the Affordable Care Act in 2010. One key program is Hospital Value-Based Purchasing (HVBP) introduced by the Centers for Medicare and Medicaid Services (CMS) in 2011. HVBP rewards or penalizes hospitals based on their performance on multiple domains of care, including clinical processes, clinical outcomes (eg, 30 day mortality for acute myocardial infarction, pneumonia, and heart failure), patient experience, and, more recently, cost efficiency. Funding for HVBP is designed to be budget neutral; Medicare withholds a percentage of inpatient payments to prospectively paid hospitals and then redistributes this money back to hospitals based on their performance. In fiscal year 2015, HVBP led to penalties for 1360 hospitals and bonus payments to 1700 hospitals.
From the Discussion
Three years after the introduction of the US national pay for performance program — Hospital Value-Based Purchasing (HVBP) — we find no evidence that it has led to better patient outcomes. The trends in mortality for the target conditions among hospitals participating in HVBP actually slowed after the program’s introduction, although that slowing was also seen among hospitals not participating in the program. Even among hospitals with worst patient mortality at baseline, a group of hospitals that had arguably more motivation to improve to avoid penalties, we found no evidence that HVBP drove improvement beyond secular trends observed in a matched group of non-HVBP hospitals. Taken together, these findings call into question the effectiveness of the national hospital pay for performance program and whether it is having the desired effect on patient outcomes.
This study has important implications for international efforts using financial incentives to drive improvements in hospital quality of care. The program on which HVBP was based, the US Premier Hospital Quality Incentive Demonstration, also failed to improve patient outcomes. Some critics argued that prior pay for performance programs based purely on attainment did not motivate poor performers to improve (since they were unlikely to improve enough to earn bonuses) and also did little for higher performers who would have received bonuses even by maintaining their status. However, HVBP was modified to include financial incentives for both achievement and improvement to ensure that all hospitals had some motivation to improve. Further, as a national non-voluntary program, HVBP was posited to be more impactful because it was not focused on a voluntary group of hospitals that might have been high performers at baseline. Despite these advantages, we found no evidence that HVBP improved patient outcomes. Given the amount of time and resources spent in its design and implementation, these findings are discouraging and should motivate policymakers to consider changes in the structure and size of incentives in ways that may lead to meaningful improvements in patient care versus completely rethinking the utility of pay for performance programs that target hospital quality.
Comparison with other studies
These results add to a growing body of literature that suggest many pay for performance programs are largely ineffective in improving patient outcomes. As further emphasis on value-based programs continues to grow, healthcare policymakers should carefully consider the costs of investing in these pay for performance programs and the potential unintended consequences. Ultimately, these programs need to be evaluated based on weighting the benefits and harms they create — and our work suggests that the benefits seem to be small, if present at all.
Pay for performance programs add to the administrative burden of our health care system and contribute to physician burnout, and now we have yet one more study that shows that they are ineffective in improving patient outcomes.
The thrust of health care reform is currently directed towards paying for quality instead of quantity, with an emphasis on measurement and process, resulting in greater administrative waste. Current cost containment has been largely confined to cost sharing which erects financial barriers to beneficial care and can only result in worse outcomes.
Now people are talking about what we really do need instead – a well designed single payer system, an improved Medicare for all – but the legislators, public administrators, and stakeholders are ignoring the conversation. This should be a call for organized protests. Why aren’t they happening?
During this election season, with health care one of the serious issues, the mainstream media are missing in action. As they posture coverage of contentious issues, they deliver disinformation and non-information at such a superficial level as to be useless.
What can we expect, since the so-called mainstream media have been corporatized and consolidated under the ownership of a few billionaires dedicated to free markets above public service? In this process, the numbers of paid reporters per capita has plummeted. (1) In their recently released book, People Get Ready: The Fight Against a Jobless Economy and a Citizenless Democracy, John Nichols and Robert W. McChesney tell us:
In the current crisis that is decimating the commercial model for journalism, the amount of resources for actual hard-digging into the actual panning and ambitions of the powerful is generally non-existent, and not something corporate owners have shown much inclination to encourage. As for political journalism, with a few fine exceptions, it is mostly pointless gossip and nutritionless assessments of spin and polls. With regard to political campaigns the journalism hits rock bottom. (2)
The reach of today’s “journalism” extends to all forms of media, including print, digital, radio, and television. The news industry is bought and paid for by large corporate interests dedicated to their own financial bottom lines. Interlocking directorates among media corporations tighten the controls of the “news,” as shown by a 2009 study by Fairness & Accuracy in Reporting (FAIR), when single-payer national health insurance was barely mentioned as the Affordable Care Act (ACA) progressed through its political compromises and manipulations. (3)
General Electric (GE) and Comcast give us examples of how big their reach has become. GE has a 49 percent interest in NBC Universal, with Comcast at 51 percent. GE media holdings include TV networks NBC and Telemundo, 27 TV stations, and many cable TV networks, including the popular web-based TV website Hulu.
So here we are in 2016 with three very different proposals by the leading presidential candidates on health care financing—the Republicans with a free market plan still in the works, the Democrats with Hillary Clinton’s support of the ACA, and Bernie Sanders’ single-payer proposal for national health insurance. The media again give almost no coverage to these proposals, and when it does, provides distortion and disinformation, as shown by these examples:
• The Washington Post, which was acquired in 2013 by Amazon’s libertarian CEO Jeff Bezos in 2013, recently ran 16 negative articles on Bernie’s campaign in 16 hours. (4)
• A recent article in the New York Times highlighted a proposal by Hillary Clinton to resuscitate the public option (5) (briefly considered as a provision of the ACA as it was being developed); but there was no critical coverage of this idea, which would be just another useless addition to the ACA with no chance of competing with the powerful consolidated and subsidized private insurance industry.
• A later New York Times article accepted uncritically a flawed analysis by the Urban Institute that Bernie’s single-payer proposal would be far more expensive and require higher taxes than proposed. (6) Since then, that “analysis” has been soundly rebutted by such flawed assumptions as Bernie’s plan continuing with private insurance (not true, with some $476 billion in annual savings by its being replaced by not-for-profit public financing), its underestimation of savings on drug costs by the government’s negotiated drug prices (as the Veterans Administration has done for years), and unrealistic projections of overutilization of health services when universal coverage to health care is implemented (7)
Obviously, the political, economic and lobbying power of corporate interests in the medical-industrial complex want to continue to defend the highly profitable, under-regulated marketplace in health care. We need a vigilant and critical media, but it’s been long gone, bought off by their owners and advertisers as they deliver empty pablum to their mass audience. Corporate acquiescence to those in power has been openly acknowledged, as Chuck Todd of MSNBC’s Meet the Press did in 2014 when he admitted that his career goals prevented him from asking tough questions, which could limit guests’ return to the program, inhibit his getting high-profile guests, and cause drops in ratings that could lead to shutting down the program. (8)
The corporate media continue to posture that they are covering the real news. But their investigative capacity has been largely diminished through underfunding by corporate chiefs. Edward R. Murrow would cringe at what our media are today, having failed to report accurately on the Iraq War, the many problems with trade agreements that outsource American workers overseas, and alternatives to our overpriced and unaffordable health care industry. Our democracy cannot work unless we have an electorate informed by accurate information as to policy alternatives. We need more investigative journalism, but corporate control and power block the way.
2. Nichols, J, McChesney, RW. People Get Ready: The Fight Against a Jobless Economy and a Citizenless Democracy, New York. Nation Books, 2016, p. 140.
3. Murphy, K. Single-payer & interlocking directorates. Extra!, August 2009, p. 7.
4. Johnson, A. Washington Post ran 16 negative stories on Bernie Sanders in 16 hours. Common Dreams, March 8, 2016.
5. Rappeport, A, Sanger-Katz, M. Hillary Clinton takes a step to the left on health care. New York Times, May 10, 2016.
6. Sanger-Katz, M. A single-payer plan from Bernie Sanders would probably still be expensive. New York Times, May 16, 2016.
7. Woolhandler, S, Himmelstein, DU. Doubling down on errors: Urban Institute defends its ridiculously high single-payer cost estimates. Huffington Post, May 22, 2016.
8. LeftofCenter, “’It’s not my job’ Chuck Todd admits he can’t ask tough questions.” Crooks and Liars, December 28, 2014. Accessed March 10, 2015. htpp://www.crooksandliars.com/2014/12/todd-admits-he-wont-ask-tough-questions-so
Shareholders vote down dark money disclosure at Aetna, Anthem
By Bob Herman
Modern Healthcare, May 26, 2016
Health insurers Aetna and Anthem won’t have to tell shareholders how much money they send to tax-exempt political organizations, at least for another year.
Shareholder resolutions that would’ve required Aetna and Anthem to disclose how much they spend on 501(c)(4) “social welfare” organizations and other business association groups failed to gain approval last week at the companies’ respective annual shareholders meetings. Approximately 91% of Anthem investors rejected the proposal, and 75% of the votes were cast against Aetna’s resolution.
Political not-for-profit organizations, also called dark money groups, do not have to reveal their donors, and they can receive unlimited amounts of money, much of which is routed toward influencing elections.
The shareholders of Aetna and Anthem, by voting down disclosure of dark money contributions, are co-conspirators with the corporate executives in the efforts to prevent transparency of their financial contributions to dark money organizations that use their funds to influence elections.
Once we replace the private insurers with a publicly-owned Medicare for all program, we need show no special sympathy for the displaced insurance executives, and that goes for their rent-seeking shareholders as well. Our sympathies should be directed to the displaced employees of the insurance corporations who will need assistance in job training and in creating new employment opportunities.
Americans’ Experiences with ACA Marketplace and Medicaid Coverage: Access to Care and Satisfaction
By Sara R. Collins, Munira Gunja, Michelle M. Doty, Sophie Beutel
The Commonwealth Fund, May 25, 2016
The fourth wave of the Commonwealth Fund Affordable Care Act Tracking Survey, February–April 2016, finds at the close of the third open enrollment period that the working-age adult uninsured rate stands at 12.7 percent, statistically unchanged from 2015 but significantly lower than 2014 and 2013. Uninsured rates in the past three years have fallen most steeply for low-income adults though remain higher compared to wealthier adults. ACA marketplace and Medicaid coverage is helping to end long bouts without insurance, bridge gaps when employer insurance is lost, and improve access to health care. Sixty-one percent of enrollees who had used their insurance to get care said they would not have been able to afford or access it prior to enrolling. Doctor availability and appointment wait times are similar to those reported by insured Americans overall. Majorities with marketplace or Medicaid coverage continue to be satisfied with their insurance.
Exhibit 2: Uninsured Rates Among Low-Income Adults Have Fallen the Most But Remain Substantially Higher Than Those For Adults with Higher Incomes
People with low and moderate incomes — the population targeted in particular by the ACA’s reforms — had the highest uninsured rates prior to the law’s enactment and subsequently have experienced the greatest gains in coverage by far. But after declining steeply in 2014, uninsured rates for adults with incomes below 138 percent of the federal poverty level ($16,243 for an individual and $33,465 for a family of four) have remained about the same. Similarly, uninsured rates for those with incomes between 138 percent and 249 percent of poverty ($29,425 for an individual and $60,625 for a family of four) had fallen by half by 2015 but remain nearly the same this year. Consequently, low- and moderate-income adults are uninsured at rates as much as 10 times higher as those for adults with higher incomes.
Conclusion and Policy Implications
After falling sharply in 2014 upon rollout of the ACA’s major coverage expansions, the uninsured rate for U.S. working-age adults has been declining at a slower pace. The chasm in insurance coverage between lower- and higher-income adults remains troubling. We will explore the possible reasons for this in a forthcoming brief.
In each year since the coverage expansions, our survey findings have indicated that overall enrollment has been propelled by people who were previously uninsured — a year or longer for the vast majority. Consistent with other national surveys and Congressional Budget Office analyses, enrollment has not been driven by people shifting out of employer coverage: the share of adults insured through an employer has declined only slightly since 2013. The survey findings do suggest that for people who lose their job-based health benefits, the expanded insurance options may be helping to bridge the coverage gap.
The Affordable Care Act (ACA) has been effective in reducing the numbers of uninsured, particularly amongst low-income adults. Although that is good news, we should be alarmed that “low- and moderate-income adults are uninsured at rates as much as 10 times higher as those for adults with higher incomes,” and that there has been little improvement in enrollment for these lower income levels since the initial steep decline in 2014.
When ACA was constructed, it was decided that the employer-sponsored plans should be left largely alone to continue to fulfill the role of covering the majority of middle- and higher-income individuals and families. The greatest need was for the uninsured low-income and uninsured moderate-income sectors of the population. Thus two of the more important design features of ACA were to expand Medicaid for low-income individuals and to offer income-indexed tax credits and subsidies for private plans offered through the ACA exchanges (Marketplace).
How successful has the plan to cover those with greater financial needs been? As stated, uninsurance for those with low and moderate incomes has stabilized at a rate 10 times higher than those with higher incomes. Except for an initial surge, ACA has failed to achieve the goal of covering these more vulnerable populations.
They would have all been covered under a single payer system. Not only that, the ACA model of reform is the most expensive model of all, yet falls miserably short in universality, efficiency and equity. The least expensive comprehensive models of reform that would have actually achieved these goals are single payer Medicare for all or a government owned and operated national health service.
Although “socialism” has become less of a pejorative in the United States, the majority of residents would prefer the social insurance model of Medicare for all rather than socialized medicine through a national health service model. Now that ACA has been demonstrated to be an over-priced failure, we should move on with establishing an Improved Medicare for All.
Milliman Medical Index: Healthcare costs for a typical American family will exceed $25,000 in 2016 and have tripled since 2001
Healthcare costs reach $25,826 for the typical American family of four, compared to $8,414 in 2001.
May 24, 2016
Milliman, Inc., a premier global consulting and actuarial firm, today released the 2016 Milliman Medical Index (MMI), which measures the cost of healthcare for a typical American family of four receiving coverage from an employer-sponsored preferred provider plan (PPO). In 2016, costs for this family will increase by 4.7% — the lowest rate of increase in the history of this study — though the total dollar increase of $1,155 marks the 11th consecutive year that the total dollar increase has exceeded $1,100. The employer pays $14,793 of the total healthcare costs and the employee — through payroll deductions and cost sharing at the time of service — pays $11,033.
2016 Milliman Medical Index
In 2016, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $25,826, according to the Milliman Medical Index (MMI).
Milliman Medical Index is an actuarial analysis of the projected total cost of healthcare for a hypothetical family of four covered by an employer-sponsored preferred provider organization (PPO) plan. Unlike many other healthcare cost reports, the MMI measures the total cost of healthcare benefits, not just the employer’s share of the costs, and not just premiums. The MMI only includes healthcare costs. It does not include health plan administrative expenses or profit loads.
Key findings of the 2016 MMI include:
1. Our lowest annual increase in 15 years still pushes the MMI over $25,000. The cost of care for the typical American family of four has more than tripled since its value of $8,414 in 2001. And the current level of $25,826 is just an average. Healthcare spending for any given family can range from $0 into the millions of dollars.
2. The percentage increase in the MMI is at its lowest rate ever. However, even at 4.7%, which is the lowest annual increase since we first measured the MMI in 2001, the rate of increase is still well above growth in the consumer price index (CPI) for medical services, and far surpasses the average 2% annual increase in median household income between 2004 and 2014. More than ever before, health insurance is a critical component of a family’s financial security, and yet it continues to become less and less affordable.
3. Employee expenses increase at rates higher than total healthcare spending. At $11,033, the employee’s total cost increased by 5.3% from 2015, while the employer’s cost increased 4.2%. In fact, only once in the past 10 years have employee costs increased at a lower rate than employer costs. Back in 2001, the first year we measured the MMI, employers paid 61% of costs while employees paid 39%. In 2016, the same split is 57% and 43%. Employees are shouldering more of the healthcare cost burden than they were 15 years ago.
4. Prescription drugs, the most rapidly growing MMI component, are nearly 17% of total healthcare spend. In 2016, the MMI family’s prescription drug costs will reach $4,270. That’s almost four times as much as the $1,111 in prescription drug expenditures the family had in 2001. Prescription drug expenses grew at 9.1% from 2015 to 2016, a lower rate than last year’s 13.6% increase.
The Milliman Medical Index (MMI) is the cost of health care for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan. It is now over $25,000 ($25,826).
Although the annual percentage increase in the MMI has been declining – this year down to 4.7% – the dollar increase has exceeded $1,100 for each of the last 11 years. Though some of that is paid by forgone wage increases, that is quite a bite to being taking each year out of the wages for a typical worker’s family of four.
Nor should the declining rate of increase in the MMI be celebrated as a success of the Affordable Care Act. It is in excess of four times the rate in the increase in the CPI over the last 12 months (1.1%). Families on the average are ending up further and further behind because of the increases in our health care costs.
By Shannon Muchmore
Modern Healthcare, May 21, 2016
The CEO Power Panel includes 110 top leaders of hospitals, insurance companies, physician groups, trade associations and other not-for-profit advocacy groups. The second-quarter survey on policy options that the next president and Congress might address attracted 86 respondents, a 78% response rate.
Future of ACA
Do you support Congress and the next president in:
Repealing and replacing the Affordable Care Act?
2.3% – Yes
67.4% – No
29.1% – It depends on the details
1.2% – No opinion
Expanding the ACA’s subsidized private insurance plan system to achieve universal coverage?
34.9% – Yes
15.1% – No
48.8% – It depends on the details
1.2% – No opinion
Scrapping private insurance in favor of expanding an enhanced Medicare to cover the entire population (single payer)?
9.3% – Yes
61.6% – No
29.1% – It depends on the details
Other insurance issues
Allowing private insurers to sell individual and family policies across state lines under national rules that preempt state rules?
52.3% – Yes
20.9% – No
24.4% – It depends on the details
2.3% – No opinion
Expanding the use of health savings accounts to pay premiums and meet costs under high-deductible plans?
74.4% – Yes
11.6% – No
12.8% – It depends on the details
1.2% – No opinion
Creating subsidized high-risk pools to cover people with preexisting conditions?
43.0% – Yes
16.3% – No
36.1% – It depends on the details
4.7% – No opinion
Raising Medicare eligibility to age 67?
54.7% – Yes
23.3% – No
22.1% – It depends on the details
Expanding means testing within Medicare, such as higher co-pays or reduced benefits for high-income seniors?
50.0% – Yes
18.6% – No
30.2% – It depends on the details
1.2% – No opinion
Moving to a universal Medicare Advantage system with a means-tested defined contribution (premium support) for seniors?
28.2% – Yes
20.0% – No
48.2% – It depends on the details
3.5% – No opinion
Gradually expanding Medicare to cover everyone over age 55 who doesn’t have private insurance?
21.4% – Yes
48.8% – No
28.6% – It depends on the details
1.2% – No opinion
Delivery system reform
Taking aggressive measures to curb rising prescription drug prices such as allowing imports and authorizing the CMS to negotiate prices?
70.6% – Yes
9.4% – No
20.0% – It depends on the details
Repealing delivery system reforms such as value-based payment, accountable care organizations and the use of quality measures included in the Affordable Care Act?
3.5% – Yes
83.5% – No
11.8% – It depends on the details
1.2% – No opinion
This poll of selected “top leaders of hospitals, insurance companies, physician groups, trade associations and other not-for-profit advocacy groups” can give us a rough idea of where the executive leadership of the health care industry stands today on health care reform. A few conclusions:
* These CEOs strongly support the Affordable Care Act (ACA). That is not surprising since these vested stakeholders were part of the process that created the legislation..
* They are uncertain on whether or not the private insurance plans should be expanded to achieve universal coverage, although one-third would agree with they should be. The majority may be concerned about the potential of being required to cover care for those with greater health care needs (adverse selection) without being able to transfer risk elsewhere..
* Over 60 percent oppose replacement of private plans with a single payer enhanced Medicare for all and another 30 percent say that it depends on the details. Only 9 percent support single payer outright. This suggests that ACA was indeed designed with these stakeholders in mind, rather than for the patients..
* At least three-fourths support health savings accounts, tacitly supporting high deductible health plans that are a source of financial hardship for far too many individuals who have health care needs..
* At least half support selling insurance across state lines even though that is not practical because of problems such as building new provider networks in other states..
* Close to half support creating subsidized high-risk pools to cover people with preexisting conditions, even though the experience with state high-risk pools has been very disappointing. They are too expensive so benefits have been too meager. Besides they have been unable to cover most eligible individuals in spite of the need..
* Over half support raising Medicare eligibility age to 67, cutting back on coverage when we need to do is increase it instead..
* They would expand means-testing of Medicare, risking support of higher income individuals for the program..
* Somewhat surprisingly there is less support for Medicare vouchers for private plans (premium support), but perhaps that is due to the fact that the premium support strategy is designed to eventually reduce government payments for Medicare. After half of a century, Medicare is here to stay, and the stakeholders do recognize the need for adequate government funds to support the program..
* Only one-fifth support allowing individuals the option of enrolling in Medicare at age 55. Half are clearly opposed. They do not want to displace employer-sponsored plans presumably because they pay higher rates than does Medicare..
* By far the strongest support is for “delivery system reforms such as value-based payment, accountable care organizations and the use of quality measures included in the Affordable Care Act.” Evidence to date with these “value over volume” proposals has been disappointing, demonstrating little savings and negligible impact on quality. One possible reason they may be popular for CEOs is that their companies have learned to game the system to collect the rewards offered by these programs.
It is likely that most of these CEOs are relatively conservative politically since they predominantly support policies advanced by the “repeal and replace” Republicans, even though they do support ACA. They also strongly oppose Medicare for all single payer in spite of it being supported by a majority of Americans. Some of the policies they support would make access and affordability worse for patients, yet these policies can be self-serving for their own entities.
This survey of health industry CEOs leads me to the conclusion that the wrong people were sitting at the table when ACA was designed. For our redo, we need people at the table who represent patients rather than the health industries. A system that takes care of patients automatically takes care of legitimate stakeholders, but the reverse has not been true. It’s time to change. Single payer.
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