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.
Social Insurance: America’s Neglected Heritage and Contested Future
By Theodore R. Marmor, Jerry L. Mashaw and John Pakutka
(Published by CQ Press, October 15, 2013))
The United States has a relatively comprehensive system of social insurance. Our programs of social provision begin with a bedrock assumption: family income will generally come from work wages or salaries, deferred compensation in the form of pensions, or investments in financial markets (roughly speaking, invested savings, although inheritance plays a small part for many families). We live and work in a vibrant market economy.
We recognize, however, that over the life cycle of any individual there are risks to adequate income from temporary or long-term inability to work and inadequate reserves to withstand major shocks, such as catastrophic medical expenses.
The overall lesson is clear: America’s social welfare programs directed at family economic security are complex compromises. They represent balances among visions of social welfare goals and understandings of the proper location of public responsibility. They also reflect compromises among conceptions of governmental and individual and private responsibilities and governmental and market allocation of goods and services. The complex nature of American social programs is hardly an accident. It is the outcome of the forces – political, economic, social, and philosophical – that shaped policy judgements at critical junctures in American history, that is, the point at which these programs were enacted, amended, or reformed.
Heterogeneity and complexity are not necessarily bad things in themselves. They may be the results of differing political preferences, differing local conditions, or the differing needs of various populations. Heterogeneous arrangements may also provide opportunities for experimentation and learning that are beneficial in the long run. But looking at the now so-called universal access to health insurance in the United States, it is difficult to perceive whether any of these values are being served. Moreover, the heterogeneity and complexity in these arrangements provide quite different levels of access to health insurance for different populations, a situation that is almost certain to lead to serious administrative difficulties and public misunderstandings. Whereas the relatively simple structure of Medicare, both in its coverage and financing, has led to immense popularity and very substantial improvements in the economic security of American seniors, both Medicare’s “modernization” in the Medicare Modernization Act of 2003 and the complex and administratively challenging provisions of the Affordable Care Act of 2010 raise all-too-obvious possibilities for health system cost inflation, citizen and provider dissatisfaction, and continued political struggle. “Universal coverage” is to be applauded from the perspective of increasing Americans’ economic security, but program design matters.
Social insurance programs engage most of the electorate precisely because they cover common risks and insure most of the population. And because practically everyone is both a contributor and a potential beneficiary, the politics of social insurance tends to be of the “us-us” rather than the “us-them” form. Each individual’s sense of earned entitlement or deservingness makes reneging on promises in social insurance programs politically costly. Each individual’s responsibility to contribute to the common pool makes extravagant promises of “something-for-nothing” future benefits less politically attractive.
The common pool feature of Medicare cannot plausibly be a cause for fiscal concern. The experience of other industrial democracies has repeatedly demonstrated the superior capacity of more universal social insurance programs to restrain growth in overall medical expenditures. Any comparison of growth in health expenditures of the United States and social insurance nations such as Germany, the Netherlands, and France would show American expenditures to have grown more rapidly in recent decades. And these are countries with both older populations and more widespread and intensive use of health care than in the United States. (The simple facts in the previous sentence are so little appreciated that we suggest you read the sentence again.) Countries with older populations, greater use of medical care, and, in addition, equal or better health results do a better job of restraining medical inflation than the United States. None of them rely on competition of individual responsibility as a major cost-control device.
It is hard to argue, and we will not, with the motivation of the ACA’s sponsors and supporters. Broadening health insurance coverage to include more than 50 million uninsured Americans is a worthy goal – as is any attempt to get a handle on cost inflation in health care expenses in the United States. But we believe that the idea that these goals are best pursued through market-mimicking and means-tested social provision is profoundly misguided. Fragmented risk pools will not promote either perceptions of fairness or us-us politics in the provision of health insurance. And patient choice and competition among insurers has no demonstrated record of cost control in medical care either in the United States or elsewhere in the developed world. The MMA and the ACA modernize health insurance in the United States by moving further toward the health insurance models that have long been available in private markets. Both statutes seem to imagine that health care economics works like the market for breakfast cereals and that individual choice in risk bearing is the solution to concerns about both quality and efficiency. We know of no evidence that could sustain these beliefs.
We should not leave this discussion without underscoring the profoundly traditional, indeed conservative, and work-oriented vision that American universalism embraces. It says not that you are entitled because you are part of the nation, although that is surely a plausible vision of universality, but that you are entitled because of your contribution to the nation. Funding is linked to earnings, and entitlement is defined largely by years of work. Hence for Americans, universalistic entitlement has always been a concept tied to, supported by and supporting, a market economy. That the protection of social insurance – and the demand for its expansion – should be thought to be the distinctive position of “liberals” is, to say the least, ironic. That the reform of social insurance should be thought to be best accomplished by moving in the direction of market-like devices that shift risks onto individuals and families already buffeted by the staggering economic uncertainties of a rapidly globalizing economy is, in our view, a serious mistake. “Modernization” in this form misunderstands what social insurance is about.
Social insurance defines a nation. Do we join together to protect each other from the many threats of financial disruption, or do we let each individual or family fend for themselves against odds of success? Compared to other nations, the record in the United States has been spotty. What are we doing right, what are we doing wrong, and how can we improve? “Social Insurance,” by Theodore Marmor, Jerry Mashaw and John Pakutka provides the answers.
Americans are very familiar with Medicare and Social Security, and, of course, are quite protective of them. But they are just two programs of social insurance, and they mesh with many other policies designed to protect us against the threat of being born poor, the threat of the early death of the family breadwinner, the threat of ill health, the threat of involuntary unemployment, the threat of disability, and the threat of outliving one’s savings. It is these threats and our current policies toward them that the authors describe, while providing us with an understanding of how we can improve security for all of us.
Everyone should have this book. For individuals already well versed in social insurance, it provides an oversight that organizes thoughts while providing us with clear explanations of the problems and solutions that we can share with others. For the business community, it explains social insurance in terms that astute businesspersons would recognize as smart business decisions on how to address these threats – for themselves and for their employees. For advocates of free markets who are uncomfortable with “government solutions,” it explains how social insurance is an essential component in maintaining a vibrant market economy. For politicians, once the public has a better understanding of social insurance, it shows them that they must abandon deceptive rhetoric and move forward with beneficial reform. For libertarians, well… they should read this to try to understand why people want to be in this together, then, if they still can’t get it, they should dig moats around their castles.
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.
New Medicaid Enrollees In Oregon Report Health Care Successes And Challenges
By Heidi Allen, Bill J. Wright and Katherine Baicker
Health Affairs, February 2014
In 2008 Oregon used a lottery to expand its Medicaid program for low-income adults, Oregon Health Plan Standard (OHP).
For this study we conducted 120 qualitative interviews among Oregon residents who had recently gained Medicaid coverage. Our purpose was to better understand how newly insured patients did—and did not—interact with the health care system
Group 1: Minimal Interactions With Health Care
Forty percent of the newly insured enrollees whom we interviewed did not use their coverage much, if at all. Low users gave one of the following four main reasons for not using their Medicaid benefits very often.
* Perception Of Good Health
* Confusion About Coverage
* Dissatisfaction With Care
* Access Barriers
Group 2: Regular Or Frequent Interactions With Health Care
The remaining 60 percent of respondents (called regular users) used their insurance more than a time or two but reported varying degrees of success.
* Regular Preventive Care And Minor Needs:
About one-tenth of the regular users took advantage of access to preventive care and also received treatment for occasional illnesses or injuries
* Immediate Health Improvement:
Another tenth of the regular users described an immediate transformation in their health after they received insurance. These people all had serious health problems that could be improved quickly, such as by getting back on a previously effective medication or having an operation that had been postponed because of lack of coverage. The members of this group saw their new insurance coverage as directly related to an improvement in their quality of life.
* Mixed Success:
Forty-four percent of regular users continued to experience challenges. Some interviewees were able to get partial treatment—such as prescriptions for chronic conditions—but had serious needs remaining. Some reported feeling misunderstood by physicians or being unable to build a relationship with a primary care provider. Others struggled with very poor health that continued to deteriorate even with regular treatment.
* Success Over Time:
Finally, 39 percent of regular users reported that their health had improved with insurance, but that it had taken time. They experienced incremental benefits once they found and built a relationship with the right doctor.
Often these users’ problems were addressed in order of severity or impairment. Lifestyle changes, such as modifications to diet and exercise, were not discussed until their acute symptoms had improved. Many of the positive changes that they reported were relatively recent.
The “Oregon Health Insurance Experiment” made possible the comparison of uninsured patients with Medicaid patients by the natural experiment in which Medicaid patients were selected by lottery from a single population. The initial study reported was not powered to detect changes in health outcomes, but opponents of reform used the lack of demonstrable outcome differences to claim that Medicaid provides no health benefits for the patients enrolled. This new study of these Oregon Medicaid beneficiaries confirms that the claim of no health benefit was an outrageous extrapolation on the part of the opponents of ACA and Medicaid.
The majority of the 60 percent of the Medicaid beneficiaries who were regular users of care significantly benefited from the program. One-tenth experienced immediate health improvement, one-tenth benefited from preventive care and occasional acute care, 39 percent experienced incremental benefits over time, and 44 percent continued to experience challenges though many of them were able to receive partial treatment.
Some of the reasons given by the 40 percent of the Medicaid beneficiaries who did not use much health care are of concern. Some reasons relate to well-known problems with Medicaid being considered a second-rate welfare program, that is chronically underfunded, and that has access problems due to an insufficient participation by health care professionals.
We can conclude that Medicaid has some definite problems, but we also can refute the opponents of Medicaid and state that it is far better to be insured, even with Medicaid, than not to be insured at all. At the same time, we can also state that mixed results for a portion of the study group should be motive enough for us to advocate emphatically for a higher quality program for everyone – an improved Medicare for all.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
ACOs saving some money, but Medicare is short on details
By Jenny Gold
Kaiser Health News, January 31, 2014
The Centers for Medicare and Medicaid Services [CMS] announced Thursday that, overall, provider groups involved in Medicare ACO programs saved a total of $380 million in the first year. Sounds like a lot of money, but CMS declined to explain which hospitals were winners and which were losers, how it compared to expectations and how much the participants invested in coordinating care. Also missing is the scale of the savings; CMS did not provide the context of total spending by the ACOs…. It’s also unclear whether the savings figures factored in any losses from some of the ACOs that did not do well. And the agency did not release information about which ACOs saved money and which did not….
By Kip Sullivan, JD
Congress has instructed CMS to conduct several experiments with Medicare ACOs. The first began in 2005, the year before the “accountable care organization” label was invented, and ran through 2010. The participating hospital-clinic chains were called “physician group practices” (PGPs), but within a few years ACO advocates and skeptics alike were asserting that these PGPs were indeed the equivalent of ACOs. The second and third ACO experiments began in 2012. CMS called one program the Pioneer ACO program and the other the Medicare Shared Savings program.
CMS’s reports on all three ACO experiments have been extremely misleading. Here are the headlines and dates of CMS’s last three reports on its ACO experiments:
July 2011: Physicians Groups Continue to Improve Quality and Generate Savings
Under Medicare Physician Pay-for-Performance Demonstrationhttp://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/…,
July 2013: Pioneer Accountable Care Organizations succeed in improving care, lowering costs http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Pre…,
January 2014: Medicare’s delivery system reform initiatives achieve significant savings and quality improvements – off to a strong start.http://www.hhs.gov/news/press/2014pres/01/20140130a.html.
Note the pattern: “Costs” are always going down, “quality” is always going up.
These reports suffer from numerous defects. The worst defects are:
• CMS fails to report how much it costs the ACOs to participate ;
• CMS usually fails to give us enough information to determine the relative size of the savings or increased costs; and
• CMS offers only the vaguest descriptions of what the ACOs are doing and yet, on the basis of a few quality measures, reports that quality is improving for all patients assigned to the ACOs.
Reports in both the general media and the professional literature rarely note these defects (for a typical example, see this article in Businessweekhttp://www.businessweek.com/articles/2014-01-30/obamacares-medicare-expe…). The article from Kaiser Health News quoted above (it appeared simultaneously in the Washington Post) is an exception to the rule. KHN reporter Jenny Gold criticizes CMS’s latest report – a press release issued last Thursday on the first-year (2012) results for both the Pioneer and the Shared Savings programs – for the first two defects. She notes CMS reports only on whether Medicare saved money and says not a word about whether the hospital-clinic chains that CMS certified as ACOs saved money after taking their ACO-related costs into account. And she comments on CMS’s failure to put the alleged $380-million first-year savings in context, that is, to help the reader understand whether $380 is a relatively large or small savings.
Gold goes on to quote an expert who did his own back-of-the-envelope calculation and concluded that, if CMS’s reported savings are accurate, CMS’s ACOs are cutting costs for Medicare (not Medicare plus the ACOs) by just $80 per beneficiary per year. (Gold offers a confusing explanation of his methodology, so I can’t vouch for it.) In 2012, Medicare spent $11,325 per beneficiary. Eighty dollars comes to seven-tenths of one percent of $11,325. (You can calculate 2012 per capita Medicare spending for yourself by going to page 6 of the 2013 Medicare trustees report. There you’ll find total spending in 2012 was $574.2 billion and total enrollment was 50.7 million. http://downloads.cms.gov/files/TR2013.pdf)
That estimate of seven-tenths of a percent is close to the half-percent savings (for Medicare only) that CMS reported in its July press release on Pioneer ACOs.
But if you want to know what effect CMS’s ACOs are having on the entire health care system (Medicare plus the ACOs), the only information we have that is remotely useful is the testimony to the Medicare Payment Advisory Commission I quoted here last December 9.http://pnhp.org/blog/2013/12/09/medpac-conflicted-between-fiscal-neutral… Katelyn Smalley stated at Medpac’s November 2013 meeting: “CMS reported [ACO Pioneer] program savings of about 0.5 percent…. The ACOs we spoke with confirmed that the cost of running the ACO was about one to two percent….” In other words, ACOs are driving costs up by a percent or two. Until CMS is more forthcoming, Ms. Smalley’s testimony must remain our most reliable estimate of whether ACOs are saving money.
My main quarrel with Gold’s article is that she or, more likely, one of her editors, inserted a misleading phrase in the headline of her article – “Medicare saving some money….” When the Washington Post published Gold’s article on their Wong Blog on January 31, their editor changed the headline to read, “Medicare won’t give a straight answer on Obamacare cost savings” http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/31/medicare-wont…. Now that’s more like it.
I have a modest request for the entire media: Please don’t insert the word “savings” in any future articles or broadcasts about Medicare ACOs until CMS reports on the cost incurred by the ACOs. There would still be other reasons to suspect there were no savings (the games ACOs play with risk-adjustment being one of them). But if my wish were granted, the media would no longer be an accomplice to the promulgation of CMS’s strange theory that ACO costs are non-existent or so trivial they don’t deserve mention, much less study.
The group that got health care passed is packing up and going home
By Harold Pollack
The Washington Post, January 5, 2014
Harold Pollack: [S]ingle-payer folks … might ask: “Wouldn’t we have a better system if we had a single payer? Why didn’t HCAN [Health Care for America Now] and its friends push for that?”
Richard Kirsch [chief executive of HCAN]: What’s the expression: “If wishes were horses, beggars would ride?”
Yes — if we could wave a magic wand and design a rational health-care system that would control costs while providing much better access, we wouldn’t design our current one. The ACA was the best that we could get through the American political system. The fact that we failed in every previous instance in the past 100 years reflects the reality that there hadn’t been a reform designed to deal with the realities of American politics….
Implementing health reform: Four years later
By Timothy Jost
Health Affairs, January 2014
How did things go so wrong [for the Affordable Care Act]? Why is there so much bad news?….
More devastating for the future of the ACA, however, were the 2010 midterm elections. Republicans picked up sixty-three seats in the House, swinging control of the chamber from the Democrats to the Republicans. Before the 2010 elections, Democrats controlled fifty-two state legislative houses and the Republicans thirty-three; after the elections, Republicans controlled fifty-three and the Democrats thirty-two. Before the 2010 election there were twenty-six Democratic and twenty-four Republican governors, and after there were twenty Democrat and twenty-nine Republican. Many saw the election as a referendum on the ACA.
By Kip Sullivan, J.D.
Was the Affordable Care Act politically feasible? Was it “the best” America could do in 2009 and 2010? Was single-payer legislation more or less feasible than the ACA? It is still too early to pronounce on the fate of the ACA, but it is not too early to discuss the political feasibility question. We have much to learn from looking back at the muffled debate about that issue among universal coverage advocates prior to the enactment of the ACA.
Since the modern American single-payer movement was formed in the late 1980s, many supporters of universal coverage have claimed that single-payer is not politically feasible. Those who made this argument (Bernstein and Marmor refer to them as “political yes buts” http://healthaffairs.org/blog/2008/08/28/medicare-for-all-why-we-should-…) never explained why multiple-payer “solutions” would be more feasible than single-payer. In the worldview of the “yes buts,” only single-payer proponents had to answer that question. If, on any given day, single-payer proponents could not point to 60 votes in the US senate or majority votes in the US House or in state legislative chambers, the conversation was over: Single-payer was not politically feasible and had to be taken off the table to make room for more “realistic” legislation.
This simple counting-noses definition of “political feasibility” avoided two issues that many observers inside and outside the single-payer movement consider paramount: Any legislation that proposes to achieve universal coverage, or even to cut the uninsured rate substantially, is not politically feasible, or at minimum is no more feasible than single-payer legislation, if
(1) it doesn’t simultaneously reduce health care spending or
(2) is so complex it cannot be implemented within a reasonable period of time.
This definition of feasibility asks not merely whether a given legislative body can be pushed into enacting a given bill. This definition asks as well, once the bill is enacted, is it politically sustainable? By this more realistic definition of political feasibility, a bill might have enough votes to pass a given legislative body, but if the bill can’t contain costs or can’t be implemented within a reasonable period of time, it shouldn’t be assumed to be politically sustainable and therefore should not be assumed to be more politically feasible than other approaches.
Sustainability depends ultimately on how the public perceives legislation after it is enacted. If the public punishes lawmakers who voted for the putative “universal coverage” legislation and rewards legislators who are hostile to government doing anything to help the uninsured and to lower health care costs, the legislation may die on the vine or be repealed.
One would think that this definition of political feasibility would have appealed naturally to the Democrats and their supporters who pushed the ACA because it asks them to take into account the impact of the ACA on voters’ perceptions of Democrats. In other words, it asks Democrats to consult their own self-interest in the course of picking a solution to a problem. It is a noble thing to suffer retribution at the polls for a bill that does good things for people when you know it’s going to work. But it is foolish to suffer retribution for a bill you suspect, or should suspect, will fail, or at minimum, will perform far below the expectations your rhetoric about the bill has created.
When in June 2009, congressional Democrats unveiled the health care “reform” bills that would become the ACA, I and many others were filled with apprehension. Our concern was not that some version of these bills might not pass. To the contrary, our concern was that it might pass (and thereby demonstrate it was “politically feasible” in the narrow sense of the phrase) but not be politically sustainable. In a June 2009 comment on this blog entitled, “Democrats’ hype about health care reform will hurt them,” I said:
“President Obama and Democratic congressional leaders are playing a dangerous game with health care reform. They are raising the public’s expectations sky high before figuring out how to meet those expectations. They are promising to give us the moon – significant cuts in health care costs and universal coverage or something close to it – but even at this late hour they have failed to publish anything resembling a detailed plan to do that. And the hints they have given us about the ‘reforms’ they are likely to endorse indicate they haven’t got a clue how to cut costs.”
I wanted a real debate about the political feasibility of the Democrats’ multiple-payer solution versus our single-payer proposal, and I thought the most effective way to make my argument was to appeal to Democrats’ self-interest, not just their altruism. Although I doubted the altruism of some members of Congress, I didn’t doubt the altruism of the vast majority of ACA supporters — I knew their desire to minimize the suffering inflicted on this country by our health care system was real. What I questioned was their understanding of how expensive and complex the ACA was going to be. If they didn’t understand that, how could they grasp what a political liability the ACA would be for Democrats? How could they intelligently evaluate the risk that future Congresses might not have enough Democrats in them to protect the ACA from underfunding or outright repeal?
But the debate about political feasibility that I and many others hoped for never came to pass. The single-payer and multiple-payer wings of the American universal coverage movement never discussed whether the ACA would be more feasible — that is, be more likely to pass AND be more sustainable — than a single-payer. We never debated whether the simplicity and efficiency of a single-payer made it more feasible, or at least no less feasible, than the costly and insanely complicated ACA. ACA proponents simply pronounced single-payer “off the table” on the ground that powerful opponents would have made a majority vote in Congress impossible. And that was that.
Four years have now passed since the enactment of the ACA. The sky is clotted with chickens coming home to roost. Evidence that the ACA was never as sustainable as its proponents implied is all around us. This evidence includes evidence of the damage the ACA has inflicted on Democrats. Timothy Jost’s article in the January 2014 Health Affairs contains an excellent summary of the unhappy history of the ACA. One of the most important paragraphs in his paper is the one quoted above in which he notes the damage Democrats suffered during the 2010 elections and that many believe this damage was due in part to the enactment of the ACA in March of 2010. Jost also predicts more bad news for the ACA as a substantial portion of the people insured through exchanges discover their choice of provider has been restricted and their out-of-pocket payments are very high. We are going to see more heartwarming stories about sick people finally getting the medical care they deserve, thanks to the ACA, but it will not be enough to forestall more damage to Democrats (especially if Republicans manage to nominate candidates who can refrain from discussing “legitimate rape” and similar subjects).
None of us have a crystal ball. I don’t claim that if Democrats and groups supporting the ACA had used the opportunity presented to us in 2009-2010 to promote HR 676 instead of the ACA that HR 676 would have passed by March 2010 or even by now. I’m reasonably sure something good would have been enacted — for example, an expansion of traditional Medicare and Medicaid to more people (Bob Kuttner makes a similar argument here http://www.huffingtonpost.com/robert-kuttner/obamacare-republicans_b_429…).
I am, however, absolutely certain about one thing: The universal coverage movement in America would be in a much better position to bring the long fight for universal coverage to a successful conclusion than we are now. There are several reasons why I’m so sure about that.
First, whether we had won big or won some incremental improvements in 2010, the public would have been exposed to a debate about a real solution to the health care crisis as opposed to a debate about make-believe cost containment schemes such as exchanges, “accountable care organizations” and punishing hospitals for “excess” readmissions.
Second, the health insurance industry would be receiving less money from the taxpayer and would be, therefore, less powerful than they are now. The insurance industry has been driving away private-sector customers in droves over the last few decades. If public purchasers — state and federal governments — had long ago stopped throwing money at Aetna et al. with legislation like the ACA, schemes to overpay Medicare Advantage plans, and legislation privatizing state Medicaid programs, the industry would by now be a shadow of its former self and a much less potent opponent of universal coverage.
Third, the political environment for health care reform would be less toxic than it is today, not because conservatives wouldn’t be leveling the same extreme charges they level at all forms of health care reform no matter how innocuous, but because the public would be less vulnerable to extremism and ultimately less cynical about real reform.
ACA proponents may disagree with my assessment of where we might be today if they had joined ranks with the single-payer movement and had fought for HR 676. What they can’t deny is they refused to engage in a real debate about the political feasibility (narrowly defined) AND sustainability of the ACA versus single-payer. They might have learned something if they had.
Opting Out Of Medicaid Expansion: The Health And Financial Impacts
By Sam Dickman, David Himmelstein, Danny McCormick, and Steffie Woolhandler
Health Affairs Blog, January 30, 2014
The Affordable Care Act (ACA) was designed to increase access to health insurance by: 1) requiring states to expand Medicaid eligibility to people with incomes less than 138 percent of the Federal Poverty Level (FPL) ($19,530 for a family of three in 2013), with the cost of expanded eligibility mostly paid by the federal government; 2) establishing online insurance “exchanges” with regulated benefit structures where people can comparison shop for insurance plans; and 3) requiring most uninsured people with incomes above 138 percent FPL to purchase insurance or face financial penalties, while providing premium subsidies for those up to 400 percent of FPL.
Recent studies suggest that Medicaid expansion will result in health and financial gains. Older studies also found salutary health effects of expanded or improved insurance coverage, particularly for lower income adults.
The Supreme Court ruled in June 2012 that states may opt out of Medicaid expansion, and as of November 2013, 25 states have done so.
The Consequences of Opting Out
The Supreme Court’s decision to allow states to opt out of Medicaid expansion will have adverse health and financial consequences. Based on recent data from the Oregon Health Insurance Experiment, we predict that many low-income women will forego recommended breast and cervical cancer screening; diabetics will forego medications, and all low-income adults will face a greater likelihood of depression, catastrophic medical expenses, and death.
The ACA’s tax subsidy for insurance purchase on the Exchanges is only available to persons with incomes above 100 percent of FPL. People below this threshold in opt-out states (the so-called low-income “coverage gap”) will see no benefit as the law goes into effect. They may even see harm because the ACA cuts disproportionate share (DSH) funding to safety net hospitals, reducing the resources available to care for the remaining uninsured.
Examining the numbers
Nationwide, 47,950,687 people were uninsured in 2012; the number of uninsured is expected to decrease by about 16 million after implementation of the ACA, leaving 32,202,633 uninsured. Nearly 8 million of these remaining uninsured would have gotten coverage had their state opted in. States opting in to Medicaid expansion will experience a decrease of 48.9 percent in their uninsured population versus an 18.1 percent decrease in opt-out states.
We estimate the number of deaths attributable to the lack of Medicaid expansion in opt-out states at between 7,115 and 17,104. Medicaid expansion in opt-out states would have resulted in 712,037 fewer persons screening positive for depression and 240,700 fewer individuals suffering catastrophic medical expenditures. Medicaid expansion in these states would have resulted in 422,553 more diabetics receiving medication for their illness, 195,492 more mammograms among women age 50-64 years and 443,677 more pap smears among women age 21-64. Expansion would have resulted in an additional 658,888 women in need of mammograms gaining insurance, as well as 3.1 million women who should receive regular pap smears.
Apparently for no other purpose than to make a political statement, politicians in about half of our states are willing to expose about 8 million poor people to further financial hardship and greater impairment in health care access. More than 7,000 of those people will die as a result. That’s not simply politics; that’s a crime!
In a PNHP press release, Dr. David Himmelstein, co-author of the study and co-founder of PNHP said it well: “Medicaid is far from perfect. In many parts of the country Medicaid pays so little that patients have trouble finding a doctor who will accept it. A single-payer program like Canada’s that covers all Americans is a far better solution for both the poor and the middle class. But until we get to single payer, Medicaid is the only safety net for many low-income Americans.”
PNHP press release: http://www.pnhp.org/news/2014/january/more-than-7100-deaths-likely-from-…
Dr. Coburn Unveils Obamacare Replayment – Patient CARE Act – with Senators Burr and Hatch
Senator Tom Coburn
January 27, 2014
Today, U.S. Senators Richard Burr (R-N.C.), Tom Coburn, M.D. (R-Okla.), and Orrin Hatch (R-Utah) unveiled the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act – a legislative plan that repeals Obamacare and then replaces it with common-sense, patient-centered reforms that reduce health care costs and increase access to affordable, high-quality care. In contrast with Obamacare and its government centered mandates and regulations, the Senators’ proposal empowers the American people to make the best health care choices for themselves and their families.
The Patient Choice, Affordability, Responsibility, and Empowerment Act
(All section numbers of the proposal are listed, with each followed, in parentheses, by a brief and admittedly biased description by Don McCanne.)
Title 1: Repeal the President’s Health Care Law
Section 101: Repeal Obamacare
(The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act would be repealed with no proposal as to how the many provisions already implemented would be undone.)
Section 201: Adopt Common-Sense Consumer Protections
(The Act would prohibit lifetime limits, guarantee renewability with restrictions, prohibit unfair terminations, and change the aged-based premium ration to 5:1, from 3:1, resulting in higher premiums for older individuals.)
Section 202: Create a New Protection To Help Americans With Pre-Existing Conditions
(Individuals with pre-existing conditions would be guaranteed coverage but only if that coverage were continuous. Lapses in coverage – an inevitability for some – would subject individuals to medical underwriting, making plans unaffordable for those with pre-existing conditions.)
Section 203: Empowering Small Business and Individuals with Purchasing Power
(Individuals and employees of small businesses would be eligible for tax credits to help purchase coverage, but these credits would be lower than the ACA subsidies which are already inadequate for many.)
Section 204: Empowering States With More Tools to Help Provide Coverage While Reducing Costs
(States could use auto-enrollment for individuals who do not select a plan, though the individual has the option to refuse the plan – an arrangement that is sure to leave tens of millions uninsured.)
Section 204 (sic): Expand and Strengthen Consumer Directed Health Care
(Some restrictions would be removed from health savings accounts, but there are no new proposals to help fund these accounts. An empty HSA is of little benefit to patients who cannot pay the high deductibles of the HSA-eligible plans.)
Title 3: Modernize Medicaid to Provide Better Coverage and Care to Patients
Section 301: Transition to Capped Allotment to Provide States with Predictable Funding and Flexibility
(Federal funding of state Medicaid programs would be changed to a system that would have an impact similar to block grants, plus the states could issue the equivalent of vouchers allowing Medicaid beneficiaries to purchase private plans. This would further reduce federal funding to this already underfunded program, shifting more costs to state governments, and, even worse, to the Medicaid beneficiaries who have incomes near or below poverty.)
Section 302: Reauthorize Health Opportunity Accounts To Empower Medicaid Patients
(Health Opportunity Accounts are health savings accounts for Medicaid patients. To show how ridiculous this concept is, a demonstration program was set up that would allow ten states to establish them, but only South Carolina did, and only five patients enrolled.)
Section 401: Medical Malpractice Reforms
(Perpetuates the fiction of junk lawsuits, although a compensation system modeled after workers’ comp is suggested.)
Title 5: Increasing Price Transparency to Empower Consumers and Patients
Section 501: Requiring Basic Health Care Transparency to Inform And Empower Patients
(Empowering patients to be price shoppers perpetuates the fiction that there is a price-sensitive market in health care delivery. As Kenneth Arrow explained to us, there isn’t.)
Title 6: Reducing A Distortion in the Tax Code That Increases Health Costs
Section 601: Capping the Exclusion of An Employee’s Employer-Provided Health Coverage
(They would reduce, rather than eliminate, tax expenditures for employer-sponsored plans – still deductible to the employer, but partially taxable to the employee, thereby increasing workers’ costs for health care.)
The Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act is a white paper that is being touted as the “Replace” part of the Republican Repeal and Replace answer to the Affordable Care Act (ACA). It has some similarity to ACA in that it would leave in place much of our dysfunctional health care financing system. Although some of the measures of ACA are beneficial, they are far too feeble compared to what we actually need. CARE would set us even further behind, leaving tens of millions more without insurance, and exposing insured patients to even greater costs when accessing the health care that they need.
This is another “if we don’t enact this, we’ll end up with single payer” proposal. Let’s hope so.
Financial Burden of Medical Care: A Family Perspective
By Robin A. Cohen, Ph.D., and Whitney K. Kirzinger, M.P.H.
Centers for Disease Control and Prevention, National Center for Health Statistics, January 2014
Recently published data from the National Health Interview Survey (NHIS) found that 1 in 5 persons was in a family having problems paying medical bills, and 1 in 10 persons was in a family with medical bills that they were unable to pay at all. NHIS defines “family” as an individual or a group of two or more related persons living together in the same housing unit. The family perspective is important to consider when examining financial risk because significant expenses for one family member may adversely affect the whole family. Health insurance coverage is one way for a family to mitigate financial risk associated with health care costs, although health insurance status may differ among family members. This report explores selected family demographic characteristics and their association with financial burdens of medical care (problems paying medical bills, paying medical bills over time, and having medical bills that cannot be paid) based on data from the 2012 NHIS.
Percentage of families that had any financial burden of medical care in the past 12 months, by family health care coverage status: United States, 2012
20.9% – All members have private insurance
21.1% – All members have public coverage
35.8% – Some members have private insurance, and some members have public coverage
39.7% – All members are uninsured
46.0% – Some members are insured and some members are uninsured
Previous reports based on data from NHIS examined financial burdens of medical care from a person-level perspective. One strength of NHIS is that information on insurance and financial burden is collected at the family level, giving analysts the ability to look at both family-level and person-level data. The family perspective is a useful expansion of previous research because having one family member who contributes to the bulk of the financial burden for medical care may place the entire family’s ability to pay medical bills and overall financial well-being at risk. From a family level, this report found that levels of financial burden of medical care were greatest for families with incomes at or below 250% of the FPL, those with children, those with mixtures of coverage types, and those in which at least one family member was uninsured. Often, persons in families with more than one member can financially benefit from shared income and household expenses. However, when one family member experiences a financial burden of medical care, the entire family may be at risk for financial burden.
This report confirms that members of insured families who all have the same health care coverage still have a one in five chance of experiencing a financial burden from medical care. What is new in this particular report is they showed that fragmentation of coverage within families produces a greater risk of financial burden, with almost half of families adversely affected if some family members are uninsured. That refers to all family members, not just the uninsured.
Fragmentation of coverage within families is not only perpetuated under the Affordable Care Act (ACA), it may be even worse than before because of the new rigid, complex rules for eligibility for various forms of coverage.
We already know that about 31 million individuals will still not be insured when ACA is fully implemented. Again, this report shows that even if other family members are insured, it is not just the uninsured member who is financially vulnerable, the entire family is.
An employed individual may or may not be covered under an employer-sponsored plan, and coverage of other family members under the same plan is also unreliable because of either affordability or eligibility considerations. Individuals with very low incomes may be eligible for Medicaid in some states but not in others. Children in the family may be eligible for Medicaid or CHIP in some states but not in others. Even if the children are eligible, the adults may not be. Even a determination of whether or not individuals living together in a housing unit constitutes a family can influence eligibility determinations. Many individuals will find that their eligibility status for whatever program for which they may be considered may leave them with unaffordable requirements for premium contributions thereby qualifying them for hardship status which provides them with the privilege of remaining uninsured without having to pay a penalty under the ACA mandate. (The complexity of ACA leads to sentences like this.)
Factors influencing eligibility for various programs such as employment, income, residence, and modification of eligibility rules and income thresholds can vary considerably over time for any given family. The point is that far too many families have and will continue to have fragmentation of their health care coverage and one-third to one-half of them will experience financial burdens as a result.
This injustice would disappear under a single payer national health program – an Improved Medicare for All. What do you think the chances are that President Obama, during his State of the Union address this evening, will recommend health justice for all through the enactment of a single payer system? Even the oddsmakers won’t take that one since they don’t deal in zeros.
Hospital Chain Said to Scheme to Inflate Bills
By Julie Creswell and Reed Abelson
The New York Times, January 23, 2014
Health Management Associates, a for-profit hospital chain based in Naples, Fla., kept tabs on an internal strategy that regulators and others say was intended to increase admissions, regardless of whether a patient needed hospital care, and pressure the doctors who worked at the hospital.
This month, the Justice Department said it had joined eight separate whistle-blower lawsuits against H.M.A. in six states. The lawsuits describe a wide-ranging strategy that is said to have relied on a mix of sophisticated software systems, financial incentives and threats in an attempt to inflate the company’s payments from Medicare and Medicaid.
For H.M.A., the timing could not be worse. Shareholders recently approved the planned $7.6 billion acquisition of the company by Community Health Systems, which will create the nation’s second-largest for-profit hospital chain by revenue, with more than 200 facilities.
Federal regulators have multiple investigations into questionable hospital admissions, procedures and billings at many hospital systems, including the country’s largest, HCA. Community Health Systems, the Franklin, Tenn., company from which H.M.A. hired its former chief executive in 2008, faces similar accusations that it inappropriately increased admissions.
The practice of medicine is moving more rapidly than ever from decision-making by individual doctors toward control by corporate interests. The transformation is being fueled by the emergence of large hospital systems that include groups of physicians employed by hospitals and others, and new technologies that closely monitor care.
The last year has been particularly tumultuous for H.M.A., starting with the announced departure of Mr. Newsome (chief executive), a battle for control of the board with Glenview Capital Management, the hedge fund founded by Lawrence M. Robbins, and the announcement of the acquisition by Community Health Systems.
When H.M.A. announced the Justice Department’s involvement in the lawsuits, investors and analysts shrugged, and the stocks for both companies involved in the merger barely budged.
Sheryl R. Skolnick, who follows health care for CRT Capital, recently wrote in a note to investors, “Investors seem to think that D.O.J. investigations, qui tam suits and allegations of serious Medicare fraud are simply a cost of doing business.” Many settlements run only into the tens of millions of dollars. That’s a corporate slap on the wrist for companies whose stocks typically soar when executives push the profit envelope. Only if the penalty is at least $500 million, Ms. Skolnick said, are corporations likely to find the cost a deterrent.
A Giant Hospital Chain Is Blazing a Profit Trail
By Julie Creswell and Reed Abelson
The New York Times, August 14, 2012
During the Great Recession, when many hospitals across the country were nearly brought to their knees by growing numbers of uninsured patients, one hospital system not only survived — it thrived.
In fact, profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors.
The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.
Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before.
Many doctors interviewed at various HCA facilities said they had felt increased pressure to focus on profits under the private equity ownership. “Their profits are going through the roof, but, unfortunately, it’s occurring at the expense of patients,” said Dr. Abraham Awwad, a kidney specialist in St. Petersburg, Fla.
Some of HCA’s tactics are now under scrutiny by the Justice Department (2012).
October 7, 2013
An investigation on behalf of investors in shares of HCA Holdings Inc (NYSE:HCA) was announced concerning whether certain HCA Holdings officers and directors possibly breached their fiduciary duties in connection with certain statements.
What is the primary purpose of a hospital? Isn’t it to meet the health care needs of patients that require more care than can be readily provided outside of the hospital? Not according to the expanding for-profit hospital chains. It is to make as much money as possible for the investors, even if that means using patients as economic tools to enhance revenues.
This is not a new problem. In 2003, HCA paid the largest health care fraud settlement in U.S. history – $1.7 billion. http://www.justice.gov/opa/pr/2003/June/03_civ_386.htm
This is why the PNHP model of single payer reform includes not only publicly-administered and publicly-financed health care for everyone, it also includes a conversion of the for-profit health care delivery system to nonprofit.
We need a health care system whose sole mission is to take care of patients, not investors.
The Better Care, Lower Cost Act
Senator Ron Wyden
January 15, 2014
Medicare is not doing enough to take care of chronically ill patients, and the limitations of the fee-for-service system inhibit a needed focus on these patients and their needs. This is critically important because most Medicare enrollees suffer from multiple chronic conditions and account for almost all of its costs.
The Wyden-Isakson-Paulsen-Welch Better Care, Lower Cost Act removes the barriers that prevent Medicare providers from building on existing successful delivery models, and provides a framework for encouraging innovative chronic care delivery across the country. Specifically, the bill:
Provides Critical Support for Providers
To support providers and plans wanting to actively engage and care for this population, this proposal: does not include any form of the attribution rule, encourages specialized team-based care with rewards for improving patient’s outcomes, uses telemedicine and knowledge networks to increase access in rural areas, and includes vital case management services proven to increase medical compliance.
Focuses on the Unique Needs of Medicare Enrollees
To help transition Medicare from a program that simply treats sickness to one that promotes wellness, this proposal identifies the patients most in need and provides them with better care before becoming the most acutely and persistently ill. To improve standards of care for Medicare enrollees, the bill provides for changes to medical school curricula in order to better respond to the evolving needs of the chronically ill.
Ends Geographic Disparities in Integrated Care
This proposal creates incentives for higher quality, lower cost Medicare coverage nationwide that is open to Medicare beneficiaries regardless of income or place of residence. With a “Better Care Plan” (BCP) designation, a state-licensed and certified provider may practice at the top of his/her license, removing barriers to care that currently exist in parts of the country with provider shortages.
Pays for a Medicare Program Taxpayers Want and Beneficiaries Need
In response to the need to move away from fee-for-service, this proposal makes BCP providers and plans fully responsible for the cost, care and outcomes of their enrolled patients, and directs CMS to determine spending based on the experience of similar patients that are not enrolled in a BCP.
Wyden Plan May Be Vision For Future Medicare Reforms
By Mary Agnes Carey
Kaiser Health News, January 21, 2014
Sen. Ron Wyden, the Oregon Democrat widely expected to be the next Senate Finance Committee chairman, last week led a bipartisan group of lawmakers, health care experts and seniors’ advocates backing a plan to better coordinate care given to Medicare beneficiaries.
The proposal is part of the ongoing health policy conversation over shifting Medicare away from paying per service provided to paying for the quality of that care.
Health insurers and providers who want to specialize in chronic care would receive a set amount of money to care for patients and would be responsible for the cost, care and outcomes of their enrolled patients.
It’s unclear what happens next. Elements of the bill may be included in legislation to repeal and replace Medicare’s “sustainable growth rate,” the formula used to pay Medicare physicians. Maybe the legislation will be attached to another bill or pass on its own. Even if it goes nowhere, it may well be the pathway to Congress finding consensus on Medicare changes in the future.
Reader response: Don McCanne
Before you come to any conclusions, read the actual bill. Google “S.1932 – Better Care, Lower Cost Act”
From the Act: “The qualified BCP (Better Care Program) shall be accountable for the quality, cost, and overall care of enrolled BCP eligible individuals and agree to be at financial risk for that enrolled population.”
Much of the rest of the legislation involves efforts to define the nature of the Better Care Program provider teams, the patient populations, their risks, and how to establish capitation rates that will reduce spending while increasing quality. Such efforts would be administratively intensive and not very effective.
Primary care already plays a very important role in providing chronic care. Our efforts would be better directed to reinforcing the primary care infrastructure. Fragmenting Medicare’s risk and shifting it to the providers might be therapeutic for the federal budget, but it places the providers in conflict with their patients over who will come out ahead – the exact opposite of what we want in our health care system.
S.1932, the Better Care, Lower Cost Act, is important since the concept is being considered as an offset to the cancellation of the accrued deficits related to the sustainable growth rate (SGR), which is a flawed formula for adjusting Medicare payments. Congress has given itself a three month window to enact an SGR fix. This is apt to slip through as attention is directed to celebrating SGR relief while ignoring the actual SGR fix.
The bill can be accessed at congress.gov. It is somewhat complex, which is not a surprise since it empirically segregates chronic care patients and then sets up an administratively complex “Medicare Better Care Program” that “promotes accountability and better care management for chronically ill patient populations and coordinates items and services under parts A, B, and D, while encouraging investment in infrastructure and redesigned care processes that result in high quality and efficient service delivery for the most vulnerable and costly populations.”
Although vague, the program seems to set up a variation of an accountable care organization, with bundling of services, while transferring financial risk to the providers so that they, in essence, also serve as the insurers. The wasteful administrative complexity and the perversity of the incentives alone should cause us to question this concept. As if caring for a patient with multiple chronic disorders wasn’t enough, we need yet additional government rules and bureaucratic oversight of an artificial chronic care construct that seems to be designed primarily to shift risk from the government to the providers?
We do need an improved Medicare that would serve all of us well as a single payer program, but this certainly isn’t it.
Remember the MaineRx
By Robert Kemp
Applied Health Economics and Health Policy, February 2014
In 2000, Maine became the first state in the US to enact a law to establish maximum retail prices for prescription drugs for all qualified state residents—MaineRx. The purpose was to lower prescription drug prices for all eligible residents of the state. The state was to have the ability to negotiate manufacturer rebates and pharmacy discounts. Major drug manufacturers, represented by the Pharmaceutical Research and Manufacturers of America, challenged MaineRx in the courts, going to the Supreme Court where it was upheld in 2003. Fifteen other states enacted, proposed, or filed price-control bills in their state legislatures. The result would have been downward pressure on prices outside of the public programs, and the first instance of state-sponsored monopsony power in the US. MaineRx is viewed as one of the proximate causes of the pharmaceutical industry’s successful lobbying effort to implement Medicare Part D in 2004. Medicare Part D is administered through private Pharmacy Benefit Managers (PBMs); it made administration via state government PBMs illegal. The lower prices that could have resulted from MaineRx-type laws did not occur and the magnitude of these reductions is commented upon.
Politics play an important role in health policy. In this case, pharmaceutical companies, represented by the PhRMA, were able to influence Congress to introduce a national solution to the threat of state-run PBMs and the negotiation of positive lists. The companies were instrumental in formulating Medicare Part D and lobbying for its passage. It is speculated that Medicare Part D came about to put a stop to state rebate programs such as MaineRx in fear of reduced profits for the pharmaceutical companies. Thus, Medicare Part D terminated the existence of state-run PBMs. The historical importance of MaineRx is that it was an attempt of the state trying to contain healthcare cost and expand prescription coverage. Had MaineRx been implemented, it might have been a milestone on the path to reduced healthcare cost.
Robert Kemp, Ph.D. is Associate Professor, Clinical and Administrative Sciences, School of Pharmacy, The University of Louisiana at Monroe
Government works for the benefit of the people, sometimes. The government of Maine almost brought under control our outrageous drug pricing in the United States. The Supreme Court even upheld Maine’s legislation that would do so. But then, with the conservatives in charge, Medicare Part D was enacted which prohibited Maine or any other state, or even the federal government itself, from using its monopsony power to demand fair pricing of drugs by the pharmaceutical firms. This time the government worked to the benefit of the plutocrats rather than the people. We have to change that.
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