Medical loss ratio under the Senate ACA replacement proposal

Posted by on Friday, Jun 23, 2017

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.

H. R. 1628 – “Better Care Reconciliation Act of 2017”

U.S. Senate, June 2017

Title II

SEC. 205. MEDICAL LOSS RATIO DETERMINED BY THE STATE.

Section 2718(b) of the Public Health Service Act (42 U.S.C. 300gg–18(b)) is amended by adding at the end the following:

“(4) SUNSET.—Paragraphs (1) through (3) shall not apply for plan years beginning on or after January 1, 2019, and after such date any reference in law to such paragraphs shall have no force or effect.

“(5) MEDICAL LOSS RATIO DETERMINED BY THE STATE.—For plan years beginning on or after 24 January 1, 2019, each State shall—

“(A) set the ratio of the amount of premium revenue a health insurance issuer offering group or individual health insurance coverage may expend on non-claims costs to the total amount of premium revenue; and

“(B) determine the amount of any annual rebate required to be paid to enrollees under such coverage if the ratio of the amount of premium revenue expended by the issuer on non-claims costs to the total amount of premium revenue exceeds the ratio set by the State under subparagraph (A).”.

https://www.budget.senate.gov…

42 U.S.C. 300gg–18(b):
https://www.law.cornell.edu…

By now you likely know that the current Senate proposal to modify the Affordable Care Act (ACA) would sharply reduce spending for the Medicaid program and would result in higher insurance premiums for plans that provide less financial protection, while reducing taxes for the wealthy. The proposal has been appropriately labeled as being “mean.” But to get a feeling of the flawed policy process behind their proposal, let’s look at just one small example: the medical loss ratio.

Under ACA, all insurers, not just the insurers offering exchange plans, must spend a minimum percentage of their premium revenue on health care benefits – 80 percent for individual and small group plans and 85 percent for large group plans. Spending money on health care is considered a loss to the insurers and thus the percentage spent is known as the medical loss ratio. If they spend more than 20 percent or 15 percent, respectively, on administrative costs or profits, then they must provide rebates to the enrollees.

When ACA was crafted, it was acknowledged that the U.S. health care system wasted tremendous resources in administrative excesses. It was not uncommon for some private insurers to keep 30 percent or even more of the premiums for their own administrative costs and profits. By placing limits on the administrative costs, a dent could be made in reducing this waste. It is important to note that only a small fraction of the total waste in our system is recovered by establishing medical loss ratio minimums – only a tiny portion of what would be recovered if we switched to a single payer national health program. But it was a start.

Sec. 205 of Title II of the Better Care Reconciliation Act – the Republican bill – sunsets 42 U.S.C. 300gg–18(b) – the ACA medical loss ratio provisions (link above), eliminating the 80 and 85 percent federal ratio requirements. It transfers the responsibility to the states. This sounds like no big deal, but when we observe how many of the states are heartlessly refusing to expand their Medicaid coverage, it does not take much imagination that some states will establish policies that will enable private insurers to divert more of the premium dollars to investors and executives, at a cost to plan beneficiaries. After all, as many have reported, this entire scheme has been designed to take health care from the masses and give the monetary gains to the wealthy.

Former Congressman Henry Waxman, a leader in crafting the House version of ACA, states it well in a Los Angeles Times op-ed (June 22, 2017):

“Legislation needs to pass sufficient public scrutiny or it’s unworthy of becoming law. If monumental, transformative legislation can be written in the dark and enacted in a rush— and children’s lives are compromised or ruined so that billionaires can get tax cuts they don’t need — it would rank among the worst scandals in U.S. history. Americans of conscience must mobilize now to stop this from happening.”

The real scandal is that we continue to dink around with the most expensive and least efficient model of financing care – our dysfunctional, fragmented system composed of a multitude of private and public plans –  when what we really need is to fix Medicare and then include everyone. Under that more enlightened system money spent on health care is not considered a loss but rather a benefit for the health of each of us and the health of the nation at large.

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The Senate’s ‘Better Care Reconciliation Act of 2017’

Posted by on Thursday, Jun 22, 2017

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.

Senate Health Care Bill Includes Deep Cuts to Medicaid

By Robert Pear and Thomas Kaplan
The New York Times, June 22, 2017

Senate Republicans, who have promised a repeal of the Affordable Care Act for seven years, took a major step on Thursday toward that goal, unveiling a bill to cut Medicaid deeply and end the health law’s mandate that most Americans have health insurance.

The 142-page bill would create a new system of federal tax credits to help people buy health insurance, while offering states the ability to drop many of the benefits required by the Affordable Care Act, like maternity care, emergency services and mental health treatment.

The Senate bill — once promised as a top-to-bottom revamp of the health bill passed by the House last month — instead maintains its structure, with modest adjustments. The Senate version is, in some respects, more moderate than the House bill, offering more financial assistance to some lower-income people to help them defray the rapidly rising cost of private health insurance.

But the Senate measure, like the House bill, would phase out the extra money that the federal government has provided to states as an incentive to expand eligibility for Medicaid. And like the House measure, it would put the entire Medicaid program on a budget, ending the open-ended entitlement that now exists.

It would also repeal virtually all the tax increases imposed by the Affordable Care Act to pay for itself, in effect handing a broad tax cut to the affluent, paid for by billions of dollars sliced from Medicaid, a health care program that serves one in five Americans, not only the poor but almost two-thirds of those in nursing homes. The bill, drafted in secret, is likely to come to the Senate floor next week, and could come to a vote after 20 hours of debate.

https://www.nytimes.com…

H.R. 1628 – “Better Care Reconciliation Act of 2017”:
https://www.budget.senate.gov…

Senate Budget Committee overview of H.R. 1628 (highly deceptive rhetoric):
https://www.budget.senate.gov/bettercare

No surprises. The discussion draft of the Senate repeal and replace legislation reveals that the legislators would reverse some of the beneficial features of the Affordable Care Act (ACA), which we knew, but the most important measure is the deep reduction in Medicaid funding, allowing them to repeal the tax increases that have paid for the expanded benefits of ACA.

At this point it does not seem that they have the votes to pass this legislation primarily because it does not repeal the fundamental structure of ACA, though negotiations are still taking place. The intent is to vote on it next week. That is a very short time to resolve deeply held ideological differences within the Republican caucus.

If the bill were to pass and be signed into law, it would open the floodgates of activism on behalf of Medicare for all. The Republicans surely do not want that. Yet a loss with the defeat of this legislation would equate to a phenomenal victory for the Republicans because it would have distracted us from following through on the surge of support for single payer reform that has been escalating this past year.

Even if the bill fails, the numbers who remain uninsured, the financial hardships that even many of the insured are facing, and the expensive and wasteful dysfunction of our fragmented health care financing system should still drive us to demand an improved Medicare for all. We cannot walk away from this pretending that a defeat of the Better Care Reconciliation Act of 2017 would equate to a victory for us. Real victory would be in finally achieving health care justice for all.

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The cruelty of using Medicaid as a tool to reduce budget deficits

Posted by on Wednesday, Jun 21, 2017

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

The Effects of Premiums and Cost Sharing on Low-Income Populations: Updated Review of Research Findings

By Samantha Artiga, Petry Ubri, and Julia Zur
Kaiser Family Foundation, June 1, 2017

Key Findings

Recently, there has been increased interest at the federal and state level to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. This brief reviews research from 65 papers published between 2000 and March 2017 on the effects of premiums and cost sharing on low-income populations in Medicaid and CHIP. This research has primarily focused on how premiums and cost sharing affect coverage and access to and use of care; some studies also have examined effects on safety net providers and state savings. The effects on individuals, providers, and state costs reflect varied implementation of premiums and cost sharing across states as well as differing premium and cost sharing amounts. Together, the research finds:

* Premiums serve as a barrier to obtaining and maintaining Medicaid and CHIP coverage among low-income individuals. These effects are largest among those with the lowest incomes, particularly among individuals with incomes below poverty. Some individuals losing Medicaid or CHIP coverage move to other coverage, but others become uninsured, especially those with lower incomes. Individuals who become uninsured face increased barriers to accessing care, greater unmet health needs, and increased financial burdens.

* Even relatively small levels of cost sharing in the range of $1 to $5 are associated with reduced use of care, including necessary services. Research also finds that cost sharing can result in unintended consequences, such as increased use of the emergency room, and that cost sharing negatively affects access to care and health outcomes. For example, studies find that increases in cost sharing are associated with increased rates of uncontrolled hypertension and hypercholesterolemia and reduced treatment for children with asthma. Additionally, research finds that cost sharing increases financial burdens for families, causing some to cut back on necessities or borrow money to pay for care.

* State savings from premiums and cost sharing in Medicaid and CHIP are limited. Research shows that potential revenue gains from premiums and cost sharing are offset by increased disenrollment; increased use of more expensive services, such as emergency room care; increased costs in other areas, such as resources for uninsured individuals; and administrative expenses. Studies also show that raising premiums and cost sharing in Medicaid and CHIP increases pressures on safety net providers, such as community health centers and hospitals.

Conclusion

Recently, there has been increased interest at the federal and state levels to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. Current rules limit premiums and cost sharing in Medicaid to facilitate access to coverage and care for the low-income population served by the program, who have limited resources to spend on out-of-pocket costs. This review of a wide body of research provides insight into the potential effects of increasing premiums and cost sharing for Medicaid enrollees. It shows that premiums serve as a barrier to obtaining and maintaining coverage for low-income individuals, particularly those with the most limited incomes, and that even relatively small levels of cost sharing reduce utilization of services. As such, increases in premiums and cost sharing result in increased barriers to coverage and care, greater unmet health needs, and increased financial burdens for families. Further, the research suggests that state savings from premiums and cost sharing in Medicaid and CHIP are limited and that increases in premiums and cost sharing in Medicaid and CHIP can increase pressures on safety-net providers.

http://www.kff.org…

***

Republicans see Medicaid as welfare. Most Americans don’t.

By Drew Altman
Axios, June 21, 2017

Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.

Why it matters: Welfare remains unpopular in our country; it’s always popular to limit or cut “welfare”. Whether it should be, and what this says about us, is a different question.

Perceptions of Medicaid as welfare don’t seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don’t fit the Ronald Reagan era image of the welfare king or queen. But it’s not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.

https://www.axios.com…

Tomorrow the Republicans in the Senate are expected to release their proposal to repeal and replace the Affordable Care Act. Although there will likely be some modest detrimental changes recommended for the individual market insurance exchanges, the largest impact will likely be in changes recommended for the Medicaid program. Today’s message explains why that would be a grievous mistake.

Medicaid is the largest insurance program in the United States, serving over 74 million people. These are low-income individuals who do not have assets that could pay for their proportionate share of America’s health care bill. Most of us consider Medicaid to be an essential insurance program for these individuals and families (in the absence of a single payer system). However, new poll results by Kaiser Foundation show that one-half of Republicans (Republicans being one-third of the population) consider Medicaid to be predominantly a welfare program, and those Republicans now control our government. The political representatives of one-sixth of our population are about to take a budget ax to this crucial program, because, after all, it is merely a welfare program and one that we can no longer afford to maintain (Republican view).

The consequences of the various policies under consideration are dire. They are considering allowing states to impose premiums that would create a barrier to Medicaid coverage, leaving those vulnerable without insurance. They are considering allowing the states to use cost sharing to make Medicaid beneficiaries better health care shoppers, but it has been shown that even small out-of-pocket costs create barriers to care for this population. They likely will dramatically reduce over time the federal contribution to the state Medicaid programs which may cause even more states to limit eligibility, keeping out individuals who may be impoverished but still have barely enough income to have a cellphone (as if cellphone fees were enough that they could be used instead to purchase health plans in the individual market).

What we will see tomorrow will be legislative recommendations to the Republicans in the Senate. It remains to be seen whether or not they will conveniently fail to find the votes to pass their proposal so that they will not all be labeled as having stone-cold hearts.

Even if Medicaid does get a reprieve, we still cannot relax. It will continue to be vulnerable to attacks by those who consider it to be welfare and thus a tool to reduce budget deficits. Medicaid must be replaced by a program that provides access to comprehensive health care benefits while removing financial barriers to care – not just for lower-income individuals, but for all of us. Regardless of the Republican replacement proposal we need to intensify our advocacy for replacement with an improved Medicare for all.

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Burden of prior authorization getting worse

Posted by on Tuesday, Jun 20, 2017

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.

Payer prior authorization requirements on physicians continue rapid escalation: increasing practice overhead and delaying patient care

MGMA Poll, May 16, 2017

Medical practice leaders say that the burden of submitting prior authorization requests and supporting documentation to health plans is getting worse.

A May 16 MGMA Stat poll found 86% of respondents saying that prior authorization requests have increased in the past year, while 3% report those requests decreasing and another 11% saying they’ve stayed the same in the past year.

Agreements between health plans and their participating physicians routinely include a statement that the insurer has the right to determine the medical necessity of surgery, imaging studies, medication and many other procedures. Physician practices then devote clinical and administrative staff time and resources to submit preauthorization requests for each service, increasing overhead and often delaying patient care.

“Health plan demands for prior approval for physician-ordered medical tests, clinical procedures, medications, and medical devices ceaselessly question the judgement of physicians, resulting in less time to treat patients and needlessly driving up administrative costs for medical groups,” said Halee Fischer-Wright, MD, MMM, FAAP, CMPE, MGMA President and CEO.

http://www.mgma.com…

Prior authorization requirements have always been a pain, and now, according to this poll, they’re getting worse. Not only do they add to our profound administrative waste in health care, they also may interfere with patient care by delaying or even preventing the delivery of appropriate services. They also waste valuable time of physicians and their staffs.

This report states, “Agreements between health plans and their participating physicians routinely include a statement that the insurer has the right to determine the medical necessity of surgery, imaging studies, medication and many other procedures.” Really? Insurers and other intermediaries have the right to determine medical necessity? Doesn’t that right belong to the patients in consultation with their health care professionals? Sure, insurers make payment decisions, and prior authorization may prevent retroactive denial of coverage. But how can they have to gall to usurp clinical judgment?

But suppose the services are unnecessary. Wouldn’t it be better to identify outliers and then attempt to educate them, reserving penalties for those remaining refractory to educational efforts? Taiwan has shown that that can work with a single payer system.

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Even the insured line up for charity

Posted by on Tuesday, Jun 20, 2017

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.

Even the Insured Often Can’t Afford Their Medical Bills

By Helaine Olen
The Atlantic, June 18, 2017

The current debate over the future of the Affordable Care Act is obscuring a more pedestrian reality. Just because a person is insured, it doesn’t mean he or she can actually afford their doctor, hospital, pharmaceutical, and other medical bills. The point of insurance is to protect patients’ finances from the costs of everything from hospitalizations to prescription drugs, but out-of-pocket spending for people even with employer-provided health insurance has increased by more than 50 percent since 2010, according to human resources consultant Aon Hewitt.

Even a gold-plated insurance plan with a low deductible and generous reimbursements often has its holes. Many people have separate—and often hard-to-understand—in-network and out-of-network deductibles, or lack out-of-network coverage altogether. While many plans cap out-of-pocket spending, that cap can often be quite high—in 2017, it’s $14,300 for a family plan purchased on the ACA exchanges, for example. Depending on the plan, medical care received from a provider not participating in a particular insurer’s network might not count toward any deductible or cap at all.

The fact is that nearly any illness or injury can lead to unexpected bills, and few are able to absorb those shocks without difficulty. Yet, despite the commonness of such problems, there is little in the way of a system for helping people out through these times.

(The article discusses a multitude of funds with a mission to assist patients in paying their medical bills. The following comments are typical about many of these funds.)

The evidence is clear when you visit the websites of the funds. The Patient Advocate Foundation’s chronic pain fund? Its aid is limited to $1,500 and you need to apply when it’s taking applications. “Effective 01/18/2017, we are unable to process applications that are pending or accept new or renewal applications at this time. Should additional funding for Chronic Pain Fund applicants become available in the future, it will be necessary to re-apply if assistance is still needed.” The Patient Advocate Foundation’s multiple-sclerosis and renal-cell-carcinoma funds have been closed to new applicants since 2016.

And even when medical supplicants find programs, they are not guaranteed aid even if they meet all the eligibility requirements. “Then you call these services, not just for medical help, but any help. They tell you, ‘Oh, you have to hit us on this date,’ or ‘We get funding every month, but our funding is gone by the fifth of the month.’”

As for hospital-based charity, it can vary widely. Most studies find for-profit hospitals provide less charity care than nonprofit medical centers. But getting aid from a non-profit hospital isn’t exactly a gimme. A paper published by the Brookings Institution in 2015 pointed out that the non-profit hospitals with the most funds that could be devoted to charity care—that is, covering or forgiving medical bills of those who cannot pay full—are not located in the geographic areas where the need is greatest.

In an effort to cut down on uncollectable bills, a number of hospitals are now teaming up with financial services firms like Commerce Bank to offer time-limited interest free loans to patients something that, while helpful to some, most certainly is not charity.

Little wonder, then, that an increasing number of patients turn to crowdfunding even before they investigate more established charitable giving programs.

Yet for all the attention paid to crowdfunding, the limited evidence we have shows that for most people, the hype is better than the actual results.

(Ethan Austin, the co-founder of Give Forward) spoke to a group of students at New York University’s Stern School of Business about his (crowdfunding) site. He was blunt about one of the reasons he believed this segment of the online fundraising world had taken off so dramatically. “Our health-care system is shit and it’s trending shittier,” he told the group.

But there is more than simple embarrassment arguing against this system. It’s the equivalent of taping a few bandages over a gaping wound and hoping for the best. The cost of medical care is so high, and the personal finances of many Americans so tight,  it’s all but impossible for any organization—or all of them—to keep up, and that’s whether or not the charitable contributions they accept are part of the problem or the solution.

https://www.theatlantic.com…

You really don’t need a long article like this to understand that our current health care financing system falls far short of preventing financial hardship for many with health care needs, insured or not, and that our various charitable resources hardly make a dent in the need.

We need a health care financing system that ensures access for all while eliminating financial barriers to care. Patches to the current fragmented system will do neither. A well designed single payer system – an improved Medicare for all – would fix the system so it works well for all of us. That’s what the people want. So let’s do it.

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Single payer systems have lower drug spending than do multi-payer systems

Posted by on Friday, Jun 16, 2017

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.

Drivers of expenditure on primary care prescription drugs in 10 high-income countries with universal health coverage

By Steven G. Morgan, PhD, Christine Leopold, PhD, Anita K. Wagner, PharmD, DrPH
CMAJ, June 12, 2017

Abstract

BACKGROUND: Managing expenditures on pharmaceuticals is important for health systems to sustain universal access to necessary medicines. We sought to estimate the size and sources of differences in expenditures on primary care medications among high-income countries with universal health care systems.

METHODS: We compared data on the 2015 volume and cost per day of primary care prescription drug therapies purchased in 10 high-income countries with various systems of universal health care coverage (7 from Europe, in addition to Australia, Canada and New Zealand). We measured total per capita expenditure on 6 categories of primary care prescription drugs: hypertension treatments, pain medications, lipid-lowering medicines, noninsulin diabetes treatments, gastrointestinal preparations and antidepressants. We quantified the contributions of 5 drivers of the observed differences in per capita expenditures.

RESULTS: Across countries, the average annual per capita expenditure on the primary care medicines studied varied by more than 600%: from $23 in New Zealand to $171 in Switzerland. The volume of therapies purchased varied by 41%: from 198 days per capita in Norway to 279 days per capita in Germany. Most of the differences in average expenditures per capita were driven by a combination of differences in the average mix of drugs selected within therapeutic categories and differences in the prices paid for medicines prescribed.

INTERPRETATION: Significant international differences in average expenditures on primary care medications are driven primarily by factors that contribute to the average daily cost of therapy, rather than differences in the volume of therapy used. Average expenditures were lower among single-payer financing systems that appeared to promote lower prices and the selection of lower-cost treatment options.

From the Methods

This is a comparative economic analysis of market research data from calendar-year 2015 for 10 selected, high-income countries with a variety of systems of universal health care coverage: Canada, Australia, New Zealand, Norway, Sweden, the United Kingdom, France, Germany, the Netherlands and Switzerland.

We chose these countries because they are all high-income countries offering universal health coverage, and all were part of a large study involving countries that have participated in the Commonwealth Fund’s International Health Policy surveys. We did not include the United States in this analysis because it is an outlier in 2 important ways: first, it has not yet achieved universal health coverage; second, it has such exceptionally high pharmaceutical expenditures that its inclusion in this analysis would skew comparisons among the 10 more comparable countries studied here.

Residents of all countries except Canada were eligible for universal health coverage that included universal coverage of outpatient prescription drugs. The systems of drug coverage in Australia, New Zealand, Norway, Sweden and the UK can be described as universal public systems. In these countries, prescription medicines are financed predominantly by government, and either government or an arm’s-length public body manages the selection and the price-setting of medicines to be covered by the universal system of public financing. Prescription drugs in France, Germany, the Netherlands and Switzerland are financed through multiple-payer, social insurance systems with various statutory policies governing minimum coverage and pricing for brand-name and generic drugs.

From the Interpretation

Across 10 high-income countries with universal health care systems, the average expenditure per capita on 6 of the largest categories of primary care medicines varied by more than 600%. The volume of therapies purchased varied by only 41%, which meant that most of the differences in average expenditure per capita were driven by differences in the average mix of drugs selected within therapeutic categories and differences in the prices paid for medicines prescribed. In New Zealand, estimated costs per day of therapy were about one-third the level in comparator countries; in Switzerland, estimated costs per day were nearly double the level in comparator countries.

Conclusion

Substantial international differences in average expenditures on primary care medications are driven primarily by factors that contribute to the average daily cost of therapy, rather than differences in the volume of therapy used. Average expenditures are lower among single-payer financing systems, which appear to promote lower prices and selection of lower-cost treatment options within therapeutic categories.

http://www.cmaj.ca…

Commonwealth Fund report on performance of health systems of 11 high-income nations:
http://www.commonwealthfund.org…

This study of ten high-income countries with universal coverage demonstrated that those with single payer systems spent less on prescription drugs than did those with multi-payer systems. This is one more bit of evidence confirming that the United States is correct in continuing its pursuit of a national single payer financing system – an improved Medicare for all.

The ten nations studied were from those reported previously in the Commonwealth Fund studies of eleven nations in which the United States was ranked last overall on various measures of performance (link above). The United States was omitted from this study because it does not have universal health care coverage, and it has exceptionally high pharmaceutical expenditures that would have skewed the study.

Switzerland presents a special case that should be of interest to single payer supporters in the United States. Their system is financed by highly regulated private insurance plans  – a system which has been praised by U.S. advocates of consumer-directed health care for placing a greater financial burden on patients in need. Switzerland has twice rejected ballot measures which would have established a single payer system within their nation. As a result, amongst other features of their system, they now enjoy paying the highest drug costs of these nations – nearly double the level in comparator countries (but still far less than drug costs in the United States).

We can learn much about health care financing from other high-income nations with universal health care systems. Here we see that a universal system alone is not enough. It needs to be a well designed single payer system. We have the rudiments of that in our traditional Medicare program, but it still needs a lot of work.

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Using automatic enrollment to cover everyone

Posted by on Thursday, Jun 15, 2017

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

The Senate Should Build Automatic Enrollment Into Health Reform. Here’s How.

By Lanhee Chen and James Capretta
Health Affairs Blog, June 5, 2017

As the discussion over the future of health reform continues in the United States Senate, some Republicans are looking for ways to boost coverage levels, help stabilize insurance markets, and lower health costs. For years, the U.S. has had insurance enrollment levels below what was possible because of lower than desirable take-up of existing options.

Currently, under the ACA, the markets are less stable than they could be, or should be, because there are too few younger and healthier enrollees. Automatic enrollment would boost enrollment into insurance among this group of potential customers, and thus help create a more balanced risk pool.

We believe that automatically enrolling Americans eligible for tax credits into no-premium health plans should be an important component of a renewed effort at health reform. Many of the uninsured who do not make plan selections on their own can be enrolled into plans that provide true insurance against significant or catastrophic health events. Individuals who are auto-enrolled will have the opportunity to opt-out of that coverage if they prefer; they will also be given the opportunity to switch to a different plan during the next available open enrollment period.

Operationalizing The Idea

* Make State Participation A Condition Of Federal Funding Under Reform, And Provide Separate Funding For Administrative Costs

* Require Insurers To Offer Default Insurance Products In The Individual Insurance Market

* Establish Parameters For Default Insurance Plans

* Establish A Target Population For Automatic Enrollment Into No-Premium Coverage

* Repurpose And Supplement The IRS’ Income And Insurance Enrollment Data

* Establish A Process For Assigning Beneficiaries To Default Plans

* Provide Notification To Beneficiaries

* Recruit Hospital And Physician Cooperation

What Happens When The Tax Credits Exceed The Premiums Needed For Default Insurance?

In the event Congress adopts income-adjusted credits, there will be cases when people get placed into default plans with premiums that are less than the value of the credits for which they are eligible. In these cases, the person would forgo the balance of their credit until such time that they make a selection of a plan, or affirm the default option.

What Happens When The Credits Fall Short Of The Premiums For Default Coverage?

The system for identifying and placing individuals into coverage will be based on income and insurance enrollment data from two years prior to the placement into a plan. There will necessarily be cases when someone gets placed into coverage with a premium than ends up exceeding the value of the credit for which they are eligible. In these cases, the insurance plan receiving the credit, and the individual who was placed into coverage, should be held harmless for misestimated credit amounts. That is, the insurer should not be required to return the difference between the credit received for a default enrollee over the amount of the credit that should have been paid based on the person’s income. Nor should the default insurance enrollee be asked to cover the difference in a payment to the federal government or the insurance plan.

What Happens When A Person Has Had A Break In Coverage And Owes A Premium Surcharge?

In the House-passed AHCA, persons who experience a break in coverage are required to pay a surcharge equal to 30 percent of the premium of the plan which they are seeking to purchase. The main intent of an automatic enrollment process is to help people avoid breaks in coverage, and thus also the penalties associated with trying to re-enter the market. In that context, it would be best to provide some level of accommodation for people who end up being placed into default coverage after a spell of being uninsured. One approach would be to provide everyone who experiences a break in coverage a one-time waiver of the surcharge penalty when they first are placed into a default plan. After that first occasion, however, if someone experienced a break in coverage and then subsequently got placed into a default plan, the person would be required to pay the surcharge or would eventually be disenrolled from coverage.

The Value Of High-Deductible Insurance

Critics of this approach to automatically enrolling people into default insurance will argue that the coverage will be inadequate because the deductibles will be too high. It is certainly true that plans which require no premium payment from the enrollees are likely to have deductibles that are even higher than is typical in today’s marketplace. But, despite much criticism of high-deductible insurance from politicians in both parties, such coverage provides what consumers need most from these products, which is protection against major medical expenses.

From the Conclusion

For the most part, the uninsured do not have principled objections to enrolling in coverage; they remain without insurance out of inertia, or lack of information about their options or the financial assistance available to them. Automatic enrollment can give many of the uninsured coverage at no cost to themselves.

***

Reader Comment:

By Don McCanne M.D.

Obviously automatic enrollment is a great idea. But why put up with the administrative complexity of the authors’ model which still leaves so many out of the system, not to mention leaving too many exposed to excessive financial barriers to care? Why not, instead, automatically enroll everyone, only once, for life? The administrative simplicity would carry through to management of health care benefits, greatly reducing the administrative waste inherent in our system. A recent estimate indicates that we would save half a trillion dollars in recoverable administrative waste, which is enough to remove financial barriers to care through the reduction of excessive patient cost sharing (Annals of Internal Medicine, online, Feb. 21, 2017).

Yes, that would be a single payer system – an improved Medicare for all – but is that any reason to dismiss it? Considering our high costs, profound waste, and inherent inequities, single payer has become an imperative. Let’s automatically enroll everyone.

http://healthaffairs.org…

Looking at policy options in isolation can be informative, but, as this article by Lanhee Chen and James Capretta demonstrates, it is crucial to understand how the particular policy meshes with the entire package of health care reform.

Automatic enrollment into the health care financing system is a great idea, assuming that we want everyone covered. When Medicare was established, everyone eligible at age 65 was automatically enrolled in Part A – the hospital coverage. That has worked very well, as far as it went. In fact, the Supreme Court has ruled that if a person were to decline enrollment in Part A they would have to relinquish their Social Security benefits as well. That is a very powerful incentive for the individual to accept automatic enrollment.

Medicare for All supporters would improve Medicare benefits and remove the financial barriers to care and then would expand it to include everyone – through automatic enrollment.

But what do Chen and Capretta propose? They would include automatic enrollment in the AHCA repeal and replace proposal currently under consideration in the Senate. For a person eligible for a premium subsidy (tax credit), they would use the subsidy to purchase a plan in which the individual would be enrolled automatically. This would fall short since it would cover only individuals eligible for subsidies, so the program would still not be universal.

Worse, they propose that the plan would, in essence, have an actuarial value based on what the tax credit would purchase. For most individuals, that would be very little insurance. They tout the benefit of very high deductibles, stating, “such coverage provides what consumers need most from these products, which is protection against major medical expenses.” But how is an individual going to cover a $40,000 deductible with an annual income of $35,000?

Automatic enrollment is a great policy concept but it needs to be an element of a system of melded beneficial policies – like a well designed single payer system – an improved Medicare for all. Let’s set that up and then automatically enroll everyone in it.

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Chicago physicians favor single payer over ACA by a 2 to 1 margin

Posted by on Wednesday, Jun 14, 2017

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

Survey: Physician Attitudes Shift To Single Payer

Chicago Medical Society, June 13, 2017

Nearly four in five Chicago area physicians are opposed to the American Health Care Act (AHCA) under consideration by the U.S. Senate as increasing numbers of physicians support a single-payer “Medicare-for-All” form of health insurance.

A survey of more than 1,000 physicians by the Chicago Medical Society about payment models indicates 77% of these doctors in Cook and its Illinois collar counties have a “generally unfavorable” view of the American Health Care Act, which was passed last month by the U.S. House of Representatives and is currently being debated in the U.S. Senate.

The AHCA, which would roll back the Medicaid expansion in 31 states, including Illinois, earned positive views from just 23.4 percent of physicians who said they were “generally favorable” about the legislation.

Rather, physicians voice support for single payer and and also support the Affordable Care Act (ACA) with some fixes. In the Chicago Medical Society survey, the ACA received a “generally favorable” view from 62.7% of Chicago area physicians and even more, or 66.8% have a “generally favorable” view of a single-payer financing health care system.  Given a choice between single payer, an improved ACA and the AHCA, Chicago physicians favored a single payer approach by 2 to 1 over the ACA and by 3 to 1 over the AHCA.

87.6% of physicians think “basic health care would be available to all individuals as part of the social contract, a right similar to basic education, police and fire protection.”

http://www.cmsdocs.org…

Once again we have a report that shows that physicians and medical students believe that health care is a human right that should be made available to all and that a single payer, improved Medicare for All is clearly the preferred model of reform. This survey also adds the findings that single payer is preferred over the Affordable Care Act (Obamacare) by a margin of 2 to 1, and also preferred over the American Health Care Act (Republican Repeal and Replace) by an even larger margin – 3 to 1.

The people want Medicare for all, and physicians and other health professionals want Medicare for all. In health care, who else matters?

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Health care is a gold mine for crowdfunding

Posted by on Tuesday, Jun 13, 2017

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.

America’s Health-Care Crisis Is a Gold Mine for Crowdfunding

By Suzanne Woolley
Bloomberg, June 12, 2017

Crowdfunding platforms such as GoFundMe and YouCaring have turned sympathy for Americans drowning in medical expenses into a cottage industry. Now Republican efforts in Congress to repeal and replace Obamacare could swell the ranks of the uninsured and spur the business of helping people raise donations online to pay for health care.

But medical crowdfunding doesn’t have to wait for Congress to act. Business is already booming, and its leaders expect the rapid growth to continue no matter what happens on the Hill.

At industry leader GoFundMe, medical is one of the biggest fundraising categories. CEO Rob Solomon has said it’s what “helped define and put GoFundMe on the map.”

With enough volume, the business of helping people raise money for medical care has a lot of profit potential. GoFundMe takes 5 percent of each donation, 2.9 percent goes to payment processing, and there’s a 30¢ transaction fee.

Indiegogo, which started out funding filmmakers, created a separate platform in 2015 called Generosity. Medical is a top category, and users pay a 3 percent payment processing fee and the 30¢. Now Facebook has jumped into the fray. On May 24, it began allowing users to launch fundraisers for personal causes or nonprofits on their pages. Medical is one of eight available categories. For personal cause campaigns, Facebook takes 6.9 percent of each donation plus 30¢.

Medical crowdfunding is “highly, highly scalable and has a ton of runway,” said Dan Saper, chief executive officer of YouCaring. “The growth rate of the industry is showing that this can absolutely be an impactful safety net for a lot of individuals and communities to help each other.”

The remarkably named Producing a Worthy Illness: Personal Crowdfunding Amidst Financial Crisis, a study published this year by the University of Washington/Bothell, offers a striking perspective on some of those communities. Personal medical campaigns on GoFundMe were likelier to come from people living in states that chose not to expand Medicaid under the ACA, preliminary results of the study showed.

“The more dramatic the need, the more successful” the fundraiser, said Adrienne Gonzalez, who follows the industry as the creator of GoFraudMe.com, a site that exposes fraudulent campaigns on GoFundMe.

“‘I need help with my deductible’—they are not going to be very successful,” said Gonzalez, who believes crowdfunding has done a lot of good but presents “this whole socioeconomic problem” because “you almost have to be a marketing guru” to create a successful campaign.

Slightly more than one in 10 health-related online campaigns reached their goal in the NerdWallet report.

“Is this something that is going to be a solution to a lack of health insurance?” said Jeremy Snyder, a health sciences professor at Simon Fraser University in Canada. “Absolutely not.”

https://www.bloomberg.com…

In spite of the Affordable Care Act, medical debt remains a major problem in the United States. It is no surprise that crowdfunding – soliciting donations over the Internet – has become a means of trying to fill the void resulting from being uninsured or under-insured. And there are plenty of entrepreneurs who are quite willing to open these channels – for a percentage of the take – Facebook being one that takes 6.9% plus 30 cents per donation.

Just what we need – more administrative costs and profits consumed by middlemen entrepreneurs. This doesn’t even take into consideration the diversion of funds that can take place once they reach the beneficiaries or their handlers. Besides, the majority of those who depend on crowdfunding to pay their medical bills will be disappointed. Why would people donate funds to help pay someone else’s deductible when they have their own deductibles to worry about?

We can surely find a better way to fund health care, like maybe an improved Medicare that covered everyone. Depending on an industry that capitalizes on charity certainly is not the way to go.

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New provider-sponsored health plans provide lessons on the medical-industrial complex

Posted by on Monday, Jun 12, 2017

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.

Analysis of Integrated Delivery Systems and New Provider-Sponsored Health Plans

By Allan Baumgarten, LLC
Robert Wood Johnson Foundation, June 2017

Many of the earliest and most prominent health insurance companies, such as Kaiser Permanente, Geisinger, and HealthPartners, were formed by provider organizations that under careful care coordination and conservative practice, were able to offer comprehensive benefits from a limited network of providers at competitive prices. Responding to incentives under the Affordable Care Act and other trends in their local markets, health systems in the United States have formed dozens of new health insurance companies or acquired existing health plans since 2010. This project examined the goals of these health systems in entering the health insurance business.

From the Introduction

Since 2010, provider systems established 37 new health insurance companies and acquired  five existing health plans. The renewed interest by provider systems in owning their own health plans grew out of longstanding strategies to gain market strength and more control over premium revenues, and in response to payment changes under the Affordable Care Act (ACA) and other market trends.

About half of the new health plans are selling Medicare Advantage products only, while some others saw their best business opportunity as selling to individuals and small groups through exchanges and other channels.

While it is not unusual for a startup health plan to lose money in its first years, only four of the new plans were profitable in 2015. Some reported significant losses, and five have gone out of business. It has generally been a difficult time for health plan startups, as demonstrated by the demise of most of the health insurance cooperatives formed under the ACA and the large losses posted by companies like Oscar and Harken Health.

Few new plans have gained enough enrollees to achieve economies of scale in plan administration, to gain ability to manage risk, or to have an impact on competition and price in their local markets.

For these new health plans to succeed, they must deliver on a value proposition of providing high-quality care at a lower cost. Most have not and only a few are making progress in that direction. Many of the provider systems are pursuing their health plan strategy at the same time they are forming clinically integrated networks and Accountable Care Organizations (ACOs). However, it appears most provider systems have not aligned these two strategies. Many new provider-sponsored health plans set their prices lower for group and individual coverage to be competitive in their local markets and to gain market share. However, they do that mostly by paying their own providers below market rates, not by reducing utilization and costs through better care management.

From the Conclusion

Dozens of provider systems have established their own health plans since 2010. Anticipating significant changes in payment in the future, they have embraced the notion of climbing to the top of the health care food chain by becoming health insurers. Some have started a health plan as a defensive move, seeking to replace patients they have lost to other systems.

Based on the analysis reported here, it is hard to identify any of the new cohort of provider-sponsored health plans that show strong promise. Five in that group have already failed, and two national hospital systems announced their intent to reduce or even end their ventures into the health plan business.

A few new plans have enjoyed some success, reaching enrollments of 100,000 in just a few years. However, almost all these plans continue to operate at a loss, in some cases reporting very large losses. When that happens, the provider owners must contribute additional capital to comply with solvency requirements, leaving less for investments in care delivery, new or improved facilities, or health information technology.

It is likely that more of this new cohort of provider-sponsored health plans will reconsider their commitment to adding the capital, energy, and focus needed to sustain a health plan long enough to achieve success. For those reasons, and others, the prospects for success by these new health plans are not strong.

http://www.rwjf.org…

Arnold “Bud” Relman long ago famously warned us about the medical-industrial complex. His warnings have not been heeded. Too many in the industry focus on enterprise, markets, competition and profit when they should be focusing on patient service, access, equity and efficiency.

The policy and political communities have been complicit by pushing us into market-based models such as accountable care organizations. They preach higher quality and lower costs but fail to deliver on quality, largely because we don’t even know how to identify it, and then pretend that they have achieved lower costs by taking a meat cleaver to the distributions to physicians and hospitals when they burn up most of the savings through additional administrative excesses (not to mention the irksome diversion of funds to passive investors and into corporate executive compensation packages).

What is really tragic is that those in the industry seem to keep looking for ways to increase the bottom line to achieve business success when they should be looking for ways to better meet the health care needs of the patients and the community at large. If they did the latter, the bottom line follows. By pursuing the former, according to this report, “it is hard to identify any of the new cohort of provider-sponsored health plans that show strong promise.”

Let’s dump “provider-sponsored health plans” and move forward with “provider-supported health care.” The traditional Medicare program has done a fairly good job on the latter. Let’s improve it and expand it to include everyone.

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