Financial protection provided by insurance is deteriorating

Posted by on Friday, Nov 14, 2014

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.

Too High a Price: Out-of-Pocket Health Care Costs in the United States

By Sara R. Collins, Petra W. Rasmussen, Michelle M. Doty, and Sophie Beutel
The Commonwealth Fund, November 2014


Whether they have health insurance through an employer or buy it on their own, Americans are paying more out-of-pocket for health care now than they did in the past decade. A Commonwealth Fund survey fielded in the fall of 2014 asked consumers about these costs. More than one of five 19-to-64-year-old adults who were insured all year spent 5 percent or more of their income on out-of-pocket costs, not including premiums, and 13 percent spent 10 percent or more. Adults with low incomes had the highest rates of steep out-of-pocket costs. About three of five privately insured adults with low incomes and half of those with moderate incomes reported that their deductibles are difficult to afford. Two of five adults with private insurance who had high deductibles relative to their income said they had delayed needed care because of the deductible.…

Health reform was supposed to make health care more affordable, yet underinsurance is increasing. The deductibles are more difficult for people to afford and a delay in needed care has been the result. Single payer would eliminate underinsurance. It’s time.

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Why does the press attack Gruber and ignore Pauly?

Posted by on Wednesday, Nov 12, 2014

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.

Who is Jonathan Gruber?

By Jose A. DelReal
The Washington Post, November 11, 2014

Jonathan Gruber is probably having a hell of a day.

The MIT economics professor, best known until now for his key role advising the Obama administration on the Affordable Care Act, has come under attack after year-old video of a University of Pennsylvania panel surfaced that featured him referring to the “stupidity of the American voter” and a “lack of transparency” as crucial to the passage of the 2010 health reform law.

Those comments have struck a nerve on the right, with some of the law’s critics pointing to Gruber’s comments as evidence that the administration intentionally deceived the American public on the costs of the program.…


AHEC 2013 Conference

November 10, 2014

As part of the 24th Annual Health Economics Conference hosted by PennLDI, Mark Pauly and Jonathan Gruber were featured in the Plenary Panel discussing the role of economics in shaping (and possibly reshaping) the ACA.

Transcript from Video:

Jonathan Gruber (at 20:24):  Mark made a couple of comments that I do want to take issue with, one about transparency of financing and the other is about moving from community rating to risk-rated subsidies. It should… You can’t do it, politically – you just literally cannot do it. Okay, transparent financing… not just transparent financing… all transparent spending. I mean, this bill was written in a tortured  way to make sure that CBO did not score the mandate as taxes. If CBO scores the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk-rated subsidies, you get a law which said healthy people are going to pay in… you make it explicit the healthy people pay in and the sick people get money, it would not have passed. Just like… lack of transparency is a huge political advantage. And, basically, you know, call it the stupidity of the American voter, or whatever, but basically that was really critical to get the thing to pass, and, you know, it’s the second best argument. Look, I wish Mark was right, we could make it all transparent, but I’d rather have this law than not.

Mark Pauly (at 12:39):  My last comment is on most needed research, and here I’m going to ask you to cheer me up. So the premise, actually, for my thesis work, on why we ought to subsidize health insurance was this idea that we… what I would now call benevolent moral hazard. We want to create moral hazard to get people who underuse medical care by community standards, to use it because it will improve their health, and, at least I was terribly depressed by the results of the Oregon study where impacts on health were minimal and moral hazard, though, came through like gangbusters – it’s still about a 33 percent increase. One study doesn’t prove anything, and it was not super powered, although it was powered to detect large impacts if they’d been there. But I think we either need to figure out a more sensitive way to detect health influences, or the alternative, which some people have talked about is, say, well it really wasn’t health care we wanted, it was financial stability, which I’m willing to give $1.98 for. I guess my concern is there are so many ways a person can go broke, why would we particularly concentrate on subsidizing health insurance to prevent them from going broke that way?

Quite a furor has been caused by Jonathan Gruber’s controversial comments at a conference last year – comments on the importance of preventing transparency over the transfer of funds from the healthy to the sick. Yet the press has remained silent on Mark Pauly’s disconcerting comments at the same conference. So what does this mean, and what does it have to do with single payer?

It is common for voters to express their opposition to taxes by stating that they do not want money to be taken away from them by the government and given to someone else. There is particular resentment, for instance, of middle-income workers paying taxes to provide food stamps for low-income individuals, or, worse, the objection of high-income individuals being required to participate in a transfer from the rich to the poor. Yet everyone agrees that we should have arrangements wherein our very high medical bills are paid by others. That is the very essence of health insurance – a transfer from the healthy to the sick. But now that health care costs are so high, a transfer from the wealthy to low- and middle-income individuals and families is also essential.

Gruber’s comment referred to the fact that voters who are not particularly sophisticated (“call it the stupidity of the American voter”) should not have the financing of the Affordable Care Act framed as a “taxes.” So the lack of transparency was in the rhetoric – avoiding the use of the term “taxes” – but not in the policy. The financing was to be perceived as insurance premiums with subsidies if required, though the rhetoric did not include the fact that the subsidies are a transfer through the tax system. So there is not dishonesty here. It is totally about political rhetoric, compounded perhaps by Gruber’s inelegant choice of words.

But look at what Mark Pauly has to say. He is considered by many to be the father of the theory of moral hazard in health insurance – obtaining free care because you are insured – care that you would not have obtained if you had to pay for it. Yet he supports creating what he calls “benevolent moral hazard” – getting people to use medical care when it benefits their health. He would do this by subsidizing insurance based on individual risk rather than based on community rating. People with greater needs would receive insurance subsidies if they could not afford the higher premiums. (Why this is a terrible idea requires a discussion of risk pools, administrative efficiency, equity, and other financing concepts which we will not go into here.)

But then Pauly goes on to lament the moral hazard of Medicaid by using the Oregon study. He indicates that health care use increased 33 percent without any demonstrable benefits. The Oregon natural experiment has been discussed thoroughly elsewhere, but, just briefly, we’ll say that the study was not powered to detect major beneficial endpoints, but, further, there are many other benefits of physician visits that are never measured in these studies (e.g., reassurance that distressing symptoms are benign). People do not go to physicians as a social outing, but rather they go because they have health concerns.

The really outrageous comment that should offend even the media is Pauly’s glib questioning of why we would “particularly concentrate on subsidizing health insurance” when “there are so many ways a person can go broke.”

The reason that we should be especially concerned about this truly insensitive comment is that it represents the thinking of one of the nation’s health policy leaders who are sending us down the path of “skin in the game” consumer-directed health care that deliberately places financial barriers in the way of beneficial health care.

And this is what the Gruber furor has to do with single payer. If the media investigated and reported on the really important issues, they would expand on Pauly’s comments to show us how single payer would REMOVE financial barriers to care – ensuring that everyone would have the health care that they need. Reporting insignificant rhetorical gotchas while ignoring an expert’s dismissal of going broke due to personal health care expenses reflects poorly on today’s media – not all of them, but far too many. Google both Gruber’s and Pauly’s comments and you’ll see which one was covered and which one wasn’t.

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AMA policy on narrow networks

Posted by on Tuesday, Nov 11, 2014

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 policy calls for adequate networks for patient access, choice

AMA Wire, November 10, 2014

The new AMA policy, which is part of a new report by the AMA Council on Medical Service, calls for health insurers to make changes to their provider networks before the open enrollment period gets underway each year. Implementing changes to provider networks at this time will help prevent patients from being stuck with plans that drop their physicians after they already have enrolled.

The policy also reiterates the need for health insurers to provide patients with an accurate, complete directory of participating physicians through multiple media outlets. These lists also should identify physicians who are not accepting new patients.

Other provisions of the new policy include:

  • Promoting state regulators as the primary enforcers of network adequacy requirements. These regulators can ensure compliance with state network adequacy laws and regulations that are intended to make sure patients have access to adequate provider networks throughout the plan year.
  • Calling for insurers to submit quarterly reports to state regulators. These reports should provide data on several measures of network adequacy, including the number and type of physicians who have joined or left the network, the provision of essential health benefits, and consumer complaints received.
  • Calling on insurers to treat patient visits to out-of-network physicians the same as in-network visits if the plan’s provider network is deemed inadequate.
  • Supporting regulation and legislation that require out-of-network expenses to count toward a patient’s annual deductibles and out-of-pocket maximums when a patient is enrolled in a plan with out-of-network benefits or is forced to go out of network as a result of network inadequacies.…

If any organization should be able to devise policies that would correct the deficiencies of narrow provider networks, it is the AMA. When you read their new recommendations, clearly they leave in place the fundamentally flawed policy of restricting patient choices of physicians. Tweaking a policy that needs to be eliminated is not an adequate response.

They speak of ensuring network adequacy, but networks are not adequate if they eliminate your primary care provider, if they require greater distances to travel in seeking care, if they limit access to specialists, if they exclude physicians at centers of excellence, or if they include any of the other restrictions that result from not having freedom to choose from all available physicians in the community and in referral centers.

Keeping provider lists current is almost impossible. Physicians often do not notify the insurers when they close their practices to new patients or when they move their offices. List changes of physician attrition (retirement, license revocation, death, etc.) or of new physicians entering the community can be difficult to keep current.

Requiring prior authorization for out-of-network services is a barrier to care, if it is even allowed at all.

One of the more important AMA recommendations is to allow the cost of out-of-network care to be applied to the deductibles and to the out-of-pocket maximums. But then there would be little reason for patients to stay in network unless they had catastrophic expenses that could expose them to large balance-billing costs. Regardless, the patient is still exposed at least to the high deductibles and high out-of-pocket maximums, creating financial hardships for many of the insured.

The AMA recently again rejected recommending single payer proposals. That’s too bad. Single payer would have taken care of not only the narrow network problem, but also the thousands of other deficiencies that are unique in our highly dysfunctional, market-oriented non-system of health care financing.

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The moral hazard of preventive services

Posted by on Monday, Nov 10, 2014

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.

An Economic Framework For Preventive Care Advice

By Mark V. Pauly, Frank A. Sloan and Sean D. Sullivan
Health Affairs, November 2014


Under the Affordable Care Act, preventive care measures, including vaccinations and screenings, recommended by the Advisory Committee on Immunization Practices and the US Preventive Services Task Force must be covered in full by insurance. These recommendations affect the cost of medical care. Yet neither organization explicitly incorporates measures of efficiency or cost-effectiveness in making its recommendations. To redress this shortcoming, we propose a decision-making framework for these two organizations based on the principles of economic efficiency. Our analysis suggests that routine use of a preventive service should be recommended for full insurance coverage if the service’s cost-effectiveness exceeds a socially determined threshold. For less cost-effective services, we suggest that information about effectiveness and cost should be provided to consumers by physicians or government, but the choice of care and insurance coverage for care should be made by individuals. For the least cost-effective services, the two organizations should discourage public and private insurers from covering such services and report their unfavorable cost-effectiveness.

Health And Cost Trade-Offs

It is crucial to note that the policies of ACIP and the US Preventive Services Task Force are affected by legislative and political constraints. Even with expertise and intent, and with reliance on staff to summarize information on cost-effectiveness, the two organizations are heavily restricted in their ability to incorporate costs in their decisions. Nonetheless, they are given the authority to make recommendations with potentially serious cost consequences. They are being asked to do a task that is impossible to do well. The current structure is thus unworkable as a vehicle for deciding on costly coverage. We therefore propose an alternative that could, in principle, then be implemented either by ACIP and the US Preventive Services Task Force or by some other entity.

An Economic Framework

Preventive care should be made free of user cost for several reasons. The classic reason for requiring immunizations for contagious diseases is concern about the failure of consumers to consider the benefits of prevention to others who might otherwise contract the disease from them. Such use is encouraged by insurance coverage. Another reason is that considerable evidence exists suggesting that some patients do not fully appreciate the benefits from some high-value preventive services, such as the measles vaccine. Finally, future cost reduction for other services that sometimes accompany effective prevention will be overlooked by consumers insured for those services (and by insurers and employers) if there is turnover of insured people from one insurance company to another.

Shorn of technical language and complex mathematics, the fundamental goal of economic efficiency is to provide all services worth more than their cost to users and others who value receipt of these services. In contrast, services should not be provided if they improve health but not by enough to justify their costs.

Categories Of Evaluation And Advice

Here is a way to consider possible policies. A highly desirable service may be “strongly” recommended, with the expectation that physicians will routinely offer and encourage the use of such services and insurance or public subsidies will reduce the user price to zero. Most recommended pediatric immunizations fall into this category.

There are effective preventive services that might be of limited benefit to most people’s health but are sufficiently beneficial for some people to prefer them. We suggest that recommendations in this case be “permissive.” They would emphasize to consumers the positive health benefits of the care and the need to alert them about its availability and cost. Those who attach personal value to the benefit in excess of the societal threshold would be permitted to use them or insure them, but neither subsidies nor insurance would be required.

Finally, there could be a “discouraging” recommendation. In such cases, the service may be effective but insufficiently effective to justify its cost for the great majority of people.

From the Conclusion

Given that higher premiums can be a consequence of a recommendation, it seems illogical not to explicitly consider the higher costs compared to the benefit but to be explicit about both benefits and the need to consider the options, as we have recommended. This is a comparison, we admit, that clinical decision makers are reluctant or unable to make because it requires something beyond clinical considerations, and there is no alternative under current law and policies other than inconsistent or undesirable behavior. We have instead recommended a three-tier approach based on cost-effectiveness ratios. The precise dollar values that divide tiers is a political and ultimately a societal judgment.

During the crafting of the Affordable Care Act it was decided that prevention should have the highest priority in the delivery of health care services on the basis that it would reduce health care costs by preventing more expensive care, and, more importantly, that preventing disease is better than managing it. Although there is little evidence that preventive care saves money, preventing disease is certainly beneficial.

For that reason it was decided to require that preventive services – including immunizations recommended by the Advisory Committee on Immunization Practices (ACIP) and screening procedures recommended by the US Preventive Services Task Force (USPSTF) – be fully covered by insurance, with no cost sharing, even if the deductible had not been reached.

The concept that all health care should be a prepaid service with no cost sharing was never considered as an option – much as single payer was excluded from consideration.

Mark Pauly, one of the co-authors of this Health Affairs article, popularized the concept of moral hazard in health insurance – that it was important to require patients to directly bear at least a portion of the costs of health care in order to prevent them from obtaining care for free that they would have forgone if they would have had to pay for it in part or in full. This concept has become an absolute given amongst the health policy wonks in this nation. This “skin in the game” consumer-driven notion has so dominated the policy community that it is being expanded by ever-higher deductibles which likely are contributing to the slowdown in health care spending – an undesirable form of cost containment, as will be explained.

The greatest problem with cost sharing (deductibles, co-payments and coinsurance) is that it has been confirmed that people frequently do forgo beneficial health care when they have to pay a portion or all of the costs of that care. Several other nations with universal systems recognize that problem and thus provide first dollar coverage for health care. This problem was also recognized by Congress when it was decided that preventive services should not be discouraged by making them subject to cost sharing (although it has been shown that plans with high deductibles also cause patients to forgo free preventive services).

It appears that Professor Pauly and his colleagues cringe at the thought of dismissing the moral hazard of accepting free preventive services (free at the time of service). Thus they now propose applying the consumer-directed concept of establishing tiers of preventive services – one for full coverage, a second for full payment out-of-pocket, and a third for discouraging the use of those preventive services as not having enough value (due to inordinately high prices) for anyone to pay for them.

It seems to matter little that the ACIP immunization lists and USPSTF screening tests have undergone decades of rigorous scientific investigation and represent the state of the art in preventive services. This begs the question: How do you overuse preventive services? Rather than disrupting these services because they supposedly constitute a moral hazard it would seem much more logical to use public (government) measures to reduce excess prices, just as they do in other nations.

Of course, a single payer national health program is designed to get pricing right – providing optimal health care value for all of us.

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OECD/WHO/EOHSP report on P4P

Posted by on Friday, Nov 7, 2014

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.

European Observatory of Health Systems and Policies

Paying for Performance in Health Care: Implications for Health System Performance and Accountability

Edited by Cheryl Cashin, Y-Ling Chi, Peter C. Smith, Michael Borowitz and Sarah Thomson
OECD, WHO, October 6, 2014

Forward from the OECD (excerpts):

The problem is that not enough is known about whether and how P4P actually increases value for money in health systems. The evidence that P4P improves health outcomes, or even quality of processes of care, is limited at best.

(This) volume analyses the experience of P4P programmes in 10 OECD countries, selected to reflect the wide range of health system contexts and challenges across the OECD.

The findings of the volume in many ways mirror the findings of the few rigorous systematic reviews of P4P programmes, and the opinions of many leading commentators. Pay for performance does not lead to “breakthrough” quality improvements, and performance measures and other key building blocks of P4P programmes remain highly inadequate.

This volume will not provide answers to questions such as whether or not P4P works, which performance measures are most appropriate, or what is the right level of financial incentive to get results. Instead – and more importantly for real health financing policy in complicated contexts – are the insights about how P4P might be used to strengthen health system governance and strategic health purchasing to continue the shift taking place in many countries from paying for performance to paying for value.

Mark Pearson, Head of Health Division, Directorate of Employment, Labour and Social Affairs
Organisation for Economic Co-operation and Development

Chapter thirteen:

United States: California integrated healthcare association physician incentive programme

By Meredith Rosenthal

One of the first, and perhaps the largest, private pay for performance (P4P) initiatives of this era was launched by the Integrated Healthcare Association (IHA) in 2001 with eight health plans representing ten million members in California. The IHA programme is of particular interest not only because of its size, but also because it has been sustained for more than a decade and has been independently evaluated.

Results of the programme:

Performance related to specific indicators

More generally, IHA’s own monitoring reports give a mixed picture of performance improvement over time. Performance measures included in the IHA P4P programme have improved modestly and unevenly across measures, with no evidence of “breakthroughs” in quality improvement.

Programme monitoring and evaluation

Two controlled studies provide the strongest evidence of impact of the IHA initiative. These studies find that not all targeted clinical process measures of quality improved. Among the measures that could be analysed, only cervical cancer screening improved differentially among the IHA participants, and improvement was modest at best.


While there has been no systemic analysis of the impact of the IHA programme on equity, several empirical clues suggest that P4P may not have distributed its benefits equally… (I)interviews with physician group leaders revealed some concerns that the P4P programme has caused groups to avoid patients whose health of health behaviour would negatively affect the group’s performance.

Cost and savings

While no formal analyses have been reported, it is unlikely that improvements in clinical quality, health information technology, and patient experience (to the extent they have occurred) would generate saving for payers.

From the Conclusions

Another possible explanation for the weak results may be the continued expansion of the measure set and the difficulty physician organizations face in making investments in quality improvement when the targets are continuously moving. There is an obvious tension here with the desire to include a comprehensive set of measures to avoid “teaching to the test,” a narrow focus that causes providers to concentrate on a small subset of tasks at the expense of unrewarded domains, and to incorporate the best available measurement science over time.


Designing Smarter Pay-for-Performance Programs

By Aaron McKethan, PhD; Ashish K. Jha, MD, MPH
JAMA, November 6, 2014

The idea behind pay for performance is simple. Because individuals and organizations respond to incentives, physicians whose patients achieve desirable outcomes should be paid more as an incentive to improve their performance. Yet the results of pay-for-performance programs have been largely disappointing. One argument is that neither the right set of incentives nor the right set of metrics has been identified. Another explanation, which has received far less attention, is that the right set of patients has not been identified for targeted efforts.

To the extent that higher-risk patients can be reliably identified prospectively, this information can inform the design of smarter, more targeted pay-for-performance programs. Specifically, a targeted pay-for-performance program would have, at its core, a prediction model that would identify patients who are at elevated risk of failing to meet a meaningful clinical goal or of having a bad outcome. Predictive models are not just risk-adjustment models already in use by payers to create a level playing field. Predictive models can take into account any factor that is likely to affect a patient’s chance of a poor outcome.

There is little doubt that the effectiveness of these programs will be driven, in large part, by the ability to prospectively identify at-risk patients. However, given the failure of recent efforts to meaningfully improve outcomes, testing targeted pay for performance may be worth the effort.

Pay for performance (P4P) continues to be promoted as a means of improving quality while reducing costs. This 338 page OECD/WHO report adds to the abundance of the policy literature that shows that P4P does not achieve these goals, and may actually impair equity.

The policy community never gives up on a bad idea. In this JAMA article (access is free), McKethan and Jha suggest that we improve P4P by applying it only to prospectively-identified at-risk patients. Not only would that be a good study, but it could also result in P4P rewards that are five times the current levels. What? Greatly increase the complexity and uncertainty by testing only at-risk patients, if you could even identify them? And then depend on provider greed to drive the program? Come on!

One thoroughly tested model that would greatly reduce wasteful spending while improving quality by redirecting the savings to more appropriate care is the single payer model – a national health program. We can let the policy people go out in the alley and play their P4P games while we get serious about improving Medicare and providing it to everyone.

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What is the evidence for access and quality in Medicare Advantage versus traditional Medicare?

Posted by on Thursday, Nov 6, 2014

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.

What Do We Know About Health Care Access and Quality in Medicare Advantage Versus the Traditional Medicare Program?

By Marsha Gold and Giselle Casillas
Kaiser Family Foundation, November 6, 2014

This literature review synthesizes the findings of studies that focus specifically on Medicare and have been published between the year 2000 and early 2014. Forty-five studies met the criteria for selection, including 40 that made direct comparisons between Medicare health plans and traditional Medicare. An additional five studies are included, even though they have no traditional Medicare comparison group.


Despite great interest in comparisons between traditional Medicare and Medicare Advantage, studies comparing overall quality and access to care between Medicare Advantage plans and traditional Medicare tend to be based on relatively old data, and a limited set of measures.

On the one hand, the evidence indicates that Medicare HMOs tend to perform better than traditional Medicare in providing preventive services and using resources more conservatively, at least through 2009. These are metrics where HMOs have historically been strong. On the other hand, beneficiaries continue to rate traditional Medicare more favorably than Medicare Advantage plans in terms of quality and access, such as overall care and plan rating, though one study suggests that the difference may be narrowing between traditional Medicare and Medicare Advantage for the average beneficiary. Among beneficiaries who are sick, the differential between traditional Medicare and Medicare Advantage is particularly large (relative to those who are healthy), favoring traditional Medicare. Very few studies include evidence based on all types of Medicare Advantage plans, including analysis of performance for newer models, such as local and regional PPOs whose enrollment is growing.

As the beneficiary population ages, better evidence is needed on how Medicare Advantage plans perform relative to traditional Medicare for patients with significant medical needs that make them particularly vulnerable to poorer care. The ability to assess quality and access for such subgroups is limited because many data sources do not allow subgroups to be identified or have too small a sample size to support estimates. Also, in many cases, metrics employed may not be specific to the particular needs or the way a patient’s overall health and functional status or other comorbid conditions influence the care they receive.

At a time when enrollment in Medicare Advantage is growing, it is disappointing that better information is not available to inform policymaking. Our findings highlight the gaps in available evidence and reinforce the potential value of strengthening available data and other support for tracking and monitoring performance across Medicare Advantage plans and traditional Medicare as each sector evolves.…


An Emerging Consensus: Medicare Advantage Is Working And Can Deliver Meaningful Reform

By Thomas Miller and James Capretta
Health Affairs Blog, November 6, 2014

The success of Medicare Advantage in recent years is changing the conversation on Medicare reform.  It is now possible to envision genuine bipartisan support for fair competition between MA plans and FFS.  The “premium support” concept still engenders highly politicized opposition in some quarters.  But support for the idea has also begun to cross ideological divides.

Premium support is of course a complex reform.  It requires risk adjustment of payments and regulation of plans to ensure fair competition.  But the risk adjustment system and the regulation need not be perfect for the reform to work; indeed, the system already in place today for MA plans should provide sufficient confidence that a competitive reform model would be beneficial for the program’s participants.

The main obstacle to more intensive competition in Medicare has been distrust.  MA advocates believe the bureaucracy will tilt the playing field toward FFS; and FFS defenders believe private plans will find new ways to risk select and game the system or to influence policymakers to provide them with overly generous terms on their payment rates.…

Today two new papers were released designed to give us greater insight on the relative value of the traditional Medicare program and the private Medicare Advantage plans. What can we learn from these reports?

It is well established that Medicare Advantage plans are paid more per patient than the costs of providing care for comparable patients in the traditional Medicare program. They continue to market their plans to healthier patients and yet they artificially magnify a touch of illness for purposes of receiving greater payments based on risk adjustment. Although the Affordable Care Act requires a gradual reduction in these overpayments, concessions have been made by the Obama administration to reduce the impact of these adjustments. The taxpayers continue to receive inferior value from their investment in the private Medicare Advantage plans.

The comprehensive literature review from Kaiser Family Foundation concludes that the information available unfortunately is quite limited. They do conclude that Medicare HMOs are able to achieve higher scores in providing preventive services – likely because of their IT systems that flag items that would improve their quality rating scores. Medicare HMOs also use resources more conservatively, which raises the concern that they could be withholding appropriate care.

Perhaps the most important conclusion from the Kaiser review is the finding that the differential in quality and access for beneficiaries who are sick is particularly large, relative to those who are healthy, between traditional Medicare and Medicare Advantage. Medicare Advantage plans may have learned how to score well on teach-to-the-test quality measures, but they fall far short of traditional Medicare in patients’ real world health care experiences.

The Health Affairs Blog article by Miller and Capretta needs to be recognized for what it is – a political tract. They claim that “evidence mounts that MA plans can deliver more efficient and higher quality care than FFS” – a claim based more on their ideological preferences for a privatized Medicare rather than on a comprehensive review of the health policy literature. They then use that conclusion to advocate for a premium support proposal that would further privatize Medicare.

They state that the main obstacle to increasing public and private Medicare plan competition is distrust. They say that Medicare Advantage advocates believe that bureaucrats will tilt the playing field toward traditional Medicare, yet the facts are that the Obama administration has been tilting the field towards the Medicare Advantage plans instead. They also say that the traditional Medicare advocates “believe private plans will find new ways to risk select and game the system or to influence policymakers to provide them with overly generous terms on their payment rates.” Of course, those are not just beliefs but are well documented facts. We are paying more for private insurers to game the system at our expense.

Although neither of these reports provides new evidence that would change our opinions on private Medicare Advantage plans, they do reinforce our view that we should not listen to ideologues who care more about markets than about patients. Instead we should continue to support our traditional Medicare program that puts patients first, although we do need to improve it and then expand it to cover everyone.

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by John Geyman, M.D.

Having just finished reading Bob Herbert’s excellent book, Losing Our Way: An Intimate Portrait of a Troubled America, I am struck by the parallels between trends in public education and in health care. Herbert, opinion columnist for the New York Times for 18 years and now a Distinguished Senior Fellow at Demos, a public policy think tank in New York City, describes trends in recent years in public schools in this country.

Here are some of his findings of these pervasive trends, accelerated since the passage of George W. Bush’s No Child Left Behind law in 200l and continued after Obama’s Race to the Top initiative:

•  Deep budget cuts to traditional public schools; nationwide, more than a quarter million staffers and administrators, including 150,000 teachers were cut between 2010 and 2012 (1)
•  Increased emphasis on privatization, including charter and online schools
•  Dedication to required testing to evaluate student achievement as well as the performance of principals and teachers
•  Increasing numbers of principals and teachers being fired for not meeting testing goals,  especially in schools and school districts in lower socio-economic areas
•  Teaching to the test has become the norm, with widespread cheating involving teachers and administrators.
•  Increasing division along social-economic and racial lines between predominantly white charter schools and mostly black/minority public schools
•  Transfer of resources from public schools to for-profit charter and online schools
•  Almost two-thirds of the nation’s school districts were providing fewer dollars per student in 2012 than they had in 2008.
•  More than 100 school districts, many in rural areas, cut the school week to four days, with almost one-half of school districts in California cutting back on art, drama, and music programs.
•  Continued attacks from the right on teachers, their unions, and the problems of public education while promoting private alternatives
•  Despite the policies of No Child Left Behind and the Race to the top, the U.S continues to fall behind in international student rankings.(2)

I am nearing completion of my next book, How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans, due out in January 2015. It will be a five-year evidence-based assessment of the Affordable Care Act (ACA). To be fair, the ACA does bring about some improvements, such as providing for children to stay on their parents’ health insurance until age 26, prohibiting exclusions based on pre-existing conditions, establishing government-sponsored exchanges to allow the uninsured to shop for coverage, and expanding Medicaid (at least in those states that agree to expansion). Almost 8 million people have gained coverage on the exchanges (though only 57 percent of them were previously uninsured) and about 7 million people have new Medicaid coverage. Despite these gains, however, there is a long list of problems that won’t be solved by further implementation of the ACA, including these:

•  Access to care is still very limited for many millions of Americans, even if “insured”, and at best, there will still be 31 million uninsured in 2019.
•  Costs of care continue to soar, especially as hospital systems expand and consolidate, thereby gaining increased market shares in their areas.
• There are no price controls throughout a largely private, for-profit delivery system.
•  Private insurers are still in charge, gaming the system in new ways, such as establishing narrow networks of physicians and hospitals and marketing plans of low actuarial value.
•  Many insurance policies now have annual deductibles more than $5,000 for individuals and $10,000 for families, forcing many people to forego necessary care because of cost.
•  New pay-for-performance (P4P) initiatives have not improved quality of care, and there is widespread gaming of the reimbursement system to increase payments to physicians and hospitals.
•  Cross-national studies of access, efficacy, quality and equity of care in the U.S. continue to be near the bottom by most measures in comparison with 10 other industrialized countries.(3)
•  Patients have decreased choice of health care provider and hospital, as well as less continuity of care.
•  Morale among physicians and other health care professionals is declining under the burden of increased administrative bureaucracy.
•  Tiering of health care is increasing by ability to pay, not by medical need.(4)

These big changes in public education and health care in the U.S. over recent years have much in common. These are some of the parallels that raise serious concerns about where to go in the future:

•  We are seeing erosion of access and quality in public education and health care, that will place many middle class and lower income Americans at a disadvantage, especially as income gaps continue to widen in our society. Legislation has been driven by corporate and private interests, leading to increasing privatization in both of these fields.
•  The power of money in politics, bolstered by the Citizens United decision of the U.S. Supreme Court and the lack of campaign financing reform, has led to these predictable outcomes.
•   Federal and state policies in public education and health care have both been driven by unproven or even discredited premises, such as—in education that “private must be better” and that “public school teachers are the problem,” and in health care that “private is more efficient,” and that “patients are the cause of increasing costs through overutilization” (moral hazard).

As a result of these policies in recent years, new norms have become established that do not work in the public interest. In public education, teaching to the test has become the rule, with firings of teachers and principals who do not meet arbitrary performance goals, ignoring the fact that socio-economic factors, such as poverty, play a big role in test results. The same holds true in health care, with physicians serving lower socio-economic groups having worse patient outcomes than those practicing in more affluent communities. Quality of teaching, as with quality of health care, worsen in such areas, despite the best efforts of dedicated teachers and health professionals. Instead of being rewarded for such service, they are punished  by misguided approaches intended to gain “efficiency,”  “cost containment,” and “improved quality,” but instead bring new profits to private interests at the expense of the public good.

Bob Herbert brings us this helpful insight about where we now find ourselves:

America’s increasingly stratified education, civic, and social
hierarchies will have to be modified. The great imperative of our time
is to imagine what that newer, fairer version of America would be
like and then to begin the very difficult work of creating it.”(5)

1,166 words

1. U.S. Bureau of Labor Statistics, Occupational Employment Statistics Surveys, 2010-2012.
2. Herbert, B. Losing Our Way: An Intimate Portrait of a Troubled America. New York. Doubleday, 2014, pp. 124-145.
3. Davis, K, Stremikis, K, Squires, D et al. Mirror, Mirror on the Wall: 2014 Update: How the U.S. Health Care System Compares Internationally. The Commonwealth Fund, June 16, 2014.
4. Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans.Friday Harbor, WA. Copernicus Healthcare, 2015.
5. Ibid # 2, p. 248.

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What the election means for reform, especially single payer

Posted by on Wednesday, Nov 5, 2014

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.

This Is How the New GOP Senate Will Try to Dismantle Obamacare

By Jonathan Cohn
New Republic, November 4, 2014

Most Republicans know that they can’t repeal Obamacare anymore. They’ll start with a symbolic vote for outright repeal. From there, (Ted) Cruz says, Republicans will go after Obamacare provisions “one at a time.”

Here’s what the GOP has in mind, based on conversations with health care experts and lobbyists:

  • Repealing the individual mandate
  • Repealing or modifying the employer mandate
    • changing the threshold to 40 hours
    • could propose raising (50 employee requirement) to 100 full-time employees
  • Eliminating “risk corridors”
  • Repealing the device tax
  • Abolishing the Independent Payment Advisory Board (IPAB)
  • Introducing “Copper Plans”
    • 50 percent actuarial value…

New Republic’s Senior Editor Jonathan Cohn, an astute and very well-informed observer of the health care reform scene, provides us with a quite plausible response of the new Republican majority in the next session of Congress. They will likely fulfill their promise to introduce legislation to repeal the Affordable Care Act (ACA), though knowing that the effort will end with either a filibuster or a presidential veto. The real action will take place over individual provisions of ACA.

Some of the less objectionable measures they propose could be included in other bills as part of the legislative compromise process. Other less desirable changes could avoid filibuster by being tacked onto reconciliation bills, and avoid veto by being added to must-sign bills ((e.g., bills to prevent shutting down the government).

Since the Republicans have never formed a consensus on the replace part of repeal and replace, it is unlikely that they will try to enact some of their proposed measures such as eliminating the tax preference of employer-sponsored plans, or selling plans across state borders to avoid effective regulatory oversight. Such efforts would create new problems that would be unpopular – not an approach they would likely take when they have their eye on the White House in two years.

So how does single payer activism fit into all of this? With one caveat, there should be no change in our mission to educate our colleagues and the public on a vastly superior alternative – a single payer national health program. As patients experience the deficiencies of our current dysfunctional system, they have to understand that it doesn’t have to be this way – that everyone can have their choices in essential health care without having to negotiate financial barriers to that care.

During the next session of Congress, it is clear that we will not see any movement on single payer legislation. Even if a wave of Republican Enlightenment were to flood Congress and they decided that single payer really was the preferred model, they would not allow President Obama to receive any credit by signing the bill, but rather would wait until a Republican President took office in 2017. Lest this seem like a fantasy, F.A. Hayek supported “a comprehensive system of social insurance.”

Our education process is two-fold: 1) describing the very positive features of the single payer model, and 2) exposing the severe inequities and deficiencies of our fragmented system which has only been perpetuated by ACA. The former is obvious, but the caveat applies to the latter.

Until we can move forward on single payer, it is important to take care of what we do have. We should not criticize the efforts of those who are still in the process of implementing ACA. They are doing the best they can under current laws and regulations. If Congress tries to enact measures that are clearly detrimental we should join our friends in opposing such actions. If beneficial patches to ACA are proposed, we should not oppose them merely because they perpetuate ACA, but rather support them as transitional improvements until we can achieve single payer.

But this is where we have a problem. We need to let the public know why these measures are inadequate – how they merely perpetuate our highly flawed system. But we must make a clear distinction between our efforts to make our health care system work well for everyone and the efforts of some members of Congress who would destroy as much of ACA as they can, and walk away leaving too many people exposed to yet more health and financial insecurity. When we are accused of helping the enemy of reform by opposing ACA we have to correct that misperception by letting them know that we support ACA as a transitional program that provides some relief until we can enact single payer, but that we cannot accept decades of incremental changes to ACA that can never lead to a rational, comprehensive system of health care financing.

Based on the simplistic messages that carried the election, it is obvious that we have a formidable task ahead of us. Our messages are not simple, but they need to be clear. Everyone can have affordable, high quality health care, but we do not have that with ACA nor would we with the anticipated Republican actions. We have to let people know.

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Fox: Patients who can’t use their exchange plans

Posted by on Tuesday, Nov 4, 2014

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.

Some ObamaCare patients with high deductibles turning to community care centers

By Jim Angle
Fox News, November 4, 2014

When ObamaCare patients learn their deductible is so high they’re unlikely to get any reimbursement, they often wind up in places like the Denton, Texas Community Care Center.

“There are quite a few, and I saw another one today, where their deductibles are so elevated that they can’t afford them,” said Dr. Flippo Masciarelli, chief physician at the center, which was designed to treat indigent patients.

Robert Laszewski of Health Policy and Strategy Associates noted, “You’re going to the doctor, you’re paying (a) premium, and because of this really high deductible, you’re not getting any benefits.”

The administration pushed insurance companies to keep premiums low, but that also created high deductibles, about $5,000 per person for the least expensive plan, as well as narrow networks of providers.

But most people buy based only on premiums.

“They don’t even look at what their deductible is going to be,” said Dan Mendelson, CEO of Avalere Health. “They don’t look at the cost of the medications that they’re on. And they don’t look at the…network that they have.”

Masciarelli said,”one of the ladies we saw said she called eight primary care offices before she found us…” The rest would not treat people on her plan.

If the doctor these patients find orders additional tests or treatment, even those with ObamaCare are sometimes forced to go without.

Health economist John Goodman said, “They go to community health centers because it’s free or almost free and or very low charges. And that’s why they’re doing it. So they were coaxed to go into the ObamaCare system, they’re paying premiums over there. And now they’re asking what did I get for my premium? I’m having to go outside the system to get health care.”

Masciarelli agreed. “We do get asked that question at times, yes, wondering you know, I have this product. I can’t even use it. ”…

Although this is a typical Fox News anecdotal report not based on any scientific study and designed to discredit “ObamaCare,” nevertheless it does make a very valid point. People obtaining their coverage through the insurance exchanges are finding that, with the narrow networks and high deductibles, they “can’t even use” their plans.

Fortunately these patients do have the backup that the 30 million people who will remain uninsured have – community health centers. But they will still have impaired access to specialized services because of unaffordable cost sharing, and because of a lack of specialists who are willing to provide services through the community health centers.

Although these plans do provide coverage for catastrophic events, it is primarily the providers rather than the patients who benefit. Because of EMTALA regulations, the patients would receive the care anyway, but the providers will be paid rather than having to write the care off as a loss. It is just one more example of how the system was designed to take care of the medical-industrial complex rather than placing the patient at the pinnacle.

Single payer would get rid of the narrow networks and unaffordable cost sharing, so no patient would be rejected based on the limitations imposed by the private insurers. But then that would deprive Fox News of these anecdotal reports that they use to bash President Obama. So what is our priority here?

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Insurance shopping without health insurance literacy

Posted by on Friday, Oct 31, 2014

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.

A Little Knowledge Is a Risky Thing: Wide Gap in What People Think They Know About Health Insurance and What They Actually Know

By Kathryn A. Paez and Coretta J. Mallery
American Institutes for Research, October 2014

Health insurance is among the most complicated and costly products that consumers buy. Lacking health insurance-related knowledge and skills — or health insurance literacy — puts people at risk of choosing an insurance product that could fail to provide needed benefits or protect them financially.

More than half of all people surveyed were moderately or very confident in their ability to choose and use a health plan that is best for their family, but their actual knowledge was less.

Because many people believe they know more than they do about health insurance, they may not fully understand their options before committing to a particular health plan for an entire year, or they may have an unpleasant surprise when they use health care services and end up owing a larger amount out of pocket than expected.

Understanding Plan Type and Calculating Cost Sharing

When comparing and selecting health plans, 61 percent of people said they were moderately or very confident that they could choose the best health plan for themselves. Only 23 percent could identify characteristics of a preferred provider organization (PPO) — for example, “you may have to pay a percentage of the bill.”

Three out of four people said they were moderately or very confident that they have the knowledge to use health insurance. However, only 20 percent could accurately calculate how much they would pay for a visit to an in-network doctor when presented with a cost-sharing scenario that included a copayment, deductible and coinsurance.

Skills Differ by Age, Care Use, Race, Income, Education

Generally younger people were less health-insurance literate — for example, people aged 22 to 34 got an average of 55 percent of knowledge and skills items correct.

Likewise, people who use health care less frequently had more difficulties.

Health insurance knowledge and skills also varied greatly by race, with blacks and Hispanics on average having less knowledge about health insurance.

Knowledge and skills also decreased with income and education.


Choosing and using a health insurance plan can be daunting, especially for people with little experience with the health care system and health insurance. According to the 2013 AIR Health Insurance Literacy Survey, many Americans are unprepared to make informed choices when selecting and using health plans — especially younger people, minorities, people with lower incomes and those with less education.

At the same time, health insurance and benefit structures are becoming even more complex. As mentioned previously, consumers likely don’t need to know the exact differences between an HMO and PPO, but they do need to consider important health plan characteristics — such as patient cost sharing, which hospitals and doctors are in network, and the rules for out-of-network coverage — when choosing a plan.

Without efforts to increase health insurance knowledge and skills, many insured people will remain at risk of forgoing needed care if they don’t understand how their health insurance works or how to estimate out-of-pocket costs.

At a minimum, counseling efforts could stress that once people are enrolled, they should contact their health plan member services department to get questions answered.…

Great. The insurance exchanges established by the Affordable Care Act have created a shoppers paradise for health insurance. People can choose from different premiums, different plans, at different levels of coverage, with different benefits, and different cost-sharing deductibles, co-payments and coinsurance, with different networks of physicians and hospitals, and different rules on out-of-network coverage, not to mention different insurance structures such as PPOs, HMOs, EPOs, and ACOs, whatever they are.

How many times have you heard physicians, nurses, health policy wonks, and knowledgeable others say that they have trouble figuring out their own insurance plans. Most end up waiting until they receive their Explanation of Benefits to find out just what was covered. How on earth can we ever expect people with little prior exposure to the intricacies of health insurance to be able to shop intelligently for plans offered in the exchanges? We can’t.

The tragedy is that poor choices in plan selection can have major impacts on both the physical and financial well being of the health plan purchasers. But when you think about it, virtually every plan offered has significant deficiencies, especially in limiting access through narrow networks and in increasing risk of financial hardship through excessive cost sharing. The subsidies may help some, but they are inadequate for most. Not only are the choices difficult to make, they are mostly all bad choices.

Those concerned about lack of “health insurance literacy” – an almost universal phenomenon – suggest that the solution is to increase transparency in the exchanges. But the authors of this report suggest that we need much more. Health insurance shoppers need additional training to “increase health insurance knowledge and skills.” Is that the answer?

What we want is a system wherein whenever we need health care, we go get it. Period. What we have is a conglomeration created by private and public intermediaries that make it difficult to decide where you can go when you need health care and how to pay for it ex-ante (premiums) and ex-post (cost sharing). And we end up paying much more for all of the administrative excesses that these intermediaries have created.

Do we want to make it all go away so that each of us can simply get the health care that we need? Easy – single payer.

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