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.
Struggling to Serve at the Nation’s Richest University
By Rosa Ines Rivera
The New York Times, October 24, 2016
I’ve been at Harvard University for 17 years, but I’ve never been in a classroom here. I’m a cook in the dining halls. I work in the cafeteria at the T.H. Chan School of Public Health, where every day I serve amazing students studying medicine, nutrition and child welfare, as well as the doctors and researchers who train them.
While I’ve earned no college credits here, I’ve had a lesson in hypocrisy.
On my way to work each morning, I pass a building with the inscription: “The highest attainable standard of health is one of the fundamental rights of every human being.” If Harvard believes this, why is the administration asking dining hall workers to pay even more for our health care even though some of us pay as much as $4,000 a year in premiums alone?
I serve the people who created Obamacare, people who treat epidemics and devise ways to make the world healthier and more humane. But I can’t afford the health care plan Harvard wants us to accept.
That’s why I have been on strike with 750 co-workers for more than two weeks. That’s why the other day, co-workers and I were arrested after we sat down in Harvard Square, blocking traffic, in an act of civil disobedience. And that’s why the medical school students, in their white coats, have been walking the picket line with us in solidarity.
Medical students analyzed Harvard’s proposal and found that the cost of premiums alone could eat up almost 10 percent of my income.
The students say that Harvard’s proposal is unaffordable for nearly all of us according to state government guidelines. If it goes through, I will keep avoiding the doctor to save that money for my kids’ co-pays. Any increase puts me at the breaking point.
Harvard is the richest university in the nation, with a $35 billion endowment. But I can’t live on what Harvard pays me. I take home between $430 and $480 a week, and this August, I fell behind on my $1,150 rent and lost my apartment. Now my two kids and I are staying with my mother in public housing, with all four of us sharing a single bedroom.
I know that health care costs are going up everywhere, and I don’t have all the answers. But there must be some way not to shift costs onto Harvard’s poorest workers.
If good health is truly “one of the fundamental rights of every human being,” then shouldn’t that also apply to the human beings working in Harvard’s cafeterias?
In my work, volunteering as a health policy fellow for Physicians for a National Health Program, I follow the health policy literature, including that produced by Harvard’s T.H. Chan School of Public Health.
They devote much of their research to tweaking the highly flawed policies that have resulted in the most expensive health care system but one that is infamous for its mediocre performance for far too many. In spite of the Affordable Care Act, tens of millions remain uninsured or underinsured, creating for them financial hardship and impaired access.
The academic community is quite aware that a well designed single payer system funded with the 3 trillion dollars that we are already spending would provide high quality, comprehensive care for everyone with no financial barriers such as those that are being forced upon their dining hall workers.
It is reassuring for our future that the students seem to understand, but it is astonishing that too many of the academics seem to be oblivious. They should be leading the protest, not only at Harvard, but throughout the nation.
President Obama gave a great speech this past week defending our dysfunctional system while once again dismissing single payer, yet he cited many deficiencies that would be adequately corrected only with comprehensive reform and not mere tweaks. He knows that single payer is the way to go, and he need only look at the dining hall workers at his alma mater as a reminder of why we need to take that course.
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.
Affordable Care Act: imploding and beyond repair
By John Geyman
The Hill, October 21, 2016
Our experience with the first six and a half years of the Affordable Care Act already tells us whether it will work.
Despite the law’s goals of containing costs and making health care affordable, it’s proven to be too expensive to be sustainable, overly complex and bureaucratic, and a gift to the private health insurance industry and other corporate stakeholders in the medical-industrial complex.
To be fair, the ACA has brought some kind of coverage to about 20 million Americans, in good part through the expansion of Medicaid in 32 states (including D.C.) and the subsidized exchanges. But its negative results far outweigh its gains, as shown by these data points:
(The article then lists concise, bulleted points with links to references that explain why ACA is beyond repair.)
Multiple studies have demonstrated that in the U.S. we could save about $500 billion a year by enacting a nonprofit single-payer national health program that streamlines administration. Those savings would be sufficient to guarantee everyone high-quality care, with no cost sharing, on a sustainable basis.
This article is a great resource that explains why the Affordable Care Act has not and will not provide us with the health care reform that we need.
The full article is relatively concise so it would take little of your time to access it today at the link above.
The Hill has a 14 day exclusivity on the article, but after that time it can be distributed widely as long as The Hill is credited and a link back to the original article is included. It would be worthwhile downloading it for your advocacy work.
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.
Regulators approve higher health premiums to strengthen Obamacare insurers
By Jacquie Lee and Jayne O’Donnell
USA TODAY, October 19, 2016
State insurance regulators across the country have approved health care premium increases higher than those requested by insurers, despite a national effort to keep rates for policies sold on Affordable Care Act exchanges from skyrocketing, a USA TODAY analysis shows.
This year may be the last for dramatic premium increases as insurers now understand their new markets better, say some supporters of the law, including the head of the Centers for Medicare and Medicaid Services (CMS).
“The business was underpriced in many markets in the first couple years,” says Andy Slavitt, CMS’ acting administrator. “In retrospect, life would have been a lot better and easier if things had started 10% higher, the rate increases had been higher and it had been just a smooth steady climb.”
“Nobody really knew what it would cost to insure sick people,” Slavitt said. “I don’t know how (anyone) could have known.”
Interesting. When the nation is upset about the very high increases in the insurance premiums for plans offered on the insurance exchanges, CMS acting administrator Andy Slavitt says that the insurers should have started with higher premiums, and the annual premium increases should have been greater.
Slavitt says that nobody could have known what it would cost to insure sick people, and, by implication, certainly not even the insurers.
But we, as a nation, are paying an extra half trillion dollars in administrative expenses to maintain our fragmented multi-payer system just to keep the private insurers in control of a major portion of our health care dollars. And their actuaries cannot even figure out how much money they need? Isn’t that fundamental to their business model?
Do we really want to keep on doing this? Or do we want to fill in our gaps in health care with that half trillion dollars? It doesn’t seem to be that difficult of a decision.
The Final Rule
By Kip Sullivan, JD
The Health Care Blog, October 19, 2016
I have read a substantial portion of CMS’s final rule, published last Friday. It is clear to me CMS intends to implement its original rule with only minor changes. I predict the implementation process will be a nightmare.
The most fundamental problem with the rule is its insane complexity. The complexity is a function of both the complexity of medicine and the impossibility of what Congress has asked CMS to do – to measure the cost and quality of physician services at both the individual and group level and to punish and reward doctors based on inaccurate scores, and to oversee the creation of vaguely defined and unproven entities like ACOs and “medical homes” which will also dish out penalties and rewards based on inaccurate data.
Implementing such a monstrously complex law, or even portions of it, would be very difficult even for an agency run by clear thinkers. But CMS is not run by clear thinkers. It is run by people who think like employees of advertising agencies. They think their job is to persuade their listeners that their product is wonderful. They think they are supposed to exaggerate what MACRA will do, and to deny or obfuscate MACRA’s obvious defects.
CMS committed both types of errors – exaggeration and denial – in its first rule, and it committed identical errors in the final rule. At this point I think it’s reasonable to predict that CMS won’t admit either type of error until long after implementation has begun and reality has repeatedly smashed its staff over the head. Of course, by then much time and money will have been wasted, and many patients may have been harmed as well.
I’ll devote the rest of this essay to examining the worst examples of both types of errors – hyping that which should not be hyped, and overlooking that which should not be overlooked. I will close with a comment on how similar MACRA and the Affordable Care Act are. Both laws are already in trouble because they rely on the same bankrupt theory of cost-containment. Their troubles have only just begun.
Republicans and Democrats share the blame for the MACRA mess
In this post I have aimed my criticism at CMS for approaching MACRA with the mindset of a PR agent. CMS deserves harsh criticism because they are not being forthright, and in some cases they have been downright dishonest.  CMS’s unwillingness to tell the truth about MACRA does not bode well for its implementation and the ensuing public debate.
But the ultimate blame for MACRA’s nightmarish complexity falls on Congress. Democrats and Republicans voted overwhelmingly for MACRA. How quickly we resolve the mess created by MACRA will depend ultimately on how quickly leaders of both parties understand MACRA’s defects. If both parties engage in some honest introspection, they will at some point realize both parties have subscribed to the same bankrupt theory of cost containment.
As Kip Sullivan explains, MACRA is bringing us considerable administrative complexity and grief without evidence that it will achieve its goal of containing costs while improving quality. You may want to use the link above to read the rest of his article, including the footnote on CMS not being forthright.
Although MACRA did have strong bipartisan support in Congress, that support was not based on the merits of MIPS (merit-based incentive payment system) and APMs (alternative payment models including ACOs). Rather the support was based on bringing an end to the flawed SGR Medicare payment system that had plagued Congress for a couple of decades. MIPS and APMs were included as a seemingly benign replacement for SGR (sustainable growth rate). It was not benign, as some of us protested, but we were ignored largely for political reasons, as described by Kip Sullivan.
Besides being a flawed model of cost containment, MACRA will absorb much of the energy in health care reform, delaying for perhaps decades a serious consideration of a model of reform that has already been proven to contain costs while improving access and quality and ensuring universality – a single payer national health program. What a shame.
By United States Government Accountability Office
Report to Congressional Committees, October 2016
Health Care Quality
HHS Should Set Priorities and Comprehensively Plan Its Efforts to Better Align Health Quality Measures
What GAO Found
While the full extent of misalignment among health care quality measures is unknown, it can have adverse effects on providers and efforts to improve quality of care. Misalignment occurs when health care payers require providers to report on measures that focus on different quality issues or define the measures using different specifications. GAO identified three studies that provided some information on the extent of misalignment. For the most part, these studies examined the number of measures that were used in common, among a narrow selection of public and private payers, and found that with few exceptions, only a small proportion of measures were commonly used by these payers. The Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) agrees that misalignment exists, and some experts note that it adds to providers’ administrative burden and often results in quality information that is not comparable.
Factors Driving Misalignment of Health Care Quality Measures
* Dispersed decision-making: Among public and private payers and other stakeholders, each entity independently decides which quality measures it will use and which specifications should apply to those measures.
* Variation in data collection and reporting systems: Payers may choose different measures, or leave details about measure specifications up to providers in order to accommodate differences in data that providers collect and the systems they use to collect these data.
* Few meaningful measures: Although hundreds of quality measures have been developed, relatively few are measures that payers, providers, and other stakeholders agree to adopt, because few are viewed as leading to meaningful improvements in quality.
The use of health care quality measures is central to HHS’s and other payers’ efforts to improve health care quality. While quality measures can encourage improvements in care, they can also be burdensome to providers when the measures are misaligned and providers have to report different quality measures to different health care payers. Such misalignment has the potential to affect the success of HHS’s efforts to pay providers based on the quality of care they provide. HHS has acknowledged the need to substantially improve quality measurement for physicians and other providers, and has a stated goal of improving alignment between federal and private payers.
Although HHS has initiated a range of different efforts to reduce misalignment, we identified two deficiencies in these efforts. First, HHS has not prioritized the development of electronic quality measures with standardized data elements for the core sets of aligned measures. CMS and private payers have prioritized certain quality measures to be used in common so alignment is improved, but HHS has not focused resources on developing electronic quality measures for these quality measures. As providers increasingly use EHRs, HHS has the opportunity to pursue its stated objective to develop electronic quality measures that would allow physicians to collect automatically much of the clinical information needed for these measures as part of their normal clinical workflow, with a consequent decrease in the administrative burden faced by physicians.
Second, CMS has not comprehensively planned its measure development efforts to ensure the development of new, more meaningful quality measures targeted to reduce misalignment, which could jeopardize CMS’s efforts to achieve that goal. Some experts we interviewed told us that the paucity of meaningful measures makes it difficult for payers and providers to agree on aligned measures. In contrast, developing new, more meaningful measures to replace older, less meaningful ones could help to promote further agreement on aligned measures and gain broader support from physicians. However, CMS’s plans do not indicate how its efforts will target new measures that will lead to greater alignment, rather than simply adding to the array of available quality measures that has led to misalignment in the past.
The mantra today is to pay for quality instead of quantity, and the government and private sector are rapidly moving ahead with administratively burdensome programs to implement this vision. But they left out a step. As this GAO report reveals, they have not developed a program that can adequately measure quality.
Measuring minutia that does not represent even one percent of health care – measures that also are misaligned between the various stakeholders – can hardly give a fair assessment of the quality of health care services delivered. Plans to add more measurements of minutia certainly will not help much.
Yet these almost worthless measurements are adding to the administrative burdens and costs of our health care system while intensifying physician burnout. Further, they are being used to assess financial penalties against the providers, and to shame providers through public reporting of quality ratings. Talk about depressing.
If we want real quality in health care, we need to do it through structural reform. We need to quit listening to Orszag, Emanuel, McClellan, and the others who support simple sound bites rather than effective policy on improving quality. Instead we should move forward with the model presented in a JAMA article over two decades ago: “A Better-Quality Alternative: Single-Payer National Health System Reform” by Gordon Schiff and his working group colleagues. The link:
Structural Racism and Supporting Black Lives — The Role of Health Professionals
By Rachel R. Hardeman, Ph.D., M.P.H., Eduardo M. Medina, M.D., M.P.H., and Katy B. Kozhimannil, Ph.D., M.P.A.
The New England Journal of Medicine, October 12, 2016
On July 7, 2016, in our Minneapolis community, Philando Castile was shot and killed by a police officer in the presence of his girlfriend and her 4-year-old daughter. Acknowledging the role of racism in Castile’s death, Minnesota Governor Mark Dayton asked rhetorically, “Would this have happened if those passengers [and] the driver were white? I don’t think it would have.”
Disproportionate use of lethal force by law-enforcement officers against communities of color is not new, but now we increasingly have video evidence of the traumatizing and violent experiences of black Americans. Structural racism — a confluence of institutions, culture, history, ideology, and codified practices that generate and perpetuate inequity among racial and ethnic groups — is the common denominator of the violence that is cutting lives short in the United States.
The term “racism” is rarely used in the medical literature. Most physicians are not explicitly racist and are committed to treating all patients equally. However, they operate in an inherently racist system. Structural racism is insidious, and a large and growing body of literature documents disparate outcomes for different races despite the best efforts of individual health care professionals. If we aim to curtail systematic violence and premature death, clinicians and researchers will have to take an active role in addressing the root cause.
Structural racism, the systems-level factors related to, yet distinct from, interpersonal racism, leads to increased rates of premature death and reduced levels of overall health and well-being. Like other epidemics, structural racism is causing widespread suffering, not only for black people and other communities of color but for our society as a whole. It is a threat to the physical, emotional, and social well-being of every person in a society that allocates privilege on the basis of race. We believe that as clinicians and researchers, we wield power, privilege, and responsibility for dismantling structural racism — and we have a few recommendations for clinicians and researchers who wish to do so.
First, learn about, understand, and accept the United States’ racist roots.
Second, understand how racism has shaped our narrative about disparities.
Third, define and name racism.
Finally, to provide clinical care and conduct research that contributes to equity, we believe it’s crucial to “center at the margins” — that is, to shift our viewpoint from a majority group’s perspective to that of the marginalized group or groups.
Addressing violence against black communities can start with antiracist practices in clinical care and research. Do we have the courage and conviction to fight to ensure that black lives do indeed matter?
The authors note that “most physicians are not explicitly racist and are committed to treating all patients equally,” but, importantly, “they operate in an inherently racist system.” Further, “structural racism is insidious, and a large and growing body of literature documents disparate outcomes for different races despite the best efforts of individual health care professionals.”
They state, “If we aim to curtail systematic violence and premature death, clinicians and researchers will have to take an active role in addressing the root cause.” They then offer some useful suggestions on how we might approach structural racism.
But we should go further. In an internal communication, David Himmelstein and Steffie Woolhandler suggest developing “a list of health financing demands related to fighting racism.”
One of the more obvious places to start would be the enactment of a single payer national health program in which financing of health facilities and health care would be equitable.
But reading the comments published by NEJM in response to this article suggest that we have more to do than simply address structural racism. One physician commented, “The NEJM, a formerly highly respected medical journal, has lowered itself to the level of a political journal that supports people who advocate the murder of policemen… This journal is now a ‘throwaway’.”
Another commenter from Georgia wrote, “K-12 schools need to teach students how to comply with police orders.”
Sadly, the problems are deeper than just structural racism. That will make our task much more difficult. But as health professionals, it is imperative that we join in leading the way toward improving the health of the nation by implementing structural reform that would improve the health of each and everyone of us. These efforts should be disproportionately directed to the greatest problems until we can achieve a truly egalitarian equilibrium.
For more on this very important topic, see the article below:
By Dominic F. Caruso, MD/MPH Candidate, David U. Himmelstein, MD, and Steffie Woolhandler, MD
Harvard Public Health Review, July 20, 2015
How Narrow Is It? Gov’t Begins Test Of Comparison Tool For Health Plan Networks
By Michelle Andrews
Kaiser Health News, October 14, 2016
The incredible shrinking provider network is nothing new in marketplace plans. One way insurers have kept premiums in check on the individual market is by reducing the number of providers available in a plan’s network. Earlier this year, the federal government said that it would introduce a tool this fall to help consumers who are shopping on HealthCare.gov gauge how narrow a plan’s provider network is compared with others in the area.
But most consumers who want that information will have to wait at least another year. The Department of Health and Human Services recently announced that the pilot project to test the network breadth tool just got a little, well, narrower.
Consumers can already check whether specific doctors or hospitals are included in a marketplace plan’s provider network on HealthCare.gov. But there’s currently no way to easily measure the breadth of a plan’s provider network. This can be an important factor for some consumers, especially given the growing number of plans with no out-of-network benefits.
The new tool will designate marketplace health plan networks as “basic,” “standard” or “broad” based on how they compare with other health plan networks in a county. The label will reflect the availability of three types of providers: primary care, pediatricians and hospitals.
Originally, network-breadth information was going to be available for the 35 states on HealthCare.gov, the federally facilitated marketplace. But in August HHS announced it would make the tool available in just six unnamed states.
In September, HHS said it would shrink the pilot still further, to four states — Maine, Ohio, Tennessee and Texas.
Although the tool will let people compare networks in their area, still, “it’s all relative,” (Georgetown Professor Sabrina) Corlette said. “If you’ve got a market where every single network is narrow, this network breadth rating is less useful.”
CMS update on the network breadth pilot program:
One of the major concerns with the implementation of the Affordable Care Act is that many of the exchange plans have narrow to ultra-narrow provider networks. Since it is difficult to determine the breadth of providers included, CMS is providing a network rating system to provide more transparency, as if the problem of narrow networks wasn’t much more serious than simply lack of adequate information.
The fact that the pilot program was pared back suggests that this will not be a simple process. It will be difficult to match a fluctuating provider list with the medical needs of the plan enrollees. Further, since each enrollee has different medical needs, it will be even more difficult to be certain that the needs of each enrollee will be met, even if the enrollees’ preferences are ignored.
Although a recent report suggests that plans with narrow networks have premiums that are about 7 percent lower than plans with broad networks, once most insurers switch to narrow networks, that differential will go away.
But this is typical of CMS. When the problem is that insurers are limiting patients’ choices in their health care, CMS decides that the solution should be to merely tweak the system with more transparency while keeping it intact. The solution needed is to eliminate the restrictive provider list, allowing patient access to the entire health care delivery system.
Patients often choose their plans based primarily on the lowest premium prices. Secondarily they may sometimes check to be certain that their primary care physician is on the list, if they have one. But both of these are flawed policies. Choice of physicians and hospitals should be unlimited (except for providers expelled for reason). Also the entire health care system should be funded automatically through progressive taxes – a much more equitable system with much less wasteful administrative complexity than assigning varying individual premiums for a market of private plans.
Today CMS released the final rule on MIPS and APMs – a major administrative boondoggle if there ever was one. They just don’t get it. When we need real reform, they simply serve us more “garbage salad” (but not the one Trump serves).
PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.
Customers sue UnitedHealth over prescription drug co-pay costs
By Brendan Pierson
Reuters, October 5, 2016
UnitedHealth Group Inc has been sued by three customers who accused the largest U.S. health insurer of charging co-payments for prescription drugs that were higher than their actual cost and pocketing the difference.
For example, the lawsuit claims, one class member paid a $50 co-payment for Sprintec, a contraceptive, while UnitedHealth paid the pharmacy only $11.65. The pharmacy was then required to hand the extra $38.85 over to UnitedHealth under its agreement with the insurer, the lawsuit said.
The lawsuit claims that such a co-payment “is not a ‘co-‘ payment for a prescription drug because the insurer is paying nothing,” but is instead “a hidden additional premium.”
The lawsuit says UnitedHealth has hidden this practice from its customers, forcing them to overpay for a wide variety of common, low-cost drugs.
The lawsuit claims UnitedHealth’s co-payments violate the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law used to target illegal conspiracies, and in some cases also violate a federal law governing employee benefit plans.
Yesterday’s message described how insurers were using the deductibles to avoid paying anything for covered drugs while collecting a significant proportion of the patient’s payment for the prescription. Today’s shows how UnitedHealth is establishing co-payments much larger than the retail value of many of its authorized prescriptions, then requiring a kickback of the balance of the co-payment. In both instances, the insurer’s net payment for the prescriptions is zero whereas the patient is unknowingly making a generous payment to the insurer. The insurer is collecting additional patient funds in exchange for providing…nothing!
These two examples are not a mere coincidence. They are written into the contracts. They are proof of the ongoing conspiracy of the insurers to cheat their own clients – the patients.
A racketeering lawsuit has now been filed. But that is not enough. We need to expel these rip-off artists from our health care system. We need to replace these leeches with our own dedicated public stewards serving us in a financing system that works for patients instead: Single payer.
Secret Rebates: Why Patients Pay $600 for Drugs That Cost $300
By Robert Langreth
Bloomberg, October 5, 2016
Behind the scenes, drugmakers gave insurers and benefit managers more than $100 billion a year in rebates and other discounts to reduce the skyrocketing cost of drugs.
No one balks when insurers get rebate checks after they actually paid for a drug. But, increasingly, Americans are forced to pay for medication out of their own pockets — at least for part of the year.
That’s because more are enrolling in insurance plans with deductibles as high as $4,000 for a family. In such cases, insurers receive the rebates even though they haven’t paid a dime.
Eight pharmaceutical companies contacted by Bloomberg, including Novo Nordisk A/S, which makes NovoLog; Merck & Co., Pfizer Inc. and EpiPen maker Mylan NV, said their contracts with benefit managers and insurers generally require rebates be paid to them on all prescriptions, even when the patients pay the full cost because of high deductibles.
On a $600 prescription, “if the patient has a high-deductible plan, then the insurer could pocket the $300 rebate and not share it with the patient,” says Adam Fein, president of Pembroke Consulting, which advises drugmakers on sales and distribution.
But why not break up the rebate checks and send the cash back to the patients who paid for the drugs? Representatives of corporate health plans say it would be impractical to do so because they get the money months after employees bought the drugs.
Says Laurel Pickering, chief executive of the Northeast Business Group on Health, a coalition of large employers: “It would be very difficult to figure out how to administer that.”
Drug rebates go to insurers. How does this work? Well, let’s go through this step by step.
1. The patient buys a health insurance plan with a high deductible – a plan that provides drug benefits.
2. The patient is prescribed a $600 medication before having met the deductible.
3. The patient purchases the drug at the pharmacy for the retail price of $600.
4. The insurance company (or pharmacy benefit manager) has previously made a confidential deal with the drug manufacturer that a 50% rebate will be paid to the insurer in exchange for including that drug in the formulary of drugs that are approved for coverage under the plan.
5. The 50% rebate – $300 – is paid to the insurer who keeps it.
6. None of the $600 is refunded to the patient.
7. The pharmaceutical firms jack up the retail prices of their drugs to pay for the rebates and to increase profits.
8. Net result:
The insurers may argue that they should be rewarded for negotiating the drug discount for the patient. But scooping up the entire discount and running away with it?
Will somebody please explain why our policymakers continue to demand that we maintain the middleman role for the private insurers in our health care financing system? It’s a great deal for the insurer, but wasn’t reform supposed to be about the patient?
What Would A Public Insurance Option Look Like In California?
By Pauline Bartolone
California Healthline, October 11, 2016
The “public option,” which stoked fierce debate in the run-up to the Affordable Care Act, is making a comeback — at least among Democratic politicians.
The proposal to create a government-funded health plan, one that might look like Medicare or Medicaid but would be open to everyone, is being reconsidered at both the federal and state levels.
Amid news that two major insurers were pulling out of Affordable Care Act exchanges, 33 U.S. Senators recently renewed the call for a public option. The idea was first floated, then rejected, during the drafting of the federal health reform law, which took effect in 2010.
Democratic presidential candidate Hillary Clinton includes a public option in her campaign platform, and President Barack Obama urged Congress to revisit the idea in a JAMA article published in August.
Dave Jones, the elected regulator of California’s private insurance industry, endorsed the idea of a state-specific public option in an interview last month with California Healthline, though he did not specify how it might work.
California may be uniquely poised for a public plan — but the state may not need one, according to Gerald Kominski, Director of the UCLA Center for Health Policy Research.
“It would look just like an insurance plan,” except that the state would pay for medical care, potentially set up the network of doctors and hospitals, and make rules about paying providers, Kominski said. Private industry could be involved in these or other aspects of running the health plan, much as they do in Medicare Advantage and managed care Medi-Cal.
Creating a public option in California may not be necessary at present, since the state currently has sufficient competition in the private insurance market, Kominski said. But he said policymakers could choose to implement a public option now as a backstop against a potential future scenario in which private insurers scaled back their California plan offerings.
California Healthline interviewed Kominski to better understand how a public option could work in California and on a national level. The interview was edited for length and clarity.
Q: When we talk about a public option, do we mean a health plan for which the government takes the risk, sets the coverage rules and pays out the claims — and enrollees pay premiums just as they would to an insurance company?
That is what the public option would be. But that still leaves out the answer to a lot of questions about how actually that would occur. How would a government agency essentially become the insurer? So we have two examples. We have the Medicare program and we have the Medicaid program.
Medicare establishes the rules. It contracts with insurance companies to pay the bills. And that’s the way that Medicare has operated for over 50 years.
Now we have Medicare Advantage plans, where the contracting is not to pay bills but is basically contracting with insurers to bundle the services. And rather than pay the doctors and hospitals, the government pays the insurer and puts the insurer at risk.
Q: Insurers have opposed this idea in the past, and they’re opposing it again now that it’s being raised by members of Congress.
Private insurers could participate as administrators or providers on behalf of the state. But here’s one concern that I have with that model: California has four large insurance companies in the exchange that account for about 90 percent of the market.
Let’s say the state of California wanted to create a public option and hire an insurance company to administer that product for it. What would be the reason or the incentive for any of those companies to agree to be the plan administrator for the public option when the public option would be competing with the product that they’re already offering? They would be competing with themselves.
Q: Some provider groups may be opposed to a public option because they say that government programs like Medi-Cal pay very little and they believe a public option plan would also pay little. Is this necessarily the case that a government program would pay low rates?
It’s not necessarily the case, but it is in fact what we observe in the Medicare and the Medicaid/Medi-Cal programs.
Q: Do you think a publicly subsidized or operated program would run the risk of having narrower provider networks because of lower payments to providers?
I don’t want to pre-judge that. If the anecdotal evidence that I’ve been told over the last couple years is indicative of what’s going on statewide, then Covered California plans are already paying somewhere around Medicare rates.
Q: Do you think a public plan would help bring down costs in the health care system by negotiating for lower payments to hospitals and doctors?
I think that is possible in other areas of the country, where there are markets with one or two health insurance plans in the exchange. I think California has one of the most competitive ACA marketplaces. And so would the public option in California dramatically reduce premiums? I think the answer is no. It would have little or no effect.
For some people, the advantage is that we think that the public option’s going to be around because the state’s not going to back out of its commitment, whereas private insurers come and go in the marketplace.
Q: Do you think we need a public option in California for any other reason?
In my opinion, a public option isn’t necessary in California, but it might nevertheless be worth exploring as a longer-term mechanism for guaranteeing access and an alternative to relying solely on the private insurance market.
Q: Is there something about California’s health care system that uniquely primes the state for a public option?
I think so. One of the things that’s unique about California is the high percentage of managed care enrollment. The public option in California would probably include or be based on a managed care model and Californians are pretty receptive to that model.
Q: So if the public option could include private insurance, why are the insurers so opposed?
Well, the simple answer is they don’t want more competition. And again it goes back to, why was this battle so intense during the development and enactment of the ACA back in 2009 and 2010? The insurance industry said we cannot compete with a plan, a government plan, that pays doctors and hospitals using Medicare fees or fee schedules.
You remember the fundamental rule of business is you don’t want more competition. You want the market to yourself.
Q: Do you think it would be more effective or easier to implement a public option at a state or national level?
Well that’s where you can’t ignore the political environment. And so the short answer is in the current political environment, doing something at the national level is extremely difficult. Even though there might be arguments to develop a public option at the national level, it’s very challenging in the current political environment to get the agreement.
Q: Is there something that’s more efficient about a national public option?
Potentially. It’s economies of scale. You know, the larger your potential market nationally, the lower the potential costs per person. You just get administrative savings and efficiency. But it’s not easy to create a national program. One issue that’s challenging is how to put together a national network of doctors and hospitals that would participate. That’s a lot of work.
Q: Do you think the idea of a public option is more viable now than it was when it was debated before and ultimately stripped from the Affordable Care Act?
Well, I think that what makes it more attractive right now is the fact that we’ve got two large insurance companies that are pulling out of the exchange marketplaces. And because of that…the idea of a public option to provide stability and protection for people in the exchanges has resurfaced. And I think with good reason.
Many public option supporters have this concept that the government would create a public insurance plan that would successfully compete with private insurance plans, eventually displacing them and becoming a single payer national health program. Is this realistic?
Gerald Kominski describes for us precisely what a public option really would look like. Clearly it would be nothing more than one more player in our inefficient, fragmented multi-payer system, only adding further to the administrative excesses that have created a tremendous financial burden for our health care system.
For those who usually skip the source in these messages and only read the comment, you should make an exception this time. It is important to understand that the public option would be crafted to resemble private plans with provider networks. It would not be a free standing public program, like Medicare, if for no other reason than the fact that you could not get the majority of physicians and hospitals to agree to participate unless you promised higher payment rates which then would make the premiums even less affordable. Further, the private insurance industry would be there to ensure that the design of the government insurance product would place it at a competitive disadvantage, just as they did with the co-ops.
Besides, competition is a feature of private markets. A public program is a model based on service. A public insurance model designed for competition in private markets, as Gerald Kominski has described, would be very different than a public model designed to remove financial barriers to care, such as a single payer national health program.
Really. Try to imagine a public option designed to become a single payer. It would have its own separate risk pool, funded with premiums instead of progressive taxes, subject to adverse selection, with pressure to reduce provider payment rates to keep the premiums affordable, with consequent difficulties in ensuring access to an adequate numbers of providers, and greatly burdened with administrative complexity. When you try to design such a system, you keep tweaking it until you end up with the model Gerald Kominski has described – just another private-style plan, public in name only.
It is no wonder that Professor Kominski said to his UCLA health policy students (in a recent Quote of the Day), “I believe that there are people in this room who will one day see a single payer system in this country.”
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