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.
QuickTake: Nonelderly Workers with ESI Are Satisfied with Nonfinancial Aspects of Their Coverage but Less Satisfied with Financial Aspects
By Adele Shartzer and Sharon K. Long
Urban Institute, September 4, 2014
The Urban Institute’s Health Reform Monitoring Survey has been tracking health insurance coverage, including employer-sponsored insurance coverage (ESI), since the first quarter of 2013. This QuickTake reports on nonelderly (ages 18–64) workers’ ESI in June 2014. In June 2014, most workers (88.6 percent) were insured and, among those who were insured, most (80.7 percent) had ESI (data not shown). When asked to assess their ESI, workers were generally satisfied with their ESI in terms of available health care services, choice of doctors and other providers, and the quality of the care available under the plan; less than 5 percent of nonelderly workers with ESI coverage report being dissatisfied with any of these factors. However, satisfaction levels are much lower for the financial aspects of coverage, with workers more concerned about premiums, co-payments, and their potential financial risk from high medical bills. Nearly one in four nonelderly workers with ESI (23.4 percent) is dissatisfied with the premium they pay for coverage, and 27.2 percent are dissatisfied with the deductibles they pay when receiving care. The protection that ESI provides against high medical bills may be particularly limited for low-income nonelderly workers (those with family income at or below 138 percent of FPL): 32.1 percent of low-income workers with full-year ESI report having problems paying medical bills in the past 12 months. Overall, 14.2 percent of nonelderly workers with full-year ESI report having problems paying medical bills over the past 12 months.
How People Feel About Their Employer-Sponsored Health Plans
By Margot Sanger-Katz
The New York Times, September 4, 2014
There are new results from the Urban Institute’s Health Reform Monitoring Survey, which asked people with employer-based coverage how they liked what they had.
For people earning between 138 percent and 400 percent of the federal poverty limit, or between $33,000 to $95,000 — the income range of people who are most likely to buy insurance on the public marketplaces — more than 23 percent of workers with employer coverage reported having problems paying their medical bills in the last year.
Sharon Long, a senior fellow at Urban, said that the results suggested that consumers might not be prepared for what happened when they combined a high-deductible insurance plan with big medical bills.
“What we’ve heard anecdotally from people with health plans is more people are signing up for high-deductible health plans and then being surprised that they have to pay the deductible,” she said. That’s a concern on the new health insurance marketplaces, too. Early evidence suggests that people tended to opt for cheaper plans, many of which came with high deductibles — meaning that the newly insured may face some of the same financial strain if they become seriously ill.
Deductibles and co-payments have been rising, as a growing number of employers embrace the idea that giving workers more of a financial stake in their medical care will help reduce overuse. “It’s been going up over the past few years,” said Gary Claxton, a director of the Health Care Marketplace Project at the Kaiser Family Foundation, which runs a comprehensive annual survey of the employer insurance market. And no one likes paying high insurance premiums or out-of-pocket costs
Over all, Ms. Long said, the rising costs of health care are likely to remain a concern for consumers, wherever they get their insurance. “I expect what we’ll see over time, unless we are able to get costs under control, is that all the cost questions are going to be an issue,” she said.
Worried about health insurance? That’s common
By Jay MacDonald
Bankrate.com, September 4, 2014
Bankrate’s Health Insurance Pulse survey was conducted Aug. 21-24 by Princeton Survey Research Associates International.
Tom Baker, a professor of insurance law at the University of Pennsylvania Law School, points out that a majority of working adults receive their health insurance through their employer and thus have largely been spared a direct impact from the Obama health care law. But the survey’s concerned majority may partially reflect uneasiness about employer-based plans.
“There is research being done on liquidity, or ‘financial fragility,’ where they asked people if they could come up with $2,000 to pay for a major medical bill in the next month,” he says. “I think 40 percent of respondents said they either couldn’t or it would be very difficult. That suggests that people are financially fragile.”
David Cusano, a senior research fellow at Georgetown University’s Health Policy Institute in Washington, D.C., suspects some of the fear over health costs may stem from growing first-hand experience with how health insurance works.
“With the Affordable Care Act, anybody who now wants insurance can get it,” Cusano says. “The question now becomes: ‘Can I afford to use it?’ When you think about people confronting out-of-pocket maximums at around $7,000 or deductibles of $5,000 for a family, that’s a lot of money. You throw prescription drug copays into the mix, and I can see where you would be worried.”
These two surveys are of people who have employer-sponsored health insurance – the very large market of health plans that was protected by the Affordable Care Act (“you can keep the insurance you have”). The most significant change in employer-sponsored plans is in the increased use of high deductibles as a means of slowing premium growth for the employers.
The trade off is that employees and their families are exposed to greater out-of-pocket costs whenever they access health care. These surveys demonstrate that this exposure is not merely theoretical but is actually creating significant financial insecurity for the insured.
But isn’t the primary purpose of insurance to relieve you of financial hardship should you have health care needs? Instead, these newer insurance product designs are increasing the risk of financial hardship, both in the employer-sponsored market, and especially, by design, in the plans offered by the ACA insurance exchanges. That is why they selected a lower actuarial value plan as the benchmark plan in the exchanges.
Reform should have been about fixing the problems with our health care financing, not making them worse. A far better system would simply provide access to health care when needed, without linking that care to specific financial transactions controlled by a third party insurance intermediary. We don’t need private insurance programs. We would do far better with prepaid health care, financed equitably through progressive tax policies.
It’s in our name. PNHP is Physicians for a National Health Program, not physicians for private health insurance.
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.
National Health Expenditure Projections, 2013–23: Faster Growth Expected With Expanded Coverage And Improving Economy
By Andrea M. Sisko, Sean P. Keehan, Gigi A. Cuckler, Andrew J. Madison, Sheila D. Smith, Christian J. Wolfe, Devin A. Stone, Joseph M. Lizonitz and John A. Poisal (all affiliated with CMS Office of the Actuary)
Health Affairs, September 2014
In 2013 health spending growth is expected to have remained slow, at 3.6 percent, as a result of the sluggish economic recovery, the effects of sequestration, and continued increases in private health insurance cost-sharing requirements. The combined effects of the Affordable Care Act’s coverage expansions, faster economic growth, and population aging are expected to fuel health spending growth this year and thereafter (5.6 percent in 2014 and 6.0 percent per year for 2015–23). However, the average rate of increase through 2023 is projected to be slower than the 7.2 percent average growth experienced during 1990–2008. Because health spending is projected to grow 1.1 percentage points faster than the average economic growth during 2013–23, the health share of the gross domestic product is expected to rise from 17.2 percent in 2012 to 19.3 percent in 2023.
Model And Assumptions
These projections remain subject to substantial uncertainty and reflect the variable nature of future economic trends, as exemplified by the prolonged and comparatively sluggish nature of the recovery from the 2007–09 recession. In addition, the United States has experienced only the initial effects of the ACA’s coverage expansions. The impacts of reform on the behavior of consumers, insurers, employers, and providers will continue to unfold throughout the projection period and beyond. In particular, the supply-side effects of the ACA remain highly speculative and are not included in these estimates.
Since the end of the Great Recession in 2009, economic growth in the United States, as measured by GDP, has remained slow: just 3.9 percent per year, on average, which is well below the average rate experienced in the four years following the three previous recessions. The fact that recent health spending increases have not returned to their prerecession rates is consistent with the long-standing relationship between overall economic growth and health spending growth.
Growth rates for both the economy and health spending have been slow. However, the health share of GDP has remained relatively constant since 2009 and is expected to be 17.2 percent in 2013. Contributing to the stable share in 2013 are continued low use of medical care and provisions of both sequestration and health reform that constrain payments to Medicare providers.
The period in which health care has accounted for a stable share of economic output is projected to end in 2014, primarily because of the coverage expansions of the ACA. It is anticipated that by 2017, once the mostly one-time transition effects of expanded coverage have fully transpired, the health share of GDP will increase, albeit at a slower rate than its historical average, as an improving economy and the aging of the baby-boom generation lead to faster health spending growth.
When people ask how much the United States is spending on health care, it is the numbers from this report that are usually cited. So how much are we spending now, and what will that spending grow to a decade from now?
Projected spending for 2014:
Projected spending for 2023:
With the Affordable Care Act (ACA) the changes in spending represent not only the usual factors that the actuaries consider each year, they also include the changes in coverage due to the establishment of the insurance exchanges and the expansion of Medicaid, along with other direct and indirect results of implementing ACA. Considering all of the variables, the actuaries once again have done a commendable job in arriving at their estimates.
Although the authors do make it clear that there is substantial uncertainty in these predictions, especially due to the variable nature of economic trends, there is one aspect that should raise our concern. Their results depend on the prediction that there will be faster growth in disposable personal income. Yet when you read the work of Thomas Piketty, Emmanuel Saez, Joseph Stiglitz, Robert Reich and others, there is a very real concern that, though the economy may continue to reward the rentiers generously, personal incomes for workers may well remain stagnant. Many will have no discretionary income and may have to continue to cut into the portions of their budgets that pay for essential needs.
This will be of particular concern because of the increases in out-of-pocket spending that will be required as more people are shifted into lower actuarial value plans with higher cost sharing, especially higher deductibles. Many policy experts believe that a significant portion of the recent slowing in health care spending has been due to the high out-of-pocket costs for upfront health care, causing patients to decline care that they should have. This is not the way we should be trying to put a lid on health care spending. People will suffer and some will die simply because of their perception that health care is personally not affordable because of the high upfront costs.
Another important consideration is that predictions of future health care spending are dependent not only on expansion of health care coverage and on the other variables, but they also are dependent on the baseline costs of the existing health care financing system. As we all know, the administratively complex multi-payer system that we have in the United States is the most expensive model of financing health care with its tremendous built in waste. If we were to change to an efficient single payer system, not only would everyone have affordable access to health care, we would not be talking about a trend in national health expenditures that in a decade will consume almost one-fifth of our gross domestic product.
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.
Implementing Health Reform: Tax Form Instructions
By Timothy Jost
Health Affairs Blog, August 29, 2014
On August 28, 2014, the Internal Revenue Service re-released the draft forms that will be used by employer, insurers, and exchanges for reporting Affordable Care Act tax information to individuals and to the IRS for 2014 and 2015, as well as the instructions for completing those forms. The IRS also released in the Federal Register requests for public comments on three of those forms – the 1094-B, the 1094-C, and the 1095-C – under the Paperwork Reduction Act. This post reports on these forms and instructions and on a guidance released by the Centers for Medicare and Medicaid Services.
The tax forms had been published earlier and are described in an earlier post. The instructions for the forms, however, had not been available and had been eagerly awaited by employers, insurers, exchanges, and tax professionals. Forms 1094-C and 1095-C will be used by large employers with more than 50 full-time or full-time-equivalent employees to determine whether the employer is responsible for penalties under the employer shared responsibility requirements of the ACA. They will also be used to determine whether employees have received an affordable and adequate offer of coverage, rendering them ineligible for premium tax credits. Employers are required to provide each full-time employee with a form 1095-C and to file each of these together with a transmittal form 1095-B form with the IRS.
The instructions for the 1094-C and 1095-C are by far the most complex of the instructions released on August 28, filling 13 pages with dense, two column, print. Most of the complexity derives from the options for complying with the employer mandate and the transition exceptions to that mandate that the administration has created…
Implementing Health Reform: Tax Form Instructions, by Timothy Jost:http://healthaffairs.org/blog/2014/08/29/implementing-health-reform-tax-…
IRS – 2014 Instructions for Forms 1094-C and 1095-C (Draft): http://www.irs.gov/pub/irs-dft/i109495c–dft.pdf
If you enjoy minutia, click on the links to the full blog post and the draft instructions and read away.
Although today’s message deals with only one minor provision of the Affordable Care Act – the instructions for tax forms used to report ACA tax information to individuals and to the IRS – the administrative detail required is mind-boggling. Extrapolate that to all aspects of ACA and it becomes obvious that, instead of gaining administrative simplicity, ACA greatly increased administrative complexity – on top of the most administratively complex health financing system in the world. What a waste!
Timothy Jost’s comment from yesterday’s message can be repeated again today: “We are doomed to continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.”
Can big data cure cancer?
By Miguel Helft
Fortune, August 11, 2014
The company they founded two years ago, Flatiron Health, is going after a rather audacious goal: shaking up the health care world. … [Nat]Turner and [Zach] Weinberg hope to collect and analyze mountains of clinical data to make inroads into one of medicine’s most … difficult fields: cancer care. Never mind that the pair, who studied economics and entrepreneurship at the Wharton School, didn’t have time for as much as a biology class.
Pioneering researcher Robert Weinberg (no relation to Zach) highlighted the checkered relationship between big data and cancer in a recent essay in the journal Cell. Weinberg, a founding member of MIT’s Whitehead Institute for Biomedical Research, noted that the explosion of data sets on everything from the interaction between proteins to the genetic mutations in a tumor has overwhelmed researchers’ ability to interpret it. “There are people who are enthralled with bioinformatics,” Weinberg told Fortune. … “The idea of aggregating data, and assuming that from that alone, one can get insights that are qualitative and that were not previously accessible, is not obvious to me.”
John Ioannidis, a professor of medicine and health research and policy at Stanford, … doubts that major advances could result from data collected outside highly controlled clinical trials. “It’s an open question as to how much we can learn from big compilations of data collected without experimental design,” he says.
In case you blinked, big data is the newest new thing in establishment health policy. The July 2014 edition of Health Affairs carries on its spine the title, “Using big data to transform care.” It was funded by IBM and the UnitedHealth Foundation, among others. Last year McKinsey & Company published a paper entitled “The big-data revolution in US health care” in which the authors predicted big data will cut American health care costs by 12 percent to 17 percent. A public-private group called Health Data Consortium, which includes the Institute of Medicine, Hewlett-Packard, and Emdeon, was formed in 2012 to promote the collection of all forms of health data.
The article quoted above from Fortune testifies to the power of the hype promoting big data. Although the article quotes two experts in biology who throw very cold water on the notion that big data can make substantial improvements in cancer care, the article also reports that two very smart 28-year-old guys with business degrees from the Wharton School of Business have raised $138 million, $100 million of it from Google Ventures, for a company that will attempt to divine new treatments for cancer from massive amounts of data about cancer patients. Someone is going to be proven wrong here. Who will it be? The info tech wizards and their wealthy backers, or the biology experts (one of whom discovered the first oncogene)?
I’m betting on the biology experts. I don’t have a degree in computer science, biology or medicine, but I have common sense that has not been warped by financial incentives, and I am familiar with the devil-may-care attitude toward evidence within the American health policy community and the effect that attitude has had on other segments of society. I view Flatiron’s founders and investors as examples of smart people who have been badly misled by the willingness of health policy experts to make unsubstantiated claims for managed care nostrums. The big data fad is the direct result of a quarter century of hype about electronic medical records (EMRs) promoted by the health policy elite with the encouragement and financial assistance of the computer industry.
From the earliest days of the EMR movement, its most prominent leaders confidently asserted EMRs would improve quality and lower costs despite the absence of empirical evidence supporting that claim. Two of the earliest pro-EMR documents by prominent health policy experts illustrate my criticism.
In 1988, Paul Ellwood (inventor of the misnomer “health maintenance organization”) published a paper in the New England Journal of Medicine entitled “Outcomes management: A technology of patient experience.” (318:1549-1556) “Outcomes management would … pool clinical and outcome data on a massive scale,” he wrote. “Millions” of computerized medical records would be funneled into “a massive, computerized data base.” By means Ellwood neglected to flesh out, this pooling of data would create information about medical care so accurate it would reveal “the relation between medical interventions and health outcomes, as well as the relation between health outcomes and money”(p. 1551).
As if this weren’t hype enough, Ellwood went on to say, “Outcomes management will help every doctor become a better doctor” (p. 1554), and if doctors didn’t accept his word for this and they let the “payers” take the lead in managing outcomes, payers will “know more about the impact of physicians’ work than they [physicians] do” and when that happens “payers will succeed in circumventing whatever exclusive legitimacy medicine claims to have as a profession” (p. 1555).
Of the 16 endnotes in Ellwood’s paper, not one of them documented his claims. The closest thing to an appropriate citation was Ellwood’s reference to the old Health Care Financing Administration’s annual report card on hospital mortality rates, a report Ellwood praised as evidence of HCFA’s “latent evaluative capacity.” But HCFA terminated that report in 1994 because it was so inaccurate. HCFA’s hospital “death lists,” as they were known, were so bad that Bruce Fried, HCFA’s director of its Office of Managed Care, later referred to the reports as the “hospital mortality report debacle” and as evidence that “the road to hell is certainly paved with good intentions.” (“HCFA to require HMO quality data,” Modern Healthcare, Sept. 16, 1996, p 6).
The Institute of Medicine (IOM) joined the chorus in 1991 with the publication of a book entitled “The Computer-based Patient Record: An Essential Technology for Health Care.” The book was financed by IBM and Hewlett-Packard, among others. Like Ellwood (who advised the IOM’s authors), the IOM confidently asserted that EMRs (the IOM called them computer-based patient records, or CPRs) would improve quality and lower costs. The IOM did this despite explicitly acknowledging it had no evidence to support that claim. “[D]ata on CPR system benefits are sparse,” they wrote. “Few recent studies have analyzed actual costs and benefits. … CPRs may reduce the cost of care enough to offset the expense of acquiring and operating CPR systems, although this remains to be proved” (p. 102).
But 30 pages later, the IOM succumbed to its urge to evangelize. CPRs “are essential for health care,” they wrote. “CPRs can play an important role in improving the quality of patient care and strengthening the scientific basis of clinical practice; they can also contribute to the … moderation of health care costs” (p. 132). Then came the preordained recommendation: “Health care professionals and organizations should adopt the computer based patient record (CPR) as the standard for medical and all other records related to patient care” (p. 133).
Because Ellwood and the IOM were already opinion-setters within the health policy and political worlds, their Pollyannish pronouncements received widespread coverage in the mainstream and professional media and were influential for years after their publication. Ellwood’s paper and the IOM’s book had a twofold effect: They accelerated the movement to force doctors and hospitals to buy EMRs, and they reinforced the norm within the health policy community that it’s OK to make costly, sweeping recommendations based on groupthink rather than evidence.
By the early 2000s, EMR groupthink within the health policy community had become conventional wisdom among politicians and much of the media. In his January 2004 State of the Union Address, President George Bush announced, “By computerizing medical records, we can avoid dangerous medical mistakes, reduce costs, and improve care.” To take another example, in August 2004 Senators Hillary Clinton and William Frist published an op-ed in the Washington Post in which they repeated as facts all the canards about EMRs. “[W]e both agree that in a new [health care] system, innovations stimulated by information technology will improve care, lower costs, improve quality and empower consumers,” they wrote. The groupthink about EMRs was canonized in 2009 when Congress enacted the Health Information Technology for Economic and Clinical Health (HITECH) Act, a law that created sticks and carrots to get providers to buy EMRs.
In this environment – in a world in which the nation’s most prominent health policy experts and most powerful politicians peddle groupthink as fact – it is easy to see how people with little knowledge of biology or health policy could be fooled into thinking there’s money to be made applying big data to cancer. Flatiron’s founders may make some money, but if they do it will be because other investors were fooled by a quarter-century of EMR hype into buying Flatiron’s stock at inflated prices. It will not be because Flatiron will substantially improve our ability to “see what therapies worked best,” determine “cost-effective therapies,” and identify “wasteful health care spending,” to quote the Fortune article.
In a decade or two it may turn out that Flatiron made modest contributions to cancer treatment by speeding up the rate at which researchers generate hypotheses, by identifying drugs and treatments that are causing serious side effects in some patients, and by speeding up recruitment of patients into clinical trials of new drugs. But in a decade or two we will not be saying, “Wow, big data reduced the cost of treating cancer and led directly to new treatments.”
All of us – citizens, policy-makers, but especially health policy experts – need to start following the money. We need to start paying attention to financial incentives that influence health policy experts. The health policy elite in this country incessantly bemoan the financial incentives that affect doctors and hospitals, but they have nothing to say about the role that financial incentives play in causing health policy experts to recommend health policies that don’t work and to refuse to say a kind word for health policies that do work, such as single-payer systems.
Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.
Transcending Obamacare: A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal Solvency
By Avik Roy
Manhattan Institute for Policy Research, August 2014
The proposal contained herein — dubbed the Universal Exchange Plan (“the Plan”) — seeks to substantially repair both sets of health-policy problems: those caused by the ACA and those that predate it.
The Universal Exchange Plan would introduce major changes to the broad set of federal health care entitlements: Obamacare, Medicare, and Medicaid. The Plan uses a reformed version of the ACA’s health insurance exchanges as the basis for far-reaching entitlement reform.
The Plan would repeal many of the ACA’s cost-increasing insurance mandates, including the individual mandate. But it would preserve the ACA’s guarantee that every American can purchase coverage regardless of preexisting conditions. And it would utilize the concept of using federal premium support subsidies, on a means-tested basis, to defray the cost of private health coverage.
It would gradually migrate most Medicaid recipients, along with future retirees (N.B.: Medicare), onto these reformed exchanges.
The plan has its roots in real-world examples of market-oriented, cost-effective health reform. Notably, two wealthy nations — Switzerland and Singapore — spend a fraction of what the United States spends on health care subsidies; yet they have achieved universal coverage with high levels of access and quality.
Following is a posted response by Don McCanne to an August 13, 2014 Forbes article in which Avik Roy introduced his reform proposal:
“A 2011 OECD & WHO report of the Swiss health system revealed that it is highly inefficient with profound administrative waste. It is inequitably funded using regressive financing. It has excessive out-of-pocket costs that can create financial hardships. And it has an increasing prevalence of managed care intrusions through a private insurance industry that has learned how to game risk selection. The problems are severe enough that current polls indicate that a majority of the Swiss support their upcoming ballot measure (September 28) that would convert Swiss health care financing to a single payer system. Obviously the current failed Swiss system should not serve as a model for U.S. reform.”
Transcending Obamacare? Analyzing Avik Roy’s ACA Replacement Plan
By Timothy Jost
Health Affairs Blog, September 2, 2014
Avik Roy’s proposal, “Transcending Obamacare,” is the latest and most thoroughly developed conservative alternative for reforming the American health care system in the wake of the Affordable Care Act.
Roy’s proposal is a curious combination of conservative nostrums (limiting recoveries for victims of malpractice), progressive goals (eliminating health status underwriting, providing subsidies for low-income Americans), and common sense proposals (enacting a uniform annual deductible for Medicare).
Most importantly, however, Roy proposes that conservatives move on from a single-minded focus on repealing the ACA toward building upon the ACA to accomplish their policy goals. He supports repealing certain features of the ACA—including the individual and employer mandate—but would retain others, such as community rating and exchanges. As polling repeatedly shows that many Americans are not happy with the ACA, but that a strong majority would rather amend than repeal it, and as it is very possible that we will have a Congress next year less supportive of the ACA than the current one, Roy’s proposal is important.
Much of Roy’s proposal is taken up with traditional conservative talking points on health care reform. It is tempting to respond to these point by point. For example, Roy trots out the health systems of Switzerland and Singapore as models for the United States because they depend heavily on consumer-funded health financing. The bottom line, however, is that we are not Switzerland and we are certainly not Singapore, and we cannot have their health care systems.
Roy also has his own hobby horses. He claims that people are better off being uninsured than on Medicaid and trots out a long list of studies that he claims show negative effects from Medicaid coverage.
Roy’s Universal Exchange Plan
Rather than respond to Roy point by point, however, this review will focus on the heart of Roy’s proposal; his universal exchange plan. (To access Jost’s critique of Roy’s universal exchange plan, use the link below.)
Projecting The Benefits And Costs Of Roy’s Proposal
In sum, higher cost-sharing should result in lower premiums for health plans — a 40 percent actuarial value plan should cost less than a 60 percent plan. Skinnier benefits could also reduce premiums. Reduced premiums should in turn draw more uninsured into the market and reduce federal subsidy costs. But higher cost-sharing would reduce access to care, decrease treatment adherence, and increase provider bad debt. The savings Roy touts come at a high cost.
The Stubborn Problem Of Complexity
Another important point about the Roy plan must be noted: It does not reduce the complexity of the ACA. Indeed, it might increase it.
The ACA has been woven inextricably into the fabric of our health care system, and even ignoring, if that were possible, the millions of Americans who are now covered under the ACA, it is simply not possible to return to status quo ante through repeal. Roy reasonably recognizes this and proposes instead to build on the ACA to move toward a system that he finds more sympathetic.
But “transcending Obamacare” will not be easy. One of the greatest defects of the ACA is its complexity. That complexity has required the Obama administration to exercise considerable creativity in implementing the law. But the law’s complexity simply follows from the fact that the drafters of the ACA attempted to build on, rather than to radically change, our current, impossibly complex, health care system.
Much of Roy’s proposal is still a broad conceptual framework. Even that framework is complicated, but were the proposal reduced to actual legislation, much less regulation, it would become far more convoluted and politically contested. We are doomed to continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.
Avik Roy presents his model of health care reform as a plan that does not require the repeal of the Affordable Care Act, but rather represents a reform of the ACA insurance exchanges along with the eventual elimination of Medicaid and Medicare. His proposed system is not yet fleshed out, but to achieve his stated ends, tremendous administrative complexity would have to be introduced.
There is much to criticize about Roy’s conservative, consumer-directed approach to health care financing – the worst flaw being the great financial burden that would be placed on those requiring health care. Should his proposal ever be seriously considered by Congress, a detailed response should be effective in countering it.
But for now, Timothy Jost summarizes the fatal flaw of his approach in two sentences:
“But the law’s complexity simply follows from the fact that the drafters of the ACA attempted to build on, rather than to radically change, our current, impossibly complex, health care system.”
“We are doomed to continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.”
Avik Roy has contributed to the cause by showing us a proposal that makes it ever more clear why we must change to a single payer national health program. And we can thank Timothy Jost for clarifying that for us.
Report: Health Law Ups Taxes On Insurers With Big Pay Packages
By Julie Appleby
Kaiser Health News, August 27, 2014
While average compensation for top health insurance executives hit $5.4 million each last year (up from $5.1 million in 2012), a little-noticed provision in the federal health law sharply reduced insurers’ ability to shield much of that pay from corporate taxes.
As a result, insurers owed at least $72 million more to the U.S. Treasury last year, said the Institute for Policy Studies, a liberal think tank in Washington D.C.
Researchers analyzed the compensation of 57 executives at the 10 largest publicly traded health plans, finding they earned a combined $300 million in 2013. Insurers were able to deduct 27 percent of that from their taxes as a business expense, estimates the report. Before the health law, 96 percent would have been deductible.
UnitedHealth Group, which paid CEO and President Stephen Hemsley about $28 million in pay and stock options in 2013, had the biggest tax bill among the 10 companies, the report found. Hemsley’s compensation accounted for nearly $6 million of the firm’s estimated $19 million in taxes that the report says it owed on pay packages for five executives under the health law.
“They’re paying more in taxes just to protect these pay packages,” said Sarah Anderson, global economy project director at the institute.
Under the 2010 law, insurers can deduct only the first $500,000 of annual compensation per employee from corporate taxes, down from $1 million allowed before the law’s passage. The law also requires insurers to include so-called “performance pay,” such as stock options, which often represent a hefty portion of an executive’s pay.
Covered California’s Peter Lee nets bonus, Obamacare site nets 1.2 million enrollees
By Chris Rauber
San Francisco Business Times, August 22, 2014
Covered California’s executive director, Peter Lee, has won a one-time $52,528 bonus for his role in launching the Obamacare exchange in the Golden State, which apparently netted 1.2 million enrollees all told during its first open enrollment period.
Lee’s one-time bonus is his first pay increase in three years… “excepting general state increases,” and represents a 20 percent “incentive award” based on his annual $262,644 salary.
There are a great many reasons that health care reform activists believe that private, investor-owned insurers should be eliminated from our health care financing, but one reason that is particularly offensive is the outrageous compensation packages for their executives. For that reason, the Affordable Care Act (ACA) included a provision prohibiting insurers from writing off for tax purposes more than $500,000 per executive, as a means to discourage the excessive executive pay.
Well, it didn’t work. Instead of taking those taxes out of the excessive salaries, executives were given pay increases averaging $300,000, raising their incomes to an average of $5.4 million. Although more corporate taxes were paid, those funds were recovered through higher premiums charged to the purchasers of health plans.
Compare the executive pay of the private insurers to that of Peter Lee, the head of California’s ACA insurance exchange – by far the largest and most successful ACA exchange in the nation. With his performance bonus, his income was only about one-twentieth of the average income of the executives of the largest publicly-traded health plans. In fact, Stephen Hemsley of UnitedHealth Group received almost 100 times as much as Lee.
These differences reflect the priorities of invested-owned corporations as opposed to quasi-public agencies. One is about making the most money possible, and the other is about serving the needs of the people.
Make no mistake. The ACA exchanges are still the wrong model because they contract with these same private insurers that perpetuate their abusive practices, such as overpaying their executives. Under a single payer system, administrators such as Peter Lee would be providing us with much greater value for their services since single payer systems eliminate much of the administrative waste while spending appropriate amounts for health care, and, yes, spending appropriate amounts for our public administrators.
Operator? Business, Insurer Take On End-of-Life Issues By Phone
By Elana Gordon, WHYY
Kaiser Health News, August 27, 2014
Kate Schleicher, 27, is a licensed clinical social worker, who knows almost as little about you as you do about her. Except she knows your phone number, your insurance provider and that you are pretty sick.
Schleicher is one of 50 social workers at a company called Vital Decisions. After sending a letter (people rarely respond) counselors essentially cold-call to offer what they describe as “nondirected” end-of-life counseling.
The hope of this program, she says, is to build a relationship over the phone, so (the patient) might be comfortable discussing his situation and his goals. Then he’ll be empowered to communicate those things with others, including his family and his doctors. He could also choose to allow the counselor to talk to his doctors or family directly. It’s paid for by insurers and federal privacy rules permit this for business purposes.
And when these conversations do happen, there’s can be another byproduct: reduced costs. Research is finding that when patients fully understand aggressive care, many choose less of it.
But some people are wary of the company’s approach. Dr. Lauris Kaldjian, professor of bioethics at the University of Iowa, has concerns about the social worker, patient and family never actually meeting. “Because if you don’t have enough knowledge about what’s actually going on with the patient, it would actually be irresponsible to pretend to have discussion that depends upon such knowledge.”
Vital Decisions is an innovative organization that assists patients and families dealing with advanced illness. We help patients clarify their values and preferences and then communicate with their family and care team to actualize those preferences. Our clients include several leading national, regional, and local health care plans which offer our service free of charge to appropriate individuals within their member populations.
We are a privately held company located in the Metropark business complex in Edison, NJ. The Company is profitable, and cash flow-positive, and is a leader in the growing field of advanced illness counseling.
The Company is a portfolio company of MTS Health Investors, the New York-based healthcare private equity firm.
HHS.gov: Health Information Privacy: “Business Associates”:http://www.hhs.gov/ocr/privacy/hipaa/understanding/coveredentities/busin…
When you are faced with advanced illness, perhaps nearing the end of life, where would you want to turn for medical advice on how to get through this difficult time? Your personal physician and health care team? Private health insurers, always looking for more administrative innovations to sell us, are now using high pressure tactics to force “advanced illness counselors” into the management of your care.
Who are these counselors? In the example given, they are employees of Vital Decisions, a private, for-profit corporation that sells its services to private insurance companies. They use your confidential medical diagnoses that have been provided to them by the private insurers to market to you an advisory service on negotiating the health care system. After an introductory letter that is routinely ignored, the counselors cold-call to try to convince you to accept their end-of-life counseling. Of course, this is “at no cost to you” since your insurer pays for this service. The services are provided over the phone from offices in New Jersey – a definition of personal care that only the insurers can understand. The clients of Vital Decisions are the private insurers, not the patients, nor the physicians, nor any other members of the health care team.
With today’s emphasis on privacy, how could unrelated business entities gain enough information about you to make a contact? In another concession to the private insurers, HHS allows them to share this confidential information with “business associates” – basically any business entity that might interact with the insurer as the insurer carries out its business functions. It is the private insurers that sic on you these end-of-life-care marketeers just at a time that you do not want any more extrinsic intrusions since you are suffering enough already.
Although the insurers say that they are paying for these services, they are actually paid by plan enrollees in the form of higher premiums. What is worse, these services are classified as health care related services and can be included in the insurers’ medical loss ratios. They do not apply to the 15% or 20% limit on administrative costs. In fact, since they are counted as medical losses, it allows the insurers even more leeway in adding on yet more administrative services. Since the percentages are fixed, more medical losses allow more administrative services – the primary product that the private insurers are selling us.
As a portfolio company of MTS Health Investors, the New York-based healthcare private equity firm, Vital Decisions is taking very good care of Wall Street, while intruding in our most difficult time of life and then walking away with our health care dollars.
Regular readers know what a single payer national health program would do with these parasites. They’d be out the door, right now.
Loving and Hating Obamacare With One Muddled Mind
By Jonathan Bernstein
Bloomberg View, August 25, 2014
E.J. Dionne has a nice column pointing out that while “Obamacare” remains unpopular, most of the provisions are well-liked, and thus Democrats should run on the issue. As regular readers know, I certainly agree that the individual components of reform are far more popular than reform overall. Actually, support for key provisions of the law, including coverage of pre-existing conditions, health-insurance exchanges offering subsidies to middle-income policy holders and Obamacare’s Medicaid expansion, have always polled well.
Moreover caution is always in order with issue polling. When these kinds of polls show public opinion fractured, it’s tempting to believe that one side or the other represents voters’ “true” support. That’s the wrong way to interpret such polls. Yes, the ACA polls badly while most of its components poll well. But that doesn’t mean that the ACA is genuinely unpopular (as most opponents suggest) or that it’s genuinely popular (as most supporters contend). There is no underlying truth to be excavated from the results; the best we can do is say that public opinion is inconsistent.
Well, that’s the best we observers can do. Campaign operatives, in contrast, can counsel their candidates to stress whatever is popular. What those operatives shouldn’t do is to fall for their own spin, or let their candidates fall for it.
The broader point: We can measure public opinion, but sometimes – actually, quite often – public opinion is an incoherent mess. Voters have plenty of things other than politics going on in their lives; it’s not surprising that they should find the strongest selling points from both sides quite appealing and let it go at that. For those of us who pay close attention, it may seem weird that someone could hate Obamacare while loving almost every part of it. There must be one overriding opinion hidden in there — pro or con — that good research can isolate, no? Well, no. Sometimes, incoherence in the polls simply reflects incoherence among voters. We just have to live with that.
The public reaction to the Affordable Care Act (ACA) is very instructive as far as understanding public attitudes toward single payer reform.
Most of the specific policies in ACA have been supported for many years by those who are relatively well informed on the issues – a minority of our population. The negative views of the public have been formed in the hollow echo chamber filled with empty political rhetoric devoid of illuminating explanations – a message chamber that reaches most of our people. The political attack has been aimed at President Obama and the Democratic Party, but not at ACA’s beneficial policies. Thus many in the media have correctly reported that “Obamacare” continues to poll poorly – as a political construct – whereas the specific improvements in health care coverage – the health policies – have support of the majority.
Although the situation with the public attitude towards single payer is similar, it has not had nearly the same intensity of exposure has had ACA. More Americans have now heard the term “single payer,” but the majority still have a poor understanding of what a tremendous improvement it would be over our highly dysfunctional, wasteful, inefficient, and inequitable multi-payer system. That is, the public at large is still very poorly informed on single payer policies.
The hollow echo chamber of empty political rhetoric targeting single payer has been around much longer but has been maintaining a lower profile. As long as single payer reform does not seem to be imminent, the effort of opponents has been directed to building anti-government memes that can be rapidly brought to the front should a single payer reform effort gain traction.
Examples of this latter phenomenon include Proposition 186 in California and Measure 23 in Oregon. Both of these single payer measures polled favorably until close to the elections. In both instances, it took only a couple of weeks of mindless trashing of the measures to result in a tidal wave of opposition. They were defeated by empty rhetoric and not by opposition to beneficial health policies.
In today’s article, Jonathan Bernstein makes the important point that “quite often public opinion is an incoherent mess.” Look how much difficulty the supporters of ACA are having in getting the message out about the genuine benefits of ACA when the listeners are exposed to a background of meaningless cacophony generated in the hollow echo chamber.
When single payer is ready for its day, the cacophony will be almost unbearable. That is why it is so important now to pull all stops in educating the public on single payer benefits. They will need a much better understanding of the concept so that they can sort out the facts from the noise.
Bernstein says, “Sometimes, incoherence in the polls simply reflects incoherence among voters. We just have to live with that.” No, we don’t have to live with that. We simply need to build our own colossal echo chamber spewing out the facts. Education. Education. Education.
By Don McCanne
August 25, 2014
This weekend numerous organizations dedicated to single payer reform assembled in Oakland, California for the 2014 National Strategy Conference. Participating organizations included Healthcare NOW!, Labor Campaign for Single-Payer Healthcare, One Payer States, National Nurses United, Physicians for a National Health Program, Progressive Democrats of America, and many others. So what was accomplished?
Above all, just gathering dedicated single payer supporters together in a single weekend meeting provided renewed energy and passion amongst the attendees, confirming that the single payer movement is not only still alive, it is thriving. We have a future.
Did we develop a national strategy that will culminate in enactment of single payer reform with the installation of a new government after the 2016 elections? Well, not exactly, but nobody expected that. What we did accomplish was the sharing of ideas on strategy, policy, politics, single payer education, state and federal legislation, and innumerable other components of a social movement that would lead to single payer.
In both the formal sessions and in informal conversations there was a very broad spectrum of ideas discussed, though not all of the ideas mesh well. And this is from a solid core of single payer activists. But all views were expressed with the intent of advancing health care justice.
Others attending will certainly have different take-home points, but mine was that we each should continue to do what we are doing while helping to open new avenues in advancing the cause. Especially helpful would be efforts to educate others, expand grassroots efforts, and work to form coalitions with other social justice organizations.
There was a consensus that we should not waste time and squander energy by becoming divided over process. We need to direct that energy to making progress towards our goal of a single payer national health program – an improved Medicare for all.
Project Evaluation Activity in Support of Partnership for Patients: Task 2 Evaluation Progress Report
Center for Medicare and Medicaid Innovation (CMMI)Submitted 7/10/2014
The Partnership for Patients (PfP) campaign was launched in April 2011 with the ambitious goals of reducing preventable hospital-acquired conditions (HACs) by 40 percent and 30-day hospital readmissions by 20 percent. To reduce harm at this level of magnitude, the campaign implemented a strategy to align all health care stakeholders, including federal and other public and private health care payors, providers, and patients, to focus on this issue concurrently. By influencing everyone to move in the same direction at the same time, the program strove to overcome the inherently limited reach of any single initiative operating in a complex environment. The three major components of the campaign, conceptualized as “engines,” are the Centers for Medicare & Medicaid Innovation (CMMI) investment engine, the federal partner alignment engine, and the outside partner engine. The program is national in scope, due to its level of implementation. For example, over 70 percent of general acute care hospitals in the United States (U.S.), representing over 80 percent of admissions, worked with PfP-funded Hospital Engagement Networks (HENs) during 2012-2013.
The PfP campaign focuses on 11 areas of patient harm. To date, the evaluation has found clear evidence for decreased rates of harms in five of the eleven areas, meaning the decreases are statistically significant, and/or meet statistical process control criteria for a special cause decrease, and/or (in cases where only aggregated data are available) are large in magnitude. These areas include obstetrical early elective deliveries (OB-EED), readmissions, adverse drug events (ADE), ventilator-associated pneumonia (VAP), and central line-associated bloodstream infection (CLABSI). In the other six areas, to date, the evaluation has found mixed evidence, meaning some datasets show decreases, while others show no change, or even worsening, including venous thromboembolism (VTE), catheter-associated urinary tract infection (CAUTI), other OB adverse events (OB-Other), pressure ulcers, surgical site infections (SSI), and falls.
The cost estimates available to date suggest cumulative savings of between $3.1 to $4 billion as a result of the decreases in harms since the baseline of 2010. Additionally, AHRQ has estimated 15,5001 deaths averted since 2010, based on mortality rate estimates associated with targeted harms. Tables 1 and 2 synthesize the evidence available to date for improvement in the rate of adverse events in each of the 11 areas, and Table 3 provides cost reduction estimates from the two available sources of estimates to date. Since hospital payment policies and other U.S. Department of Health & Human Services (HHS) programs that played an important role as part of the PfP campaign were in place and making changes over time, it is not possible at this time for the evaluation to identify the portion of these harm reductions and savings attributable to the PfP campaign’s direct work with hospitals versus alignment of forces for harm reduction versus other harm reduction work that would have continued with or without PfP.
About the CMS Innovation Center
The Innovation Center was established by section 1115A of the Social Security Act (as added by section 3021 of the Affordable Care Act). Congress created the Innovation Center for the purpose of testing “innovative payment and service delivery models to reduce program expenditures …while preserving or enhancing the quality of care” for those individuals who receive Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) benefits.
Did Hospital Engagement Networks Actually Improve Care?
By Peter Pronovost, M.D., Ph.D., and Ashish K. Jha, M.D., M.P.H.
The New England Journal of Medicine, August 21, 2014
Everyone with a role in health care wants to improve the quality and safety of our delivery system. Recently, the Centers for Medicare and Medicaid Services (CMS) released results of its Partnership for Patients Program (PPP) and celebrated large improvements in patient outcomes. But the PPP’s weak study design and methods, combined with a lack of transparency and rigor in evaluation, make it difficult to determine whether the program improved care. Such deficiencies result in a failure to learn from improvement efforts and stifle progress toward a safer, more effective health care system.
CMS launched the PPP in December 2011 as a collaborative comprising 26 “hospital engagement networks” (HENs) representing more than 3700 hospitals, in an effort to reduce the rates of 10 types of harms and readmissions. The HENs work to identify and disseminate effective quality-improvement and patient-safety initiatives by developing learning collaboratives for their member facilities, and they direct training programs to teach hospitals how to improve patient safety. In a February 2013 webcast, CMS announced that the rates of early elective deliveries had dropped 48% among 681 hospitals in 20 HENs and that the national rate of all-cause readmissions had decreased from 19% to 17.8%, though it is unclear which HENs were included for each measure and what time periods were the pre- and post-intervention periods.
These numbers appear impressive, but given the publicly available data and the approach CMS used, it’s nearly impossible to tell whether the PPP actually led to better care. Three problems with the agency’s evaluation and reporting of results raise concerns about the validity of its inferences: a weak design, a lack of valid metrics, and a lack of external peer review for its evaluation. Though the evaluation of many other CMS programs also lacks this basic level of rigor, given the large public investment in the PPP, estimated at $1 billion, and the strong public inferences about its impact, the lack of valid information about its effects is particularly troubling.
The design of a quality-improvement program influences our ability to make reasonable inferences about its benefits to patients. Although individual HENs may have used more rigorous methods, the overall PPP evaluation had three important weaknesses: it used a pre–post design with only single points in the pre and post periods, did not have concurrent controls, and did not specify the pre and post periods a priori. Such an approach is highly subject to bias.
There are alternatives available, including a randomized or even a cluster-randomized trial. If such trials were not feasible, CMS could have used other robust design approaches, such as an interrupted time-series study with concurrent controls. Rather than having a single pre time period and a single post time period, this design entails repeated measurements of the safety indicators before and after the intervention in both HEN and non-HEN hospitals. Such an approach would have provided more valid inferences about the effects of the program, with few additional costs.
Beyond using a poor design, CMS did not use standardized and validated performance measures across all participating hospitals — further hampering inferences about the program’s effects. To support engagement, CMS allowed each HEN to define its own performance measures, with little focus on data quality control.
CMS also required HENs and participating hospitals to submit a large number of process measures of unknown validity. It is essential to use validated measures — ideally those endorsed by the National Quality Forum — unless there is a compelling reason not to. In instances where validated measures are unavailable, instead of using poor quality metrics, CMS can have an agency such as the Agency for Healthcare Research and Quality (AHRQ) or the CDC develop measures rapidly.
Finally, CMS made — and presented publicly — inferences about its program’s benefits without having subjected its work to independent evaluation or peer review. Peer review, though imperfect, is a powerful quality control.
The PPP involved an investment of nearly $1 billion to improve care — three times the annual budget of the AHRQ, the lead federal funding agency for implementation science, which often lacks resources for promising projects. With such a sizable investment, CMS could have supported a better evaluation. It could have randomized HENs or hospitals to receive interventions earlier or later; used standardized, validated measures across the HENs; built in basic data quality controls; and independently collected qualitative information alongside quantitative data to learn not just whether the interventions worked but also how and why they did, thereby advancing our understanding of the mechanisms and context of improvement science. These changes would have allowed the country to learn so much more.
The lack of a careful evaluation is symptomatic of a broader problem: some members of the quality-improvement community eschew even modestly rigorous methods, believing that one can simply “know” if an intervention worked. Though maintaining hope and optimism among clinicians is important, when untested interventions are implemented widely, they often fail to improve care. The confidence we can have in an intervention’s efficacy is directly related to the rigor with which it is designed, implemented, and evaluated. Given the strong desire to improve care and the conflicts of interest we all face in evaluating our own work, subjecting all evaluations to external examination is critical.
The field of improvement science is still in its infancy. Given the magnitude of the quality and cost problems in health care and the amount of money invested in mitigating these problems, the public, providers, and policymakers need to have confidence that money used to improve care is being well spent. It’s true that improvement science requires mixed methods and is difficult, but all good science is difficult. Failing to attend closely to issues of design, methods, and metrics leaves us with little confidence in an intervention. For the PPP, which required thousands of hours of clinicians’ time and large sums of money, that lack of confidence is particularly unfortunate. More important, the failure to generate valid, reliable information hampers our ability to improve future interventions, because we are no closer to understanding how to improve care than we were before the PPP. And that is the biggest cost of all.
Another creation of the Affordable Care Act (ACA) is the Center for Medicare and Medicaid Innovation (CMMI) – an entity established to test innovations in payment and service delivery models designed to reduce costs and improve quality. How is it doing?
After spending almost a billion dollars on a study designed to reduce hospital-acquired conditions – a budget three times the total annual budget of AHRQ (Agency for Healthcare Research and Quality) – we have almost nothing to show for that effort and expense. As the CMMI report states, “Since hospital payment policies and other U.S. Department of Health & Human Services (HHS) programs that played an important role as part of the PfP campaign were in place and making changes over time, it is not possible at this time for the evaluation to identify the portion of these harm reductions and savings attributable to the PfP campaign’s direct work with hospitals versus alignment of forces for harm reduction versus other harm reduction work that would have continued with or without PfP.”
In their article on the flaws in this program, Peter Pronovost and Ashish Jha make an observation that typifies what has been wrong with the entire reform process centered on ACA. They state, “some members of the quality-improvement community eschew even modestly rigorous methods, believing that one can simply “know” if an intervention worked. Though maintaining hope and optimism among clinicians is important, when untested interventions are implemented widely, they often fail to improve care.”
Think of some of the prominent personalities involved in crafting and implementing ACA and how outspoken they were and continue to be on what they simply “know” will work – accountable care organizations, bundled payments, pay for performance, competing exchange plans bringing us higher quality at lower cost, placing the empowered consumer in charge through deductibles and other cost sensitivity, and improving payment policies through the Center for Medicare and Medicaid Innovation.
The tragedy is that much of this was to avoid adopting a program that every informed person knows really would work – an improved Medicare for all. It would have been far better to have directed that billion dollars towards implementing single payer.
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