We have a private health care system in this country, right? But that belief is way off target. Here are some of the ways that the federal government dominates the financing of U. S. health care, over so many years and to an increasing extent, and subsidizes our private market-based system:

  • The long-term exclusion from taxes of employers’ costs of employer-sponsored health care (ESI) amounts to a government subsidy of about $250 billion a year in forgone income and payroll taxes; that invisible government subsidy represents 1.6 percent of GDP and about 9 percent of all federal tax revenues over the next ten years. (1)
  • According to the Congressional Budget Office (CBO), Medicare and Medicaid took up 14 percent and 8 percent of the federal budget in 2013, respectively. (2)
  • Under pressure from the private sector since the early years of private Medicare HMOs in the 1990s, the government paid overpayments up to  115 percent or more compared to the costs of traditional public Medicare; the 2003 Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) was the next bonanza handed over to the private sector, estimated to cost about 120 percent of what Medicare would have paid for these drugs (3)
  • Privatization of Medicaid has become common, accelerated under the ACA, and sharing the same kinds of problems as privatized Medicare—higher costs, built-in profits, reduced choice, more volatility, and  administrative waste.
  • Federal Medicaid costs are climbing steadily, having paid 100 percent of Medicaid expansion costs under the ACA for three years, then 90 percent thereafter; as well as 40 percent of the nation’s total nursing home costs. (4)
  • Today, more than 30 percent of Medicare’s 55 million beneficiaries are in privatized programs, as are more than one-half of Medicaid’s 66 million enrollees. (5)

In his excellent new book, We Are Better Than This: How Government Should Spend Our Money, Edward Kleinbard, professor of law and business at the University of Southern California’s Gould School of Law, sums up the public vs. private financing situation in health care this way:

The federal government spends about $1 trillion/year on the health of Americans. In doing so it subsidizes virtually everyone who has health insurance of any kind, including the majority of Americans who believe that they have entirely private employer-sponsored  health insurance. (6)

What should be the role of the federal government in U. S. health care? This is still a bitterly contested political issue and despite its importance, remains an unanswered question. It is a big political issue in this current election cycle. The GOP, including its presidential candidates, wants the government out of health care—“just leave health care to the markets.” But that would destroy ESI, Medicare and Medicaid, and the Republicans have no replacement for them. Meanwhile, the Democratic presidential candidates, with the exception of Bernie Sanders, don’t answer this question.

Even as we keep paying more as taxpayers for our health care, we’re getting less and less value from the huge federal investment in our health care and the growing tax burden on taxpayers. In recent posts, we have seen the soaring costs and increasing unaffordability of health care (7), the declining benefits and choice of insurance coverage (8), and the increasing bureaucracy and fraud in health care (9). All that is getting worse, so what can we do about it?

Enter Kleinbard’s important book about how government should spend its money, and what its role should be. An age-old question with two major alternatives today—support the few and powerful with continuation of a subsidized, deregulated private marketplace, or meet the needs of the many, almost all of our population, through a greater role of government. Adam Smith, the guru of markets embraced over the years by conservatives but also a moral philosopher, recognized the downside of markets in his later writings, The Theory of Moral Sentiments, with these words:

When the happiness or misery of others depends in any respect upon our conduct, we dare not, as self-love might suggest to us, prefer the interest of one to that of many. (10)

In his above-mentioned book, Kleinbard makes “a principled call for the reinvigoration of government as a positive complement to private enterprise in contemporary America,” reminding us that “government—which is to say, all of us, acting collectively—can make our country healthier, wealthier, and happier, if we put government to useful work in those areas where it most productively complement our private markets.” As he further says:

For all the good that the Affordable Care Act may have done in extending the number of Americans with some form of medical insurance, it did very little to address the underlying fiscal crisis of healthcare, which is that our current fragmented form of delivering health insurance is unaffordable. (11)

Traditional Medicare has already proven that this has been so, over more than 50 years, for a large part of our population that benefits from the greater efficiency, cost-effectiveness, and reliability of public financing of health care compared to the inefficiency, greed, and waste of private health insurers. Can we learn from this experience, take on the economic and political power of the medical-industrial complex, and answer the question about how best to finance health care?

Adapted and excerpted, in part, from my soon-to-be-released book, The Human Face of ObamaCare: Promises vs. Reality and What Comes Next.
(See advance press release at: http://www.johngeymanmd.org)

References:

  1. Congressional Budget Office. The Distribution of Major Tax Expenditures in the Individual Income Tax System, May 2013, pp. 6, 12.
  2. Kleinbard, ED. We Are Better Than This: How Government Should Spend Our Money. New York. Oxford University Press, 2015, p. 162.
  3. Headstart for HMOs: Medicare Watch 6 (25): 2, 2003.
  4. Congressional Budget Office. Growth in Means-Tested Programs, 18.
  5. Pear, R. As Medicare and Medicaid turn 50, use of private health plans surges. New York Times, July 30, 2015: A12.
  6. Ibid # 2, pp. 202-203.
  7. Huffington Post blog, March 9, 2015.
  8. Geyman, JP. The continued degradation of health insurance under the ACA. Huffington Post blog, December 3, 2015.
  9. Geyman, JP. Growing bureaucracy and fraud in U. S. health care.    Huffington Post blog, December 8, 2014.
  10. Smith, Adam. The Theory of Moral Sentiments, Book III, Sec. I, Chap. III.
  11. Ibid # 2, pp. xviv, xxvi, 323.     .

Value-based pricing: another medical-industrial con job

Posted by on Tuesday, Dec 29, 2015

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.

Value in Medical Care

The New York Times, Letter, December 22, 2015

To the Editor:

We applaud expanding reimbursement analysis beyond Medicare data to include commercial insurance.

It is essential to differentiate locally provided care from complex specialty care best provided by destination medical centers. Future payment models should recognize making an accurate diagnosis, providing appropriate treatment and achieving the best results.

It will be through a commitment to work collaboratively that payers, providers and policy makers build a sustainable, value-based health care delivery system in our country.

John H. Noseworthy

President and Chief Executive
Mayo Clinic, Rochester, Minn.

http://www.nytimes.com/2015/12/22/opinion/value-in-medical-care.html?partner=rssnyt&emc=rss

***

Payment for Medical Care

The New York Times, Letter, December 29, 2015

To the Editor:

I take issue with the “value-based payment models” for medical care promoted by John H. Noseworthy, the president of the Mayo Clinic, in his letter to the editor (“Value in Medical Care,” Dec. 22).

When he says, “It is essential to differentiate locally provided care from complex specialty care best provided by destination medical centers,” is he suggesting that his destination medical center should be paid more than local care providers for the same work?

It is my understanding that all doctors are being evaluated equally on the accuracy of their diagnoses, the appropriateness of their treatments and the quality of their results. They should be paid accordingly.

Value-based payment models are used by the pharmaceutical industry to justify a drug price many times greater than the cost to bring it to market and manufacture it. The drug company decides how much “value” its drug provides to the patient who takes it.

Let’s not allow major destination medical centers to follow the same model. Better yet, let’s reverse the trend entirely.

Robert D. Schrock Jr.
Chapel Hill, N.C.

The writer is a retired orthopedic surgeon.

http://www.nytimes.com/2015/12/29/opinion/payment-for-medical-care.html

It seems that the current policy fixation in health care reform is on paying for value instead of volume. This really plays into the hands of the medical-industrial complex.

Currently the pharmaceutical industry is leading the way. A prime example is the new, outrageously priced drugs for hepatitis C. In explaining why the prices are so high, representatives of the industry indicated that the new standard for drug pricing should not be simply the usual costs such as research and marketing, but rather they should be priced on the value provided – the value of preserving quality of life that would be lost with progression of disease, and the value in preventing expensive care in the future, such as liver transplants. These executives have to gall to claim that the monetary value of the preservation of quality of life and the aborted potential future health care costs should accrue to them and their shareholders.

By that same reasoning, many of the high priced cancer therapy drugs should be repriced at pennies on the dollar since they have an almost negligible benefit on the quality of life, and they actually increase the cost of cancer care simply because of the very high prices of the drugs themselves along with the costs of administering and monitoring them. Of course, then instead of pricing based on value, they resort to their fallback position of the high cost of drug research and other corporate expenses, like executive compensation (plus an extra bonus because this is CANCER, after all).

Of great concern, the pharmaceutical industry was successful in including in the Trans-Pacific Partnership Agreement (TPP) this concept that “value” be included as a legitimate basis for determining the price of drugs – pocketing greater profits for this nebulous add-on to the drug itself.  This is one more reason that TPP should not be approved in its current form.

Now the president and CEO of Mayo tells us that the complex specialty care provided by “destination medical centers” implicitly is of higher value and thus presumably should be rewarded more highly through value-based payment models. If they offer unique specialty care that is not offered at other centers, then payment based on costs plus a fair margin would be appropriate. But care that duplicates quality care available in the community should not command higher prices.

We cannot underestimate the uncanny ability of the medical-industrial complex to innovate with policy concepts to further their own pecuniary interests.

This concept of rewarding value instead of volume has led to the implementation of numerous payment models that are backed by not much more than “wish-it-would-work” concepts from the policy community; the initial evidence of benefit is extremely limited. We know single payer works. That’s what we should be implementing instead.

If you wish more information, yesterday’s message, “No more SGR, but… here you go!,” discusses some of these wish-it-would-work concepts such as Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) supposedly rewarding value instead of volume:

http://www.pnhp.org/news/2015/december/no-more-sgr-but…-here-you-go

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No more SGR, but… here you go!

Posted by on Tuesday, Dec 29, 2015

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.

CMS Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) (DRAFT)

CMS, December 18, 2015

Building on the principles and foundation of the Affordable Care Act, the Administration announced a clear timeline for targeting 30 percent of Medicare payments tied to quality or value through alternative payment models by the end of 2016 and 50 percent by the end of 2018. These are measurable goals to move the Medicare program and our healthcare system at large toward paying providers based on quality, rather than quantity, of care.

The passage of the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) supports the ongoing transformation of healthcare delivery by furthering the development of new Medicare payment and delivery models for physicians and other clinicians. Section 102 of MACRA requires that the Secretary of Health and Human Services develop and post on the CMS.gov website “a draft plan for the development of quality measures” by January 1, 2016, for application under certain applicable provisions related to the new Medicare Merit-based Incentive Payment System (MIPS) and to certain Medicare alternative payment models (APMs).

Merit-Based Incentive Payment System

Measures for use in the quality performance category are a specific focus of the MDP. MIPS will build upon existing quality measure sets from the Physician Quality Reporting System (PQRS), Value-based Payment Modifier (VM), and Medicare EHR Incentive Program for Eligible Professionals (EPs), commonly referred to as Meaningful Use.

To fill identified measure and performance gap areas, CMS will expand and enhance existing measures to promote alignment and harmonization in the selection of measures and specifications, while concurrently developing new (de novo) measures according to priorities described in Section IV.

To accelerate the alignment of quality measurement and program policies, MACRA sunsets payment adjustments for PQRS, VM, and the EHR Incentive Program and establishes MIPS.

Alternative Payment Models

MACRA establishes incentive payments for EPs participating in certain types of APMs. MACRA requires quality measures used in APMs to be comparable to the quality measures used in MIPS; therefore applicability of candidate measures to support a variety of future APMs is an important element of this MDP.

From the Conclusion

CMS is committed to reducing provider burden through the use of measures aligned across federal and private-payer quality reporting programs. We stress harmonization of data elements and specifications among measure developers, whose cooperation and sharing are essential to creating aligned measures. Toward that end, we also intend to leverage the optional pre-rulemaking process and MAP review for MIPS and to participate with other stakeholders in efforts that promote measure alignment. This draft MDP acknowledges the associated challenges and identifies opportunities for measure developers to share information to reduce duplication of efforts.

CMS Quality Measure Development Plan (MDP)
– 61 pages:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/Draft-CMS-Quality-Measure-Development-Plan-MDP.pdf

MACRA, MIPS, APMs, MDP, and request for public comment:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

Physicians celebrated the passage of the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) since it brought an end to the much despised SGR (Sustainable Growth Rate) method of adjusting Medicare payment rates. Though SGR was rarely implemented, it carried forward a massive deficit that would have required major reductions in Medicare payment rates. Besides, MACRA included the reauthorization of the Children’s Health Insurance Program. The trade-off, which was largely ignored, was the requirement to establish the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). CMS has now released a draft of the Quality Measure Development Plan for transitioning to MIPS and APMs.

Perhaps the main reason that physicians, who happened to be aware of MIPS and APMs, were not concerned is that they replaced the Physician Quality Reporting System (PQRS), Value-based Payment Modifier (VM), and Medicare EHR Incentive Program for Eligible Professionals (EPs), commonly referred to as Meaningful Use. Many thought that this would bring efficiency to existing programs by coordinating them under MIPS.

There are three reasons that physicians should be concerned. The first is that these programs are not simply now coordinated, they are expanded and enhanced with the development of new de novo measures. Think of what that means for new administrative burdens added to existing ones.

Second, some physicians no doubt thought that they could escape the MIPS burdens since MACRA would allow physicians to move into Alternative Payment Models (APMs) – accountable care organizations, patient centered medical homes, or whatever. Don’t celebrate yet. MACRA requires that the quality measures used in APMs to be comparable to the quality measures used in MIPS. MIPS is now an obligation no matter where you turn.

Third, and most important of all, is that the PQRS, VM, and the EHR Incentive Program were highly flawed programs adding significantly to the excessive administrative burden that characterizes the U.S. health care system, while having a relatively negligible impact on improving health care quality. The proper policy step should have been to send these programs back to the drawing boards, and then when it became obvious that there was no there there, locking them in storage forever. The worst policy decision would be to expand these programs and force them on everyone, but that is precisely what they did.

Quality is not achieved by playing the alphabet games, with nominal penalties and rewards. It is achieved by instilling efficiency and equity into our health care delivery system. A well-designed single payer system does that. A paper written by a team led by Gordon Schiff, and published in JAMA two decades ago, defines quality and describes how it can be achieved by implementing a single payer national health program:

A Better-Quality Alternative: Single-Payer National Health System Reform

JAMA, September 14, 1994, Volume 272 Copyright 1994, American Medical Association

http://www.pnhp.org/publications/a_better_quality_alternative.php

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ACA-compliant plans not providing adequate financial protection

Posted by on Friday, Dec 25, 2015

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.

How Much Do Marketplace and Other Nongroup Enrollees Spend on Health Care Relative to Their Incomes?

By Linda J. Blumberg, John Holahan, and Matthew Buettgens
Urban Institute, December 2015

In this paper, we examine premiums and out-of-pocket costs, as well as total financial burdens for individuals with different characteristics enrolled in ACA-compliant nongroup coverage. We show that despite the additional assistance available, individuals across the income distribution who are ineligible for Medicaid can still face very high expenditures. At the median, financial burdens can be reasonably high, particularly for those with incomes between 300 and 400 percent of FPL (Figure 1). As medical care needs increase, however, financial burdens grow appreciably across the income distribution. Even with federal financial assistance, 10 percent of 2016 nongroup marketplace enrollees with incomes below 200 percent of FPL will pay at least 18.5 percent of their income toward premiums and out-of-pocket medical costs. Ten percent of marketplace enrollees with incomes between 200 and 500 percent of FPL will spend more than 21 percent of their income on health care costs. Those in fair or poor health and those over age 45 are most likely to face high median financial burdens.

http://www.urban.org/sites/default/files/alfresco/publication-pdfs/20005…

This is just one more study that shows that far too many individuals who need health care still face excessive financial burdens in spite of being insured. Instead of merely trying to tweak our dysfunctional system, we should go ahead and replace it with one that works – a single payer national health program.

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Generic drug pricing confirms that markets are not working

Posted by on Thursday, Dec 24, 2015

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.

Medicare Drug Spending Dashboard

By Andy Slavitt, Acting CMS Administrator and Niall Brennan, CMS Chief Data Officer
The CMS Blog, December 21, 2015

Today, CMS is releasing a new online dashboard to provide information on Medicare spending on prescription drugs, for both Part B (drugs administered in doctors’ offices and other outpatient settings) and Part D (drugs patients administer themselves) to provide additional information and increase transparency.

In today’s announcement, the topline findings include:

* The diversity, growth, and impact of drug spending in the Medicare program – while the high-cost drugs include brand name Hepatitis C and cancer therapies, some generic drugs are seeing large price increases.

http://blog.cms.gov/2015/12/21/medicare-drug-spending-dashboard/

***

Competition Not Stopping Drug Price Hikes, Medicare Data Shows

By Brianna Ehley
Politico Pulse, December 23, 2015

If you think a marketplace monopoly is behind all massive drug price hikes you might want to take a look at the new CMS drug spending dashboard. Eight of the 10 drugs that had big cost increases between 2013 and 2014 were made by multiple manufactures. Among them were five drugs that more than doubled in price during that time. If you expand to taking a look at the 15 drugs with the largest increases, nearly two-thirds or 9 of the 15, were made by multiple manufacturers. This data may throw a wrench in a popular solution proposed by Congress to deal with exponential drug price hikes — have FDA review faster the generic applications for drugs with a market monopoly but no patent or exclusivity protection. Furthermore, only one drug in the top 15 for the biggest price hikes was listed on the FDA’s drug shortage list during 2013-2014, which means we can’t blame companies taking advantage of a limited supply either. Take another look at the drug spending dashboard released this week and play around with the information yourself: http://go.cms.gov/1PkbJEk

http://www.politico.com/tipsheets/politico-pulse/2015/12/obamacare-enrollment-climbs-to-93-million-in-septcompetition-not-curbing-drug-price-hikesutah-can-block-federal-grants-to-planned-parenthood-211914

Only Rip Van Winkle would not know that drug prices are totally out of control, yet the pharmaceutical industry tells us that there is no problem since the market will price drugs appropriately. But instead of competition bringing down prices, their concept of market dynamics is to push up the prices to the maximum that will be tolerated by patients who are partially insulated by various public and private payers.

If there is an area in pharmaceutical pricing in which competition should work, that would be the competition between generic products that are no longer under patent. But looking at the Medicare drug spending dashboard, it is obvious that the pharmaceutical firms have been able to push pricing of several generic drugs well above the levels that would be expected in a well functioning free market.

When the Republicans passed the Part D Medicare drug program, they prohibited Medicare from negotiating drug prices, instead insisting that the markets would be more effective in bringing drugs prices down. But instead the insurance and pharmaceutical industries have been allowed the freedom to essentially establish their own rules on how markets work. Their rules allow them to maximize their revenues while patients are being gouged, either directly or through taxes and higher insurance premiums. Adam Smith would agree that this corrupted version of markets is no market at all. They are using their control of essential medications to extort us. Extortion is not a tool of normal markets – quite the opposite.

We do not need to recite again the work by Nobel laureate Kenneth Arrow on why health care markets do not work. We have already proven that our reliance on markets is not effective by the mere fact that we spend, per capita, over two and one-half times as much on health care as the average of other wealthy nations.

We simply need to push the ideologues aside and put into place public policies that other nations have used to obtain value in their health care purchasing. The model most suitable for us would be a single payer national health program – an improved Medicare for all.

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Republicans and Democrats concerned about health care costs

Posted by on Wednesday, Dec 23, 2015

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.

Healthcare costs a top concern for Republican and Democratic voters

By Jilian Mincer and Erin McPike
Reuters, December 21, 2015

Americans want to know what the next U.S. president will do to lower their rising healthcare costs, a priority shared by Republican and Democratic voters and second only to keeping the country safe, according to a recent Reuters/Ipsos poll.

In all, 62 percent of people surveyed said they would want to know about a presidential candidate’s plan for reducing healthcare costs, according to the online poll conducted Dec. 14-18.

While Republican and Democratic candidates are worlds apart on how to address healthcare, poll results show roughly the same proportion of Republican voters, or 62 percent, view it as a priority compared with 67 percent of Democrats, highlighting their frustration with rising drug prices, insurance premiums and deductibles ahead of the 2016 vote.

The only topic that attracted more interest was national security, as 67 percent wanted to know more about how presidential candidates planned to keep the country safe.

U.S. employers have been shifting more health coverage costs onto workers, particularly through high deductible health insurance plans, which can reach $6,600 in out of pocket costs for an individual and $13,200 for a family before insurance kicks in. Many of these changes have been ushered in with President Barack Obama’s signature healthcare law, as well as recent sharp increases in some prescription drug costs.

Republican strategists said party candidates are more focused on national security and the economy as dominant issues, noting they have little to gain by offering a detailed plan to tackle healthcare costs that could run up against major business interests, including the pharmaceutical industry.

“I’m on Obamacare, and it’s a horrible situation,” said Fred Voeltner, 64, who was laid off in 2009 and now pays for his own insurance. He is frustrated by how far he has to travel for care and how much more he has to pay each visit. “I’m open-minded,” he said. “But I expect to vote for a Republican.”

http://www.reuters.com/article/us-usa-election-healthcare-idUSKBN0U42GU2…

Unhappiness over the high costs of health care is not a partisan issue. Both Republicans and Democrats want to know the presidential candidates’ proposals to lower health care costs – a priority almost as great as their concern about national security.

Lest Democrats be smug over the introduction of the Affordable Care Act, it is ACA’s higher deductibles and narrower networks actually brought to us by the Democrats that have further infuriated voters over runaway health care costs.

Republicans keep promising us their replacement plan – the latest promise being by House Speaker Paul Ryan – but they fail to deliver. They actually prefer a “trust us” approach instead of providing specifics, since their telegraphed preferences would worsen patient affordability and access.

In the Reuters article, Fred Voeltner says that he is “frustrated by how far he has to travel for care and how much more he has to pay each visit” – consequences of narrow networks and high deductibles. But he is “open-minded” and expects “to vote for a Republican.” People are having trouble giving the Democrats credit for reform when they can’t see their own doctor and can’t pay their deductibles.

Democrats are now gathering around a candidate that would perpetuate our highly flawed financing system. On the other hand, another candidate – a democratic socialist running for the Democratic nomination – advocates for an affordable model that is supported by a majority of Americans – a single payer Medicare for all.

Unfortunately, presidential politics are complex. When you ask people why they are supporting a given candidate, you will only rarely hear single payer mentioned. Even though they want our next president to fix the health care cost problem, the answers you will hear are meaningless sound bites such as, he will “Make America Great Again.” When final ballots are cast, they will be based more on political personalities rather than public policy.

This brings to mind a quote of Winston Churchill, “It has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.” (House of Commons, November 11, 1947).

Churchill also said, “At the bot­tom of all the trib­utes paid to democ­racy is the lit­tle man, walk­ing into the lit­tle booth, with a lit­tle pen­cil, mak­ing a lit­tle cross on a lit­tle bit of paper — no amount of rhetoric or volu­mi­nous dis­cus­sion can pos­si­bly dimin­ish the over­whelm­ing impor­tance of that point.” (House of Com­mons, Octo­ber 31, 1944

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Most people who have explored options or purchased health insurance on the Affordable Care Act’s exchanges learned quickly that premiums and deductibles are closely related—the lower the premiums, the higher the deductibles will be. This is the insurance industry’s come-on way of attracting enrollees, which may work at first but not in the longer run. Here we examine what this inter-relationship means for many millions of Americans as premiums go up and coverage goes down.

Looking first at premiums, these are the current trends. Although presidential candidate Barack Obama once promised that his health care reform bill would save the typical or average American family about $2,500 a year on their health insurance premiums (1), that promise fell by the wayside long ago. Since many of the ACA’s requirements had not kicked in for the first and second enrollment periods in 2013 and 2014, insurers had some latitude in keeping their premiums low to attract enrollees in the early years. But those days are over as these premium projections for 2016 tell us: (2)

  • Blue Cross/Blue Shield plans, market leaders in many states, are seeking rate increases of 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee, 37 percent in Kansas, 51 percent in New Mexico, and 54 percent in Minnesota. (2)
  • The Geisinger Health Plan in Pennsylvania has filed for a 40 percent premium increase, while the Scott & White plan in Texas wants a 32 percent rate increase.

Insurers defend these hikes in various ways, including claims that enrollees were sicker or older than expected, and that some costs were higher than anticipated, such as those for hospitalization, emergency room services, and specialty drugs. Regulation of premium rates falls to the states, where the insurance lobby tends to prevail in avoiding significant regulation of premiums. As one example of industry-friendly regulation, the Oregon insurance commissioner, after a rigorous review of the experience of Health Net, actually approved a 34.8 percent increase in premiums, almost four times what had been requested, over concerns that “inadequate rates could result in companies going out of business in the middle of the plan year, or being unable to pay claims.” (3)

As premiums keep going up, so do deductibles. A 2014 survey by the Kaiser Family Foundation found that average deductibles for bronze plans, which cover just 60 percent of health care costs, were more than $5,000 for individuals and $10,000 for families, while deductibles for silver plans were $2,907 and $6,078, respectively. (4)

Narrow networks have become endemic under the ACA, which initially permitted insurers to include just 20 percent of “essential community providers” in their plans. A backlash soon broke out among hospitals and physicians on being arbitrarily excluded, forcing disruption of their established relationships with patients and breaking up continuity of care. In response, the Department of Health and Human Services raised its requirement to 30 percent, but this is still a major problem for many patients, especially since out-of-network costs are typically not covered by insurers. Since insurers, hospitals, and physician groups continue to negotiate and re-negotiate their contracts, networks are subject to change at any time, which patients (and physicians) find difficult to keep up with. A recent study found that many health plans sold through the ACA’s exchanges in 2015 were so narrow as not to include such specialists as endocrinologists, rheumatologists, and psychiatrists; 15 percent of these plans did not include a single in-network physician in at least one specialty. (5)

What do these well-entrenched trends mean for patients with private health insurance, whether through their employers or ACA plans purchased on the exchanges? These are three major impacts, with no resolution in sight under the ACA:

  1. Disruption and churning of coverage
    The Urban Institute estimated that 9 million people would shift between Medicaid and the ACA’s exchanges in 2014. (6) We can expect that instability of coverage will continue indefinitely as insurance markets change, requiring a massive bureaucracy trying to mitigate the adverse effects of these shifts. Now, in the ACA’s third open enrollment period, the Obama administration is actually encouraging enrollees to switch plans as a way to avoid steep increases in premiums, acknowledging that 86 percent of people who have coverage through the federal exchange can find a better deal (at least for premiums) by switching. (7) Unfortunately, this volatility of coverage is likely to lead to increased costs as new providers become involved in patients’ care (often repeating laboratory tests and procedures  that were done in the recent past by former providers), as well as decreased quality of care.
  2. Unaffordability of health insurance
    More than 2 million exchange enrollees are not getting subsidies/tax credits because they selected a non-qualifying plan, such as a bronze plan with the lowest premiums and an actuarial value of only 60 percent. (8) Although the median household income in the U. S. is about $53,650, Americans are spending an average of more than $5,000, just forhealth insurance, without factoring in all the other costs associated with actual health care. By the fall of 2015, among adults age 19-64 visiting the ACA’s exchanges, 57 percent could not afford a health plan. (9) The latest study by the Commonwealth Fund found that 43 percent of privately insured adults say their deductible is difficult or impossible to afford, while one-half of low- and moderate-income adults express difficulty affording their deductibles. (10)
  3. Inability to afford health care
    According to the 2015 Milliman Medical Index (MMI), total health care costs, including insurance, for a family of four with an average employer-sponsored insurance PPO plan in 2015 came to $24,671, including payroll deductions and out-of-pocket costs, and is expected to exceed $25,000 in 2016. (11) More than one-half of privately insured adults with incomes under 200 percent of the federal poverty level ($23,340 for an individual and $47,700 for a family of four) had unaffordable health care costs, while 30 percent of adults with moderate incomes (up to $46,680 for an individual and $95,400 for a family of four) had unaffordable costs, double the rate of higher-income adults. (12)

As we look at these trends, it seems clear that the health insurance industry needs more and more help from government and taxpayers to stay alive. Though denied by its supporters and lobbyists, it is in a death spiral and would already be in dire straits without these bailouts by the federal government over many years:

  • Employers’ contributions to employer-sponsored health plans have been tax-deductible for many years
  • Subsidized markets through the ACA’s subsidies/tax credits
  • The industry continues to seek out healthier enrollees, shifting sicker patients to public programs
  • The ACA’s “risk corridor program” protects insurers from losses in qualified health plans sold in the individual and small group markets; as one example, Blue Cross Blue Shield, the largest insurer in North Carolina, received almost $295 million in federal payouts even as it was seeking a 25.7 percent rate increase for its individual policies. (13)

Today, in effect, the Obama administration is being held hostage by the health insurance industry, since it is dependent on it to carry out its signature domestic policy success. No further bailouts are warranted. The public, including patients, families, business and taxpayers, are the patient, not the insurance industry. The industry has had a long run and failed the public interest. It is time to replace it with a more accountable system with universal access, cost containment, lower administrative overhead, and a service-oriented culture—single-payer national health insurance (NHI).

References:

1. Wogan, JB. No cut in premiums for typical family. The Obameter. PolitiFact, August 30, 2012.

2. Pear, R. Health insurance companies seek big rate increases for 2016. New York Times, July 3, 2015.

3. Ibid # 2.

4. Goodnough, A, Pear, R. Unable to meet the deductible. New York Times, October 17, 2014.

5. Dorner, SC, Jacobs, DC, Sommers, BD. Adequacy of outpatient specialty care access in marketplace plans under the Affordable Care Act. JAMA 314 (16): 1749, October 27, 2015.

6. Bergal, J. Churning between Medicaid and exchanges could leave gaps in coverage, experts warn. The Washington Post, January 5, 2014.

7. Goodnough, A. Now, finding a health plan is annual rite for shoppers. New York Times, November 19, 2015.

8. Andrews, M. Study: 2 million exchange enrollees miss out on cost-sharing assistance. Kaiser Health News, August 21, 2015.

9. Collins, SR, Gunja, M, Dotie, MM. To enroll or not to enroll? Why many Americans have gained insurance under the Affordable Care Act while others have not. The Commonwealth Fund, September 25, 2015.

10. Issue Brief. How High Is America’s Health Care Cost Burden? Findings from the Commonwealth Fund Health Care Affordability Tracking Survey, July-August 2015.

11. Milliman. 2015 Milliman Medical Index, May 2015.

12. Ibid # 10.

13. Murawski, J. Blue Cross eligible for $295 million ACA bailout, seeks rate increase. Charlotte Observer, July 7, 2015.

Adapted and excerpted, in part, from my soon-to-be-released book, The Human Face of ObamaCare: Promises vs. Reality and What Comes Next.

(See advance press release at: http://www.johngeymanmd.org)

PolitiFact rates Sanders TRUE on U.S. health spending

Posted by on Monday, Dec 21, 2015

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.

Fact-checking Sanders’ claim that U.S. spends 3 times per capita what the U.K. spends on health care

By Jon Greenberg
PolitiFact, December 20, 2015

Sen. Bernie Sanders, I-Vt., says the best solution to address problems in the United States’ health care system is to guarantee every American access to health care as a right.

Speaking at the New Hampshire Democratic presidential debate, Sanders continued to express support for a single-payer health care system that is popular throughout much of the rest of the world.

To make his point, Sanders compared health care costs between the United States and two other Western nations — the United Kingdom and France.

“Why is it that we spend almost three times per capita as to what they spend in the U.K. —  50 percent more than what they pay in France?” Sanders asked. “The insurance companies, the drug companies are bribing the United States Congress. We need to pass a Medicare-for-all single-payer system.”

Sanders’ numbers are arresting and largely correct.

The Organization for Economic Cooperation and Development has the data for all three nations.

Total per capita spending:

$8,713 – United States
$3,234 – United Kingdom
$4,123 – France

Do the math, and total U.S. spending is about 2.7 times what they spend in the United Kingdom per person, and a bit over twice what they spend per person in France. Everything is measured in dollars, and the data are from 2013.

Sanders’ claim in this case is more accurate than more sweeping versions he has made in the past. In 2009 and again in 2015, he claimed that the United States spends twice as much per capita on health care as any other country. Those claims are overly broad.

Our ruling

Sanders said that the United States spends almost three times on health care per capita what is spent in the United Kingdom and about double what they spend in France. The numbers from an independent, reliable source back that up.

We rate this statement True.

http://www.politifact.com/truth-o-meter/statements/2015/dec/20/bernie-s/fact-checking-bernie-sanders-claim-us-spends-three/

***

Health at a Glance 2015

OECD

In 2013, the United States continued to outspend all other OECD countries by a wide margin, with the equivalent of USD 8,713 for each US resident. This level of health spending is two-and-a-half times the average of all OECD countries (USD 3,453).

http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/health-at-a-glance-2015_health_glance-2015-en#page165

In the Democratic debate this past weekend, Bernie Sanders said, “Why is it that we spend almost three times per capita as to what they spend in the U.K., 50 percent more than what they pay in France… The insurance companies, the drug companies are bribing the United States Congress. We need to pass a Medicare-for-all single-payer system.” In response, PolitiFact wrote, “Sanders’ numbers are arresting and largely correct.”

Although single payer supporters are very familiar with these numbers, it is a welcome change that a source such as PolitiFact finds these numbers to be “arresting” and largely correct, and thus they rate this statement as True.

Another line that Sanders frequently uses is that we spend twice as much on health care as any other country. PolitiFact has twice rated this as False. Technically they are correct. In 2013, we spent over two-and-a-half times the average of OECD countries, but there are some that spent more than half of what we do. Sen. Sanders trips on his words by saying “any other country” instead of “average of other countries.”

Nevertheless, in the two previous articles, PolitiFact trumpeted the fact that his statement was False (though in the second version they buried in the text the fact that fine tuning his talking point would have made it accurate).

Spending on health care that is more than two-and-a-half times the average OECD nation is a very impressive number, and yet PolitiFact buried this behind their stamp of False.

On today’s PolitiFact we can give them a True. On the two previous articles we can give them a rating of “Technically True but Highly Misleading” simply because they swamped the important and accurate fact about how much more we spend on health care that Sen. Sanders was attempting to convey.

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Private insurers are data mining our personal information

Posted by on Friday, Dec 18, 2015

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.

Insurers want to nudge you to better health. So they’re data mining your shopping lists

By Rebecca Robbins
STAT, December 15, 2015

Health insurers are scooping up huge quantities of personal information in a bid to figure out when you’re likely to get sick — and to design interventions to keep you healthy.

Insurance companies have always had access to your medical records, and in some cases your genetic data, too. Now, they’re paying data miners to sift through information on everything from what model car you drive to how many hours you sleep, from which magazines you read to where you shop and what you buy.

The goal: To decipher patterns that will allow them to steer you away from health emergencies. And to save themselves a whole lot of money in the process.

Shopping at home-improvement stores, for instance, turns out to be a great predictor of mental health. If you suddenly stop shopping at Lowe’s, your insurance company may suspect that you’re depressed, (Deloitte’s Dr. Harry) Greenspun said.

And if you drive a foreign-made car, you’re more likely to lose your eligibility for Medicaid in the coming year, according to Chris Coloian, president of Predilytics, a Massachusetts health-care data analytics company recently acquired by the firm Welltok.

Not all of this information is useful in crafting interventions to keep patients healthy. But with the help of data miners, insurers are finding that some patterns can make for powerful tools.

The intervention can be as simple as determining patients’ ethnicities to make sure they’re receiving information in the right language. Or it can be as aggressive as sending a patient a free digital scale — unprompted — if, say, she has congestive heart failure; unexpected weight gain from pooling fluids can be a sign the condition is worsening.

Privacy advocates worry that insurers are using all this highly personal, often sensitive information without informed consent and with little transparency or accountability.

Long before Big Data, of course, health insurers made decisions about which patients to prioritize. But using an algorithm to determine how and when to intervene raises troubling risks, said Kirsten Martin, an assistant professor at George Washington University who studies business ethics and Big Data.

Health insurers say they don’t deny care to anyone based on algorithms; they just use the data to customize the approach to each patient.

In one popular intervention, for instance, three health insurers in the Northeast designed outreach around neighborhood demographics. They staged outdoor health fairs for customers in walkable neighborhoods. Those more likely to drive everywhere were targeted instead with messages about healthy behaviors on social media, Coloian said.

Fifteen years ago, as a young Cornell physics graduate student, (Colin) Hill got swept up in the excitement around the Human Genome Project. He and a fellow physics graduate student started a company that aimed to harness the promise of all that new data.

For nearly a decade, GNS Healthcare worked mostly with pharmaceutical companies, mining genomic and lab test data to help discover drugs and evaluate them. But the firm, based in Cambridge, Mass., has since expanded its focus.

GNS helped the insurance giant Aetna predict which of about 37,000 policyholders were most at risk of developing metabolic syndrome or seeing their condition worsen within a year, using an analysis that took into account demographic variables including ethnicity, cigarette usage, and nightly hours of sleep.

GNS will also rank patients by how much return on investment the insurer can expect if it targets them with particular interventions, such as sending a text message reminding them to refill a prescription or sending a nurse to their home for a checkup. For example, the firm helped a group that manages pharmacy benefits for Regence Blue Cross Blue Shield’s policyholders in the Northwest make decisions about how to target patients who skip their pills.

All patients, of course, should take the medication prescribed to them, “but as a health plan with precious finite resources, where do you focus your energy?” asked Hill, the chief executive of GNS. The algorithm, he said, can tell the insurer not to waste time and money trying to get certain patients to take their pills — but to spend resources on other patients instead.

http://www.statnews.com/2015/12/15/insurance-big-data/

The private insurers are masters at innovation. Now they are paying data miners to sift through extensive personal information on each of their clients. Is this really to keep patients healthy, as the insurers claim, or is it to simply to introduce an opaque process to create a new pathway to medical underwriting to benefit their own bottom line?

Big Data now impacts all of us. The attack on our privacy has placed all of us in the Emperor’s new clothes (nobody told you?). Although the Affordable Care Act greatly limited medical underwriting (smoking, age, etc.), insurers can introduce new innovations based on personal data that could have the same impact (e.g., telling the insurer not to waste time or money on certain patients, etc.).

We should ask, who should be partnering with the patient to provide the best health outcomes? Should it be the health care team with a mission to protect and improve the patient’s health, or should it be a private insurance company with a mission to compete for greater business success in the marketplace?

This blatant invasion of our privacy is one more reason that we should get rid of the private insurers and replace them with a well designed single payer national health program – an institution that would be expected to protect our privacy (think of HIPPA).

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Kaiser Poll: 58% of Americans support Medicare for all

Posted by on Thursday, Dec 17, 2015

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.

Kaiser Health Tracking Poll: December 2015

By Bianca DiJulio, Jamie Firth, and Mollyann Brodie
Kaiser Family Foundation, December 17, 2015

From the Tracking Poll:

As the presidential primaries inch closer and candidates begin to debate the intricacies of their platforms, a long-discussed health policy option has reemerged in debate between democratic candidates; the idea of creating a national health plan in which all Americans would get their insurance through an expanded, universal form of health insurance called Medicare-for-all.  When asked their opinion, nearly 6 in 10 Americans (58 percent) say they favor the idea of Medicare-for-all, including 34 percent who say they strongly favor it. This is compared to 34 percent who say they oppose it, including 25 percent who strongly oppose it. Opinions vary widely by political party identification, with 8 in 10 Democrats (81 percent) and 6 in 10 independents (60 percent) saying they favor the idea, while 63 percent of Republicans say they oppose it.

From the Press Release:

Recently Democratic presidential candidates Hillary Clinton and Bernie Sanders debated the idea of “Medicare-for-all,” which involves creating a national health plan in which all Americans would get their insurance through an expanded version of the Medicare program. A large majority of Democrats (81%) support the idea of Medicare-for-all, as do most independents (60%), while most Republicans (63%) oppose the idea. The poll did not ask about details or tradeoffs.

At the same time, few Democrats say the issue will be the driving force behind their vote: just 5 percent of Democrats say that it will be the single most important factor in their presidential vote. A third of Democrats (34%) say it will be very important, but not the most important factor, while others say it will be one of many factors they will consider (36%) or that it won’t matter at all (5%). Future polls may explore the issue in greater depth.

KFF December 2015 Tracking Poll:

http://kff.org/uninsured/poll-finding/kaiser-health-tracking-poll-december-2015/

Press Release:

http://kff.org/health-costs/press-release/few-uninsured-know-date-of-pending-deadline-for-obtaining-marketplace-coverage-many-say-they-will-get-coverage-soon-though-cost-is-a-concern/

Many political insiders contend that a single payer national health program – an improved Medicare for all – is off the table, so essentially all current political efforts are directed to paring back or modifying the Affordable Care Act – Obamacare. Bernie Sanders does not agree and has injected Medicare for all back into the political arena. So what do Americans think about Medicare for all?

This new poll shows that there has been no decline in support of Medicare for all in that  58 percent of Americans still support the concept, in spite of implementation of the Affordable Care Act. Although there is a partisan divide – 81 percent of Democrats support it and 63 percent of Republicans are opposed – it should be noted that 60 percent of independents also support the idea.

Although this poll did not identify reasons for the opinions, it is likely that many who do not support the concept are simply ideologically opposed to social solidarity, though they would likely use different labels (freedom, markets, individual responsibility, etc.). Others may be opposed because they believe the system is working for them and are concerned about the uncertainties of change.

The poll asked Democrats who support Medicare for all whether this issue might affect their vote in the 2016 presidential election. Although they report that only 5 percent of all Democrats consider it to be the most important factor in their vote, in fact most Democrats do consider it to be a factor to some degree, with only 5 percent saying that it is not important.

So now that the Affordable Care Act has been implemented, Americans still want something better. The majority of Americans, including the majority of independents, support Medicare for all. Let’s work on it.

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