By Jeffrey Krasner
The Boston Globe
March 4, 2007

Governor Deval Patrick yesterday unveiled significantly lower prices for the health insurance plans that uninsured residents will be required to buy starting July 1.

The annual deductible for the basic plan would be steep: $2,000 for an individual and $4,000 for a family.

Performing a calculation… shows an average monthly premium for residents of Eastern Massachusetts of $305. That indicates a decrease of nearly 20 percent in premiums from the earlier bids.

But each plan offers a range of prices based on age. Plans for young adults with more limited coverage are much less expensive. Residents older than 56 will pay more for coverage. The highest-priced plan for those in Eastern Massachusetts, for people ages 56 to 64 with prescription coverage, is from Blue Cross Blue Shield and has a proposed monthly premium of $504.69.

James Roosevelt Jr., the chief executive of Tufts Health Plan, said… (that) Tufts was able to lower prices in part by limiting its hospital network to those that could provide lower-cost, high-quality care. “For example, for cardiac care, we have Mount Auburn Hospital in Cambridge rather than Massachusetts General Hospital,” Roosevelt said.

http://www.boston.com/business/globe/articles/2007/03/04/insurers_slice_rates_on_health_premiums/?page=full

And…

High deductibles a healthcare worry

By Alice Dembner
The Boston Globe
March 5, 2007

In its attempt to make health insurance premiums affordable, a state board is giving the go-ahead to plans with high deductibles, but that is causing concern that many newly insured people may avoid getting treated when they’re sick or may run up onerous debts to pay their medical bills.

Board officials have said a high deductible is necessary to keep the monthly premiums as low as possible and potentially entice more people to comply with the state mandate to obtain health insurance.

But, research shows high deductibles deter people from getting needed treatment, including preventive care, and can plunge those without savings into debt.

“The state is going to have to make some difficult trade-offs between comprehensiveness of benefits and affordability of coverage, at least in the short-run,” said Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, which helped shape the universal coverage law. “High deductibles are a blunt and crude way to make coverage affordable. In the future, I hope we can find other ways.”

The new minimal plans are targeted at 160,000 to 200,000 Massachusetts residents without insurance who earn more than $29,400 a year.

John McDonough, executive director of the advocacy group Health Care For All, worries that the board’s proposal could undermine the goal of universal insurance because people “in marginal circumstances” will be “coerced into paying premiums for a policy they won’t be able to use.”

One board member who supports a higher deductible to reduce the premium nonetheless acknowledges it is not ideal.

“It’s not the policy that optimizes health,” said Jonathan Gruber, an economist at the Massachusetts Institute of Technology who has studied the impact of deductibles. “But, we can’t insist everyone who has no insurance get the policy that optimizes their health. They’re going to revolt.”

“The main thing is no one should be bankrupted by medical costs in Massachusetts,” he added. “Let’s get them into the system and get them real insurance, and then maybe they’ll be interested in buying something better.”

http://www.boston.com/news/local/massachusetts/articles/2007/03/05/high_deductibles_a_healthcare_worry/?page=full

Comment:

By Don McCanne, MD

At an average premium of $305 per month, plus a $2,000 deductible, a person earning $29,400 per year must pay $5,660 before receiving help with medical bills. That leaves less than $2,000 per month to live on. That’s affordable? And don’t even think about receiving care at Massachusetts General Hospital.

The contortions that the policy community goes through to avoid endorsing single payer reform could not be better exemplified than by the comments of Jonathan Gruber, a highly respected MIT economist: “Let’s get them into the system… and then maybe they’ll be interested in buying something better.”

Sure, Professor Gruber.

Insurers slice rates on health premiums

By Jeffrey Krasner
The Boston Globe
March 4, 2007

Governor Deval Patrick yesterday unveiled significantly lower prices for the health insurance plans that uninsured residents will be required to buy starting July 1.

The annual deductible for the basic plan would be steep: $2,000 for an individual and $4,000 for a family.

Performing a calculation… shows an average monthly premium for residents of Eastern Massachusetts of $305. That indicates a decrease of nearly 20 percent in premiums from the earlier bids.

But each plan offers a range of prices based on age. Plans for young adults with more limited coverage are much less expensive. Residents older than 56 will pay more for coverage. The highest-priced plan for those in Eastern Massachusetts, for people ages 56 to 64 with prescription coverage, is from Blue Cross Blue Shield and has a proposed monthly premium of $504.69.

James Roosevelt Jr., the chief executive of Tufts Health Plan, said… (that) Tufts was able to lower prices in part by limiting its hospital network to those that could provide lower-cost, high-quality care. “For example, for cardiac care, we have Mount Auburn Hospital in Cambridge rather than Massachusetts General Hospital,” Roosevelt said.

http://www.boston.com/business/globe/articles/2007/03/04/insurers_slice_rates_on_health_premiums/?page=full

And…

High deductibles a healthcare worry

By Alice Dembner
The Boston Globe
March 5, 2007

In its attempt to make health insurance premiums affordable, a state board is giving the go-ahead to plans with high deductibles, but that is causing concern that many newly insured people may avoid getting treated when they’re sick or may run up onerous debts to pay their medical bills.

Board officials have said a high deductible is necessary to keep the monthly premiums as low as possible and potentially entice more people to comply with the state mandate to obtain health insurance.

But, research shows high deductibles deter people from getting needed treatment, including preventive care, and can plunge those without savings into debt.

“The state is going to have to make some difficult trade-offs between comprehensiveness of benefits and affordability of coverage, at least in the short-run,” said Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, which helped shape the universal coverage law. “High deductibles are a blunt and crude way to make coverage affordable. In the future, I hope we can find other ways.”

The new minimal plans are targeted at 160,000 to 200,000 Massachusetts residents without insurance who earn more than $29,400 a year.

John McDonough, executive director of the advocacy group Health Care For All, worries that the board’s proposal could undermine the goal of universal insurance because people “in marginal circumstances” will be “coerced into paying premiums for a policy they won’t be able to use.”

One board member who supports a higher deductible to reduce the premium nonetheless acknowledges it is not ideal.

“It’s not the policy that optimizes health,” said Jonathan Gruber, an economist at the Massachusetts Institute of Technology who has studied the impact of deductibles. “But, we can’t insist everyone who has no insurance get the policy that optimizes their health. They’re going to revolt.”

“The main thing is no one should be bankrupted by medical costs in Massachusetts,” he added. “Let’s get them into the system and get them real insurance, and then maybe they’ll be interested in buying something better.”

http://www.boston.com/news/local/massachusetts/articles/2007/03/05/high_deductibles_a_healthcare_worry/?page=full

Comment:

By Don McCanne, MD

At an average premium of $305 per month, plus a $2,000 deductible, a person earning $29,400 per year must pay $5,660 before receiving help with medical bills. That leaves less than $2,000 per month to live on. That’s affordable? And don’t even think about receiving care at Massachusetts General Hospital.

The contortions that the policy community goes through to avoid endorsing single payer reform could not be better exemplified than by the comments of Jonathan Gruber, a highly respected MIT economist: “Let’s get them into the system… and then maybe they’ll be interested in buying something better.”

Sure, Professor Gruber.

The New York Times/CBS News Poll
Feb. 23-27, 2007

22. Thinking about the country as a whole, are you generally satisfied or dissatisfied with the cost of health care in this country? Would you say you are very (satisfied/dissatisfied) or somewhat (satisfied/dissatisfied)?

3% – Very satisfied
11% – Somewhat satisfied
22% – Somewhat dissatisfied
59% – Very dissatisfied
4% – DK/NA

24. If you had to say, which do you think is a more serious problem right now — keeping health care costs down for average Americans, OR providing health insurance for Americans who do not have any insurance?

31% – Keeping costs down
65% – Providing for uninsured
5% – DK/NA

25. How serious a problem is it for the United States that many Americans do not have health insurance — very serious, somewhat serious, not too serious, or not at all serious?

70% – Very serious
25% – Somewhat serious
3% – Not too serious
1% – Not at all serious
1% – DK/NA

27. Do you think the federal government should guarantee health insurance for all Americans, or isn’t this the responsibility of the federal government?

64% – Guarantee
27% – Not responsibility
9% – DK/NA

30. If you had to choose, which do you think is more important for the country to do right now, maintain the tax cuts enacted in recent years or make sure all Americans have access to health care?

18% – Cutting taxes
76% – Access to health insurance
1% – Neither
2% – Both
4% – DK/NA

31. Would you be willing or not willing to pay higher taxes so that all Americans have health insurance that they can’t lose no matter what?

60% – Willing
34% – Not willing
6% – DK/NA

37. Do you think it would be fair or unfair for the government in Washington to require all Americans to participate in a national health care plan, funded by taxpayers?

43% – Fair
48% – Unfair
9% – DK/NA

38. Which do you think would be better for the country: 1. Having one health insurance program covering all Americans that would be administered by the government and paid for by taxpayers, OR 2. Keeping the current system where many people get their insurance from private employers and some have no insurance.

47% – One program
38% – Current system
4% – Combination (vol.)
2% – Neither (vol.)
8% – DK/NA

39. Some people have suggested requiring all Americans to have health insurance. Under this plan, employers would be required to provide insurance for all their workers or pay into a fund that would be used to buy insurance for people who do not have insurance. Does this sound like a good idea to you, a bad idea or are you unsure?

36% – Good idea
17% – Bad idea
46% – Unsure
2% – DK/NA

49. Do you think the government would do a better or worse job than private insurance companies in providing medical coverage?

30% – Better
44% – Worse
3% – Same (vol.)
22% – DK/NA

http://graphics8.nytimes.com/packages/pdf/national/03022007_poll.pdf

Comment:

By Don McCanne, MD

Polls continue to show that Americans are very concerned about the problem of the uninsured and about our high health care costs. They believe that the government should guarantee insurance for everyone, and a clear majority are even willing to pay more taxes to accomplish that.

Although we have decided that the problems are very serious and that they must be fixed, we remain divided as to the appropriate respective roles of the government and the private insurance plans. Especially noteworthy in this poll is the fact that only 30 percent of Americans believe that the government would do a better job than the private insurance plans in providing medical coverage.

This lack of confidence in the government isn’t strictly due to anti-government ideology. To the contrary, 64 percent believe that the government should be involved in guaranteeing insurance for everyone. It is much more likely that that those who are healthy and insured believe that their private health plans will work for them should major problems arise. Although they are concerned about increases in premiums, cost sharing, and reduction in benefits, they have not really given much thought as to how the government could address those issues more effectively. The fact that 48 percent believe that it would be unfair for the government to require all Americans to participate in a national health care plan does demonstrate that there is still concern about making the government the exclusive provider of health insurance.

Privately insured individuals incorrectly assume that most of their health cost spending is for the premiums they and their employers pay and the out-of-pocket expenses for themselves and their families. What they don’t realize is that two-thirds of health costs are being paid through the tax system, though with little transparency. They believe that the private plans are funding much of our health care when the heavy weight is actually being carried by us as taxpayers.

Just to list a few other issues that most people don’t think of when they express a preference for private health plans: profound administrative waste, cost shifting, fragmentation of risk pools, medical underwriting, insurance rescission, lifetime caps on coverage, restricted choice of physicians and hospitals, cream skimming, lack of impact on infrastructure to reduce waste and improve value, inability to provide adequate financial security at affordable premiums, inequitable regressive financing of health care, necessity to perpetuate demeaning and underfunded welfare programs, inadequacies of mandates to purchase private insurance, tax dollars wasted on private Medicare Advantage plans, and… (this list is endless!).

So the decision has been made that we must reform health care. We still need to agree on whether that should be through a universal program of government insurance or through an expansion of our inequitable, wasteful, fragmented system of a multitude of private plans and public programs. Polls such as this are being used to suggest that solutions perpetuating the role of private insurers have greater political feasibility. Thus most proposals accept the deficiencies of private plans, such as those listed above, as a tradeoff for increasing the probability of enacting some type of reform, no matter how flawed. Rather than crafting reform to fit misperceptions, shouldn’t we be attempting to change perceptions to align them with reality?

The ultimate decision may default to the government solution once the policy community wakes up and reframes the problem from the straw man of affordable insurance premiums to the blatantly obvious problem of affordable health care. The private insurers have no solutions for the latter, except to dump the real costs onto the taxpayers. Since we’re already paying those, why should we continue to pay the private insurers so much to merely stand on the sidelines and watch? They disappear when it’s their time to play.

Medicare Advantage

Kaiser Family Foundation
February 2007

Most of the 43 million elderly and disabled people on Medicare (81%) have their health bills paid by the traditional fee-for-service program; 19% (8.3 million) receive their Medicare benefits through private health plans that receive payments from Medicare, now generally known as “Medicare Advantage” plans.

Private fee-for-service plans (PFFS) differ from Medicare HMOs and PPOs in that they are not required to establish provider networks or to adopt utilization management strategies, and do not coordinate care like most other Medicare Advantage plans.

In 2006, Medicare began to pay plans under a bidding process. Plans bid against county level benchmarks established by CMS based on the prior year’s MA county payment rate, increased by the projected national growth rate in per capita Medicare spending.

Many plans have expanded services to rural and other areas with benchmarks that are high relative to Medicare FFS spending because these areas were given increases in payment rates under earlier law.

MedPAC analysis based on July 2006 enrollment data shows that Medicare payments to private health plans on behalf of enrollees average 112% of FFS costs for the counties where MA enrollees reside. PFFS plans–prevalent in rural areas where the benchmark rate is significantly higher than Medicare FFS costs–are paid 119% of FFS costs before adjusting for enrollee risk.

http://www.kff.org/medicare/upload/2052-09.pdf

Comment:

By Don McCanne, MD

Of the various Medicare Advantage plans, the private fee-for-service plans most closely resemble the traditional fee-for-service Medicare program. Just as with the traditional Medicare program, the patient can receive care on a fee-for-service basis from any physician willing to accept payment from the plan.

If the private fee-for-service plans work like the traditional Medicare program, then why is the government paying them 119 percent of the costs of the traditional program? That’s much more than the other Medicare Advantage plans receive. Weren’t the private sector plans authorized because they would be much more efficient than the traditional Medicare program run by a government bureaucracy? Aren’t they supposed to be saving the taxpayers money?

Medicare regulations do require that a small portion of the excess payments be used to increase benefits, and so these plans may also offer prescription drug coverage or extra days in the hospital, or a reduction in premiums paid. (They do not need to use very much of the 19 percent overpayment, but only 75 percent of the amount by which the plan’s bid is below the benchmark for the region.)

Why should private plans be paid so much more for duplicating what our more efficient traditional Medicare program is already doing?

Why should patients in the traditional Medicare program be deprived of benefits, such as drug coverage, that are made possible by this deliberate overpayment to the private plans?

Why do our legislators tell us that there isn’t enough money to improve benefits in the traditional program, when they can find plenty of money to reward these plans so generously?

Why do we even have to ask these questions?

By Diane Archer
TomPaine.com
February 27, 2007

The health insurance industry is full of surprises, but history and experience show that insurers will never surprise us with a good, affordable health care system for America. No cocktail of regulations, subsidies and tax credits will provide health security to the uninsured, underinsured and anxiously insured–virtually all Americans.

Unlike private insurance, Medicare works for older and disabled Americans because it pools risk and does not punish people financially because they need costly health care services. It works because it has predictable benefits and offers reliable coverage. And it works because coverage is automatic, unlike Medicaid and SCHIP, ensuring all eligible persons coverage and protecting them against the risk of losing coverage for failing to sign up or recertify.

Of course, every health policy expert out there knows that a publicly administered system would guarantee all Americans good, affordable health care at far less cost than we can ever achieve through private insurers, and they’ll say so at the dinner table. It’s time they went public.

http://www.tompaine.com/articles/2007/02/27/profit_for_some_or_care_for_all.php

Comment:

By Don McCanne, MD

Request to the policy community: Please come out of the closet. We need you!

Profit For Some Or Care For All

By Diane Archer
TomPaine.com
February 27, 2007

The health insurance industry is full of surprises, but history and experience show that insurers will never surprise us with a good, affordable health care system for America. No cocktail of regulations, subsidies and tax credits will provide health security to the uninsured, underinsured and anxiously insured–virtually all Americans.

Unlike private insurance, Medicare works for older and disabled Americans because it pools risk and does not punish people financially because they need costly health care services. It works because it has predictable benefits and offers reliable coverage. And it works because coverage is automatic, unlike Medicaid and SCHIP, ensuring all eligible persons coverage and protecting them against the risk of losing coverage for failing to sign up or recertify.

Of course, every health policy expert out there knows that a publicly administered system would guarantee all Americans good, affordable health care at far less cost than we can ever achieve through private insurers, and they’ll say so at the dinner table. It’s time they went public.

http://www.tompaine.com/articles/2007/02/27/profit_for_some_or_care_for_all.php

Comment:

By Don McCanne, MD

Request to the policy community: Please come out of the closet. We need you!

AISHealth.com
From Managed Care Week, Feb. 19, 2007

One objective of Aetna, Inc.’s launch of four new plans for early retirees targeting the 55-to-65 age group Feb. 8 is to create long-term relationships with pre-retirees that can continue as the members age in to Medicare.

Aetna’s new products will enable employers to reduce the benefits they pay for, while ensuring that retired employees have a level of coverage equal to, or slightly less than, what they had before.

The new plans will also enable Aetna to keep members after Medicare becomes their primary payer. Enrollees in an Aetna pre-65 product will be informed about 90 days before becoming eligible for Medicare that they need to convert to some form of post-65 coverage, and one option will be Aetna. Employers may assign beneficiaries to a post-65 Aetna plan, but they must give them notice, information about the plan and opportunity to opt out, (Aetna vice president Jay) Putterman says. The value of staying with Aetna is that “if we’re helping them pre-65 clinically, as they age, we think we’re in the most favorable position to continue to help them after 65.”

Aetna will guarantee issue of policies for people in the employer group, but employers’ rates will be subject to group underwriting.

http://www.aishealth.com/Bnow/022107a.html

Comment:

By Don McCanne, MD

Cream skimming? Well, let’s see.

Aetna has designed these plans to resemble their Medicare Advantage plans. By enrolling individuals in the decade before Medicare eligibility, presumably the patients will become comfortable with their Aetna physicians and want to continue with them under the Medicare Advantage version. Aetna makes the transition very easy by making enrollment essentially automatic unless the beneficiary specifically elects to opt out.

There is an element of cream skimming here since this over 55 group is still employed and comparatively healthy since those no longer employed because of their diasbilities have been removed from this risk pool. Targeting a healthier sector is cream skimming.

But this program is more nefarious than that. The over 55 population has a higher incidence of significant chronic disorders, though many may still be able to continue their employment. Aetna does not want those individuals to enroll in their Medicare Advantage program. So Aetna has established a separate risk pool for these employees over 55 that is subject to group underwriting. If they are healthy, great. But if that pool has an unacceptable level of chronic disorders, Aetna merely sets the premium at a level that is unaffordable so that the employer will decline this program. This is about as close as you can get to a program that is almost 100 percent effective in excluding those with health care needs from their Medicare Advantage plans.

Why do the policymakers continue to insist that the private insurers must be a part of our models of reform? How much more evidence do they need? Have the policymakers no decency?