Assembly passes universal health care bill

By Dan Goldberg 
Capital New York, May 27, 2015

The state Assembly on Wednesday voted for a single-payer health bill, the first time in more than two decades the chamber has taken up the measure.

The vote was 89-47, an overwhelming but largely symbolic step toward universal health insurance. The bill now heads to the Republican-controlled Senate where it is not expected to pass. 

Assemblyman Richard Gottfried, chair of the health committee, gave an impassioned speech on the floor in support of the New York Health Act, arguing that it was long past time for New Yorkers to rid themselves of the intrusive insurance companies whose goal is to deny claims rather than provide care.

The plan’s benefits, Gottfried said, would be more generous than any plan on the current market, and there would be no co-pays or deductibles.

One problem, pointed out by Republicans, is that the offering, while generous, is the opposite of what public health officials are pushing, including those in the Cuomo administration, who have professed that insurance systems, and high deductibles and co-pays help ensure people use the health system judiciously instead of opting for more, often unnecessary, care.

“There is a role for insurance companies,” state health commissioner Dr. Howard Zucker said Wednesday before the debate.

The passing of the Affordable Care Act, which subsidizes private insurance for people below a certain income level, was a valid effort, Gottfried said, but ultimately served to highlight why the system needs to be entirely scrapped.

“I think the A.C.A. has made it clear to people … there are profound problems in our health care system that cannot be addressed by incremental change in that system,” Gottfried said.

http://www.capitalnewyork.com/article/albany/2015/05/8568890/assembly-passes-universal-health-care-bill?top-featured-2

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Comment:

By Don McCanne, MD

Although there remains considerable political resistance to the concept of a universal public health insurance program, the fact that Richard Gottfried’s New York Health Act passed the Assembly by such a wide margin, 89-47, shows that there is very strong support for single payer reform amongst many politicians and the voters who support them.

The policies incorporated in a publicly-administered and publicly-financed single payer model of health care financing are vastly more efficient and effective than a fragmented, multi-payer model such as that perpetuated by the Affordable Care Act. But better policy alone does not equate with an improved understanding of the models. That is why coalitions, education, and grassroots support is so important. These activities in New York undoubtedly contributed to moving the bill through the Assembly.

In an email message, Mark Dunlea, co-founder of Single Payer New York, listed coalition members supporting the New York Health Act:

“New York Health has been endorsed by the NYS Academy of Family Physicians, NYS American Academy of Pediatrics, NYS Nurses Association, Committee of Interns and Residents, Doctors Council SEIU, NY chapter of Physicians for a National Health Program, SEIU 1199, NYS AFL-CIO, Communications Workers of America, Amalgamated Transit Union Local 1056 and 1179, United Auto Workers 9 & 9A, UFCW Local 1500, Capital District Area Labor Federation, Local 32BJ SEIU, NYSUT, United Federation of Teachers, Working Families Party, Green Party, Citizen Action, StateWide Senior Action Council, NYPIRG, League of Women Voters, and others.”

Those of us at Physicians for a National Health Program are particularly proud of the contribution of the New York Metro chapter of PNHP.

The lesson is clear. The health policies enacted through the Affordable Care Act, though of some limited benefit, are grossly inadequate when considering the need that exists. When people understand that there is a far better option, they will support it. Obviously we have much more work to do, so it is imperative that we step up our efforts in educating the public and in mobilizing grassroots efforts through coalition activities.

The Post-Launch Problem: The Affordable Care Act’s Persistently High Administrative Costs

By David Himmelstein and Steffie Woolhandler
Health Affairs Blog, May 27, 2015

Last year we, and many others, drew attention to the chaotic and costly roll out of the Affordable Care Act’s (ACA) exchanges. The chaos is mostly over (unless King prevails over Burwell), but the costs will linger on. The roughly $6 billion in exchange start-up costs pale in comparison to the ongoing insurance overhead that the ACA has added to our health care system — more than a quarter of a trillion dollars though 2022.

Bloated Administrative Costs

Between 2014 and 2022, CMS projects $2.757 trillion in spending for private insurance overhead and administering government health programs (mostly Medicare and Medicaid), including $273.6 billion in new administrative costs attributable to the ACA. Nearly two-thirds of this new overhead — $172.2 billion — will go for increased private insurance overhead.

Most of this soaring private insurance overhead is attributable to rising enrollment in private plans which carry high costs for administration and profits. The rest reflects the costs of running the exchanges, which serve as brokers for the new private coverage and will be funded (after initial startup costs) by surcharges on exchange plans’ premiums.

Government programs — primarily Medicaid — account for the remaining $101.4 billion increase in overhead. But even the added dollars to administer Medicaid will flow mostly to private Medicaid HMOs, which will account for 59 percent of total Medicaid administrative costs in 2022. (The subcontracting of Medicaid coverage to private HMOs has nearly doubled Medicaid’s administrative overhead, which has risen from 5.1 percent of total Medicaid expenditure in 1980 to 9.2 percent this year).

The $273.6 billion in added insurance overhead under the ACA averages out to $1,375 per newly insured person per year, or 22.5 percent of the total federal government expenditures for the program.

Better Options

Insuring 25 million additional Americans, as the CBO projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seem awfully steep, particularly when much cheaper alternatives are available.

Traditional Medicare runs for 2 percent overhead, somewhat higher than insurance overhead in universal single payer systems like Taiwan’s or Canada’s. Yet traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage. Indeed, dropping the overhead figure from 22.5 percent to traditional Medicare’s 2 percent would save $249.3 billion by 2022.

The ACA isn’t the first time we’ve seen bloated administrative costs from a federal program that subcontracts for coverage through private insurers.  Medicare Advantage plans’ overhead averaged 13.7 percent in 2011, about $1,355 per enrollee. But rather than learn from that mistake, both Democrats and Republicans seem intent on tossing more federal dollars to private insurers. Indeed, the House Republicans’ initial budget would have voucherized Medicare, eventually diverting almost the entire Medicare budget to private insurers (the measure passed by the House on April 30 dropped the “premium support” voucher scheme).

In contrast, a universal single payer system would pare down both insurers’ and providers’ overhead, yielding huge administrative savings — $375 billion in 2012 according to one recent estimate.

In health care, public insurance gives much more bang for each buck.

http://healthaffairs.org/blog/2015/05/27/the-post-launch-problem-the-affordable-care-acts-persistently-high-administrative-costs

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Comment:

By Don McCanne, MD

Although there are innumerable major problems with having used the Affordable Care Act to reform health care, one of the more significant deficiencies that we pointed out well in advance was that the design would add significantly to the excessive administrative burden that already characterized the U.S. health care system. This study quantifies that additional burden.

These additional administrative costs amount to $1,375 per newly insured person per year, an astonishing 22.5 percent of the total federal government expenditures for the program. Between 2014 and 2022, $273.6 billion in new administrative costs will be attributable to ACA.

The two primary goals of those involved in reforming health care were to expand coverage to everyone (well, almost everyone) and to control health care spending. Because of design defects, tens of millions will be left uninsured, and tens of millions more will be have inadequate coverage, leaving them vulnerable to health care costs — certainly falling short of what should have been our goals in expanding coverage.

Regarding controlling spending, the experimental innovations to date have had little impact in reducing wasteful spending but rather seem to have slowed health care costs by erecting financial barriers to beneficial health care services. Not only did the designers fail to use this opportunity to reduce the profound administrative waste unique to the U.S. health care financing system, they added significantly to this waste, as this study demonstrates.

Single payer would fix these problems. Administrative waste would be dramatically reduced and the savings would be used to expand coverage to absolutely everyone while eliminating financial barriers to care. We simply need the political resolve to do it.

Health, Medicine and Justice: Designing a Fair and Equitable Healthcare System

By Joshua Freeman, M.D.

I hope that this book complements the others (by Donohoe, Geyman, Young, and others), offering a perspective that combines a physician’s knowledge of medical care and how it is delivered, a scholar’s understanding of the organization of the health system, social determinants of of health and health disparities, a caring person’s commitment to justice and equity, and an activists’s desire to change the world. I hope it is of some value.

Contents

Chapter 1:  Why Do We Have a Healthcare System?
Chapter 2:  The U.S. Healthcare System: Best in the World?
Chapter 3:  The Social Determinants of Health and Health Inequities
Chapter 4:  Impact of the U.S. Health System on the Health of the Public
Chapter 5:  Primary Care: The Essential Basis for an Effective Healthcare System
Chapter 6:  The Role of Medical Education in Perpetuating the Health System
Chapter 7:  Graduate Medical Education
Chapter 8:  Assessing Appropriate Healthcare: Sometimes the Best Thing to Do Is Nothing
Chapter 9:  The Role of Profit in U.S. Health Care
Chapter 10:  Solutions and Projected Outcomes

Health, Medicine and Justice, by Joshua Freeman: http://www.amazon.com/Medicine-Justice-Designing-Equitable-Healthcare/dp/0988799685

Josh Freeman’s Blog: Medicine and Social Justice: http://www.medicinesocialjustice.blogspot.com

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Comment:

By Don McCanne, MD

Many books have been written about the problems and potential solutions for our health care system. This one stands out because it represents the informed views of a noted physician educator who is also a health and social justice activist. He hopes the book is “of some value,” and it assuredly is.

Joshua Freeman is a leader in primary care, both as a practitioner and as an academic, being the Chair of the Department of Family Medicine at the University of Kansas Medical Center. He has an excellent understanding of our disorganized health care system and of the social determinants of health and health inequities. He has studied extensively medicine and social justice, and shares his views through his blog. This book brings to print the basis of his passionate activism in support of equitable health care for all.

As the nation meanders on with implementation of the well-meaning but intolerably deficient policies of the Affordable Care Act, this book can give us renewal in our efforts to educate the nation on the policies that actually would work to bring affordable and equitable health care to all.

Overkill: An avalanche of unnecessary medical care is harming patients physically and financially. What can we do about it?

By Atul Gawande
The New Yorker, May 11, 2015

Could pointless medical care really be that widespread? Six years ago, I wrote an article for this magazine, titled “The Cost Conundrum,” which explored the problem of unnecessary care in McAllen, Texas, a community with some of the highest per-capita costs for Medicare in the nation. But was McAllen an anomaly or did it represent an emerging norm? In 2010, the Institute of Medicine issued a report stating that waste accounted for thirty per cent of health-care spending, or some seven hundred and fifty billion dollars a year, which was more than our nation’s entire budget for K-12 education. The report found that higher prices, administrative expenses, and fraud accounted for almost half of this waste. Bigger than any of those, however, was the amount spent on unnecessary health-care services. Now a far more detailed study confirmed that such waste was pervasive.

I decided to do a crude check. I am a general surgeon with a specialty in tumors of the thyroid and other endocrine organs. In my clinic that afternoon, I saw eight new patients with records complete enough that I could review their past medical history in detail. One saw me about a hernia, one about a fatty lump growing in her arm, one about a hormone-secreting mass in her chest, and five about thyroid cancer. To my surprise, it appeared that seven of those eight had received unnecessary care.

Virtually every family in the country, the research indicates, has been subject to overtesting and overtreatment in one form or another. 

Another powerful force toward unnecessary care…: the phenomenon of overtesting, which is a by-product of all the new technologies we have for peering into the human body.

Overtesting has also created a new, unanticipated problem: overdiagnosis. This isn’t misdiagnosis—the erroneous diagnosis of a disease. This is the correct diagnosis of a disease that is never going to bother you in your lifetime.

My last patient in clinic that day, Mrs. E., a woman in her fifties, had been found to have a thyroid lump. A surgeon removed it, and a biopsy was done. The lump was benign. But, under the microscope, the pathologist found a pinpoint “microcarcinoma” next to it, just five millimetres in size. Anything with the term “carcinoma” in it is bound to be alarming—“carcinoma” means cancer, however “micro” it might be. So when the surgeon told Mrs. E. that a cancer had been found in her thyroid, which was not exactly wrong, she believed he’d saved her life, which was not exactly right. More than a third of the population turns out to have these tiny cancers in their thyroid, but fewer than one in a hundred thousand people die from thyroid cancer a year. Only the rare microcarcinoma develops the capacity to behave like a dangerous, invasive cancer. (Indeed, some experts argue that we should stop calling them “cancers” at all.) That’s why expert guidelines recommend no further treatment when microcarcinomas are found.

Nonetheless, it’s difficult to do nothing. The patient’s surgeon ordered a series of ultrasounds, every few months, to monitor the remainder of her thyroid. When the imaging revealed another five-millimetre nodule, he recommended removing the rest of her thyroid, out of an abundance of caution. The patient was seeing me only because the surgeon had to cancel her operation, owing to his own medical issues. She simply wanted me to fill in for the job—but it was a job, I advised her, that didn’t need doing in the first place. The surgery posed a greater risk of causing harm than any microcarcinoma we might find, I explained. There was a risk of vocal-cord paralysis and life-threatening bleeding. Removing the thyroid would require that she take a daily hormone-replacement pill for the rest of her life. We were better off just checking her nodules in a year and acting only if there was significant enlargement.

H. Gilbert Welch, a Dartmouth Medical School professor, is an expert on overdiagnosis, and in his excellent new book, “Less Medicine, More Health,” he explains the phenomenon this way: we’ve assumed, he says, that cancers are all like rabbits that you want to catch before they escape the barnyard pen. But some are more like birds—the most aggressive cancers have already taken flight before you can discover them, which is why some people still die from cancer, despite early detection. And lots are more like turtles. They aren’t going anywhere. Removing them won’t make any difference.

We’ve learned these lessons the hard way. Over the past two decades, we’ve tripled the number of thyroid cancers we detect and remove in the United States, but we haven’t reduced the death rate at all. In South Korea, widespread ultrasound screening has led to a fifteen-fold increase in detection of small thyroid cancers. Thyroid cancer is now the No. 1 cancer diagnosed and treated in that country. But, as Welch points out, the death rate hasn’t dropped one iota there, either. (Meanwhile, the number of people with permanent complications from thyroid surgery has skyrocketed.) It’s all over-diagnosis. We’re just catching turtles.

What if I recommend not operating on a tiny tumor, saying that it is just a turtle, and it turns out to be a rabbit that bounds out of control?

Mrs. E., my patient with a five-millimetre thyroid nodule that I recommended leaving alone, feared doing too little. So one morning I took her to the operating room, opened her neck, and, in the course of an hour, removed her thyroid gland from its delicate nest of arteries and veins and critical nerves. Given that the surgery posed a greater likelihood of harm than of benefit, some people would argue that I shouldn’t have done it. I took her thyroid out because the idea of tracking a cancer over time filled her with dread, as it does many people. A decade from now, that may change. The idea that we are overdiagnosing and overtreating many diseases, including cancer, will surely become less contentious. That will make it easier to calm people’s worries. But the worries cannot be dismissed. Right now, even doctors are still coming to terms with the evidence.

Two hours after the surgery, Mrs. E.’s nurse called me urgently to see her in the recovery room. Her neck was swelling rapidly; she was bleeding. We rushed her back to the operating room and reopened her neck before accumulating blood cut off her airway. A small pumping artery had opened up in a thin band of muscle I’d cauterized. I tied the vessel off, washed the blood away, and took her back to the recovery room.

I saw her in my office a few weeks later, and was relieved to see she’d suffered no permanent harm. The black and blue of her neck was fading. Her voice was normal. And she hadn’t needed the pain medication I’d prescribed. I arranged for a blood test to check the level of her thyroid hormone, which she now had to take by pill for the rest of her life. Then I showed her the pathology report. She did have a thyroid cancer, a microcarcinoma about the size of this “O,” with no signs of unusual invasion or spread. I wished we had a better word for this than “cancer”—because what she had was not a danger to her life, and would almost certainly never have bothered her if it had not been caught on a scan.

http://www.newyorker.com/magazine/2015/05/11/overkill-atul-gawande

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Comment:

By Don McCanne, MD

Yesterday’s Quote of the Day discussed the harm done by our health care reform agenda that overemphasizes attacking overutilization while neglecting more compelling goals of reform. Atul Gawande has been one of the more credible and outspoken voices in raising the alarm on overutilization, especially with his widely referenced 2009 New Yorker article on the excessive use of health care services in McAllen, Texas. But where does Dr. Gawande stand when he is faced with health care utilization questions regarding his own patients?

In his current New Yorker article, “Overkill,” he describes the overtesting and overdiagnosis of thyroid carcinoma, which, in turn, results in overtreatment – all manifestations of overutilization of health care. For his own patient with a very small thyroid nodule, he recommended leaving it alone – a recommendation that is well supported in the medical literature.

Yet, apparently because the patient wanted something done, he elected to remove her thyroid gland. She did turn out to have a microcarcinoma, but he reports that it “was not a danger to her life, and would almost certainly never have bothered her.” She manifested two common problems of overutilization: 1) a post-operative complication (hemorrhage requiring a second operation), and 2) significant costs that were unnecessary but added to the very high costs of health care paid by all of us through taxes or insurance premiums.

Thus Dr. Gawande is himself an overutilizer while preaching the evils of overutilization. Our current policy priorities are to combat overutilization. What should be done in Dr. Gawande’s case? Should he and the hospital be denied payment for the thyroidectomy? Should he be assigned low quality scores that will reduce future payments for his health care services? Should he be disciplined by the appropriate medical staff committee? Was his violation serious enough to report him to the state medical licensing board for consideration of disciplinary action?

No to all of these. He is a highly respected, ethical surgeon who certainly tries to do the right thing. He did make a clinical decision that could be challenged, especially in today’s environment where overutilization is the primary target in health care reform.

Most cases of supposed overutilization as reported in many studies, such as those from Dartmouth, represent similar judgmental decisions in which opinion as to the optimal way to proceed would vary amongst the best of authorities, and Dr. Gawande’s judgement in this case falls within the realm of acceptable medical practices (she did have cancer!).

We do not have and likely never will have processes through which we can identify, with certainty, medical care that should be aborted in advance because it clearly would constitute overutilization. Complex clinical settings defy clarity in health care utilization. (There are exceptions in which clear guidelines can be established, and those guidelines certainly should be enforced.)

As mentioned yesterday, designing health policy based on overutilization has been detrimental because it results in concepts such as patient-driven health care, especially high deductibles, that have impaired patient access to beneficial medical care and have exposed patients to financial hardship. It also has generated concepts such as accountable care organizations that, to this date, have not accomplished much more than to increase the profound administrative waste that permeates the U.S. system.

Our efforts should not be directed to trying to ferret out reputable physicians such as Dr. Gawande, accuse them of overutilization, and chase them out of the profession. That could be all of us, and who then would be left to care for patients? (This is not to say that we shouldn’t rein in blatant abusers.)

Instead we should turn our attention to policies that would would make health care truly universal, comprehensive, equitable, accessible, and priced appropriately, while increasing efficiencies through policies that would actually be effective in recovering waste – the prime example being the replacement of our expensive, fragmented system of financing care with an efficient single payer national health program.

Overutilization, Overutilized

By Deborah Levine and Jessica Mulligan
Journal of Health Politics, Policy and Law, April 2015

Abstract

Overutilization is commonly blamed for escalating costs, compromising quality, and limiting access to the US health care system. Recent estimates suggest that nearly one-third of health care spending in the United States is a result of unnecessary care. Despite the surge of exposés that purport to uncover this “new” problem, narratives about overutilization have been circulating in health policy debates since the beginnings of the health insurance industry. This article traces how the term overutilization has spread in popularity from a relatively small community of mid-twentieth-century insurance experts to economists, physicians, epidemiologists, and eventually the news media of the early twenty-first century. A quick glimpse at the history of the term reveals that there has been constant disagreement and debate over the meaning and impact of overutilization. Moreover, the term has been put to very different uses, from keeping socialism at bay to preserving the fiscal integrity of Medicare to protecting the health of patients. The overutilization narrative, seductive in its promise of cutting costs without sacrificing access to quality care, too often drowns out other difficult conversations about social welfare, health equity, prices, and universal coverage.

Conclusion: Overutilization Has Overreached

For sixty years, overutilization has been a key term in health policy debates. The term emerged in literature about the potential demise of voluntary insurance and then spread to new domains: first with inpatient hospital stays and then eventually with almost every other form of care. The audience for this narrative expanded as well: from industry insiders to economists, physicians, public health researchers, the media, and finally, patients.

Utilization review and other techniques for curbing overutilization like requiring prior authorization, capitated payments, and increasing patient cost sharing have now been employed by insurers and providers for decades. Yet the overall impact on health care costs appears negligible; costs continue to rise. Moreover, some analysts point out that the United States may be underutilizing a host of important services relative to other countries, especially primary care.

Overutilization of certain services probably is one of the many problems in our health care system. But there are grave consequences to considering overutilization the central problem. For one, the increased patient cost sharing that is supposed to rein in overutilization has contributed to a situation in which 31.7 million people with insurance are considered underinsured because they dedicate such a high proportion of their household income to medical bills. And as to the sizable uninsured population, the prospect of expanding coverage has too often been cast as a menace to the system rather than a laudable and socially responsible achievement.

There is a need for a more critical conversation about who wins and loses thanks to the present system setup. Some work is already happening in this regard, but it has yet to reach the wide popular audiences and become “common sense” in the way that overuse has. Academic researchers have called attention to how much we pay for services and pointed out that our high prices are largely to blame for runaway health care costs. Others have argued that risk-pooling techniques need to be resocialized by turning away from the highly segmented, experience-rated pools that currently dominate insurance marketplaces. But it is too difficult for these counternarratives to be heard above the seductive din about overutilization and the attendant need for individual consumer restraint that continues to dominate discussions of health care costs in the United States.

Overutilization is a management neologism that has become an economistic health policy fairy tale where costs can be cut, services denied, and hospital days reduced with no harm — financial, physical, or otherwise — to patients, providers, or payers. Curbing overutilization alone will not redeem our health care system. And real people stand to lose when reducing utilization and increasing efficiency is seen as the primary goal of health policies.

http://jhppl.dukejournals.org/content/40/2/421.full

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Comment:

By Don McCanne, MD

Yesterday’s Quote of the Day message on the prevalence of underinsurance and its consequences, largely caused by the increased use of high deductibles designed to decrease utilization of health care, is a prime example of the pervasiveness of the misguided concept that “overutilization” needs to be the primary target of reform.

Hopefully this article, “Overutilization, Overutilized,” will become a landmark paper in the chronology of health care reform. The concept of overutilization of health care has driven much of the political and policy decisions in our reform efforts. This is tragic because it “too often drowns out other difficult conversations about social welfare, health equity, prices, and universal coverage,” according to the authors.

The policies designed to correct alleged overutilization have not only been relatively ineffective in reducing spending to a meaningful degree, often they have also been harmful, impairing access to health care and frequently creating financial hardships for those with health care needs.

This is particularly shameful when there remains disagreement on which particular applications of health care are clearly excessive, and whether they are truly as pervasive as is often claimed. Further, if this waste is as common as is often claimed, most of it is not recoverable because of the difficulty of establishing precise guidelines that can be applied reliably to complex clinical settings.

We have a much greater problem with health care underutilization and its adverse consequences which are compounded by policies designed to curtail utilization.

The Abstract and Conclusion above describe the general theme of the article, but the details are important if we are to turn the reform process into one that aims to provide health care for everyone, and away from our current processes that are blunt instruments designed to reduce utilization while ignoring harm to the patient.

For those who do not have access to the current issue of the Journal of Health Politics, Policy and Law, this article can be downloaded at the link above for a fee of $15. It is unfortunate that this article is behind a paywall, because it does need to be distributed widely.

We need to do all that we can to change the dialogue on reform. Instead of imperiling our health care system with misguided policies to haphazardly reduce utilization, we need to advance policies that would make health care truly universal, comprehensive, equitable, accessible, and priced appropriately, while increasing efficiencies through policies that would actually be effective in recovering waste – the prime example being the replacement of our expensive, fragmented system of financing care with an efficient single payer national health program.

Let’s change the narrative.

The Problem of Underinsurance and How Rising Deductibles Will Make It Worse

By Sara R. Collins, Petra W. Rasmussen, Sophie Beutel, Michelle M. Doty
The Commonwealth Fund, May 20, 2015

Abstract

New estimates from the Commonwealth Fund Biennial Health Insurance Survey, 2014, indicate that 23 percent of 19-to-64-year-old adults who were insured all year — or 31 million people — had such high out-of-pocket costs or deductibles relative to their incomes that they were underinsured. These estimates are statistically unchanged from 2010 and 2012, but nearly double those found in 2003 when the measure was first introduced in the survey. The share of continuously insured adults with high deductibles has tripled, rising from 3 percent in 2003 to 11 percent in 2014. Half (51%) of underinsured adults reported problems with medical bills or debt and more than two of five (44%) reported not getting needed care because of cost. Among adults who were paying off medical bills, half of underinsured adults and 41 percent of privately insured adults with high deductibles had debt loads of $4,000 or more.

Exhibit 2. Underinsured rates among adults ages 19-64 who were insured all year, by source of coverage at the time of the 2014 survey
20% – Employer-provided coverage
37% – Individual coverage
22% – Medicaid
42% – Medicare (under age 65, disabled)

Conclusion

The rate of growth in medical costs and insurance premiums has slowed in recent years. However, millions of consumers continue to be saddled with high out-of-pocket health care costs. While the number of underinsured people in the United States held constant in 2014, the steady growth in the proliferation and size of deductibles threatens to increase underinsurance in the years ahead.

The Affordable Care Act’s coverage expansions and protections have greatly improved the quality of insurance coverage available to people who lack job-based health benefits. In addition, cost-sharing subsidies significantly reduce deductibles for people with low incomes who buy plans in the marketplaces. But those subsidies phase out quickly, leaving families with deductibles that may be high relative to their incomes. In addition, the law has only limited ability to improve the cost protection of employer plans, which is the source of most American’s health insurance.

Reforms and new approaches are needed to improve the cost protection of health plans. These could include innovations in benefit design that slow growth in deductibles and emphasize incentives that encourage people to utilize, rather than delay, timely health care. In addition, policymakers should identify and address holes in health plans — like out-of-network physicians in in-network hospitals — which are surprising many families with unexpected costs. Finally, systemwide efforts to lower the underlying rate of medical cost growth and share those savings with consumers will be critical.

http://www.commonwealthfund.org/publications/issue-briefs/2015/may/problem-of-underinsurance

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Comment:

By Don McCanne, MD

This update of The Commonwealth Fund’s continuing study of the rate of underinsurance confirms that the problem persists, and the trend of increasing deductibles may well make it worse.

It is alarming that, since 2003, the category with the most comprehensive coverage – employer-provided coverage – has doubled the rate of underinsurance increasing from 10% to 20%. The greatest contributing factor has been the increase in the use of high deductibles.

Because this study was of individuals insured for a full year, and it was completed before the end of 2014 – the first year of the ACA exchanges – the underinsurance rate of enrollees in the exchanges could not be separated out, and they were included in the category of individual coverage. In total, 37% of those with individual coverage were underinsured. This is no surprise since high deductibles have been used in the individual market in an attempt to prevent premiums from becoming even less affordable, but this has been at the cost of more than doubling the rate of underinsurance.

Although we do not have the data yet, we can make some assumptions, based on plan design, for the trends in underinsurance for those enrolled in the exchanges. Because of the subsidies for out-of-pocket expenses for those with the lowest incomes that qualify for the exchange plans, it is possible that the rate of underinsurance is slightly reduced for this group. However, for those with moderate incomes, especially for those who do not qualify for cost-sharing subsidies, the relatively low actuarial values (percent of costs that the plans cover) that most exchange enrollees select will likely perpetuate and perhaps even expand the prevalence of underinsurance. So middle-income Americans do not escape the risk of being underinsured.

Although Medicaid provides more comprehensive benefits with fewer out-of-pocket expenses, the very low incomes of Medicaid beneficiaries leave many of them underinsured since the modest cost sharing that they do have consumes an excessive percentage of their incomes.

Patients under 65 who receive Medicare do so because of major long-term disabilities. Since most of them have very limited incomes and other expenses, and Medicare’s comprehensiveness is limited, this group has the highest rates of underinsurance – 42%. Obviously, when we speak of Medicare for all, it is imperative that we clarify that we mean an improved Medicare that has much more comprehensive coverage.

Can this trend be reversed? Can we put in place policies that will result in reducing or even eliminating the deductibles?

If the plans were to maintain the same actuarial values to keep the premiums the same while reducing deductibles, the out-of-pocket costs would shift to those with greater health care needs who already have enough financial problems. That would defeat one of the most important functions of health insurance – preventing financial hardship in the face of medical need.

Another possibility would be to reduce the deductibles and shift the actuarial values upward, but that would result in sharp increases in insurance premiums. That would not be acceptable to employers, nor would it be acceptable to politicians who would have to find revenue sources to increase the premium subsidies for the exchange plans. It is easy to cut spending for employers and for the budget hawks in Congress, but it is almost impossible to reverse the cuts and restore or even expand that spending.

Suppose we leave the higher deductibles in place, but provide enough subsidies to eliminate underinsurance for everyone. The administrative complexity alone would make this a very foolish idea. Also when you look at who is underinsured, you would have to increase the amounts of the subsidies and expand eligibility to cover many more of the moderate income individuals in the exchanges, and you would also have to provide subsidies for those enrolled in employer-provided plans to cover the increase in deductibles and other cost sharing in those plans. This would further compound the wasteful administrative excesses that already characterize our health care financing system.

Do we really need to say it again? A well designed single payer system would fix this.