Inpatient Hospital Prices Drive Spending Variation for Episodes of Care for Privately Insured Patients

By Chapin White, James D. Reschovsky, Amelia M. Bond
National Institute for Health Care Reform, February 2014

When including all care related to a hospitalization — for example, a knee or hip replacement — the price of the initial inpatient stay explains almost all of the wide variation from hospital to hospital in spending on so-called episodes of care, according to a study by researchers at the former Center for Studying Health System Change (HSC) based on 2011 claims data for 590,000 active and retired nonelderly autoworkers and dependents. For example, average spending for uncomplicated inpatient knee and hip replacements ranged across 36 hospitals from less than $17,500 to $37,000 for an episode of care that included all services during the inpatient stay and all follow-up care within 30 days of discharge. The pattern of spending variation for knee and hip replacements held true for other conditions, with hospital inpatient price differences accounting for the vast majority of spending variation rather than differences in spending on physician and other non-hospital services during and after discharge or spending on readmissions. Moreover, hospitals’ case-mix-adjusted relative spending per episode for different service lines — for example, orthopedics and cardiology — tend to be highly correlated with each other. Understanding why spending for episodes of care varies so much among hospitals can help private purchasers accurately target ways to control spending. This study’s findings — inpatient prices drive the bulk of episode-spending variation and hospitals with high spending for one service line tend to have high spending for other service lines — indicate that private purchasers can focus on hospitals’ overall inpatient price levels rather than pursue bundled payments for episodes of care or service-line-specific purchasing strategies.

To Bundle or Not to Bundle…

In Medicare, there is a compelling case for bundled payments — wide variations in post-acute care use are the main factor behind differences between high- and low-spending geographic regions and between high- and low-spending hospitals. Moreover, Medicare patients often have multiple chronic conditions that are complex to manage. But the results of this analysis show that the case for bundled hospital payments for the privately insured is much weaker — post-acute care and other ancillary services account for a relatively small share of overall spending on hospitalization episodes, and they account for almost none of the variation in episode spending from one hospital to another.

Implications for Private Purchasers

It remains to be seen whether, going forward, the tools available to private purchasers — tiered benefits, reference pricing, and so on — can counteract hospitals’ significant market power. Other more dramatic interventions, such as state-based hospital rate setting, or offering a “public option” that uses administered pricing through the state health insurance exchanges are options, albeit unlikely in most states to gain traction.

http://www.nihcr.org/Episode-Spending-Variation

Rather than relying on proven methods of controlling health care costs through government administered pricing, the Affordable Care Act (ACA) relies on private sector integration of the health care delivery system through entities such as accountable care organizations. One of the mechanisms promoted by ACA is bundled payments – paying a single pre-set amount for all services associated with a single hospital episode of care such as a joint replacement. Will bundled payments adequately control our health care spending?

This study shows that, for private patients, the upper end of the wide variation in spending between hospitals is driven by high prices which permeate all of the hospitals’ service lines. For those services amenable to bundling, such as joint replacement, most of the services provided are related to the specific episode and thus do not vary much between hospitals. Post-acute care and other ancillary services which might otherwise be pared back with bundling are such a small part of the overall services that bundling cannot save money by reducing the volume of services connected to the episode.

Since it is the high prices of the standard services that are a problem, attacking only those services that are bundled will not save much since high prices throughout the rest of the hospital are left undisturbed or even increased some to offset any price concessions for the bundled services.

This article mentions that there is a case for bundled payments under Medicare since these more complex patients have wide variations in acute and post-acute care, providing more flexibility in controlling the volume of services. Prices are already controlled through the Medicare prospective payment system, which, to a limited degree, represents a form of bundling (think DRGs).

Other nations, even if using private insurers, utilize rigid government price setting through one form or another. The authors of this report suggest that state-based hospital rate setting or government administered pricing would not likely gain traction. Yet “bundling” all hospital spending through global hospital budgets (like fire or police department budgets), as part of a single payer system, is precisely what we need. Let’s give it traction.

Connected health and the rise of the patient-consumer: How to achieve better care at a lower cost? 

By William Frist
Health Affairs, February 2014

America’s health care delivery sector stands at a tipping point—a convergence of a growing, graying, and highly consumptive population with increasingly limited financial and human capital resources.

Policy makers naturally gravitate toward government to provide the framework for solutions to this worsening scenario…. I’ve spent about equal time in government and the private health sector, and I believe there are two other levers that are more likely to be effective.

The first lever is the rapid ascent of the newly empowered consumer, equipped for the first time with actionable knowledge that can affect his or her health. The second consists of magnificent advances in information technology (IT). The exponential growth and application of these technologies are revolutionizing, in a very short period of time, the automation, connectivity, decision support, and mining of health information and data, which together will radically transform and improve health care delivery.

These two forces are just beginning to come of age. Neither was a significant driver of health care value just three years ago. Today their potential is enormous. Together, the empowered consumer and rapidly advancing health IT will channel our chaotic, fragmented, and wasteful health care sector toward a more seamless, transparent, accountable, and efficient system. They will answer the underlying question of how we will get better care for less cost. They will be the primary keys for game-changing, value-driven reform, where provider compensation and payments are determined not by the type and number of specific services rendered but by the quality and outcomes of care provided. 

…. Government is slow to change and even slower to self-correct. …But what America needs now is more health for less money…. And in that effort, the newly empowered consumer is likely to lead the way. 

http://content.healthaffairs.org/content/33/2/191.full

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Comment:

By Kip Sullivan, JD

In this article, William Frist, a former Republican senator from Tennessee, claims “the newly empowered consumer” will play the leading role in health care reform. According to Frist, “consumers” recently acquired immense power thanks to “magnificent advances in information technology (IT).” The “empowered consumer” aided by health IT will lead us to a “more seamless, transparent, accountable and efficient system.” 

Why couldn’t Frist lower his decibel level a notch and simply call our attention to recent developments in HIT that have some potential to improve health and perhaps lower costs? Why all the undocumented hype?

In Frist’s case, it appears his conservative ideology is at work. He notes early in his paper that government is pokey and cannot be expected to play a leading role in health care reform. If he can draw readers into his fantasies about patients with the powers of comic book figures, readers might be less likely to ask government to play a leading role in solving the health care crisis.

But Frist’s conservative values can’t be the entire explanation because thousands of American health policy experts with no discernible political leanings, and many Democrats, talk just like him. Frist’s article represents a common style of argument utilized by American health policy researchers as well as the politicians who listen to them. Hillary Clinton, Tom Daschle, Newt Gingrich and Tommy Thompson are other examples of politicians who have been influenced by managed-care speak.

In the rest of this comment I will use Frist’s paper as a case study with which to elucidate three key elements of this style.

First, the subjects of discussion – the mechanisms that will allegedly ameliorate the crisis – are described so abstractly it is difficult to know how to refute or confirm the claims made for them. The “accountable care organization” is a prominent example. The “empowered consumer” is another. Frist offers us not one example of how any of us would know if we fall into the category of “empowered,” and he is vague about how “rapidly advancing health IT” will confer “power” upon patients.

If Frist had simply argued that Americans are becoming more knowledgeable about their health, we might quibble about how true that is but we wouldn’t be baffled by his argument. But he speaks of more “power,” not more knowledge. Does he mean that thanks to growing access to medical records via computers, for example, that patients now have the power to browbeat insurance companies into paying for their medical care if the insurance company refuses? Does he mean that because of the numerous apps one can buy to monitor calories consumed, steps walked per day, etc. that patients have the power to force drug companies and hospitals to lower their prices?

A second characteristic of managed-care speak is the use of value-laden labels to refer to the aforementioned amorphous concepts. As Ted Marmor has noted on numerous occasions, and as he and Jonathan Oberlander noted in a recent paper http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3514994, the vague concepts advanced by American health policy experts often bear labels designed to persuade rather than enlighten. “Empowered consumers” and “seamless” care are two examples from Frist’s paper. “Accountable care,” “coordinated care,” and “integrated delivery systems” are common examples one could find in myriad other articles. What do those labels mean? And who could be in favor of their opposites, for example, “unaccountable care” or “disempowered patients”?

A third common feature of the style I’m talking about is the confidence with which conclusions are asserted even though no evidence is marshaled to support the claim, or the evidence cited is incomplete, cherry-picked, or flat wrong. In Frist’s case, he could have limited his argument to a simple statement that the spread of electronic medical records and mobile phones and the invention of numerous apps might create a better informed patient among the segment of the population that can afford access to the Internet and myriad apps. But he did not do that. Instead he got out his trumpet and heralded the coming of a new age.

Those three features – poorly defined concepts, value-laden names for these concepts, and exaggerated claims for them – coupled with their ubiquitousness are lethal for busy readers, especially busy politicians who don’t have time to give definitions a reality check and to read papers cited in endnotes to see if they say what the writer said they said. The net effect is a form “truthiness,” to borrow Stephen Colbert’s wonderful label for claims that seem to be true but aren’t.  http://www.merriam-webster.com/info/06words.htm

This “truthiness” – the illusion that what experts like Frist say is based on science – is a major obstacle to a productive public debate about how to solve the health care crisis, and to the enactment of a single-payer system. It lends cover to politicians who want to take single-payer off the table.

Association Between Participation in a Multipayer Medical Home Intervention and Changes in Quality, Utilization, and Costs of Care

By Mark W. Friedberg, MD, MPP; Eric C. Schneider, MD, MSc; Meredith B. Rosenthal, PhD; Kevin G. Volpp, MD, PhD; Rachel M. Werner, MD, PhD
JAMA, February 26, 2014

Abstract

Importance:  Interventions to transform primary care practices into medical homes are increasingly common, but their effectiveness in improving quality and containing costs is unclear.

Objective:  To measure associations between participation in the Southeastern Pennsylvania Chronic Care Initiative, one of the earliest and largest multipayer medical home pilots conducted in the United States, and changes in the quality, utilization, and costs of care.

Design, Setting, and Participants:  Thirty-two volunteering primary care practices participated in the pilot (conducted from June 1, 2008, to May 31, 2011). We surveyed pilot practices to compare their structural capabilities at the pilot’s beginning and end. Using claims data from 4 participating health plans, we compared changes (in each year, relative to before the intervention) in the quality, utilization, and costs of care delivered to 64 243 patients who were attributed to pilot practices and 55 959 patients attributed to 29 comparison practices (selected for size, specialty, and location similar to pilot practices) using a difference-in-differences design.

Exposures:  Pilot practices received disease registries and technical assistance and could earn bonus payments for achieving patient-centered medical home recognition by the National Committee for Quality Assurance (NCQA).

Main Outcomes and Measures:  Practice structural capabilities; performance on 11 quality measures for diabetes, asthma, and preventive care; utilization of hospital, emergency department, and ambulatory care; standardized costs of care.

Results:  Pilot practices successfully achieved NCQA recognition and adopted new structural capabilities such as registries to identify patients overdue for chronic disease services. Pilot participation was associated with statistically significantly greater performance improvement, relative to comparison practices, on 1 of 11 investigated quality measures: nephropathy screening in diabetes (adjusted performance of 82.7% vs 71.7% by year 3, P < .001). Pilot participation was not associated with statistically significant changes in utilization or costs of care. Pilot practices accumulated average bonuses of $92 000 per primary care physician during the 3-year intervention.

Conclusions and Relevance:  A multipayer medical home pilot, in which participating practices adopted new structural capabilities and received NCQA certification, was associated with limited improvements in quality and was not associated with reductions in utilization of hospital, emergency department, or ambulatory care services or total costs over 3 years. These findings suggest that medical home interventions may need further refinement.

http://jama.jamanetwork.com/article.aspx?articleid=1832540

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The Medical Home’s Impact on Cost & Quality: An Annual Update of the Evidence, 2012-2013

By Marci Nielsen, PhD, MPH, J. Nwando Olayiwola, MD, MPH Paul Grundy, MD, MPH, Kevin Grumbach, MD
Patient-Centered Primary Care Collaborative, January 2014

A summary of key points from this year’s report include:

1.  PCMH (Patient-Centered Medical Home) studies continue to demonstrate impressive improvements across a broad range of categories including: cost, utilization, population health, prevention, access to care, and patient satisfaction, while a gap still exists in reporting impact on clinician satisfaction.

2.  The PCMH continues to play a role in strengthening the larger health care system, specifically Accountable Care Organizations and the emerging medical neighborhood model.

3.  Significant payment reforms are incorporating the PCMH and its key attributes.

Although the evidence is early from an academic perspective, and this report does not represent a formal peer-reviewed meta-analysis of the literature, the expanding body of research provided here suggests that when fully transformed primary care practices have embraced the PCMH model of care, we find a number of consistent, positive outcomes.

http://www.pcpcc.org/resource/medical-homes-impact-cost-quality

Comment:

Don McCanne, M.D.

Imagine doing away with all primary care professionals. Patients would select a specialist depending on their specific presenting symptoms: an otolaryngologist for a cold, a surgeon for a minor laceration, a neurologist for a headache, or a gastroenterologist for an acute diarrhea. Of course, that’s ridiculous. Primary care is not a concept that we have to sell to the public. Virtually everyone accepts it as a given.

So what is the Patient-Centered Medical Home (PCMH) and how does it differ from primary care? This RAND study published in the current issue of JAMA provides enough information that we can say that, for practical purposes, there is no difference.

The primary care practices studied by RAND received a stamp of approval from the National Committee for Quality Assurance (NCQA) and received bonuses for accomplishing that goal. Other than that, when compared to similar practices, they proved to be slightly better on only one of eleven quality measures and showed no reductions in utilization of hospital, emergency department, or ambulatory care services or in total costs over the 3 years of the study.

Various commentaries on this study have suggested that the reason that the study group did not do better was that the PCMH is more appropriate for people with complex, chronic problems. Only then would we expect to see improved outcomes. Really? If this effort to reinforce our primary care infrastructure is to be designed to take care of the sickest patents only, then where do the relatively healthy go? Directly to the specialists?

It has also been speculated that the practices volunteering for the study were already high-performing practices and thus did not have much room for further improvement. If that were the case, then why did the control practices do just as well?

Rather than criticizing the disappointing performance of the NCQA-recognized primary care practices, we should acknowledge that the comparison practices were providing the same efficiency and quality of care that was being provided by these selected practices. Although some might quibble with the terminology, our primary care practices are already functioning as patient-centered medical homes!

It is true that we need to reinforce primary care. The latest report from the Patient-Centered Primary Care Collaborative suggests that we can strengthen primary care, though the improvements that they report have not been subjected to “a formal peer-reviewed meta-analysis of the literature.” But more important, the reinforcement that we urgently need is to expand the primary care infrastructure, both geographically to provide better access, and through the greater use of non-physician primary care professionals, especially nurse practitioners.

Another interesting observation about this RAND study is that it was conducted using our multi-payer system – a system well documented to be inefficient, and one that is driven more by business interests rather than patient-service interests. Although we need more than just a single payer system to improve our primary care infrastructure, it would be a gigantic and crucially important first step in establishing a single public system that would enable further improvements in primary care, where patients come first.

Association Between Participation in a Multipayer Medical Home Intervention and Changes in Quality, Utilization, and Costs of Care

By Mark W. Friedberg, MD, MPP; Eric C. Schneider, MD, MSc; Meredith B. Rosenthal, PhD; Kevin G. Volpp, MD, PhD; Rachel M. Werner, MD, PhD
JAMA, February 26, 2014

Abstract

Importance:  Interventions to transform primary care practices into medical homes are increasingly common, but their effectiveness in improving quality and containing costs is unclear.

Objective:  To measure associations between participation in the Southeastern Pennsylvania Chronic Care Initiative, one of the earliest and largest multipayer medical home pilots conducted in the United States, and changes in the quality, utilization, and costs of care.

Design, Setting, and Participants:  Thirty-two volunteering primary care practices participated in the pilot (conducted from June 1, 2008, to May 31, 2011). We surveyed pilot practices to compare their structural capabilities at the pilot’s beginning and end. Using claims data from 4 participating health plans, we compared changes (in each year, relative to before the intervention) in the quality, utilization, and costs of care delivered to 64 243 patients who were attributed to pilot practices and 55 959 patients attributed to 29 comparison practices (selected for size, specialty, and location similar to pilot practices) using a difference-in-differences design.

Exposures:  Pilot practices received disease registries and technical assistance and could earn bonus payments for achieving patient-centered medical home recognition by the National Committee for Quality Assurance (NCQA).

Main Outcomes and Measures:  Practice structural capabilities; performance on 11 quality measures for diabetes, asthma, and preventive care; utilization of hospital, emergency department, and ambulatory care; standardized costs of care.

Results:  Pilot practices successfully achieved NCQA recognition and adopted new structural capabilities such as registries to identify patients overdue for chronic disease services. Pilot participation was associated with statistically significantly greater performance improvement, relative to comparison practices, on 1 of 11 investigated quality measures: nephropathy screening in diabetes (adjusted performance of 82.7% vs 71.7% by year 3, P < .001). Pilot participation was not associated with statistically significant changes in utilization or costs of care. Pilot practices accumulated average bonuses of $92 000 per primary care physician during the 3-year intervention.

Conclusions and Relevance:  A multipayer medical home pilot, in which participating practices adopted new structural capabilities and received NCQA certification, was associated with limited improvements in quality and was not associated with reductions in utilization of hospital, emergency department, or ambulatory care services or total costs over 3 years. These findings suggest that medical home interventions may need further refinement.

http://jama.jamanetwork.com/article.aspx?articleid=1832540

****

The Medical Home’s Impact on Cost & Quality: An Annual Update of the Evidence, 2012-2013

By Marci Nielsen, PhD, MPH, J. Nwando Olayiwola, MD, MPH Paul Grundy, MD, MPH, Kevin Grumbach, MD
Patient-Centered Primary Care Collaborative, January 2014

A summary of key points from this year’s report include:

1.  PCMH (Patient-Centered Medical Home) studies continue to demonstrate impressive improvements across a broad range of categories including: cost, utilization, population health, prevention, access to care, and patient satisfaction, while a gap still exists in reporting impact on clinician satisfaction.

2.  The PCMH continues to play a role in strengthening the larger health care system, specifically Accountable Care Organizations and the emerging medical neighborhood model.

3.  Significant payment reforms are incorporating the PCMH and its key attributes.

Although the evidence is early from an academic perspective, and this report does not represent a formal peer-reviewed meta-analysis of the literature, the expanding body of research provided here suggests that when fully transformed primary care practices have embraced the PCMH model of care, we find a number of consistent, positive outcomes.

http://www.pcpcc.org/resource/medical-homes-impact-cost-quality

Imagine doing away with all primary care professionals. Patients would select a specialist depending on their specific presenting symptoms: an otolaryngologist for a cold, a surgeon for a minor laceration, a neurologist for a headache, or a gastroenterologist for an acute diarrhea. Of course, that’s ridiculous. Primary care is not a concept that we have to sell to the public. Virtually everyone accepts it as a given.

So what is the Patient-Centered Medical Home (PCMH) and how does it differ from primary care? This RAND study published in the current issue of JAMA provides enough information that we can say that, for practical purposes, there is no difference.

The primary care practices studied by RAND received a stamp of approval from the National Committee for Quality Assurance (NCQA) and received bonuses for accomplishing that goal. Other than that, when compared to similar practices, they proved to be slightly better on only one of eleven quality measures and showed no reductions in utilization of hospital, emergency department, or ambulatory care services or in total costs over the 3 years of the study.

Various commentaries on this study have suggested that the reason that the study group did not do better was that the PCMH is more appropriate for people with complex, chronic problems. Only then would we expect to see improved outcomes. Really? If this effort to reinforce our primary care infrastructure is to be designed to take care of the sickest patents only, then where do the relatively healthy go? Directly to the specialists?

It has also been speculated that the practices volunteering for the study were already high-performing practices and thus did not have much room for further improvement. If that were the case, then why did the control practices do just as well?

Rather than criticizing the disappointing performance of the NCQA-recognized primary care practices, we should acknowledge that the comparison practices were providing the same efficiency and quality of care that was being provided by these selected practices. Although some might quibble with the terminology, our primary care practices are already functioning as patient-centered medical homes!

It is true that we need to reinforce primary care. The latest report from the Patient-Centered Primary Care Collaborative suggests that we can strengthen primary care, though the improvements that they report have not been subjected to “a formal peer-reviewed meta-analysis of the literature.” But more important, the reinforcement that we urgently need is to expand the primary care infrastructure, both geographically to provide better access, and through the greater use of non-physician primary care professionals, especially nurse practitioners.

Another interesting observation about this RAND study is that it was conducted using our multi-payer system – a system well documented to be inefficient, and one that is driven more by business interests rather than patient-service interests. Although we need more than just a single payer system to improve our primary care infrastructure, it would be a gigantic and crucially important first step in establishing a single public system that would enable further improvements in primary care, where patients come first.

Medicare Data Show Wide Differences In ACOs’ Patient Care

By Jordan Rau
Kaiser Health News, February 21, 2014

Networks of doctors and hospitals set up under the Affordable Care Act to improve patients’ health and save money for Medicare are having varying rates of success in addressing their patients’ diabetes and heart disease, according to government data released Friday.

About 4 million Medicare beneficiaries are being cared for by one of the more than 250 ACOs that Medicare has approved. Each ACO is responsible for taking care of a group of at least 5,000 Medicare beneficiaries; although patients can go to any doctor they choose. Medicare counts as part of an ACO the patients who mostly go to doctors and facilities within that coalition. Patients generally do not choose an ACO. 

The release is the first public numbers from Medicare of how patient care is being affected by specific networks. These accountable care organizations, or ACOs, are among the most prominent of Medicare’s experiments in changing the ways physicians and health care facilities work together and are paid.

To make sure the ACOs are not stinting on care in their quests to earn bonuses, Medicare is tracking 33 different quality measures.

On Friday, the Centers for Medicare & Medicaid Services (CMS) released data on five of these measures for 141 ACOs during 2012. Four evaluate how well the ACOs helped patients with diabetes. The fifth examined how many patients with arteries packed with plaque received appropriate medicines to relax their blood vessels. Medicare said it did not release more measures because it did not think some of them could be easily understood by consumers or would be useful. Other measures, such as ones about cholesterol levels, were not released because the clinical standards have changed.

http://www.kaiserhealthnews.org/Stories/2014/February/21/Medicare-Data-Shows-Wide-Differences-In-ACOs-Patient-Care.aspx

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Comment:

By Don McCanne, M.D.

Single payer reform continues to be dismissed in favor of insurer-friendly reform – reform led by accountable care organizations (ACOs) initiated by the Affordable Care Act (ACA). This new report should make it clear that we are following the wrong path.

Of tens or hundreds of thousands of potential measurements to determine quality, only thirty-three were selected. Of those thirty-three, only five are being reported because the other twenty-seven were not useful, or could not be understood, or were measuring out-of-date standards.

It is an outrage that our government continues to take us down this expensive ACA pathway that wastes our resources while impairing access for far too many people with health care needs. They keep promising us that ACOs will improve efficiency and quality, when they have already proven otherwise. Five lousy measures! Is that all that we have to show for it!?

We need to dismiss our politicians and have them take with them their ACA with its ACOs so that we can bring in leaders who will establish for us a truly American program – an improved Medicare single payer program that covers everyone.

Five measurements, and four of them are for only one disease! Get outta here!

Medicare Data Show Wide Differences In ACOs’ Patient Care

By Jordan Rau
Kaiser Health News, February 21, 2014

Networks of doctors and hospitals set up under the Affordable Care Act to improve patients’ health and save money for Medicare are having varying rates of success in addressing their patients’ diabetes and heart disease, according to government data released Friday.

About 4 million Medicare beneficiaries are being cared for by one of the more than 250 ACOs that Medicare has approved. Each ACO is responsible for taking care of a group of at least 5,000 Medicare beneficiaries; although patients can go to any doctor they choose. Medicare counts as part of an ACO the patients who mostly go to doctors and facilities within that coalition. Patients generally do not choose an ACO.

The release is the first public numbers from Medicare of how patient care is being affected by specific networks. These accountable care organizations, or ACOs, are among the most prominent of Medicare’s experiments in changing the ways physicians and health care facilities work together and are paid.

To make sure the ACOs are not stinting on care in their quests to earn bonuses, Medicare is tracking 33 different quality measures.

On Friday, the Centers for Medicare & Medicaid Services (CMS) released data on five of these measures for 141 ACOs during 2012. Four evaluate how well the ACOs helped patients with diabetes. The fifth examined how many patients with arteries packed with plaque received appropriate medicines to relax their blood vessels. Medicare said it did not release more measures because it did not think some of them could be easily understood by consumers or would be useful. Other measures, such as ones about cholesterol levels, were not released because the clinical standards have changed.

http://www.kaiserhealthnews.org/Stories/2014/February/21/Medicare-Data-S…

Single payer reform continues to be dismissed in favor of insurer-friendly reform – reform led by accountable care organizations (ACOs) initiated by the Affordable Care Act (ACA). This new report should make it clear that we are following the wrong path.

Of tens or hundreds of thousands of potential measurements to determine quality, only thirty-three were selected. Of those thirty-three, only five are being reported because the other twenty-seven were not useful, or could not be understood, or were measuring out-of-date standards.

It is an outrage that our government continues to take us down this expensive ACA pathway that wastes our resources while impairing access for far too many people with health care needs. They keep promising us that ACOs will improve efficiency and quality, when they have already proven otherwise. Five lousy measures! Is that all that we have to show for it!?

We need to dismiss our politicians and have them take with them their ACA with its ACOs so that we can bring in leaders who will establish for us a truly American program – an improved Medicare single payer program that covers everyone.

Five measurements, and four of them are for only one disease! Get outta here!

Strong Enrollment Numbers Released by Covered California and Department of Health Care Services

Covered California, February 19, 2014

Covered California™ and the California Department of Health Care Services (DHCS) announced today that as of Jan. 31, 2014, more than 1.6 million Californians have signed up for either Covered California health insurance plans or for low-cost or no-cost Medi-Cal.

Nearly half of those covered — 728,410 Californians — selected a Covered California health insurance plan.

Most subsidy-eligible consumers who enrolled — 451,074, or about 62 percent — signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86 percent of consumers across all tiers received some sort of financial assistance.

Metal Level of Individuals Enrolled: Oct. 1 to Jan. 31:

Subsidy eligible (626,210):

0.4% – Minimum Coverage

21.1% – Bronze

67.3% – Silver

6.0% – Gold

5.1% – Platinum

Unsubsidized (102,200):

5.5% – Minimum Coverage

33.8% – Bronze

28.7% – Silver

14.4% – Gold

17.7% – Platinum

http://news.coveredca.com/2014/02/strong-enrollment-numbers-released-by.html

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40 Percent Of Enrollees Through eHealth Website Are Young Adults

By Julie Appleby
Kaiser Health News, February 21, 2014

During a call with Wall Street analysts Thursday, eHealth CEO Gary Lauer said 40 percent of the 169,000 consumers who used the site to obtain insurance from October through December were in the young adult category (18-34), “a highly sought-after demographic.”

http://capsules.kaiserhealthnews.org/index.php/2014/02/40-percent-of-enrollees-through-ehealth-website-are-young-people/

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Private exchange sees surge in health care enrollment

By Kelly Kennedy
USA TODAY, February 20, 2014

Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012.

Premium rates, (eHealth v.p. Brian) Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.

http://www.usatoday.com/story/news/nation/2014/02/20/fourth-quarter-reports-show-high-insurance-enrollment-in-private-sector/5639725/

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Comment:

By Don McCanne, M.D.

Of the 728,000 people already enrolled in Covered California – California’s insurance exchange established under the Affordable Care Act – over two-thirds of those who were eligible for subsidies purchased silver plans, whereas well less than one-third who were not eligible for subsidies also selected silver plans. Why might that be?

(First, a clarification on subsidies: The Covered California report includes both premium tax credits and cost-sharing subsidies under their definition of subsidies. However, the type of subsidy can influence whether or not an individual chooses a silver plan. Anyone with an income below 400 percent of the federal poverty level [FPL] can receive a premium tax credit if the plan is purchased through the exchange. Those with incomes below 250 percent of the FPL can also qualify for cost-sharing subsidies when they use their plans, but only if they purchase a silver plan through the exchange.)

(Clarifying metal tiers: The actuarial value of a plan is the percent that the plan pays for for health care services provided within the insurer-selected networks, leaving the rest to be paid by the patient, sometimes with subsidies. Bronze covers 60 percent, silver 70, gold 80 and platinum 90 percent. The standard for the exchanges is silver, whereas the standard for Congress is gold.)

It is likely that the conservatives are right in one regard with their consumer-driven health care in that people will shop prices when purchasing health plans. For the Covered California purchasers who were not eligible for any subsidies, more chose the lower priced bronze or minimal coverage plans (plans with very high deductibles) – 39 percent combined. Since the unsubsidized group included wealthier plan purchasers, it is no surprise that 32 percent chose the high end gold and platinum plans. Since only 29 percent of the unsubsidized purchasers selected the intermediate silver plans, it appears that these purchasers were more interested in either lower prices or better coverage, but not so much both. Consumer shopping seemed to play a role.

What about those who were eligible for subsidies – those below 400 percent of FPL? It is likely that the majority were eligible for both premium and cost-sharing subsidies, but would have to purchase silver plans to receive both. Since the spreads between the premiums for the silver and bronze plans were not that great after the premium credits were applied, most shoppers likely decided that the additional cost-sharing subsidies were well worth the small differences in the premiums. So 67 percent of this group were smart shoppers and bought the silver plans. Only 21 percent bought the bronze or minimum coverage plans, and likely many of those were above 250 percent FPL that disqualifies them from receiving cost-sharing subsidies. Only 11 percent sprung for the gold or platinum plans – not surprising that it was this low since members of this group all fall under 400 percent FPL.

Now let’s look at purchases of health plans through private exchanges that are not eligible for any subsidies, using eHealth as our example. We do not have a breakdown of the precise numbers that chose the various tiers, but the price shopping impact had to be very great. eHealth reports that their average premiums dropped 25 percent because so many individuals chose the cheap bronze-level plans. The percentage has to be huge. With no subsidies to consider, these shoppers chose price.

What can we make of all of this? Everyone should have essential health care coverage automatically. Instead we have inserted shopping decisions that are not a problem for the wealthy because they can buy the best, but they are a problem for the majority who will buy lower actuarial value plans because their personal finances are limited. Our policymakers have selected a plan with the relatively low actuarial value of only 70 percent (silver plan) to serve as the benchmark, especially for those with incomes below 250 FPL. They reduce the impact with subsidies, but this does not correct what is a fundamentally flawed policy in health care financing.

Wait until those shoppers who chose bronze plans start accessing health care. When they’re left broke, maybe they will finally understand our message – that we all can have essential health care, and we can pay for it easily through equitable taxes. Nobody has to shop plans, everyone gets care, and nobody goes broke.