What if my individual health insurance plan is changing or being cancelled?

HealthCare.gov, Accessed December 20, 2013

If your insurance company cancels your plan, you have several options:

*  Buy one of the plans the company offers in its place.

*  Buy a new plan in the Marketplace.

*  Buy a plan outside the Marketplace.

Additional option if your plan is cancelled: A catastrophic plan

If your plan has been cancelled and you can’t afford a Marketplace plan to replace it, you can apply for a hardship exemption. This will allow you to buy a catastrophic plan. A catastrophic plan generally requires you to pay all of your medical costs up to a certain amount, usually several thousand dollars. These policies usually have lower premiums than a comprehensive plan, but cover you only if you need a lot of care. They basically protect you from worst-case scenarios.

http://www.healthcare.gov/what-if-my-current-individual-plan-is-changing-or-not-being-offered-in-2014/

Comment:

By Don McCanne, M.D.

As the numerous reports in the media indicate, the insurance industry is not particularly pleased with the prospect of a large influx of older and sicker individuals enrolling in the catastrophic plans designed and priced for healthy individuals under age 30. Instability is an inherent characteristic of such a dysfunctional financing system.

This rule modification is simply one more reason why we need to enact a simplified, more affordable, and more effective health care financing system – an improved Medicare for all.

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The Effect of Patient Cost Sharing on Utilization, Health, and Risk Protection

By Hitoshi Shigeoka

National Bureau of Economic Research, Working Paper 19726, December 2013

Abstract

This paper exploits a sharp reduction in patient cost sharing at age 70 in Japan, using a regression discontinuity (RD) design to examine its effect on utilization, health, and financial risk arising from out-of-pocket expenditures. Due to the national policy, cost sharing is 60-80 percent lower at age 70 than at age 69. I find that both outpatient and inpatient care are price sensitive among the elderly. While I find little impact on mortality and other health outcomes, the results show that reduced cost sharing is associated with lower out-of-pocket expenditures, especially at the right tail of the distribution.

1. Introduction

I reach three conclusions. First, I find that reduced cost sharing at age 70 discontinuously increases health care utilization. The corresponding elasticity is modest, at around -0.2 for both outpatient visits and inpatient admissions. Examining patterns of utilization in more detail, I also find that lower patient cost sharing is associated with increases in the number of patients presenting both serious and nonserious diagnoses. For example, I find large increases in outpatient visits for diagnoses that are defined as Ambulatory Care Sensitive Conditions (ACSCs), for which proper and early treatment reduces subsequent avoidable admissions.

Second, in terms of benefits, I do not find that lower patient cost sharing improves any of the health measures I examine, such as mortality and self-reported physical and mental health. Since health is a stock, it may take some time for the most observable health effects to be realized. Therefore, it is challenging to address it using the RD approach unless the causes of death are acute. Nonetheless, I do not find any change even in acute cause-specific mortality. The lack of differences in health in spite of utilization changes implies that patient cost sharing can reduce health care utilization without adversely affecting health, at least in the short run.

Finally, I do find that lower cost sharing at 70 yields reductions in out-of-pocket expenditure, especially at the right tail of the distribution, because the reduction in price at age 70 overwhelms offsetting increases in utilization. This finding suggests that patients with high medical spending benefit substantially from financial protection against risk due to lower cost sharing.

6. Discussion

6.3 Cost—benefit Analysis

Finally, I conduct a simple cost—benefit analysis associated with the change in the price of health care services at age 70. Since I needed to make a number of assumptions, the results from this exercise are mostly speculative. The social cost is the combination of the deadweight loss of program financing and the moral hazard, while the benefit is risk protection against unexpected out-of-pocket medical spending. My estimates suggest that the welfare gain of risk protection from lower patient cost sharing is comparable to the total social cost, indicating that the welfare gain from risk protection may fully cover the total social cost in this setting. One limitation of this welfare analysis is that it does not incorporate welfare gains from health improvements. While I do not find any short-term reduction in mortality or improvement in any self-reported health measures, it is possible that preventive care induced by lower cost sharing at age 70 may prevent severe future health events, thus improving health in the long run. It is infeasible to estimate long-run effects in this framework, because individuals eventually age into treatment.

http://www.nber.org/papers/w19726?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Comment:

By Don McCanne, M.D.

Although this paper is challenging to read because of its technical nature, nevertheless it is an important contribution to our understanding of patient cost sharing for health care services and what that means for the individual and society.

Cost sharing has permeated health care financing in the United States, and it is intensifying. Why? It is commonly thought to be one of the most important tools to control health care spending. By requiring the patient to pay a significant portion of the health care that they actually utilize, it is thought that patients will select only the health care that they really need and will decline care that is of little value. But is the care that they would decline of so little value that it is not worth what would be spent on it? Let’s look at that.

A unique feature of health insurance in Japan provides some insight. When a patient turns 70, cost sharing is reduced 60 to 80 percent. In this paper, Hitoshi Shigeoka of Simon Fraser University in British Columbia does confirm what other studies have shown – reducing cost sharing does modestly increase utilization of outpatient and inpatient services. As with other studies, he did not find that lowering cost sharing improved, on a short time basis, either mortality or self-reported physical or mental health. However, he points out that conclusions cannot be drawn for long-term outcomes, which is also true of other studies such as the RAND HIE and the Oregon Medicaid lottery. A study of limited duration that is not powered to find adverse outcomes should not be used to conclude that there are no adverse outcomes of forgoing care due to cost sharing, yet that is exactly what the policy community is doing when they say that such forgone care does not adversely effect health.

Shigeoka notes that reducing cost sharing resulted in “large increases in outpatient visits for diagnoses that are defined as Ambulatory Care Sensitive Conditions (ACSCs), for which proper and early treatment reduces subsequent avoidable admissions.” This is really important. Even though these studies are not powered to detect adverse outcomes, he has shown that cost sharing does reduce use of services for conditions that are serious enough to result in hospitalizations and other adverse outcomes should the patients not receive appropriate earlier interventions. Bad conditions which cause bad outcomes for which earlier intervention has been shown to be effective are conditions which should be managed regardless of whether or not there exists a study which is powered enough to be conclusive that there is benefit.

Another important point that he makes is that the increased spending because of lower cost sharing should be compared to the social cost of receiving that care. The social cost includes the deadweight loss of program financing (a loss of economic efficiency – less than optimal use of those funds) and moral hazard (accepting greater risk without bearing the consequences – obtaining more health care when insurance provides protection against the costs). Shigeoka estimates that “the welfare gain of risk protection from lower patient cost sharing is comparable to the total social cost, indicating that the welfare gain from risk protection may fully cover the total social cost in this setting.”

It would be a tradeoff except that there are other gains that favor reduced cost sharing. Although he did not demonstrate short-term health gain from lower cost sharing, he did show that improved management of Ambulatory Care Sensitive Conditions does occur which should certainly produce long-term health gains. Another benefit that is never measured is the reassurance that patients receive when they are informed that their presenting complaints do not represent serious disorders, and are further satisfied when they receive medical interventions that can relieve their symptoms. These interventions may never show up in a list of measured processes and outcomes, but they are still fundamental benefits of health care.

Another problem is that these cost sharing studies tend to evaluate patients’ decisions on whether or not to access care. If there were zero cost sharing, these clinical scenarios would still represent a relatively small part of our total health care utilization. The 80 percent of health care that is utilized by the 20 percent of individuals who have more serious problems is care that is quite insensitive to cost sharing, having already exceeded the deductibles. Yet the policy community tends to extrapolate the percentage of savings from forgone care in these largely outpatient situations to our entire health care spending, resulting in preposterous estimates of potential savings.

Further, he reminds us of one on the most fundamental principles of all: “Patients with high medical spending benefit substantially from financial protection against risk due to lower cost sharing.” And isn’t this really about the patient?

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Estate Recovery and Liens

Mediciad.gov (CMS)

State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

http://medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Eligibility/Estate-Recovery.html

Expanded Medicaid’s fine print holds surprise: ‘payback’ from estate after death

By Carol M. Ostrom
The Seattle Times, December 15, 2013

With an estimated 223,000 adults seeking health insurance headed toward Washington’s expanded Medicaid program over the next three years, the state’s estate-recovery rules, which allow collection of nearly all medical expenses, have come under fire.

Medicaid, in keeping with federal policy, has long tapped into estates. But because most low-income adults without disabilities could not qualify for typical medical coverage through Medicaid, recovery primarily involved expenses for nursing homes and other long-term care.

The federal Affordable Care Act (ACA) changed that. Now many more low-income residents will qualify for Medicaid, called Apple Health in Washington state.

But if they qualify for Medicaid, they’re not eligible for tax credits to subsidize a private health plan under the ACA, which requires all adults to have health insurance by March 31.

Some 55- to 64-year-olds, who may have taken early retirement or who were laid off during the recession, have found themselves plunged into a low-income bracket. Unlike Medicaid recipients in the past — who were required to reduce their assets to qualify — they’re more likely to have a home or other assets.

For health coverage through Medicaid, income is now the only financial requirement.

Around the country, the issue has sizzled away in blogs and commentaries from both right and left. 

http://seattletimes.com/html/localnews/2022469957_medicaidrecoveryxml.html

Medi-Cal Recovery Frequently Asked Questions (FAQ)

California Advocates for Nursing Home Reform (a nonprofit 501(c)(3) advocacy organization)

California’s Medi-Cal applicants and beneficiaries are often confused about their rights regarding Medi-Cal and are particularly concerned that the state will “take” their homes after they die if they received Medi-Cal benefits.

I. Can the State Take my Home If I Go on Medi-Cal?

The State of California does not take away anyone’s home per se. Your home can, however, be subject to an estate claim after your death. For example, your home may be an exempt asset while you are alive and is not counted for Medi-Cal eligibility purposes. However, if the home is still in your name when you die, the State can make a claim against your estate for the amount of the Medi-Cal benefits paid or the value of the estate, whichever is less. Thus, if your home or any part of it is still in your name when you die, it is part of your “estate” and can be subject to an estate claim.

III. What Happens After I Die If I Received Medi-Cal?

After the Medi-Cal beneficiary’s death, the State can make a claim against the estate of an individual who was 55 years of age or older at the time he or she received Medi-Cal benefits or who (at any age) received benefits in a nursing home, unless there is a surviving spouse or a minor, blind or disabled child. Thus, if there are any assets left in the estate of the deceased beneficiary, Medi-Cal will seek to be reimbursed for benefits paid. It is important to note that, even if you received Medi-Cal at home, any benefits paid while you were 55 years of age or older will be subject to Medi-Cal recovery.

IV. How Much Can the State Recover?

Managed Care: Estate claims can be much higher if the beneficiary is enrolled in managed care. When a managed care beneficiary dies, the estate will receive a claim for the total amount paid by Medi-Cal to the managed care plan, regardless of how much the actual services cost the managed care plan.

IX. How Do I Avoid an Estate Claim?

The best way to avoid an estate claim is to leave nothing in the estate. Most Medi-Cal beneficiaries leave nothing but a home. If the property is transferred out of the beneficiary’s name during life, the state cannot place a claim. Any transfer of real property can have tax consequences that may outweigh a Medi-Cal estate claim. Currently, there are a number of legal options (irrevocable life estates, occupancy agreements, certain types of trusts) available to avoid probate, avoid tax consequences and avoid estate claims. Anyone considering a transfer of real property should consult an attorney experienced in the Medi-Cal rules and regulations.

http://www.canhr.org/factsheets/medi-cal_fs/html/fs_medcal_recovery_FAQ.htm

Comment:

By Don McCanne, M.D.

States are required to recover the costs of certain benefits from the estates of Medicaid beneficiaries who received them. That is not new. What is new is that the Affordable Care Act requires everyone to be insured (with exemptions for hardship, immigration status, etc.), and, if individuals are eligible for Medicaid based on income, they are not allowed to use subsidies to purchase plans in the exchanges. Since plans outside of the exchanges are unaffordable for individuals with low incomes that qualify them for Medicaid, they are pretty much stuck with enrolling in Medicaid.

Since Medicaid eligibility is determined by income and not by assets, those who were able to purchase a home and build other assets, but have retired at 55 or reduced their incomes for other reasons, are now becoming part of a large pool that states can tap to recover Medicaid expenditures. The states will be taking over estates that the deceased had intended would go to their heirs.

The rules are complicated enough such that individuals concerned about this potential transference to the state are advised to consult with an attorney. Just what we need. More excessive administrative costs tacked onto our wasteful system of health care financing.

Another annoyance is that many states are now forcing their Medicaid patients into managed care organizations. Even though the individuals may not have utilized much health care, the rules require that the entire capitated payments made to the managed care organizations be recovered from the estate. How ironic. The individual doesn’t want managed care but is forced into it, doesn’t use it, and then his heirs must pay through reduced value of the estate the full managed care premiums of a program the deceased would have avoided by remaining in the fee-for-service Medicaid program.

As with so much in the Affordable Care Act, these issues are not simple. Let’s look just at how we finance health care, and how we tax estates.

If we had a single payer national health program, it would be financed equitably based on ability to pay. You would not have the situation we have now in which Medicaid spending is reimbursed by the estate whereas Medicare spending is not. Everyone would contribute through progressive financing of the universal risk pool, and everyone would receive benefits based on medical need.

With the highly inequitable distribution of income and wealth that has taken place within the past few decades, we have an imperative to establish fairness in providing the government with the necessary revenues to fulfill its functions. We have largely agreed that income taxes need to be progressive, though many believe that we need tax policies that would have very high income individuals contribute more than is their current obligati on.

But the issue of the Medicaid Estate Recovery Program should make us look at how we tax wealth. Although most believe that very wealthy individuals should pay higher estate taxes, we have here a situation in which individuals with very small estates are having to pay what is, in essence, an estate tax in the form of recovered Medicaid expenses. How is that fair?

This is one more example of why we need to totally separate the funding of our health care system from the delivery of health care services. A single payer national health program – an improved Medicare for all – would do precisely that.

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Hospital industry consolidation – Still more to come?

By Leemore Dafny
The New England Journal of Medicine, December 11, 2013

The Affordable Care Act (ACA) has unleashed a merger frenzy, with hospitals scrambling to shore up their market positions, improve operational efficiency, and create organizations capable of managing population health. The figures are impressive: 105 deals were reported in 2012 alone, up from 50 to 60 annually in the pre-ACA, pre-recession years of 2005–2007. This activity could have lasting repercussions for consumers; the last hospital-merger wave (in the 1990s) led to substantial price increases with little or no countervailing benefits. …[A] compelling argument can be made for putting the brakes on consolidation. Indeed, unless new public and private initiatives are developed to discourage consolidation and to support enforcement of antitrust law, most of these deals will proceed unchallenged. [endnotes omitted]

….

[I]t would behoove health care analysts and policymakers who are concerned about consolidation to give enforcers more tools for doing their jobs and to develop other avenues for slowing the march toward conglomeration.

….

A full discussion of possible initiatives is beyond the scope of this article, but three ideas are worth mentioning. First, angel investors and venture capitalists could help create innovative health care – provider organizations that deliver clinically integrated, evidence-based care at the lowest possible cost without reducing competition. New funders would consider different organizational ideas and bring strategic and operational skills to their ventures, and they might be better positioned than local health care systems or physician groups to accept the associated risks. Second, Medicare could experiment with reimbursement schemes that provide incentives to newly forming accountable care organizations to pursue organizational structures that do not involve joint ownership of all assets. Joint ventures and contractual relationships would be easier to unwind than mergers, if that proved necessary.

Last, but certainly not least, we could urge private and public insurers to make detailed claims data readily available to public agencies and private researchers….. These data would enable researchers and enforcers to assess how the latest types of consolidations affect both costs and quality.

http://www.nejm.org/doi/full/10.1056/NEJMp1313948?query=TOC#.UqnH764iI9I.facebook

Comment:

By Kip Sullivan, JD

The first seven paragraphs of this essay present an important and rarely made argument, namely, consolidation within the hospital industry is accelerating once again, it is a serious problem, and antitrust law is too weak to stop it. The author correctly implies that the sections in the ACA authorizing ACOs are a significant cause of the latest epidemic of merger fever. But in the final two paragraphs the author prescribes utterly futile solutions. She recommends:

•  that outside investors sponsor new ACOs to compete with ACOs being created by hospitals;

•  that CMS encourage ACOs to form by contract rather than by merger so that in the remote event the Department of Justice were to win an antitrust suit the ACO would be easier to break apart; and 

•  that scholars and antitrust authorities do more research on ACOs.

Merger madness throughout the health care system will not stop until the incentive to merge is removed. That incentive is the conventional wisdom that the solution to our health care crisis is to shift insurance risk onto hospitals and doctors. The ACO fad is merely the latest expression of that groupthink.  Encouraging venture capitalists and CMS to sponsor more ACOs is not the solution. 

Within the health care sector of our economy, the most powerful incentive to build empires is the widespread belief, nourished enthusiastically by the insurance industry, much of academia, and both political parties, that our health care crisis is caused primarily by excessive volume of medical services induced by the fee-for-service payment method. If you buy this diagnosis, then you are compelled to endorse a “solution” that neutralizes the FFS incentive (salary) or turns the fee-for service incentive upside down. For reasons I won’t get into here, putting all doctors on salary has never been seriously considered. Instead, those who bought the overuse diagnosis adopted a solution that encourages providers to order fewer services. Since the early 1970s when this conventional wisdom took root, the antidote to FFS has been to force clinics and hospitals to share insurance risk with insurers and to subject providers to utilization review by insurers in the event that risk-sharing fails to cut volume enough. 

The earliest method of shifting insurance risk was called “capitation.” Capitation was later joined by “bonus sharing/withholding,” “pay-for-performance” (where “performance” was judged by cost to the insurance company), and lately “shared savings.” It all amounted to the same thing – making providers share the risk with insurance companies that the premium revenue taken in by insurance companies would not be sufficient to cover the cost of the medical services provided to the insurance companies’ policyholders. (To make the function of these schemes clear, it would have been helpful if the powers-that-be had called “capitation” and other forms of risk shifting “premium-splitting,” but that would, of course, have called attention to capitation’s close kinship with “fee-splitting,” and we wouldn’t want that.)

The solution has been, in short, to make clinics and hospitals bear some or all of the insurance risk traditionally borne by insurance companies. The ACO fad takes this logic to its natural endpoint: providers are being induced to accept some insurance risk now and will be induced or forced to accept all insurance risk later on, in other words, become insurance companies. (If this sounds incredible, you haven’t been reading what leading ACO advocates such as Elliot Fisher and the Medicare Payment Advisory Commission are talking about. These advocates have been silent on what it is insurance companies are supposed to do in a world where clinics and hospitals bear all insurance risk.)

This logic – that overuse induced by fee-for-service is the problem and shifting insurance risk is the solution — in turn required that clinics and hospitals be herded into large networks organized by insurance companies, and that patients be required or given incentives to see only providers within these networks. Herding providers into large systems was essential because small hospitals and clinics cannot bear insurance risk. Forcing patients to stay within networks was essential because you can’t ask providers to share insurance risk for patients who aren’t contractually required to come to them in the event of illness.

Let us stop for a moment and review this cascade of undocumented assumptions:

•  Overuse, not underuse and not excessive price, is the cause of our health care crisis;

•  The FFS method of payment is the main cause of overuse;

•  Forcing providers to bear insurance risk and to allow insurance companies to second guess provider-patient decisions is the appropriate antidote to FFS;

•  Providers must become big to shoulder insurance risk;

•  Patients must be forced to accept limited choice of provider if providers are going to be expected to bear insurance risk.

Once we array the elements of the establishment’s syllogism this way, we can see how the overuse diagnosis (and the refusal to acknowledge the primary role of high prices and administrative waste which drives prices up) created a strong incentive among providers to merge. But there was one other consequence of this syllogism which turned out to be perhaps the most powerful stimulus – the effect this syllogism had on incentives to get big within the insurance industry.

Allowing insurance companies to create provider networks and limit patient choice gave the early-adopting insurers much more market power over providers. The first insurers to create their own provider networks and limit patient choice (they were called HMOs) used this market power to extract enormous discounts from providers, and to exert more influence over decisions by doctors and patients. (By the early 1990s, HMOs were forcing hospitals to give them rates at 30-40 percent below those of competing insurers that had not yet adopted HMO tactics.) 

By the late 1980s this lopsided growth in market power in favor of insurance companies had induced a counter-reaction among providers, especially hospitals. They began to merge in order to create what John Kenneth Galbraith called “countervailing power” to offset the new power acquired by the burgeoning insurers. The insurance industry responded with more mergers of their own, which induced even more mergers among hospitals and clinics. And around the vicious cycle goes. The insurance industry’s effort to exclude many hospitals from networks available on ACA exchanges is just the latest skirmish in this never-ending and pointless battle. http://online.wsj.com/news/articles/SB10001424052702304202204579256621005722460

To sum up, by the mid-1990s the conventional wisdom that FFS-induced-overuse is the problem, and that shifting insurance risk to providers is the solution, had put enormous pressure on both insurers and providers to get big. This pressure has only been aggravated by the ACO provisions in the ACA, and to a lesser extent by the cuts in Medicare reimbursements to hospitals authorized by the ACA in order to finance enormous subsidies for the insurance industry.

Repealing those ACA provisions would be helpful, but far from sufficient. The urge to merge will not subside until policymakers stop demonizing FFS and lionizing risk-shifting to doctors and hospitals. 

Abandoning the quest to stamp out FFS does not mean we must give up on eliminating the overuse that does exist. We could enact a single-payer system and, failing that, take other steps within the current system. Single-payer systems affect overuse not by micromanaging doctors and hospitals, but by 

•  allocating capital equipment (such as MRIs) equitably and intelligently, 

•  funding more research on which treatments are most effective and educating doctors and patients on the results, 

•  controlling the relative price of services that appear to be overused (for example, lowering the fee for C-sections relative to the fee for normal deliveries), and 

•  making some types of fraud more easily detectable. 

Some of these solutions (such as more research and education) are available even under a multiple-payer system.

What we should not do is continue to experiment with shifting risk to doctors and hospitals.

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U.S. ranks near bottom among industrialized nations in efficiency of health care spending

UCLA Fielding School of Public Health, December 12, 2013

A new study by researchers at the UCLA Fielding School of Public Health and McGill University in Montreal reveals that the United States health care system ranks 22nd out of 27 high-income nations when analyzed for its efficiency of turning dollars spent into extending lives.  

The study, which appears online Dec. 12 in the “First Look” section of the American Journal of Public Health, illuminates stark differences in countries’ efficiency of spending on health care, and the U.S.’s inferior ranking reflects a high price paid and a low return on investment.  

For example, every additional hundred dollars spent on health care by the United States translated into a gain of less than half a month of life expectancy. In Germany, every additional hundred dollars spent translated into more than four months of increased life expectancy.

The researchers also discovered significant gender disparities within countries.  

“Out of the 27 high-income nations we studied, the United States ranks 25th when it comes to reducing women’s deaths,” said Dr. Jody Heymann, senior author of the study and dean of the UCLA Fielding School of Public Health. “The country’s efficiency of investments in reducing men’s deaths is only slightly better, ranking 18th.”  

The study, which utilized data from 27 member countries of the Organization for Economic Cooperation and Development collected over 17 years (1991–2007), is the first-known research to estimate health-spending efficiency by gender across industrialized nations.  

 “While there are large differences in the efficiency of health spending across countries, men have experienced greater life expectancy gains than women per health dollar spent within nearly every country,” said Douglas Barthold, the study’s first author and a doctoral candidate in the department of economics at McGill University.  

The report’s findings bring to light several questions. How is it possible for the United States to have one of the most advanced economies yet one of the most inefficient health care systems? And while the U.S. health care system is performing so poorly for men, why is it performing even worse for women?  

The exact causes of the gender gap are unknown, the researchers said, thus highlighting the need for additional research on the topic, but the nation’s lack of investment in prevention for both men and women warrants attention. 

http://ph.ucla.edu/news/press-release/2013/dec/us-ranks-near-bottom-among-industrialized-nations-efficiency-health-care

American Journal of Public Health:  Abstract – “Analyzing Whether Countries Are Equally Efficient at Improving Longevity for Men and Women”: http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2013.301494

Comment:

By Don McCanne, M.D.

To no surprise to those who have been paying attention to the U.S. health care system, we rank very low amongst OECD nations – 22nd out of 27 studied – on the efficiency of health care spending when measured by improvements in life expectancy. Spending on women was even less efficient than spending on men. As we have long known, we spend more while getting less.

There are likely many factors that contribute to these differences, but there is no doubt that we have a very dysfunctional, fragmented, wasteful, inequitable health care financing system that certainly is an exemplar of inefficiency. Why should we not expect poor outcomes for our high level of spending?

Once we have in place a single payer national health program it will be much easier to identify the deficiencies specifically related to health care delivery, and then we can correct them. Ladies first, please.

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Health Care Rationing: Doing It Better in Public and Private Health Care Systems

By Alan Maynard
Journal of Health Politics, Policy and Law, December 2013 Abstract All public and private health care systems ration patient access to care. The private sector rations access to consumers who are willing and able to pay. The poor and disadvantaged have limited access to care and inadequate income protection. In public health systems, care is provided on the basis of “need,” that is, the comparative cost-effectiveness of competing treatments. This results in patients being deprived of care if treatments are clinically effective but not cost-effective. Rationing health care is ubiquitous. In both types of systems physicians have discretion to deviate from these rationing principles. This has created inefficient variations in clinical practice. These are difficult to resolve because of the lack of transparency of costs and patient outcomes and perverse incentives. The failure to remove universal inefficiency in a period of economic austerity sharpens awareness of rationing. Hopes of greater efficiency are largely faith based. Competing ideologues from the left and the right continue to offer evidence for free solutions to long-established problems. Inefficiency is unethical, as it deprives potential patients of care from which they could benefit. Reducing inefficiency is essential but difficult. The universal challenge is to decide who shall live when all will die in a world of scarce resources. From the Overview In all countries there is a reluctance to use the word “rationing.” Policy makers and politicians prefer terms such as “prioritization” and “resource allocation.” Call it what you will, rationing in health care is ubiquitous in public and private health care systems. The latter ration by consumers’ ability to pay, and “success” is related to physicians and other providers making a good living. Public health care systems, in principle, ration in relation to need or comparative cost-effectiveness; in practice, prioritization is determined by physicians’ providing treatments that most satisfy the physicians. Productivity variations exist throughout the manufacturing and service industries. Indeed, these variations drive innovators to act smarter and capture market share from rivals. Public and private health care markets are remarkable in that innovation tends to increase costs rather than reduce them, as has happened in information technology and other industries. The causes of this difference are debated and include the power of the medical profession (physicians’ monopoly of many areas of activity where efficient substitutes exist), third-party pays (weak budget caps), and perverse incentives confronting providers and consumers (moral hazard). Mitigating problems such as these could ease rationing constraints but would not remove them. The failure of health care systems to measure and manage these problems with greater transparency and improved incentive structures will result in rationing becoming more explicit. The hope is that the consequent debate about who will die and who will live in what degree of pain and discomfort will not be dominated only by emotion (e.g., hysteria about “death panels”) but by evidence of cost-effectiveness produced by robust HTA programs (health technology assessment) and the transparent judgments of clinicians using this information. The policy priority, as efficient HTA and P4P (pay for performance) schemes increasingly influence rationing choices, will be to ensure that this is seen by the public as improving patient safety and value for money for insurers and taxpayers, and not merely seen as depriving patients of care from which they might benefit marginally but which societies choose not to fund, either by NHS rationing or US rationing by restrictive benefit packages and poor access. http://jhppl.dukejournals.org/content/38/6/1103.abstract

Comment:

By Don McCanne, M.D. “All public and private health care systems ration patient access to care.” Professor Alan Maynard of the University of York, with his characteristic academic objectivity, describes the differences in public and private approaches to health care rationing. Public health care systems ration access in relation to medical need, whereas private systems ration access based on willingness and ability to pay. In public systems, success is measured by the satisfaction of physicians with their ability to meet the medical needs of their patients, whereas in private systems, success is measured by the ability of physicians to make a good living. Both public and private systems experience inefficiency. Since the rationing that results from inefficiency deprives some patients of care that they should have, tolerating inefficiency is unethical. When you compare the public British system with the largely private system in the United States, it is clear that our much greater inefficiency results in an insufferable level of ethical compromise. We do ration far more than the British; we just don’t see it since our victims of rationing are not even allowed a position in the queue. Why do we tolerate this? A clue might be found in Alan Maynard’s words in “The Public-Private Mix for Health” (The Nuffield Trust, 2005): “As societies spend increasing proportions of their rising GDP on healthcare, more realism about its productivity in terms of improving the health of the population is needed. But this is not in the interest of the media, politicians and commerce. Promising miracles increases their income and power!”

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Medicare Patients’ Access to Physicians: A Synthesis of the Evidence

By Cristina Boccuti, Christina Swoope, Anthony Damico and Patricia Neuman
Kaiser Family Foundation, December 10, 2013 Main findings: *  On a national level, Medicare patients have good access to physicians.  The vast majority (96%) of Medicare beneficiaries report having a usual source of care, primarily a doctor’s office or doctor’s clinic. *  Most people with Medicare — about 90 percent — are able to schedule timely appointments for routine and specialty care. Medicare seniors are more likely than privately insured adults age 50-64 to report “never” having to wait longer than they want for timely routine care appointments. *  A small share of Medicare beneficiaries say they looked for a new physician in the past year, and only 2 percent of seniors with Medicare report problems finding one when needed — comparable to rates reported by privately insured adults age 50-64. *  Medicare seniors report foregoing medical care at similar or lower rates than privately insured adults age 50-64. Certain subgroups of the Medicare population are more likely than others to report not seeing a doctor when they thought they needed to during the year, particularly beneficiaries who: are under age 65 and qualify for Medicare because of a permanent disability; have either Medicaid (dually eligible for Medicare and Medicaid) or no supplemental coverage; are Black; have lower incomes; are in fair or poor health, and/or have five or more chronic conditions.  Even within these vulnerable subgroups, however, the majority do not report foregoing doctor visits when needed. *  According to recently-released physician survey data, the majority (91%) of non-pediatric physicians accept new Medicare patients — the same rate that accept new patients with private non-capitated insurance.  This correlation persists generally across states, indicating that physician acceptance of new Medicare patients may be more related to local market factors than issues unique to Medicare overall. *  According to new physician data from Medicare, less than 1 percent of physicians in clinical practice have formally “opted-out” of the Medicare program, with psychiatrists accounting for the largest share (42%). These findings show that according to national patient and physician surveys and other data sources, most Medicare beneficiaries enjoy good access to physician services, comparable to the experiences of privately insured patients.  Most physicians accept new Medicare patients, and relatively few have formally opted out of the Medicare program. http://kff.org/medicare/issue-brief/medicare-patients-access-to-physicians-a-synthesis-of-the-evidence/

Comment:

By Don McCanne, M.D. This comprehensive report lays to rest once and for all the the rumor that physicians are leaving Medicare in droves. Most physicians accept new Medicare patients, and less than 1 percent have formally opted-out of the Medicare program. An improved Medicare would be even more attractive to physicians, especially if it covered everyone. It would dramatically reduce hassles with intrusive third party payers so that physicians could spend most of their time doing what they devoted their lives to – taking care of their patients. As far as the threat that physicians would quit if we enacted an improved Medicare for all, first of all, very few would leave – likely less than 1 percent – and, second, since most of those who would leave seem to be more interested in money rather than patients (think concierge), we really don’t want them around anyway. It would be a great way to clean up our profession.

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AIDS advocates say drug coverage in some marketplace plans is inadequate

By Ariana Eunjung Cha
The Washington Post, December 9, 2013 The nation’s new health-care law says insurers can’t turn anyone away, even people who are sick. But some companies, patient advocates say, have found a way to discourage the chronically ill from enrolling in their plans: offer drug coverage too skimpy for those with expensive conditions. Some plans sold on the online insurance exchanges, for instance, don’t cover key medications for HIV, or they require patients to pay as much as 50 percent of the cost per prescription in co-insurance — sometimes more than $1,000 a month. “The fear is that they are putting discriminatory plan designs into place to try to deter certain people from enrolling by not covering the medications they need, or putting policies in place that make them jump through hoops to get care,” said John Peller, vice president of policy for the AIDS Foundation of Chicago. As the details of the benefits offered by the new health-care plans become clear, patients with cancer, multiple sclerosis, rheumatoid arthritis and autoimmune diseases also are raising concerns, said Marc Boutin, executive vice president of the National Health Council, a coalition of advocacy groups for the chronically ill. “The easiest way [for insurers] to identify a core group of people that is going to cost you a lot of money is to look at the medicines they need and the easiest way to make your plan less appealing is to put limitations on these products,” Boutin said. Insurers say that such accusations are unfounded, and that the drug coverage is more than adequate, with many plans exceeding the minimum levels required by the Affordable Care Act. But they acknowledge that to keep premiums low, they must restrict the use of some costly drugs if there are alternatives. And they say that when high-priced medications must be used, it’s reasonable to expect patients to pick up more of the cost. But people who expected the new plans to provide pharmaceutical coverage comparable with that of employer-sponsored plans have been disappointed. In recent years, employers have compelled workers to pick up a growing share of the costs, especially for brand-name drugs. But insurers selling policies on the exchanges have pared their drug benefits significantly more, according to health advocates, patients and industry analysts. Robert Zirkelbach, a spokesman for American’s Health Insurance Plans, an industry group, said the exchange plans are designed “to try to give consumers better value for their health-care dollars.” http://www.washingtonpost.com/national/health-science/aids-advocates-say-drug-coverage-in-some-marketplace-plans-is-inadequate/2013/12/09/0fca0fd0-5d18-11e3-95c2-13623eb2b0e1_print.html

Comment:

By Don McCanne, M.D. It is no surprise that private insurers would use every devious trick to try to limit their payments for expensive drugs, including requiring the patient to pay more through higher cost sharing, or by omitting expensive drugs from their formulary altogether. From the insurers’ perspective, that’s just good business. What is really nefarious is that they are now using this to discourage patients with expensive disorders from even enrolling in their plans. Patients with HIV/AIDS, multiple sclerosis, rheumatoid arthritis, lupus, cancer, hepatitis C, and other disorders who are on long term therapy with expensive drugs will go elsewhere for their coverage when they find that their current drug regimens would leave them with intolerable costs under these plans. A provision of the Affordable Care Act – guaranteed issue – requires that insurers accept all applicants, no matter how expensive their care is anticipated to be. But Obamacare did not change the nature of the private insurance beast. Insurers will always find more ways to circumvent requirements such as guaranteed issue. Insurers boast to their shareholders about innovation in insurance product design. The problem for us is that the innovations are not designed to improve access and affordability for the insured. The innovations are to improve the bottom line of the insurers. Just think of the innovations we are already seeing – higher deductibles, more limited provider choice through narrower networks, limited benefits within each of the ten categories of required benefits, and greater financial barriers to care such as these outrageous cost sharing requirements for drugs. The insurers are not through. When the insurance lobbyists are saying that they are trying to “give consumers better value for their health-care dollars,” they really mean keeping insurance premiums low enough to compete in the marketplace. They do that by paying as little as possible for health care, shifting ever more of the costs to patients. The sky is the limit on innovations when they are driven by greed. We have the wrong people in charge – the insurers. We need our own public financing system that is designed to help patients get care by removing financial barriers. That’s what an improved Medicare that covered everyone would do for us. Enough of this, “Boy, do we have a plan for you, and it’s cheap, but if you have anything wrong, study this plan carefully since you’ll find that it won’t cover what you need (and then go away kid, you bother me).”

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