PNHP

Is Medigap for wealthy people who want more health care?

Is Medigap for wealthy people who want more health care?

The Future of Medicare Supplemental Insurance

By Gail R. Wilensky, PhD
JAMA Internal Medicine, August 19, 2013

Even these highly regulated versions of Medigap have problems. They are expensive and, frequently, are not a very good buy. And Medigap insurance imposes significant costs on the Medicare program. Because Medigap plans pay for the deductibles, coinsurance, and copayments associated with Medicare, they frequently are paying for low-cost, routine care. Such payments are prepayments, rather than “real insurance,” but Medigap plans have to set premiums to cover the costs of this expected use, as well as the administrative costs associated with the insurance.

More than half of the people who buy Medigap insurance buy one of the 2 most expensive plans—“C” or “F.” These plans pay almost all of the beneficiaries’ costs, thus providing first-dollar coverage, which has been the cause for congressional concern.

Currently, the Obama administration and Congress are focused on the costs that Medigap insurance imposes on the Medicare program. Because the plans typically cover all or most cost sharing, seniors with supplemental insurance use more medical services than seniors without supplemental insurance.

The Patient Protection and Affordable Care Act (Pub L No. 111-148) requires the National Association of Insurance Commissioners to review the benefit designs of plans C and F and introduce cost sharing for physician services for plans purchased as of 2015.

President Obama’s fiscal year 2014 budget proposal introduces a $100 home health copayment and a 30% surcharge on Part B premiums for new Medicare beneficiaries who purchase Medigap policies with low cost-sharing requirements.

The National Commission on Fiscal Responsibility and Reform (known as the Fiscal Commission) recommended that Medigap plans not be allowed to cover the first $550 per year in cost sharing and cover no more than half of the cost sharing up to $5500 per year.

The health care cost containment initiative of the Bipartisan Policy Center recommended a prohibition on first dollar supplemental insurance and a more coherent and rational cost-sharing benefit structure for traditional Medicare, as part of broader changes to the US health care system.

Medicaid would protect low-income beneficiaries, but other high users of Medicare services would be more likely to incur higher costs.

Not surprisingly, many of these proposals raise concerns about inappropriate reductions in the use of health care and increased costs for some Medicare beneficiaries. According to a Kaiser Family Foundation study, the majority of elderly persons would have reduced costs, but 20% would have higher costs.

Neither the outdated structure of Medicare nor the costs imposed on the program by Medigap insurance are new issues. Medicare needs to be a viable program, while providing insurance coverage appropriate for the 21st century. Congress and the Obama administration know that reforms to supplemental insurance are needed, and the specific types of changes that make most sense.

http://archinte.jamanetwork.com/article.aspx?articleID=1729536

Health Care Spending and the Medicare Program

MedPAC, June 2013

Chart 5-6.  Out-of-pocket spending for premiums and health services per beneficiary, by insurance and health status, 2009

Beneficiaries who report they are in good, very good, or excellent health:

Medicare only

$1,079  Premium
$1,643  Out-of-pocket

Medicare plus Medigap

$3,264  Premium
$1,900  Out-of-pocket

Beneficiaries who report they are in fair or poor health:

Medicare only

$1,128  Premium
$3,446  Out-of-pocket

Medicare plus Medigap

$3,191  Premium
$3,382  Out-of-pocket

http://www.medpac.gov/documents/Jun13DataBookEntireReport.pdf

Comment:

By Don McCanne, M.D.

Former HCFA Administrator Gail Wilensky has long been a supporter of patient cost sharing as a means of discouraging use of health care services, hopefully reducing spending in government health programs such as Medicare. She has particularly targeted Medigap plans because they remove cost sensitivity by providing first-dollar coverage. So do we need to prohibit Medigap plans from providing full coverage of deductibles and other cost sharing, as she recommends?

MedPAC has provided us with the numbers that indicate how patients respond to Medigap incentives. When Medicare beneficiaries elect to purchase Medigap plans, their premiums triple, no matter the status of their health. But look at their out-of-pocket expenses, excluding the premiums. If they are healthy, the out-of-pocket expenses are not much different, whether or not they are enrolled in a Medigap plan. If they are not healthy, the out-of-pocket expenses are quite a bit higher, but still with not much difference between those with and those without a Medigap plan.

According to the MedPAC report, “Insurance that supplements Medicare does not shield beneficiaries from all out-of-pocket costs. Beneficiaries who report being in fair or poor health spend more out of pocket for health services than those reporting good, very good, or excellent health regardless of the type of coverage they have to supplement Medicare.”

The report also speculates that “this result likely reflects the fact that beneficiaries who have Medigap have higher incomes and are likely to have stronger preferences for health care.” Rich people want more health care? It is much more likely that these numbers represent two other factors: 1) the actual dollar benefit of Medigap plans is truly paltry (except for a cap on the costs of catastrophic events), and 2) Medicare benefits are quite spartan, covering on average only about half of seniors’ health care costs.

Considering their high premiums, administrative excesses, and relatively paltry benefits, Medigap plans don’t need revision; they need to be eliminated, with the benefits being rolled into the traditional Medicare program.

Perhaps the most telling comment in Wilensky’s article is her statement that Medicare plus Medigap payments are “prepayments, rather than ‘real insurance.'” The consumer-driven advocates have created the meme that “real insurance” is catastrophic insurance only; it should not pay for routine medical care. That arbitrary definition is nonsense. Insurance is pooling risk, and you can include all health care costs in that pool, including routine and preventive care. Perhaps a better term is “prepaid health care.”

Regardless, when routine care exposes too many individuals to financial hardship, the system needs to be changed, and certainly not by increasing that exposure, as Wilensky recommends. Her diversionary strategy is to prevent us from considering a program that really would work for all of us – a government-run (OMG!) single payer, improved Medicare for all.

Why is she and her ilk so opposed? Is adhering to their ideology really more important to them than preventing physical suffering and financial hardship for the rest of us? I’ve tried to understand them, but I’ll never get it.

More definitive report confirming that most physicians accept Medicare

Access to Physicians’ Services for Medicare Beneficiaries

By: Adele Shartzer, Rachael Zuckerman, Audrey McDowell, and Richard Kronick
U.S. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation, August 2013

Key Findings:

–  According to federal survey data, the percentage of all office-based physicians who report accepting new Medicare patients has not changed significantly between 2005 and 2012, with 87.9% of physicians accepting new Medicare patients in 2005 and 90.7% in 2012.

–  The percentage of physicians who report accepting new Medicare patients is similar to, and in recent years slightly higher than, the percentage accepting new privately insured patients.

–  Medicare beneficiary access to care is high and has remained stable over the past five years.

According to Centers for Medicare and Medicaid Services (CMS) data, there were about 650,000 physicians who participated in the Medicare program in 2011 and nearly 1 million participating providers in total (including non-physician providers such as nurse practitioners). It is clear from the data the percentage of all physicians who accept new Medicare patients has been stable from 2005 to 2012. To the extent that there may have been a very small increase in the number of providers ‘opting out’, that increase has been mitigated by an increase in the share of other physicians who accept new Medicare patients. Further, the total number of providers participating in and billing Medicare has steadily increased since 2007.

These findings allay concern that the number of physicians ‘opting out’ of Medicare has increased in recent years.[4] (Footnote 4: Beck, M. “More Doctors Steer Clear of Medicare”, Wall Street Journal 7/29/13 p.A1, vCCLXII #24. This article reported that the number of physicians opting out of Medicare increased from 3,700 in 2009 to 9,539 in 2012.)

A 2005 study examining characteristics of providers opting out of Medicare found that overall less than one percent of providers eligible to opt out of Medicare did so, and the two specialties with the highest opt out percentages were psychiatrists (with 1.11% opting out) and plastic and reconstructive surgeons (with 1.56% opting out). In contrast, about a third of one percent of primary care physicians (0.35%) opted out of Medicare.

In its March 2013 Report to Congress, based on this and other federal surveys, MedPAC noted that Medicare beneficiaries report good access to care, and access to physicians’ services has remained stable over the past five years. Similarly, the large majority of beneficiaries had no problems getting an appointment with a new physician, and again the results are comparable to those for people with private insurance. Additionally, Medicare beneficiaries were less likely than the privately insured to report forgoing needed medical care (8% vs. 11%) in 2012.

Conclusion
 
Approximately 90% of all office-based physicians report accepting new Medicare patients. The percentage of physicians who report accepting new Medicare patients is similar to the percentage of physicians who report accepting new privately insured patients. In addition, the share accepting new Medicare patients has been relatively stable over the 2005-2012 period and shows a slight increase in 2011-2012 based on initial NAMCS data.  Beneficiary reports of access to care, including the ability to find a physician and see a doctor in a timely manner, are also favorable. Again, these results are comparable to reports by patients with private insurance and have been stable over time. Overall, Medicare beneficiary access to care has been consistently high over the last decade and continues to be high today.

http://aspe.hhs.gov/health/reports/2013/PhysicianMedicare/ib_PhysicianMedicare.cfm

Comment:

By Don McCanne, M.D.

This highly credible report lays to rest the nonsense perpetrated by media reports such as the recent Wall Street Journal article, “More Doctors Steer Clear of Medicare.” Although some physicians have stopped accepting new Medicare patients because of overload, over 90 percent still do, more than those who accept new privately insured patients. A few isolated anecdotes do not alter the truth.

Opponents of an improved Medicare for all have suggested that physicians would bale out in droves if that were the only insurance program in the U.S. But where would they go?

Everyone automatically would be enrolled in the Medicare program. Why would patients want to buy a private plan duplicating Medicare benefits when they are already paying obligatory taxes for the Medicare program? There would be no market for such plans, not to mention that consumers would be protected by making them illegal.

It would not be long before the physicians who opted out for a cash-only practice would discover that there would not be enough cash to support them. In fact, today 20 percent of concierge practices fail and that number has been increasing.

Under a Medicare for all program there simply would not be enough patients who would want to pay more than they would already be paying in taxes to support more than a minute contingency of cash-only concierge practices. Virtually all physicians would accept Medicare, without giving it a second thought, though the Wall Street Journal might then have to turn to the contrived scandal of the physician glut in Medicare.

Price-posting: Oh look! Another healthcare cost 'solution' gimmick

By Victoria Powell, MS3
Short White Coat, Inc., blog, Aug. 2, 2013

The Surgery Center of Oklahoma has been in the spotlight recently because of its decision to post all of its prices for its procedures online. This has been heralded as increasing transparency in healthcare costs and implicitly demonizes other hospitals in the area that haven’t followed suit, like traditional academic centers.

Why haven’t hospitals done this a long time ago, so the uninsured can bargain shop for their knee replacement instead of being stuck with a huge bill they’ll have to go into bankruptcy to afford? It’s an attractive idea, especially when presented as oversimplified as it has been to the public.

In isolation, price-posting is just another market-based artifice, more zeitgeist of our accelerating entrenchment in our broken, healthcare-as-commodity model than any real solution. Nothing illustrates it better than this quote in the NYT opinion piece from the co-founder of the Surgery Center himself, “Patients are holding plane tickets to Oklahoma City and printing out our prices, and leveraging better deals in their local markets.”

HOLD UP DOC. There are a few BIG assumptions here:

1) The medical procedure you need is known to you in advance – that is, it isn’t an emergency.

2) You have the ability to pay SOMETHING, but either don’t have insurance or lack specific coverage for the procedure, etc.

3) You are physically and mentally able to bargain shop for the healthcare you need. There are many people who need healthcare services who aren’t able to do this – people with dementia requiring long-term care, a person in a coma from a car accident, a person with a debilitating psychiatric problem – it’s not hard to bring examples to mind.

We find that what this really represents is a very specific marketing tactic to a targeted audience – mostly healthy people who need an elective surgery to improve their quality of life. Clearly a very important demographic, but it by no means representative of everyone seeking healthcare.

This approach might works for certain places, like outpatient surgery centers, because they don’t have to deal with people who can’t pay. They can throw their hands up and say, “Don’t blame us! This is a fair deal. Our prices are listed with no small print – pay or don’t receive services.” These are not hospitals – they are centers that offer specific, non-comprehensive services.

Meanwhile, other hospitals in the area, like Oklahoma University Medical Center, take care of people who can’t pay.

The NYT opinion piece basically sums the problem of healthcare costs as a lack of knowledge on the part of the consumer. That IS a problem, but the real problem is summed up simply in one word: profit.

When there is a market-based healthcare system like there is now, we get comical (but tragic!) comparisons like the NYT piece where finding cheap airline tickets through Kayak is used as analogy to “shopping” for health care.

Anyone without a stake in the current system, any American that needs life-saving services, anyone with the presence of mind to take a step back and examine things in context will see this is just. another. tired. gimmick.

The beginning of a real solution to the healthcare cost problem requires the following steps, in order:

1. Recognize every single person’s fundamental vulnerability to disease and death.

THEN

2. Affirm healthcare as a human right, NOT a commodity that is only available to those that can afford it.

THEN

3. Change the system into an “Ultimate Public Utility” model – because it’s something that we ALL benefit from, and are (mostly) unable to predict when we will require.

THEN

4. Realize that a publicly funded, Single Payer model – improved Medicare for everyone – is the NECESSARY BUT NOT SUFFICIENT next step.

I’ve noticed some Single Payer advocates start to falter when they present Single Payer as the ipso facto solution for every healthcare-related problem. It will not be like that. Very little will change for the average person if we just decide tomorrow to extend Medicare to cover everyone. A Single Payer system’s REAL power is providing the ONLY framework that will allow us to collate our bloated, fragmented system into one that can be examined and systematically changed in response to population needs. More fundamentally, it is the only one in which population needs can be accurately assessed in the absence of profiteering. It will be a quicker, more centralized, more responsive system because it is structured to be resistant to conflicts of interest. The goal of a Single Payer system is to provide necessary healthcare to everyone, NOT quibble about piecemeal, temporary gimmicks like price-posting.

Victoria Powell, a 3rd-year med student at Virginia Commonwealth University in Richmond, Va. Her blog, Short White Coat, Inc., is a collection of  thoughts, experiences and opinions on the complex relationship between medical industry and medical practice. You can follow her commentaries here.

http://shortwhitecoatinc.wordpress.com/2013/08/02/price-posting-oh-look-another-healthcare-cost-solution-gimmick/

Physicians group pushes for single-payer health care

By Ryan Gustafson
KEYC Channel 12 News (Mankato, Minn.), Aug. 21, 2013

Health care reform will take a big step forward on October 1st, when the insurance exchanges first open up.

Supporters of the law are busy making sure everyone is aware, and advocating for further reform in the future.

Up on the Loyola Hill, Our Lady of Good Counsel hosts a speaker from The Campaign for The Minnesota Health Plan, Dr. Nelson Adamson.

Dr. Adamson with Physicians for a National Health Program says, “The Affordable Care Act is a step forward, but it’s to the complete answer.”

Along with taking questions tonight on the implementation of the Affordable Care Act, health care reform law, or Obamacare, depending on your preference, Dr. Adamson’s main goal was to advocate for a single-payer system, where all medical bills are picked up by the government.

And he feels that personal stories will be the best way to get the point across.

Dr. Adamson says, “Cancer is a difficult enough diagnosis to deal with, but when you have the issue of how is this going to get paid for, whether I’ll be bankrupt seeking care, that is really more than you should have to handle when they’re dealing with a difficult diagnosis.

“From my point of view, I won’t dwell on the economics and policy, but the personal side. What I see as a practicing physician — how this affects my patients.”

Enrollment in the health care exchanges opens up on October 1. Actual health coverage will begin on January 1.

http://www.keyc.com/story/23224603/group-pushes-for-single-payer-health-care

Medicare for all is GOP's best bet

By Jack Bernard
The Springfield (Mo.) News-Leader, Aug. 21, 2013

While hospitals in Missouri are having their reimbursement cut under the Affordable Care Act (Obamacare), “red’’ leaning states are still trying to figure out whether or not to fully implement the law.

As pointed out in “What’s next? Information about the Affordable Care Act is in short supply in Missouri” in the News-Leader Aug. 11, Missouri has been among the most vehement in its opposition to implementation, going so far as legally prohibiting state employees from assisting.

Hospitals that treat the poor in disproportionate numbers are having their Medicare reimbursements cut under the ACA. Before the Supreme Court made Medicaid expansion voluntary, the law assumed that under the ACA these hospitals would see a decrease in medically indigent patients who would instead be covered by Medicaid.

In the short term, we Republicans need to wake up and support implementation of Obamacare in so far as it expands coverage of insurance to our low-income citizens at little cost to the state. The first three years of the expansion would be paid for 100 percent by the feds. After that, there would be a gradual tapering down to 90 percent federal support.

Expanding Medicaid also makes economic sense. Adding coverage for a more people means more economic activity in the health sector. This equates to thousands of jobs being created, both directly and indirectly. With unemployment still high, there is a need for more jobs in Missouri.

Besides, if Missouri does not take the federal money, it will be used in the “blue” states in the Northeast and the West Coast. So, take the money and push for more effective reform.

Which leads us to “where should the GOP go from here long term regarding national health financing reform?” The answer, to paraphrase “Star Trek,” is in a bold new direction where no Republican has gone before.

And, what would be bolder than having my party propose Medicare for all?

Medicare for all would find wide acceptance with the all important independent swing voters who make up an increasing portion of the electorate and decide national elections. It would also be a hard position for elderly tea party activists to attack. In 2009, they carried nonsensical signs saying “keep the government out of my Medicare.” Tea party or not, seniors like me love the program.

A group of progressive doctors known as Physicians for a National Health Program have a website, www.pnhp.org, devoted to explaining how universal Medicare would operate and how it could be funded.

On this site, you can also find references to numerous studies showing conclusively that our current system is clearly not cost-effective. The United States is currently spending more tax money per capita on health care than any other developed nation. We are just not getting as much for our excessive public expenditures.

It is time for us to face the facts. We do not have the best health care system in the world. Our expenses are out of control and our outcomes are much worse than nations with a single payer system, like Canada.

If we really want to change America for the better while turning around electoral losses in Congress and the presidency, we Republicans should propose something that can actually get the votes needed for passage. That something is Medicare for all.

Jack Bernard is a retired senior level health care executive who worked with Missouri hospitals and health systems on planning and cost-containment issues. He is a former chairman of the Republican Party and the County Commission in Jasper County, Georgia, an Atlanta suburb.

http://www.news-leader.com/article/20130822/OPINIONS02/308220044/Medicare?nclick_check=1

Modest premium increases hide important part of story

2013 Employer Health Benefits Survey

By Kaiser Family Foundation
August 20, 2013

Employer-sponsored insurance covers about 149 million nonelderly people. To provide current information about employer-sponsored health benefits, the Kaiser Family Foundation (Kaiser) and the Health Research & Educational Trust (HRET) conduct an annual survey of nonfederal private and public employers with three or more workers.

HEALTH INSURANCE PREMIUMS AND WORKER CONTRIBUTIONS

In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage. The single premium is 5% higher and the family premium is 4% higher than the 2012 average premiums. During the same period workers’ wages increased 1.8% and inflation increased 1.1%.

There is significant variation around the average single and family premiums, resulting from differences in benefits, cost sharing, covered populations, and geographical location. Twenty-one percent of covered workers are in plans with an annual total premium for family coverage of at least $19,622 (120% of the average family premium), while 21% of covered workers are in plans where the family premium is less than $13,081 (80% of the average family premium).

As with total premiums, the share of the premium contributed by workers varies considerably among firms. For family coverage, 42% of covered workers are in plans that require them to make a contribution of less than or equal to a quarter of the total premium and 14% are in plans that require more than half of the premium, while only 5% are in plans that require no contribution at all for family coverage.

EMPLOYEE COST SHARING

Seventy-eight percent of covered workers have a general annual deductible for single coverage that must be met before most services are reimbursed by the plan.

Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,135.

Almost three-in-four covered workers pay a copayment (a fixed dollar amount) for office visits with a primary care physician (74%) or a specialist physician (72%), in addition to any general annual deductible their plan may have.

Most workers also face additional cost sharing for a hospital admission or an outpatient surgery episode. The average coinsurance rate for hospital admissions is 18%, the average copayment is $278 per hospital admission, the average per diem charge is $264, and the average separate annual hospital deductible is $436.

Conclusion (excerpt)

The emergence of new exchanges, or marketplaces, also may portend important changes for employer-sponsored health insurance. Through an exchange, an employer can provide employees with a larger number and type of health plan options. Exchanges also facilitate the use of defined contributions or other strategies that encourage employees to choose lower cost plans or pay the difference in costs themselves. New SHOP exchanges will offer coverage options to small employers beginning in 2014, although employee choice will be limited in the federal SHOP exchanges until 2015. Large employers have the option of offering coverage through one of several exchanges being sponsored by benefit consulting organizations. While these approaches are new and differ across different exchanges, the common theme is to devolve some benefit choices, and some of the financial responsibility for those choices, to employees. Whether this new way of purchasing coverage works for employers and their employees, and how it affects benefits and plan costs, will be among the more important stories for the employer health insurance market over the next few years.

http://kff.org/private-insurance/report/2013-employer-health-benefits/

Comment:

By Don McCanne, M.D.

Many of the media reports about this annual Kaiser survey of employer-sponsored plans are expressing relief that the increases in premiums are relatively modest – only about 4 or 5 percent. But these numbers are not so reassuring when you consider that they are over twice the rate of wage increases and four time the rate of inflation. Workers continue to fall behind.

Also of concern is the fact that plans requiring high deductibles have increased and the amounts of those deductibles also have continued to increase. Thus the percentage increase in the premiums can be quite deceptive if you ignore the increase in out-of-pocket expenses that workers and their families are experiencing.

Also many employers are now considering private insurance exchanges which will allow them to convert their premium contributions into defined contributions, requiring employees to pick up the additional costs for plans that have more than minimal benefits.

Also there is considerable variation in the premiums, benefits, cost sharing, and covered populations of employer-sponsored health coverage. As if the average expenses that the employees must cover weren’t bad enough, many of them will find that the cost variations will be intolerably burdensome, even if some are better off.

These trends have been going on so long that they’ve become quite boring, but the cumulative impact on wage earners can be quite distressing. Giving a new definition to “catastrophic insurance,” the costs shifted to the workers can be catastrophic. Instead of catastrophic plans leaving people precariously exposed, what we really need is prepaid coverage that removes financial barriers to health care (i.e., single payer).

Health care costs can be controlled

By Richard A. Damon, M.D.
Bozeman Daily Chronicle, Letters, Aug. 5, 2013

Health economist and Professor Gerald Friedman, University of Massachusetts, celebrated Medicare’s 48th birthday by releasing a new study on health care. Analysis shows that a non-profit single-payer system based on an Expanded and Improved Medicare for All Act, H.R. 676, introduced by Rep. Conyers, D-Mich, and co-sponsored by 45 other lawmakers, would “save an estimated $592 billion in 2014, which would be more than enough to cover all 44 million people left uninsured by the ACA (Obamacare), and upgrade benefits for everyone else.” Friedman says the savings would come from slashing the administrative waste associated with today’s private health insurance industry ($476 billion), and using government bargaining muscle to negotiate pharmaceutical drug prices down to European levels ($116 billion).

“These savings would be more than enough to fund $343 billion in improvements to our health system, achieving truly universal coverage, improved benefits, and the elimination of premiums, co-payments and deductibles, which are major barriers to people seeking care.”

Friedman says the savings would also fund $51 billion in transition costs while retraining displaced workers from the insurance industry and phasing out investor-owned, for-profit delivery systems.

Over 10 years, the savings from reduced health inflation from cost-control methods such as negotiated fees, hospital global budgeting, and capital planning, would amount to $1.8 trillion. By expanding Medicare to everyone, we’d save billions of dollars annually. Friedman said the plan would be funded by current federal revenues for health care, a small increase in payroll taxes instead of insurance premiums, and new modest tax increases on high income earners and a small tax on stock and bond transactions. 95 percent of households would save money.

These findings are consistent with other economists, the CBO, and the General Accountability Office.

Where is the political will to get real health care for Americans?

Dr. Richard A. Damon lives in Bozeman.

http://www.bozemandailychronicle.com/opinions/letters_to_editor/article_f4a80086-fdef-11e2-867f-0019bb2963f4.html?mode=story

AHIP seeks reversal of "any willing provider" clauses

Insurers seek limited insurance exchange plan networks

By Jennifer Lubell
American Medical News, August 19, 2013

Health plans are focused on being ready “and doing what we need to do” as states set up their respective marketplaces, said Karen Ignagni, president and CEO of America’s Health Insurance Plans.

But some policy concerns remain. Many states, for example, “still have restrictions on our ability to actually provide high-performing networks for individuals to be able to access high-performing doctors and hospitals to make sure again we’re stretching those dollars. That will have to be looked at,” she said.

Ignagni was referring to the “any willing provider” clause, a mandate in some states that requires health plans to allow health care professionals to participate in a health plan’s network if the professional agrees to a plan’s contract terms, limits and conditions.

She also encouraged giving nurses a broader role, joining them with other professionals as part of health care teams, “so that we can try to customize health care and make it very patient-centered, and again stretch those dollars.”

http://www.amednews.com/article/20130819/government/130819959/7

Comment:

By Don McCanne, M.D.

Insurer opposition to “any willing provider” clauses is yet one more example of why we should question leaving coverage decisions in the hands of the private insurance industry.

Any willing provider clauses allow care provided by any qualified physician to be covered even if that physician is not contracted by the insurer but is still willing to accept payment based on contracted rates. The advantage of such clauses is that patients may choose to continue to see their own physician as long as the physician agrees to the insurer’s rates.

Why would insurers want to prohibit patients from having that right? It has to do with their current strategy of switching to narrow network plans – plans that have fewer choices of health care professionals. They say that they can extract even greater discounts from physicians who believe that they will have more patients referred to them by the insurer. Although it is questionable as to just how much further the insurers can ratchet down rates, these limited network plans have the advantage for the insurer of further impairing accessibility, thereby resulting in savings from forgone care, no matter how important that care might be.

Besides reducing the number of physicians in their networks, they also want to increase the number of nurse practitioners, presumably because they can negotiate even lower rates with them than they can with primary care physicians. That assumes that the current movement by nurse practitioners to gain equal pay for equal work will fizzle when the insurers offer the bait.

When they say this isn’t about the money, but it’s about quality… No, wait, they do say that this is about “stretching those dollars.” But how should those dollars be stretched? Should we take away choices of physicians and substitute nurses unwillingly, or should we consider eliminating this egregiously wasteful industry with its unwelcome intrusions? The latter would not only produce immensely more savings, it would also be much more beneficial for patients.

Tackling our uncontrolled health care expenditures

By Jack Bernard
The Star-Ledger (Newark, NJ), Aug. 20, 2013

As stated in various newspaper articles, there is a national concern with hospital billings. Specifically, charges vary tremendously from facility to facility for the same services and procedures, as shown by the Centers for Medicare & Medicaid Services data that was released in May 2013.

For those employed in the hospital and insurance fields, none of this comes as any surprise whatsoever. The “billing versus actual reimbursement” scenario is a long-standing nonsensical game played by providers and third-party reimbursers.

But, the articles miss the larger point. The true underlying problem with Medicare/Medicaid is escalating, uncontrolled national health care expenditures. This excessive increase is caused in large part by our insurance system (as well as providers of care, to a lesser extent), and not by wildly varying charges by service providers — charges that are simply disregarded by third-party payers.

After spending 25 years in the health care field, most of it related to making hospitals more efficient, I have become skeptical of most Washington reform efforts. I am especially wary of the supposed “reforms” proposed by my party, the Republican Party.

The GOP and Rep. Paul Ryan (R-Wis.), the fiscal policy leader of the party, want to talk about only the federal budget and shifting health costs to seniors, as opposed to true systemic cost containment for the nation. Maybe this reflects the fact that Ryan has never spent any significant time in the private sector and is solely a creature of Washington.

Experts in health care economics may differ on many things, depending on how conservative or liberal they may be. But, one thing they all agree on is that raising the age for Medicare will do virtually nothing to reduce the overall cost of health care in this nation. Cost shifting is not cost reduction.

Under the Affordable Care Act, everyone must have insurance, so theoretically the seniors cut out of Medicare under the Ryan plan would just get private insurance.

Medicare has a 3 percent administrative overhead while the private sector is now at 28 percent and trying to eventually come down to 20 percent. Raising the age to join Medicare simply shifts the insurer from the government to less efficient private providers. The national cost of care remains the same; only the insurer has changed for a small group of seniors.

In fact, the cost per capita for Medicare itself will actually rise because the remaining pool of Medicare enrollees will be older and, therefore, sicker than they are now. Plus, the Republican proposal dumps the extra cost into the lap of seniors 65-67, many of whom may well be unemployed/unemployable, according to national statistics.

The real solution to the American health care dilemma is obvious to Canadians, Australians and Europeans, but apparently not to us. Forget what bombastic politicians say about the United States having the best care in the world. Other developed countries have better health care outcomes, according the World Health Organization, and much lower costs. For example, Canada has superior mortality and morbidity statistics compared with ours. Per-capita cost for health care is $4,445 in Canada versus $8,233 in our nation.

How did they do this? Through a single-payer system, otherwise known as Medicare for All. Details can be found at the Physicians for a National Health Program website.

Under single payer, every provider would be paid the same for like procedures, adjusted for intensity. More efficient hospitals would survive. Less efficient ones would go under. That is consistent with the free-market principles that my party advocates … and better for our country’s future.

Jack Bernard was a senior executive with several national health care firms before retiring and worked with various hospital systems around the nation regarding cost containment.

http://blog.nj.com/njv_guest_blog/2013/08/tackling_our_uncontrolled_heal.html

Canadians should beware of Americans bearing ‘activity-based funding’

By Jonathon Ross, M.D.
Canadian Healthcare Network, Aug. 1, 2013

Many American physicians, myself included, support single-payer national health insurance, with global budgets for hospital care. A single, publicly accountable payer, coupled with global hospital budgets, are tools needed to assure cost control in health care systems.

But I was recently reminded by one of my Canadian colleagues that some American “reforms” are getting a hearing north of the border. One of these is that hospitals should be paid by case-based activity fees rather than global budgets.

In the U.S., we bundle clinically similar care into diagnosis related groups (DRGs), and the money follows the patient. We pay hospitals according to the fee assigned to each DRG. I would advise extreme caution and careful assessment of the implications for cost, quality, access, equity and efficiency before adopting this hospital funding model.

In Canada, I’m told you call this “activity-based funding” or ABF. Depending where you live, this method of funding may be called patient-focused funding, payment by results, volume-based funding, service-base funding, case-mix funding, or prospective payment system. But no matter what you call it, ABF has serious side effects.

One of the dangers is that ABF can be used to “game the system.” When you pay hospitals according to diagnosis, the incentive is to increase or otherwise modify your diagnosis so your hospital will make more money. And that’s exactly what happened when the United States implemented ABF for U.S. Medicare patients.

Here in the States, we have a small army of nurses reviewing every case in hospital to remind us to use special words just the right way so we can get more money for each case, regardless of whether we have done anything different in managing our patients.

For example, it is not enough to say that patient has lost weight and looks ill. Instead physicians must use the term “malnourished.” It’s even better if you order a blood test to prove the obvious, even if that test does not change the diet ordered for the patient, or your case management.

The incentive is to list all of the diagnoses you can possibly list for every patient, as some of these will increase the payment even if it does not change your management one bit. These are “complicating conditions” and can increase payment even if they change none of your orders or tests.

All day, every day, nurses are caring for charts rather than for patients at every U.S. hospital. This is what activity-based funding will buy you.

Of course, there will also be pressure to discharge patients sicker and quicker in order to create more cases. You can expect that you will need added extended care rehabilitation beds. There will be demand for added bricks and mortar to build rehab facilities for patients who could more efficiently spend another few days in a hospital bed getting rehabilitation before going straight home. This transfer makes no sense at all unless you already happen to have excess empty rehab beds in a community. It also diverts the patient to a facility where the patient’s physician team does not regularly visit. If physician care is still needed during the rehab stay, the access to those physicians will be impaired, disrupting continuity of care.

Your length of hospital stay will decrease, but the added costly days will just happen in a different costly building, with another costly set of therapists, working under another costly set of administrators.

If the hospitals game the codes upward, then you need another army of regulators to catch them and code them back down. This version of the popular video arcade game, “Whack-a-Mole,” continues in U.S. hospitals to this day. There is now a large hospital bureaucracy whose job it is to up-code the severity of illness of Medicare patients and another large Medicare bureaucracy trying to figure out how to stop the hospitals from gaming the system.

The game of up-coding has been getting significant attention in the U.S. press, where the extreme disparities in hospital costs and insurance payments are making headlines. Surely, Canadians wouldn’t want this administrative nightmare in their own health care system.

If you want to use financial incentives to change behavior in health care, you need to be clear about what you want. How about rewarding staying within budget without patients feeling a loss of access to needed care or reduced quality? How about rewarding providers for reducing the number of premature deaths related to treatable illness? Canadians should ask themselves what they want before implementing activity-based funding.

Winston Churchill is rumored to have said, “You can always count on the Americans to do the right thing … after they have exhausted all the other possibilities.” I would beware of American consultants bearing gifts such as case-based payments for hospitals as a cost-saving idea. Count your blessings, Canadians, and get to work improving the effective system that you have!

Dr. Johnathon Ross is past-president of Physicians for a National Health Program, a U.S. physician organization that supports Medicare for all. He teaches and practices primary care internal medicine at a 500-bed teaching hospital in Toledo, Ohio.

http://www.canadianhealthcarenetwork.ca/healthcaremanagers/discussions/opinion/beware-of-americans-bearing-activity-based-funding-19897

Where’s the outrage over our failed health care system?

By Philip Caper, M.D.
Bangor (Maine) Daily News, Aug. 15, 2013

For the next few months we’ll be bombarded by messages from the Obama administration urging people, especially young, healthy people, to sign up for insurance provided under the Affordable Care Act. Without them, premiums for that insurance will soon climb to unaffordable levels.

We’ll also hear plenty of noise from the ACA’s opponents. It will be hard to get any other health policy messages across during the upcoming PR blitz.

But there are some other important and noteworthy things going on in the policy world. Perhaps the most important is the growing interest in the origins of the high costs of medical care in the U.S., now about double that of other wealthy countries.

That interest has been fueled by the ACA. By requiring many Americans to buy private health insurance, the federal government is now obliged to see to it that insurance remains affordable. Whether they are actually able to do so remains to be seen.

Because of that, both government and the lay media have now joined academicians in paying a lot more attention to the costs of medical care in the U.S. and how they compare to those in other countries. That attention was jump-started last March by a Time Magazine article titled “Bitter Pill” by journalist Stephen Brill, who looked at hospital charges and their causes. He concluded that while many of those paying the bills suffered badly from the high costs, those selling health care products and services were prospering, helping to create an island of affluence for themselves and a sea of poverty for everybody else.

That was followed by Medicare’s public release of the prices it was being charged in various regions throughout the country, revealing huge variations without any persuasive explanation as to why these variations should exist.

More recently, the New York Times has published an ongoing series by Elizabeth Rosenthal examining the costs of medical care for various procedures throughout the U.S., and comparing them with those in other countries. So far she has examined three common types of care: colonoscopy, pregnancy and hip replacement. In each case, she found prices in the U.S. were both variable and extremely high by international standards, some up to 10 times the prices for comparable care in other countries. When asked why, one expert commented, “They’re charging these prices because they can.”

In other words, as economist George Akerlof predicted in his Nobel Prize-winning paper “Selling Lemons,” in a market where the sellers have a great deal of information (and therefore power) and the buyers have little or none, the buyers (most of us) are being ripped off big time.

In most countries that have enacted programs of universal health care, two things have taken place. First, health care prices were restrained so as to keep their national programs affordable. Profiteering from illness is not allowed.

Second, the importance of medical care in maintaining a healthy population was put in perspective. Medical care can be very effective in fixing what’s already broken, but not very effective in preventing the breakage in the first place.

What are now called the “social determinants of health” turn out to be much more important than medical care in maintaining a population’s health. They include lifestyle factors such as a healthy diet; exercise; restraint in the use of substances such as alcohol, tobacco and other drugs; and the presence of robust social policies that help minimize excessive disparities of wealth and income within the national population.

Although the ACA does move the ball toward the goal of universal health care, we are still a long way from scoring. It attempts to curb some of the worst abuses of the health insurance industry, but it doesn’t eliminate the incentives to try them anyway. It will leave many people out, and although it makes some efforts to control overall costs and promote healthy living, many experts believe those efforts are inadequate.

As Akerlof predicted, the medical-industrial complex is becoming increasingly corrupt. It is now one of our largest and most profitable industries. Much (but not all) of what it is doing is legal, but it has lost its moorings and is forgetting about its health care mission in the pursuit of profits and growth.

The MBAs have taken over. We are all paying the price.

I don’t blame only the corporate health care providers, pharmaceutical and device manufacturers and insurance industry. After all, they are just doing what they are supposed to do for their “stakeholders” — profit and grow.

I also blame all the rest of us for letting it happen. What we are witnessing is a massive failure of public policy that is not permitted in any other wealthy country. It is being enabled by the timidity of experts in academia and the media, who are paid to be truth-tellers but who until very recently ignored the elephant in the room — rampant corporatism that is subverting the interests of most of the American public and the mission of our health care system. I blame the passivity of a public that consistently permits our politicians to fail to do their jobs to protect our interests.

Where’s the outrage?

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.

http://bangordailynews.com/2013/08/15/health/wheres-the-outrage-over-our-failed-health-care-system/

The “Cadillac” health plan is a myth

A doctor explains that limiting the scope of employer-based health care has long been a dream of the establishment

By Adam Gaffney
Salon, August 16, 2013

What would a gold-plated Cadillac health care plan look like to you? By the sound of it, you might think it’d cover such superfluities as annual trips to Swiss medical spas, cosmetic surgery on demand and weekly thermal seaweed wraps.

Alas, that appears to be far from the case. As the New York Times reported last week, municipal unions across the country are facing pressure to accept worse health care plans, before the so-called “Cadillac tax” on expensive health care plans kicks in in 2018.  Not surprisingly, workers are displeased with the prospect of being downgraded to inferior plans with more out-of-pocket spending.

Before concluding that such luxurious plans are the sole preserve of supposedly greedy city workers, keep in mind that by the estimate of one health economist, as many as 75 percent of employer health plans could fall under the “Cadillac” umbrella over the next decade. Reasonably good insurance – you know, the kind that covers all of your medical needs, without making you pay an arm and leg out-of-pocket every time you need to use it – has stealthily become the new Cadillac. However much the reputation of General Motors may have fallen in recent years, this seems like a bit of a stretch.

A reasonable observer might be enticed to ask: What on earth is going on here? From whence came this health care Cadillac?

To begin, the nationwide trend towards lower-value health insurance – now enshrined in law in the form of the Cadillac tax – is not, contrary to appearances, some newfangled, desperate cost-saving measure. On the contrary, limiting the scope of employer-based health insurance has been a dream of health policy wonks for decades.

The academic taproots of the idea stretch at least back to the year 1968, with the publication of the economist Mark Pauly’s highly influential paper “The Economics of Moral Hazard” in the American Economic Review. “The effect of an insurance which indemnifies against all medical care expenses,” Pauly wrote, “is to reduce the price charged to the individual at the point of service from the market price to zero.”  As a result, “no individual will be motivated to restrain his own use … since the incremental benefit to him for excess use is great, while the additional cost of his use is largely spread over other insurance holders.” Although others had made note of this phenomenon previously, Pauly’s contribution was to calculate the loss to society as a result of this “excess use,” which he found to be quite substantial.

Thus was the idea of health care “moral hazard” born, otherwise known as the doctrine of: “it’s included, so we might as well take it!” We could also more colloquially label it the “salad bar” hypothesis.

From “moral hazard,” in turn, came the idea that that the fundamental, “original sin” of the American health care system was not our failure to enact universal health care, but was instead our creation of a system of tax-favored, overly generous employer-based insurance. Several years after the Pauly paper, along this line of thinking, the prominent economist Martin Feldstein – future chief economist of the Reagan administration – would argue in another important paper that “American families are in general overinsured against health expenses,” and that the right medicine was more deductibles and coinsurance.

It was not until the early 1980s, in the face of persistently rising health care costs, that this academic concern for “moral hazard” began to hit the pocketbooks of Americans: Between 1982 and 1984, for instance, the percentage of insurance plans requiring some deductible for hospitalization more than doubled, from 30 percent to 63 percent. During the 1990s, on the other hand, the central importance of “cost sharing” was sidelined as corporatized “managed care” took central stage, and insurance companies sought to decrease costs (and thereby increase profits) by limiting care on the supply side.

But with the widespread revolt against managed care in the late 1990s (and with health care costs continuing to rise in spite of it), “moral hazard” again became a prime target for “reform.” The solution was in line with the recommendations of Pauly and Feldstein – higher deductible insurance. President George W. Bush’s 2003 Medicare prescription drug law gave us the “Health Savings Account” (HSA) – a tax-free account that could be used for out-of-pocket medical expenses, but which had to be attached to a high-deductible insurance plan. “Consumer-driven” health care plans – not much more than high-deductible plans with the capacity to be coupled with an HSA – quickly became all the rage.

Yet even for those outside these new plans, cost-sharing soared over the decade. Copayments for expensive drugs skyrocketed, sometimes to the tune of hundreds or thousands of dollars, while the percent of employer plans with $1,000 deductibles (or more) tripled.

But this was not enough – the alleged culprit for our continuously rising health care costs was still that dreaded “moral hazard.” Once you paid for the salad bar, after all, why not heap on larger and larger portions of colonoscopies, all-nighters in the emergency room or chemotherapy infusions? By 2008, John McCain was essentially centering his entire health care platform on the vilification of those “gold-plated Cadillac plans,” as he called them, which covered, among other things, such absurdities as “transplants.”

And in 2010, despite opposition from House Democrats and organized labor, a somewhat limited but still highly controversial “Cadillac tax” made its way into the Affordable Care Act, creating a 40 percent excise tax for family plans valued at greater than $27,500, or individual plans greater than $10,200.

The Age of the Cadillac, it seemed, was finally coming to a close. Health care “consumers” would now have to play with their own damn money. A golden age of improved quality and reduced costs was about to dawn.

Unfortunately, however, we didn’t live happily ever after.

For over these very s
ame years, the idea that we were a nation “overinsured” began to collide with several lines of hard evidence. First, the very existence of a large societal net loss from “overinsurance” was called into question in the academic health economic literature, most prominently by the economist John Nyman. Nyman argued that while there may be some cost to moral hazard, it was far smaller than what Pauly, Feldstein and others had calculated. We use more health care when we are sick, he demonstrated, not because health care becomes free, but because we gain “income” in the form of insurance transfers, which we rationally use to pay for “otherwise unaffordable procedures.”

Second, there was an accumulating body of data in the academic medical literature suggesting that “underinsurance,” not “overinsurance,” was the more serious problem facing Americans. More and more families were seeing higher and higher percentages of their family income consumed by their health care service burden and by out-of-pocket medical expenses. In fact, we were increasingly going bankrupt as a result of our health care expenses – according to one study, in 2007 62 percent of all bankruptcies had a medical cause, despite the fact that in a majority of those cases, those going bankrupt actually already had health insurance. Not much evidence for “overinsurance” in that department, either.

And looking at the problem from another angle, it became increasingly appreciated that the rise in deductibles, copays and coinsurance was having significant effects on our very health. As I described in a recent article, there are clear downsides to becoming “Copay Country.” There is evidence, for instance, that cost sharing may increase the risk of death for the most vulnerable, perhaps because it reduces expenditure on both “inappropriate” and “appropriate” care. In one recent experiment that randomized patients to copays or to full coverage for prescriptions after they suffered heart attacks, those with full coverage took their medications more regularly – and had less strokes and other cardiovascular complications as result. And all told, there was still no overall increase in cost, either way.

Yet, in the face of this growing body of solid evidence, we simply continue to hear more and more about how patients (apologies, “consumers”) need to have more “skin in the game” – as if having their physical hearts, lungs or – in some instances – their skin on the line wasn’t enough already.

So don’t be surprised if you find, in the coming years, that your semi-reasonable-quality heath insurance – perhaps won through hard-fought negotiation, or maybe earned in exchange for lower pay or other benefits – somehow transforms itself into a taxed “Cadillac” plan. From the perspective of much of the health policy establishment, you’ve had it too good, for too long, already. And however nice it might sound, they say we simply can’t afford truly universal health care, with comprehensive benefits for all and with little or no cost sharing (even if other industrialized countries magically manage to do so, at a lower price, and with better results).

Instead, it’s time we tightened our belts, stopped our whining and traded in our Cadillacs, or – depending on which metaphor you find less loathsome – that we finally got off of the salad bar.

Adam Gaffney is a physician and writer in Massachusetts.

http://www.salon.com/2013/08/16/the_cadillac_health_plan_is_a_myth/