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Does population health explain geographical variation in Medicare spending?

Does population health explain geographical variation in Medicare spending?

Geographic Variation in Fee-for-Service Medicare Beneficiaries’ Medical Costs Is Largely Explained by Disease Burden

By James D. Reschovsky, Jack Hadley and Patrick S. Romano
Medical Care Research and Review, May 28, 2013

Abstract

Control for area differences in population health (casemix adjustment) is necessary to measure geographic variations in medical spending. Studies use various casemix adjustment methods, resulting in very different geographic variation estimates. We study casemix adjustment methodological issues and evaluate alternative approaches using claims from 1.6 million Medicare beneficiaries in 60 representative communities. Two key casemix adjustment methods—controlling for patient conditions obtained from diagnoses on claims and expenditures of those at the end of life—were evaluated. We failed to find evidence of bias in the former approach attributable to area differences in physician diagnostic patterns, as others have found, and found that the assumption underpinning the latter approach—that persons close to death are equally sick across areas—cannot be supported. Diagnosis-based approaches are more appropriate when current rather than prior year diagnoses are used. Population health likely explains more than 75% to 85% of cost variations across fixed sets of areas.

http://mcr.sagepub.com/content/early/2013/04/26/1077558713487771.abstract

And…

Health Differences Explain Most Geographic Variation in Medicare Costs

Center for Studying Health System Change, May 28, 2013

Wide geographic variation in Medicare costs is largely explained by health differences across communities rather than inefficient care delivery, according to a Center for Studying Health System Change (HSC) study published online today in the journal Medical Care Research and Review.

Earlier research has asserted that Medicare could reduce spending by as much as 30 percent without harming health if all providers adopted treatment patterns found in low-cost areas, but the new Medical Care Research and Review study questions how well earlier studies accounted for differences in Medicare beneficiaries’ health status.

HSC Senior Fellow James D. Reschovsky, Ph.D., along with Jack Hadley, Ph.D., of George Mason University; and Patrick Romano, M.D., M.P.H., of the University of California, Davis, Center for Healthcare Policy and Research, examined multiple ways of adjusting for patient health, finding that a fuller accounting of health status explained at least 75 percent to 85 percent of Medicare geographic cost differences between high- and low-cost areas.

http://www.hschange.com/CONTENT/1353/

And…

Dartmouth Institute for Health Policy and Clinical Practice Responds to Reschovsky at al

By Jonathan Skinner, PhD
The Dartmouth Institute for Health Policy and Clinical Practice, May 29, 2013

There are three fundamental concerns with the Reschovsky et al (2013) geographic variations paper published online May 28, 2013 in Medical Care Research and Review.

The first and most important is that they include current HCCs – diagnostic billing codes – as “explanatory” factors for spending. … the authors’ use of the HCC billing codes would “explain” the more aggressive cardiologist’s behavior as worse health status, rather than attributing it to the more aggressive physician behavior.

But they do find that “non-discretionary” measures of disease, like hip fractures, are higher in high-cost regions.  Wouldn’t that lend credence to their claim that poor health explains higher spending?   I believe the answer is still no – because we cannot reproduce even those basic findings using population based Medicare claims data.

The final concern with this study is a more technical one, so bear with me.  Typically, HCC risk adjustment is predetermined by the HCC formula designed by CMS.  If someone has diagnosed COPD, Medicare would implicitly allow (say) 23% more expenditures as a consequence.  As far as I can tell from the methods section, this is not what they do. Instead, they throw the HCC diagnostic codes into the regression, and let the regression do its best to explain the regional variation.

Now of course, my views on this paper may be viewed as tainted, given my Dartmouth affiliation.  So it’s informative to consider the interim report by the IOM-convened panel of experts on regional variations – a panel that did not include any Dartmouth faculty.  The panel commissioned many studies of regional variation in Medicare, Medicaid, and in private insurance markets.  They read every paper in the literature, and conducted their own analysis of the data.   After sorting through all this evidence, they concluded, as we have:
 
Observation 4
Although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.

http://tdi.dartmouth.edu/press/updates/dartmouth-institute-for-health-policy-and-clincial-practice-responds-to-res

And…

Medicare Spending Variations Mostly Due To Health Differences, Study Concludes

By Jordan Rau
Kaiser Health News, May 28, 2013

The idea that uneven Medicare health care spending around the country is due to wasteful practices and overtreatment—a concept that influenced the federal health law — takes another hit in a study published Tuesday. The paper concludes that health differences around the country explain between 75 percent and 85 percent of the cost variations.

“People really are sicker in some parts of the country,” said Dr. Patrick Romano, one of the authors.

That’s a sour assessment for those hoping to wring large savings out of the health care system by making it more efficient. Some, such as President Barack Obama’s former budget director, Peter Orszag, assert that geographic variations in spending could mean that nearly a third of Medicare spending may be unnecessary.

The new paper is one of the sharpest attacks yet on the work of the Dartmouth Institute for Health Policy & Clinical Practice, whose three decades of research has popularized the theory that the unexplained regional differences in spending are due to the aggressiveness of some physicians to do more, in large part because it enriches them.

“The trouble with Dartmouth is they were trying to spin a simple story from a world which is far more complex and far more nuanced,” said James Reschovsky, the lead author on the paper. “They are to be credited for highlighting that there’s a lot of inefficiency in the delivery of health care in the United States. They defaulted by hanging their hat on geographic determinants of efficiency, and I think that premise is fundamentally being torn down, not only by my research, but also by the IOM work and a bunch of other studies.”

Dartmouth strongly disputed the study, which they said they could not replicate. Jonathan Skinner, a Dartmouth economist, called the study “fatally flawed” in an email. He noted that the Institute of Medicine’s preliminary report stated that “although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.”

Skinner also noted that Dartmouth researchers have never endorsed the idea of adjusting Medicare spending by region.

A 2008 “white paper” from Dartmouth directed at policy makers and titled “an agenda for change” implied the possibility of substantial savings if Medicare rooted out ineff
iciency and unnecessary treatments.

Dartmouth researchers have long maintained that experts shouldn’t trust Medicare diagnosis records, which the new study used for its analysis. They believe that doctors in some areas of the country are more aggressive in diagnosing people with serious ailments than doctors elsewhere.

Still, while faulting Dartmouth’s methods, the new paper left between 15 percent and 25 percent of geographic differences unexplained. And Romano said he agrees there are substantial differences in how medicine is practiced. “I really do believe there is huge practice variation, but I don’t think we see that variation at the level of these large geographic units,” he said. “We see those variations at the level of individual physician practices.”

http://www.kaiserhealthnews.org/Stories/2013/May/28/medicare-state-geographic-variation-costs.aspx

Comment:

By Don McCanne, M.D.

It has been well documented that there is considerable variation in Medicare spending both between and within geographical areas. What has been disputed is whether or not these differences are due to population health. This latest study indicates that population health explains about four-fifths of the differences in spending. If that is true, the differences in spending are largely warranted.

If the differences in spending are due to geography and physician behavior and not to how sick the patient is, then the onus of explaining how the excess spending could be precisely identified and recovered should be borne by those supporting this view.

Jonathan Skinner of the Dartmouth Institute has been a leading advocate of using accountable care organizations to ferret out this waste. It is difficult to conceptualize how providing care and making the providers “accountable” for it leads to recovery of this alleged waste, especially since accountability measures are so primitive and misdirected that they could never identify most of the excesses.

What is tragic is that this debate has distracted us from seriously considering changes that are well documented to be capable of recovering waste while providing greater value in our health care spending – changes that we could easily achieve by enacting and implementing a single payer national health program.

If there are crooks out there who are wasting our health care dollars, we can investigate them as outliers and then take appropriate measures as warranted. It would be much easier to do under a single payer system.

Immigrants heavily subsidize Medicare’s Trust Fund: Health Affairs study

Harvard Medical School and Hunter College School of Public Health researchers find immigrants generated surplus contributions of $115.2 billion in 2002-2009, $13.8 billion in 2009

FOR IMMEDIATE RELEASE: May 29, 2013
Contact: Mark Almberg, PNHP, mark@pnhp.org, (312) 782-6006

Immigrants, particularly noncitizens, pay billions more into Medicare’s Hospital Insurance Trust Fund than they withdraw in health benefits each year, according to researchers at Harvard Medical School and Hunter College School of Public Health. The study is being released today as a Web First by Health Affairs, and will also appear in the journal’s June issue.

In 2009 alone, immigrants paid $33.1 billion into the Trust Fund but used only $19.3 billion in health care paid for by the Trust Fund, yielding a surplus of $13.8 billion. About three-quarters of this surplus, $10.1 billion, came from noncitizens. The article concludes that reducing immigration would worsen Medicare’s financial health.

Payroll taxes are the major source of revenues for the Trust Fund, which mostly pays hospital bills. The overwhelming majority of immigrants are working age, have high rates of labor force participation, and hence pay substantial payroll taxes. Moreover, even undocumented immigrants often pay these taxes, usually under a borrowed or false Social Security number.

Trust Fund outlays for immigrants are low for several reasons. Few are elderly. Moreover, even some elderly immigrants are ineligible for Medicare because they have not worked the required 40 quarters in the U.S. under a valid Social Security number, lack legal status, or, if legal residents, do not meet the five-year (legal) residency requirement. Even among eligible immigrants, some may not use Medicare because they retire to their country of origin. Those who do enroll in Medicare use relatively little care, which probably reflects problems in access to care.

The study authors examined Trust Fund contributions and expenditures for each year between 2002 and 2009. They analyzed data from the Census Bureau’s Current Population Survey to determine tax contributions, and used the Medical Expenditure Panel Survey to examine medical expenses.

They found that immigrants contributed a surplus of between $11.1 billion and $17.2 billion per year, or a total of $115.2 billion dollars from 2002-2009. During the same years, U.S.-born persons generated a net deficit of $28.1 billion. In 2009 immigrants provided an average per capita surplus of $368, while native-born Americans generated a per capita deficit of $113. Noncitizen immigrants contributed a net subsidy of $466 per person.

“For years I have seen my immigrant patients be blamed for driving up health care costs,” said lead author Dr. Leah Zallman, an instructor in medicine at Harvard Medical School and staff physician at Cambridge Health Alliance, “and yet few acknowledge their contributions. Our study demonstrates that in one large sector of the U.S. health care economy, immigrants actually subsidize the care of native-born Americans.”

“The numbers completely contradict the widely held misperception that immigrants are a drain on the health system,” said Dr. Steffie Woolhandler, professor at Hunter College School of Public Health, visiting professor of medicine at Harvard, and co-founder of Physicians for a National Health Program. “Reducing immigration would worsen Medicare’s financial woes.”

****

“Immigrants contributed an estimated $115.2 billion more to the Medicare Trust Fund than they took out in 2002-09,” Leah Zallman, M.D., M.P.H., Steffie Woolhandler, M.D., M.P.H., David Himmelstein, M.D., David Bor, M.D., M.P.H., Danny McCormick, M.D., M.P.H. Health Affairs, June 2013. Web First, May 29, 2013.

A free copy of the complete study will be available from May 29 through June 3 at 4 p.m. Eastern time at the following link: http://content.healthaffairs.org/content/early/2013/05/20/hlthaff.2012.1223.full
After that time the study will migrate to be part of the June print issue.

****

Physicians for a National Health Program is a nonprofit research and educational organization of more than 18,000 doctors who support single-payer national health insurance, an improved Medicare for all. PNHP had no role in funding or otherwise supporting the study described above.

Cambridge Health Alliance (CHA) is an integrated health care system that serves Cambridge, Somerville, and Boston’s metro-north communities, and is a Harvard Medical School teaching hospital. With three hospital campuses, an extensive primary care network, and an employed physician model, CHA provides high-quality, culturally competent care to a large, diverse patient population.

The Hunter College School of Public Health, located in Manhattan, works with communities, nonprofits, private groups and government agencies to help people live healthier lives. It conducts research and creates new models of public health education and practice to solve urban health problems. Hunter College is the largest college in the City University of New York (CUNY) system.

Scribbling in the Chart

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, May 24, 2013

William Faulkner, the great American writer who was born in New Albany, Mississippi, wrote screenplays to support his family, although he didn’t really like the job, and referred to it as “mere scribbling.”

There is a story that when the Warner Brothers Studio office, where Faulkner wrote, was cleaned out, his desk contained an empty bottle and yellow pad upon which, 500 times, he had written the words: “Boy Meets Girl. Boy Meets Girl. Boy Meets Girl.”

When it comes to health care, many physicians might leave an echo of Faulkner’s scrawl in their desk drawer. It might read: “Coding and billing. Coding and billing. Coding and billing.”

Coding refers to selecting a five-digit code that labels an encounter with a patient, the code that will be sent on to an insurance company, or Medicare, or Medicaid, for payment. Billing refers to sending a claim to an insurer, electronically these days, for payment in a timely and efficient manner. Coding and billing depend upon what the doctor has written in the chart.

The idea of the medical chart might be that it should form a repository for in-the-moment descriptions of a patient’s history, clinical condition, and course. The chart serves the patient by communicating information vital to the patient’s future care.

One of my senior colleagues the other day stressed the value of narrative description in her charts. She believes that communicating a sense of her patient as a person remains essential to participating in the effort to become or stay healthy.

Accurate medical records are also the responsibility of every medical professional, with ethical and legal implications. A humane narrative may offer every element needed for future medical decision-making, and yet lack mention of one or two elements needed to justify a particular visit code.

I have heard health care administrators refer to this situation as “Money left on the table.” In order for an institution to collect the money “left on the table,” administrators will try to get the doctors to record key details in order to justify “accurate” or “appropriate” coding and billing.

Last year The New York Times looked at the implementation of electronic health records in this connection. At a Utica emergency room, following the implementation of an electronic health record, the proportion of patients who were coded as requiring the highest level of care rose 43 percent. After implementation of an electronic health record at a Tennessee hospital the use of the visit codes with the highest reimbursement rose 82 percent after the implementation of an electronic health record. The Times reported that “representatives for both hospitals said the increases reflected more accurate billing for services.”

Electronic health records have been shown to drive costs up in other ways also, for example, by prompting physicians to order more tests. And part of the motivation behind a move toward “bundled payments” and “accountable care organizations” and care coordination efforts is a recognition that fee-for-service billing games infuse the whole health system to a frenzy.

Now that most physicians in the United States are employees of hospitals or big health care corporations, we find a new source of scrutiny upon our charts. Quality improvement efforts, pay-for-performance schemes and all kinds other metrics center upon our notes in the record.

This can warp the purpose of the medical record. Instead of a document primarily meant to serve the patient, as well as something to serve present and future caregivers, the chart becomes a document primarily meant to justify financial remuneration for the institution. This wastes valuable time and resources. The worst examples are checkbox documents in which essential information is at risk of being overwhelmed by automatically generated data.

This introduces “mere scribbling” into our charts.

The experience of providing care then changes too, as we sit at screens, sometimes spending more time with the electronic representation of the patient than we have at the beside, mouse clicking our way through our exam and our orders, our documentation. We caregivers would like to be remembered for what we do at the bedside, not in front of the screen.

While we take seriously how well our documentation helps our fellow physicians and nurses, we don’t measure ourselves by how well our charts fit the needs of coding and billing — but the people with power over us, health care businesspeople, administrators, insurers, do exactly that.

For now this seems an inescapable compromise we must make. As William Faulkner told his agent, “In some ways Proust was lucky. He didn’t ever have to contend with Hollywood for his bread and butter.”

Dr. Andrew Coates practices internal medicine in upstate New York. He is president of Physicians for a National Health Program.

You can listen to Dr. Coates’ radio broadcast here: http://www.wamc.org/post/andrew-coates-scribbling-chart

New Hampshire AFL-CIO endorses H.R. 676

By Kay Tillow
Single Payer News, May 29, 2013

“On Saturday, May 4, the New Hampshire AFL-CIO unanimously passed a resolution supporting H.R. 676 and the adoption of a national single-payer health care system that covers all Americans for all necessary medical care including prescription drugs and dental,” reports President Mark MacKenzie.

New Hampshire is the 42nd state AFL-CIO federation to endorse H.R. 676, Expanded and Improved Medicare for All, sponsored by Congressman John Conyers Jr., D-Mich.

“H.R. 676 will save hundreds of billions of dollars by eliminating the private health insurance industry with its high overhead and profits,” said MacKenzie.

“As president of the New Hampshire AFL-CIO I am proud to have our members actively participate in the movement to win passage of H.R. 676 and to make health care a human right.”

In a separate development, on May 21, H.R. 676 gained another co-sponsor in Congress with the addition of Rep. Danny Davis (Ill.-7). H.R. 676 now has 42 co-sponsors.

***

More on the Expanded and Improved Medicare for All Act

H.R. 676 would institute a single-payer health care system by expanding a greatly improved Medicare to everyone residing in the U.S.

H.R. 676 would cover every person for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental (including oral surgery, periodontics, endodontics), mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care and correction, hearing services including hearing aids, chiropractic, durable medical equipment, palliative care, podiatric care, and long-term care.

H.R. 676 ends deductibles and co-payments. H.R. 676 would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

In the current Congress, H.R. 676 has 42 co-sponsors in addition to Conyers.

H.R. 676 has been endorsed by 601 union organizations including 145 Central Labor Councils/Area Labor Federations and 42 state AFL-CIOs (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, NE, NJ, NY, NV, MA, RI, & NH).

For further information, a list of union endorsers, or a sample endorsement resolution, contact: Kay Tillow, All Unions Committee for Single Payer Health Care—H.R. 676, c/o Nurses Professional Organization (NPO) 1169 Eastern Parkway, Suite 2218, Louisville, KY 40217. Phone: (502) 636-1551. E-mail: nursenpo@aol.com Website: unionsforsinglepayer.org

Millions of the poorest will remain uninsured

States’ Policies on Health Care Exclude Some of the Poorest

By Robert Pear
The New York Times, May 24, 2013

The refusal by about half the states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance under President Obama’s health care law even as many others with higher incomes receive federal subsidies to buy insurance.

More than half of all people without health insurance live in states that are not planning to expand Medicaid.

People in those states who have incomes from the poverty level up to four times that amount ($11,490 to $45,960 a year for an individual) can get federal tax credits to subsidize the purchase of private health insurance. But many people below the poverty line will be unable to get tax credits, Medicaid or other help with health insurance.

http://www.nytimes.com/2013/05/25/us/states-policies-on-health-care-exclude-poorest.html?hp&_r=0&pagewanted=all

Comment:

By Don McCanne, M.D.

The poorest of the poor, those living below the federal poverty level, are ineligible for subsidies for the exchange plans, and they will not be able to enroll in Medicaid in those states that have refused to expand eligibility beyond those who are already qualified.

For those living in poverty, the Affordable Care Act (ACA) could have provided plans through the state exchanges with subsidies for 100 percent of the premiums and 100 percent of the out-of-pocket costs. Instead, it was decided to cover those in poverty with Medicaid, while limiting the income-indexed exchange subsidies to those living above 100 percent of the federal poverty level.

That was before the Supreme Court ruled that state participation in the Medicaid expansion could not be made mandatory. Since so many states opted out, millions of the very poor will not be eligible for Medicaid nor for the exchange plan subsidies. They will simply remain uninsured.

Because of the obstructionists in Congress, no legislative remedy is possible at this time. Too many members of Congress want to prove that ACA won’t work. Of course, they do not advance any program that will.

Even if all glitches were eliminated, the fundamental structure of ACA is irreparably flawed. It will leave 31 million uninsured, establish under-insurance as the new standard, and fail to control costs. So let’s replace it with a system that covers not only the poorest of the poor, but covers all of us – an improved Medicare for all.

Economist: North Carolina could save $18.7B by adopting single-payer model for health care

The U.S. health-care payment system is unsustainable, Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst, said Thursday night in Charlotte

By Jennifer Thomas
Charlotte (N.C.) Business Journal, May 24, 2013

North Carolina could save as much as $18.7 billion next year on health-care costs if it changed the way it finances health care.

The catch? That change would require a switch to a single-payer system in which one entity collects all health-care fees and pay related costs, says Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst.

“We have a system that was broken 10 years ago, and it’s getting worse,” he says. “You can’t fix it unless you change its fundamental basis.”

Friedman spoke Thursday night in Charlotte at the Health Care Justice meeting. That organization wants everyone in the community to have access to health care. It is a chapter of the Physicians for a National Health Program, which supports single-payer national health insurance.

Friedman has drafted financing plans for single-payer health systems for Maryland, Massachusetts and the United States. If adopted, he estimates such a payment model could result in $2 trillion in savings nationwide over the next decade mainly by cutting administrative costs and controlling prescription drug prices.

On Thursday night at the Midwood International and Cultural Center, he touted the need for universal-comprehensive coverage, in which everyone would have access to care. Individuals, businesses and the government stand to benefit, Friedman said.

Universal coverage would minimize billing expenses, avoid wasteful competition among insurers and eliminate adverse selection against people who are sickest, he said.

Friedman estimates that nationwide there is $1.5 trillion in waste annually when it comes to health-care spending. Such spending now accounts for roughly 18 percent of the gross domestic product. And it is expected to rise to 22 percent of the GDP within five years.

In North Carolina, health-care spending has risen more than 400 percent in North Carolina since 1990, Friedman said.

At the same time, per capita income has barely doubled, which puts increased pressure on a family’s income. In 1960, health-care spending accounted for just 7 percent of a family’s take home pay. That rose to 39 percent in 2010.

“More and more money is going to health care,” he said.

The current health-care payment system is unsustainable because it is focused on making profits, Friedman said. That results in waste, fragmented care delivery and significant administrative costs and monopolistic pricing, he added.

For example, he said drug prices are 60 percent higher in the U.S. than elsewhere.

Health insurers will spend nearly $200 billion on administrative costs in 2013, he noted.

Friedman expects the current payment system will collapse. He notes expanded access through federal health-care reform will fall short of providing universal coverage and does not do enough to stem rising health-care costs.

That means health insurance premiums will continue to rise, making it unaffordable for more individuals.

“Right now health-care is a lump-sum tax on individuals, especially sick individuals,” he said.

Jennifer Thomas covers health care, biotech, education and retail for the Charlotte Business Journal.

http://www.bizjournals.com/charlotte/news/2013/05/24/economist-nc-could-save-187b-by.html?page=all

Health care CEOs have highest pay

Health care tops other industries for highest median CEO pay

The Washington Post, May 23, 2013

Here’s a look at median CEO pay by industry last year, as calculated by executive pay research firm Equilar. For the fourth time in five years, health care CEOs got the most pay and utilities CEOs got the least.

—Health care: $11.1 million

—Industrial goods: $11 million

—Services: $10.9 million

—Financial: $9.8 million

—All companies: $9.7 million

—Consumer goods: $9.5 million

—Basic materials: $9.3 million

—Technology: $9.2 million

—Utilities: $7.5 million

http://www.washingtonpost.com/business/health-care-tops-other-industries-for-highest-median-ceo-pay/2013/05/23/8003ef12-c3be-11e2-9642-a56177f1cdf7_story.html

Comment:

By Don McCanne, M.D.

So health care CEOs have the highest median pay of all industries in the United States. But notice that their pay is not much higher than the median CEO pay in all industries. That brings up a couple of questions.

What do CEOs do?

Does their “contribution” to society warrant that level of pay?

Considering what CEOs do, do we really even want them in our health care system since it is an “industry” apart from all the rest?

Cruelty or Care? The Choice is Yours

By Pippa Abston, M.D.
Pippa Abston’s blog, May 22, 2013

Well. From the beginning, I have been telling you all that the so called “Patient Protection and Affordable Care Act” is neither protective nor affordable to patients. We can keep the same PPACA abbreviation and call it what it is: The Profiteering Protection and Affordable Cruelty Act. Although I read the whole darn thing, I lack a background in law or politics. As the specific corporate protections emerge from this convoluted mess, I have to say I didn’t foresee some of them. I knew it would be bad, just not all the details of said badness.

The latest in our story of woe? Insurers and some employers have discovered an irresistible loophole that allows skimpy policies covering only a few outpatient services. The key phrase is “minimal essential coverage,” previously defined in federal law under the IRS Act of 1986. I noticed some folks had conflated that term with “essential health benefits,” but EHB are mandated items on state Exchange policies starting in 2014. No plan will be allowed to put lifetime or annual dollar limits on coverage, but outside of the Exchanges, other details of minimal essential coverage are minimally described.

I think I was fooled by the ACA’s opening paragraphs allowing insurers to temporarily restrict annual limits on essential health benefits until 2014. I missed the absence of any requirement to offer those benefits at all, at any date, except on the Exchanges. Insurer can’t restrict annual dollar amounts of those benefits if they are offered. In a stunning twist on catastrophic coverage, it is possible for insurers to cover only the required preventive services and omit the catastrophes. You can get your colonoscopy “free” if you have a non-grandfathered plan, but any follow-up surgery is entirely on you.

The most minor effect is that employers who offer bare-bones policies and employees who get them are exempt from the ACA penalties. I see some reference to this loophole only applying to large employers, but I don’t know how that was determined. I don’t see it in the IRS code that I found, which includes as minimal essential coverage “B) any other plan or coverage offered in the small or large group market within a State” —it may be elsewhere. It seems to me it would apply to any size group policy offered outside of the Exchanges. If one of you can find me the relevant law making this only applicable to large employers, I’d be grateful.

The worst effect is that employees who have minimal essential coverage are not eligible for premium subsidies on the Exchanges, as far as I can tell. This also seems to be the IRS’s interpretation: “A month is not a coverage month for an individual, and thus no premium tax credit is allowable for the individual’s coverage, if the individual is eligible for minimum essential coverage other than coverage offered in the individual market for that month.” If you can show me in the law itself or in administrative policy how it can be read otherwise, please post a link. Maybe the IRS can do some creative adjusting. Generally their creativity seems to apply only to corporations.

How many employers will use these plans to avoid penalties and thus apply this affordable cruelty to their employees in the process? You know it will start with those who already pay poor wages. As health care costs rise, don’t be surprised if you get this offer you can’t refuse in your own benefits package.

Do I have grounds to put the word “cruelty” in place of “care” in the ACA? The law is no longer new. It is now part of our health care system. I don’t know what else to call a system that not only allows but entrenches the abuses I see in my office. Children who desperately need skilled child psychiatrists but whose insurance does not have a single child psychiatrist, skilled or unskilled, on the panel. Children who don’t get the care they need because their parents delay over co-pays and deductibles. Parents who work long, hard hours at low pay, producing goods and services we use without gratitude or notice, whose “non-emergency” pain goes untreated because of money. Who try to smile at me in front of their kids, as if it doesn’t hurt, but cry when I take them in another room. I refuse to make excuses for this awfulness or play around with euphemisms. Cruelty, brutality, callousness — many words apply, and none of them is “care.”

I can hear the defensive talk already, from people who won’t be able to believe their beloved party would intentionally expose us to this treatment. It was an oversight, right? The law is complicated. We missed this problem, and they did too. We have a bumbling, well-meaning but hapless government, like a dog that’s so ugly it’s almost cute. Don’t buy it. Somebody had better ask what the President and insurers knew and when they knew it. Remember the industry was mighty cozy with our Executive Branch during construction of the law. Is it just now that this minimalist option has been discovered? Or is this a convenient time for discovery, well into the second term? Will we allow the President to wash his hands of the disaster and pretend he never imagined anyone would behave so?

What will it be, folks? Do you want to keep trying to pass legislation to close loopholes, even though the insurers are always one step ahead? How long will you continue to support and vote for people who cater to them? When will you finally say “don’t let the door hit your butt on the way out” — and insist on real insurance and real representation?

Improved, expanded Medicare for All is a simple, achievable, affordable, practical next step. It doesn’t require revolution, utopia or socialism. Even conservatives can embrace it. We have the structure in place. We are only waiting for you. Will you speak up?

Pippa Abston, M.D., Ph.D., F.A.A.P., is a pediatrician. She resides in Huntsville, Ala.

http://pippaabston.wordpress.com/2013/05/22/cruelty-or-care-the-choice-is-yours/

Important: Milliman Medical Index now $22,030

2013 Milliman Medical Index (MMI)

Milliman, May 2013

The MMI represents the projected total cost of medical care for a hypothetical American family of four (two adults and two children) covered under an employer-sponsored PPO health benefit program.

Key findings

*  As measured by the 2013 MMI, the total annual cost of healthcare for a typical family of four covered by an employer-sponsored preferred provider plan (PPO) is $22,030.
 
*  The 6.3% increase over 2012 is the fourth consecutive year of decreasing trends, but the total dollar increase of $1,302 is the fourth year in a row of increases over $1,300.

*  Of the $22,030 healthcare cost for a family of four, the employer pays about $12,886 in employer subsidy while the employee pays the remaining $9,144, which is a combination of $5,544 in payroll deductions and $3,600 in employee out-of-pocket costs. For employees, this represents a cost increase of 6.5% over last year’s total employee cost of $8,584.

*  We expect that the emerging reforms required by the Patient Protection and Affordable Care Act (ACA) will have little impact on the cost of care for our family of four in 2013 because this family tends to be insured through a large group health plan. Some of the most far-reaching reforms will not become effective until 2014, and they are focused primarily on the individual and small employer markets. Additionally, while those reforms will likely have immediate impacts on premium rates in those markets, it is unclear whether they will have any near-term effects on growth in the cost of healthcare services for a given person.

http://publications.milliman.com/periodicals/mmi/pdfs/mmi-2013.pdf

Comment:

By Don McCanne, M.D.

According to the Milliman Medical Index (MMI), the average projected cost for health care today for the typical family of four with an employer-sponsored preferred provider plan (PPO) is $22,030. That includes an employee contribution to the premium of $5,544, out-of-pocket expenses of $3,600, both totaling $9,144, plus an employer contribution of $12,886 which is actually paid by the employee through forgone wage increases.

Median annual household income is now $51,404 (February 2013). Although that does not represent the same demographic group as working families with four members, it does give you a general perspective of the burden of today’s health care costs on families and households.

An important point made in the MMI report: “the Patient Protection and Affordable Care Act (ACA) will have little impact on the cost of care for our family of four in 2013 because this family tends to be insured through a large group health plan,” and ACA is “focused primarily on the individual and small employer markets.” Since employment remains the primary source of health care coverage, the majority of families can anticipate little relief from these health care cost burdens.

A fundamental flaw in employer-sponsored coverage is that the entire burden of health care costs is placed on the employee (when considering forgone wages), yet it is clearly not affordable for low- or middle-income families. Progressive financing of health care is an imperative.

ACA provides at least modest income-indexed public subsidies which extend into the middle-income ranges, though they are still inadequate. Premiums for employer-sponsored plans are tax deductible, which is a form of public subsidy (tax expenditure), but since the premiums represent forgone wages, this tax subsidy benefits higher-income individuals much more than those with lower incomes. Thus the financing of health care through employer-sponsored coverage is terribly regressive (lower-income families pay a much larger percentage of their income for health care than do higher-income families).

This outrageous $22,000 burden on typical working families should be enough to provide us with an incentive to fix our health care financing system. A single payer national health program that includes everyone and is financed with progressive taxes is precisely what we need. Keep in mind this $22,000 burden when you discuss health care reform with others. ACA is not going to make that go away.

Insurers dump debt on physicians

Loophole in health care law could stick doctors with tab

By Jim Sanders
The Sacramento Bee, May 22, 2013

A loophole in California’s upcoming health care overhaul could be exploited by families gaming the system or responding to hardship in a way that doctors say could leave a pile of unpaid bills.

A chain of events would create a two-month period during which a family has medical coverage but no insurer must pay its claims.

Nonpayment of premiums for subsidized policies would trigger the oddity: Federal law provides a three-month grace period before cancellation – but insurers are responsible only for the first month.

The U.S. Department of Health and Human Services, in written comments, conceded that nonpayment of premiums would “increase uncertainty for providers and increase the burden of uncompensated care.” But it rejected a handful of proposals for cracking down on families whose policies lapse.

During the three-month grace period, insurers are required to pay claims for the first month, after which policyholders would be asked to pay their doctor’s bill or their insurance premium. If they pay neither, doctors get stuck with the tab.

http://www.sacbee.com/2013/05/21/5438115/loophole-in-health-care-law-could.html

Comment:

By Don McCanne, M.D.

This looks like another provision of the Affordable Care Act (ACA) designed specifically to protect insurers, at least partially, from untoward losses.

To protect patients who have financial hardships that prevent them from paying their premiums on time, ACA requires that their insurance remain in force for three months before it can be cancelled for non-payment. Physicians contracted with the insurers providing plans through the exchanges will have to continue to provide services for three months after non-payment begins. The insurers, on the other hand, are required to pay the bills for only the first month. After that, the physicians bear the losses.

This is one more example of the role played by the private insurers in both creating ACA and then in implementing it, taking care of their own interests first.

This particular defect is directly related to the fact that Congress, with the support of the Obama administration, selected a highly flawed model of reform – expanding our fragmented, dysfunctional system of private and public plans.

A much greater problem than this transitional coverage issue for non-payment is what then follows. After three months, the patient may remain uninsured, especially if not eligible for Medicaid. The financial hardship that caused the lapse of insurance in many instances will prevent the person from obtaining any other coverage.

Although we can be angry with the insurers for dumping on the physicians, we should hold greater contempt for the politicians and policy makers who brought us this highly flawed financing system. They know that we could have prevented these problems by enacting an improved Medicare that automatically includes everyone, forever, but they didn’t do it.

We still can, you know.

Health Care for All Colorado will try for 2014 ballot with universal, single-payer plan

By Michael Booth
The Denver Post, Daily Dose blog, May 21, 2013

Health Care for All Colorado will shoot for a 2014 statewide ballot vote rather than 2013, supporters have decided.

The progressive cause has launched an education effort across the state, but decided to take the extra year to gather support and earn enough of the tens of thousands of signatures it would need to make the ballot, said director Donna Smith.

One of the group’s slogans is that health care is a right, not a commodity. Most supporters are backers of “Obamacare” reforms passed by Congress in 2010, but argue they don’t go far enough to guarantee health care to all citizens. In Colorado alone, hundreds of thousands of people will remain without health insurance because of gaps left in undocumented residents, workers changing jobs, and those who risk a penalty in refusing to buy insurance.

Health Care for All would put a payroll tax on all residents according to their income and asset levels. It would also ask Medicare and Medicaid, which use federal and state dollars to pay for more than a million state residents, to issue waivers allowing their funds to be pooled with the health care tax. A single administration would then make payments to health care providers like doctors and hospitals, on a common set of benefits.

A separate effort for a somewhat similar system was dropped in this past Legislature by Sen. Irene Aguilar of south Denver, a Democrat who also believes Obamacare did not go far enough. Because she wanted the Legislature to refer the issue to voters, Aguilar would have needed a two-thirds vote, including highly reluctant Republicans. She apparently was not able to win that extra support.

http://blogs.denverpost.com/health/2013/05/21/health-care-for-all-colorado-will-try-for-2014-ballot-with-universal-single-payer-plan/3249/

10,000 signatures for universal health care

By Tanique Williams
Legislative Gazette (Albany, N.Y.), May 21, 2013
   
New Yorkers from across the state — including hundreds of doctors, nurses, patients, labor unions, community organizations, faith groups, and seniors — delivered 10,000 signatures supporting a single-payer health care bill sponsored by Assemblyman Richard Gottfried, D-Manhattan, and Sen. Bill Perkins, D-Harlem.

The press conference was coordinated with Healthcare-NOW NYC, Hunger Action Network of New York State, Physicians for a National Health Program (New York Metro chapter), Single Payer New York, and Statewide Senior Action.

“These signatures are a testament to the dedication of New Yorker all across this great state to reach out to members of their communities and help build the grassroots movement it will take to make healthcare a human right in New York,” said Katie Robbins, an organizer with Healthcare-Now.

The New York Health bill (A.5389-a/S.2078-a) —”an act to amend the public health law and the state finance law”— would expand health coverage to all New Yorkers regardless of age, income, or employment status, and would control costs by implementing a single-payer, universal healthcare system, its supporters say.

The bill has 74 co-sponsors in Assembly and 17 in the Senate.

“The affordable care act has made some important improvements in how we organize and pay for health care in this country but it still leaves us and our health care, and our wallets, in the hands of insurance companies—with their premiums, and their administrative costs, and deductibles, and co-pays, and limited network, and denials of payment for the care we need. We can do better and New York can do better,” said Gottfried, chair of the Assembly Health Committee.

“President Obama during [his] campaign said that no American should have to spend their golden years at the mercy of insurance companies, and I agree with that, but I want to know why that is only for golden years. We can get better health care, more affordable health care, more fairly paid for, for every single New Yorker if we enact the New York Health bill to provide universal, publicly sponsored, publicly funded, single-payer health coverage. We want to get this bill to the floor of the Assembly this year for a vote,” he said.

Under the legislation, there would be no premiums, co-payments, or deductibles, and coverage would be publicly funded. Advocates said they would like to see the bill passed in the Assembly, in the Senate, and signed by the governor.

Perkins began his speech with a call and response of “you’re heath is your wealth.”

“We not only want to get [the New York Health bill] passed in the Assembly, we also want to get it passed in the Senate, and most importantly, we want the governor to sign the bill. In fact if we could, we would ask the governor to advocate [and] make sure it gets passed in the Assembly; to advocate [and] make sure it gets passed in the Senate; to be standing there with us so that our wealth, our health, is not compromised,” Perkins said.

New York Hunger Action Network Executive Director Mark Dunlea said health care costs are “one of the three big bills” that send people to emergency food programs.

“When Massachusetts enacted their insurance mandate, many low-income residents found they had less access to health care services. It is immoral that the rich country in the world still refuses to treat health care as a basic human right, even while we spend far more money on health care per capita than countries with universal access,” Dunlea said.

The 10,000 signatures were delivered to the offices of Gov. Andrew Cuomo, Senate Republican Leader Dean Skelos, R-Rockville Centre, Independent Democratic Conference head Sen. Jeff Klein, D- Bronx, and Assembly Speaker Sheldon Silver, D-Manhattan.

http://www.legislativegazette.com/Articles-Top-Stories-c-2013-05-21-83855.113122-10000-signatures-for-universal-health-care.html