PNHP

HCA hasn't changed

HCA hasn't changed

A Giant Hospital Chain Is Blazing a Profit Trail

By Julie Creswell and Reed Abelson
The New York Times, August 14, 2012
During the Great Recession, when many hospitals across the country were nearly brought to their knees by growing numbers of uninsured patients, one hospital system not only survived — it thrived.
In fact, profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors.
The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.
The financial performance has been so impressive that HCA has become a model for the industry. Its success inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall.
HCA’s emergence as a powerful leader in the hospital industry is all the more remarkable because only a decade ago the company was badly shaken by a wide-ranging Medicare fraud investigation that it eventually settled for more than $1.7 billion.
Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff, a move that sometimes led to conflicts with doctors and nurses over concerns about patient care.
In late 2008, for instance, HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.
As HCA’s profits and influence grew, strains arose with doctors and nurses over whether the chain’s pursuit of profit may have, at times, come at the expense of patient care.
http://www.nytimes.com/2012/08/15/business/hca-giant-hospital-chain-crea…

Nobody expected the for-profit HCA hospital chain to change its fundamental practices. It hasn’t. It is an investor-owned corporation designed to make money, which it does very effectively. The PNHP model of single payer reform calls for an end to for-profit, investor-owned corporations in health care. You need only to read this fairly long article to understand why.

Performance pay for physicians may backfire: BMJ editorial

Pay-for-performance schemes may do more harm than good by changing the mindset required for good doctoring, experts say

EMBARGOED until
Aug. 14, 2012, at 6:30 p.m. Eastern time

Contact:
Steffie Woolhandler, M.D., M.P.H.
David Himmelstein, M.D.
Dan Ariely, Ph.D.
Ida Hellander, M.D., PNHP, (312) 782-6006, ida@pnhp.org

In a cautionary editorial alongside a related article in today’s issue of the British medical journal BMJ, leading experts in health policy and behavioral economics argue that pay-for-performance (P4P) schemes – which financially reward doctors and hospitals for hitting specific, numerical targets in such matters as preventing hospital readmissions or prescribing certain drugs – are likely to do more harm than good.

Such schemes are being adopted as a key component of the Accountable Care Organization strategy mandated by the 2010 health reform and are now part of the Medicare program, Massachusetts’ cost-control legislation and virtually all major new private health insurance payment contracts.

Yet the editorial, echoing a theme of the accompanying article, says there’s very little evidence that P4P has improved patient survival or any other measure of public health.

“Despite a dearth of robust evidence that P4P is clinically effective in health care, payers charge ahead with implementing everywhere an intervention that has proven to work nowhere,” the authors write.

Worse still, there is mounting evidence – reinforced by the latest findings in behavioral economics – that such schemes may actually do harm, the authors say.

For example, doctors and nurses may perceive detailed, overly prescriptive financial P4P contracts as “controlling,” which can cause them to dissociate from their work, lose their intrinsic motivation to do their very best for the patient, and engage in gaming – the medical equivalent of “teaching to the test.”

According to the authors, such gaming – e.g. “upcoding” a diagnosis to another condition that yields a higher payment – is already rife. For instance, labeling a pneumonia patient’s condition as “complex” rather than “simple” can increase the hospital’s payment by 42 percent.

“Pay for performance inverts medical priorities, making care an instrument for generating money, rather than vice versa,” said Dr. David Himmelstein, professor at the City University of New York’s School of Public Health and senior author of the editorial. “It can mutate honesty and altruism into accounting and legal trickery.”

Dan Ariely, James B. Duke Professor of Psychology and Behavioral Economics at Duke University, co-author of the editorial and the author of numerous research studies and three bestselling books on behavioral economics, including “The (Honest) Truth about Dishonesty,” said: “Several studies show that while performance-based rewards can increase output for straightforward manual tasks, they can undermine motivation and actually worsen performance on complex cognitive tasks, such as those required in medicine. The unintended consequence is likely a worsening of care, not its improvement.”

Lead author Dr. Steffie Woolhandler, also a professor at CUNY’s School of Public Health, noted another hazard: Some physicians in safety-net hospitals may score poorly because of circumstances beyond their control, such as their institution’s financial distress. “In such situations, penalizing low-scorers can make matters worse, effectively punishing patients who have nowhere else to go,” she said.

Himmelstein and Woolhandler are also visiting professors of medicine at Harvard Medical School and the co-founders of Physicians for a National Health Program, an organization of 18,000 doctors who advocate for a single-payer health care system. PNHP played no role in supporting their research.

The editorial concludes, “We worry that P4P may simply not work because it changes the mindset for good doctoring. However, if P4P schemes must be envisaged then rigorous consideration of their likely benefit prior to their implementation seems essential,” referring to an exacting P4P checklist developed by the authors of the related article.

“Why pay for performance may be incompatible with quality improvement,” Steffie Woolhandler, M.D., M.P.H., Daniel Ariely, Ph.D., David U. Himmelstein, M.D. BMJ, Aug. 15, 2012.

The related article:
“When financial incentives do more good than harm: A checklist,” Paul P. Glasziou, Heather Buchan, Chris Del, et al. BMJ, Aug. 15, 2012.

Ryan's "premium support" proposal for Medicare: Myths and facts

By Ida Hellander, M.D.
PNHP, August 14, 2012

Background:

“Premium support” or voucher proposals for Medicare are a mainstay of conservative health policy. They have been defeated for over three decades, starting with President Reagan’s FY 1981 budget proposal. They are a key feature of “managed competition”-type reform proposals. Although President Clinton embraced managed competition in his ill-fated health reform bill, he vetoed the 1995 Balanced Budget Act which would have turned Medicare into a voucher program. Premium support proposals were defeated again in 1997 and 2003.

Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee and candidate for vice president on the presumptive GOP ticket with Mitt Romney, resurrected the idea of a premium support proposal for Medicare in April 2011 with his “Path to Prosperity” budget proposal. Seniors would receive a fixed federal contribution or “defined contribution” to apply towards the cost of a private plan, and traditional Medicare, with its guaranteed coverage, or “defined benefits,” would be eliminated. The plan also called for increasing the age of Medicare eligibility from 65 to 67.

A so-called bipartisan variant of this scheme was proposed by Ryan in November 2011, with Sen. Ron Wyden (D-Ore.); in this version traditional Medicare would continue to be an option alongside private plans, and subsidy levels would be set at the cost of the next-to-cheapest plan, as determined by competitive bidding rather than be set by CMS. Medicare growth would be capped at GDP + 1 percent.

The latest version of “premium support” promoted by Rep. Ryan is the virtually the same as this more recent proposal with one major change; it sets the cap on Medicare growth lower, at GDP + ½ percent.
With the exception of the choice of traditional Medicare, the scheme is similar to the Affordable Care Act’s exchanges.

At the heart of all premium support proposals – and indeed the Affordable Care Act itself – are a number of myths:

1.  Myth: Private health insurance is more efficient than Medicare. Fact: Medicare has controlled costs better than private insurance and has much lower administrative overhead. According to CMS, Medicare spending rose by an average of 4.3 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.5 percent each year. The CBO has estimated that the private insurance equivalent of Medicare would cost almost 40 percent more in 2022 for a typical 65-year-old. Administrative costs in Medicare are less than 2 percent of expenditures, compared to 17 percent of revenues for private insurers.

2.  Myth: Expanding private plans in Medicare will reduce Medicare’s costs. Fact: Private Medicare Advantage plans have raised Medicare costs. Private insurers profit by selectively enrolling the healthy and shunning the sick, as documented in a New England Journal of Medicine article subtitled “The healthy go in and the sick go out.” Hence, they collect premiums paid by the Medicare program, and provide little care. As a result, the Congressional Budget Office estimates that Medicare Advantage plans cost Medicare 12 percent more per enrollee than the traditional program. New research from the National Bureau of Economic Research indicates that the true cost of private plans to Medicare may be much higher than the CBO estimate. Since Medicare launched a new risk adjustment scheme based on 70 diagnostic codes in 2004, overpayments to private plans have increased dramatically and accounted for $30 billion in excess spending, or 8 percent of total Medicare spending, in 2006 alone. Since then the overpayments have likely risen as the proportion of Medicare recipients in private plans has jumped from 16 percent to 24 percent.

3.  Myth: Premium support will reduce Medicare’s costs. Fact: Premium support plans don’t reduce costs, they shift them onto the patient. The rising cost of premiums will quickly outstrip the value of the fixed federal contribution, and seniors will have to pay more in either premiums or out-of-pocket payments for care. The Congressional Budget Office estimates that Ryan’s original Medicare proposal would raise out-of-pocket costs for the typical 65-year-old Medicare beneficiary in 2022 by $6,240. They haven’t estimated the cost of the latest plan yet.

4.  Myth: Competition among private plans will control costs. Fact: Private plans profit by competing to enroll the healthy and shun the sick. The industry is so consolidated that there is no effective competition in most regions of the country.

5.  Myth: Paying private plans in Medicare via “competitive bidding” will lower costs. Fact: There’s no evidence for this. Private plans compete by selectively enrolling healthier beneficiaries. Private insurers have been competing on price in the under 65 market for decades, yet costs and premiums have skyrocketed even as benefits and choices have been reduced.

6.  Myth: Premium support will increase choice for seniors: Fact: Premium support will decrease choice for seniors. Private plans with limited networks dictate which physicians seniors may see and which hospitals they may use. Medicare gives beneficiaries completely free choice of physician and hospital.

7.  Myth: Competition among private insurers will reduce administrative costs. Fact: Premium support will likely boost administrative costs since patients will move from the low-overhead traditional Medicare program to private plans with far higher overhead.

8.  Myth: There are no alternatives to reduce Medicare spending besides premium support. False: There are many better options for reducing Medicare spending, including the 9 listed below. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls. Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs and control costs with budgets, negotiated fee schedules and drug prices, and health planning. Separate budgets for hospital operating costs and capital investment will permit the real health planning needed to reduce the costly and dangerous proliferation of expensive high-tech facilities.

Nine ways to reduce Medicare costs now –

  1. Eliminate Medicare Advantage plans.
  2. Give Medicare the power to negotiate drug prices.
  3. Eliminate private Part D plans, which have high overhead, and replace them with a public drug benefit along traditional Medicare principles
  4. Proscribe participation by for-profit providers, and mandate that participating providers (like hospitals) not pay any individual more than the president of the U.S.
  5. Extend the self-referral ban to include doctors who refer patients to their own MRI, CT, PET, and other complex imaging equipment (about half of total cardiologists income currently comes from imaging studies that they order and perform).
  6. Ban participating physicians from prescribing medications or medical devices (including orthopedic and cardiac implants) produced by drug or device makers from whom they receive payments.
  7. Reduce fees paid to the highest paid specialists, generally those who prescribe or use expensive drugs and devices. D
    octors should be paid for the time they actually put in.
  8. Revamp Medicare’s payment policies for subacute hospital care and so called “long-term acute care” (LTAC). Hospitals currently collect a set fee based on diagnosis for the acute hospital stay, and quickly transfer Medicare patients to a second inpatient facility that collects an additional fee. The result of this financial incentive has been a huge upswing in subacute and LTAC utilization, without any evidence that patients benefit. A colleague who is knowledgeable on this issue informs us that the proportion of Medicare patients with a subacute or LTAC admission after discharge from an acute care hospital has gone from 10 percent to 28 percent since these financial incentives came into effect, with about 600 LTACs appearing de novo.
  9. Abolish the Medicare pay-for-performance and ACO schemes, which are causing increases in administrative costs without any evidence of benefit.

9.  Myth: Medicare is already a single payer system. Fact: Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs, implement effective cost-control methods like globally budgeting hospitals, negotiating fees, and doing real health planning with teeth to reduce the costly and dangerous proliferation of expensive high-tech facilities.

10.  Myth: Premium support will provide all seniors with the security that quality, affordable coverage will always be there. False: Premium support eliminates traditional Medicare with its defined benefits and substitutes a fixed contribution that, over time, will cover less care. Only a single payer plan can control costs while eliminating financial barriers to care for all. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls.

Outline of Rep. Ryan’s proposal for Medicare and Medicaid reform

Medicare

  1. Starting in 2023, transforms Medicare from a program that entitles seniors to “defined benefits” to one in which beneficiaries receive a “defined contribution” or “premium support” towards the purchase of private coverage or traditional fee-for-service Medicare.
  2. Although Ryan has claimed that people 55 and older would not be affected by his changes to Medicare, today’s seniors would be hard hit by Ryan’s $800 billion in proposed cuts to Medicaid because that program funds nursing home care. Few seniors have the resources to pay for nursing home care, and the cost of even a short stay in a nursing home can lead to impoverishment. Today’s Medicaid program allows the surviving spouse to protect a home and some assets so they may live out the rest of their lives with dignity. When Medicaid’s funding is slashed and benefits are determined by the states, that may no longer be the case.
  3. The plan gradually raises the eligibility age of Medicare from 65 to 67 by 2034. Private coverage is prohibitively expensive for many at this age. Research shows that the uninsured have worse health before they gain access to Medicare, and have more medical expenses for the first few years they are in the program, than their insured counterparts. Lengthening their wait by two years would lead to even greater health disparities before gaining coverage and higher unmet medical needs and higher costs among this cohort once they are on Medicare.
  4. Private Medicare plans would compete with traditional Medicare on a Medicare exchange. Seniors would be responsible for the additional premiums of any plan (including traditional Medicare) costing more than the next-to-cheapest plan. Private plans have been shown to selectively enroll healthier seniors while shunning the sick. Thus, the cheapest plans would be those private plans most effectively able to cherry pick the healthy (e.g. by offering gym memberships as a covered benefit), while other plans and traditional Medicare’s costs would rise. The cost of the additional premiums on top of cost-sharing could quickly add up to many thousands of dollars per year. The result would be a massive shift of the burden of health care costs to beneficiaries, particularly anyone with serious health needs.
  5. There is no evidence that private plans will reduce Medicare’s costs, and a lot of evidence they will raise them. Private plans have already been shown to cherry-pick healthier patients, raising costs by 12 percent compared to the cost of caring for the same patients in traditional Medicare. Administrative costs are much higher in private plans (about 17 percent) than in Medicare (under two percent), shifting funds from clinical care to bureaucracy.
  6. The plan calls for “risk adjusting” plan premium payments so that plans with healthier patients receive less funding. However, there is no evidence that risk-adjustment can work in the dynamic reality of profit seeking health care insurers/providers. Private plans quickly learned to game Medicare’s new risk-adjustment system to garner an extra $15 billion annually, about 4 percent of total Medicare spending. Interestingly, private plans were able to obtain more lucrative overpayments after the newly enhanced risk adjustment was put into place.
  7. The plan calls for capping overall Medicare growth at GDP plus 1/2 percent. This limits the financial exposure of the federal government, but exposes beneficiaries to increasing risk and larger out-of-pocket costs over time.
  8. In sum, this is a plan to eliminate Medicare as we know it, including traditional Medicare (since the voucher only has to cover the cost of the second-cheapest plan, not today’s Medicare) and replace it with a private system beholden to Wall Street. Seniors would bear the burden of rising health care costs themselves. In contrast, a single payer system could provide comprehensive coverage to everyone.

Medicaid

  1. Ryan’s plan would turn the joint federal-state program covering 62 million low-income Americans into a federal block grant program starting in 2013 and slash the federal contribution by $800 billion (35 percent) in 2022 and by 49 percent in 2030. States would have flexibility in determining who they cover and what benefits are provided with the remaining funds.
  2. According to the CBO, “states would need to increase their spending on these programs, make considerable cutbacks in them, or both.”
  3. Between 14 million and 27 million fewer people would be covered in 2021 than under Medicaid as it currently exists, according to the Urban Institute. Beneficiaries might also see reductions in benefits and increases in cost sharing.
  4. An additional 11 million people would not gain new Medicaid coverage if the federal health reform law were repealed, as Ryan has proposed, according to the Congressional Budget Office.

Ryan’s “premium support” proposal for Medicare: Myths and facts

By Ida Hellander, M.D.
PNHP, August 14, 2012

Background:

“Premium support” or voucher proposals for Medicare are a mainstay of conservative health policy. They have been defeated for over three decades, starting with President Reagan’s FY 1981 budget proposal. They are a key feature of “managed competition”-type reform proposals. Although President Clinton embraced managed competition in his ill-fated health reform bill, he vetoed the 1995 Balanced Budget Act which would have turned Medicare into a voucher program. Premium support proposals were defeated again in 1997 and 2003.

Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee and candidate for vice president on the presumptive GOP ticket with Mitt Romney, resurrected the idea of a premium support proposal for Medicare in April 2011 with his “Path to Prosperity” budget proposal. Seniors would receive a fixed federal contribution or “defined contribution” to apply towards the cost of a private plan, and traditional Medicare, with its guaranteed coverage, or “defined benefits,” would be eliminated. The plan also called for increasing the age of Medicare eligibility from 65 to 67.

A so-called bipartisan variant of this scheme was proposed by Ryan in November 2011, with Sen. Ron Wyden (D-Ore.); in this version traditional Medicare would continue to be an option alongside private plans, and subsidy levels would be set at the cost of the next-to-cheapest plan, as determined by competitive bidding rather than be set by CMS. Medicare growth would be capped at GDP + 1 percent.

The latest version of “premium support” promoted by Rep. Ryan is the virtually the same as this more recent proposal with one major change; it sets the cap on Medicare growth lower, at GDP + ½ percent.
With the exception of the choice of traditional Medicare, the scheme is similar to the Affordable Care Act’s exchanges.

At the heart of all premium support proposals – and indeed the Affordable Care Act itself – are a number of myths:

1.  Myth: Private health insurance is more efficient than Medicare. Fact: Medicare has controlled costs better than private insurance and has much lower administrative overhead. According to CMS, Medicare spending rose by an average of 4.3 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.5 percent each year. The CBO has estimated that the private insurance equivalent of Medicare would cost almost 40 percent more in 2022 for a typical 65-year-old. Administrative costs in Medicare are less than 2 percent of expenditures, compared to 17 percent of revenues for private insurers.

2.  Myth: Expanding private plans in Medicare will reduce Medicare’s costs. Fact: Private Medicare Advantage plans have raised Medicare costs. Private insurers profit by selectively enrolling the healthy and shunning the sick, as documented in a New England Journal of Medicine article subtitled “The healthy go in and the sick go out.” Hence, they collect premiums paid by the Medicare program, and provide little care. As a result, the Congressional Budget Office estimates that Medicare Advantage plans cost Medicare 12 percent more per enrollee than the traditional program. New research from the National Bureau of Economic Research indicates that the true cost of private plans to Medicare may be much higher than the CBO estimate. Since Medicare launched a new risk adjustment scheme based on 70 diagnostic codes in 2004, overpayments to private plans have increased dramatically and accounted for $30 billion in excess spending, or 8 percent of total Medicare spending, in 2006 alone. Since then the overpayments have likely risen as the proportion of Medicare recipients in private plans has jumped from 16 percent to 24 percent.

3.  Myth: Premium support will reduce Medicare’s costs. Fact: Premium support plans don’t reduce costs, they shift them onto the patient. The rising cost of premiums will quickly outstrip the value of the fixed federal contribution, and seniors will have to pay more in either premiums or out-of-pocket payments for care. The Congressional Budget Office estimates that Ryan’s original Medicare proposal would raise out-of-pocket costs for the typical 65-year-old Medicare beneficiary in 2022 by $6,240. They haven’t estimated the cost of the latest plan yet.

4.  Myth: Competition among private plans will control costs. Fact: Private plans profit by competing to enroll the healthy and shun the sick. The industry is so consolidated that there is no effective competition in most regions of the country.

5.  Myth: Paying private plans in Medicare via “competitive bidding” will lower costs. Fact: There’s no evidence for this. Private plans compete by selectively enrolling healthier beneficiaries. Private insurers have been competing on price in the under 65 market for decades, yet costs and premiums have skyrocketed even as benefits and choices have been reduced.

6.  Myth: Premium support will increase choice for seniors: Fact: Premium support will decrease choice for seniors. Private plans with limited networks dictate which physicians seniors may see and which hospitals they may use. Medicare gives beneficiaries completely free choice of physician and hospital.

7.  Myth: Competition among private insurers will reduce administrative costs. Fact: Premium support will likely boost administrative costs since patients will move from the low-overhead traditional Medicare program to private plans with far higher overhead.

8.  Myth: There are no alternatives to reduce Medicare spending besides premium support. False: There are many better options for reducing Medicare spending, including the 9 listed below. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls. Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs and control costs with budgets, negotiated fee schedules and drug prices, and health planning. Separate budgets for hospital operating costs and capital investment will permit the real health planning needed to reduce the costly and dangerous proliferation of expensive high-tech facilities.

Nine ways to reduce Medicare costs now –

  1. Eliminate Medicare Advantage plans.
  2. Give Medicare the power to negotiate drug prices.
  3. Eliminate private Part D plans, which have high overhead, and replace them with a public drug benefit along traditional Medicare principles
  4. Proscribe participation by for-profit providers, and mandate that participating providers (like hospitals) not pay any individual more than the president of the U.S.
  5. Extend the self-referral ban to include doctors who refer patients to their own MRI, CT, PET, and other complex imaging equipment (about half of total cardiologists income currently comes from imaging studies that they order and perform).
  6. Ban participating physicians from prescribing medications or medical devices (including orthopedic and cardiac implants) produced by drug or device makers from whom they receive payments.
  7. Reduce fees paid to the highest paid specialists, generally those who prescribe or use expensive drugs and devices. Doctors should be paid for the time they actually put in.
  8. Revamp Medicare’s payment policies for subacute hospital care and so called “long-term acute care” (LTAC). Hospitals currently collect a set fee based on diagnosis for the acute hospital stay, and quickly transfer Medicare patients to a second inpatient facility that collects an additional fee. The result of this financial incentive has been a huge upswing in subacute and LTAC utilization, without any evidence that patients benefit. A colleague who is knowledgeable on this issue informs us that the proportion of Medicare patients with a subacute or LTAC admission after discharge from an acute care hospital has gone from 10 percent to 28 percent since these financial incentives came into effect, with about 600 LTACs appearing de novo.
  9. Abolish the Medicare pay-for-performance and ACO schemes, which are causing increases in administrative costs without any evidence of benefit.

9.  Myth: Medicare is already a single payer system. Fact: Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs, implement effective cost-control methods like globally budgeting hospitals, negotiating fees, and doing real health planning with teeth to reduce the costly and dangerous proliferation of expensive high-tech facilities.

10.  Myth: Premium support will provide all seniors with the security that quality, affordable coverage will always be there. False: Premium support eliminates traditional Medicare with its defined benefits and substitutes a fixed contribution that, over time, will cover less care. Only a single payer plan can control costs while eliminating financial barriers to care for all. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls.

Outline of Rep. Ryan’s proposal for Medicare and Medicaid reform

Medicare

  1. Starting in 2023, transforms Medicare from a program that entitles seniors to “defined benefits” to one in which beneficiaries receive a “defined contribution” or “premium support” towards the purchase of private coverage or traditional fee-for-service Medicare.
  2. Although Ryan has claimed that people 55 and older would not be affected by his changes to Medicare, today’s seniors would be hard hit by Ryan’s $800 billion in proposed cuts to Medicaid because that program funds nursing home care. Few seniors have the resources to pay for nursing home care, and the cost of even a short stay in a nursing home can lead to impoverishment. Today’s Medicaid program allows the surviving spouse to protect a home and some assets so they may live out the rest of their lives with dignity. When Medicaid’s funding is slashed and benefits are determined by the states, that may no longer be the case.
  3. The plan gradually raises the eligibility age of Medicare from 65 to 67 by 2034. Private coverage is prohibitively expensive for many at this age. Research shows that the uninsured have worse health before they gain access to Medicare, and have more medical expenses for the first few years they are in the program, than their insured counterparts. Lengthening their wait by two years would lead to even greater health disparities before gaining coverage and higher unmet medical needs and higher costs among this cohort once they are on Medicare.
  4. Private Medicare plans would compete with traditional Medicare on a Medicare exchange. Seniors would be responsible for the additional premiums of any plan (including traditional Medicare) costing more than the next-to-cheapest plan. Private plans have been shown to selectively enroll healthier seniors while shunning the sick. Thus, the cheapest plans would be those private plans most effectively able to cherry pick the healthy (e.g. by offering gym memberships as a covered benefit), while other plans and traditional Medicare’s costs would rise. The cost of the additional premiums on top of cost-sharing could quickly add up to many thousands of dollars per year. The result would be a massive shift of the burden of health care costs to beneficiaries, particularly anyone with serious health needs.
  5. There is no evidence that private plans will reduce Medicare’s costs, and a lot of evidence they will raise them. Private plans have already been shown to cherry-pick healthier patients, raising costs by 12 percent compared to the cost of caring for the same patients in traditional Medicare. Administrative costs are much higher in private plans (about 17 percent) than in Medicare (under two percent), shifting funds from clinical care to bureaucracy.
  6. The plan calls for “risk adjusting” plan premium payments so that plans with healthier patients receive less funding. However, there is no evidence that risk-adjustment can work in the dynamic reality of profit seeking health care insurers/providers. Private plans quickly learned to game Medicare’s new risk-adjustment system to garner an extra $15 billion annually, about 4 percent of total Medicare spending. Interestingly, private plans were able to obtain more lucrative overpayments after the newly enhanced risk adjustment was put into place.
  7. The plan calls for capping overall Medicare growth at GDP plus 1/2 percent. This limits the financial exposure of the federal government, but exposes beneficiaries to increasing risk and larger out-of-pocket costs over time.
  8. In sum, this is a plan to eliminate Medicare as we know it, including traditional Medicare (since the voucher only has to cover the cost of the second-cheapest plan, not today’s Medicare) and replace it with a private system beholden to Wall Street. Seniors would bear the burden of rising health care costs themselves. In contrast, a single payer system could provide comprehensive coverage to everyone.

Medicaid

  1. Ryan’s plan would turn the joint federal-state program covering 62 million low-income Americans into a federal block grant program starting in 2013 and slash the federal contribution by $800 billion (35 percent) in 2022 and by 49 percent in 2030. States would have flexibility in determining who they cover and what benefits are provided with the remaining funds.
  2. According to the CBO, “states would need to increase their spending on these programs, make considerable cutbacks in them, or both.”
  3. Between 14 million and 27 million fewer people would be covered in 2021 than under Medicaid as it currently exists, according to the Urban Institute. Beneficiaries might also see reductions in benefits and increases in cost sharing.
  4. An additional 11 million people would not gain new Medicaid coverage if the federal health reform law were repealed, as Ryan has proposed, according to the Congressional Budget Office.

NAIC consumers' report on ACA's private insurance reforms

Implementing the Affordable Care Act’s Insurance Reforms: Consumer Recommendations for Regulators and Lawmakers

National Association of Insurance Commissioners (NAIC)
August 2012

These materials were prepared to assist regulators, lawmakers, and the National Association of Insurance Commissioners (NAIC) during ongoing implementation of the comprehensive insurance reforms called for by the Patient Protection and Affordable Care Act of 2010 (ACA). The purpose of these recommendations is to convey the perspectives of consumer advocates on appropriate standards and guidelines for implementing these reforms, which will go into effect in 2014.

These recommendations are limited to the ACA’s insurance reforms and do not address other critical reforms of equal importance to the consumer representatives and millions of consumers, such as the expansion of the Medicaid program, the implementation of health insurance exchanges, the availability of federal subsidies, and the need for meaningful consumer outreach and education, among others.

Table of Contents

Guaranteed Issue and Guaranteed Renewal
Elimination of Preexisting Condition Exclusions
Rating Reforms
Definition of the Small Group Market
Limitation on Waiting Periods
Coverage for Participating in Approved Clinical Trials
Essential Health Benefits, Including State-Mandated Benefits
Actuarial Value, Limitations on Cost-Sharing, and Catastrophic Coverage
Stop Loss and Self-Insurance
Limited Medical Benefit Plans
Risk Adjustment
Reinsurance
Risk Corridors

http://www.naic.org/documents/committees_conliaison_1208_consumer_recs_aca.pdf

Comment: 

By Don McCanne, MD

You likely don’t have time for this now, but this report is so important that you should download it now, or at least keep the link for later downloading. If nothing else, when you have time, you should read the six page executive summary of the recommendations.

So what is this that makes it so important? It is a report prepared for the National Association of Insurance Commissioners by respected authorities who represent consumer interests (that is, patients). It discusses details of reforms of private insurance that should be considered as the Affordable Care Act is implemented.

It is important to understand the complexities and interactions of the various private insurance reforms that should be considered. Two things are clear: 1) They will never get the details aligned such that the final product will serve the best interests of patients, and 2) The complexities leave wide open the opportunities for the private insurance industry to game the system – obviously for their own benefit and not for the benefit of patients.

This report does not address many other important issues such as the changes in Medicaid, the complexities of the private insurance premium and out-of-pocket subsidies, the fate of the 30 million who will remain uninsured, and, most importantly, how this highly flawed, outrageously expensive, and highly fragmented model of reform is the worst model to try to best serve the interests of consumers (oh yes, patients).

Maybe it’s time for someone to write that much needed paper, “It’s the Private Insurers, Stupid!”

NAIC consumers’ report on ACA’s private insurance reforms

Implementing the Affordable Care Act’s Insurance Reforms: Consumer Recommendations for Regulators and Lawmakers

National Association of Insurance Commissioners (NAIC)
August 2012

These materials were prepared to assist regulators, lawmakers, and the National Association of Insurance Commissioners (NAIC) during ongoing implementation of the comprehensive insurance reforms called for by the Patient Protection and Affordable Care Act of 2010 (ACA). The purpose of these recommendations is to convey the perspectives of consumer advocates on appropriate standards and guidelines for implementing these reforms, which will go into effect in 2014.

These recommendations are limited to the ACA’s insurance reforms and do not address other critical reforms of equal importance to the consumer representatives and millions of consumers, such as the expansion of the Medicaid program, the implementation of health insurance exchanges, the availability of federal subsidies, and the need for meaningful consumer outreach and education, among others.

Table of Contents

Guaranteed Issue and Guaranteed Renewal
Elimination of Preexisting Condition Exclusions
Rating Reforms
Definition of the Small Group Market
Limitation on Waiting Periods
Coverage for Participating in Approved Clinical Trials
Essential Health Benefits, Including State-Mandated Benefits
Actuarial Value, Limitations on Cost-Sharing, and Catastrophic Coverage
Stop Loss and Self-Insurance
Limited Medical Benefit Plans
Risk Adjustment
Reinsurance
Risk Corridors

http://www.naic.org/documents/committees_conliaison_1208_consumer_recs_aca.pdf

Comment: 

By Don McCanne, MD

You likely don’t have time for this now, but this report is so important that you should download it now, or at least keep the link for later downloading. If nothing else, when you have time, you should read the six page executive summary of the recommendations.

So what is this that makes it so important? It is a report prepared for the National Association of Insurance Commissioners by respected authorities who represent consumer interests (that is, patients). It discusses details of reforms of private insurance that should be considered as the Affordable Care Act is implemented.

It is important to understand the complexities and interactions of the various private insurance reforms that should be considered. Two things are clear: 1) They will never get the details aligned such that the final product will serve the best interests of patients, and 2) The complexities leave wide open the opportunities for the private insurance industry to game the system – obviously for their own benefit and not for the benefit of patients.

This report does not address many other important issues such as the changes in Medicaid, the complexities of the private insurance premium and out-of-pocket subsidies, the fate of the 30 million who will remain uninsured, and, most importantly, how this highly flawed, outrageously expensive, and highly fragmented model of reform is the worst model to try to best serve the interests of consumers (oh yes, patients).

Maybe it’s time for someone to write that much needed paper, “It’s the Private Insurers, Stupid!”

Wisconsin's Greater West Central Area Labor Council Endorses HR 676

By Kay Tillow
All Unions Committee For Single Payer Health Care–HR 676, August 13, 2012

The Greater West Central Area Labor Council, AFL-CIO, of Wisconsin, has unanimously endorsed HR 676, national single payer health care. The labor council, which represents affiliated local unions in Eau Claire, Chippewa, Dunn, Pierce, Pepin, Polk, St. Croix, Barron, and Clark Counties, released the following statement.

 “Millions of working people go without health care insurance in the United States.  The current system continues to treat health care as a commodity designed for profit.  Populations with the most need are at the mercy of the HMO’s and insurance agencies competing for sectors with the ability to pay, rather than providing affordable and accessible options for universal, comprehensive health care coverage.  The Council is totally opposed to any of kind of a voucher system.

“We continually witness our Members struggling with employers in contract negotiations over benefits as the obscene cost of health care continues to be the major barrier towards resolution.  Retirees who have previously agreed to wage reduction to obtain health care benefits are now losing those benefits.

“The Council agrees a single payer health system is part of a morally correct solution to the nation’s health care crisis.”

The council is the 4th one in Wisconsin to support HR 676.  The others are the South Central Federation of Labor, the Greater Green Bay Labor Council, and the Washington County Central Labor Council.  In addition, the Wisconsin State AFL-CIO endorsed HR 676 at its convention in 2006.

Judy Gatlin, Executive Board member of the council representing the Wisconsin State Employees Union Local 1914 of AFSCME Council 24, released the council’s statement.  Gatlin is also a board member of the Wisconsin Labor History Society.

#30#

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

HR 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.

HR 676 ends deductibles and co-payments.  HR 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, HR 676 has 76 co-sponsors in addition to Conyers.

Wisconsin’s Greater West Central Area Labor Council Endorses HR 676

By Kay Tillow
All Unions Committee For Single Payer Health Care–HR 676, August 13, 2012

The Greater West Central Area Labor Council, AFL-CIO, of Wisconsin, has unanimously endorsed HR 676, national single payer health care. The labor council, which represents affiliated local unions in Eau Claire, Chippewa, Dunn, Pierce, Pepin, Polk, St. Croix, Barron, and Clark Counties, released the following statement.

 “Millions of working people go without health care insurance in the United States.  The current system continues to treat health care as a commodity designed for profit.  Populations with the most need are at the mercy of the HMO’s and insurance agencies competing for sectors with the ability to pay, rather than providing affordable and accessible options for universal, comprehensive health care coverage.  The Council is totally opposed to any of kind of a voucher system.

“We continually witness our Members struggling with employers in contract negotiations over benefits as the obscene cost of health care continues to be the major barrier towards resolution.  Retirees who have previously agreed to wage reduction to obtain health care benefits are now losing those benefits.

“The Council agrees a single payer health system is part of a morally correct solution to the nation’s health care crisis.”

The council is the 4th one in Wisconsin to support HR 676.  The others are the South Central Federation of Labor, the Greater Green Bay Labor Council, and the Washington County Central Labor Council.  In addition, the Wisconsin State AFL-CIO endorsed HR 676 at its convention in 2006.

Judy Gatlin, Executive Board member of the council representing the Wisconsin State Employees Union Local 1914 of AFSCME Council 24, released the council’s statement.  Gatlin is also a board member of the Wisconsin Labor History Society.

#30#

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

HR 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.

HR 676 ends deductibles and co-payments.  HR 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, HR 676 has 76 co-sponsors in addition to Conyers.

NAIC consumers' report on ACA's private insurance reforms

Implementing the Affordable Care Act’s Insurance Reforms: Consumer Recommendations for Regulators and Lawmakers

National Association of Insurance Commissioners (NAIC)
August 2012
These materials were prepared to assist regulators, lawmakers, and the National Association of Insurance Commissioners (NAIC) during ongoing implementation of the comprehensive insurance reforms called for by the Patient Protection and Affordable Care Act of 2010 (ACA). The purpose of these recommendations is to convey the perspectives of consumer advocates on appropriate standards and guidelines for implementing these reforms, which will go into effect in 2014.
These recommendations are limited to the ACA’s insurance reforms and do not address other critical reforms of equal importance to the consumer representatives and millions of consumers, such as the expansion of the Medicaid program, the implementation of health insurance exchanges, the availability of federal subsidies, and the need for meaningful consumer outreach and education, among others.
Table of Contents
Guaranteed Issue and Guaranteed Renewal
Elimination of Preexisting Condition Exclusions
Rating Reforms
Definition of the Small Group Market
Limitation on Waiting Periods
Coverage for Participating in Approved Clinical Trials
Essential Health Benefits, Including State-Mandated Benefits
Actuarial Value, Limitations on Cost-Sharing, and Catastrophic Coverage
Stop Loss and Self-Insurance
Limited Medical Benefit Plans
Risk Adjustment
Reinsurance
Risk Corridors
http://www.naic.org/documents/committees_conliaison_1208_consumer_recs_aca.pdf

You likely don’t have time for this now, but this report is so important that you should download it now, or at least keep the link for later downloading. If nothing else, when you have time, you should read the six page executive summary of the recommendations.
So what is this that makes it so important? It is a report prepared for the National Association of Insurance Commissioners by respected authorities who represent consumer interests (that is, patients). It discusses details of reforms of private insurance that should be considered as the Affordable Care Act is implemented.
It is important to understand the complexities and interactions of the various private insurance reforms that should be considered. Two things are clear: 1) They will never get the details aligned such that the final product will serve the best interests of patients, and 2) The complexities leave wide open the opportunities for the private insurance industry to game the system – obviously for their own benefit and not for the benefit of patients.
This report does not address many other important issues such as the changes in Medicaid, the complexities of the private insurance premium and out-of-pocket subsidies, the fate of the 30 million who will remain uninsured, and, most importantly, how this highly flawed, outrageously expensive, and highly fragmented model of reform is the worst model to try to best serve the interests of consumers (oh yes, patients).
Maybe it’s time for someone to write that much needed paper, “It’s the Private Insurers, Stupid!”

Blue Shield's contract dispute with University of California hospitals

Blue Shield, UCLA end long health insurance dispute

By Chad Terhune
Los Angeles Times, August 10, 2012

Nonprofit insurer Blue Shield of California said it resolved a lengthy contract dispute with UCLA and other UC system hospitals over reimbursements for patient care.

The previous contract expired Dec. 31 as the two sides bickered over rising medical costs. These disputes have become more common across the country as some insurers try to rein in healthcare costs and major hospitals exert their market power to maintain adequate reimbursements.

Contract talks broke down between UCLA and Blue Shield in 2006 and 2008 as well.

http://www.latimes.com/business/money/la-fi-mo-ucla-blue-shield-20120810,0,3160712.story

And…

Blue Shield top executives’ pay changed little in 2011

By Chad Terhune
Los Angeles Times, August 11, 2012

Nonprofit insurer Blue Shield of California said its outgoing chief executive earned $4.6 million last year, off slightly from a year earlier, as all insurance companies faced new government rules on how customer premiums are spent.

The San Francisco company declined to comment on the value of Bodaken’s retirement pay and benefits or to reveal the pay package of his successor. Paul Markovich, chief operating officer, will take over as CEO Jan. 1.

http://www.latimes.com/business/la-fi-0811-health-insure-pay-20120811,0,1114038.story

Comment: 

By Don McCanne, MD

We should be able to agree that a health care financing system should be designed to optimally serve the health care needs of the patient. Under the private insurance model of health care financing, there should be no better example as to how that might work than non-profit Blue Shield of California’s coverage of care at the public University of California academic medical centers. Surely, a large non-profit traditional insurer and a system of public university health centers would collaborate to serve patients first.

California’s Blue Cross set the stage. It converted to a for-profit corporation, and then engaged in practices to improve investor return. An important part of their strategy was to impose contract restrictions on both patients and providers. To remain competitive, Blue Shield adopted the same strategies, blurring the distinction between the for-profit and non-profit Blues in California.

There are clinical situations in which the most appropriate care would be provided at one of California’s prestigious university medical centers. A health care financing system that was designed in the patients’ best interests would ensure access to these centers when appropriate. But that is not what happened in this instance when disputes arose over contract terms on the provider side. Though there was no dispute on the patient side of the contracts, Blue Shield patients nevertheless were potentially exposed to severe financial penalties should they access care at the university centers.

So this is what we get with the best in private insurance financing – contract disputes that are disruptive to patient care. If a single payer system – an improved Medicare – were our only program, spending would be priced right, based on global budgets and negotiated rates. Patients would no longer be restricted to contracted networks imposed on them by private insurers. Instead, patients would consult with health care professionals of their own choice and would receive care in facilities that best served their own medical needs, rather than in facilities that best complied with the business plans of private insurers.

Why do we keep paying private insurers for their expensive administrative services that they use to impede our access to care? That’s not very smart.

Blue Shield’s contract dispute with University of California hospitals

Blue Shield, UCLA end long health insurance dispute

By Chad Terhune
Los Angeles Times, August 10, 2012

Nonprofit insurer Blue Shield of California said it resolved a lengthy contract dispute with UCLA and other UC system hospitals over reimbursements for patient care.

The previous contract expired Dec. 31 as the two sides bickered over rising medical costs. These disputes have become more common across the country as some insurers try to rein in healthcare costs and major hospitals exert their market power to maintain adequate reimbursements.

Contract talks broke down between UCLA and Blue Shield in 2006 and 2008 as well.

http://www.latimes.com/business/money/la-fi-mo-ucla-blue-shield-20120810,0,3160712.story

And…

Blue Shield top executives’ pay changed little in 2011

By Chad Terhune
Los Angeles Times, August 11, 2012

Nonprofit insurer Blue Shield of California said its outgoing chief executive earned $4.6 million last year, off slightly from a year earlier, as all insurance companies faced new government rules on how customer premiums are spent.

The San Francisco company declined to comment on the value of Bodaken’s retirement pay and benefits or to reveal the pay package of his successor. Paul Markovich, chief operating officer, will take over as CEO Jan. 1.

http://www.latimes.com/business/la-fi-0811-health-insure-pay-20120811,0,1114038.story

Comment: 

By Don McCanne, MD

We should be able to agree that a health care financing system should be designed to optimally serve the health care needs of the patient. Under the private insurance model of health care financing, there should be no better example as to how that might work than non-profit Blue Shield of California’s coverage of care at the public University of California academic medical centers. Surely, a large non-profit traditional insurer and a system of public university health centers would collaborate to serve patients first.

California’s Blue Cross set the stage. It converted to a for-profit corporation, and then engaged in practices to improve investor return. An important part of their strategy was to impose contract restrictions on both patients and providers. To remain competitive, Blue Shield adopted the same strategies, blurring the distinction between the for-profit and non-profit Blues in California.

There are clinical situations in which the most appropriate care would be provided at one of California’s prestigious university medical centers. A health care financing system that was designed in the patients’ best interests would ensure access to these centers when appropriate. But that is not what happened in this instance when disputes arose over contract terms on the provider side. Though there was no dispute on the patient side of the contracts, Blue Shield patients nevertheless were potentially exposed to severe financial penalties should they access care at the university centers.

So this is what we get with the best in private insurance financing – contract disputes that are disruptive to patient care. If a single payer system – an improved Medicare – were our only program, spending would be priced right, based on global budgets and negotiated rates. Patients would no longer be restricted to contracted networks imposed on them by private insurers. Instead, patients would consult with health care professionals of their own choice and would receive care in facilities that best served their own medical needs, rather than in facilities that best complied with the business plans of private insurers.

Why do we keep paying private insurers for their expensive administrative services that they use to impede our access to care? That’s not very smart.

Blue Shield's contract dispute with University of California hospitals

Blue Shield, UCLA end long health insurance dispute

By Chad Terhune
Los Angeles Times, August 10, 2012
Nonprofit insurer Blue Shield of California said it resolved a lengthy contract dispute with UCLA and other UC system hospitals over reimbursements for patient care.
The previous contract expired Dec. 31 as the two sides bickered over rising medical costs. These disputes have become more common across the country as some insurers try to rein in healthcare costs and major hospitals exert their market power to maintain adequate reimbursements.
Contract talks broke down between UCLA and Blue Shield in 2006 and 2008 as well.
http://www.latimes.com/business/money/la-fi-mo-ucla-blue-shield-20120810,0,3160712.story

And…

Blue Shield top executives’ pay changed little in 2011

By Chad Terhune
Los Angeles Times, August 11, 2012
Nonprofit insurer Blue Shield of California said its outgoing chief executive earned $4.6 million last year, off slightly from a year earlier, as all insurance companies faced new government rules on how customer premiums are spent.
The San Francisco company declined to comment on the value of Bodaken’s retirement pay and benefits or to reveal the pay package of his successor. Paul Markovich, chief operating officer, will take over as CEO Jan. 1.
http://www.latimes.com/business/la-fi-0811-health-insure-pay-20120811,0,1114038.story

We should be able to agree that a health care financing system should be designed to optimally serve the health care needs of the patient. Under the private insurance model of health care financing, there should be no better example as to how that might work than non-profit Blue Shield of California’s coverage of care at the public University of California academic medical centers. Surely, a large non-profit traditional insurer and a system of public university health centers would collaborate to serve patients first.
California’s Blue Cross set the stage. It converted to a for-profit corporation, and then engaged in practices to improve investor return. An important part of their strategy was to impose contract restrictions on both patients and providers. To remain competitive, Blue Shield adopted the same strategies, blurring the distinction between the for-profit and non-profit Blues in California.
There are clinical situations in which the most appropriate care would be provided at one of California’s prestigious university medical centers. A health care financing system that was designed in the patients’ best interests would ensure access to these centers when appropriate. But that is not what happened in this instance when disputes arose over contract terms on the provider side. Though there was no dispute on the patient side of the contracts, Blue Shield patients nevertheless were potentially exposed to severe financial penalties should they access care at the university centers.
So this is what we get with the best in private insurance financing – contract disputes that are disruptive to patient care. If a single payer system – an improved Medicare – were our only program, spending would be priced right, based on global budgets and negotiated rates. Patients would no longer be restricted to contracted networks imposed on them by private insurers. Instead, patients would consult with health care professionals of their own choice and would receive care in facilities that best served their own medical needs, rather than in facilities that best complied with the business plans of private insurers.
Why do we keep paying private insurers for their expensive administrative services that they use to impede our access to care? That’s not very smart.