PNHP

Value-based insurance design

Value-based insurance design

Applying Value-Based Insurance Design To High-Cost Health Services

By James C. Robinson
Health Affairs, November 2010

Value-based insurance design programs have focused on reducing consumer cost sharing in health insurance for preventive tests and medications for chronic diseases. But for value-based design principles to have a stronger clinical and economic impact, they should be extended to expensive services and to those for which the evidence is limited or controversial. This paper proposes applying value-based insurance design principles to self-administered and office-administered specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures.

http://content.healthaffairs.org/cgi/content/full/29/11/2009

And…

Applying Value-Based Insurance Design To Low-Value Health Services

By A. Mark Fendrick, Dean G. Smith and Michael E. Chernew
Health Affairs, November 2010

Value-based insurance design improves health care quality and efficiency by reducing cost sharing for services that have strong evidence of clinical benefit. The same goals can also be accomplished by increasing cost sharing for low-value services, which would ensure more effective care and achieve net cost savings. However, there are challenges in defining what is meant by “low-value services” and implementing programs to restrict such services’ use. This paper argues that investments in processes to define low-value care, comparative effectiveness research to identify services that produce harm or marginal clinical benefit, and information technology to implement findings can facilitate applying value-based insurance design to the low-value realm.

http://content.healthaffairs.org/cgi/content/full/29/11/2017

And…

Assessing The Evidence For Value-Based Insurance Design

By Niteesh K. Choudhry1, Meredith B. Rosenthal and Arnold Milstein
Health Affairs, November 2010

High copayments for medical services can cause patients to underuse essential therapies. Value-based health insurance design attempts to address this problem by explicitly linking cost sharing and value. Copayments are set at low levels for high-value services. The Mercer National Survey of Employer-Sponsored Health Plans demonstrates that value-based insurance design use is increasing and that 81 percent of large employers plan to offer it in the near future. Despite this increase, few studies have adequately evaluated its ability to improve quality and reduce health spending. Maximizing the benefits of value-based insurance design will require mechanisms to target appropriate copayment reductions, offset short-run cost outlays, and expand its use to other health services.

Impact Of Health Care Fragmentation

Payers have the greatest incentive to adopt plans using value-based insurance design when they stand to benefit from reductions in spending on medical care that is averted from the use of highly effective therapies. However, the fragmented nature of the US health care system may reduce the likelihood of this scenario. Payers often carve out certain types of benefits, most notably for prescription drugs. Similarly, pharmacy benefit managers often have little incentive to reduce cost sharing for fully insured people unless such terms are specifically negotiated. In addition, patients frequently switch insurers, such as when they change jobs. Thus, with the exception of very high-risk conditions where improved quality may be achieved quickly, payers face the possibility that they will bear the cost of therapy while other payers reap the savings from averted clinical events.

The implications of insurance “churn” — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.

http://content.healthaffairs.org/cgi/content/full/29/11/1988

Comment: 

By Don McCanne, MD

Value-based insurance design generally refers to the drafting of insurance benefits in a way that would improve health care value. Under this concept, financial disincentives such as deductibles, copayments and coinsurance should be reduced or eliminated for health care that has been proven to be beneficial, whereas these cost-sharing measures should be increased for “expensive services and those for which the evidence is limited or controversial.” Is this a good idea?

There is already considerable evidence that reducing cost sharing for proven drugs and for preventive services is of benefit for the health of the individual. Patients taking effective maintenance medications are more likely to fill their prescriptions, and patients are more likely to access preventive screening services. However, the evidence that this saves money is quite spotty and weak. Nevertheless, eliminating barriers to beneficial care is desirable, and our health care policies should be designed to encourage such improved access.

What about increasing financial barriers to expensive care, such as specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures? If these expensive services are beneficial, then higher cost sharing explicitly creates rationing based on the ability to pay. Those who can afford the high out-of-pocket expenses receive the care, and those who can’t afford the cost sharing don’t. Those of us who are passionate advocates of health care justice would find this to be totally unacceptable. We would support more equitable policies to address the cost issues.

What about increasing financial barriers to expensive care for which the evidence of benefit is marginal or controversial? Do we want to have a system in which the wealthy can spend whatever they want for try-it-and-see health care, while those of more modest income are not allowed that option? First of all, there is a lot of high-cost care that falls into this marginal category, much of which should probably be made accessible to everyone. So financial barriers would still be inappropriate from a policy perspective.

But what about the care that crosses the threshold of clearly being too expensive while likely of no value or perhaps even detrimental? Should that care still be available, if only for the wealthy? Should we even care? The problem is that the health care delivery infrastructure is a limited resource; it is expensive; and we all pay for it. Diverting our health care resources, at the whim of the wealthy and those who would profit from them, places stresses on our capacity that can have undesirable consequences such as unnecessarily expanding queues.

Value-based insurance design is a bad idea for three reasons: 1) we should not have financial barriers to beneficial health care services; 2) we should not use financial barriers that establish two-tiered or multi-tiered systems which favor the wealthy while neglecting our workforce; and 3) we shouldn’t continue with the creation of administratively burdensome policies made necessary merely because our Congressional leaders value our private insurers more than they value patients.

One statement pulled out of this special issue of Health Affairs carries a very pregnant message that the authors likely didn’t intend:

“The implications of insurance ‘churn’ — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.”

Diagnostic Criteria for PIISD – Private Insurance Induced Stress Disorder

By Carol A. Paris, MD
Psychiatric Times, October 28, 2010

The essential feature of private insurance induced stress disorder (PIISD) is the development of characteristic symptoms following exposure to an insurance-induced traumatic stressor involving direct personal experience of an event or witnessing an event that threatens another person. Traumatic events include, but are not limited to, recission of health insurance after developing a costly illness, denial of health insurance due to a pre-existing condition such as being female and fertile or delay of needed treatment or medication due to requirements for pre-authorization. In the case of physicians, traumatic events include witnessing the deterioration of patients due to financial ruin resulting from uncovered costs of care. Similar to some forms of PTSD, this disorder is prone to be severe because the stressor is of human/corporate design. Note: this diagnosis is not currently reimbursed by health insurance carriers.

Diagnostic criteria for PIISD include a history of exposure to a traumatic insurance-induced event meeting the following criteria and symptoms:

Criterion A: The person has been exposed to a traumatic insurance-induced event in which both of the following have been present:

• The person has experienced a health insurance traumatic event, due either to lack of access to health insurance, or due to failure of their health insurance to meet their health care needs. (NOTE: in the case of physicians/providers, the trauma is based on the inability to  provide needed care to one’s patients, or doing so at one’s personal  expense, ie, free care and/or oppressive paperwork burdens).

• The person’s traumatic response involved intense fear, helplessness,  anger, and confusion and was caused by financial considerations that  seriously complicate their (or their patient’s) medical treatment and  recovery.

Criterion B: The traumatic event is persistently reexperienced in one  (or more) of the following ways:

• Feelings of anger, frustration, and shame at the thought of one’s inability to access (or provide) needed care.

• Feelings of alienation from and abandonment by one’s countrymen and elected officials, precipitated by exposure to any form of corporate-controlled news media coverage of the health care crisis.

• Feelings of inadequacy, as an individual, as a family member, or as  a physician/provider, due to the repeated inability to obtain needed  care for oneself, one’s family member, or one’s patient.

• Avoidance of seeking, or providing, needed care due to fear of  serious financial strain or even bankruptcy.

• Fear of an acute confusional state or other cognitive disorder  following attempts to understand one’s EOBs (explanation of benefits).

Criterion C: Persistent avoidance of stimuli associated with the  trauma and numbing of general responsiveness, as indicated by three or  more of the following:

• Efforts to avoid thoughts, feelings or conversations about anything  related to health insurance or healthcare.

• Efforts to avoid interactions with physicians, hospitals or health  care centers that arouse recollection of the trauma. In the case of  physicians, efforts to avoid patients who are experiencing health  insurance trauma.

• Markedly diminished interest or participation in significant  activities.

• Feelings of detachment or estrangement from others.

• Restricted range of affect (eg, unable to experience feelings of  wellbeing)

• Sense of foreshortened future (eg, does not expect to have a career,  marriage, children, or a normal life span). In the case of physicians,  does not expect to remain in practice, anticipates early retirement or  disability due to consequences of health insurance trauma.

Criterion D: Persistent symptoms of increased arousal, as indicated by  two or more of the following:

• Difficulty falling or staying asleep, due to intrusive thoughts about the health insurance trauma.

• Irritability or outbursts of anger. In the case of physicians, this  often results in sanctions, possible loss of hospital privileges, and  being labeled a “disruptive physician.” In the case of patients, it  often results in suspiciousness directed at one’s physician, often  being labeled a “difficult patient.”

• Difficulty concentrating, resulting in functional impairment and  further jeopardizing career, health, and sense of well being.

• Hypervigilance, (eg, won’t let children play on playground equipment  for fear of minor injury resulting in possible retraumatizing need to  interact with one’s health insurance company).

Criterion E: The disturbance causes clinically significant distress or impairment in social, occupational, or other important areas of functioning.

Specify if:
With bankruptcy
With home foreclosure

Dr Paris is a member of the Maryland Chapter of Physicians for a  National Health Program and a board certified adult psychiatrist in  private practice in Leonardtown, Maryland.

http://www.psychiatrictimes.com/blog/couchincrisis/content/article/10168/1707756

Single-payer coverage sought by doctors

The government is the only insurance provider in such a system, touted by some local physicians

By Bob Cuddy
The Tribune (San Luis Obispo, Calif.), Nov. 1, 2010

These are gloomy days for those who believe President Barack Obama’s health care plan did not go far enough. The prevailing political wisdom is that he overreached, and there is talk of repealing the bill that he did sign should Republicans recapture Congress.

Nonetheless, some local doctors have joined with others nationwide to continue to push for single-payer health care coverage, even though they know they won’t get it anytime soon. Under such a system — like the one in Canada — the government becomes the sole provider of health coverage, with no private or other insurance plans.

“It’s really an uphill battle,” said Dr. Ron Lapp of Paso Robles. “All the health insurance companies have to do is say ‘government takeover’ or ‘socialized medicine,’ ” and fear takes control of the conversation.

Lapp belongs to a national group called Physicians for a National Health Care Program. He says a dozen other doctors in the county belong.

Lapp also helped organize a visit in San Luis Obispo last month for another universal health care group, the Mad As Hell Doctors, who also are working for single-payer health coverage. Lapp described single payer, in general terms, as Medicare for all.

Mad As Hell Doctors, based in Oregon and formed in 2009, spoke to 120 people at the San Luis Obispo City/County Library recently as part of a nationwide tour to promote the idea. They visited 22 cities in California.

“I get up every day and am discouraged that I’m providing care in a system that (ranks) 37th in the world, even though we’re spending twice as much,” Dr. Mark Sapir of Mad As Hell Doctors said. The rating comes from the World Health Organization.

Sapir claims that 70 percent of Americans and 55 percent of their doctors want single payer.

Single payer has had traction. A bill creating such a system in California twice passed the Legislature in recent years, only to be vetoed by Gov. Arnold Schwarz-enegger. A new bill is expected to be introduced during the next legislative session, Lapp said.

The San Luis Obispo County Health Commission also has endorsed a single-payer system.

However, the political climate is not favorable now, Lapp said. Further complicating matters is a provision in the national health care bill that took away a state’s right to create its own single-payer system until 2017, he said.

“You just have to keep pushing for it,” Lapp said.

He noted that many other movements took a long time to succeed, against odds that at the time seemed insurmountable — the environmental, civil rights, women’s and farmworkers movements, among others.

The bulk of the people at the Mad as Hell Doctors presentation in San Luis Obispo were older, and some referred to organizing experiences from their youth.

Sapir urged them to keep at it — and expand — despite opposition from the insurance industry, which, Lapp claimed, takes 25 percent of every health care dollar and would be out of business if single payer became the law of the land.

Lapp said that, at a minimum, he and other doctors need to educate the public, because he believes that there is a tremendous amount of misunderstanding.

“It will happen,” Lapp said confidently of universal health coverage. “It’s going to happen because the current system is not sustainable.”

http://www.sanluisobispo.com/2010/10/31/1350432/single-payer-coverage-sought-doctors.html

The NHS is in the danger zone

By Kailash Chand
Tribune Magazine
Monday, November 1st, 2010

The Institute for Fiscal Studies has exposed how the cuts proposed under the Comprehensive Spending Review will harm the economy as well as the most vulnerable in society. David Cameron and Nick Clegg continue to insist their proposals will create a fairer society. They intend to increase VAT, which is regressive, and say that they are doing this in the interest of fairness. They cut benefits to the poor and say this is in the interest of fairness. They cut child benefits and insist this is fair. They announce nearly 500,000 job losses, condemning many to life on the breadline, and claim this will lead to a better future.

The president of the British Medical Association, Sir Michael Marmot, in his address to World Medical Association’s general assembly in Vancouver, described this is a ”grotesque parody of the word fairness”. It is likely that this aspiration for fairness, however laudable, will come to haunt the coalition.

Another false impression perpetuated by the Government is that the National Health Service has been spared the scalpel wielded by George Osborne. Although the NHS budget has been relatively protected, the health service still has to find cost savings of £20 billion by 2014. This is already resulting in cuts to services, staff and rationing of elective treatments such as cataract surgery and hip replacement operations.

The assertion that NHS spending will grow in real terms is baseless: a commitment to a 0.1 per cent real-terms rise in annual spending — just about the lowest level that could still claim to honour the Government’s pledge – is neither here nor there. With inflation in healthcare currently running at more than 4 per cent, the health service’s purchasing power for drugs and equipment will suffer significantly. Considerable money from the NHS budget will have to be siphoned off to help to pay off debts accrued from the Private Finance Initiative. The annual charge that the NHS pays for acute PFI facilities is about 11-18.5 per cent of hospital turnover, compared with 5-8 per cent for non-PFI facilities. This produces an affordability gap that is filled only by diverting money from patient care and creating new pressures for hospital, community and primary care service closures in the medium and the long term.

There is also the wide-scale pay decrease that staff have to contend with at a time of rising family expenditure and a potential threat to pensions. Further, the free prescriptions for the long-term ill, one-to-one cancer nursing care and one-week waits for cancer diagnostics promised by the last Labour Government are being scrapped.

The £2 billion announced for social care is another economic deception, since £1 billion of it will actually be drawn from the current NHS budget – and an additional £1 billion a year will be added to the personal social services grant to local government. However, the reality is that this money is not ring-fenced and hence there is no guarantee that it will be spent on social care. Research to be published by the Nuffield Trust next month reveals how social care can substitute for hospital care and vice versa by helping to reduce admissions or earlier discharge from hospital. It is vital that social care is funded adequately – otherwise there will be even greater pressure on health budgets. Cuts of billions of pounds to local government budgets could have a knock-on impact on NHS services.

The overall effect of all these measures on healthcare is set to be a declining share of gross domestic product, which is unlikely to be enough to keep pace with the demand for services, fuelled by the spiralling costs of managing diseases such as obesity, depression and diabetes. Cuts in expenditure in other areas, such as welfare benefits, will also have a knock-on effect on demands on the NHS.

Vulnerable groups often have complex health needs and it is essential that help remains available to them.

The white paper reforms will use much of the financial resource to stimulate the private sector and transfer or outsource large numbers of healthcare initiatives and jobs to the private sector.

Competition will become an ideological end in itself. Monitor will become a quango with a remit to ensure there is competition in the NHS and to intervene if there are signs of anti-competitive behaviour.  In addition, the Government’s policies will generate demand for the healthcare insurance industry, as rationing will increase due to the financial pressure. The Nuffield Trust research suggests that GP commissioning may add £1.2 billion to NHS expenditure, which is not factored into the Government’s aspiration for change.

The NHS has not faced this level of challenge in its history. The universal healthcare provided by the NHS is in serious danger of becoming unsustainable. Even at this stage, David Cameron, who pledged his loyalty to the NHS before the general election, needs to halt this futile and expensive reorganisation that threatens to bring in privatisation through the back door.

The electorate wants modernisation of the NHS, not its destruction. If the coalition truly wants to reduce waste and inefficiency, it should abandon the mantra of competition, market forces and choice of provider and instead work towards developing a co-operative and integrated healthcare system, with collaborative commissioning at the heart of how precious resources are utilised.

Kailash Chand is chairman of Tameside and Glossop primary care trust

http://www.tribunemagazine.co.uk/2010/11/the-nhs-is-in-the-danger-zone/

Cast a vote for single-payer

By Susanne King, MD
The Berkshire Eagle, 10/27/2010

On Nov. 2, you will be able to vote for “single-payer” health care if you live in the 2nd or 4th districts of Berkshire County. This referendum is non-binding, but will send a strong message to our legislators and governor.

A single-payer health care program would be an expanded and improved Medicare system for everyone, not just senior citizens. The government would be the only administrator of the health care funds (the “single payer”), rather than the hundreds of for-profit health insurance companies which currently administer our health care dollars.

The insurance companies add to the enormous cost of health care by keeping 20-30 percent of our health care dollars for their administration, profits and exorbitant CEO salaries. In contrast, Medicare uses less than 1.5 percent of our health care funds for administration. “Single payer” refers only to the administration of health care dollars, not to the delivery of care, which would remain in the hands of health care providers.

Who will benefit from a single-payer system?

First, patients will experience cost-savings and better access to care. Rather than paying insurance premiums that increase in price each year for policies that provide less coverage with higher deductibles and co-payments, everyone will pay a modest income tax that will cost less than current premiums for health care insurance. Plus, patients will be able to choose their own doctors.

Second, doctors and hospitals will benefit, because they will no longer have to hire legions of office workers for administrative tasks. Doctors will be relieved of the onerous paperwork demands from multiple insurance companies, freeing them to spend more time with their patients.

A majority of doctors support single-payer health care. The annual study by the Massachusetts Medical Society found doctor shortages throughout our state, especially in the Berkshires, and especially in primary care. Doctors were asked about their preferences for a health care system: they picked single-payer health reform over a public option, over high-deductible plans, and over the Massachusetts health reform — in short, over every other option presented. The current Massachusetts health reform was least favored.

Third, business will benefit, especially small business owners who view rising health insurance costs for their employees as their greatest concern. If everyone were covered by a single-payer program, payment for health care would no longer be tied to employment, and business owners would be freed from an expensive, complicated responsibility.

Fourth, towns and cities will benefit because they will not need to provide health insurance for their active and retired employees; instead, that money can be used to improve other services such as education.

Fifth, our state will benefit. The recent health care legislation that extended health insurance to 97% of our state population has required enormous infusions of cash to provide subsidies for those unable to afford health insurance policies. As a result, we have filled the coffers of the private health insurance industry, while seriously straining the state budget.

Sixth, even though the Massachusetts referendum is not a national vote, the United States would benefit from a single-payer national health program by saving $400 billion per year in administrative costs alone; a serious consideration for a financially-strapped country. The legislation just passed by President Obama and Congress, the Patient Protection and Affordable Care Act (PPACA), makes only minor improvements to an unsustainable for-profit health insurance system. Similar to the Massachusetts legislation in its laudable attempt to provide universal coverage, this legislation is not cost-effective.

Our government will subsidize private insurance premiums for the “near poor,” channeling $447 billion of taxpayer dollars to private insurers over the next decade. As Drs. Steffi Woolhandler and David Himmelstein (founders of Physicians for a National Health Program) have written, “Morphine has been dispensed for the treatment of cancer — the reform (PPACA) may offer a bit of temporary relief, but it is certainly no cure.”

Another physician, Dr. Edward Ehlinger, wrote, “Insurance is a strange model for health care . (Insurance) is meant for life’s uncertainties, but illness is a pretty sure thing ” That’s why we don’t use the insurance model for fire and police protection or for education. Health care should also be in the category of essential services we will all need someday.

The only loser after single-payer health care is enacted will be the health insurance industry, the middlemen who provide no medical care and siphon our hard earned premiums into their own exorbitant profits.

If you are in favor of a single-payer health care system for Massachusetts, I urge you to vote “Yes” on Question 4 on Tuesday, Nov. 2.

Susanne L. King, M.D. is a Lenox-based practitioner.

http://www.berkshireeagle.com/ci_16442378

Value-based insurance design

Applying Value-Based Insurance Design To High-Cost Health Services

By James C. Robinson
Health Affairs, November 2010

Value-based insurance design programs have focused on reducing consumer cost sharing in health insurance for preventive tests and medications for chronic diseases. But for value-based design principles to have a stronger clinical and economic impact, they should be extended to expensive services and to those for which the evidence is limited or controversial. This paper proposes applying value-based insurance design principles to self-administered and office-administered specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures.

http://content.healthaffairs.org/cgi/content/full/29/11/2009

And…

Applying Value-Based Insurance Design To Low-Value Health Services

By A. Mark Fendrick, Dean G. Smith and Michael E. Chernew
Health Affairs, November 2010

Value-based insurance design improves health care quality and efficiency by reducing cost sharing for services that have strong evidence of clinical benefit. The same goals can also be accomplished by increasing cost sharing for low-value services, which would ensure more effective care and achieve net cost savings. However, there are challenges in defining what is meant by “low-value services” and implementing programs to restrict such services’ use. This paper argues that investments in processes to define low-value care, comparative effectiveness research to identify services that produce harm or marginal clinical benefit, and information technology to implement findings can facilitate applying value-based insurance design to the low-value realm.

http://content.healthaffairs.org/cgi/content/full/29/11/2017

And…

Assessing The Evidence For Value-Based Insurance Design

By Niteesh K. Choudhry1, Meredith B. Rosenthal and Arnold Milstein
Health Affairs, November 2010

High copayments for medical services can cause patients to underuse essential therapies. Value-based health insurance design attempts to address this problem by explicitly linking cost sharing and value. Copayments are set at low levels for high-value services. The Mercer National Survey of Employer-Sponsored Health Plans demonstrates that value-based insurance design use is increasing and that 81 percent of large employers plan to offer it in the near future. Despite this increase, few studies have adequately evaluated its ability to improve quality and reduce health spending. Maximizing the benefits of value-based insurance design will require mechanisms to target appropriate copayment reductions, offset short-run cost outlays, and expand its use to other health services.

Impact Of Health Care Fragmentation

Payers have the greatest incentive to adopt plans using value-based insurance design when they stand to benefit from reductions in spending on medical care that is averted from the use of highly effective therapies. However, the fragmented nature of the US health care system may reduce the likelihood of this scenario. Payers often carve out certain types of benefits, most notably for prescription drugs. Similarly, pharmacy benefit managers often have little incentive to reduce cost sharing for fully insured people unless such terms are specifically negotiated. In addition, patients frequently switch insurers, such as when they change jobs. Thus, with the exception of very high-risk conditions where improved quality may be achieved quickly, payers face the possibility that they will bear the cost of therapy while other payers reap the savings from averted clinical events.

The implications of insurance “churn” — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.

http://content.healthaffairs.org/cgi/content/full/29/11/1988

Value-based insurance design generally refers to the drafting of insurance benefits in a way that would improve health care value. Under this concept, financial disincentives such as deductibles, copayments and coinsurance should be reduced or eliminated for health care that has been proven to be beneficial, whereas these cost-sharing measures should be increased for “expensive services and those for which the evidence is limited or controversial.” Is this a good idea?

There is already considerable evidence that reducing cost sharing for proven drugs and for preventive services is of benefit for the health of the individual. Patients taking effective maintenance medications are more likely to fill their prescriptions, and patients are more likely to access preventive screening services. However, the evidence that this saves money is quite spotty and weak. Nevertheless, eliminating barriers to beneficial care is desirable, and our health care policies should be designed to encourage such improved access.

What about increasing financial barriers to expensive care, such as specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures? If these expensive services are beneficial, then higher cost sharing explicitly creates rationing based on the ability to pay. Those who can afford the high out-of-pocket expenses receive the care, and those who can’t afford the cost sharing don’t. Those of us who are passionate advocates of health care justice would find this to be totally unacceptable. We would support more equitable policies to address the cost issues.

What about increasing financial barriers to expensive care for which the evidence of benefit is marginal or controversial? Do we want to have a system in which the wealthy can spend whatever they want for try-it-and-see health care, while those of more modest income are not allowed that option? First of all, there is a lot of high-cost care that falls into this marginal category, much of which should probably be made accessible to everyone. So financial barriers would still be inappropriate from a policy perspective.

But what about the care that crosses the threshold of clearly being too expensive while likely of no value or perhaps even detrimental? Should that care still be available, if only for the wealthy? Should we even care? The problem is that the health care delivery infrastructure is a limited resource; it is expensive; and we all pay for it. Diverting our health care resources, at the whim of the wealthy and those who would profit from them, places stresses on our capacity that can have undesirable consequences such as unnecessarily expanding queues.

Value-based insurance design is a bad idea for three reasons: 1) we should not have financial barriers to beneficial health care services; 2) we should not use financial barriers that establish two-tiered or multi-tiered systems which favor the wealthy while neglecting our workforce; and 3) we shouldn’t continue with the creation of administratively burdensome policies made necessary merely because our Congressional leaders value our private insurers more than they value patients.

One statement pulled out of this special issue of Health Affairs carries a very pregnant message that the authors likely didn’t intend:

“The implications of insurance ‘churn’ — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.”

Private insurers game Part D

Fixing Flaws In Medicare Drug Coverage That Prompt Insurers To Avoid Low-Income Patients

By John Hsu, et al
Health Affairs
October 28, 2010

Abstract

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicare’s risk and subsidy adjustments could mitigate these perverse incentives.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0323v1

Comment: 

By Don McCanne, MD

Under the Medicare Part D program for prescription drugs, private insurers are paid more for lower-income subsidized patients with greater health care needs. Since the insurers find that the higher payments are still below what they find to be acceptable, they are setting their premiums at rates above the benchmark levels. This results in an automated transfer of these higher-cost beneficiaries to competitors’ programs.

As long as Congress continues to insist on using private plans for Medicare Part D, we will always see efforts by the insurers to enroll healthier patients while avoiding the sick – gaming by private insurers sometimes referred to as cherry picking and lemon dropping. (Of course, this is also true of private insurers throughout the individual, small group, and large group markets.)

The authors of this study recommend yet more administrative complexity by introducing additional modifications of the calculations in an effort to reduce these perverse incentives, but such changes certainly would not prevent the insurers from seeking other forms of gamesmanship. They owe it to their investors to game the system as much as possible.

How is the Patient Protection and Affordable Care Act addressing this problem? It isn’t. We could have had reform that would increase efficiency and equity while eliminating the private insurers, but Congress rejected that. It’s still not too late to change.

Private insurers game Part D

Fixing Flaws In Medicare Drug Coverage That Prompt Insurers To Avoid Low-Income Patients

By John Hsu, et al
Health Affairs
October 28, 2010

Abstract

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicare’s risk and subsidy adjustments could mitigate these perverse incentives.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0323v1

Under the Medicare Part D program for prescription drugs, private insurers are paid more for lower-income subsidized patients with greater health care needs. Since the insurers find that the higher payments are still below what they find to be acceptable, they are setting their premiums at rates above the benchmark levels. This results in an automated transfer of these higher-cost beneficiaries to competitors’ programs.

As long as Congress continues to insist on using private plans for Medicare Part D, we will always see efforts by the insurers to enroll healthier patients while avoiding the sick – gaming by private insurers sometimes referred to as cherry picking and lemon dropping. (Of course, this is also true of private insurers throughout the individual, small group, and large group markets.)

The authors of this study recommend yet more administrative complexity by introducing additional modifications of the calculations in an effort to reduce these perverse incentives, but such changes certainly would not prevent the insurers from seeking other forms of gamesmanship. They owe it to their investors to game the system as much as possible.

How is the Patient Protection and Affordable Care Act addressing this problem? It isn’t. We could have had reform that would increase efficiency and equity while eliminating the private insurers, but Congress rejected that. It’s still not too late to change.

More evidence of the expanding menace of high-deductible health plans

Profiling California’s Health Plan Enrollees: Large Enrollment in High-Deductible Health Plans

By Dylan H. Roby, Gina L. Nicholson, and Gerald F. Kominski
UCLA Center for Health Policy Research
October 2010

Three million commercially insured Californians were enrolled in high-deductible health plans in 2007. High-deductible health plans (HDHPs) have been gaining momentum in the health insurance market as a way to encourage more rational use of health care services. However, HDHPs come with risks.  While the plans offer lower monthly premiums than typical health insurance coverage, they carry much higher deductibles for health care services. For these plans, the average annual deductible for individuals with employer-based insurance is more than $1,800. Studies have shown that significant cost sharing may create disincentives for both necessary and unnecessary care. While individuals with high-deductible plans may be less likely to utilize the emergency room for care, they may also delay necessary treatment or doctor visits.

Another mechanism for improving the affordability of health insurance is the Health Savings Account (HSA), which allows individuals with high-deductible health plans to set aside tax-deductible funds for medical expenses. However, only 23% of commercial HMO and 20% of commercial Kaiser HMO enrollees with HDHPs reported having HSAs as well. Thirty-one percent of commercial PPO enrollees reported having a Health Savings Account in addition to their HDHP.

With the recent passage of health reform, individuals and families will be mandated to have health insurance beginning in 2014. To comply with the mandate and attempt to save money, consumers may purchase plans with lower premiums. However, they could still face high deductibles and cost-sharing requirements, which would harm their ability to access health care.

http://www.healthpolicy.ucla.edu/pubs/files/health-plans-fact-sheet_102110.pdf

Full UCLA report (35 pages):
http://www.healthpolicy.ucla.edu/pubs/files/hmo-enrollee-report_102710.pdf

Comment: 

By Don McCanne, MD

This large study from the UCLA Center for Health Policy Research provides yet one more confirmation that the use of high-deductible health plans (HDHPs) continues to expand because of the very high cost of private health insurance, yet these high-deductible plans are causing patients to delay or decline necessary health care.

The supporters of HDHPs claim that health consumers can be protected by health savings accounts. Yet this study confirms that two-thirds to four-fifths of Californians with HDHPs do not have health saving accounts. They remain exposed to the full brunt of the deductible.

These findings are particularly applicable to the insurance exchanges which will be established in 2014. The subsidies to purchase plans within the exchanges will be targeted to the bronze and silver plans. These are plans with lower actuarial values – paying a lower percentage of the health care costs – but they will be the plans that most individuals will have to select because the more generous gold and platinum plans will be unaffordable.

How do the bronze and silver plans maintain a lower actuarial value? Primarily by requiring large deductibles. (Also they may apply greater coinsurance rates – a percentage of the health care costs for which the patient is responsible – and they may strip benefits down to the minimum permitted by government regulations.) Thus high-deductible health plans that reduce access to care will become the norm.

We can do better than that. We can improve Medicare by providing first-dollar coverage – eliminating deductibles and coinsurance – and expanding benefits to include all essential services, and then make it universal so everyone is covered. The near nominal cost of first-dollar coverage is well worth having the assurance that financial barriers to all necessary health care would be removed for everyone.

Dubie wrong on business climate

By Paul Millman
Burlington Free Press
Sunday, October 24, 2010

Brian Dubie, Republican candidate for governor, says he is business friendly. He says he has a plan to promote business development in Vermont.

I’m president of Chroma Technology Corp. in Bellows Falls. Together with our subsidiary 89North in Burlington, we employ over 100 people at high paying jobs in Vermont. These jobs come with company provided medical benefits and a retirement plan. Chroma Technology Corp. is a 100 percent employee-owned company. We started Chroma in 1991. In 2009 and 2010 we were among Inc. magazine’s list of the 5,000 fastest growing companies in the United States. Earlier this year, Inc. magazine named Chroma one of the 20 best small-business workplaces in the United States.

Chroma was created and grown in the Vermont that Mr. Dubie blasts as a bad business climate. One of us is wrong. Chroma’s success indicates that it’s Mr. Dubie.

Mr. Dubie says that Vermont taxes discourage economic development. He’s wrong. Taxes pale compared to the soaring cost of health care.

Mr. Dubie recently made the following statement: “I have not met a businessperson yet who says if we enact a single-payer health care system in Vermont that is going to be a boon for business.”

Mr. Dubie knows better. He’s heard my mantra annually at the governor’s breakfast with the Vermont Business Roundtable where I am a member; the cost of health care restricts business development much more than taxes.

Do the math. In 2009 Chroma’s costs rose to nearly $1.3 million. Our tax liability for fiscal 2009 was only $226,000 on sales of more than $20 million. Research and development tax credits reduced that number even further.

It’s clear, and should be even to a nonbusinessman like Mr. Dubie, that the cost of health care has a much more profound effect on our ability to finance expansion than does the tax rate.

I think this is what they call a no-brainer.

During the last few years other Vermont business leaders and I testified that a publicly-financed health care system would save our companies substantial amounts of money.

Mr. Dubie, do you not understand that saving substantial amounts of money equals a boon for business? Perhaps Mr. Dubie doesn’t want to hear the Vermont business leaders who call for a publicly financed system.

Mr. Dubie’s concept of economic development is to lure big companies from other states. He wants to use tax credits to entice them. Oh yeah? Think Husky. Where are the two to three thousand jobs they promised when we gave them tax credits of $17 million?

We can get a much bigger return on investment by supporting the growth of smaller companies already in Vermont. Think of this list: NRG Systems, King Arthur Flour, Small Dog Electronics, Ben and Jerry’s, Green Mountain Coffee Roasters, Chroma Technology, Gardener’s Supply, groSolar, Seventh Generation, Hubbardton Forge, Zutano and Lake Champlain Chocolates.

These are all companies with both national and worldwide reputations. These are all companies that grew substantially within the current Vermont business climate. I’ll go one step further; these are all companies that grew substantially because of Vermont’s business climate.

My major criticism of Mr. Dubie is that he has been a terrible salesman for Vermont and he will continue to be so. I would never hire a salesman to sell a product he thought inferior. The voters of Vermont shouldn’t either.

Paul Millman is president of Chroma Technology Corp. in Bellows Falls.

http://www.burlingtonfreepress.com/article/20101024/OPINION02/10240321/1006/OPINION/My-Turn-Dubie-wrong-on-business-climate

Medicare-for-all doctor to speak at Chicago’s ‘Rally to Restore Sanity’

Physician says relying on Wall Street health insurance companies to finance medical care is ‘insane’

FOR IMMEDIATE RELEASE
Oct. 29, 2010

Media advisory

Contact:
Rob Stone, M.D.
Ali Thebert, PNHP, (312) 782-6006, ali@pnhp.org

What
Rob Stone, M.D., an emergency medicine physician in Bloomington, Ind., and a nationally renowned advocate for single-payer national health insurance – an improved Medicare for all – will speak at the Chicago satellite rally coinciding with the “Rally to Restore Sanity and/or Fear” hosted by comedians Jon Stewart and Stephen Colbert in Washington on Saturday. Dr. Stone is presently scheduled to speak Saturday at 1 p.m. CDT. He is available for interview before and after the rally.

Where
Grant Park, Jackson and Columbus, at the Petrillo Music Shell.

When
11 a.m. – 2 p.m., Saturday, Oct. 30

Who
Dr. Rob Stone is the director and co-founder of Hoosiers for a Commonsense Health Plan (HCHP) and is a national board member of Physicians for a National Health Program.

Stone is an outspoken advocate of single-payer national health insurance — an improved Medicare for all — and a frequent public speaker in Indiana and nationwide. Of the new health law, he says: “You’ve probably heard the quote that the definition of insanity is doing the same thing over and over again and expecting a different result. Well, that’s what we’ve been doing, trying to reform health care. We keep trying to improve our system while relying on the huge Wall Street health insurance companies, and that’s insane. It hasn’t worked, and if we want to Restore Sanity, we need to try something different. We need to get rid of the insurance companies. They are the problem, not part of the solution. We already have Medicare, an American plan with a track record that works. Get rid of the insurance companies and bring everyone into an expanded and improved Medicare for all.”

Stone has been an emergency department physician at Bloomington Hospital since 1983, and was the medical director of the Community Health Access Program Clinic in Bloomington from 2005 to 2007 until it was transformed into the Volunteers in Medicine Clinic. He continues to volunteer at the new clinic. He is assistant clinical professor of emergency medicine at Indiana University School of Medicine.

Born and raised in Evansville, Ind., he graduated from Dartmouth College and the University of Colorado Medical School. He is a diplomat of the American Board of Emergency Medicine.

This spring, Stone championed a controversial shareholder resolution at the annual meeting of WellPoint, the giant health insurer. The resolution called upon the company to return to its nonprofit roots. Despite the fact that debate on the measure was cut short, the resolution received over 30 million votes, 9.4 percent of the shares voted, which amount to “a jaw-dropping vote of no confidence” in WellPoint’s management, Stone writes in his blog at The Huffington Post.

A survey published in the Annals of Internal Medicine in April 2008 showed that 59 percent of U.S. physicians support government action to establish national health insurance, an increase of 10 percentage points over similar findings five years before.

A photo of Dr. Stone is available here and video footage of him is available here.

###

Physicians for a National Health Program (www.pnhp.org), a membership organization of over 18,000 physicians, supports a single-payer national health insurance program. PNHP is headquartered in Chicago and has chapters across the United States.

More evidence of the expanding menace of high-deductible health plans

Profiling California’s Health Plan Enrollees: Large Enrollment in High-Deductible Health Plans

By Dylan H. Roby, Gina L. Nicholson, and Gerald F. Kominski
UCLA Center for Health Policy Research
October 2010

Three million commercially insured Californians were enrolled in high-deductible health plans in 2007. High-deductible health plans (HDHPs) have been gaining momentum in the health insurance market as a way to encourage more rational use of health care services. However, HDHPs come with risks.  While the plans offer lower monthly premiums than typical health insurance coverage, they carry much higher deductibles for health care services. For these plans, the average annual deductible for individuals with employer-based insurance is more than $1,800. Studies have shown that significant cost sharing may create disincentives for both necessary and unnecessary care. While individuals with high-deductible plans may be less likely to utilize the emergency room for care, they may also delay necessary treatment or doctor visits.

Another mechanism for improving the affordability of health insurance is the Health Savings Account (HSA), which allows individuals with high-deductible health plans to set aside tax-deductible funds for medical expenses. However, only 23% of commercial HMO and 20% of commercial Kaiser HMO enrollees with HDHPs reported having HSAs as well. Thirty-one percent of commercial PPO enrollees reported having a Health Savings Account in addition to their HDHP.

With the recent passage of health reform, individuals and families will be mandated to have health insurance beginning in 2014. To comply with the mandate and attempt to save money, consumers may purchase plans with lower premiums. However, they could still face high deductibles and cost-sharing requirements, which would harm their ability to access health care.

http://www.healthpolicy.ucla.edu/pubs/files/health-plans-fact-sheet_102110.pdf

Full UCLA report (35 pages):
http://www.healthpolicy.ucla.edu/pubs/files/hmo-enrollee-report_102710.pdf

This large study from the UCLA Center for Health Policy Research provides yet one more confirmation that the use of high-deductible health plans (HDHPs) continues to expand because of the very high cost of private health insurance, yet these high-deductible plans are causing patients to delay or decline necessary health care.

The supporters of HDHPs claim that health consumers can be protected by health savings accounts. Yet this study confirms that two-thirds to four-fifths of Californians with HDHPs do not have health saving accounts. They remain exposed to the full brunt of the deductible.

These findings are particularly applicable to the insurance exchanges which will be established in 2014. The subsidies to purchase plans within the exchanges will be targeted to the bronze and silver plans. These are plans with lower actuarial values – paying a lower percentage of the health care costs – but they will be the plans that most individuals will have to select because the more generous gold and platinum plans will be unaffordable.

How do the bronze and silver plans maintain a lower actuarial value? Primarily by requiring large deductibles. (Also they may apply greater coinsurance rates – a percentage of the health care costs for which the patient is responsible – and they may strip benefits down to the minimum permitted by government regulations.) Thus high-deductible health plans that reduce access to care will become the norm.

We can do better than that. We can improve Medicare by providing first-dollar coverage – eliminating deductibles and coinsurance – and expanding benefits to include all essential services, and then make it universal so everyone is covered. The near nominal cost of first-dollar coverage is well worth having the assurance that financial barriers to all necessary health care would be removed for everyone.