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American Amnesia

How the War on Government Led Us to Forget What Made America Prosper

By Jacob S. Hacker and Paul Pierson

This book is about an uncomfortable truth: It takes government – a lot of government – for advanced societies to flourish.

But Americans have never been good at acknowledging government’s necessary role in supporting both freedom and prosperity. And we have become much less so over the last generation. We live in an era of profound skepticism about government. Contemporary political discourse portrays liberty and coercion as locked in ceaseless conflict. We are told that government is about “redistribution” and the private sector about “production,” as if government only reshuffles the economic deck rather than holding many of the highest cards. We are told “free enterprise” and “big government” are engaged in a fierce zero-sum battle (one side’s gain is the other’s loss), when, in fact, the modern partnership between markets and government may well be humanity’s most impressive positive-sum bargain (making both sides better off). We are told the United States got rich in spite of government, when the truth is closer to the opposite: The United States got rich because it got government more or less right.

We suffer, in short, from a kind of mass historical forgetting, a distinctively “American Amnesia.”

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Like other advanced democratic nations, the United States has what economic analysts call a “mixed economy.” In this public-private arrangement, markets play the dominant role in producing and allocating goods and innovating to meet consumer demand. Apple brings us iPhones, and it earns sizable profits by doing so.

Alongside companies like Apple, however, government plays a dominant or vital role in the many places where markets fall short.

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Although the modern robber barons can be found in many parts of our economy, three stand out: health care, finance, and energy. Other sectors have barons, but none rivals these big three in the scale of the tolls they extract or the scope of their political influence.

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No doubt the United States is doing something with the extra trillions it has poured into the medical sector over the last few decades. On the available evidence, however, what it is mainly doing is paying higher tolls to the robber barons.

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To reverse this spiral, we must reestablish a government with the capacity to foster broad prosperity. We need to ensure that ordinary voters and diffuse interests are capable of triumphing over concentrated interests, And we need to rescue the ideal of the mixed economy from the mists of American Amnesia. Many changes have swept the American economy since the 1970s. Yet our biggest problem is not a lack of attractive policy options. Our biggest problem is our politics. The mixed economy is as necessary as ever – indeed, in a world of increased interdependence and complexity, more than ever. And despite all the changes of recent decades, it is still within our grasp. We need better policies to restore its potential. But above all, we need a better politics.

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But we should also recognize just how valuable the mixed economy is, how fundamental the role of government is within it, and how badly we are served by the misleading juxtapositions that dominate public debate: markets versus the state, freedom versus tyranny, free enterprise versus big government. From a more realistic and historically grounded starting point, we can have more vigorous, reasoned, fact-based debates that reflect the diversity of our values and priorities as well as the inevitable uncertainties about the best ways to tackle complex problems. We can seek positive-sum bargains and broad consensus about how to improve the mixed economy and address new challenges, learning over time how to adjust the nimble fingers of the market and the strong thumb of government to best grasp our future.

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A government that effectively promotes human flourishing is a government worth fighting for. More than ever, the problems we face demand a sustained and principled defense of a vital proposition: The government that governs best needs to govern quite a bit. Americans must remember what has made America prosper.

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Simon and Schuster
http://books.simonandschuster.com/American-Amnesia/Jacob-S-Hacker/9781451667820

Amazon
http://www.amazon.com/American-Amnesia-Government-America-Prosper/dp/1451667825

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Comment:

By Don McCanne, M.D.

When you read this exceptional book by Jacob Hacker and Paul Pierson, it becomes clearer why we have such an expensive health care system that is only mediocre in its performance.

They remind us how half a century ago we had a well-functioning “mixed economy” wherein both the government and the private sector fulfilled their appropriate roles in facilitating a vibrant economy.

In recent decades there has been a shift toward believing that we need to cut back on big government and rely more on the marketplace. But in health care, the market works very well for the modern robber barons (higher costs) but not so well for patients (mediocrity). Conservatives, neoliberals and an accommodating press perpetuate the conviction that private insurers, private Medicare Advantage plans, and private Medicaid managed care plans all ensure better care than the government is capable of providing. Although the government still remains the largest source of health care funds, the “concentrated interests” (plutocracy) and their legislative lemmings place with the private sector much greater control on how those funds are spent.

As long as we have an imbalance in our mixed economy that disproportionately favors the private sector, while suppressing those functions provided well only by the government, we cannot expect to achieve the health care reform goals of true universal coverage, universal access, universal comprehensiveness, efficiency, and, most importantly, equity. Governments do these well, whereas the private sector acting alone does them poorly, if at all.

It is important to understand that the private sector performs better when the government is functioning well under a public-private partnership. To address our American amnesia, everyone should read this book. Liberals, progressives, and moderates will surely understand. Many conservatives in the business community will understand after this refresher course on why we do want the government involved in those activities that only the government does well. Hard Randians (amoral or cold-hearted libertarians) likely will not, but there is nothing we can say that would ever satisfy them since they are lost in their ill-conceived fictional utopia created by Ayn Rand.

Randians aside, we need to remember the words of the authors: “A government that effectively promotes human flourishing is a government worth fighting for.”

Young Adult Insurance Coverage And Out-Of-Pocket Spending: Long-Term Patterns

By Marc L. Berk and Zhengyi Fang
Health Affairs, April 2016

From the Abstract

The Affordable Care Act appears to have improved health insurance coverage for young adults (ages 18–30). But data from twenty national surveys conducted between 1977 and 2013 paint a more complex picture, showing coverage rates lower in 2013 than they were thirty-six years earlier.

http://content.healthaffairs.org/content/35/4/734.abstract

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Comment:

By Don McCanne, M.D.

Although the provision in the Affordable Care Act (ACA) that allowed individuals up to age 26 to be covered through their parents’ insurance was partially effective, the rate of coverage for young adults was lower in 2013 than it had been 36 years earlier. Some progress!

The point is the ACA is a series of patches superimposed on our highly fragmented, dysfunctional health care financing system. This patch – extending family coverage into early adult years – fell far short of the one goal of insuring all young adults. In fact, all ACA patches combined are falling far short of our goals of universality, affordability and equity, and we are still left with a highly fragmented, dysfunctional health care financing system.

A improved Medicare that covered everyone would fix this.

Study Of Physician And Patient Communication Identifies Missed Opportunities To Help Reduce Patients’ Out-Of-Pocket Spending

By Peter A. Ubel, Cecilia J. Zhang, Ashley Hesson, J. Kelly Davis, Christine Kirby, Jamison Barnett and Wynn G. Hunter
Health Affairs, April 2016

Abstract

Some experts contend that requiring patients to pay out of pocket for a portion of their care will bring consumer discipline to health care markets. But are physicians prepared to help patients factor out-of-pocket expenses into medical decisions? In this qualitative study of audiorecorded clinical encounters, we identified physician behaviors that stand in the way of helping patients navigate out-of-pocket spending. Some behaviors reflected a failure to fully engage with patients’ financial concerns, from never acknowledging such concerns to dismissing them too quickly. Other behaviors reflected a failure to resolve uncertainty about out-of-pocket expenses or reliance on temporary solutions without making long-term plans to reduce spending. Many of these failures resulted from systemic barriers to health care spending conversations, such as a lack of price transparency. For consumer health care markets to work as intended, physicians need to be prepared to help patients navigate out-of-pocket expenses when financial concerns arise during clinical encounters.

From the Introduction

In recent years an increasing number of Americans have chosen health insurance plans with high out-of-pocket expenses, in the form of deductibles, copayments, or coinsurance rates. According to economic theory, such plans should make consumers more sensitive to the price of health care services. Indeed, copayments have been shown to reduce health care use. However, high out-of-pocket spending can also create financial burdens for patients. In 2014 one in three Americans reported having difficulty paying health care bills. Many patients did not adhere to prescribed health care interventions because of difficulty paying for them. In addition, some patients reported that the financial burden of paying for medical care caused them to miss mortgage payments or led them to personal bankruptcy.

On the one hand, patients with high out-of-pocket spending have an opportunity to behave as informed consumers in the health care Marketplace. On the other hand, their status as consumers exposes them to potential financial burden. Ideally, patients will recognize this trade-off between the medical benefits and the financial costs of receiving health care services, incurring out-of-pocket expenses only when the benefits of receiving the services outweigh the costs.

In this article we present a qualitative content analysis of health care spending discussions from outpatient clinic visits for patients with breast cancer, rheumatoid arthritis, or depression who saw specialists who treat these conditions. We present a series of physician behaviors that interfered with patients’ efforts to either lower their out-of-pocket expenses or understand the pros and cons of less costly health care alternatives.

From the Study Results

Our qualitative content analysis revealed two broad categories of physician behaviors that led to missed opportunities to reduce out-of-pocket expenses. The first set of behaviors involved the physician’s failure to address the patient’s financial concerns, in which the physician did not make an explicit effort to either acknowledge or deal with the seriousness of the patient’s concerns. The second category involved instances where physicians did make explicit efforts to deal with patients’ financial concerns but failed to resolve such concerns satisfactorily.

From the Discussion

Many health care policies are ultimately played out “at the bedside,” by influencing the way doctors and patients make medical decisions. In the case of policies promoting health care consumerism, many patients are faced with important decisions about whether the benefits of health care interventions justify their financial cost. In this qualitative, observational study of outpatient interactions, we identified a range of physician behaviors that stand in the way of helping patients make informed decisions about ways to potentially lower their out-of-pocket spending. Some behaviors reflect physicians’ failures to fully engage with patients’ financial concerns, from never acknowledging such concerns, to dismissing them too quickly, to getting sidetracked discussing frustration with a system that creates such high out-of-pocket spending. Other behaviors reflect physicians’ efforts to engage patients about their financial concerns but efforts that potentially fall short, because physicians fail to resolve uncertainty about out-of-pocket expenses or turn to temporary solutions without making long-term plans to reduce patients’ spending.

We recognize that physician-patient communication is a two-way street and that some of the failures described here resulted in part from patients having difficulty clearly and explicitly expressing their financial concerns. Patients have difficulty partly because health care consumerism is a relatively recent phenomenon in the United States for most people, meaning that patients have not had substantial experience that would help them become savvier about the health care marketplace. Nevertheless, it is still incumbent on physicians to do their best to overcome patients’ difficulties communicating about their expenses.

We acknowledge that many of the potential failures we have identified here, if they truly do reflect physician failure, also reflect more general failure of the US health care system. Physicians in the United States have difficulty factoring financial concerns into health care decisions in part because out-of-pocket spending is often difficult to determine and health care prices are often opaque. Consequently, physicians under time constraints cannot be expected to fully resolve patients’ financial concerns in the space of any single outpatient appointment.

From the Conclusion

Ideally, when people face high out-of-pocket spending for health care services, they will act like savvy consumers, exploring the pros and cons of their alternatives with full knowledge of the financial consequences of those alternatives. This confidence is undermined whenever clinical interactions lead patients to miss opportunities to explore less costly alternatives or to identify means by which they can receive their current interventions at lower prices.

http://content.healthaffairs.org/content/35/4/654.abstract

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Comment:

By Don McCanne, M.D.

Although the theme of this article seems to be that physicians should improve their skills in communicating with patients about their out-of-pocket spending for health care in order to enable spending reductions that are the goal of the ever-increasingly prevalent consumer-directed health care plans. But there is a much more important message buried in this study. Physicians do not have the time nor the tools and are basically incapable of assisting patients with their burdensome cost sharing.

Patients are mostly on their own to try to negotiate past the financial barriers to care, or, failing to do so, accept the fact that they may have to forgo the recommended health care simply because they cannot afford to pay for it. Training physicians in personal financial management so that they can counsel patients on how they can manage their deductibles and other expenses, and then expecting physicians to dedicate a significant portion of the patient interaction time to that counseling are just not practical uses of the very limited time the physician has with the patient – time that should be fully dedicated to managing the patient’s medical problems.

Also buried in the full article is this comment: “From this sample of 3,000 transcripts, we excluded visits that were conducted by primary care physicians, nurse practitioners, or nurses because these clinicians are often not the ones that prescribed the expensive interventions relevant to the diseases in question.”

Wow! Primary care was excluded because that is not where the expensive interventions occur? So primary care really does provide greater value? Yet most primary care (except sometimes certain preventive services) falls below today’s higher deductibles, and thus the patient is quite sensitive to primary care costs because it usually lacks first dollar coverage.

It is not the lack of training of health care professionals in patient-consumer financial counseling that is the problem. It is the transfer of financial responsibility to the patient that is causing the difficulties. Many other nations that spend much less on health care than we do are able to provide first dollar coverage. We can as well. We can control costs in a much more patient-friendly manner through an improved Medicare that covers everyone.

High costs of hepatitis medicine make a good case for universal Medicare

Editorial
The Salt Lake Tribune, April 4, 2016

Those who continue to argue that there is a “free market solution” to the unconscionable costs and gaps in the American health care system have to explain away the train wreck surrounding new cures for hepatitis C.

The good news is that there is a cure for hepatitis C, a blood disease that can lead to a slow and painful death as it destroys a victim’s liver. In fact, now there are a few. Gilead Sciences markets concoctions called Sovaldi and Harvoni. Janssen Research offers a drug called Olysio.

The bad news is that the cost of the full treatment regimen for a single patient can run from $83,000 to $189,000. That, obviously, is well beyond the reach of nearly every household and understandably enough to scare off both private insurance carriers and government-funded Medicaid.

The worse news is that, because the United States clings to the idea that wellness is a commodity subject to rational market forces, nobody is trying to limit these awful costs.

The drug companies charge so much for these medications for one reason: Because they can.

Functioning free markets do not — and never will — exist in health care because the sellers so often hold all the cards.

Civilized nations — a term that excludes the United States when discussing health care — either regulate the prices of drugs or use their concentrated purchasing power to negotiate a reasonable cost.

Drug makers argue that even the staggering cost of Sovaldi or related drugs is a bargain compared to avoided costs of more treatment, surgeries, disability, early death, etc.

It is notable that single-payer systems, such as in the United Kingdom, have done the math and agreed to pay high — though less than in the U.S. — prices for these drugs. That’s because, in those nations, the single payer does, indeed, come out ahead by paying a lot now but saving many multiples of that later.

In other words, the case made by the drug companies for allowing them to charge such high prices is also an argument for Medicare for all.

http://www.sltrib.com/opinion/3738478-155/editorial-high-costs-of-hepatitis-medicine

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Comment:

By Don McCanne, M.D.

If there is any good in the fact that drug companies are gouging patients and payers it is that the citizenry may finally awaken to the fact that we need the government involved to straighten out this crisis, and, by extension, that we can finally get past the anti-government hangup preventing us from enacting a single payer system. We can thank the editors of The Salt Lake Tribune for reminding us that the solution we need is a single payer Medicare for all.

Anthem Blue Cross, Dignity Health Partner to Improve Health, Lower Employer Costs

Business Wire, March 31, 2016

Anthem Blue Cross and Dignity Health, one of the largest hospital systems in the country, have collaborated to introduce a new tiered EPO/PPO plan designed to improve employee health and lower costs through an integrated care management system.

The Premier Tiered EPO/PPO product is designed for self-insured large groups, or employers with more than 101 employees and will launch on May 1, 2016 in Ventura County.

The plans are designed to offer choice and flexibility for employees who are members. They can select from either the Exclusive Provider Organization (EPO) that provides the best price with a pre-determined network of high value Dignity Health providers, or a Preferred Provider Organization (PPO) which provides access to a wider range of providers to choose from at varying copay and cost share levels. The new product combines the managed care capabilities and expertise of both organizations, with a focus on clinical quality, access and efficiency of health care services.

“As health care providers, we understand the challenges employers face in managing health care access and cost of care,” said Duncan Ross, Dignity Health Vice President, Employer Relations. “This collaboration with Anthem creates a care management model that will help employers reduce costs and provide a better patient experience for their employees, and reflects our mission of service and commitment to our communities.”

http://www.businesswire.com/news/home/20160331006282/en/Anthem-Blue-Cross-Dignity-Health-Partner-Improve

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Comment:

By Don McCanne, M.D.

In announcing their new program that will “improve health and lower employer costs,” Anthem Blue Cross and Dignity Health show us once again that by relying on the private sector to control health care financing, we will continue to see innovations that serve their industries well, but at a cost to patients.

In this case Anthem and Dignity are providing a competitively priced product that will be cheaper for employers, but it will cause employees to choose between either an exclusive provider organization with severe restrictions in choice of providers or a preferred provider organization with moderate restrictions in provider choice but greater exposure to out-of-pocket spending. Either choice is worse for the employees than under more typical employer-sponsored plans of the past.

Under a well-designed single payer system, patients would have choice of their health care professionals and hospitals, and financial barriers would be removed by providing first dollar coverage. Many other features of a single payer system would control costs in a patient-friendly manner.

Oklahoma State Medical Association urges doctors to mull leaving Medicaid over 25 percent rate cut

By Barbara Hoberock
Tulsa World, April 1, 2016

Oklahoma State Medical Association leaders have voted unanimously to urge members to consider dropping out of Medicaid.

The association’s executive committee took the unanimous vote on Wednesday following an announcement earlier in the week by the Oklahoma Health Care Authority that Medicaid rates could be cut by as much as 25 percent effective June 1.

For the current fiscal year, the state has seen a deepening revenue failure requiring state-appropriated agencies to make cuts.

“We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” said OSMA President Woody Jenkins. “But a 25 percent rate cut, combined with previous cuts that had already been made in recent years, will leave many of our members with little choice.”

He said the association in coming days will be offering guidance on its website for doctors on how to opt out of the Medicaid program.

http://www.tulsaworld.com/homepagelatest/oklahoma-state-medical-association-urges-doctors-to-mull-leaving-medicaid/article_8f6feba5-dd9f-56eb-9c74-ff3eac146838.html

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KGOU Update:

The third part of the plan would restore the Medicaid reimbursement rate to 86.5 percent of Medicare. Earlier this week, the Oklahoma Health Care Authority proposed reducing the reimbursement rate to providers by 25 percent as a result of the estimated $1.3 billion general revenue shortfall in the upcoming fiscal year.

http://kgou.org/post/oklahoma-health-care-authority-proposes-plan-insure-more-oklahomans#stream/0

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Comment:

By Don McCanne, M.D.

One of the flaws in our fragmented, multi-payer system of financing health care is that low-income patients tend to be lumped into the Medicaid program. Since it is a welfare program serving individuals who do not command much political capital, politicians are more willing to use cuts in Medicaid to balance their budgets than cuts for programs designed to serve the general population such as Medicare and Social Security. What lessons can Oklahoma’s proposed 25 percent cut in Medicaid rates provide for us?

As a welfare program, Medicaid does remain chronically underfunded. As such, access problems occur because of a lack of willing providers since there is reluctance on the part of others to accept the lower Medicaid rates. But should the less fortunate members of society be relegated to a lower standard of health care, or should everyone have the equivalent access to essential health care services? That question has been answered by our politicians even if it was never asked.

That said, what response should organized medicine have to these cuts in Medicaid? Perhaps we should ask whom they perceive as being victimized here. The Oklahoma State Medical Association (OSMA) has recommended that all physicians drop out of the Medicaid program in order to protect themselves from underpayment for their services.

What about the patients otherwise qualified for Medicaid who need health care? OSMA has provided no recommendation. Do the physicians simply refuse to see those patients if they cannot pay cash for their services? Would some physicians agree to see them on a charitable basis at the risk of having their schedules swamped because too many others would continue to boycott the patients until their fee demands were met?

Although we can sympathize with physicians who are being requested to practice in a toxic environment because of unreasonable policy decisions made by the politicians, we can also be troubled by their abandonment of the needy patients who seem to be the real victims here. This is not unlike some members of Congress who have repeatedly voted to repeal the Affordable Care Act yet have offered no replacement to ensure that people can get the health care that they need.

We could replace the politicians who have refused to enact policies that would ensure health care for everyone. Physicians could also replace their medical association delegates with those who follow modern Hippocratic traditions: “I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.”

What was it the OSMA president said? “We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” but they are left with little other choice than to abandon them. Really?

Update:

It appears that they may receive a reprieve with a new proposal from the state Medicaid agency, but that does not excuse them from the fact that they were willing to abandon their Medicaid patients.

Who Are the Remaining Uninsured, and What Do Their Characteristics Tell Us About How to Reach Them?

By Linda J. Blumberg, Michael Karpman, Matthew Buettgens, and Patricia Solleveld
Robert Wood Johnson Foundation
Urban Institute, March 2016

From the Introduction

Although the ACA was not designed to eliminate uninsurance, a detailed assessment of those remaining uninsured after reform can provide insight into the potential to increase coverage further.

Main Findings

*  According to the CPS-ASEC, 32.9 million nonelderly residents of the United States remained uninsured as of March 2015, constituting 12.2 percent of the total non-elderly, civilian, non-institutionalized population of the country.

*  The rate of uninsurance is significantly higher in (Medicaid) nonexpansion states, where 15.4 percent of the nonelderly are uninsured compared with only 10.1 percent in expansion states, a relative difference of over 50 percent.

*  About 28 percent of the uninsured are eligible for Medicaid or the Children’s Health Insurance Program (Medicaid/CHIP), and 21 percent are eligible for marketplace tax credits.

*  Fully 66.5 percent of uninsured children are eligible for Medicaid/CHIP compared with only 20.6 percent of uninsured adults.

*  We posit that the uninsured who are eligible for the greatest amount of financial assistance under the ACA — 12.4 million uninsured in total — are those for whom additional outreach and enrollment efforts are likely to be most successful.

*  Absent further policy changes (e.g., more states expanding Medicaid, increased financial assistance, and expanded eligibility for assistance), we do not expect that a substantial share of the other uninsured — who constitute 20.6 million of the total — will gain coverage.

*  Targeting of resources to those 12.4 million uninsured with the greatest potential to enroll in either Medicaid/CHIP or marketplace coverage can be improved by understanding their characteristics.

From the Conclusion

Our analysis of the CPS-ASEC combined with past work on program participation rates and case studies on insurance enrollment behavior under the ACA suggests that two subpopulations of the uninsured have the most promise in further expanding coverage: the Medicaid eligible and the low-income marketplace tax credit eligible. These are the uninsured eligible for the most comprehensive coverage at the lowest direct cost under current law, and those eligible for this level of assistance have relatively high rates of participation in health insurance programs. Together, these subgroups account for 37.5 percent of the remaining uninsured, or approximately 12.4 million people.

Under current law, however, expectations of increasing coverage substantially among the other 62.5 percent of the remaining uninsured should be tempered. Although some additional coverage within these groups is likely as the individual mandate penalties increase and information on available coverage alternatives spread further, gains are likely to be quite modest unless further financial assistance is provided.

http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2016/rwjf427898

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Comment:

By Don McCanne, M.D.

Perhaps the most important statement in this report on the remaining uninsured is the following: “The ACA was not designed to eliminate uninsurance.” It should be no surprise that we are left with trying to figure out why so many are uninsured and who they are when the architects of the Affordable Care Act abandoned, in advance, any effort to make health care insurance truly universal.

If there is good news in this report it is that there are two groups in which, with concerted effort, we can increase rates of enrollment: the uninsured eligible for Medicaid/CHIP, and the lower-income uninsured eligible for government subsidies for ACA exchange plans. These eligible individuals are more likely to accept coverage because government subsidies make it free or very low cost to them. But those eligible are still a minority of the uninsured – 12.4 million individuals.

The majority of the uninsured – 62.5 percent, 20.6 million individuals – have no publicly-supported programs available for them and are likely to remain uninsured. It has been suggested that we can expand coverage through incremental changes in ACA, but, because of political, logistical and financial barriers, it would be very difficult to design add-on programs that would be effective in bringing these individuals under the coverage umbrella.

Another problem is that a static picture at one point in time does not lead to policies that would address the instability in coverage due to changes in income, employment, age, residency, and other requirements that determine the type of coverage for which an individual may or may not be eligible. As we work on the front end to expand coverage to the currently uninsured, people are falling off of the back end as they lose their coverage and may face new barriers to transitioning to other programs. This instability makes it virtually impossible to ever cover everyone simultaneously under our fragmented system that has been perpetuated by ACA.

So do we want everyone insured? I would say absolutely yes, but it is not going to happen under a system that was clearly not designed to do that. In contrast, an Improved Medicare for All would be designed to actually cover everyone, permanently, not to mention the multitude of other social and health benefits that it would bring to all of us.

Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

BlueCross BlueShield, March 2016

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

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Comment:

By Don McCanne, M.D.

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care – 22 percent higher in 2015. Adverse selection – concentrating more costly patients in the ACA-compliant plans – was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients’ choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad news for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection – the individuals pooled in these plans have greater medical needs and thus are more expensive – driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.