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Obamacare beats GOP’s nothing, expanding Medicare would be even better

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Obamacare beats GOP’s nothing, expanding Medicare would be even better

By Tom Gates, M.D.
Lancaster (Pa.) Online, June 1, 2015

I was astonished to read U.S. Rep. Joe Pitts’ criticism that Obamacare does not do enough to cover the uninsured, leaving 30 million without coverage, and that it “achieves too little at too high a cost.” Astonished, because for the last five years Pitts and his congressional colleagues have to all appearances been concerned not with covering the uninsured, but rolling back the modest progress we have made.

Since I graduated from medical school 35 years ago, the number of uninsured in this country has risen inexorably year after year, more than doubling over the course of my career. The number of uninsured peaked at around 50 million in 2010, with a modest decrease of about 2 million from 2011 to 2013 as the initial provisions of the Affordable Care Act took effect.

Then in 2014, when Medicaid expansion and the new insurance exchanges kicked in, the number of uninsured fell by 15 million — far and away the biggest decrease in uninsured since Medicare was passed. The ACA has performed better than predicted, at a lower cost than projected, and, contrary to congressional critics like Pitts that it would be a “job killer,” its full implementation in 2014 coincided with the biggest net gain in employment in 15 years.

Pitts says that “Republicans in Congress have many ideas that are more practical than the ACA,” but doesn’t divulge to us, his constituents, what those ideas might be. So here is a suggestion for Pitts and his colleagues: If you are really concerned about the 30 million Americans who remain without health insurance, and you don’t like the ACA because it “achieves too little at too high a cost,” then support the proposal of Rep. John Conyers, D-Mich., HR 676, the Expanded and Improved Medicare for All Act.

Medicare is arguably the most valuable and popular government program of the last half-century. Together with Social Security, it has lifted tens of millions of older Americans out of poverty. It has consistently out-performed the private sector, with lower inflation and much lower administrative costs than private health insurance.

Conyers’ proposal would build on Medicare’s success, extending it to cover not just the elderly and disabled, but all Americans. Like traditional Medicare, this “single payer” system would allow patients complete freedom to choose their preferred physicians and hospitals (no more “out-of-network” denials). Providers would remain private entities competing for our business, but would be paid out of a government fund rather than the myriad of competing and profit-driven insurance companies. By eliminating $400 billion a year in private insurers’ administrative costs, there would be enough savings to cover those 30 million uninsured, plus eliminate all deductibles and co-pays.

How is this possible? According to the Institute of Medicine, as much as 30 percent of our current health care expenditure is pure waste, amounting to some $700 billion per year. Much of this waste comes from the high cost of administering our needlessly complex system. Insurance companies, ultimately beholden to their stockholders, make money by providing insurance to the healthy while finding ways to avoid covering the sick. Private, for-profit insurance companies have overhead and administrative costs of 12 percent to 20 percent, compared to 1.6 percent for Medicare (according to the 2013 Medicare trustees report).

If expanded and improved Medicare for all, with no deductibles and co-pays, sounds too good to be true, remember that every other advanced country in the world has been able to provide universal coverage at a much lower per-capita cost than the U.S., with health outcomes often better than our own. Why do we settle for less?

As we approach the 50th anniversary of the passage of Medicare in July 1965, let us urge Pitts and his colleagues not to cut or further privatize Medicare, but protect it, improve it, and most importantly, expand it to cover everyone. Urge Congress to pass HR 676. That would be real health care reform.

Dr. Tom Gates is a family physician who lives in Manheim Township and has practiced in downtown Lancaster for 20 years.

http://lancasteronline.com/opinion/columnists/obamacare-beats-gop-s-nothing-expanding-medicare-would-be-even/article_c7dcf356-08a4-11e5-aa8d-37beba707cad.html

Health care cost cure: single payer

By Ewell G. Scott, M.D.
Lexington (Ky.) Herald-Leader, Letters, June 2, 2015

Dr. Kevin Kavanagh, a leading Kentucky advocate for transparency in health-care costs and outcomes, writes in a recent commentary that Medicare-for-all might be the solution to our financing woes.

I support going to a single-not-for-profit payer system and eliminating for-profit health insurance companies. These unneeded middlemen must be eliminated if health care costs are to be controlled.

Twenty percent to 30 percent of the premium dollar goes for their profits and overhead.

A single-payer system could do it for 3 percent overhead — what our single-payer system for seniors does now. The Affordable Care Act (a misnomer if there ever was one) merely forces us to buy a private, inefficient, expensive product.

I am thankful for Gov. Steve Beshear’s Medicaid expansion, but his reliance on private (for the most part) companies to “manage” (read: “deny”) health care is robbing hospitals and other providers of rightful compensation and merely increasing the private companies’ profits.

Anthem, an Indiana-based insurer, recently announced record profits, which leave our rural facilities teetering on the brink of insolvency.

One only has to look at Auditor Adam Edelen’s recent in-depth report for verification of their poor financial health. Our people deserve better. It can be done. Medicare for all. Easy.

Dr. Ewell G. Scott resides in Morehead.

Read more here: http://www.kentucky.com/2015/06/01/3879845/june-2-letters-to-the-editor.html#storylink=cpy

2015 Milliman Medical Index

2015 Milliman Medical Index

Milliman, May 2015

In 2015, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $24,671 according to the Milliman Medical Index (MMI). The amount will almost certainly surpass $25,000 in 2016.

  • This year, the growth rate has again climbed, increasing to 6.3% in 2015, largely due to increases in prescription drug costs. Even at last year’s low-water mark of 5.4%, the annual rate of increase is still well above growth in the consumer price index (CPI) for medical services.
  • Costs for our typical family have more than doubled over the past decade.
  • A family of four with the MMI plan is likely to reach the Cadillac tax much sooner if the plan is provided by a smaller employer and if trends exceed recent levels.
  • Prescription drug costs spiked significantly, growing by 13.6% from 2014 to 2015.
  • The total employee cost (payroll deductions plus out-of-pocket expenses) increased by approximately 43% from 2010 to 2015, while employer costs increased by 32%.
  • Over the 10-year period ending March 2015, medical CPI has increased by approximately 3.3% per year, while the MMI has increased by 7.3% per year.

The family of four represented by the MMI has total annual healthcare expenditures of $24,671, of which $10,473 is paid by the family, $6,408 through payroll deductions, and $4,065 in out-of-pocket expenses incurred at point of care. These figures represent significant (and increasing) percentages of family income, particularly for middle-income families. The U.S. median annual household income in 2015 is approximately $53,800.

With income growth at slightly less than 2% per year and healthcare expense growth over 6%, health insurance will likely become even less affordable for many working families and for employers.

http://www.milliman.com/MMI/

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Comment:

By Don McCanne, MD

Health care for a typical family of four with an employer-sponsored PPO health plan now costs about $24,671, according to this update of the Milliman Medical Index. This has increased 6.3% since last year, well in excess of the rate of increase in the CPI. The claim that we have controlled health care costs rests on very tenuous grounds.

For perspective, in 2013 the median family household income was $65,587. Obviously, if there were no government programs to help pay for heath care, the typical American family could not afford the average costs of health care nor could they afford an insurance policy that would cover most of those costs.

We do have a multitude of programs that result in transfers of income that make it possible for a large majority to have some sort of coverage. Examples are Medicaid for low income individuals funded by progressive taxes, Medicare for the elderly and individuals with long-term disabilities partially funded by payroll taxes on workers and by general revenues, government supported safety net institutions, subsidies for lower income individuals and families enrolled in ACA exchange plans, and a multitude of other transparent and opaque forms of income transfer.

These programs and the income transfers – especially taxes – that make them possible are complex and administratively burdensome and are not always equitable. For instance, the tax expenditures that help pay for the largest sector of health care coverage – employer-sponsored health plans – are regressive since the tax benefit increases with an increase in income, leaving lower income individuals and families with little or no tax benefit. Also, the very high administrative costs of the most common method of administering health care payments – private health plans – are relatively fixed and thus the percentage of income consumed is inversely related to the amount of income, with lower income individuals paying a higher percentage of their incomes for these wasteful services.

The complexity of this highly fragmented system of paying for health care is unique in the United States and is a primary contributor to the dysfunctions of our system that result in its very high costs and in its inequities that leave tens of millions underinsured and tens of millions more with no insurance at all.

These high health care costs will result in greater financial hardship for workers and their families. Either the premiums will exceed the threshold for excise taxes (“Cadillac tax”) which would be paid either directly or indirectly by the employee, or the employer will reduce benefits to avoid the excise tax, thereby increasing out-of-pocket costs for the employee, or perhaps a combination of the two.

If we had a single payer national health program we could more effectively slow the rate of increase in health care spending without compromising health care access and quality, we could dramatically reduce the profound administrative waste in our system, and we could fund the entire system with much more equitable transfers through the tax system that would make health care affordable for everyone.

Remember, the Milliman Medical Index – now close to $25,000 – shows us, that, without transfers, middle- and low-income families would not receive adequate health care. Most Americans believe that everyone should have health care, but they are more comfortable with paying a premium than with paying a tax. But if you removed all of the opacity in financing health care today, and you showed families what the premium would have to be for a plan that actually did cover an average of $25,000  and then compare that with the amount of taxes they would be paying in a transparent progressive tax system that funded health care, how many people would really want to pay significantly more in premiums than they would in taxes simply because of their aversion to government taxation?

Only high-income individuals would pay more in a single payer national health program. You say that is not fair? Then keep paying that $6,408 in payroll deductions for your family premium, plus an average of $4,065 in out-of-pocket expenses, plus $14,198 in forgone pay increases that your employer is paying towards your family premium. Maybe a better awareness of that last relatively opaque number, combined with the rest, might give you pause. $25,000 is a lot of money.

Notes from this year’s psychiatry meeting in Canada

By David Drake, D.O.
The Iowa Psychiatrist, June 2015

From a Physicians for a National Health Program (PNHP) poster board its booth at the American Psychiatric Association Annual Meeting:

“This is what we could have in the USA if we had single payer:

Psychiatrists in British Columbia get:

  • 50 min psychotherapy $162
  • 50 min inpt psychotherapy $180
  • 25 min med visit $92
  • Geriatric consult to Medicine $300

“’I collect 99.5 percent of what I bill.’” (quote by a Canadian psychiatrist in British Columbia)

So … just back from Toronto and the APA. Great city. Great time. While there I had the opportunity to sit down over lunch with a Canadian psychiatrist who practices in Toronto.

When was the last time you heard a colleague say he/she loved their practice and the health care system?

First, we have no system. And more we have to deal with co-pays, co-insurance, and deductibles. When I review this with Canadian physicians there is disbelief.

My lunch partner, S. Udaya Shankar, M.D., who goes by “Sachi,” treated me to an Indian lunch and beer. Our Canadian colleague showed me his Health Canada insurance card that looks like a credit card and is simply run by the provider’s office for billing purposes.

As a health care provider, he gets paid two weeks after the service is provided. No money exchanges hands.

Referrals to our Canadian colleagues come through a general practitioner. Some GPs have extra training in counseling and may provide the service themselves. It can take 3-6 months to see a psychiatrist for an evaluation and medication alone versus 6-9 months to see a psychiatrist like Sachi who does the medication and psychotherapy himself. His own experience is that it is not uncommon for a psychiatrist in Toronto to provide psychotherapy. He told me the long waiting times reflect an intentional move by the government to keep costs down by limiting access through a shortage of physicians.

Sachi’s malpractice is only $2,000 – $3,000 per year. He described Canadians as “not litigious.”

Physicians can opt out of the government plan and can offer some services as self-pay, e.g., some plastic surgery, if these are not covered by Health Canada.

Of course providing health care to every Canadian comes at a cost. After reaching of an income of around $79,000 and higher Canadians pay around 40 percent in taxes compared with some 30 percent in taxes that most of we physicians will pay in the U.S. at higher income brackets.

Our Canadian colleagues and Health Canada have much to teach us in the U.S. It’s not a perfect system but it is a system. Canada needs more physicians to cut down on waiting time and of course this could mean higher taxes. But the cost of providing health care coverage for every citizen should not scare us away. It’s simply the right thing to do.

David E. Drake, D.O., DFAPA, FACN, is in private practice in Des Moines, a clinical professor at Des Moines University. He can be reached at drakeoffice@gmail.com.

Universal Medicare would cut the costs of health care

By F. Douglas Stephenson, LCSW, BCD
The Gainesville (Fla.) Sun, May 31, 2015

No greater disconnect exists between the public good and private interests than in the U.S. system of for-profit health insurance.

With the Affordable Care Act, the health insurance industry successfully lobbied the U.S. Congress to enact a requirement that most non-elderly Americans become compulsory customers and approve taxpayer financing of massive subsidies for the private insurance industry. Americans have been forced to purchase the product of a particular private industry, plus fund tax-financed subsidies for the insurance industry in the amount of a half-trillion dollars per decade.

To protect profits, the private health insurance industry and their Congressional supporters oppose universal Medicare, or single-payer/public health insurance. Private health insurance companies know that with low administrative costs and no need to produce profits, a universal Medicare insurance plan would have pricing advantages for the American public.

Research in the New England Journal of Medicine showed that administration consumes a total of 31 percent of U.S. health spending, most of it waste and much of that waste attributable to private insurance company overhead and profit. If the single-payer plan pays health care professionals, hospitals and drug companies at levels comparable to Medicare’s current substantially lower rates, premiums for all individuals and families could be so low that the public plan could consume the market and end private health insurance.

Often the public is confused when they conflate the “socialized medicine” label with single-payer, Medicare-for-all “socialized health insurance.” Whatever the pros/cons of socialized medicine, national Medicare for all is not socialized medicine.

Socialized medicine is a system in which doctors and hospitals work for and draw salaries from the government. Health-care professionals in the U.S. Veterans Administration and the armed services are paid this way. The good health systems in Great Britain and in Spain are other examples.

Most European countries, Canada, Australia and Japan have socialized health insurance, not socialized medicine. The government pays for care that is delivered in the private (mostly not-for-profit) sector. This is similar to how Medicare works in this country. Doctors are in private practice and are paid on a fee-for-service basis from government funds. The government does not own or manage medical or mental health practices or hospitals.

The U.S. subscribes to a private business model for health insurance that defines insurers as commercial entities. Private health insurers maximize profits by mainly limiting benefits or by not covering people with health problems. Like all businesses, their goal is to make money. Under this business model of health insurance, the greed of casual inhumanity is built in and the common good of the citizens and nation is ignored. Excluding many in the middle class, the poor, the aged, the disabled and the mentally ill is sound business practice policy since it maximizes profit.

Today we still have tens of millions of individuals without insurance, many more who are underinsured, many who have impaired access to their physicians because of insurer network restrictions, many who face financial hardship when health needs arise, and an outrageously expensive system due to the profound administrative waste of the insurers and the burden they place on the health care delivery system when profit is required.

Almost none of these problems would exist if the government instead of the private insurers served us as the health care financing authority. It is inhumane to allow consumer-directed, moral-hazard based private health policies to erect barriers to health care for millions of citizens with minimal or modest resources.

Universal Medicare is a solid investment in our country and all of its citizens. This investment simply promotes a social service for universal access to affordable health care for all.

Aren’t we a society that cares enough to see that everyone receive the health care they need? That’s the basic point of universal Medicare, and it’s the right thing to do now. You can help by asking your congressman to support the new “Expanded and Improved Medicare for All Act,” H.R. 676 now in Congress.

F. Douglas Stephenson is former president of the Florida Society for Clinical Social Work. He lives in Inglis.

http://www.gainesville.com/article/20150531/OPINION03/150539993

Obamacare’s big overhead costs to top $270B

By Dan Mangan
CNBC, May 27, 2015

That sure is a lot of paper clips.

Obamacare is set to add more than a quarter-of-a-trillion—that’s trillion—dollars in extra insurance administrative costs to the U.S. health-care system, according to a new report out Wednesday.

The $273.6 billion in additional insurance overhead represents an average of of $1,375 per newly insured person, per year, from 2012 through 2022.

The overhead cost equals a whopping 22.5 percent of the total estimated $2.76 trillion in all federal government spending for the Affordable Care Act programs during that time, the authors of the report in the journal Health Affairs noted.

In contrast, the federal government’s traditional Medicare program has overhead of just 2 percent, according to the report.

“Insuring 25 million additional Americans, as the [Congressional Budget Office] projects the ACA will do, is surely worthwhile,” the authors of the Health Affairs blog post write. “But the administrative cost of doing so seems awfully steep, particularly when much cheaper alternatives are available.”

The eye-popping Obamacare overhead tally cited by the Health Affairs comes from calculations based on data posted online in July 2014 by the federal Centers for Medicare and Medicaid Services’ Office of the Actuary.

Dr. Steffie Woolhandler told CNBC that she and her blog co-author Dr. David Himmelstein only became aware of the projected spending data earlier this year. Their blog said this data allowed “calculation of the incremental insurance overhead costs directly attributable the reform.”

But subsequent postings of National Health Expenditure Projections by CMS no longer include separate tables projecting costs with and without the ACA, the blog post noted.

“I am pretty sure we’re the first we’re bringing it to light,” said Woolhandler, who like Himmelstein is a City University of New York School of Public Health professor as well as a lecturer in medicine at Harvard Medical School. “This is the first time there’s been a number, and it’s a pretty shocking number.”

“We’re seeing 22 percent of federal spending on the program is actually going to be eaten up by bureaucracy,” she said.

A CMS spokesman had no comment when CNBC asked about the blog post.

The large amount of spending devoted to administrative costs both in dollar terms and as a percentage of total ACA spending is a reflection of Obamacare’s “use of private health insurance for most of the coverage expansion,” said Woolhandler. Private insurance, she said, is “associated with high overhead costs.”

“The national average is about 13 percent,” Woolhandler said.

Her blog post noted that $172.2 billion, nearly two-thirds of total new ACA overhead spending, “will go for increased private insurance overhead,” in the form of insurers’ administrative costs and profits.

The remaining administrative overhead is due mainly to government programs, primarily from the cost of expanding Medicaid benefit coverage to previously ineligible poor adults, the blog post said.

“But even the added dollars to administer Medicaid will flow mostly to private Medicaid HMOs [health maintenance organizations],” the blog said.

“Traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage,” the blog said. “Indeed, dropping the overhead figure from 22.5 percent to traditional Medicare’s 2 percent would save $249.3 billion by 2022.”

Obamacare is designed to expand health coverage in three primary ways: the sale of private insurance plans on government-run marketplaces, with federal financial assistance available to most customers; allowing more poor adults to qualify for Medicaid than before; and allowing people under age 26 to stay on their parents’private insurance plans.

Woolhandler, like Himmelstein, is a proponent of a single-payer health system that would have the federal government insure all Americans. Both are co-founders of a leading advocacy group for that goal, Physicians for a National Health Program.

A single-payer system was not seriously debated in Congress before the implementation of the ACA. But advocates for such a scheme had argued that it would give “a bigger bang for your buck” than expanding coverage primarily through the use of private insurance, Woolhandler noted.

But until the CMS data came to light, she said, advocates could not point to official estimates of how much Obamacare would actually cost in terms of administrative overhead. If such an estimate had been available, it might have helped sway Congress to save the so-called public option for the ACA, she said.

The public option would have involved the government offering its own insurance coverage as one of the options for customers of government-run Obamacare exchanges, which currently offer only private insurance plans. The public option ended up being removed from the final ACA bill voted upon by Congress. 

Woolhandler said she expects the public option, like Medicare, would have had much lower overhead costs than private insurance.

She also said that the massive amount of money that will be spent on administrative overhead in Obamacare hobbles the law’s stated goal of providing expanded, affordable coverage to uninsured Americans.

“You’re getting less of it if you’re covering 22 percent in overhead,” she said.

If the program had much lower administrative overhead costs, then people insured under the ACA could have lower co-payment and deductibles as part of their insurance, she said.

Those costs, which a customer must personally pay out of their pocket before their plan covers a medical service, can lead people to avoid seeking health care because of financial concerns, Woolhandler said.

http://www.cnbc.com/id/102707721

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Obamacare to add billions in insurance overhead costs, study says

Single-payer system would save on administrative costs

By Russ Britt
Marketwatch, May 27, 2015

Obamacare will cost insurers more than a quarter of a trillion dollars in additional administrative costs by 2022, a new study released Wednesday says.

The findings published in Health Affairs magazine call for a universal single-payer system because it would reduce, rather than add, to administrative costs.

The report says that over the eight years through 2022, the Affordable Care Act will tack on $273.6 billion in overhead. Some of that will be added to Medicare and Medicaid programs, but the bulk of it — $172.2 billion — will be borne by private insurance. That total increase, in both government and private insurance programs, amounts to $1,375 for each newly insured person a year, or roughly 22.5% of total government expenditures.

“Insuring 25 million additional Americans, as the [Congressional Budget Office] projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seems awfully steep, particularly when much cheaper alternatives are available,” the report says.

It goes on to say: “Traditional Medicare runs for 2% overhead, somewhat higher than insurance overhead in universal single-payer systems like Taiwan’s or Canada’s. Yet traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage.”

The report is written by Drs. David Himmelstein and Steffie Woolhandler, both professors at the City University of New York School of Public Health and lecturers at Harvard Medical School. They say bloated administrative costs present in Medicare Advantage plans added 13.7% in overhead in 2011, or $1,355 per enrollee.

“But rather than learn from that mistake, both Democrats and Republicans seem intent on tossing more federal dollars to private insurers. Indeed, the House Republican’s initial budget proposal would have voucherized Medicare, eventually diverting almost the entire Medicare budget to private insurers,” the report says.

A universal single-payer system for the entire health-care system would have reduced overhead by $375 billion in 2012, according to one recent estimate.

http://www.marketwatch.com/story/obamacare-to-add-billions-in-insurance-overhead-costs-study-says-2015-05-27?link=MW_home_latest_news

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For more coverage, see the following:
“Obamacare’s $273 Billion Bonanza for Paper Pushers,” The Fiscal Times, May 28
“What’s Going on With Spending on Health Insurance Overhead?” The Wall Street Journal, Washington Wire blog, May 28.
“Overhead, administrative costs for health plans explode under the PPACA,” Becker’s Hospital Review, May 28
“Blog: Single-payer advocates tally ACA’s administrative burden,” Modern Healthcare, May 28

Is Blue Cross Blue Shield an illegal cartel?

Antitrust Lawsuits Target Blue Cross and Blue Shield

By Anna Wilde Mathews
The Wall Street Journal, May 27, 2015

Blue Cross and Blue Shield health insurers cover about a third of Americans, through a national network that dates back decades. Now, antitrust lawsuits advancing in a federal court in Alabama allege that the 37 independently owned companies are functioning as an illegal cartel.

A federal judicial panel has consolidated the claims against the insurers into two lawsuits that represent plaintiffs from around the country. One is on behalf of health-care providers and the other is for individual and small-employer customers.

The antitrust suits allege that the insurers are conspiring to divvy up markets and avoid competing against one another, driving up customers’ prices and pushing down the amounts paid to doctors and other health-care providers.

The suits, which name all of the Blue Cross and Blue Shield companies as defendants as well as the Blue Cross Blue Shield Association, have already survived the insurers’ first major legal challenge.

The Blue Cross and Blue Shield companies trace their roots to the 1930s, when hospital and doctor groups started insurance plans to help people pay for medical care. Hospital plans used the Blue Cross name, and the physician plans were sold under the Blue Shield banner. Eventually, the names were trademarked.

Today, the Blue Cross Blue Shield Association licenses the brands to the insurers that use them. Companies typically hold exclusive rights to the Blue Cross and Blue Shield names within a certain territory.

Most of the 37 Blue Cross and Blue Shield companies are not-for-profit. Many do business in a single state. The biggest Blue Cross and Blue Shield company is publicly traded Anthem Inc., which operates the plans in 14 states. In a few places, Blue-branded plans compete directly against one another, as in California, where Anthem Blue Cross battles Blue Shield of California.

“This is a model that has withstood scrutiny over our entire history,” said Scott Nehs, general counsel of the Blue association. “There’s no smoky room involved, there’s no dividing up.” Also, he said, the insurers’ rates are closely watched by state regulators.

The plaintiffs, however, allege that the Blue association is controlled by its members, who use it to engage in “illegal market division.” The customer suit says the association also limits the amount of insurance business insurers can do under non-Blue brands. The suit also alleges that the Blue agreements result in “inflated premiums.”

“You have less competition in a market, so prices are higher,” said William Isaacson, an attorney with Boies, Schiller & Flexner LLP, which represents the customer plaintiffs. “That’s one of the basics of antitrust law.”

The plaintiffs have “some surprisingly strong claims,” said Mark Hall, a professor at Wake Forest University School of Law. “It’s sort of antitrust law 101 that direct competitors can’t agree to divvy up their territory.”

http://www.wsj.com/articles/antitrust-lawsuits-target-blue-cross-and-blue-shield-1432750106

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Comment:

By Don McCanne, MD

Although this lawsuit is basically over whether or not the Blue Cross Blue Shield Association and its 37 licensees are functioning as an illegal cartel, its significance for those of us interested in health care reform is much deeper. Even the best of the private insurers can become corrupted when they operate under the rules of the free marketplace, which is quite a contrast to the rules under which a public program such as Medicare operates, or should operate.

This is not to say that government bureaucrats are never corrupt. Rather the point is that, whereas corrupt bureaucrats would be ferreted out and prosecuted for their illegal acts, the business world thrives on manipulating markets to serve their own interests. A government bureaucrat whose function it is to help citizens obtain and finance their health care is guided by an ethic that places the patient first, whereas an intermediary that creates a business entity designed to manage the money that flows within the health care system functions under an amoral business ethic.

The executives of the Blue Cross Blue Shield entities are not crooks. But look at the largest one of all – Anthem Blue Cross. Read any of its annual reports and the emphasis is primarily on enhancing investor value. Though most Blue Cross Blue Shield plans are nonprofit, they adopt the same innovations as the for-profits that are trying to gain an advantage in the competitive markets. In California, it is difficult to see any differences between the innovative leader – for-profit Anthem Blue Cross – and nonprofit Blue Shield of California that has adopted the same business innovations.

What about Medicare? The traditional Medicare program is subject to abuses by the health care providers – abuses which occur with private plans as well – but these abuses are prosecuted in the public sector whereas the private sector seems to consider them to be business as usual.

An example is the approach to current outrageous drug prices. Public programs such as Medicaid and the VA demand fair pricing in contrast to the modest marketplace discounts that protect the excessive profits of not only the pharmaceutical firms but also the intermediary pharmacy benefit managers. The latter is good business whereas the former is good governance. There is a difference.

Yet there is a serious problem that has crept into our Medicare program, and that is the expanding privatization of Medicare through the private Medicare Advantage plans. We have recited repeatedly the abuses of this industry stemming largely from their adherence to “good business practices” – behavior that covertly shortchanges the taxpayers who finance Medicare while enhancing profits for their passive investors.

It will be interesting to see if the courts determine the prohibition of geographic overlapping of the Blue Cross Blue Shield trademarks to be anticompetitive behavior. But do we really care? If we were to establish one uniform public program that covered everyone, this issue goes away.

Good health is a global goal

By Chiang Been Huang
Atlanta Journal Constitution, May 27, 2015

National health insurance has long been an issue of controversy among Americans. Even now, with Obamacare in place, Georgians and other U.S. citizens are divided as to its efficacy. Perhaps Taiwan’s experience with national health care can offer some perspective.

There was controversy when, in 2013, Georgia refused to expand the Medicaid program under the Affordable Care Act. The expansion would have provided an estimated 650,000 low-income Georgians with health coverage, with most of the funding provided by the federal government.

Taiwan’s single-payer National Health Insurance system enrolls more than 99 percent of the population, and around 93 percent of the country’s health care providers participate. Basic premiums, shared among the insured, employers and government, are calculated based on monthly salaries and a set premium scale.

Disadvantaged persons can have their premiums and co-payments subsidized or waived, if necessary. As the NHI has achieved universal coverage at an affordable cost, health care is not a financial burden for the public. These factors contribute to a system satisfaction rate of about 80 percent. In Georgia, by contrast, taxpayers bear the cost of care for the uninsured in public hospitals and emergency rooms.

Yet since its launch in 1995, the NHI has faced funding challenges. Rising user demand led to budgetary shortfalls, spurring the government to implement systemwide fiscal and structural reforms. In 2013, the government levied a 2 percent supplementary premium on capital gains and unearned income, a measure that contributed to the NHI’s newfound financial strength.

Another step in improving universal care was the adoption of the latest information technologies. The integrated circuit card, issued to all system users, functions as a link between patients and health care providers, giving quick, secure access to medical records. The smart card is also valuable in managing the spread of highly communicable diseases, such as SARS.

As time is of the essence when dealing with medical issues, in 2013, the NHI established PharmaCloud, a cloud-based database of patient pharmaceutical records accessible to health care providers. This undertaking has minimized the incidence of script duplication and over-prescription, as well as the risk of harmful drug interactions.

Buoyed by the cost and efficiency benefits of PharmaCloud, the NHI launched My Health Bank in 2014. In less than 10 minutes, users can access their full medical data from the past year. Designers hope easy access to personal records will help users develop an appreciation of healthier lifestyles.

An automated system for processing hospital claims and reimbursements contributes to the NHI’s administration costs of 1.07 percent of medical expenditures, the lowest in the world. The sizable database of claims, which boasts leading-edge, internationally certified information security, also allows the NHI to analyze trends and generate statistics.

Going forward, decreasing birth rates and rapidly aging populations are the order of the day. Taiwan is no exception to these global trends, and its shrinking youth demographic will have to shoulder a greater financial burden. When estimating future demand for health care, the factor of aging must be taken into account.

Looking at ways to improve public health and slow the rate of aging are two of the most important challenges facing the NHI in the 21st century and beyond.

Taiwan is committed to national and global good health. We are proud of our health care system, and we wish much future success to the Affordable Care Act and good health to the Georgians who subscribe to it.

Chiang Been Huang is minister of health and welfare for the Republic of China, Taiwan.

http://www.myajc.com/news/news/opinion/good-health-is-a-global-goal/nmPhN/#267d4b4c.3519149.735746

This article appeared in the print edition under the title “Insights from a single-payer system.”

New York Assembly passes the New York Health Act

Assembly passes universal health care bill

By Dan Goldberg 
Capital New York, May 27, 2015

The state Assembly on Wednesday voted for a single-payer health bill, the first time in more than two decades the chamber has taken up the measure.

The vote was 89-47, an overwhelming but largely symbolic step toward universal health insurance. The bill now heads to the Republican-controlled Senate where it is not expected to pass. 

Assemblyman Richard Gottfried, chair of the health committee, gave an impassioned speech on the floor in support of the New York Health Act, arguing that it was long past time for New Yorkers to rid themselves of the intrusive insurance companies whose goal is to deny claims rather than provide care.

The plan’s benefits, Gottfried said, would be more generous than any plan on the current market, and there would be no co-pays or deductibles.

One problem, pointed out by Republicans, is that the offering, while generous, is the opposite of what public health officials are pushing, including those in the Cuomo administration, who have professed that insurance systems, and high deductibles and co-pays help ensure people use the health system judiciously instead of opting for more, often unnecessary, care.

“There is a role for insurance companies,” state health commissioner Dr. Howard Zucker said Wednesday before the debate.

The passing of the Affordable Care Act, which subsidizes private insurance for people below a certain income level, was a valid effort, Gottfried said, but ultimately served to highlight why the system needs to be entirely scrapped.

“I think the A.C.A. has made it clear to people … there are profound problems in our health care system that cannot be addressed by incremental change in that system,” Gottfried said.

http://www.capitalnewyork.com/article/albany/2015/05/8568890/assembly-passes-universal-health-care-bill?top-featured-2

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Comment:

By Don McCanne, MD

Although there remains considerable political resistance to the concept of a universal public health insurance program, the fact that Richard Gottfried’s New York Health Act passed the Assembly by such a wide margin, 89-47, shows that there is very strong support for single payer reform amongst many politicians and the voters who support them.

The policies incorporated in a publicly-administered and publicly-financed single payer model of health care financing are vastly more efficient and effective than a fragmented, multi-payer model such as that perpetuated by the Affordable Care Act. But better policy alone does not equate with an improved understanding of the models. That is why coalitions, education, and grassroots support is so important. These activities in New York undoubtedly contributed to moving the bill through the Assembly.

In an email message, Mark Dunlea, co-founder of Single Payer New York, listed coalition members supporting the New York Health Act:

“New York Health has been endorsed by the NYS Academy of Family Physicians, NYS American Academy of Pediatrics, NYS Nurses Association, Committee of Interns and Residents, Doctors Council SEIU, NY chapter of Physicians for a National Health Program, SEIU 1199, NYS AFL-CIO, Communications Workers of America, Amalgamated Transit Union Local 1056 and 1179, United Auto Workers 9 & 9A, UFCW Local 1500, Capital District Area Labor Federation, Local 32BJ SEIU, NYSUT, United Federation of Teachers, Working Families Party, Green Party, Citizen Action, StateWide Senior Action Council, NYPIRG, League of Women Voters, and others.”

Those of us at Physicians for a National Health Program are particularly proud of the contribution of the New York Metro chapter of PNHP.

The lesson is clear. The health policies enacted through the Affordable Care Act, though of some limited benefit, are grossly inadequate when considering the need that exists. When people understand that there is a far better option, they will support it. Obviously we have much more work to do, so it is imperative that we step up our efforts in educating the public and in mobilizing grassroots efforts through coalition activities.

N.Y. Assembly passes universal health care bill

By Dan Goldberg
Capital New York, May 27, 2015

The state Assembly on Wednesday voted for a single-payer health bill, the first time in more than two decades the chamber has taken up the measure.

The vote was 89-47, an overwhelming but largely symbolic step toward universal health insurance. The bill now heads to the Republican-controlled Senate where it is not expected to pass. 

Assemblyman Richard Gottfried, chair of the health committee, gave an impassioned speech on the floor in support of the New York Health Act, arguing that it was long past time for New Yorkers to rid themselves of the intrusive insurance companies whose goal is to deny claims rather than provide care.

“You do not have to be an Einstein to understand New York Health is the right choice for New York,” Gottfried said.

Gottfried, a Democrat from Manhattan, spent the legislative session barnstorming the state, trying to gain support for his bill, which would be funded through a progressive income tax and payroll assessments. There would be a net savings of $45 billion in health spending by 2019, Gottfried said, based on an analysis from Dr. Gerald Friedman, a professor at the University of Massachusetts at Amherst, though that figure was attacked by Republicans.

The bill, Gottfried said, would lower costs by getting rid of insurance companies. It would lower administrative costs and allow doctors to focus their time on treating patients instead of fighting for reimbursements.

“What will bring down health care costs is taking out of the equation the more than 20 percent we now spend on administrators whose job it is to fight with insurance companies,” he said.

The plan’s benefits, Gottfried said, would be more generous than any plan on the current market, and there would be no co-pays or deductibles. The bill would also require a care coordinator for every member, though that coordinator is not empowered to choose the type of care a patient receives.

For some Republicans, it was all too good to be true. 

“This bill promises remarkable things for New York State residents,” said Assemblyman Andy Goodell, a Republican from Chautauqua. “It says providers, ‘you’ll be paid a lot more money,’ and it says to the employees ‘you’ll contribute a lot less money,’ and it says to the patients ‘you’ll have much broader access,’ and to the employers ‘you’ll pay $45 billion less.’ My background is in math and economics and I haven’t been able to figure out how this all works. … There is no free lunch, there is no free health care.”

Leslie Moran, spokeswoman for the New York Health Plan Association, which represents insurers, said the bill “represents an unrealistic, utopian view of a universal health care system where everyone would be covered, everything would be covered and the system would magically pay for it all.”

One problem, pointed out by Republicans, is that the offering, while generous, is the opposite of what public health officials are pushing, including those in the Cuomo administration, who have professed that insurance systems, and high deductibles and co-pays help ensure people use the health system judiciously instead of opting for more, often unnecessary, care.

“There is a role for insurance companies,” state health commissioner Dr. Howard Zucker said Wednesday before the debate.

The last time a universal health care bill was on the Assembly floor was 1992. It passed but the debate was sidelined because of federal efforts to reform health care, which ultimately failed under the Clinton administration. 

The passing of the Affordable Care Act, which subsidizes private insurance for people below a certain income level, was a valid effort, Gottfried said, but ultimately served to highlight why the system needs to be entirely scrapped.

“I think the A.C.A. has made it clear to people … there are profound problems in our health care system that cannot be addressed by incremental change in that system,” Gottfried said.

Wiping out an industry — even the insurance industry — was not seen as popular by many Republicans who worried about the loss of jobs and what might happen should this plan fail.

Goodell asked why the state should go down this road when when Medicaid — a government run insurance program for lower-income residents — is expensive, burdensome and not well liked.

“Why would we want to expand that type of approach,” he asked.

Gottfried responded that his bill would improve Medicaid by putting everyone into one pot. He would, he said, eliminate the two-tiered system. There’d be no greater risk of fraud under this law than in the current Medicaid program.

Republicans also pointed out how much was left to be done. The income tax rates have yet to be decided, but would likely cost the highest earners more than they currently pay for health insurance, while subsidizing lower income residents.

The analysis provided by Gottfried estimates no income tax on the first $25,000, an income tax of 9 percent on income between $25,0001 and $50,000, graduating to 16 percent tax for income over $200,000.

The legislation is also not specific on how to deal with residents of New York State who retire to another state.

That would have to be resolved at a later date, Gottfried said.

“Though we have numerous pages on this legislation, we have numerous holes also,” said Al Graf, a Republican from Holbrook. “There is no way I can go back to my constituents and tell them you may have coverage in the future. … This is an exercise in insanity.”

Moran said there is no certainty that providers would accept government set reimbursement, though Gottfried said almost all would receive more for their services than they are currently being paid.

The bill also “completely disregards the economic contribution of health plans — both to the state and to local communities,” Moran said.

Joseph Borelli, a Republican from Staten Island, cited Vermont, which tried and failed to enact a single-payer health system.

Vermont’s collapse has been a cautionary tale for even the most enthusiastic supporters of government sponsored health insurance, but Gottfried was having none of it.

“New York … bears no resemblance to Vermont,” Gottfried said. “The bill bears very little resemblance to Vermont. Their financing system is different. The two have absolutely nothing to do with one another, nothing! Why don’t you ask me whether New York will flood Just like Texas flooded if we enact this plan. The weather in Texas has as much to do with this as Vermont does.”

Read the bill here: http://bit.ly/1JVUg1I

http://www.capitalnewyork.com/article/albany/2015/05/8568890/assembly-passes-universal-health-care-bill

N.Y. Assembly votes for universal health coverage

By Michael Virtanen, Associated Press
Democrat & Chronicle (Rochester, N.Y.), May 27, 2015

ALBANY – The New York Assembly voted 89-47 on Wednesday for legislation to establish publicly funded universal health coverage in a so-called single payer system.

All New Yorkers could enroll. Backers said it would extend coverage to the uninsured and reduce rising costs by taking insurance companies and their costs out of the mix.

With no patient premiums, deductibles or co-payments for hospital and doctor visits, testing, drugs or other care, New York Health would pay providers through collectively negotiated rates. It would be funded through a progressive payroll tax paid 80 percent by employers and 20 percent by employees.

Also, waivers would be sought so federal funds now received for New Yorkers in Medicare, Medicaid and Child Health Plus would apply.

“Employers are shifting more and more health care costs to workers or are dropping it entirely,” said Assemblyman Richard Gottfried, chief sponsor. “The only ones who benefit are the insurance companies.”

The Manhattan Democrat estimated universal care would save New Yorkers more than $45 billion annually, cutting the statewide total cost for health care to about $255 billion in 2019.

Assembly Republicans doubted Gottfried’s estimate and questioned what would happen to everyone now employed by insurance companies.

“All I can say right now I think this is the last think New York state needs as far as an additional cost,” said Assemblywoman Jane Corwin, an Erie County Republican. She said they’re still trying to grapple now with the cost of the federal Affordable Care Act. That extended health care coverage to about 1 million New Yorkers, more than half in Medicaid and the others in private insurance with possible tax subsidies to offset costs.

An identical bill hasn’t advanced in the state Senate and isn’t expected to before the legislative session ends in June. Senate Health Committee Chairman Kemp Hannon said Wednesday that Gottfried’s bill faces two major hurdles, resistance from senior citizens to giving up Medicare for a new state program and obtaining federal waivers to apply Medicaid and Medicare funding to support it.

http://www.democratandchronicle.com/story/news/local/2015/05/27/assembly-passes-universal-coverage/28046359/

The bureaucratic waste of ACA quantified

The Post-Launch Problem: The Affordable Care Act’s Persistently High Administrative Costs

By David Himmelstein and Steffie Woolhandler
Health Affairs Blog, May 27, 2015

Last year we, and many others, drew attention to the chaotic and costly roll out of the Affordable Care Act’s (ACA) exchanges. The chaos is mostly over (unless King prevails over Burwell), but the costs will linger on. The roughly $6 billion in exchange start-up costs pale in comparison to the ongoing insurance overhead that the ACA has added to our health care system — more than a quarter of a trillion dollars though 2022.

Bloated Administrative Costs

Between 2014 and 2022, CMS projects $2.757 trillion in spending for private insurance overhead and administering government health programs (mostly Medicare and Medicaid), including $273.6 billion in new administrative costs attributable to the ACA. Nearly two-thirds of this new overhead — $172.2 billion — will go for increased private insurance overhead.

Most of this soaring private insurance overhead is attributable to rising enrollment in private plans which carry high costs for administration and profits. The rest reflects the costs of running the exchanges, which serve as brokers for the new private coverage and will be funded (after initial startup costs) by surcharges on exchange plans’ premiums.

Government programs — primarily Medicaid — account for the remaining $101.4 billion increase in overhead. But even the added dollars to administer Medicaid will flow mostly to private Medicaid HMOs, which will account for 59 percent of total Medicaid administrative costs in 2022. (The subcontracting of Medicaid coverage to private HMOs has nearly doubled Medicaid’s administrative overhead, which has risen from 5.1 percent of total Medicaid expenditure in 1980 to 9.2 percent this year).

The $273.6 billion in added insurance overhead under the ACA averages out to $1,375 per newly insured person per year, or 22.5 percent of the total federal government expenditures for the program.

Better Options

Insuring 25 million additional Americans, as the CBO projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seem awfully steep, particularly when much cheaper alternatives are available.

Traditional Medicare runs for 2 percent overhead, somewhat higher than insurance overhead in universal single payer systems like Taiwan’s or Canada’s. Yet traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage. Indeed, dropping the overhead figure from 22.5 percent to traditional Medicare’s 2 percent would save $249.3 billion by 2022.

The ACA isn’t the first time we’ve seen bloated administrative costs from a federal program that subcontracts for coverage through private insurers.  Medicare Advantage plans’ overhead averaged 13.7 percent in 2011, about $1,355 per enrollee. But rather than learn from that mistake, both Democrats and Republicans seem intent on tossing more federal dollars to private insurers. Indeed, the House Republicans’ initial budget would have voucherized Medicare, eventually diverting almost the entire Medicare budget to private insurers (the measure passed by the House on April 30 dropped the “premium support” voucher scheme).

In contrast, a universal single payer system would pare down both insurers’ and providers’ overhead, yielding huge administrative savings — $375 billion in 2012 according to one recent estimate.

In health care, public insurance gives much more bang for each buck.

http://healthaffairs.org/blog/2015/05/27/the-post-launch-problem-the-affordable-care-acts-persistently-high-administrative-costs

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Comment:

By Don McCanne, MD

Although there are innumerable major problems with having used the Affordable Care Act to reform health care, one of the more significant deficiencies that we pointed out well in advance was that the design would add significantly to the excessive administrative burden that already characterized the U.S. health care system. This study quantifies that additional burden.

These additional administrative costs amount to $1,375 per newly insured person per year, an astonishing 22.5 percent of the total federal government expenditures for the program. Between 2014 and 2022, $273.6 billion in new administrative costs will be attributable to ACA.

The two primary goals of those involved in reforming health care were to expand coverage to everyone (well, almost everyone) and to control health care spending. Because of design defects, tens of millions will be left uninsured, and tens of millions more will be have inadequate coverage, leaving them vulnerable to health care costs — certainly falling short of what should have been our goals in expanding coverage.

Regarding controlling spending, the experimental innovations to date have had little impact in reducing wasteful spending but rather seem to have slowed health care costs by erecting financial barriers to beneficial health care services. Not only did the designers fail to use this opportunity to reduce the profound administrative waste unique to the U.S. health care financing system, they added significantly to this waste, as this study demonstrates.

Single payer would fix these problems. Administrative waste would be dramatically reduced and the savings would be used to expand coverage to absolutely everyone while eliminating financial barriers to care. We simply need the political resolve to do it.

Health care advocates here seek single-payer plan

Legislation could provide alternative under the ACA

By Kendall Heintzelman
Spokane (Wash.) Journal of Business, May 7, 2015

The contested issue of health care coverage and how insurance options will be dictated by employers has a possible solution found in legislation written by Health Care for All-Washington that could go into effect in 2017. 

HCFA-WA is an organization that advocates for the reform of comprehensive health care coverage for Washington residents. It’s campaigning for legislation that would create the Washington Health Security Trust, which would be a single public trust fund dedicated to paying for a defined set of health services for residents. 

Dr. Daniel Schaffer is a primary care physician in Spokane who has worked at Sacred Heart and Holy Family Hospital. He and Lynnette Vehrs, a registered nurse who has taught as a clinical instructor at Washington State University, are organizers and advocates for the local chapter of HCFA-WA. 

Vehrs says the goal with HCFA is “educating the public and the business community” about alternatives to health care financing. 

She and Schaffer say HCFA evolved into an association in Washington as a way to pass the health security trust legislation, which was written years ago. They both assert that the trust would be beneficial to employers who struggle with shortcomings in the present health care system, such as rising insurance prices and inadequate coverage leading some people to go without.  

Schaffer says health care in the United States has become something of a burden for employers. He says he wants to see health care as more of an infrastructure, so it is fundamental to all citizens. 

“Consider health care as an infrastructure and it’ll work better,” he says. 

Schaffer describes the current form of health care in this country as “insurance-controlled health care.” He says many people have inadequate health coverage because insurance makes it too costly. Insurance companies lack transparency as well, says Schaffer, and he says the WHST bill seeks to improve transparency. 

Schaffer says health care coverage wasn’t intended to be carried on the back of employers, but that is how it has evolved. 

Vehrs says employers have to spend a significant amount of time finding a health plan for employees, and says the WHST looks to improve this issue. 

The Affordable Care Act allows states to opt out of the federal health care system by 2017 if they come up with their own equal or better method of paying for health care. HCFA-WA is trying to do that with the WHST. Under the WHST, the money spent on health insurance and health care would be put into a trust. The trust would cover health care for all Washington residents without additional revenue, asserts Schaffer, because it would put a cap on the overhead costs of private insurance agencies. 

Currently, private insurers have a built in overhead of 20 percent to 25 percent, says Schaffer. The WHST would limit that overhead to less than 10 percent. 

This would take away high deductibles and copays, says Schaffer, and without these added expenses, employees would be more likely to visit the doctor rather than waiting to see if health symptoms worsen or subside. 

The WHST seeks to provide a defined set of benefits regardless of health or employment status, providing something of a uniform health plan for employees, and therefore Schaffer says an employer “could opt to just not deal with health care at all,” as it already would be covered. 

Employers could still provide supplemental insurance for their employees if they wished, he says, but it wouldn’t be necessary. 

Under the WHST, the amount of money being allocated to health care would be reduced because what would be needed in the public fund would cost less than paying for private insurance agencies, proponents say. 

Schaffer says Massachusetts, Vermont, Colorado, Oregon, and California have similar legislation written or are looking to do the same. He says he hopes this form of health care to will reach a federal level in the future. 

http://www.spokanejournal.com/special-report/health-care-advocates-here-seek-single-payer-plan/