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Does $760m a year of industry funding affect the FDA’s drug approval process?

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Does $760m a year of industry funding affect the FDA’s drug approval process?

A study out this week indicates that new “black box” warnings and safety withdrawals have increased since the drug approval process was changed

By Sydney M. Wolfe, M.D.
The BMJ, Aug. 5, 2014

In 1992, because of widespread concern that the US Food and Drug Administration was taking too long to approve drugs, the Prescription Drug User Fee Act (PDUFA) was enacted, authorizing the FDA to collect user fees from drug companies to expedite the approval process. Besides providing funding for an increased FDA staff, the act established performance goals during the approval process to ensure more rapid review.

As of the current fiscal year (October 2013 to September 2014), $760m (£450m; €570m) in drug industry money is allocated to the FDA’s Center for Drug Evaluation and Research, comprising a large proportion, more than 60%, of the center’s drug review expenditure.[1]

The hypothesis posed in a study published this week was that “new black-box warnings and safety withdrawals have increased following PDUFA’s enactment, perhaps as a result of an expedited review process that may not adequately detect serious drug safety problems in the preapproval period.” This was the first study to look at all FDA drug approvals for a long enough time before and after the enactment to examine this question.[2]

The study involved the 748 new molecular entity drugs approved by the FDA between 1975 and 2009. The principal finding was that “drugs approved after the act’s passage [from 1993 to 2009] were more likely to receive a new black-box warning or be withdrawn than drugs approved before its passage (26.7 per 100.0 drugs versus 21.2 per 100.0 drugs at up to sixteen years of follow-up,” a statistically significant 25% increase in the rate of such safety actions.

In the case of drugs withdrawn from the market, the average review time for those approved before PDUFA was around three years, but this had fallen sharply to one year for the post-PDUFA drugs. After PDUFA was passed, the number of approvals of new molecular entity drugs rose dramatically, with 92 approved in 1996 and 1997 combined, considerably more than in any other two year period from 1975 to 2009.[3] Of the 39 new drugs approved in 1997, a fifth (eight) were eventually withdrawn for safety reasons, considerably more than in any year in the 1975 to 2009 interval encompassed by this study.[2] These eight withdrawn drugs were three fluoroquinolone antibiotics, one appetite suppressant, one antidiabetes drug, one statin, one non-steroidal anti-inflammatory drug, and one antihypertensive drug—none arguably breakthrough drugs.

Although the study found that the faster post-PDUFA drug approvals were associated with a higher rate of subsequent safety withdrawals and black box warnings, it could not establish a causal connection between the funding aspects of PDUFA and the increased dangers of these outcomes.

However, coinciding with the original law and its renewal every five years have been legislative changes that often outline specific steps or pathways toward faster drug approval. One such change has given the FDA the authority to mandate post-approval studies to resolve safety issues that have arisen during the pre-approval review of a drug. There is therefore concern that one reason for the outcomes documented in this new study is that the shorter review times—combined with increased FDA authority to require further studies after approval, rather than settling safety issues before approval—have contributed to the increased rate of withdrawals and black box warnings.

In a survey of FDA physicians who review drugs (medical officers) conducted in 1998, by which time the PDUFA effect had clearly sunk in, many of the 53 respondents expressed concern that drugs they thought should not have been approved had been, despite negative safety conclusions. Respondents thought that standards of safety and efficacy had been weakened since the passage of the law. Nineteen medical officers identified a total of 27 approved new drugs in the past three years that they reviewed that they thought should not have been approved. Most of these medical officers said that current FDA standards were “lower” or “much lower” than previous ones. Twelve medical officers identified 25 new drugs that they reviewed in the past three years that in their opinion had been approved too fast.[4]

The most important preventive remedy for this post-PDUFA increase in safety withdrawals and black box warnings would be to restore more thorough reviews of the majority of approved drugs that clearly do not represent a therapeutic breakthrough. For the smaller proportion of drugs that appear to represent important advances, a shorter approval time, without compromising standards of safety or efficacy—as occurred in the case of approval of the antiviral zidovudine, a long time before the PDUFA—is appropriate.

But because these much needed changes have not yet occurred at the FDA, the principle of caveat emptor (and caveat prescriber) must be applied. An important conclusion of the new study was that patients should delay using any new non-breakthrough drug until it has been on the market for several years and is thereby less likely to be subject to a safety withdrawal or a new black box warning. An article published several years ago discusses the “seven year rule,” referring to the suggestion that in the case of drugs that aren’t breakthroughs—the majority of drugs approved—it is safer to wait at least seven years after approval before using them. Even though subsequent withdrawals and new safety warnings beyond seven years will still occur, older alternative drugs are, on average, safer.[5]

The answer to the question in the title of this article seems to be yes, but the source of the impact on the approval process goes beyond the massive drug industry funding itself and is likely to be related to many of the legislative, regulatory, and attitudinal changes that have inevitably accompanied PDUFA and its renewal every five years.

Sidney M Wolfe (Swolfe@citizen.org) is founder and senior adviser, Health Research Group at Public Citizen, Washington, DC, USA.

Notes

Cite this as: BMJ 2014;349:g5012

Footnotes

    Competing interests: I am a coauthor of the Health Affairs article on which this article was based.

    Provenance and peer review: Commissioned; not externally peer reviewed.

References

  1. Food and Drug Administration. FY 2015: justification of estimates for appropriations committees. www.fda.gov/downloads/aboutfda/reportsmanualsforms/reports/budgetreports/ucm388309.pdf.
  2. Frank C, Himmelstein DU, Woolhandler S, Bor DH, Wolfe SM, Heymann O, et al. Era of faster FDA drug approval has also seen increased black-box warnings and market withdrawals. Health Affairs2014;33:1453-9.
  3. Food and Drug Administration. CDER new drug review: 2012 update. www.fda.gov/downloads/aboutfda/centersoffices/officeofmedicalproductsandtobacco/cder/ucm331454.pdf.
  4. Lurie P, Wolfe SM. FDA medical officers report lower standards permit dangerous drug approvals. Dec 1998. www.citizen.org/Page.aspx?pid=2339.
  5. Wolfe SM. The seven-year rule for safer prescribing. Aus Prescrib 2012;35:138-9.

This is an Open Access article distributed in accordance with the Creative Commons Attribution Non Commercial (CC BY-NC 3.0) license, which permits others to distribute, remix, adapt, build upon this work non-commercially, and license their derivative works on different terms, provided the original work is properly cited and the use is non-commercial. See: http://creativecommons.org/licenses/by-nc/3.0/.

http://www.bmj.com/content/349/bmj.g5012

Both Medicaid and uninsured patients face disparities in care of deadly cancers

Disparities in Stage at Diagnosis, Treatment, and Survival in Nonelderly Adult Patients With Cancer According to Insurance Status

By Gary V. Walker, Stephen R. Grant, B. Ashleigh Guadagnolo, Karen E. Hoffman, Benjamin D. Smith, Matthew Koshy, Pamela K. Allen and Usama Mahmood
Journal of Clinical Oncology, August 4, 2014

Abstract

Purpose 

The purpose of this study was to determine the association of insurance status with disease stage at presentation, treatment, and survival among the top 10 most deadly cancers using the SEER database.

Patients and Methods 

A total of 473,722 patients age 18 to 64 years who were diagnosed with one of the 10 most deadly cancers in the SEER database from 2007 to 2010 were analyzed. A Cox proportional hazards model was used for multivariable analyses to assess the effect of patient and tumor characteristics on cause-specific death.

Results 

Overall, patients with non-Medicaid insurance were less likely to present with distant disease (16.9%) than those with Medicaid coverage (29.1%) or without insurance coverage (34.7%; P < .001). Patients with non-Medicaid insurance were more likely to receive cancer-directed surgery and/or radiation therapy (79.6%) compared with those with Medicaid coverage (67.9%) or without insurance coverage (62.1%; P < .001). In a Cox regression that adjusted for age, race, sex, marital status, residence, percent of county below federal poverty level, site, stage, and receipt of cancer-directed surgery and/or radiation therapy, patients were more likely to die as a result of their disease if they had Medicaid coverage (hazard ratio [HR], 1.44; 95% CI, 1.41 to 1.47; P < .001) or no insurance (HR, 1.47; 95% CI, 1.42 to 1.51; P < .001) compared with non-Medicaid insurance.

Conclusion 

Among patients with the 10 most deadly cancers, those with Medicaid coverage or without insurance were more likely to present with advanced disease, were less likely to receive cancer-directed surgery and/or radiation therapy, and experienced worse survival.

http://jco.ascopubs.org/content/early/2014/08/01/JCO.2014.55.6258.abstract

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Comment:

By Don McCanne, MD

Clearly, insured patients with one of the most deadly cancers have better outcomes than uninsured patients. Of concern is that this study shows that patents on Medicaid do not do much better than uninsured patients. What can we make of this?

Medicaid coverage is limited to low-income populations. These people have many other problems that can result in impaired access and impaired outcomes – conceivably enough to explain these differences. However, Medicaid also may result in impaired access because of a lack of an adequate number of physicians who are willing to care for Medicaid patients. This is particularly true of specialists, such as oncologists who would otherwise care for these patients with the most deadly cancers. Impaired access due to a lack of willing providers applies to both uninsured and Medicaid patients. That is not true for either privately insured or Medicare patients.

Under a well designed single payer system – an improved Medicare for all – physicians would not cull patients out of their practices merely because they were on Medicaid or uninsured. Enacting single payer would allow us to remove barriers based simply on the type of insurance coverage or lack thereof. That would then allow us address other important societal issues that result in impaired access, delayed or forgone management, and impaired survival.

Although this study will be used by opponents as an excuse not to fund Medicaid based on the fact that Medicaid patients did not do much better than the uninsured, we cannot allow them to discount the other factors faced by low-income patients that undoubtedly played a greater role in these disparate outcomes. Many other studies have shown that Medicaid patients definitely fare better than the uninsured. Until we can enact and implement a single payer system, it is imperative that Medicaid continue to be offered as an interim measure.

First person perspective: Lobbying for single-payer health care

By Burkely Hermann
Citizen Vox blog (Public Citizen), Aug. 7, 2014

Lobbying usually gets a bad rap, and sometimes for good reason: it can be part of corporate special interest money’s current corruption of the political system. But during the first-ever national Single-Payer Lobby Day events in May, real people lobbied for a good cause that benefited the general public, not just a wealthy few.

As Congress’ August recess approaches and activists prepare to make in-district visits with their lawmakers’ offices, now is a good opportunity to recall my experience lobbying for single payer.

As an undergraduate student who is currently interning with Public Citizen, I participated in the second day of events, which kicked off with a training for participants. I saw many different faces in the room, which was filled with about 75 people, ranging from nurses, who are part of National Nurses United, physicians who are members of Physicians for a National Health Program (PNHP), union leaders fighting for healthcare justice and concerned citizens who want a universal and inclusive health care system.

Next was an informational panel featuring single-payer advocates, labor leaders and physicians railing against the unjust lack of coverage, administrative waste caused by billing multiple insurance companies and urging Congress to pass a Medicare-for-all single-payer health care system. Representatives Jim McDermott (D-Wash.) and John Conyers (D-Mich.) also spoke to participants about their single-payer bills, H.R. 676 and H.R. 1200. Rep. McDermott focused on building on the existing reforms put in place by the Affordable Care Act, while Conyers advocated directly for single payer.

Participants in the lobby meetings spoke of single payer as a fair and comprehensive solution to the many shortcomings of the Affordable Care Act (ACA). I joined my fellow Marylander single-payer lobbyists, consisting of physicians, labor leaders, concerned citizens and a dietician. A member of PNHP, which advocates for a national single-payer health care system, led our lobbying team, but the group still made decisions collectively.

For each lobby meeting, different members of our group took different roles. The group’s deepest strength was the diversity of stories told in favor of single payer. A nurse who worked in D.C. talked about how, even under ACA, health care was not affordable and told a story of how her colleague didn’t bring her kids to the doctor because she already owed the doctor a co-pay. An elderly private citizen recalled being treated by Austria’s single-payer health care and explained how she wanted the same sort of system in the U.S. A single-payer activist talked about surveys conducted by his organization, Healthcare-NOW! of Maryland, showing that a majority of those living in 10 of Maryland’s counties support single-payer health care. Other individuals, like the labor leaders and seniors, stated that they were glad they had Medicare and wanted to expand it to others.

Our main message was simple: to have a health care system based on human need, not profit, and which would cover everyone, including undocumented immigrants, from birth until death.

We visited five different House offices and two Senate offices. In most instances, representatives’ or senators’ staff members met with our lobbying group to hear our stories about why we support a single-payer health care system. We also had the opportunity to meet directly with Rep. Chris Van Hollen (D-Md.), who made an impromptu stop by our scheduled meeting with his staffers. When asked by our group about support of single-payer legislation, he was not able at the time to provide an answer as to whether he would lend his support for single-payer health care in the future (though he made an important point about Republican governors denying Medicaid expansion money).

The lobby day highlighted the solidarity between doctors, concerned citizens, labor leaders and others around a common cause. It was exciting and empowering to see that my fellow group members were willing to engage in action to support something they cared about.

While the two days of events helped shine an important light on the need for single payer, many of the offices we met with stated that their current task was to defend the recent health care reforms from political attacks.

People are “mad as hell” about the current health care system, built around greed, not human need, and pushing for a single-payer system is the antidote. That sentiment is why it’s so imperative that citizen activists contact their members of Congress and Senators about the urgent need to implement a national single-payer system. If concerned citizens and activists from multiple organizations can lobby lawmakers, sometimes face-to-face, then so can you.

To start this process, sign up to let us know you’re interested in lobbying your member of Congress during the August recess.

Burkely Hermann is a summer intern for Public Citizen’s Congress Watch division and part of Public Citizen’s Online Action Team.

http://www.citizenvox.org/2014/08/07/first-person-perspective-lobbying-for-single-payer-healthcare/

Study questions value of some home health providers

By Lois A. Bowers
Long-Term Living, Aug. 7, 2014

Should for-profit home health agencies continue to receive Medicare reimbursement for the services they provide? That’s the question authors of a new study published in Health Affairs are asking after they found that the entities scored slightly but statistically significantly worse on some quality indicators compared with their nonprofit counterparts.

The authors, from the City University of New York (CUNY), analyzed cost reports filed with Medicare by more than 7,000 home health agencies in 2010-2011 as well as data related to 22 quality measures from Medicare’s Home Health Compare database covering more than 9,000 agencies. They found higher per-patient and administrative costs, slightly lower-quality care and less avoidance of hospitalization among the for-profit entities. Overall cost per patient was $1,215 higher at for-profits, with operating costs accounting for $752 of the difference and excess profits for $463. For-profits also reported many more speech, physical and occupational therapy visits, which are often highly profitable under the complex Medicare payment formula, than the nonprofits, according to the researchers.

When it came to care, on average, the for-profits met each quality standard 77.2 percent of the time, whereas the nonprofits met them 78.7 percent of the time. Rehospitalizations occurred in 28.4 percent of for-profit patients versus in 26.5 percent of nonprofit patients.

Medicare spent $18 billion on home care in 2012, the most recent year for which figures are available, say the study authors, who note that 88 percent of agencies are for-profit and they care for 81 percent of Medicare home care patients.

“While our study is the first to show that profit-making has trumped patient care in Medicare’s home health program, that’s no surprise,” says lead author William Cabin, PhD, MPH, MSW, JD, MA, an assistant professor of social work at Temple University who undertook the study as part of his doctoral work at CUNY. “A large body of research on hospitals, nursing homes, dialysis facilities and HMOs has shown that for-profits deliver inferior care at inflated prices.”

Senior author Stephanie “Steffie” Woolhandler, MD, MPH, a professor of public health at CUNY’s Hunter College and a lecturer at Harvard Medical School, says: “Letting for-profit companies into Medicare was a huge mistake that Congress needs to correct.”

Lois Bowers is senior editor at Long-Term Living.

http://www.ltlmagazine.com/news-item/study-questions-value-some-home-health-providers

Not all health care systems are created equal

By Ann Troy, M.D.
Pacific Sun (San Rafael, Calif.), Letters, Aug. 7, 2014

Congress created Medicare 49 years ago to provide seniors with health care, protection against financial ruin and peace of mind. All you needed was proof of age, citizenship (or legal residency) and you were covered. It was so simple and straightforward that all seniors were enrolled in six months, in the pre-computer era—using index cards!

Congress could have and should have extended Medicare to cover all Americans, creating a single-payer system with free choice of doctors and hospitals. Instead, they passed the hopelessly complex Affordable Care Act with its malfunctioning websites and uneven coverage. It has kept the wasteful and bureaucratic insurance industry in health care, wreaked havoc on the health care system, left millions uninsured and millions more with woefully inadequate coverage.

It could be argued that by not extending Medicare to cover all Americans, the government is not providing equal protection under the law.

It is well known that people without insurance or with high deductibles wait longer to seek medical care, thus, their illnesses or problems become more difficult to treat. They suffer more from injuries and disabilities, resulting in decreased productivity and poorer quality of life. They face financial hardships or ruin (50 percent of bankruptcies in the United States are due to medical debt). And, sometimes they die because they have no insurance (an estimated 50,000 every year).

Those with Medicare have more protection against the devastating effects of illness and injury, get more help overcoming or living with disabilities and are protected against financial ruin.

“Equal protection” has been used, with some success, to improve access to education and to allow same-sex couples to marry. It seems that an even stronger case can be made regarding access to health care -— which is considered a right in every other developed nation.

Dr. Ann Troy resides in San Anselmo.

http://www.pacificsun.com/opinion/letter-it-is-well-known-that-people-without-insurance/article_e4419b8a-1dab-11e4-8689-0017a43b2370.html

ACA plan renewal leads to rate shock and delayed tax refunds

An Ounce Of Prevention For The ACA’s Second Open Enrollment

By Jon Kingsdale and Julia Lerche
Health Affairs Blog, August 4, 2014

Since recovering from its flawed rollout, the ACA has enjoyed a string of successes. By April, some eight million Americans managed to enroll.

Approximately 87 percent of Marketplace enrollees claimed premium tax credits, of which an estimated 85 percent, or six million, actually paid premiums. Many of the original six million, plus more recent enrollees, will experience their second enrollment between November 15, 2014 and February 15, 2015. They will also file with the IRS for a premium tax credit as early as January 2015.

The two events in combination represent a huge risk.

However, moderate rate actions, and even rate decreases, can translate into huge, net (after-subsidy) rate hikes. This is one of the challenges that Marketplaces and other stakeholders must anticipate and address. The other potential crisis for enrollees, coinciding with the last month of open enrollment, is filing for their 2014 tax refunds; while most high-income filers with complex returns file in March, April or later, many low-to-moderate-income taxpayers who anticipate a refund file by February. But doing so in 2015 may be impossible. If not addressed, rate shock followed by refund delays will deliver a one-two punch.

I. Rate Shock

Premium subsidy calculations are based on household income and the benchmark premium (second-lowest-cost silver plan) available to each household. For the benchmark plan, a subsidy-eligible enrollee’s monthly contribution is based solely on the household’s modified adjusted gross income (“MAGI”); but for any other qualified health plan, the subsidized enrollee’s contribution is based on MAGI plus/minus the difference in premium between that plan and the benchmark.

There is a very high likelihood that the price and identity of the benchmark plan will change from year to year, as issuers adjust premiums, offer new, narrow network plans, enter new Marketplaces, and expand or contract service areas. A recent study of proposed premium changes in the largest city in each of nine states indicated a change in benchmark plans in eight of them. The impact on after-subsidy rates will be very significant.

Because subsidies are tied to a benchmark plan, the only way a subsidy-eligible consumer can ensure relatively stable premiums is to enroll in the benchmark plan each year. Consumers could even move to another state and pay similar after-subsidy rates, if they were committed to enrolling in the benchmark plan. However, consumers may resist changing plans each year, because they like their current plans, they like their current providers, and/or because of simple inertia.

The calculus is even more complicated for enrollees in non-benchmark plans. Since they contribute the rate they would have paid for the benchmark plan, plus or minus the difference in premiums between their plan and the benchmark, their monthly contributions will change if either the benchmark or their current plan’s premium changes. In other words, it is the difference between two moving targets that determines the net contribution for a subsidized household in a non-benchmark plan. This creates counter-intuitive results.

II. Delayed Tax Refunds

Fifteen public Marketplaces, hundreds of issuers, and CMS/IRS have been trading information for months now in a massive effort to reconcile who is enrolled in what coverage for which months, and who owes what to whom. These are the “back-office” processes that are still being worked on, months after most consumer-facing web sites were fixed. This kind of reconciliation among accounting entities can continue for years; indeed, it is generally “tolerated” ad infinitum among insurers, Medicare, Medicaid, and hospitals with respect to claims submitted, approved, and actually paid, not to mention COB and subrogation. The firms estimate year-end liabilities and reserve for them; auditors check their credibility.

The “tolerable” accounting timeframe for taxpayers of modest means is entirely different. They typically file returns soon after receiving their W-2s in January. Why the rush? According to H&R Block, the country’s largest tax preparer, many of their 21 million clients fit the socio-economic profile of subsidy-eligible enrollees, and most of those receive tax refunds. Refunds average $2,500 to $3,000 and often represent the filers’ largest financial transaction of the year; filers may urgently need the refunds to pay rent, utilities, medical and other bills.

The annual cycle for these tax filers begins to build in January, and it crests in mid-February. No doubt, this is why the IRS requires Marketplaces to provide all their enrollees with the information required to claim and reconcile premium tax credits by January 31. However, meeting this deadline in 2015 will be a challenge, to say the least. Anticipating the need for corrections, IRS/CMS will allow Marketplaces to update these notices monthly, until April 15, 2015. They also want Marketplaces to start sending CMS this information (year-to-date) no later than October 15, but the ability of some Marketplaces to comply is in serious doubt. Even for Marketplaces that have been tracking and reconciling these data all along, two other problems will arise.

First, there will be hundreds of thousands of “open” issues in December 2014, which probably cannot be resolved in time for the January notices. If not delayed, these January notices must be subsequently “corrected.” For example, consider the impact of the 90-day grace period for late premium payment: subsidy-eligible enrollees who do not pay their share of October-through-December premiums until late December will have received APTCs for October, but not for November and December. If the late-payment is received within 90 days (December 29), the issuer must post and report it to the Marketplace, and the Marketplace must reconcile this report with prior data, report that to CMS/IRS, and incorporate it into the enrollee’s 1095-A by January 31 — smack in the middle of its busy open enrollment season. On the other hand, if late payment is not received by year-end, and there were other lapses in coverage, the enrollee may be subject to a tax penalty. (A filer may qualify for both premium tax credits and the penalty.)

Second, for tax filers accustomed to handling one or more W-2s and perhaps their bank’s 1099, the new 1095s with over a dozen data fields will be mystifying. Some tax filers will receive multiple 1095s from Marketplaces, employers and insurers. Many subsidized enrollees will probably not recall “receiving” advance tax credits, since the advance credits simply offset QHP premiums. Reconciliation will also require filing a new (8962) tax form; and filers who previously used the short form (1040EZ) must switch to a long form (1040 or 1040A).

And this is the simple scenario. The IRS regulations also describe multiple formulas for allocating premiums and tax credits among (a) members of one tax-filer’s household enrolled in multiple health plans, or (b) members of one subscriber’s family who file taxes separately.

Difficulties in projecting tax credits at the time of enrollment and fear about “claw-back” later on have received much attention. Far more significant may be the dislocation that will occur if millions of low-to-moderate income enrollees cannot file their tax returns in January and February 2015 because they lack accurate 1095s, cannot decipher them, or are stymied by the new tax forms.

Ducking This One-Two Punch

Those closest to these issues, the IRS, CMS, and Marketplaces in particular, may have more practical solutions, but we offer a few suggestions for consideration. First, urge enrollees to compare premiums and shop for the best choice of health plans, rather than auto-renew their current health plan. Exchanges were developed to facilitate comparison shopping and they should continue to engage consumers. Doing so will minimize rate shock in 2015 and can actually reduce monthly contributions for some subscribers. This means overcoming consumers’ natural inertia and the policy arguments in favor of auto reenrollment.

Second, help subsidized enrollees understand the gyrations in their net (after-subsidy) rates and select the best option. This will require decision-support tools which customer service representatives, navigators, brokers, and outreach workers can use to assist shopping and APTC redetermination. “Premium migration tables,” developed at the rating region or county level, by FPL level and household size, plus guidance as to which plans offer enrollees’ current providers, could help with renewals. The premium tables are readily doable, but they require advance notice to develop and disseminate.

Third, consider one-time “fixes” to the premium tax credit reconciliation process for 2014, in order to enable timely filing for refunds. One option might be to cut off reconciliation of premium tax credits for 2014 prior to the end of December, so that carriers and Marketplaces have enough time to issue accurate 1095 forms by January 31, 2015. Another might be for the IRS to apply Marketplace-generated data on premium tax credits, even if tax filers omit the long form and 8962s. This might even mean carrying over some 2014 reconciliations into tax-year 2015.

Fourth, prior to January 2015, mail Marketplace enrollees a partial-year 1095-A, reporting advance tax credits paid through September or October 2014. Doing so would remind enrollees that they are benefiting from these tax credits, and allow them to scrutinize and seek corrections of the calculations.

Fifth, provide clear, detailed training from the enrollees’ perspective to health plans, brokers, navigators, and tax preparers on both premium tax credits and counter-intuitive changes in enrollees’ contributions.

The next customer experience with new enrollments, renewals, and tax filings is the next big opportunity to reset public perception of the ACA. At a minimum, those who will be holding enrollees’ hands next winter, must understand these challenges and be given the tools and training to help their clients cope.

http://healthaffairs.org/blog/2014/08/04/an-ounce-of-prevention-for-the-acas-second-open-enrollment/

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Comment:

By Don McCanne, MD

Easy. Set up marketplaces (ACA insurance exchanges), let each shop for his or her own preferences, then apply premium subsidies based on income. Then next year let the plan automatically renew. Then why does it require so many words for Jon Kingsdale and Julia Lerche to describe this simple process?

Clearly, when you read this article, you see that the process is not simple, and, at that, only some of the complexities are discussed here. These complexities are directly due to the highly flawed model of reform selected by President Obama and the Democratic members of Congress.

The authors suggest five possibilities for getting around the two problems they discuss – rate shock and delayed tax refunds. But when you read their proposals for negotiating your way around these complications, you see that they are not so simple either. You almost need an accountant, though that is not affordable for most people who are eligible for premium subsidies because of their lower incomes.

According to the authors, “The next customer experience with new enrollments, renewals, and tax filings is the next big opportunity to reset public perception of the ACA.” And where will that reset of public perception land? In a sea of ACA complexities.

How would renewal under a single payer system compare to renewal in the ACA marketplaces? Renewal wouldn’t exist. Your initial enrollment is for life, not to mention that it is an exceedingly simple process – a matter of simply identifying who you are for purposes of enrollment.

Most uninsured will be exempt from penalties

Fewer Uninsured Face Fines as Health Law’s Exemptions Swell

By Stephanie Armour
The Wall Street Journal, August 6, 2014

Almost 90% of the nation’s 30 million uninsured won’t pay a penalty under the Affordable Care Act in 2016 because of a growing batch of exemptions to the health-coverage requirement.

The architects of the health law wanted most Americans to carry insurance or pay a penalty. But an analysis by the Congressional Budget Office and the Joint Committee on Taxation said most of the uninsured will qualify for one or more exemptions.

The Obama administration has provided 14 ways people can avoid the fine based on hardships, including suffering domestic violence, experiencing substantial property damage from a fire or flood, and having a canceled insurance plan. Those come on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects.

Factoring in the new exemptions, the congressional report in June lowered the number of people it expects to pay the fine in 2016 to four million, from its previous projection of six million.

http://online.wsj.com/articles/fewer-uninsured-face-fines-as-health-laws-exemptions-swell-1407378602

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Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update

Congressional Budget Office, June 5, 2014

Under the Affordable Care Act, most legal residents of the United States are required to obtain health insurance or pay a penalty.

CBO and JCT have estimated that about 30 million nonelderly residents will be uninsured in 2016 but that the majority of them will be exempt from the penalty. Those who are exempt include:

  • Unauthorized immigrants, who are prohibited from receiving almost all Medicaid benefits and all subsidies through the insurance exchanges;
  • People with income low enough that they are not required to file an income tax return;
  • People who have income below 138 percent of the federal poverty guidelines (commonly referred to as the federal poverty level) and are ineligible for Medicaid because the state in which they reside has not expanded eligibility by 2016 under the option provided in the ACA;
  • People whose premium exceeds a specified share of their income (8 percent in 2014 and indexed over time); and
  • People who are incarcerated or are members of Indian tribes.

CBO and JCT estimate that 23 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 7 million uninsured people, CBO and JCT estimate that some will be granted exemptions from the penalty because of hardship or for other reasons.

All told, CBO and JCT estimate that about 4 million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf).

http://www.cbo.gov/publication/45397

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Comment:

By Don McCanne, MD

The Affordable Care Act was designed with incentives for almost everyone to obtain insurance. A financial penalty was to be assessed against any individual who remained uninsured, but now almost 90 percent of the uninsured will be exempt from the penalty. Larger employers were to be penalized if their employees remained uninsured, but now there is bipartisan support to eliminate the employer mandate. The expansion of Medicaid was to occur in all states but it has now been declined by about half of the states. Even with legislative patches, this fragmented system can never ensure that everyone has adequate health care coverage.

Compare this to a single payer system in which absolutely everyone would have been automatically enrolled in a better plan than any of those currently available, including Medicare. Why is there no clamoring for change?

Government evidence of Medicare Advantage cheating

How Medicare Advantage plans code for cash

By Fred Schulte
The Center for Public Integrity, August 7, 2014

A new federal study shows that many Medicare Advantage health plans routinely overbill the government for treating elderly patients — and have gotten away with doing it for years.

Analyzing government data never before made public, Department of Health and Human Services researchers found that many plans exaggerate how sick their patients are and how much they cost to treat. Medicare expects to pay the privately run plans — an alternative to traditional Medicare — some $160 billion this year.

The HHS study does not directly accuse any insurers of wrongdoing or name specific plans that were scrutinized. But the researchers offer the most comprehensive evidence to date that suspect billing practices have been common across much of the Medicare Advantage industry and are likely to get worse unless officials crack down.

Medicare pays the Advantage health plans higher rates for sicker patients and less for healthy people using a complex formula called a “risk score.” But the HHS study spells out several ways health plans have inflated those scores, from reporting implausibly high levels of medical conditions such as alcohol or drug dependence to billing for an inordinately high number of patients with complications of diabetes.

Despite its broad implications for Medicare spending, the study by HHS researchers Richard Kronick and W. Pete Welch has attracted scant notice in Washington. It was quietly posted late last month on an online research site run by the Centers for Medicare and Medicaid Services, part of HHS.

Kronick directs the HHS Agency for Healthcare Research and Quality, whose mission is to improve health care delivery. Welch works for the HHS Office of the Assistant Secretary for Planning and Evaluation.

http://www.publicintegrity.org/2014/08/07/15216/how-medicare-advantage-plans-code-cash

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Measuring Coding Intensity in the Medicare Advantage Program

By Richard Kronick and W. Pete Welch
Medicare and Medicaid Research Review (MMRR), A publication of the Centers for Medicare & Medicaid Services, 2014: Volume 4, Number 2

In 2004, Medicare implemented a system of paying Medicare Advantage (MA) plans that gave them greater incentive than fee-for-service (FFS) providers to report diagnoses.

The increase in relative MA scores appears to largely reflect changes in diagnostic coding, not real increases in the morbidity of MA enrollees.

Concerns about overpayment as a result of favorable risk selection have confronted the Medicare program throughout the history of Medicare contracting with health maintenance organizations and other private plans. In the late 1980s, Medicare paid health plans using a system that adjusted for demographic factors such as age and gender, but plan enrollees were healthier than fee-for-service beneficiaries with the same demographic characteristics, and, as a result, health plans were estimated to be overpaid by approximately 11%.

In order to reward health plans for attracting sicker-than-average enrollees, and to discourage plans from constructing business models designed to avoid risk, Medicare and other payers have increasingly turned to diagnosis-based risk- adjusted payment systems in which health plans are paid more for enrollees expected to need more care. While mitigating the incentive to enroll only healthy people, diagnosis-based risk adjustment creates another set of incentives: to find and report as many diagnoses as possible.

The MA payment system uses diagnostic information to assign a risk score to each beneficiary.

This payment system creates incentives for MA plans to find and report as many diagnoses as can be supported by the medical record.

In addition to the incentives to report more completely, the method of collecting diagnostic information also provides MA plans additional opportunities to increase risk scores. FFS diagnoses are drawn only from health care claims submitted for payment. MA plans may also review medical records and can report all diagnoses that are supported in the record, including those that were not reported by physicians on any health care claim or encounter record. MA plans can also employ nurses to visit enrollees in their homes to conduct health assessments and report diagnoses that are found.

From the Discussion

It appears that most of the reason that MA risk scores increased more quickly than FFS scores is due to increases in relative coding intensity—measured as increases in risk scores for stayers—with little of it accounted for by changes in enrollment mix. There is little sign of coding intensity slowing; in fact, Exhibit 2 shows that it may be increasing.

CMS and the Congress have responded to the increase in risk scores over time in several ways. First, starting in 2010, CMS lowered payment by 3.41% by applying an across-the-board coding adjustment. The coding intensity adjustment will increase to 4.91% in 2014 and to at least 5.91% in 2018. Second, starting in 2013, CMS set the four most severe diabetes HCCs (Hierarchical Condition Category) to have the same payment coefficient (Department of Health and Human Services, 2012). As a result, recording diagnoses that move enrollees from HCC18 (diabetes with ophthalmologic or unspecified manifestation) into HCC15 (diabetes with renal or peripheral circulatory manifestation) will no longer increase revenue for MA plans. Third, CMS made further changes to the model in 2014, removing some of the HCCs that were the subject of MA efforts at increasing coding intensity.

Relative MA risk scores have been increasing at least 1% per year and are likely to continue to do so, even though MCBS-based risk scores have been roughly constant.8

Footnote 8:  Some would expect that MA plans will react to the 2013 and 2014 model changes by finding other HCCs on which to focus their efforts, and the success of coding intensity efforts may well increase in the future.

http://www.cms.gov/mmrr/Downloads/MMRR2014_004_02_a06.pdf

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Comment:

By Don McCanne, MD

We have discussed before the ways in which the private Medicare Advantage (MA) plans have been cheating the taxpayers, including cheating the beneficiaries in the traditional Medicare program who are paying higher premiums to support these private MA plans. Today’s message is especially significant since it cites a detailed 19 page report from the director of AHRQ and his colleague – a report which further confirms the private insurers’ distortion of Hierarchical Condition Categories (HCC) to receive extra risk adjustment payments based on upcoding that reports their patients as being more ill than they actually are (i.e., they pad the diagnoses).

The history of Medicare Advantage is that of a steady string of abuses. The program began with overpayments of about 14 percent over the cost of caring for Medicare patients in the traditional program. That overpayment was a deliberate ploy of Congress to give the private plans a competitive market advantage in an effort to privatize Medicare. The plans then selectively enrolled healthier, less expensive patients through deceptive marketing practices. When an effort to correct this favorable selection was made through risk adjustment using Hierarchical Condition Categories, the insurers then padded the diagnoses, as mentioned above. Further, since the Affordable Care Act included adjustments to correct the overpayments, the insurance industry heavily lobbied Congress and the Obama Administration to use three years of accounting gimmicks to reduce the impact of these adjustments. Cheat, cheat, cheat.

What can we expect now? Richard Kronick and W. Pete Welch are reserved in their language when they state, in a footnote, “Some would expect that MA plans will react to the 2013 and 2014 model changes by finding other HCCs on which to focus their efforts, and the success of coding intensity efforts may well increase in the future.”

I’ll be more frank. These crooks will continue to cheat the American taxpayers. They will surely use other HCCs to upcode their patients, until that door is finally slammed shut. What then? The private insurers continually tout to their shareholders the importance of “innovation” in health care coverage. They will always be able to find new and more effective ways to cheat us.

One of the more important improvements in an Improved Medicare for All would be to get rid of these crooks once and for all. The sooner the better.

Vermont Is ‘Single-Payer’ Trailblazer

By Michael Ollove
Stateline, The Pew Charitable Trusts, Aug. 7, 2014

BERLIN, Vt. – Dr. Marvin Malek has been yearning and advocating for a publicly financed, single-payer health care system for at least two decades. Now, as Vermont stands on the threshold of being the first state to launch such a plan, he’s confessing to trepidation.

“I am pretty damn nervous,” he confided before bounding off for rounds at the Vermont Central Medical Center, still clutching the bicycle helmet he wore on his ride to work.

It’s not that Malek has reservations about the desirability of a single-payer system. He and other supporters in Vermont point out that it is already in place in many developed countries that produce better health outcomes at lower cost than the U.S.

It’s that getting there seems so fraught with complexity. “The problem is that the tentacles of our completely dysfunctional U.S. health system reach so deeply into every state,” he said. “How do you disentangle from that abysmal structure to create single-payer?”

That explains why Malek and many others here believe the Vermont legislature’s landmark vote in 2011 to move the state to a single-payer system by 2017 was the easy part of the process. Devising how to actually do it, a process the state is enmeshed in now, will be much more grueling.

The outcome couldn’t be more consequential, not only for Democratic Gov. Peter Shumlin, who put single-payer health care at the center of his first gubernatorial campaign in 2010, but for many others who have long cherished the idea of universal health care built on the foundation of a single-payer system.

Some believe that if the Vermont experiment is successful, other states could follow. In Canada, they note, single-payer started in one province and then spread across the country.

“We could be the Saskatchewan of America,” said Bram Kleppner, CEO of Danforth, a pewter manufacturer in Middlebury with roots tracing back to colonial America. He is among a group of business executives in Vermont Businesses for Social Responsibility, which actively promotes single-payer. He also sits on a board advising the governor on the financing of the plan.

Maverick State

A single-payer system is one in which the government, rather than private insurance companies, pays all health care costs. Some on the left have long harbored hopes for a national single-payer system, but the odds that Congress would ever extinguish the private insurance industry have never been anything but long.

Vermont is different. Vermonters proudly bring up the state’s maverick, progressive past: first state to mandate public financing for universal education in its constitution, first to partially outlaw slavery in its constitution, first to introduce civil unions for same-sex couples, and first to allow gay marriages by legislation, rather than through a court order. Many Vermonters hope a single-payer health system will be the latest addition to that list.

But it’s way too early to predict that other states will fall like dominoes for single-payer. Vermont’s unusual characteristics helped make that legislative vote possible. It is tiny and it has Democratic super-majorities in both legislative chambers. Its seven hospitals (eight if you count Dartmouth-Hitchcock Medical Center just across the border in New Hampshire), are spread out and tend not to think of themselves as competitors.

Nevertheless, other states will be watching closely to see if Vermont can successfully build the elements of its single-payer plan, including a unified data and claims system, a method for measuring the delivery of quality health care and a pay-for-performance scheme to replace the traditional “fee-for-service” model.

“Even for states that are keeping it ‘old school,’ watching a state create a unified health budget and seeing how it benefits them and the process they use, that will be enlightening to everybody,” said Hilary Heishman, a program analyst at the Robert Wood Johnson Foundation.

Medicare, Medicaid, and health benefit plans for both veterans and active duty military personnel will continue to operate in Vermont after 2017. Other plans would also continue, including those serving employees and retirees of out-of-state companies, and tourists and other visitors. Plus, there are major businesses in the state that could continue to self-insure if they are exempted from the new taxes. (Some countries with single-payer systems also have separate health plans for some constituencies, such as veterans.)

Despite those caveats, Act 48, as it is called, represents the first time a state has guaranteed all its citizens health care simply on the basis of their residency. Instead of premiums, Vermonters and businesses would pay for health care through yet-to-be determined taxes. Benefits and formularies (the prescription medicines that are covered in a plan) would be uniform, excluding Medicare and Medicaid, although both programs, through waivers, would be folded into a unified claims administration and payment system run under a new, independent agency called Green Mountain Care.

Billions in Savings?

The Vermont plan largely derives from Harvard economist William Hsiao, who described it in a 2011 Health Affairs paper. He estimated that single-payer would save 25.3 percent over current state health spending, cut employer and household health care spending by $200 million, create 3,800 jobs and raise the state’s economic output by $100 million.

The savings, according to Hsiao, would come from the consolidation of insurance functions, reduced administrative costs for providers, better mechanisms for detecting fraud and abuse and shifting to a no-fault medical malpractice model.

Hsiao said the savings, an estimated $4.3 billion over five years, could be used to pay for coverage of the uninsured and improved benefits, reducing the overall savings to a still healthy $2.3 billion.

Those numbers quickly proved overly optimistic. The legislature didn’t adopt the malpractice reforms Hsiao recommended, and the multiple payers still active in the state could reduce the expected administrative savings. Meanwhile, a University of Massachusetts study commissioned by the state estimated Vermont would have to raise $1.6 billion in new revenues each year to support the plan. A later report by Avalere Health, a consulting firm, estimated the annual cost to be $1.9 billion to $2.2 billion.

Robin Lunge, director of Health Care Reform for the Shumlin administration, said last week the state is assuming it will need between $1.7 billion and $2.2 billion in additional annual revenue. Right now, Vermont collects about $2.85 billion in annual revenue from state sources, mainly through taxes, so raising that amount would be a huge lift for the state. But Lunge thinks a fairer comparison is the amount of new revenue that would have to be raised versus the $1.9 billion in private health insurance premiums that Vermonters pay now.

Mixed Feelings

Shumlin missed a 2013 deadline for revealing exactly how he planned to finance the reforms. Now he is promising to do so in January, in time for the next legislative session. Some critics say he purposely withheld the details to not imperil his re-election in November.

Lunge said the state will raise most of the revenue through some combination of income and payroll taxes on both employers and employees. People will not be asked to pay premiums, although Lunge said she expects there will be some kind of cost-sharing (as in co-pays or co-insurance) to discourage overuse of medical services.

“You can say it will be the biggest tax increase in Vermont’s history,” Lunge said, “but you could also say it’ll be the biggest premium decrease in our history, too.” She also pointed out that the tax increase will be based on household income, while under the current system people pay the same premiums no matter how much they earn.

The Vermont public seems to have mixed feelings about single-payer. A VTDigger/Castleton Polling Institute survey in April found Vermonters equally divided. Another poll by Vermont Leads, a pro-single-payer organization, found 55 percent of Vermonters in favor of single-payer once the upcoming changes had been explained to them.

Too Radical?

Detractors, though, aren’t hard to find. Cynthia Browning, a House Democrat from Bennington who voted against Act 48, said that while she supported universal coverage, she can’t fathom why the state would risk so radical an approach. “I thought we should see where we were after the Affordable Care Act had been in effect.”

She has filed suit against the Shumlin administration to force it to be more transparent in its decision-making.

Another critic is Dan McCauliffe, a 59-year old dermatologist in Rutland, who said he fears that creating a finite state budget for health care will inevitably lead to long waiting times for patients and the rationing of medical care. “If I was younger, I would probably leave the state,” he said.

Ted Adler, owner of Union Street Media, a Burlington web design firm, predicted that for him and his employees, the new taxes will exceed any premium savings by more than $150,000 a year. The cost of the company’s current insurance plan reflects the relative youth and health of its 40-person workforce.

Adler believes single-payer will accelerate the departure of young people from Vermont, which already has the country’s second-oldest population. “If we already have a lot of problems keeping young people, do we want to penalize a business that employs a lot of young people?” he asked.

Darcie Johnston, a Republican political consultant, created Vermonters for Health Care Freedom to rally opposition to the plan. She was handed her best weapon when the Vermont health exchange website, like the federal website and sites in many other states, performed disastrously after its launch last year. “If they can’t even build a website, how are they going to build government-run health care for 600,000 people?” she asked last week in her Montpelier office.

Still, many others are excited about the plan. When Shumlin proclaimed during his first gubernatorial run that the Affordable Care Act didn’t go far enough, he energized Deb Richter, a doctor practicing addiction medicine in Berlin and a leader in Vermont Health Care for All.

Many of Richter’s patients experience abrupt changes in their incomes, frequently forcing them to switch from one insurance plan to another, or to none at all. With single-payer, that will never happen. Richter also expects single-payer to vastly reduce the time she has to spend dealing with insurance matters.

“All my patients will have the same insurance and the same benefits,” said Richter. “There will be one set of rules, one set of regulations, one set rate of reimbursement and one formulary.”

‘The Price of My Life’

Walt Carpenter, a 59-year-old with a sandy-colored walrus mustache who is a jack-of-all-trades at a ski resort, is covered by Medicaid now, but he has often been uninsured or underinsured. In the 2000s, he suffered from a liver disease that turned his skin yellow. During a bad spell in 2006, he said could hardly sleep at all, lost 90 pounds in a matter of weeks and was tortured by merciless itchiness. His doctors said he needed endoscopic surgeries, but his insurance plan resisted. “I’d wake up in the morning everyday wondering, ‘Okay, which plan denial do I fight today?’”

Three procedures were eventually covered. By the time he needed a fourth, however, the company he had joined six months earlier because of its health insurance, decided it could no longer afford an employee health plan. The hospital told him the cost of his procedure would be $20,000. When he replied that he was without insurance, a hospital employee told him the “uninsured rate” was $14,000.

“We went back and forth negotiating what the price of my life was worth to save,” Carpenter said. They eventually arrived at $8,000.

Not surprisingly, Carpenter is an ardent backer of single-payer. “Health care is a human right. It shouldn’t be treated like a commodity that’s based on your income or employment,” he said.

Don Mayer, the 65-year old owner of Small Dog Electronics, an Apple retailer and service supplier, serves on Shumlin’s health care advisory board. True to its name, six or seven little dogs wander around the firm’s Waitsfield offices. Mayer said providing health insurance to his 60 employees is 22 percent of his overall personnel costs, and he finds it difficult to compete against companies that don’t cover their workers.

“If you were designing the system now and put 20 people in a room and said, ‘How are you going to pay for health care?’ not one of them would pick the ludicrous, Rube Goldberg system we have now,” he said. 

http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/08/07/vermont-is-single-payer-trailblazer?

Free Medicaid? Gotcha!

You Qualify for Medicaid: Don’t Sign Up

By Christopher Flavelle
Bloomberg View, August 4, 2014

The debate over Obamacare’s Medicaid expansion divides states into two broad categories — those that expand their program and those that don’t. New research suggests we should talk more about a third group: States that agree to expand Medicaid, then impose premiums whose only purpose seems to be keeping people out of the program.

A paper released today in the journal Health Affairs, written by researchers from the federal government’s Agency for Healthcare Research and Quality, seeks to quantify the effect of premium increases on children’s enrollment in Medicaid or its sister plan, the Children’s Health Insurance Program. They found that even small premiums lead to big drops in sign-ups.

Using data from 1999-2010, the researchers — Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Selden — found that for children in families making from 101 percent to 150 percent of the federal poverty line, a $10 increase in monthly premiums was associated with a 6.7 percent reduction in enrollment. For the subset of families not eligible for health coverage through their jobs, that grew to 7.3 percent.

The authors of the Health Affairs study don’t examine the effect of premium increases on adults. But Laura Dague, a professor at Texas A&M University, has. In an article published in the Journal of Health Economics in May, Dague looked at three years of data from the Wisconsin BadgerCare Plus program, which offers subsidized health coverage to families with low incomes. She found that moving from $0 to $10 a month reduced enrollment among children and adults by 12 percent to 15 percent.

What struck Dague about those results was that it’s not just the magnitude of the premium that matters, but the existence of a premium.

“The biggest effects in my data were at the margin where folks start having to pay premiums at all,” she told me by phone last week. She wasn’t sure why that was — perhaps the difficulty of paying another monthly bill or the psychology of having to pay in the first place.

What makes these papers relevant is that at least four states — Indiana, Iowa, Michigan and Pennsylvania — have expanded or are trying to expand Medicaid access in a way that imposes premiums on those making from 101 percent to 138 percent of poverty. Those premiums aren’t high: $25 a month in Indiana, $10 in Iowa, $25 in Pennsylvania ($35 for a household) and 2 percent of income in Michigan. But these new studies show that even those small amounts can significantly reduce the number of people who sign up.

That seems to be the point. After all, Medicaid spending per beneficiary will reach almost $6,400 in 2014, against which $120 in premiums each year generates additional revenue that’s barely significant. And as Dague notes, imposing a premium at all means spending money to obtain and process those payments.

“If the administrative costs of collecting premiums are high relative to revenue collected,” she wrote, “small premiums seem difficult to justify as anything other than a measure to discourage enrollment.”

If the states that have already imposed premiums were the outliers, then this would be a frustrating story but a limited one. However, 24 states still refuse to expand their Medicaid programs, and there’s a strong chance that some of those will change their minds on the condition that they can impose premiums, too. There’s an equally good chance that the Centers for Medicare and Medicaid Services, which faces pressure to bring those states into the fold, will go along with it.

Unquestionably, access to Medicaid for a small premium is better than no access at all. But this new research says we shouldn’t mince words about the point of those premiums. They’re designed to get fewer people to sign up.

http://www.bloombergview.com/articles/2014-08-04/you-qualify-for-medicaid-don-t-sign-up

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Children’s Health Insurance Program Premiums Adversely Affect Enrollment, Especially Among Lower-Income Children

By Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Seedless
Health Affairs, August 2014

In this article we have examined the effects of public premiums on insurance coverage of children who were eligible for Medicaid or CHIP and whose family incomes were above 100 percent of the federal poverty level in 1999–2010. Higher public premiums are associated with lower public coverage and with increases in private coverage and uninsurance. The magnitudes of these premium effects vary considerably by poverty level and by parental coverage offers.

Among lower-income children, premium increases are associated with larger reductions in enrollment in public coverage, and a larger share of the decline in enrollment takes the form of increased uninsurance. The association between premiums and uninsurance is particularly strong among lower-income children who lack access to employer-sponsored insurance through parental offers.

http://content.healthaffairs.org/content/33/8/1353.abstract

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The effect of Medicaid premiums on enrollment: A regression discontinuity approach

By Laura Dague
Journal of Health Economics, September 2014

This paper estimates the effect that premiums in Medicaid have on the length of enrollment of program beneficiaries. Whether and how low income-families will participate in the exchanges and in states’ Medicaid programs depends crucially on the structure and amounts of the premiums they will face.

http://www.sciencedirect.com/science/article/pii/S0167629614000642

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Comment:

By Don McCanne, MD

The obsession of the policy and political communities with requiring even low income families to experience consumer sensitivity to costs has crossed the bounds into blatant psychopathology, as these studies confirm.

The Medicaid and CHIP programs were specifically designed to provide health care coverage for low income families – a goal with which most caring individuals agree. The very modest Medicaid and CHIP premiums extracted from these families are so small that they have no impact on the overall financing of the programs. Yet they are enough that these families with no discretionary income find these programs to be unaffordable, and so they remain uninsured.

The screwball idea that these premiums somehow make these low income families better consumers is totally void of reason. These premiums merely defeat the purpose of the programs – getting these people the coverage that they need. The psychopathology rests with those who insist that cash payments, no matter how small, are absolutely essential for these families to appreciate the benefits of actively participating in markets rather than passively accepting a government handout. This is ideology gone mad!

Under a well designed single payer system, premiums and cost sharing are eliminated. People simply get the heath care they need when they need it. Paying for the system is totally removed from the delivery of care since it is financed through progressive taxes that everyone can afford.

Staying Covered: How Immigrants Have Prolonged the Solvency of One of Medicare’s Key Trust Funds and Subsidized Care for U.S. Seniors

Partnership for a New American Economy, August 5, 2014

The Partnership for a New American Economy’s new report, Staying Covered: How Immigrants Have Prolonged the Solvency of One of Medicare’s Key Trust Funds and Subsidized Care for U.S. Seniors, shows that immigrants are key contributors to Medicare’s Hospital Insurance Trust Fund, a pool of money covering hospital and home health care for 50 million Americans.

Key report findings include:

  • Immigrants are subsidizing Medicare’s core trust fund. In the period from 1996 to 2011, immigrants contributed $182.4 billion more to Medicare’s Hospital Insurance Trust Fund than was expended on their benefits. Immigrants generated multibillion-dollar surpluses in the trust fund during every year examined in our study. In the average year between 1996 and 2011, they contributed $11.4 billion more to the trust fund than was expended on their care.
  • Immigrants played a critical role subsidizing Medicare’s Hospital Insurance Trust Fund during the recent recession. From 2008 to 2011, a period when the great recession and its after effects eroded trust fund contributions, Medicare’s Hospital Insurance Trust Fund operated at a deficit, failing to bring in enough contributions to fully cover costs each year. Immigrants, however, continued to generate surpluses in the program during this time, including a $16.3 billion surplus during the height of the recession in 2008.
  • Medicare’s Hospital Insurance Trust Fund would be nearing insolvency if not for the contributions of immigrants in recent years. If immigrants had not participated in the Medicare program from 1996 to 2011, Medicare’s core trust fund would be expected to become insolvent by the end of 2027. This is roughly three years earlier than currently predicted by the Medicare Trustees.
  • The role immigrants play subsidizing Medicare’s Hospital Insurance Trust Fund distinguishes them from the broader population. While immigrants contributed a net of $182.4 billion from 1996 to 2011, the U.S.-born population generated a deficit of $68.7 billion during the same period.

This report was prepared for the Partnership for a New American Economy by Leah Zallman of the Institute for Community Health and Cambridge Health Alliance at the Harvard Medical School. It builds on a study the author previously published in the peer-reviewed journal Health Affairs.

Download the full report.

Read the press release.

http://www.renewoureconomy.org/news/updates/press-release-new-report-finds-immigrants-contributed-net-182-4-billion-medicares-core-trust-fund-1996-2011/

Medicare shows that public, universal health coverage is superior to private insurance

By Pamella Gronemeyer, M.D.
St. Louis Post-Dispatch, Letters, Aug. 1, 2014

We are thrilled to help celebrate Medicare’s 49th anniversary this week. Medicare, which was passed into law in 1965 under President Lyndon B. Johnson, provides the elderly and disabled health care benefits that would not be available to them in our profit-driven (and -ridden) fragmented insurance market.

In contrast to the ongoing, never-ending partisan disputes over the Affordable Care Act, Medicare has been for 49 years and still is the living proof that public, universal health coverage is superior to private insurance in every way. Medicare is more efficient than private health insurance and is administered at a cost of 3 percent to 4 percent, as opposed to private health insurance, which has administrative costs above 15 percent. Medicare’s costs have risen more slowly than those of private health insurance. Medicare provides better access to care, better financial protection and higher patient satisfaction.

The current Medicare system is not perfect, but should be expanded and enhanced to provide universal coverage. We are an exceptional country, and we need to provide exceptional health care to all Americans.

Dr. Pamella Gronemeyer resides in Glen Carbon, Ill.

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor/medicare-shows-that-public-universal-health-coverage-is-superior-to/article_89b3cb2d-00da-5f5e-9055-d42fd4bf75cd.html#.U-C94jE_6Qw.email