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Data Update – Summer 2014 newsletter

UNINSURED AND UNDERINSURED

• 8 million people signed up for private coverage on the federal and state health exchanges during the open enrollment period that ended March 31, according to a report from the Department of Health and Human Services. Since as many as two-thirds of enrollees had prior coverage and 10-20 percent of people have yet to pay their first month’s premiums, the net impact of the ACA’s exchanges and federal subsidies on the number of uninsured won’t be clear for several months (Pear, “Late rush to sign up for insurance,” New York Times, 5/2/14).

In its most recent release, the Congressional Budget Office estimates that 42 million Americans will remain uninsured in 2014, 36 million in 2015, and 29-31 million between 2016 and 2024 (CBO, “Insurance Coverage Provisions of the Affordable Care Act,” April 2014).

• In 2012, 31.7 million Americans under age 65 were underinsured, according to a conservative estimate by The Commonwealth Fund. The estimate was based on new Census Bureau data on household medical expenditures. An additional 47.3 million Americans were uninsured that year. “Underinsurance” in the study was defined as spending 10 percent or more of household income for medical care or, if under 200 percent of the federal poverty line, greater than 5 percent of household income. The estimate didn’t include people who were insured but went without care due to cost, or were healthy but whose insurance was so skimpy they would have faced high costs in the event of illness (Schoen et al., “America’s Underinsured,” Commonwealth Fund, 3/14).

• Nearly 3.7 million low-income, uninsured people with a serious mental illness, serious psychological distress, or a substance use disorder will not receive coverage under the Affordable Care Act because they live in one of the 24 states that have refused to expand their Medicaid programs to people with incomes up to 138 percent of poverty. Three-quarters of these individuals (2.7 million) live in 11 Southern states, and over 1.1 million live in just two states – Texas (625,000) and Florida (535,000) (American Mental Health Counselors Association, 2/27/14).

Of an estimated 115,000 uninsured and low-income people with HIV/AIDS living in the U.S., over half (about 60,000 people) live in states that are not expanding Medicaid, according to an analysis of HIV surveillance data and data from the National Health Interview Survey (Snider et al., Health Affairs, March 2014).

• Many insurance plans – including both employer-based plans and those purchased through the health exchanges – include “source-of-injury” exclusions that preclude coverage of medical bills arising from suicide or attempted suicide, even when it stems from a mental illness. Despite the federal mental health parity law (2008), insurers still discriminate in the fine print, claiming that parity only requires them to cover mental health benefits, not medical bills arising from an intentional overdose or injury (Andrews, “Some plans refuse to cover medical costs related to suicide despite federal rules,” Kaiser Health News, 2/18/14).

SOCIOECONOMIC INEQUALITY

• Women’s life expectancy in McDowell County, W.Va., where average household income is around $22,000, has fallen by two years since 1985, to 73 years. In contrast, women’s life expectancy in Fairfax County, Va., where average household income is $107,000, has risen over the same period by five years, to 85 (“Income Gap, Meet the Longevity Gap,” New York Times, 3/16/14).

• Income inequality is rising around the world, not just in the U.S. The rate of return to capital has historically been higher than the rate of economic growth and wages, according to a new analysis of centuries of data by Thomas Piketty of the Paris School of Economics. The first half of the 20th century was an aberration due to the destruction of a huge amount of capital in two world wars. In 1913, at the end of the Gilded Age, the stock of the world’s privately held capital amounted to about five years’ worth of global income. In 1950 it had fallen to three, by 2010 risen to four, and will rise to seven by the end of the century. Future inequality in the U.S. will be driven by two forces: a rising share of income going to corporate profits and the owners of capital, and of the remaining labor income, a rising share going to top executives (Porter, “A relentless widening of disparity in wealth,” New York Times, 3/12/14).

• The U.S. middle class is no longer the richest in the world, according to an analysis of data from the Luxembourg Income Study. After-tax median income in Canada is now higher than in the U.S., and Britain, the Netherlands, and Sweden are closing in. Also, poor U.S. families, at the 20th percentile of the income distribution, make significantly less than similar families in Canada, Sweden, Norway, Finland or the Netherlands. The findings are due to U.S. firms distributing a higher share of pay to top executives and lower top tax rates, and to Canadian and European government policies that redistribute income and subsidize health care, college, day care, paid maternity leave, and other benefits for their residents (Leonhardt, “U.S. middle class no longer world’s richest,” New York Times, 4/23/14).

COSTS

• The cost of employer-sponsored health care among large employers (>1,000 employees) is expected to rise 4.4 percent, to $9,560 per employee, in 2014, despite another round of benefit cuts (without this year’s cuts the increase would have been 7 percent). Employees’ share of premiums will increase an estimated 7 percent, to $2,975. Employees will pay an estimated 37 percent of total health costs (premiums and out-of-pocket costs) in 2014, up from 34.4 percent in 2011. Nearly two-thirds of large (>1,000 employees) companies with employer-sponsored health coverage say they are likely to eliminate coverage in the next few years and steer their workers to public exchanges. They have already started with their under-age-65 retirees (Towers Watson, “Survey for the National Business Group on Health,” 3/6/14).

• Maryland has received a waiver from CMS to transition its “all payer” hospital payment system, under which all insurers pay the same fees, to a global budget system, effective January 1, 2014. The goal is to reduce overutilization of inpatient care and shift resources to more appropriate settings. Whether it will control costs or just, in the absence of a single payer that can slash bureaucracy, restrict access to care, is unclear. The effort, led by the Maryland Health Services Cost Review Commission, is just getting under way. Details may be found at www.hscrc.maryland.gov.

‘Medicare for all’ given to more victims of asbestos poisoning

Sen. Max Baucus, D-Mont., who as chair of the Senate Finance Committee relied heavily on staffer Liz Fowler, a former WellPoint VP, to craft the private-insurance-based ACA, created an exception from his own bill and gave Medicare and supplementary benefits to residents of all ages in Libby, Mont., with asbestos-related disease caused by the operations of the W.R. Grace mining company. Instead of being required to buy private insurance on the health exchange, affected Libby residents received lifelong Medicare coverage and access to a new, permanent “Libby Pilot Program,” which covers services “tailored to specific health needs resulting from asbestos exposure” not covered by Medicare, like long-term care, medications, and transportation. Now, affected residents of Libby who have moved to any of 18 other counties (including six counties in Idaho and seven in Washington state) will be able to access those services without charge under an expansion of the program approved by CMS (Gerstenecker, “Libby Montana program expands,” The Western News, 2/4/14).

• Even a small unpaid medical debt can damage a person’s credit rating, making it harder and more expensive to get a mortgage or other loan. Medical bills account for about half of all bills reported to collection agencies and affect the credit record of about 20 percent of the population, according to Richard Cordray, director of the federal Consumer Financial Protection Bureau. About 40 percent of a sample of 5,000 mortgage applicants to a Texas firm, Supreme Lending, had medical debt in collection, with the average around $400. Most people were unaware of their debt. The problem is worsening with increasing deductibles and the rise of large physician and hospital groups, making it impossible for patients to negotiate debt with their physician (Rosenthal, “When Health Costs Harm Your Credit,” New York Times, 3/8/14).

• Massachusetts’ 2006 health reforms, the model for the ACA, did not solve the problem of unaffordable health care costs. In 2012, more than one-third (38.7 percent) of insured Massachusetts adults reported problems with health care costs. The proportion of adults reporting problems with costs rose to 41.6 percent for people with incomes below 138 percent of poverty, and to 49.5 percent for people with incomes between 139 and 399 percent of poverty. Over 40 percent of insured, low-income people had problems with costs despite the fact that Massachusetts’ reform has stronger consumer protections against out-of-pocket costs (e.g. limited to $1,000 for people below 200 percent of poverty) than the ACA (Long, “Health insurance coverage is just the first step: Findings from Massachusetts,” Health Affairs blog, 3/26/14).

Congress boosts pay to private Medicare plans

In response to a multimillion-dollar lobbying campaign by the insurance industry, HHS reversed its plans for a 1.9 percent cut in payments (about $7 billion) to Medicare Advantage (MA) plans. Instead, the plans will receive a 0.4 percent raise in 2014. The plans were overpaid by 6 percent compared to the cost of taking care of similar enrollees in traditional Medicare in 2012, according to the Medicare Payment Advisory Committee. MA plan enrollment grew by 9 percent last year, to 14.4 million. According to a study by economists at the University of Pennsylvania, the excess payments to MA plans almost all go to marketing and profits, with only 17 percent going into benefits. Humana makes two-thirds of its total annual profit on MA plans (Hancock, “Decoding the high-stakes debate over Medicare Advantage cuts”, Kaiser Health News, 4/7/14).

CORPORATE MONEY AND CARE

For-profit hospital chains breed fraud, again

• The Justice Department is investigating the giant hospital chain Health Management Associates (HMA) for Medicare and Medicaid fraud. HMA, which recently merged with Community Health Systems (CHS) in a $7.6 billion deal to create the nation’s second largest for-profit hospital chain with over 200 hospitals, is the target of eight separate whistle-blower (qui tam) lawsuits in six states and several investigations by states’ attorneys general for using “sophisticated software systems, financial incentives, and threats” to inflate hospital admissions. HMA administrators used a customized software program called Pro-Med to monitor its physicians and drive admissions. For example, the software gave emergency department physicians daily scorecards on their progress towards meeting the firm’s target of admitting 50 percent of all ER patients over age 65, regardless of clinical necessity. Physicians and administrators who questioned HMA’s policies and procedures were threatened and fired. Former HMA CEO Gary Newsome, who received $22 million in compensation in the three years before his departure last year, was a top executive at CHS prior to being hired by HMA; CHS faces similar accusations. In 2003, HCA (the biggest for-profit hospital chain) paid the then-largest health care fraud settlement in U.S. history, $1.7 billion, for Medicare fraud (Creswell and Abelson, “Hospital Chain Said to Scheme to Inflate Bills,” New York Times, 1/23/14).

CEOs at top insurers still getting outsize pay

CEO pay at the nation’s biggest for-profit health insurers generally held firm, but in one case increased sharply between 2012 and 2013: Aetna’s CEO, Mark Bertolini, saw his compensation more than double to $30.7 million from $13.3 million. UnitedHealth Group’s Stephen Hemsley received $12.1 million in 2013, WellPoint’s Joseph Swedish received $17 million, Humana’s Bruce Broussard took in $8.8 million, and Cigna’s David Cordani received $13.5 million. In the three years since the passage of the ACA, 32 executives of the nation’s five biggest for-profit health insurance firms have received a total of $548.4 million in cash and stock options (“The Irony of Obamacare,” UNITE HERE, March 2014, and SEC schedules 14A in 2011, 2012, 2013).

CEOs at the nation’s two largest Medicaid managed care insurers received huge pay raises. Centene CEO Michael Neidorff received $14.5 million in compensation in 2013, up 71 percent from 2012. Centene runs Medicaid programs in nearly 20 states, including Missouri and Illinois. On top of his salary of $1.2 million, Neidorff got a $3 million bonus, $10 million in stock, and $82,798 of personal flights on a company plane, financial adviser fees, event tickets and security services. If Neidorff leaves Centene after a takeover, his golden parachute will be worth $31.9 million. That includes $24.2 million for unvested stock and $7.7 million in severance, bonus and incentive payments. Molina Healthcare CEO Mario Molina’s pay more than doubled, rising to $12 million from $5 million. Molina runs Medicaid programs in 11 states (David Nicklaus, “Centene CEO’s pay jumps to $14.5 million,” St. Louis Post Dispatch, 2/25/14, and SEC filings).

• Two recent studies of Patient Centered Medical Homes (PCMH) found that most quality indicators did not improve and there were no significant cost savings compared with control practices. The first study, supported by The Commonwealth Fund, was a randomized controlled trial that compared 18 small adult primary care practices in New York that were randomly chosen to receive two years of support and financial incentives to redesign their practices into PCMHs (as recognized by the National Committee of Quality Assurance), with 14 control practices. Compared to controls, PCMH physicians performed better on just 2 of 11 quality indicators (blood pressure control and breast cancer screening) and 1 of 10 efficiency indicators (care visits leading to ED visits) but there were no significant cost savings. The second study, a large three-year RAND trial comparing performance on 11 quality measures, utilization, and costs at 32 PCMH’s to 29 comparison practices in southern Pennsylvania, found significant improvement on only one quality measure (nephropathy screening in diabetes). No significant differences in utilization or costs of care were found other than a one-year increase in ambulatory care sensitive admissions in PCMH practices. Pilot practices accumulated bonuses averaging $92,000 per physician over the three-year study (which were excluded from the cost calculations). The lack of savings from PCMH’s suggests that delivery system reform alone won’t control costs (Fifield et al., JGIM, 6/1/13, and Friedberg et al., JAMA, 2/26/14).

GALLOPING TOWARD OLIGOPOLY

• Just two health insurers controlled over 50 percent of the market for private health insurance in 45 states in 2011. In 15 states, a single insurer had more than 50 percent of the private insurance market, according to the AMA’s most recent study of the lack of competition in the commercial health insurance market (AMA, “AMA Analysis Lists States Where One Private Health Insurer Rules,” 11/7/13).

• Anthem, the giant for-profit Blues plan, is the only firm selling health insurance on the exchange in New Hampshire. Nationwide, in 515 mostly rural, low-income counties across 15 states, only a single insurer is offering coverage on the health exchange. Premiums in those counties can be hundreds of dollars more per month than in nearby metropolitan areas. Overall, monthly premiums for a silver plan for a 40-year-old individual range from $154 in Minneapolis to $461 in southwest Georgia and $483 in Colorado’s mountain resort region, where many permanent residents are low-paid service workers. Insurers are not supposed to deny coverage to patients with pre-existing conditions since the passage of the ACA, and risk adjustment for sicker patients is supposed to make “cherry-picking” obsolete, but for-profit insurers have found new methods to accomplish the same thing. Aetna’s CEO, for example, admitted they were targeting areas with high employment and incomes to attract desirable customers (Martin and Weaver, “For many, few health plan choices,” Wall Street Journal, 2/12/14, and Ehley, “Ten worst places to live for Obamacare,” Fiscal Times, 2/20/14).

Corporate ‘finance people’ closely monitor patient care – for profits

“The practice of medicine is moving more rapidly than ever from decision-making by individual doctors toward control by corporate interests. The transformation is being fueled by the emergence of large hospital systems that include groups of physicians employed by hospitals and others, and new technologies that closely monitor care. While the new medicine offers significant benefits, like better coordination of a patient’s treatment and measurements of quality, critics say the same technology, size and power can be used against physicians who do not meet the measures established by companies trying to maximize profits. ‘It’s not a doctor in there watching those statistics – it’s the finance people,’” said an attorney representing whistle-blowers (Creswell and Abelson, “Hospital Chain Said to Scheme to Inflate Bills,” New York Times, 1/23/14).

• The Cleveland Clinic is contracting directly with national employers like Lowe’s to perform cardiac and orthopedic surgery on their employees. Lowe’s pays the cost of travel and waives deductibles and co-pays for its workers to have their surgery at the clinic for a set fee. While the Cleveland Clinic claims to have a lower-than-average readmission rate for cardiac patients, patients who are able to travel for care are undoubtedly younger, healthier, and more stable than the average cardiac patient. The practice raises questions about the clinic “cream skimming” profitable patients, leaving more costly, sicker and less well-insured patients for local facilities (Daily Briefing, Advisory.com, “For Cleveland Clinic, employer deals have been a ‘win-win-win,’” 3/10/14).

PHARMA

• Gilead is marketing its new hepatitis C drug, sofosbuvir, in the U.S. for $84,000 for a three-month course ($168,000 for six months of treatment that some patients need) or about $1,000 per pill. Gilead’s first quarter sales of $2.3 billion of sofosbuvir are the highest ever for a new drug. During the same period, UnitedHealth Group, the nation’s largest insurer, spent over $100 million on sofosbuvir and other treatments for hepatitis C, some of which it attributed to pent-up demand for treatment by newly insured patients. Sofosbuvir, which costs less than $1.62 per pill to produce, is sold for about $350 per pill in the U.K. Gilead says it will sell the drug to low-income countries for $2,000 for a 12-week course, but Médecins Sans Frontières says, based on their experience treating HIV, that diagnosis and comprehensive treatment costs must be limited to $500 per patient in both middle- and low- income nations to be successful (Pollack, “Gilead revenue soars on hepatitis C drug” New York Times, 4/23/14, and “MSF responds to reports on Gilead pricing for hepatitis C drug sofosbuvir in developing countries,” Médecins Sans Frontières Access Campaign, 2/7/14).

As the price of specialty drugs soars, employers are shifting more of the cost onto patients. This year, 23 percent of employer-sponsored health plans and nearly all plans sold on the health exchanges have a separate tier with higher cost-sharing for specialty drugs, up from 5 percent of plans in 2006. Just 2.3 percent of prescriptions now account for 30 percent of all out-of-pocket costs. In 2012, U.S. regulators approved 39 drugs, the most since 1996. Of the 12 for cancer, 11 cost at least $100,000 a year (“Hard pills to swallow,” The Economist, 1/5/14, and Thomas, “Prices Soaring for Specialty Drugs, Researchers Find,” New York Times, 4/15/14).

• Questcor has raised the price of a 60-year-old immune system drug, Acthar, from $40 to more than $28,000 a vial since acquiring the rights to the drug for $100,000 in 2001. Acthar, made from the pituitary glands of pigs, was originally used to treat a rare disease in babies. Questcor has aggressively marketed the drug for more common conditions like multiple sclerosis and lupus, uses approved several decades ago when approval standards were low, and clinical trials were not needed. As a result, sales of Acthar topped $761 million last year, and the firm is being bought out by another drug maker, Mallinckrodt Pharmaceuticals, for $5.6 billion. Questcor’s promotional practices are under investigation by the Justice Department (Pollack, “Mallinckrodt pharmaceuticals to buy Questcor for $5.6 billion,” New York Times, 4/8/14).

• A federal jury in Louisiana awarded $6 billion in punitive damages against Takeda Pharmaceuticals, the manufacturer of the diabetes drug Actos, and $3 billion against Eli Lilly Inc., the U.S. distributor of Actos, for failing to disclose that the drug raises the risk of bladder cancer when used for more than one year. Regulators in France and Germany suspended sales of Actos over health concerns in 2009. (Li, Los Angeles Times, 4/8/14).

POLLS

• Nearly two-thirds (64.3 percent) of Maine physicians and medical students favor a single-payer approach to health system reform, up from 52.3 percent in 2008, according to a recent survey by the Maine Medical Association. The survey asked the following question both years: “When considering the topic of health care reform, would you prefer to make improvements to the current public/private system or a single-payer system such as a ‘Medicare for all’ approach?” Support for “improvements to the current public/private system” fell to 35.7 percent in 2014 from 47.4 percent in 2008. There was no significant difference in response to the question based upon age, geographic location, or MMA membership status. Primary care physicians and psychiatrists were more supportive of single payer than other physicians, as were physicians who did not own their own practices. More details of the survey are available on the association’s website at www.mainemed.com.

Vermont residents favor single payer 55 percent to 42 percent after being read a brief description and rationale for reform. An even greater majority, 70 percent, say they favor a system that would have the government pay medical bills directly instead of through insurance companies. The margin of support drops but remains a majority (51 percent in favor, 43 percent opposed) when told it would mean “the largest tax increase in Vermont history.” Women, younger adults, people with college or graduate degrees, and Democrats are more likely to be supportive. Three-fourths of Vermonters say they would either favor or remain neutral towards a candidate supporting single payer; only one-quarter of respondents said they would oppose such a candidate. The poll of 502 Vermonters in mid-January, at the height of problems with the rollout of the Vermont health exchange, was conducted by Boston-based Kiley and Co. with funding from the National Education Association (True, “Single-payer advocacy group gets boost from NEA, poll shows support for health reform,” Vtdigger.com, 2/21/2014).

• Despite a $27 billion investment by the federal government, nearly 70 percent of physicians think electronic health records have not been worth the effort, resources, and cost, according to a national survey of 1,000 physicians for Medical Economics. Sixty-nine percent of respondents said that coordination of care with hospitals has not improved, 67 percent dislike the functionality of their EHR system, and 66 percent of internists would not buy their current system. A qualitative study of 30 physician practices in six states by RAND found that a number of problems with EHR’s significantly worsened physician satisfaction. “Aspects of current EHRs that were particularly common sources of dissatisfaction included poor usability, time-consuming data entry, interference with face-to-face patient care, inefficient and less fulfilling work content, inability to exchange health information, and degradation of clinical documentation” (Verdon, “Physician outcry on EHR functionality, cost,” Medical Economics, 2/10/14, RAND 10/13).

INTERNATIONAL

• A survey of 20,045 adults in 11 industrialized countries, intended to form a baseline for the impact of the ACA on the U.S. health system in an international context, found that U.S. adults are far more likely than people in other nations to go without health care, have trouble paying medical bills, and encounter time-consuming health insurance paperwork or disputes, or claims unexpectedly not paid. The other nations studied were Australia, Canada, France, Germany, the Netherlands, Norway, Sweden, Switzerland and the U.K. Even insured U.S. adults were more likely than adults in other countries to forgo care because of costs and to struggle with medical bills. Forty-two percent of insured Americans reported paying $1,000 or more out-of-pocket for medical bills last year, compared to 2 percent of Swedes and 3 percent of people in the U.K.

Thirty-two percent of U.S. adults had to spend a lot of time on insurance paperwork or had an insurer deny a claim. Problems with insurers were also common in Switzerland (25 percent), the Netherlands (19 percent), and Germany (17 percent), the other three nations in the survey that use multiple payers (albeit highly regulated) for basic coverage in their systems. (Switzerland and the Netherlands use private insurance while Germany uses “sickness funds.”) There has been a steep increase in the proportion of people in the Netherlands forgoing care because of costs, rising from 8 percent in 2010 to 22 percent in 2013, a period in which the Netherlands implemented market-based reforms, along with austerity (Schoen et al., “Access, Affordability, And Insurance Complexity Are Often Worse In The United States Compared To Ten Other Countries,” Health Affairs, December 2013).

ACA WATCH

• Tom Scully, the former CMS chair who shepherded the Medicare drug bill – based on private, for-profit drug plans – through Congress in 2003, recently assured a group of hedge fund and private equity investment managers that “[Obamacare] is not a government takeover of medicine. It’s the privatization of health care” (Davidson, “The President wants you to get rich on Obamacare,” New York Times Magazine, 10/30/13).

Early enrollment figures

• A net of about 9.3 million uninsured adults between the ages of 18 and 64 gained coverage during the first quarter of 2014, according to a mid-March survey of 2,425 adults by RAND. An expansion of employer-based coverage (to 8.2 million people, of whom 7.1 million were uninsured) and Medicaid (to 5.9 million people, of whom 3.6 million were uninsured), not enrollment through the exchanges, accounted for most of the new coverage among the uninsured, the survey found. RAND estimated that two-thirds of the people who enrolled via the health exchanges had prior coverage, along with all but about 500,000 of the 7.8 million people who enrolled in individual plans directly through insurers. Overall, RAND found that the uninsured rate among 18-64 year olds dropped to 15.8 percent in 2014 from 20.5 percent in 2013. Because the data did not include the final two weeks of open enrollment, the actual uninsured rate for this group is likely to be slightly lower (Carman and Eibner, “Survey estimates net gain of 9.3 million American adults with health insurance,” RAND, April 2014).

A similar survey by the Urban Institute in early March estimated that 15.2 percent of adults aged 18-64 were uninsured. In states that are expanding their Medicaid programs, 12.4 percent of non-elderly adults were uninsured, compared with a rate of 18.1 percent in states not expanding Medicaid (Long, Urban Institute, 4/3/14).

• Nearly 83 percent of those signing up for private coverage through exchanges received a federal subsidy, but overall, only about 21 percent of people eligible for a subsidy actually enrolled, according to an early estimate by the Kaiser Family Foundation. A higher proportion – up to 40 percent – of those eligible enrolled in Washington, California, Connecticut and Rhode Island. Tragically, the ACA made no provisions for subsidies to people earning less than 100 percent of the federal poverty line because the authors assumed that all states would expand their Medicaid programs (Levitt, “How much financial assistance are people receiving under the Affordable Care Act,” Kaiser Family Foundation, 3/27/14).

The average federal subsidy for private health insurance premiums on the exchanges will be about $4,250 per enrollee in 2014, rising to $7,170 per enrollee in 2024, according to the Congressional Budget Office’s latest estimates. The CBO estimates that about 25 million people each year will purchase private insurance with federal subsidies between 2016 and 2024. Factoring in subsidized cost-sharing ($167 billion), federal subsidies to the private insurance industry over the 10-year period 2015-2024 will total $1.03 trillion (CBO, “Insurance Coverage Provisions of the Affordable Care Act,” April 2014).

• Several of the 14 state-based exchanges experienced major problems. Maryland, Massachusetts, Oregon, Nevada and Vermont replaced top officials, cancelled contracts with software companies and spent tens of millions of dollars on new contractors and fixes. Only about 63,000 people were able to sign up for private coverage in Maryland, far short of the state’s goal of 250,000 people. Maryland officials have decided to drop their exchange and start over with Connecticut’s exchange software. The software is free, but they’ll have to invest another $50 million to adapt it for Maryland. Oregon officials are dumping their $248 million exchange and switching to the federal exchange HealthCare.gov next year. The switch will cost about $35 million to complete. The Massachusetts Connector, which received $180 million in federal grant money to prepare for the transition to the ACA, was unable to sign people up for federally subsidized coverage. The state signed up about 30,000 people for unsubsidized coverage, and 138,000 people for “temporary coverage,” with many of the sign-ups occurring via paper applications. The state also asked HHS to allow 114,000 Massachusetts residents to stay in their current plans through September (“extended coverage”) due to their technical problems. Xerox and the Nevada health exchange are being sued for not passing on premiums and applications to insurers, leading to disputes among hospitals, patients, and insurers over medical bills (Chereb, “Bungling mars health care deadline in some states,” AP, 3/25/14; Walker, “MD votes to adopt health exchange software used in Connecticut,” Baltimore Sun, 4/2/14; Cassidy, “$180 million Fed connector tab eyed,” Boston Herald, 4/1/14; and Chereb, “Xerox, Nevada health exchange subject of class-action filing,” Las Vegas Sun, 4/2/14).

• Several states are concerned that their exchanges aren’t financially sustainable. The Hawaii Health Connector, which cost $54 million to build, only signed up 7,788 people, for a cost of $6,934 per enrollee; it is expected to cost $15 million annually to operate, but only bring in $1 million in revenues from a 2 percent fee on the plans it sells. The Hawaii exchange would have needed to sign up 150,000 people to be sustainable; officials now admit this was an “unrealistic” expectation in a state with 100,000 people who are uninsured, half of them eligible for Medicaid (Consillo, “Hawaii health connector won’t be sustainable after 2014,” Honolulu Star-Advertiser, 2/26/14).

Benefits

Low actuarial value, ultra-narrow networks, high administrative costs

• As of April 1, 20 percent of policies purchased through the exchanges were bronze, 65 percent were silver, 9 percent were gold, and 5 percent were platinum. Bronze plans have lower premiums but are not eligible for federal subsidies for cost-sharing (available to those with incomes below 250 percent of poverty), so most people enrolled in silver plans that are eligible for these additional subsidies (Summary enrollment report, HHS, 5/1/14).

• Patients are responsible for up to 50 percent of the cost of specialty drugs in plans sold on the exchanges, a burden that will hit people with chronic illness especially hard, according to reviews by Milliman Inc. and Avalere Health. Milliman reported, in a study of plans in California, New York, Florida and Texas, that the latter two states have especially high drug coinsurance, of 40 percent to 50 percent. An analysis of plans in 19 states by Avalere found that 60 percent of bronze plans and 23 percent of silver plans had drug coinsurance rates of 30 percent or more (“Chronically ill facing high drug costs under U.S. health law,” Reuters, 2/28/14).

• Every insurer offering plans on the health exchanges restricts patients to its own network of doctors and hospitals. Even more expensive plans in the same market from the same insurer don’t necessarily grant access to a wider choice of providers, and out-of-network care can be costly. Federal subsidies for cost-sharing don’t apply for out-of-network care, and out-of-network care costs may not count toward the out-of-pocket maximums ($6,350 for an individual, and $12,700 for a family, excluding premiums), leaving patients on the hook for the entire cost. A McKinsey & Co. analysis of 120 silver-level exchange plans found that 70 percent were narrow network, with at least 30 percent of the area’s largest hospitals excluded, or ultra-narrow, excluding at least 70 percent. While insurers can’t charge more for out-of-network emergency department care, patients placed on observation status or admitted to an out-of-network hospital are no longer shielded from uncovered costs (Andrews, “Warning, Opting Out of Your Insurance Plan’s Provider Network is Risky,” Kaiser Health News, 3/18/14).

• For the most part, patients were unable to verify if their doctors were covered by a particular plan on the exchange in advance of purchasing it. According to ZocDoc, an online appointment booking firm which tried to verify the accuracy of insurers’ directories, about half of the listings for in-network providers were wrong. The California exchange took down its directory in early February due to errors (Tozzi, “Obamacare limits choices under some plans,” Bloomberg Businessweek, 3/20/14).

• Individuals can keep coverage that doesn’t meet the minimum benefits standards of the ACA for another year, and in some cases until 2016, according to new rules from HHS. Insurance commissioners in 21 states and the District of Columbia have blocked the extension on the grounds that they need these people in the exchange risk pools to avoid premium increases (“Keeping Your Insurance Policy,” New York Times, 3/6/14).

Insurers will be allowed to spend more than the ACA’s limit of 20 percent of their premiums on overhead because of the rocky rollout of the exchanges. Insurers complain that it required them to hire more call-center staff, process applications manually, and, in some states, like Maryland, where the exchange hasn’t functioned at all, pay broker fees (Hancock and Appleby, “Insurers may get cost break thanks to rocky ACA rollout,” Kaiser Health News, 3/13/14).

• Insurers are also receiving more federal help in the form of new, lower, reinsurance rates. In 2014, reinsurance for high-cost cases will kick in at $45,000 in claims for one individual, down from $60,000, and extending to a cap of $250,000. While reinsurance is a temporary $10 billion program that, like the risk corridors (which limit gains or losses by insurers over 3 percent of premiums) is only in effect until 2016, risk adjustment is a permanent feature of the new law. Plans that can show they have enrolled a sicker population are supposed to receive payments from plans that have enrolled healthier people. But risk adjustment is easy to game (as repeatedly demonstrated in the Medicare Advantage program) by labeling patients with more diagnoses, known as “upcoding.” Insurers are already scrambling to find out about enrollees’ health conditions, which they say they need to know in order reduce the cost of caring for those patients. Cigna is calling enrollees to ask about health conditions, medications, and other medical needs, while Florida Blue is encouraging enrollees to fill out health risk forms and get tests for cholesterol and blood sugar (Mathews, “Health plans rush to size up new clients,” Wall Street Journal, 2/27/14).

• The penalty for not having health insurance by March 1, 2014, will “almost always” be more than the $95 figure often cited in news reports. The penalty is $95 or 1 percent of adjusted gross income, whichever is greater, minus some adjustments, up to the cost of the premium of a bronze plan. The penalty will rise to 2 percent of income or a minimum of $325 in 2015, and 2.5 percent of income but at least $695 in 2016. A “tax penalty calculator” is online at the Tax Policy Center (McKinnon, Wall Street Journal, 3/6/14).

• Insurers are required to keep people on their rolls for three months if payments are missed, but are only required to pay their medical bills for the first month, leaving providers on the hook for the other two months if payments are not forthcoming. (“Commenters say ACA grace period rule puts unfair burden on hospitals, providers,” Bloomberg BNA, 8/21/13).

Medicaid expansion

• As of March 28, 21 states have decided to opt out of the Medicaid expansion and three are still debating their participation (Missouri, Pennsylvania and Utah). Most of the states opting out require parents to make less than 50 percent of the federal poverty level to be eligible for Medicaid. The Commonwealth Fund estimated that states opting out of the Medicaid expansion will forgo an estimated $34.7 billion in federal funds between 2014 and 2022 (Advisory.com and Glied et al., Commonwealth Fund, December 2013).

States privatize, shrink Medicaid benefits

Arkansas, which was allowed by HHS to use its federal Medicaid funds to buy private insurance for 94,000 Medicaid-eligible residents this year, diverted anyone thought to be medically frail (about 10 percent of new enrollees) to traditional Medicaid, thereby selectively enrolling the healthy in four for-profit, “private option” plans, which receive $476 per person, per month. Now Arkansas is seeking waivers to shift more costs onto patients by (1) expanding the use of co-pays to people with incomes as low as 50 percent of poverty (only enrollees with incomes between 100 and 138 percent of poverty are currently charged co-pays), (2) curtailing non-emergency transportation assistance, and (3) setting up health savings accounts for beneficiaries (without necessarily putting funds in them). The state’s Republican Party has threatened to end the expansion unless CMS approves these changes (DeMillo, “Arkansas officials eye changes to Medicaid plan,” AP, 3/5/14, and Goodnough, “In Arkansas, private option Medicaid plan could be derailed,” New York Times, 2/11/14).

Several other states are appealing to HHS to institute premiums or co-pays for Medicaid enrollees, including Arizona, Iowa, Michigan, Indiana, New Hampshire, Pennsylvania and Tennessee. Iowa wants to charge Medicaid enrollees premiums of $30 a month that beneficiaries can “earn back” by quitting smoking or losing weight. Premiums discourage uninsured poor people from enrolling in Medicaid while raising little in new health funds. Similarly, co-pays penalize the sick, particularly those with chronic illness (Saloner et al., “Pinching the Poor,” NEJM, 3/27/14, and Vestal, “‘Private Option’ for Medicaid Expansion Would Cut Some Benefits,” KHN, 3/27/14).

• The number of long-term care residents enrolled in mandatory Medicaid managed care is projected to double this year to 1.2 million. Florida, New Jersey, Ohio, California, and Virginia are implementing statewide mandates this year, while some other states, including New York, Texas, and Rhode Island, are expanding the approach to additional counties. “The mandatory transition of large numbers of consumers who use long-term care … is unprecedented,” according to Laura Summer at Georgetown (Galewitz, “States accelerate shift of nursing home residents into Medicaid managed care,” 2/11/14).

Employer mandate delayed, cap on deductibles for employees of small business eliminated

• The employer mandate in the ACA was slated to begin January 1, 2014. Now, the large employer mandate (>100 employees) has been postponed for one year, and will be phased in, so that in 2015 employers only need to cover 70 percent of employees working 30 or more hours per week to avoid a penalty, rising to 95 percent of workers in 2016. The deadline for employers with 51-99 workers to provide coverage for their workers or pay a fine was also extended for an additional year, to 2016. Seasonal employees who work six months or less are not considered full-time employees.

• Businesses with 50 workers or less are not required to provide or report coverage, but the federal government and 16 states and the District of Columbia have set up separate exchanges for small businesses and their employees under a program called the Small Business Health Insurance Options Project (SHOP). In 14 states and D.C., SHOP exchanges are facilitating small business owners’ ability to shift costs onto their workers through defined contributions. Instead of covering a uniform set of benefits for every employee, employers are permitted to contribute a set percentage (typically 50 percent) of the cost of an index plan towards the cost of the policy of the employee’s choice, making the worker responsible for the difference. While the ACA required plans sold through SHOP to limit deductibles to $4,000 for family policies and $2,000 for individual coverage, the cap on deductibles was removed in the “doc fix” legislation passed in March (Dash, Commonwealth Fund, 3/14, and Lieberman, “Repeal on deductible caps marks another step in The Great Cost Shift,” Columbia Journalism Review, 4/11/14).

Labor issues under the ACA

• Union-management-run health insurance plans (Taft-Hartley plans) are not eligible for subsidies under the ACA; subsidies are restricted to the private plans sold on the exchanges. As a result, firms hiring nonunion workers with access to subsidized plans have a competitive advantage over unionized firms. In addition, firms with employees working less than 30 hours per week are not required to provide coverage, so there is a strong incentive for employers to cut workers’ hours. Labor unions warn that the ACA will lead to cuts in wages and benefits for the middle class (Mark Dudzic, “Ten things unions need to look out for when bargaining under Obamacare,” www.laborforsinglepayer.org).

VA scandal lessons are not about the viability of single-payer

By Paul Hochfeld, M.D., Chinh Le, M.D., Betty Johnson and Mike Huntington, M.D.
Corvallis Gazette-Times, Letters, June 16, 2014

We would like to thank Bill Dougherty for his question of whether a single-payer health insurance plan can still be advocated (Letters, June 5, “If VA is example of single-payer, that should be avoided”).

It offers us the opportunity to respond with an unequivocal “Yes!”

There is no question that the issues raised by the recent VA care scandal needs to be addressed, and can be fixed. We still need to acknowledge that in many domains, such as quality and safety of care, cost control, patient satisfaction and ultimately patient health outcomes, the VA has kept pace with, or surpassed private sector health systems, despite its severe constraints and demands (source: New England Journal of Medicine, June 5, 2014).

A statewide, or a national single-payer system would be different from the VA system, as we envision health care financed from an equitable public funding source, but locally administered and privately delivered.

“Gaming the system,” using misaligned performance measurements as financial incentives, organizational insularity and secrecy is seen in many sectors of our society, but it is especially damaging in the current medical industrial complex. What needs to be learned from the VA scandal is a cautionary note that no system can be insulated from public accountability and transparency.

Paul Hochfeld, M.D., Chinh Le, M.D., Betty Johnson and Mike Huntington, M.D., live in Corvallis.

http://www.gazettetimes.com/news/opinion/mailbag/letter-va-scandal-lessons-are-not-about-the-viability-of/article_afb57404-f529-11e3-a5d5-001a4bcf887a.html

VA has issues, but its bright spots show value of Medicare-for-all system

Enhanced single-payer health insurance would save lives and money and provide high-quality care

By Julie Keller Pease, M.D., and Kevin Twine
Portland (Maine) Press Herald, June 18, 2014

Not surprisingly, columnist Steve Robinson of the Maine Heritage Policy Center has jumped onto the story of the Department of Veterans Affairs scandal to sound the alarm about “single-payer” and “socialized medicine” (“VA corruption devastating for Michaud, single-payer fans,” June 7).

As physicians and concerned citizens, we offer a more rational and reasoned perspective. The problems within the VA have in fact presented another opportunity for us to shine a light on the many benefits of an improved version of Medicare for all.

Historically, there have been long waits for care at the VA. This is not unique to the VA. Compared to the rest of Americans, eligible veterans have better access to quality health care, and in some areas the VA has been unable to recruit enough doctors and mental health professionals to keep up with demand.

This is not all the VA’s fault: There is a national shortage of primary care doctors, and there is no evidence that wait times in the private sector for primary care are any shorter. For example, a family practitioner who arrived in rural Maine last August now has a wait time of almost 11 months for new patients. Many practices in Maine and elsewhere are not accepting any new patients.

Long waits for VA care are often associated with the time it takes to determine if veterans are eligible to receive care at the VA. Not all veterans are eligible. Currently, about 2.3 million veterans and their family members are uninsured, representing about 5 percent of the 47 million medically uninsured Americans in our country today.

When people are uninsured, and don’t get the care they need, the results can be catastrophic. We have learned that an estimated 40 veterans reportedly died while waiting for VA care in Phoenix.

This is tragic. However, in Maine, more than 130,000 of our citizens lack health insurance and are unable to access health care. It is estimated that because of this, 150 Mainers will die this year.

Even more devastating, more than 46,000 Americans die every year because they cannot access the care that they need, mostly because they lack health insurance or have substandard plans. In dramatic contrast, if we were to expand and improve Medicare to cover all Americans, these “excess deaths” would be avoided.

Not only would an improved Medicare for all cover everyone and save lives, but it would save money by eliminating much of the enormous administrative overhead generated in our current fragmented system of care.

William Hsiao, an internationally recognized health care economist and designer of health care systems around the world, testified before a select committee of the Maine Legislature in October 2010. He estimated that Mainers could save 10 percent of total health care spending, or $1 billion in the first year alone, by implementing a universal Medicare-like system. UMass economist Gerald Friedman estimates that a universal Medicare system would save as much as $570 billion per year nationwide.

Single-payer national health insurance, an improved Medicare for All, would offer a single tier of high-quality care to everyone. Everyone would be able to choose any provider and source of care in the U.S. It would address wait times in an organized way, be transparent and accountable, and allocate medical resources based on need, not ability to pay.

In the furor over the manipulation of waiting lists, we cannot overlook the many positives about the Veterans Affairs health care system. The VA has pioneered quality improvement initiatives and delivery system changes. It has an electronic medical record system that is far ahead of the private sector. Its administrative overhead is far less than the private health insurance industry’s.

Veterans’ service organizations praise the VA, even as they report the wait times, precisely because of its high quality. Patient and provider satisfaction within the VA system is consistently much higher than within the private, for-profit sector of our fragmented health care system.

As for substituting a voucher-like insurance system for the VA, would anyone in their right mind suggest that we take Maine’s veterans out of the VA and put them into Gov. LePage’s PL 90 health insurance plan?

We have much to learn from both the problems and the successes within the VA system. We applaud the steps taken by Sens. Bernie Sanders, I-Vt., and John McCain, R-Ariz., to quickly address some of the problems. And we will continue our efforts to promote universal access to quality health care for all Americans, via an improved system of Medicare for all.

Julie Keller Pease, M.D., and Kevin Twine are both residents of Brunswick, Maine, and members of Physicians for a National Health Program and Maine AllCare.

Maine Voices: VA has issues, but its bright spots show value of Medicare-for-all system

PNHP backgrounder on the VA – June 2014

PNHP has physician-spokespeople who are available to the media for comment on these issues. To schedule an interview, contact PNHP communications director Mark Almberg at mark@pnhp.org.

1. Waits for care in the Veterans Health Administration are probably similar to (or shorter than) waits elsewhere, but are more carefully scrutinized in the VA.

Notwithstanding recent reports of long waits for non-urgent care at some sites for new patients, a recent audit of VA wait times system-wide found that 96 percent of the 6,004,350 appointments currently scheduled have wait times of 30 days or less. Only 4 percent of appointments have wait times of more than 30 days.
At the Phoenix VA, where the investigation started, 89 percent of appointments have wait times under 30 days. The average wait for established patients to see a primary care doctor was 3 days, and to see a specialist was 14 days.
Overall, the audit found 57,436 veterans (<1 percent of appointments) can’t be seen in the next 90 days and are waiting for appointments, and another 63,869 veterans (1 percent) have enrolled in the VHA in the past 10 years but have never sought an appointment, most likely because they have other coverage. (Some veterans sign up for the VA in case eligibility standards tighten in the future.) The VA plans to contact the last two groups (VA Audit Wait Times Fact Sheet, 6/9/2014).
According to a recent Massachusetts Medical Society survey, the average wait time for a new patient appointment for an internist in that state (which has the most doctors per capita) is 50 days and for a family physician is 39 days (MMS Patient Access to Care Study, Massachusetts Medical Society, 7/2013).
According to a recent Merritt Hawkins survey of wait times, the cumulative average wait time to see a physician in five specialties (family medicine, OB/GYN, dermatology, cardiology and orthopedic surgery) in 15 major metropolitan markets in 2013 was 18.5 days, and in some cases much longer (2014 Physician Appointment Wait Times, Merritt Hawkins).
Even the longest waits for care in the private sector don’t reflect the true extent of unmet need because over one-third (37 percent) of adults forgo care due to financial concerns (Schoen et al., “Access, Affordability, And Insurance Complexity Are Often Worse In The United States Compared To Ten Other Countries,” Health Affairs, 11/2013).
In many locales, Medicaid patients face long waits because many private physicians and hospitals do not accept Medicaid. A recent study found that children with Medicaid waited 22 days longer for an appointment than the privately insured (Bisgaier et al., “Auditing Access to Specialty Care for Children with Public Insurance,” NEJM, 6/16/2011).

2. Long waits in the VA result largely from inadequate resources, especially a shortage of clinicians, not inefficiency.

There are over 400 positions for primary care physicians that are currently unfilled in the VA, reflecting both a national shortage of primary care doctors and the VA’s relatively low pay scale (Oppel and Goodnough, “Doctor Shortage Is Cited in Delays at V.A. Hospitals,” New York Times, 5/29/14).
The VA has faced a surge in demand by aging Vietnam-era vets with a rapidly growing burden of chronic illness and the 6.4 million veterans of the wars in Iraq and Afghanistan, many of whom have severe injuries that will require lifelong care and/or mental health problems such as PTSD. Another factor contributing to increased demand is a greater willingness to seek mental health care among younger veterans.
The loosening of VA eligibility standards by the Obama administration in 2010 contributed to a large influx of new patients. Veterans with certain illnesses that have been linked to Agent Orange exposure (including Parkinson’s disease, prostate cancer, diabetes and ischemic heart disease) are now presumed to have a service-related condition and to be eligible for VA care. The VA simultaneously reduced demands for documentation supporting claims of post-traumatic stress disorder (Longman, “VA Care: Still the Best Care Anywhere?” Washington Monthly, 6/3/2014).
While the VA budget kept up with overall medical inflation between 2003 and 2012, rising from $25.5 billion to $45.5 billion, the increase did not take into account the increased demand for services (Merrill Goozner, “Beyond the theatrics of the VA wait-list scandal,” Modern Healthcare, 5/24/2014).
The inadequate supply of VA resources is particularly acute in the South (e.g. Phoenix and Miami), where the population of older vets has increased rapidly, but VA resources have not.

3. Studies indicate that quality of care at the VA is, on average, as good as or better than in the private sector.

A Rand study found that:
- VA patients received much more of the care recommended by national standards, 66 percent as opposed to 50 percent in a representative national sample of non-veterans.
- Among chronic care patients, VA patients received about 70 percent of recommended care, compared with about 60 percent in the national sample.
- For preventive care, the difference was greater: VA patients received about 65 percent of recommended care, while patients in the national sample received 45 percent.
- VA patients received consistently better care across the board, including screening, diagnosis, treatment, and follow-up (Asch et al., “Comparison of Quality of Care for Patients in the Veterans Health Administration and Patients in a National Sample,” Annals of Internal Medicine, 12/21/2004).
A recent systematic review concluded: “Studies that assessed recommended processes of care almost always demonstrated that the VA performed better than non-VA comparison groups. Studies that assessed risk-adjusted mortality generally found similar rates for patients in VA and non-VA settings” (Trivedi et al., “Systematic review: comparison of the quality of medical care in Veterans Affairs and non-Veterans Affairs settings,” Medical Care, 1/2011).
A direct comparison of quality in the VA and Medicare Advantage (MA) plans concluded that: “Among persons aged 65 years or older, the VA health-care system significantly outperformed private-sector MA plans and delivered care that was less variable by site, geographic region, and socioeconomic status” (Trivedi et al., “Quality and equity of care in the VA and Medicare Advantage health plans,” Medical Care, 6/2011).
Patients cared for in the VA have lower risk-adjusted mortality compared with those in private Medicare Advantage plans. (AJ Selim et al., “Risk-adjusted mortality as an indicator of outcomes: comparison of Medicare Advantage Program with the Veterans Health Administration” Medical Care, 4/2006).
Patient satisfaction scores at the VA are consistently higher than the private sector. For patients recently discharged from a VA hospital, average overall satisfaction is 4 points higher (84 out of 100 points) than for patients discharged from non-VA hospitals. When asked if they would use a VA medical center the next time they need inpatient or outpatient care, veterans overwhelmingly indicate that they would (96 percent and 95 percent, respectively). (Final report: 2013 Customer Satisfaction Inpatient Survey, CFI Group, 3/2014).

4. VA costs are lower than private sector costs and rising more slowly.

If the VA were paid at Medicare rates, the payments would be 20 percent higher than actual VA costs, a difference of more than $5 billion in 2003 (Nugent et al., “Value for Taxpayers’ Dollars: What VA Care Would Cost at Medicare Prices,” Medical Care Research and Review, 2004: 61, 495-508).
According to the Congressional Budget Office, between 1999 and 2005, per enrollee costs grew by 1.7 percent in the VA compared to 29.4 percent in Medicare and 70 percent for private family coverage (CBO, “The Healthcare System for Veterans: An Interim Report,” 12/2007).
In 2009, the VA provided $3.2 billion worth of care to Medicare HMO enrollees, but collected only $9.4 million for that care – providing a large subsidy to the private plans (Trivedi, A., et al., “Duplicate federal payments for dual enrollees in Medicare Advantage Plans and the Veterans Affairs health care system.” JAMA, 7/4/2012).
Privatizing the VA would increase costs and reduce quality. Allowing private HMOs into Medicare has raised Medicare’s costs by over $283 billion since 1985. In addition, the VA “significantly outperforms” Medicare Advantage plans on quality measures. (Hellander et al., “Medicare Overpayments to Private Plans, 1985-2012,” International Journal of Health Services, Volume 43, Number 2, 2013 and Trivedi et al., “Quality and equity of care in the VA and Medicare Advantage health plans,” Medical Care, 6/2011).

5. The alleged fraudulent reporting of wait times by VA officials was apparently stimulated by pay-for-performance (P4P) incentives. Similar fraudulent reporting occurs in the private sector. P4P incentives are the problem, not the VA.

95 percent of Medicare HMOs falsely inflate their quality statistics (Cooper et al., “Underreporting high-risk prescribing among Medicare Advantage Plans: A cross-sectional analysis,” Annals of Internal Medicine, 10/2013).
Behavioral economics research indicates that such financial incentives generally result in widespread cheating (Ariely, “The Honest Truth About Dishonesty,” 2013).

6. The VA is not a single-payer system. It coexists with many other payers, and not all veterans are eligible for care at the VA.

Of 21.6 million veterans, only 9.1 million are enrolled in the VHA system.
2.3 million veterans and their family members were uninsured in 2010. Nationally, 41.2 percent of uninsured veterans report unmet medical needs and 33.7 percent report delaying care due to cost (Haley and Kenney, “Uninsured Veterans and Family Members,” Urban Institute, 5/2012).
VA care is not an entitlement. Iraq and Afghanistan veterans are automatically eligible for VA care for five years after discharge. After that, they are subject to means testing or must show that they have a service-related condition like Vietnam-era veterans to determine if they are eligible. Eligibility determinations can take 6-9 months or longer, and are often confused by veterans and the media as waiting times for appointments, which are completely separate. The need to determine eligibility would be unnecessary in a single-payer system.

Narrow Provider Networks: Balancing Affordability with Access – a flawed approach

Narrow Provider Networks in New Health Plans: Balancing Affordability with Access to Quality Care

By Sabrina Corlette, JoAnn Volk, Robert Berenson and Judy Feder
Urban Institute, Georgetown University Center on Health Insurance Reforms, May 2014

New network configurations offer trade-offs for consumers. Many insurers were able to lower their overall costs by reducing the prices they pay participating providers, which in turn allowed them to lower their premiums to attract price-conscious shoppers. However, in many cases, consumers have been surprised to discover that their new plan offers a more limited choice of providers. Some others willing to pay more to purchase a plan with broader access to providers have found that only limited-network plans are available in their area.

It is not yet clear whether these new, narrower network plans can effectively deliver on the benefits promised under the plan. If policyholders opt to seek medically necessary care out-of-network, it could expose them to significant financial liabilities. If policyholders delay or forgo care because in-network providers can’t meet their needs, it could put their health at risk.

Consequently, state and federal policy-makers are taking another look at the Affordable Care Act (ACA) requirement that plans participating on the new health insurance marketplaces maintain an adequate provider network. In doing so, they must strike a delicate balance. If they overly constrain insurers’ ability to negotiate with providers, consumers could face significant premium increases. On the other hand, consumers must be able to choose among plans with confidence that they have a sufficient network to deliver the benefits promised and that they will not be exposed to unanticipated health and financial risks because of an inadequate network. Insurers also need incentives to take provider quality into account (in addition to prices).

Conclusion

There is no perfect approach to the oversight of health plan networks. In the absence of other government policies to constrain provider prices, insurers’ ability to exclude or threaten to exclude providers from the network is important to their ability to negotiate reimbursement rates and offer more affordable premiums to consumers. On the other hand, if insurers narrow their networks too much, consumers could be harmed if forced to go out-of- network or to a less-preferred provider tier to meet their needs. Policy-makers therefore need to strike a balance between consumer protection and insurer flexibility.

Our proposed approach sets minimum quantitative standards, with waivers for certain providers based on price and quality; improves transparency and consumer information to give consumers better tools to make informed choices; gives insurers the flexibility to develop more value-oriented network designs so long as they maintain a provider network that can meet people’s needs; and — to assure effective consumer protection — calls for continuous monitoring of consumers’ use of out-of-network services, complaints and appeals, and more active oversight of plan behavior.

Full report (10 pages): http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf413643

****

Comment:

By Don McCanne, MD

This report provides an excellent discussion of the tradeoffs between affordability and access to care when insurers use networks of providers, especially the trendy narrow networks in many of the ACA exchange plans. Unfortunately, the authors’ approach to trying to achieve an optimal balance misses an opportunity both to totally avoid the impaired access characteristic of narrow networks, and to make health care even more affordable.

The flaw is that they assume that private health plans are a given. With that, they then try to achieve a compromise between avoiding excessively reduced access to providers and reducing insurance premiums by restricting patients to providers who agree to lower contracted rates. A single payer system would have full choice of providers and would be more affordable because of the efficiencies of a government administered program, including its power as a monopsony. Compared to single payer, patients enrolled in narrow network plans have less choice of providers and pay more. They lose on both counts.

Even broader networks found in the majority of private plans still compromise between these choices, though not to as great of a degree. But they still do compromise.

The remedial proposals in this report are designed to support the superfluous private insurer intermediaries, while compromising access and cost for patients. Our health care system should be about patients, not insurers.

It is not as if the authors of the report do not understand this. They write, “In the absence of other government policies to constrain provider prices…” If they are going to change policy, why don’t they move to policies that actually benefit patients? Like a single payer national health program – full access to all health care professionals and institutions, in an equitably funded system that all of us can afford.

Just how long are those wait times at the VA really?

By Phillip Longman
Washington Monthly, June 13, 2014

You probably saw headlines earlier this week like this one from CNN: “Audit: More than 120,000 veterans waiting or never got care.”

Sounds pretty bad, and so does the lede CNN used:

Washington (CNN) — An internal Veterans Affairs audit released Monday said tens of thousands of newly returning veterans wait at least 90 days for medical care, while even more who signed up in the VA system over the past 10 years never got an immediate appointment they requested.

Want to know what that audit actually shows? Click here (pdf), or trust me to give you the main findings and some context:

It shows that in 96 percent of cases, when vets seek a doctors appointment at the VA, they get one within 30 days.
It shows that even at the Phoenix VA, which is supposedly ground zero of the VA scandal, 89 percent of people enrolled in the system get an appointment in less than 30 days, with the average wait for established patients to see a primary care doc coming to just over 14 days.
Most everywhere else in the VA system, average wait times for established patients to see a primary care doc are in the range of 2 to 4 days, as are waiting times to receive specialty care.

Bear in mind, these are the audited numbers, not juked stats submitted by frontline employees trying to satisfy a performance metric. So what’s up with the way CNN, and many other organs of the mainstream media, covered this story?

The audit does show that as of May 15, there were 57,436 vets systemwide who had been waiting for an appointment for 90 days or more. Contrary to CNN’s reporting, the audit does not indicate how many were “newly returning.” Many if not most are probably Vietnam-era veterans, who have been surging to join the VA in large numbers due to recently relaxed eligibility rules. CNN also fails to gives any sense of proportion. Yes, the number of people waiting for 90 days or more is way too high, but before we use it to dismantle the VA, let’s put it in context. It amounts to less than one percent of the some 6 million vets who got appointments in less time—hardly a systematic breakdown.

And what about those vets who CNN says have been waiting more than ten years for an appointment? The audit turned up the the names of 63,869 people who had signed up for VA care sometime over the last ten years but who for unspecified reasons never were seen by a VA doctor. No doubt some of these people truly were waiting for an appointment and got lost in the system. But no doubt, too, many of those people were not waiting for an appointment.

Their ranks surely include, for example, people who enrolled at the local VA but who then wound up moving to a different city before making an appointment, or who got a job with group health insurance. Their ranks no doubt also include many vets who, following advice commonly given to people leaving the military, enrolled with the VA just to be sure that they would be grandfathered in should eligibility rules be tightened again as they were during the Bush years.

In other words, CNN just flat out made up the part about the auditors finding tens of thousands of vets who have been waiting for up to ten years to get an “appointment they requested.” All the audit actually finds is that there are “63,869 who over the past ten years have enrolled in our healthcare system and have not been seen for an appointment.” And the really obnoxious part is, CNN has the gall to claim that the political damage it is doing to the VA with such distorted coverage is somehow of benefit to veterans.

Phillip Longman is senior editor of the Washington Monthly.This appeared at the Washington Monthly’s “Political Animal” blog.

http://www.washingtonmonthly.com/political-animal-a/2014_06/just_how_long_are_those_wait_t050776.php

The U.S. health system ranks last again

Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally

By Karen Davis, Kristof Stremikis, David Squires, and Cathy Schoen
The Commonwealth Fund, June 2014

The United States health care system is the most expensive in the world, but this report and prior editions consistently show the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied in this report—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2010, 2007, 2006, and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity. In this edition of Mirror, Mirror, the United Kingdom ranks first, followed closely by Switzerland.

The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes.

Key Findings

Quality: The indicators of quality were grouped into four categories: effective care, safe care, coordinated care, and patient-centered care. Compared with the other 10 countries, the U.S. fares best on provision and receipt of preventive and patient-centered care. While there has been some improvement in recent years, lower scores on safe and coordinated care pull the overall U.S. quality score down.

Access: Not surprisingly—given the absence of universal coverage—people in the U.S. go without needed health care because of cost more often than people do in the other countries. Americans were the most likely to say they had access problems related to cost.

Efficiency: On indicators of efficiency, the U.S. ranks last among the 11 countries, with the U.K. and Sweden ranking first and second, respectively.

Equity: The U.S. ranks a clear last on measures of equity. Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year.

From the Discussion

It is difficult to disentangle the effects of health insurance coverage from the quality of care experiences reported by U.S. patients. Comprehensiveness of insurance and stability of coverage are likely to play a role in patients’ access to care and interactions with physicians. We found that insured Americans and higher-income Americans were more likely than their counterparts in other countries to report problems such as not getting recommended tests, treatments, or prescription drugs. This is undoubtedly a reflection of the lack of comprehensive health insurance coverage and the high out-of-pocket costs for care in the U.S., even among the insured and those with above-average incomes. Fragmented coverage and insurance instability undermine efforts in the U.S. to improve care coordination, including the sharing of information among providers. Patients in other countries, in addition, are more likely to have a regular physician and long-time continuity with the same physician.

These results indicate a consistent relationship between how a country performs in terms of equity and how patients rate other dimensions of performance: the lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it also fails to meet needs for the average citizen. Rather than regarding performance on equity as a separate and lesser concern, the U.S. should devote far greater attention to building a health system that works well for all Americans.

http://www.commonwealthfund.org/~/media/files/publications/fund-report/2014/jun/1755_davis_mirror_mirror_2014.pdf

Comment:

By Don McCanne, MD

In this 2014 update of The Commonwealth Fund study on the performance of the U.S. health care system compared to other nations, the United States once again comes in last, in spite of having the most expensive system of all nations.

This year the authors express hope that implementation of the Affordable Care Act (ACA) will improve our performance, though so far the changes in the first three years of ACA have not been enough to lift us from the bottom. There is reason to believe that it is too weak of a program to ever have enough impact.

An interesting finding in this report is that the United Kingdom came in first in most categories studied, placing it in solid first place overall. Their National Health Service is government owned and operated – socialized medicine – and is one of the least expensive systems of all, spending only 40 percent per capita of what we spend in the United States. The next time someone claims that we are headed towards socialized medicine, we can respond, “Don’t we wish.”

However we do have to be careful about drawing sweeping conclusions from this study. Canada, which has a single payer system, scored next to the bottom, just above the United States. They scored lower in access, especially in timeliness of care, and in efficiency and safety. Although they have single payer government insurance systems in each province, the health care delivery system remains largely private. Since the deficiencies are primarily those of private delivery systems, it would suggest that the Canadian government should play a much greater role in improving resource allocation.

One of the more important deficiencies of a single payer system is that when conservative governments are in control – as they now are in Canada – the politicians attempt to reduce the role of government. Currently in Great Britain, conservatives are attempting to move more towards privatization, but so far their solidarity has prevented a massive shift in that direction, though they have introduced some worrisome policies.

Nevertheless, politics will always play a role in any system. That makes it even more imperative to put in place a system that is much less vulnerable to political whim – a universal national system in which the people take pride.

Pew Research on the Government’s Role in Health Care

Political Polarization in the American Public

Pew Research Center, June 12, 2014

Section 4: Political Compromise and Divisive Policy Debates

Government’s Role in Health Care

The idea of a single-payer health care system – in which the government pays for all health care costs – has long been a dream of many liberals. But when Congress took up health care reform in 2009, Democrats united behind a market-based proposal – what became the Affordable Care Act – which was seen as more politically feasible.

The current survey finds that government involvement in the health care system continues to draw extensive liberal support: Fully 89% of consistent liberals say it is the responsibility of the federal government to make sure all Americans have health care coverage. And roughly half – 54% – think health insurance “should be provided through a single national health insurance system run by the government.”

Overall, the public is divided over how far the government should go in providing health care. About half (47%) say the government has a responsibility to make sure all Americans have health care coverage, while 50% say that is not the responsibility of the federal government.

Those who believe the government does have a responsibility to ensure health coverage were asked if health insurance should be provided through a mix of private insurance companies and the government, or if the government alone should provide insurance. The single-payer option was supported by 21%, while about as many (23%) favor a mix of public and private insurance.

On the other side of the issue, while half say it isn’t the government’s responsibility to make sure all have health care coverage, relatively few want the government to get out of the health care system entirely. Rather, 43% say it’s not the government’s responsibility to ensure health care coverage for all, but believe the government should “continue programs like Medicare and Medicaid for seniors and the very poor.” Only 6% of Americans go so far as to say the government “should not be involved in providing health insurance at all.”

Even among consistent conservatives, there is minimal support for the government having absolutely no role in providing health care. Three-quarters of consistent conservatives (75%) say the government should continue Medicare and Medicaid while just 20% think the government should not be involved in providing health insurance.

Section 4: Political Compromise and Divisive Policy Debates

Bar graph of poll results on government involvement in health care: http://www.people-press.org/2014/06/12/section-4-partisan-compromise-and-divisive-policy-debates/pp-2014-06-12-polarization-4-08/

Table 4.7 Government Role in Health Care

Q121/a/b: Do you think it is the responsibility of the federal government to make sure all Americans have health care coverage, or is that not the responsibility of the federal government?

ASK IF GOV’T RESPONSIBILITY: Should health insurance (Be provided through a single national health insurance system run by the government) OR (Continue to be provided through a mix of private insurance companies and government programs) [RANDOMIZE]?

ASK IF NOT GOV’T RESPONSIBILITY: Should the government (Not be involved in providing health insurance at all) OR (Continue programs like Medicare and Medicaid for seniors and the very poor) [RANDOMIZE]?

Table of results at this link: http://www.people-press.org/2014/06/12/government-role-in-health-care/

Comment:

By Don McCanne, MD

It is often said, based on many polls, that about 60 percent of Americans support a single payer national health program. How solid is that support? This important poll from Pew Research Center provides some perspective.

Those polled were split into two groups based on whether or not they thought that it is the responsibility of the federal government to make sure all Americans have health care coverage. They were split fairly evenly – 47 percent believing that it is a government responsibility and 50 percent believing that it is not. But then the 50 percent who thought it is not a government responsibility split into 43 percent of the total believing that we should keep Medicare and Medicaid and only 6 percent holding the position that government should not be involved at all.

This demonstrates a problem with polling. We tend to think that answers to seemingly straightforward questions accurately represent the views of the public. But against a background of rhetoric, memes, subliminal persuasion, and the messages of controlled media (think Fox), simple responses are not all that simple. The oft-repeated line, “Keep government out of my Medicare,” facetiously represents the complexity of seemingly simple concepts. Fully half of people seem to believe that they do not want the government to have the responsibility of making sure that all Americans have health care coverage, yet actually only 6 percent do not want the government involved if it means eliminating Medicare and Medicaid. That does not seem to be intuitive. People do want the government involved, even though half said that health care coverage wasn’t the government’s responsibility.

Single payer supporters likely will be troubled by the further responses of the nearly one-half who do believe that the government should be involved. Of those individuals ideologically classified as “Consistently Liberal” 89 percent believe that it is a government responsibility, yet only 54 percent believe that we should have a single national health insurance system run by the government; 31 percent believe that we should have a mix of private insurance and government programs. Of “Consistently Conservative” 98 percent believe that the government should not be involved, and zero percent support single payer (though that 98 percent drops to 20 percent of the “consistently conservative” when asked about Medicare and Medicaid).

Overall, only 21 percent of Americans in this poll seem to believe that we should have a single national health insurance system run by the government.

Most single payer supporters find this difficult to believe. But the view is quite malleable and subject to exposure to memes, rhetoric, political advertising and whatever. As examples, California’s Proposition 186 and Oregon’s Measure 23 – two single payer ballot measures – had support in the polls early in their campaigns, yet three-fourths of voters rejected Prop. 186, and four-fifths rejected Measure 23. Late in each campaign, the insurance industry had very little difficulty in taking advantage of the malleability of the views on single payer.

How could the voters be so deceived? It’s easy. It took only one more question in this Pew poll to change opposition to government involvement from 50 percent to 6 percent!

The lesson is that we cannot rest on believing that the 60 percent of Americans who support single payer will eventually drive the political process and bring us reform. That 60 percent is not an absolute – ask single payer supporters in California and Oregon. People need to have a much better understanding of health policy than they do. We need a solid foundation that cannot be washed away by memes. That is a monumental task, but that is what we are faced with.

We have a lot of educating to do. Get to work.

Addendum: The full Pew report represents a massive undertaking of defining political polarization in America. It is important to understand better this polarization if we hope to communicate our views on a superior alternative for health care financing – a single payer national health program (or, using malleable political rhetoric, “an improved Medicare for all”).

Political Polarization in the American Public: http://www.people-press.org/2014/06/12/political-polarization-in-the-american-public/

I also want to thank Harvard Professor Robert Blendon for the help he has given me in understanding political polling. Several years ago, responding to my request to get the wording right on single payer in the polls that Harvard and Kaiser Family Foundation were conducting, he sent me a large package of material that amounted to a mini-course on political polling. He convinced me how naive my view was that if we could just phrase the poll questions appropriately, we could get a stronger response supporting single payer and then use that to move the political process. We may have many polls with a 60 percent favorable response, but do we have single payer?

Austin Frakt: ACA fails moral test for affordable care

The Moral Case for Affordable Coverage and How Obamacare Fails To Live Up to It

By Austin Frakt, PhD
The JAMA Forum, June 11, 2014

Some health policy commentators have claimed that President Obama and Affordable Care Act (ACA) supporters have not made a convincing moral case for coverage expansion. Scholars suggest that support for the law could turn, in part, on the moral argument for it. What is that argument, and is implementation of the law consistent with it?

We can make some headway by turning to Norman Daniels, PhD; Brendan Saloner, PhD; and Adriane Gelpi, who articulate one possible moral case for universal coverage. Their key assumption is that there is a “social obligation to protect opportunity.”

From this, a lot follows. One’s opportunity is threatened by poor health. In sickness, one cannot learn or earn as efficiently, let alone enjoy the same length or quality of life. Therefore, protecting opportunity implies protection of access to health care services that promote and preserve health. And, it’s hard to argue with the notion that such access should be protected equally.

Access to health care is enhanced by health insurance. As Daniels, Saloner, and Gelpi argue, universal health insurance is a means to this end. But it’s not the only way. The key is to recognize that equality of access is not equality of receipt. The authors are not suggesting that we have a moral obligation to ensure that everyone receive the same amount of health care, merely that everyone have the same degree of access to it.

This more modest obligation would be met in a system that does not cover everyone but extends equal opportunity of access to affordable coverage to everyone. That is, equal opportunity to obtain coverage is a necessary condition for equal access to health care, though some may choose not to avail themselves of that care or that coverage. Put another way, if we are morally satisfied with a regime under which people can choose whether to receive care, we ought to be morally satisfied with one under which people can choose whether to obtain coverage for it, so long as there is equal opportunity of access to that coverage and the care it facilitates.

The distinction is crucial because the ACA was not designed for universal coverage, and it will not achieve it. However, it was passed with the more modest ambition to provide universal access to affordable coverage, the very thing we’re morally obligated to provide.

But, when you go beyond the law’s ambition and consider its actual implementation, there are some problems. It has failed to provide universal access to affordable coverage in at least 2 ways. First, the Supreme Court ruled to permit states to opt out of Medicaid expansion without penalty. Though gradually, more states are expanding their programs, many states still have not. In those states, millions of poor residents lack access to affordable coverage. No matter what institution one wishes to blame, this is a moral failing.

Second, for some consumers, the products offered in the new exchanges are unaffordable, even with subsidies. This is a serious ethical concern, as addressed by Saloner and Daniels.

“[T]he exchanges leave families vulnerable to burdensome out-of-pocket spending for treating health conditions that are costly but not necessarily catastrophic. For example, 25 percent of individuals in the United States have a major chronic condition such as a mood disorder, diabetes, heart disease, asthma, or hypertension. The annual cost of treating such conditions, including visits with specialists and payments for medications, can exceed several thousands of dollars, even with health insurance (Soni 2009). Under the ACA, a family of four with an income around 275 percent of the [federal poverty level] ($64 000 in 2010) would be responsible for premium costs of around $5600 and would not experience relief from cost sharing until it had reached half the family cap, around $6000 in 2010 (KFF 2010b).”

Jed Graham of Investor’s Business Daily recently reported that such affordability concerns have become reality. He documents that some families covered by exchange plans could face out-of-pocket costs as high as 40%. By any reasonable definition of affordable, this is not. This is another moral failing.

So, what can be done to bring policy into better alignment with morality? First, all states could expand Medicaid. Second, Saloner and Daniels suggest that subsidies could be increased for families with higher health care burdens, such as chronic conditions. Third, tax credits, (which now kick in when premiums are higher than a specified percentage of income) could take into account other out-of-pocket costs. Saloner and Daniels offer a final suggestion:

“[E]xchanges could be redesigned to protect specific types of investments by providing income disregards for money that low-income families set aside for paying children’s college tuition, opening a small business, or saving for retirement. An added benefit is that such a proposal would encourage families to increase their assets and to build financial stability.”

All of these approaches would make coverage expansion more expensive, unless they could be offset by policies that would make health system delivery or health insurance more efficient.

Perhaps the moral argument for the ACA was not made fully or loudly in years past. That’s a failing we can now easily remedy. I’ve just done my part. But, having done so, it’s now clear that as designed and implemented, the law is not consistent with what that moral reasoning demands. That too can be remedied, but it will require some changes, potentially at some cost. Do we have the moral fiber to make them?

JAMA Forum: The Moral Case for Affordable Coverage and How Obamacare Fails To Live Up to It

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Comment:

By Don McCanne, MD

Austin Frakt is a highly credible health economist with great values, and a person for whom I have profound respect. But sometimes he thinks too much. He is certainly correct when he states that the design and implementation of the Affordable Care Act (ACA) is not consistent with “what moral reasoning demands.” Where he falls short is in his endorsement of flawed recommendations for improvement.

In conceding that ACA was not designed for universal coverage and will not achieve it, he implies that this is acceptable since our only moral obligation is to provide universal access to affordable coverage. The problem is that no matter how much you modify our existing fragmented, multi-payer system, you can never achieve truly universal access to affordable coverage, much less to affordable health care.

Let’s look at his suggestions. He says that all states could expand Medicaid. Sure, but they aren’t, and the Supreme Court ruled that we can’t make them do it. He says that we could increase subsidies for families with greater health care burdens. Sure, but imagine the administrative complexity assigning a health-care-needs status to each individual and then continually adjusting that status as needs change with time. He says that premium tax credits could take into consideration other out-of-pocket costs. Sure, but which would be allowable and how much documentation would be required? He says that exchanges could be redesigned to protect certain investments such as the children’s college education fund, the expenses of starting a small business, or saving for retirement. Sure, but talk about an administrative nightmare, and the error rate would likely be very great.

He says that these approaches would make coverage expansion more expensive. Sure. Much of the increased cost would be in the waste inherent in adding more administrative complexity to a system that is already uniquely heavily burdened with expensive administrative excesses. He says that these extra costs could be offset by increasing efficiency in health system delivery, but that has proven to be an elusive goal with little gain to date. Besides, wouldn’t we want the gains from increased efficiency to be used to improve health care delivery rather than to add to the administrative waste we already have?

The proper moral argument is to make actual health care – not health care coverage – accessible and affordable for absolutely everyone. This is what a single payer system would do. Tweaking our highly flawed financing system so that more people have access to an insurance card falls far short of the moral obligation that we have to each other. Austin Frakt knows this. He should give up on trying to think up ways to skirt single payer.

AHIP supports catastrophic plans as option

Continuing Our Commitment to Consumers: Solutions That Will Enhance Affordability, Stability and Accessibility in the New Health Care Marketplace

America’s Health Insurance Plans (AHIP), June 2014

Enhancing affordability by creating a new lower premium Catastrophic Plan option

While millions of Americans have the peace of mind that health insurance provides, more can be done to maximize choice and affordability for individuals and families. As a solution to bring more families into the marketplace:

Health plans support the creation of a new, lower-premium catastrophic plan.

Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury.

Under the ACA, plans offered in the marketplaces fall into several metal-level categories, based on their “actuarial value” (AV) standard – essentially, what percentage of health care costs the policy would cover for a standard population. Plans are labeled as platinum (90% AV), gold (80% AV), silver (70% AV), or bronze (60% AV). A limited number of individuals — including individuals under the age of 30 — also have the option to purchase a catastrophic, high-deductible plan, although it has an actuarial value that is comparable to the bronze plan.

The new catastrophic plan would offer an AV just below the current minimum requirement, allowing for lower premiums, but would still include coverage of the law’s mandated essential health benefits, have no annual or lifetime benefit limits, and cover all preventive health services with zero cost-sharing for consumers. This would allow individuals and families eligible for premium subsidies to use that financial assistance to purchase the new plan, an option currently unavailable to consumers purchasing the ACA catastrophic plan.

We believe a new catastrophic plan would further the public policy goal of affordability and call upon policymakers to expand consumer choices by allowing this lower-premium option to be offered.

http://www.ahip.org/News/Press-Room/2014/Policy-Solutions/

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Comment:

By Don McCanne, MD

One of the worst failures of the Affordable Care Act (ACA) is that, even with subsidies, the premiums and out-of-pocket expenses are unaffordable for far too many people. AHIP now proposes to make the premiums slightly more affordable by offering catastrophic plans with very high deductibles that would make accessing health care truly unaffordable for even more people (cost sharing subsidies are available only for silver plans, but coverage of the proposed catastrophic plans would fall even below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion of the market of the 31 million people who will still remain uninsured after ACA is fully implemented?

Who would actually select these plans with very high deductibles but lower premiums? Those with very low incomes who would struggle even with subsidized premiums might choose these plans if they consider their subsidized premiums to be “all that they can afford.” These are individuals who would be much more likely to forgo essential health care simply because they couldn’t afford their portion of the deductibles.

Very high income individuals might select these plans to insure against catastrophic losses while deciding to self insure against more modest medical costs. The problem with this is that this is a form of regressive financing of the insurance risk pools. Since average health care costs are well beyond the means of middle income families to pay for them, wealthier individuals need to contribute more to the collective insurance pools (as they would in a single payer financing system). The AHIP proposal for low-premium catastrophic plans would allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the tradeoff of lower premiums for higher-deductibles – an observation confirmed by behavior in the individual insurance market before the enactment of ACA. Families that remain healthy will come out ahead, but those families that later face significant health problems often find that they will face severe financial hardship as well – even bankruptcy.

So the insurance industry is taking a position that they can increase their market, that they will not have to pay for routine medical expenses, and that they can lower their medical losses by paying only for the comparatively few individuals with high medical expenses. Little does it matter that they have the health coverage function backwards in that the healthy and wealthy do very well but the sick and poor suffer. Limiting essential protection for the most vulnerable demonstrates again why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations that benefit themselves. This release by AHIP suggests that this is the beginning of another self-serving public campaign – this time to allow individuals to have (in marketing terms) “the choice of purchasing only the insurance they need” – a high-deductible catastrophic health plan.

Social solidarity takes another beating.

Future of health care

By Jawad Husain
Boston Herald, Letters, June 11, 2014

The race for governor in the Democratic primary has raised the issue of moving Massachusetts to a single-payer health insurance system (June 10). As a medical student at the Boston University School of Medicine, I want to treat patients based on medical need, not socioeconomic status. Health care is a human right. And it needs to be affordable. That’s why I support having a single-payer system — essentially Medicare for all — which would cover all Massachusetts residents for all medically necessary services.

Let’s continue our legacy of leadership in health care and social justice, and move Massachusetts toward having a truly just, single-payer health care system.

Jawad Husain resides in Boston.

http://bostonherald.com/news_opinion/opinion/letters_to_the_editor/2014/06/letter_future_of_health_care

Skyrocketing salaries for health insurance CEOs

If they’re making millions, should the rest of us have to pay higher premiums?

By Wendell Potter
The Center for Public Integrity, June 9, 2014

If health insurance companies announce big premium increases on policies for 2015, I hope regulators, lawmakers and the media will look closely at whether they are justified, especially in light of recent disclosures of better-than-expected profits in 2013, rosy outlooks for the rest of this year and soaring CEO compensation.

Almost all of the publicly traded health insurers reported big increases in revenue and profits last year. The big winners have been the top executives of those companies, led by Mark Bertolini, CEO of Aetna, the nation’s third largest health insurer. Bertolini’s total compensation of $30.7 million in 2013 was 131 percent higher than in 2012.

If the stock prices of these firms keep growing at the current pace, Bertolini and his peers can expect to be rewarded even more handsomely this year, especially if they can hike premiums high enough to satisfy shareholders.

According to Health Plan Week, a trade publication, the CEOs of the 11 largest for-profit companies were rewarded with compensation packages last year totaling more than $125 million.

Over the past several weeks, several of them have told shareholders and Wall Street financial analysts that their companies likely will have higher profits at the end of this year than they expected, despite having to pay more medical claims as a result of the new Obamacare customers they picked up.

Those announcements have been music to the ears of shareholders, who are considerably wealthier today than they were this time last year.

Of those 11 companies (Aetna, Centene, Cigna, Health Net, Humana, Molina, Triple-S Management Corp., UnitedHealth Group, Universal American, Wellcare, and WellPoint) nine saw their stocks close near 52-week highs this past Friday.

The biggest gainer has been Humana, one of the largest operators of Medicare Advantage plans, whose share price has increased more than 53 percent over the past year.

The increases have been equally impressive at most of the other big companies. Aetna’s share price is up 31 percent, Cigna’s 32 percent. United’s is up 28 percent. And WellPoint’s is up 39 percent.

But it is the CEO compensation that has been the most eye-popping, especially at two of the publicly traded companies that specialize in managing Medicaid enrollees in several states: Centene and Molina.

Centene’s CEO Micheal Neidorff saw his compensation increase 71 percent last year, from $8.5 million to $14.5 million. Even more impressive was the 140 percent raise Molina’s J. Mario Molina got. His compensation jumped from $4.95 million in 2012 to $11.9 million in 2013.

All of those totals were disclosed in the proxy statements those companies filed with the Securities and Exchange Commission earlier this spring.

When I handled financial communications for Cigna, the day I dreaded most every year was the day we filed the company’s proxy. That’s because I knew I would get calls from reporters wanting to know how we could justify paying the CEO so much when most other employees were lucky to get 3 percent raises.

I always had talking points drafted with plenty of help from the company’s lawyers and HR executives. They didn’t vary much from year to year. Basically, all I said was, hey, this is a very big company, the CEO has a very big job and his pay is in line with what other firms of similar size pay their top guys.

I made frequent use of those talking points the first couple years. But toward the end of my 15 years at the company, I would rarely get more than one or two calls. By 2008, the year I left, the phone didn’t ring at all, at least not from the media. Fewer and fewer reporters even bothered to look at the proxy statements.

Chances are you are learning for the first time right now just how much the CEOs of big health insurance companies make. Unless you subscribe to Health Plan Week, it’s not likely you will stumble across their salaries. Nor it is likely that many members of Congress have subscriptions to Health Plan Week. That’s a shame, because they probably haven’t seen this quote, attributed to Paul Dorf, managing director of Compensation Resources Inc., from the May 19 edition, in reaction to insurers’ increasingly stratospheric CEO pay:

“I think what is going to happen is that the government is going to be stepping in. I really foresee it. As this stuff becomes public and more of the media recite these numbers, I think people are going to go to their legislators … This is crazy.”

I agree. But I’m not holding my breath waiting for the media to recite those numbers. Or for Congress to pay any attention to the outsized paychecks those CEOs are demanding — and getting — even though by law we now have to buy coverage from those companies.

Former CIGNA executive-turned-whistleblower Wendell Potter writes about the health care industry and the ongoing battle for health reform. He is a senior analyst at The Center for Public Integrity.

http://www.publicintegrity.org/2014/06/09/14912/skyrocketing-salaries-health-insurance-ceos

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Enhanced single-payer health insurance would save lives and money and provide high-quality care

Narrow Provider Networks in New Health Plans: Balancing Affordability with Access to Quality Care

Comment:

Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally

Comment:

Political Polarization in the American Public

Comment:

The Moral Case for Affordable Coverage and How Obamacare Fails To Live Up to It

Comment:

Continuing Our Commitment to Consumers: Solutions That Will Enhance Affordability, Stability and Accessibility in the New Health Care Marketplace

Comment:

If they’re making millions, should the rest of us have to pay higher premiums?

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