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Doctor favors a single-payer health care system

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Doctor favors a single-payer health care system

By Ed Weisbart, M.D.
The Lawton (Okla.) Constitution, Feb. 2, 2014 

I am a proudly patriotic, fiscally prudent, family physician. For those three reasons, I support a national health insurance program. 

Patriots like me prefer to think that America leads the world. Unfortunately, statistics show that we lag far behind in health care. Our diabetics are more likely to get an amputation, our maternal and infant mortality rates are among the worst, and our life expectancy ranks 51st in the world. 

We have many of the world’s best doctors and hospitals. So how do we explain our poor health outcomes?

It’s our deeply flawed way of paying for care.

We should demand an explanation for why we continue to spend double any other nation per person on health care, despite our dreadful results. 

Nearly two-thirds of that spending comes from our tax dollars. Our public funds for health care are already higher than the total health spending in any other nation. We’re paying more than enough for universal comprehensive health care, but we’re not getting it.

Even more striking, 31 percent of what we spend on health care has nothing to do with actual care. That 31 percent goes to the paperwork and administration inherent in an insurance model designed to be confusing to patients and profitable for big insurance companies.

In contrast, all other nations spend less than 10 percent on overhead. Our own Medicare program has overhead of  roughly 2-5 percent.

Thirty-one percent. That means that of my $1,300 monthly premium, $403 dollars is squandered every month just to prop up the bureaucracy inflicted on us by the health insurance industry.

As a practicing physician, I see the ravages of living with inadequate insurance. I’ve seen my diabetics take their insulin every other day, my hypertensives choosing between prescription and eviction, and my 64-year-old stroke patients choosing to wait until they turn 65, get Medicare, and can afford what they need to stay alive. 

This is not the United States I was brought up to believe in.

Yes, we have emergency rooms as a last resort. But patients often defer or forgo care, sometimes with fatal consequences. Further, by limiting universal access to the ER means that we pay the $48,000 average cost of a stroke, but we refuse to pay for a $4 bottle of pills to prevent that stroke. This is both terrible health care and fiscal imprudence. It is inconsistent with our nation’s alleged culture of life.

The good news is that there is a solution, hiding in plain sight. Most seniors love their Medicare program, despite its limitations. Many seniors purchase a wrap or supplement to fill Medicare’s gaps. We could simply embed those supplements into the Medicare program and provide that to all Americans, not just seniors.

Every serious economic analysis shows that the savings from an “improved Medicare for all,” otherwise known as single-payer national health insurance, would more than outstrip its new expenses. 

By slashing the administrative waste and redirecting that money to care, and by eliminating premiums, copays and deductibles, 95 percent of Americans would spend less, not more, on health care.

For businesses, these savings would spill over into reductions in workers comp, liability, and even auto insurance. Such a system would also provide more predictable future costs.

Only through a single-payer model can we establish a business case for improving the health of all Americans. With everyone (including Congress) in the same program, we would reap the benefits of timely, effective care, treating hypertension and diabetes rather than continually courting preventable medical disasters.

What are we waiting for?

Ed Weisbart, M.D., is chair of the Missouri chapter of Physicians for a National Health Program.

Why we need a single-payer health system

By Thomas Clairmont, M.D.
WFEA AM1370 Radio (Manchester, N.H.), Feb. 19, 2014

PNHP note: Dr. Thomas Clairmont, a leader of the Granite State chapter of Physicians for a National Health Program, appeared on the Feb. 19 edition of the WFEA AM1370 radio show called “On Call,” a program sponsored by the New Hampshire Medical Society (NHMS), to discuss why the United States needs a single-payer health system. You can listen to the 50-minute audio recording or download the podcast here. The host is Scott G. Colby, the executive vice president of the NHMS; the interview took place at WFEA’s studio in Manchester.

“Value-based insurance”: The journey from hype to evidence-based policy

Value-based insurance design program in North Carolina increased medication adherence but was not cost neutral

By Matthew L. Maciejewski et al.
Health Affairs, February 2014

Value-based insurance design (VBID) … is based on the premise that higher medication and administrative expenses incurred by insurers will be offset by lower nonmedication expenditures that result from better disease control. This article examines Blue Cross Blue Shield of North Carolina’s VBID program, which began in 2008. The program eliminated copayments for generic medications and reduced copays for brand-name medications. Patient adherence improved 2.7–3.4 percent during the two-year study period. Hospital admissions decreased modestly, but there were no significant changes in emergency department use or total health expenditures. The insurer incurred $6.4 million in higher medication expenditures; total nonmedication expenditures for the study population decreased $5.7 million. Our results provide limited support for the idea that VBID can be cost-neutral in specific subpopulations…..

[S]tatistically insignificant short-term changes in expenditures fall short of demonstrating that VBID can bend the cost curve as anticipated by its proponents.

http://content.healthaffairs.org/content/33/2/300.full

Comment:

By Kip Sullivan JD

In the space of a decade and a half, the concept of “value-based insurance design” has undergone a rapid transformation: from an idea few had heard of; to the latest health policy fad; to the subject of some very good research that refuted claims that VBID will cut costs. It is not unusual for unproven health policy notions to leap onto center stage. It is unusual, however, to see them subjected to unbiased, rigorous analysis so soon after they have been loosed on the public. For cultural anthropologists who like to study the mores of the US health policy community, the VBID fad provides an interesting case study because its treatment has to date proven to be the exception to the rule.

At the turn of this century, the label “value-based insurance design” had not been invented, and discussion of the underlying concept was limited to a few professional journals. Judging from several of the early papers on the concept http://www.ncbi.nlm.nih.gov/pubmed/11570020, its advocates were motivated by a desire to counteract the destructive effects of yet another health policy fad – the “consumer-driven” health policy.

In 2004, thanks largely to an article in the Wall Street Journal, the VBID idea burst out of obscurity and quickly became another hyped nostrum in the managed care pharmacopeia. The article described a successful experiment by Pitney Bowes, a self-insured Fortune 500 company, designed to reduce its total health care spending on employees with asthma and diabetes by reducing copayments on asthma and diabetes drugs. http://www.sph.umich.edu/vbidcenter/news/pdfs/2004_WSJ%20article%20%20(2).pdf

By 2005 the VBID label had been invented and a VBID “center” had been created at the University of Michigan. By 2006 the VBID label was appearing regularly in the professional literature. For the next several years the lay and professional literature published claims that VBID was not just good for patients but would also lower spending http://content.healthaffairs.org/content/26/2/w204.full  By 2009 congressional Democrats had incorporated VBID into legislation that would become the ACA and, when the ACA was enacted in March 2010, VBID was engraved into US law. (The phrase appears in the third full paragraph of the ACA under a paragraph entitled, “Coverage of preventive services.” http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf  It reads: “The Secretary [of Health and Human Services] may develop guidelines to permit a group health plan and a health insurance issuer … to utilize value-based insurance designs.”)

But at about the time the ACA was enacted, research was beginning to demonstrate that VBID, at least as it applied to drugs, did not save money. A paper co-authored by, among others, people affiliated with Pitney Bowes concluded that Pitney Bowes’ VBID program did not cut costs http://content.healthaffairs.org/content/29/11/1995.full?ijkey=V1BuR15ZDc2.o&keytype=ref&siteid=healthaff.  A literature review published in Health Affairs in 2013 concluded VBID programs “were consistently associated with improved adherence (average change of 3.0 percent over one year),” but they did not lead to “significant changes in overall medical spending for patients and insurers.” http://www.ncbi.nlm.nih.gov/pubmed/23836741 The study by Maciejewski et al. quoted above, which examined the first VBID program run by an insurance company (as opposed to a self-insured company), reached the same conclusion. The insurance company, Blue Cross Blue Shield of North Carolina, lowered copayments for medications prescribed for hypertension, hyperlipidemia, diabetes, and congestive heart failure. Adherence rates rose 3 percent over the first two years (2008-2009), but total spending did not fall.

It is instructive to ask at this point what it is about the VBID proposal that distinguishes it from other long-lived managed care fads such as the HMO, “coordination,” utilization review, report cards, and electronic medical records, all of which were and still are promoted as cost-containment ideas. A closer look at the VBID’s evolution suggests three features account for VBID’s different treatment:

•  It was clearly defined; 

•  its costs, including the indirect costs, were much easier to measure; and 

•  the great majority of all costs were paid by the same payer (a self-insured employer and, more recently, an insurance company). 

By contrast, many managed care fads are poorly defined, their indirect costs (for example, the administrative costs that utilization review imposes on providers) are harder to track, and the costs (as opposed to the savings) are absorbed by multiple parties.

A few payers have recently begun to experiment with applying the VBID concept beyond prescription drugs and using the “stick” approach (higher copayments for “lower valued” services) rather than the “carrot” approach (lower copayments for “higher valued” services). If that practice becomes widespread, the VBID concept may become more amorphous and its costs more difficult to track. In that event, we may see a resurgence in evidence-free claims about the potential for VBID to cut costs. If that happens, researchers should insist that analyses of VBID must continue to include an examination of all costs generated by VBID, including patient out-of-pocket expenses and higher medical costs caused by any damage to patient health.

Analysis: Single Payer Needs A Political Quarterback

By Hamilton E. Davis
VPR News, Feb. 19, 2014

From the opening days of Gov. Peter Shumlin’s single payer health care initiative, House Speaker Shap Smith has been a rock-solid supporter of the campaign. In 2011, he delivered Act 48, arguably the most far-sighted health care reform blueprint in the country, by lining up his huge Democratic house majority behind it.

In the early weeks of the current legislative session, however, the tone in the Statehouse around health care reform has turned remarkably sour, raising questions partly about the details of the project itself, but mainly about the political management of it. In fact, the actual engineering of the Shumlin design is going quite well – but the political operation of it is a mess.

Political Reality

Smith is Exhibit A for this conclusion. In late January, the speaker hired a consultant to advise him and the Legislature on the whole progress of health care reform so far and to assess whether the state should adopt a single payer plan.

“Everybody agrees that we want to make sure that we have quality health care. We’re doing things to bring down the rate of growth for costs,” Smith told VPR’s Peter Hirschfeld recently. “And if we don’t have those two things, we don’t want to move ahead with the single payer.”

The actual engineering of the Shumlin design is going quite well – but the political operation of it is a mess.

If taken at face value, this is a striking piece of commentary by the most important member of the Legislature. In other words, if the consultant finds in the next four months that the Vermont effort that has been underway since early 2011 isn’t good enough, then you give up on single payer? What does that mean?

Do you repeal Act 48? Do you leave the regulatory structure based on the Green Mountain Care Board in place? What about the extensive effort now underway to reorganize the whole delivery system and change the way providers are paid? Do you return the $45 million federal grant that is paying for that project?

In point of fact, Smith undoubtedly did not intend any such cataclysmic reading of the reform situation. The remarks to Hirschfeld were made in a brief, fast moving interview in a busy day. In the normal course of things, they wouldn’t have caused a ripple. But the course of things in the Legislature now is quite far from normal, and Smith’s comments clearly reflect that political reality.

Financing And Payment Reform

The underlying problem in the rhetoric that encompasses health care reform is how enormously complex and multifaceted the issue is. The term “single payer” is used to refer to the whole spaghetti ball, but in fact there is a whole cluster of issues that make up the whole.

The Green Mountain Care Board, for example, regulates hospital budgets, and some other issues such as benefit packages and insurance rates, which are two complex subject areas.

But the board is also the locus of an extraordinarily complex program that seeks to change the whole infrastructure of the health care delivery system, reworking the way that doctors and hospitals relate to one another – do they compete, or cooperate? – and, equally gnarly, how doctors and hospitals get paid.

The term ‘single payer’ is used to refer to the whole spaghetti ball, but in fact there is a whole cluster of issues that make up the whole.

At the same time, the health care reform office inside the governor’s suite on the fifth floor of the Pavilion Building in Montpelier has to figure out how to build a new state financing system that pulls together the money streams now paying for health care in the state. It also must design a system to shift a major piece of the money now going into the private insurance system to a state financing system.

Meanwhile, of course, Shumlin’s health services bureaucrats have to wrestle the federally financed insurance exchange into some semblance of competent operation. Referring to this policy cement mixer as “single payer” doesn’t really get at the entirety of the effort.

As Speaker of the Vermont House, Shap Smith has a relatively narrow, but vital, role in the reform plan. He knows perfectly well that the regulatory effort and the design work at the Green Mountain Care Board have to continue. Smith knows that you unless you get costs under control, no reform is possible.

There isn’t much he can do about the difficulties with the exchange; Shumlin himself has to manage that. What Smith has to worry about is ultimately one of the most intractable obstacles to reform: the need for the Legislature come up with a state-run, publicly financed mechanism for the new system. That bill is estimated at this point to run somewhere between $1.7 and a little over $2 billion.

Collateral Damage From Exchange

That number will exceed the entire general fund budget of Vermont. It’s not just a “big lift;” it is a gargantuan lift and it will take every ounce of skill that Smith has to get it passed. The financing bill is now scheduled to come into the Legislature a little less than a year from now, and the situation could be different then. But as of today, a bill of the single payer magnitude has little to no chance of passage. So, why is that true? How has the project gone off the rails? And what will it take to get it back on the rails? 

As of today, a bill of the single payer magnitude has little to no chance of passage.

The troubled rollout out of the federal health insurance exchange has to have been a major part of the problem. It wasn’t just that the rollout was a mess – it was that Shumlin and his team failed to inform the Legislature about what was going on. The inevitable outcome of a mistake like that is the loss of both trust and confidence that the Shumlin Administration can handle a huge, technically complex issue like single payer.

Consultant Comfort

In his tenure to date, Smith has managed the House with a deft touch, but that political skill alone won’t suffice. So Smith hired a consultant, Ken Thorpe, a health care economist from Emory University earlier this winter. It doesn’t cost much, and can be justified by the relative lack of staffing at the legislative level and by the need to help legislators frame questions and begin to learn the complexities of health care reform.

Of course, it makes sense that Smith would want a green eyeshade type to examine the cost of single payer as part of the Legislature’s due diligence. But the risk is that people will see Thorpe as some sort of a referee or a judge of the quality of the work done so far by the Shumlin designers. That risk was illuminated by Thorpe’s comments in the Statehouse shortly after he was hired. 

In his tenure to date, House Speaker Shap Smith has managed the House with a deft touch, but that political skill alone won’t suffice.

Thorpe made two key points in his first presentation. First, he credited the Vermont Blueprint for Health for important help in bringing down the rate of health care inflation in the last few years. His second point was that the state has to get costs for chronic care under control or its reform efforts are doomed to failure.

Neither of these claims makes much sense. The Blueprint for Health, which essentially provides social service support for vulnerable sick people in a way that leverages the actual medical work done by doctors, is an interesting initiative and may be saving money, but there is no way that it begins to match the other forces that have been acting on health care inflation.

The most powerful of those was the 2008 great recession, which hammered down costs in Vermont just like it did all over the country. That was followed by two years of caps on Vermont health care cost inflation to rates that were half the historic trend. The Green Mountain Care Board’s mandated hospital budgets for the current fiscal year came to 2.7 percent, the lowest level of increase since the launch of Medicare and Medicaid in the mid-1960s.

As for the comments about chronic care, they were far more true 10 or 15 years or ago than they are now. Two of the very important issues in that arena are the management of diabetes and asthma. The essence of the problem with those diseases is that the patients themselves can manage much of the problem themselves – if they know how. If they do, that means they don’t have to rush to their doctor or to a hospital emergency room if they are having a problem.

Inflationary Pressures

This leads to another point: the underlying reason why doctors some years ago dragged their feet over solving this problem was that to the extent they succeeded, they also succeeded in reducing their incomes. No care, no payment.

Inflationary cost pressures suffuse the entire health care delivery system. There is no panacea – fix this one little glitch and the whole problem goes away. And even if you believe that the costs of chronic care are the key to everything, you still face the question of what to do about them.

Even if you believe that the costs of chronic care are the key to everything, you still face the question of what to do about them.

If your analysis reaches that point, the answer that much of the health policy community now endorses is that you have to reorganize the delivery system and change the payment mechanism. The system has to be moved away from fee-for-service – no care, no payment. Instead, it should favor some sort of “capitated,” or fixed price per patient, mechanism that allows – or forces – doctors and hospitals to take financial risk for the system that they operate.

If this analysis is valid, then why would Smith bother to hire Thorpe in the first place? The reason can only be that the speaker can’t get what he needs from the Shumlin team, even though it exists there. And it isn’t mainly substance he can’t get: his house members don’t really trust what they do get from the Shumlin team.

Earlier Lessons

As to what can be done about it, you can gain some insight into that question by considering two earlier “heavy lifts” that were successfully undertaken by Vermont legislatures.

One was the civil unions-gay marriage campaign; another was the passage of Act 60, which drastically reworked the way that Vermonters finance their public school systems.

Neither of these was actually as complex as the health reform project. For one thing, both the earlier “lifts” were driven by the lash of Vermont Supreme Court decisions that something had to be done. Another is that they were nowhere near as technically complex.

Neither civil unions and gay marriage nor Act 60 were as complex as the health reform project, but their political management was illuminating.

Still, their political management was illuminating. The civil union and gay marriage campaign that spanned some eight year was managed by two people primarily. The lead was Beth Robinson, a Middlebury attorney who also led a statewide advocacy group pressing for change. The second was Steve Kimbell, then a veteran lobbyist from the Montpelier-based firm Kimbell, Sherman and Ellis.

Whenever the issue was “live” in the Legislature, Robinson, who knew every detail of the relevant law, was there to deal with it. Kimbell, meanwhile, spent much of those eight years walking the halls of the statehouse with a checklist of names of every senator and representative in his pocket. He knew, every day, where the members stood.

If a Democratic representative, for example, began to get shaky about losing his seat, Kimbell could talk to one of the Democratic leaders and they would try to find a way to help encourage him or her to hold firm.   

The “management” of the school issue was different superficially, but based on the same in principle. The real “manager” was Paul Cillo, a representative from Hardwick who was a member of the Ways and Means Committee, the linchpin for any tax issue. Cillo knew all the legislators, and moreover, had an encyclopedic grasp of the financing involved. Cillo could also respond instantly to a query from a legislator about how the new education funding plan would affect his or her town. And Cillo could also keep track of the running count of supporters and opponents of the bill.

Right now, the Shumlin Administration has no one person in the Statehouse directing the political strategy and messaging necessary to move the health care reform measure.

Right now, the Shumlin Administration has no one person in the Statehouse directing the political strategy and messaging necessary to move the health care reform measure. The administration believes that they don’t need anyone like that because the Legislature doesn’t have to pass anything this year.

They are wrong about that. The fact is that opposition to and doubt about the Shumlin initiative are settling like a miasma over the Legislature. That doesn’t mean that single payer is doomed at this point, but it is clearly worse off than at any time since Shumlin launched his initiative. For evidence of that you don’t have to look any further than Shap Smith’s hiring of Thorpe. If that’s not enough, try sitting in on the House Ways and Means committee when it’s working on health care and take the temperature.

A reasonable conclusion from all this is that Shumlin needs to get a grip on the political management of his pet project – and he better do it sooner than later. He has some very strong players, but he has no quarterback.

Without one he is risking failure, because there has never been as heavy a lift as health care reform. And if this chance is lost, we won’t see another for at least a generation. 

http://digital.vpr.net/post/analysis-single-payer-needs-political-quarterback

The ‘no free health care’ tax

We all pay when the ‘undeserving’ have to grovel for treatment

By Philip Caper, M.D.
Bangor (Maine) Daily News, Feb. 20, 2014

How much tax would you be willing to pay to make sure somebody who can’t afford health care has to grovel to get it?

I have watched the fight about whether to expand Maine’s Medicaid program (sometimes referred to as “welfare”) going on in Augusta during the past year or so with increasing bewilderment. Many Mainers, including Gov. LePage, seem to be really angry at the idea that “those people” (you know who they are) may get something they don’t “deserve” at taxpayer expense. Yet these angry people seem unwilling to take the step that would really save money by just letting those who can’t pay for medical care die.

Why? I suspect it’s because the overwhelming majority of us still value human life. But they don’t seem to mind making “undeserving welfare takers” grovel.

We all end up paying the bill for their care one way or another anyway, in higher health insurance premiums and hospital and doctors’ charges. That bill is much higher than it needs to be.

Adding it all up, the price of unnecessary administration, avoidable illness, and lack of more effective control of costs that are avoided in the Medicare-for-all-like systems in other countries easily amount to 20 percent of our total health-care spending.

Many people are unwilling to believe you can cover everybody for less than the cost of covering just some, and probably can’t be persuaded otherwise. But it’s still worth trying.

Deciding who is or is not “worthy” of dignified health care turns out to be very expensive. It’s been persuasively shown in dozens of other countries that it costs far less to cover everybody than to spend lots of money, energy and political capital deciding who the “undeserving” are, and then figuring out how not to cover them.

For example, doctors in Maine, required to deal with scores of health insurance plans, spend about three times as much on administration as Canadian doctors with their much simpler single-payer financing system.

Hospitals spend even more, requiring large billing departments, often with hundreds of employees. Insurance companies have large underwriting departments in order to create dozens or hundreds of “risk pools.”

Credible estimates of the money wasted on such unnecessary administration run to about $1,500 per year for every person in the state.

Then there’s the cost of avoidable illness. It’s a well-known fact that people without health insurance often delay seeing a doctor if they think they can’t afford it. This results in many delayed diagnoses that then end up requiring treatments that are far more difficult and expensive than need be.

Uninsured people tend to use emergency rooms that do their best to stabilize patients, but cannot prevent illnesses and injuries from happening in the first place and are not required or equipped to provide adequate follow-up care. Such pent-up demand is most likely what underlies the recent finding that the use of ERs surged among newly insured Medicaid enrollees, who are less likely to have a regular doctor. I expect that it will level off as they begin to receive regular care.

A single pool of funds is much easier to control than our current fragmented system of financing health care. Constraining the flow of money into our current system is like trying to control the flow of a river by building a dam in its delta rather than upstream.

As governments and employers try to restrain their payments into the health-care system, the latest rivulet to expand is direct out-of-pocket payments (co-pays and deductibles) by patients. They too will soon become a flood.

Out-of-control health care costs are eroding our ability to do lots of other important things in both public and private sectors. The complexity of the Affordable Care Act will only make these unnecessary administrative costs grow even more. The tax just went up.

Is it really worth $1,500 every year and rising — to you and every member of your family — to make sure some “undeserving” person doesn’t get “free” medical care?

That’s something worth thinking about.

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.

http://bangordailynews.com/2014/02/20/health/the-no-free-health-care-tax-we-all-pay-when-the-undeserving-have-to-grovel-for-treatment/print/

Bipartisan support of Medicare Advantage overpayments

To: Ms. Marilyn Tavenner, Administrator, CMS
From: 40 Senators – 21 Republicans and 19 Democrats
United States Senate, February 14, 2014

Excerpts

We write to raise serious concerns about the Medicare Advantage (MA) 2015 rate notice and the impact further cuts may have on the millions of individuals enrolled in the program. We are strongly committed to preserving the high quality health plan choices and benefits that our constituents receive through the MA program. Given the impact that payment policies could have on our constituents, we ask that you prioritize beneficiaries’ experience and minimize disruption in maintaining payment levels for 2015.

MA has been a great success and should remain a competitive choice for our constituents. Unfortunately, continued regulatory changes that affect the program’s funding, year after year, create disruption and confusion among beneficiaries who are looking for consistency and predictability.

While we are very supportive of your decision to assume a “doc fix” in the 2014 MA rate calculation and urge you to continue it this year, the MA program still experienced a real payment cut in 2014, not simply reductions in rates of projected growth.

We urge you to maintain payment levels that will allow MA beneficiaries to be protected from disruptive changes in 2015.

(Signatures of 40 Senators – click link to see names)

http://www.ahipcoverage.com/wp-content/uploads/2014/02/Bipartisan-Senate-MA-Letter-to-CMS-2015.pdf

Comment:

By Don McCanne, M.D.

AHIP, the health insurance lobby organization, has been conducting an intensive campaign to prevent the reductions in overpayments to the private Medicare Advantage plans – reductions required by the Affordable Care Act. A hint at how successful their campaign has been can be inferred from the fact that this letter from 40 senators, calling for perpetuation of the overpayments, but using AHIP rhetoric, was downloaded from the AHIP website.

If you read the entire letter you will see that it is filled with AHIP marketing phraseology touting the Medicare Advantage plans – distorting the benefits of these private plans. Democrats can’t blame Republicans for this one. Democratic politicians are very much a part of this conspiracy.

Last year the scheduled reductions were countered by increasing quality rewards to MA plans that had not earned them. This year, the reductions were partially countered by an accounting gimmick assuming a “doc fix” to scheduled reductions in Medicare payments, even though no such fix has been enacted. AHIP wants these “doc fix” increases to continue.

In a press release, AHIP President and CEO Karen Ignagni said, “CMS should protect seniors in the program by maintaining current payment levels next year,” even though there is no basis for them. Private insurers have promised lower costs, they have claimed lower costs, yet their costs are higher than for comparable patients in the traditional program.

Why should we care? The most obvious reason is that it is our tax funds that are being given to these private health plans, paying them more than it costs us to provide care in the traditional Medicare program. A much more important reason is that enrollment in these plans continues to expand, opening the door to converting Medicare into a “premium support” program (vouchers) for a market of private plans. Traditional Medicare will then be allowed to wither as an underfunded welfare program, and perhaps eventually be abolished. Then the value of the premium support vouchers will be allowed to diminish, shifting more health care costs to the beneficiaries.

If these 40 senators really cared about their Medicare beneficiaries, instead of asking CMS to overpay the private insurers, they would pass legislation to increase coverage for those in the traditional Medicare program in order to protect them from excessive out-of-pocket costs that currently require medigap or employee retiree health benefit coverage. Why should those in the private plans receive greater benefits when we’re all paying for them?

For single payer supporters who like to use the “Improved Medicare for All” designation, it is imperative that the traditional Medicare program be protected so that the public can understand that it is nominally a framework on which single payer improvements can be built.

For the time being, instead of Congress insisting on paying more to the private MA plans, we should demand that they move those overpayments to the traditional Medicare program where they’ll be put to better use in reducing financial hardship, rather than giving them to the private insurers to squander on gym memberships or whatever else might be used to market their plans.

Data Update – Spring 2014 newsletter

UNINSURED AND UNDERINSURED

• 48.0 million Americans, 15.4 percent of the population, were uninsured in 2012, down slightly from 15.7 percent in 2011. The number of uninsured people was not statistically different from 2011, according to the Census Bureau.

Similarly, there was no significant change in the number of uninsured young adults aged 19-25, 8.2 million, in 2012. The effects of an Affordable Care Act (ACA) provision allowing young adults to be covered by a parent’s plan, which modestly increased coverage for this group between 2010 and 2011, appear to have plateaued. 6.6 million children (8.9 percent) were uninsured in 2012, including 12.9 percent of children in poverty.

Although Medicare expanded slightly in 2012 with more baby boomers reaching retirement age, Medicaid has covered more people than Medicare (50.9 million vs. 48.9 million) since 2009. 54.9 percent of Americans had employment-based insurance in 2012, down from 64.2 percent in 2000.

Texas had the highest percentage of uninsured, at 24.6 percent, followed by Nevada, New Mexico, and Florida, each of which exceeded 20 percent. 272,000 people in Massachusetts (4.1 percent) were uninsured in 2012. Massachusetts’ 2006 health reform is the model for the ACA.

About 8 in 10 of the uninsured are U.S. citizens and 19.7 percent are non-citizens. Uninsured non-citizens include both lawfully present and undocumented immigrants. Undocumented immigrants and legal immigrants residing in the U.S. for less than five years are barred from  federally funded health coverage (U.S. Census Bureau, “Income, Poverty and Health Insurance Coverage in the Unites States: 2012,” September 2013).

More than half of Americans (57 percent) report delaying or forgoing health care in 2012 due to cost. While 83 percent of the uninsured skipped or delayed care due to cost, so did 54 percent of people with coverage. About 1 in 5 people with insurance reported that their plan did not cover a needed service or that they had a problem with medical bills (Kaiser Family Foundation, September 2013).

• Psychiatrists are significantly less likely to accept insurance (even private insurance) than other physicians. According to a new study, only 55 percent of psychiatrists accepted private insurance in 2010, down from 72 percent in 2005. In contrast, about 89 percent of other physicians accepted private insurance in 2005, down from 93 percent in 2005. The proportion of psychiatrists accepting Medicare (55 percent) and Medicaid (43 percent) in 2010 was also lower compared to other physicians, for whom the acceptance rate was 86 percent for Medicare and 73 percent for Medicaid (Seaman, Reuters, 12/11/13).

As of Jan. 1, 3.9 million people had signed up for Medicaid and 2.1 million people had signed up for private coverage on the ACA’s health exchanges (HealthCare.gov and 14 state-based exchanges). The final impact of the ACA on the number of uninsured in 2014 is uncertain as the enrollment period has been extended until March 31 (and indefinitely for people facing certain circumstances, such as a change in family size or hardship); private insurers must receive monthly premium payments from enrollees; the number of enrollees who had coverage last year but are switching to exchange plans is unknown; and more states may choose to expand their Medicaid programs.

The Congressional Budget Office estimated that the number of uninsured Americans would drop by 14 million in 2014. The CBO projected that Medicaid enrollment would increase by 9 million and that another 7 million people would gain private coverage through the exchanges; these gains would be offset by 2 million people losing or switching from their current individual coverage (Congressional Budget Office, May 2013).

High deductibles reduce emergency care, raise subsequent hospitalizations

Even patients with severe conditions reduce trips to the emergency department in response to high deductibles. Two recent studies assessed emergency department use among people with high-deductible health plans (HDHPs) compared with patients in HMOs. The first study found that males whose employers switched them from a traditional HMO to a HDHP reduced their utilization of emergency department visits for high-severity indications (conditions clearly warranting an ED visit) by 34.4 percent, even more than they reduced visits for low- and medium-severity indications (down 22 percent). They also experienced a reduction in hospitalizations in year one by 24.2 percent, but this was followed by a 30.1 percent increase in hospitalizations in year two, suggesting that men “put off needed care after their deductible went up, leading to more severe illness requiring hospital care later on” (Kozhimannil, “The impact of high-deductible health plans on men and women: An analysis of emergency department care,” Medical Care, August 2013).

A second study found that low socio-economic status enrollees in HDHPs in Massachusetts reacted in a similar way: They reduced high-severity ED visits by 25 percent to 32 percent in the first two years, but their rate of hospitalization eventually rebounded after falling 23 percent in the first year. The findings suggest that initial reductions in high-severity ED visits might have increased the need for subsequent hospitalizations (Wharam, “Low socio-economic status enrollees in high-deductible plans reduced high-severity emergency care,” Health Affairs, August 2013).

In contrast, patients who gained Medicaid coverage in the 2008 lottery in Oregon increased their use of the ED by 0.41 visits per person, or 40 percent relative to an average of 1.02 visits per person in the control group over the 18-month study period. ED visits by the newly insured were for a broad range of conditions, some of which could have been treated in a primary care setting. These findings were not unexpected given that the poor tend to be sick and have unmet health needs, especially in the short term after acquiring coverage (Taubman et al., “Medicaid Increases Emergency-Department Use: Evidence from Oregon’s Health Insurance Experiment,” Science, 1/17/14).

SOCIOECONOMIC INEQUALITY

• In 2012, the share of total income going to the top 10 percent of earners exceeded 50 percent, the highest ever recorded, while the top 1 percent took more than one-fifth of the total income earned by Americans, the same level as before the Great Depression (see chart, below). Overall, the top 1 percent of earners have captured 95 percent of the income gains since the recession ended. The incomes of the other 99 percent plunged 12 percent in the recession and have grown only 0.4 percent since then (Lowrey, “The Rich Get Richer Through the Recovery,” New York Times, 9/10/13).

COSTS

• In 2014, U.S. health spending will be $3.1 trillion, $9,697 per capita, 18.3 percent of GDP. This estimate, by the Centers for Medicare and Medicaid Services (CMS), assumes that over 11 million mostly healthy Americans will gain health insurance coverage in 2014, primarily through Medicaid and the health exchanges. Administrative costs for both government and private sector insurance administration are expected to jump in 2014 due to the administrative complexity of the ACA model of reform, to $41.9 billion (up 13 percent from 2013) and $199.4 billion (up 10.8 percent), respectively. Total health spending is projected to rise 6.2 percent per year until 2022, to $5.0 trillion, $14,664 per capita, 19.9 percent of GDP (“National Health Expenditure Projections, 2012-2022,” Health Affairs, 9/13/13).

• In 2013, the cost of employer-sponsored health insurance coverage rose to $16,351 for family coverage and $5,884 for individual coverage, up 4 percent over 2012. Workers paid an average of 29 percent of the cost of family coverage ($4,742) and 18 percent of the cost of individual coverage ($1,059). Over 38 percent of workers with individual coverage have an annual deductible of $1,000 or more, up from 34 percent in 2012. Nearly one-third (29 percent) of employers with 5,000 or more employees said they were considering giving workers a fixed sum of money to buy coverage in an online marketplace (or “private exchange”), with workers’ responsible for the difference between the value of the voucher and the cost of their coverage (“Employer Health Benefits Annual Survey,” Kaiser Family Foundation, 8/20/13).

Since passage of the Parity Act in 2008, spending on in patient mental health and substance abuse care for people under 65 with employer-sponsored coverage has risen only marginally. Mental health spending as a share of total hospital spending grew from 1.8 percent in 2009 to 2.2 percent in 2011; substance-use spending as a share of hospital spending rose from 0.7 percent in 2009 to 1.0 percent in 2011. As a share of the cost of an admission, copayments for mental health treatment and substance abuse treatment (12 percent and 10 percent, respectively) are nearly three times higher than for medical/surgical treatments (4 percent) despite the legislation’s requirement of similar coverage for mental health/substance abuse as for medical/surgical treatment. About 60 percent of total mental health spending of $150 billion in 2009 came from public sources, up from 57 percent in 1986. The ACA includes mental health as an “essential benefit,” but a government rule on what services must be covered is still pending, and choice of provider is severely limited by plans with “narrow networks” (“Mental Health-Substance Use Services In Hospitals Up After Parity Law,” HCCI, 2/27/13; Levit et al., “Federal Spending on Behavioral Health Accelerated During Recession as Individuals Lost Employer Insurance,” Health Affairs, May 2013).

• The Milliman benefits consulting firm estimates the average total cost of health care for a typical family of four in an employer-sponsored PPO plan annually. In 2013, the Milliman Medical index reached $22,030, including $12,886 in employer-paid premiums, $5,544 in employee premiums, and out-of-pocket spending of $3,600. In comparison, median household income (not identical to the worker’s family, but still instructive) for the most recent year available (2011) was $50,054 (Uwe Reinhardt, Economix, New York Times, 8/30/13).

Large employers shifting workers to high deductible plans, health exchanges

One-third of all large employers ( >500 employees) are already taking steps to avoid the “Cadillac tax” that goes into effect in 2018 on plans in excess of $10,200 for an individual or $27,500 for a family. To avoid the tax, many employers are pushing high-deductible, so-called consumer-directed health plans. Nearly three-quarters of large employers (72 percent) now offer at least one high-deductible Consumer Directed Health Plan (CDHP), and nearly one-quarter (22 percent) of employers plan to only offer high-deductible CDHP’s next year, up from 19 percent this year.

Large employers also plan to cut costs by offloading coverage of part-time employees, pre-65 retirees, and COBRA plan participants to the federally subsidized coverage on the health exchanges. Home Depot, Trader Joe’s, and Target are among the large firms that have announced they will no longer provide health insurance to their part-time workers (National Business Group on Health, 8/28/13, “Employers Hold the Line on Health Benefit Costs,” Mercer, 10/1/2013).

MEDICARE

• The number of physicians who agree to take Medicare patients grew from 705,568 in 2012 to 735,041 in 2013 according to CMS. While the number of doctors who decline to take Medicare more than doubled between 2009 and 2012, from 3,700 to 9,539, they are offset by the much larger flow of physicians into Medicare (Diamond, “More Doctors are Quitting Medicare. Is Obamacare Really to Blame?” California Healthline, 8/7/13).

• Medicare premiums for 2014 will stay the same, $104.90 per month. The average premium for enrollees of Medicare Advantage Prescription Drug plans will be $39 per month in 2014, a 14 percent increase from 2013. Some plans are also raising their out-of-pocket limits (The Associated Press, 10/28/13).

The nation’s largest insurer, United Healthcare, is cutting up to 20 percent of the physicians who participate in their Medicare Advantage plans across the U.S., including the entire faculty at Yale’s hospital and medical school. A U.S. district judge issued a restraining order against the firm, temporarily blocking them from dumping 2,200 doctors in Connecticut. United claims it has a unilateral right to terminate a participating physician by “amending” their United Medicare Advantage Plan (Christian, “United Healthcare enjoined from terminating physicians,” Giordano, Halleran & Ciesla, 12/16/13).

• Medicare beneficiaries in fair or poor health spent over twice as much on out-of-pocket costs for health services in 2009 as beneficiaries in good or excellent health, $3,446 vs. $1,643, respectively, according to MedPAC. Having a supplemental plan raised spending on premiums for Medicare beneficiaries in poor health from $1,128 to $3,191 annually, but they still spent a similar amount, $3,382, out of pocket (excluding premiums) for health care (“Health care spending and the Medicare Program,” MedPAC, June 2013).

• Cost-sharing hits black and Hispanic Medicare beneficiaries the hardest, due to their lower median incomes, savings, and home equity. Median per capita income from all sources was lower for black ($15,250) and Hispanic ($13,800) beneficiaries than for white beneficiaries ($24,800) in 2012, a gap that is expected to widen. Per capita savings among black ($11,650) and Hispanic ($12,050) beneficiaries is one-seventh that of white beneficiaries ($85,950). Similarly, a lower percentage of black and Hispanic beneficiaries have at least some home equity (67 percent and 65 percent, respectively) compared to white beneficiaries (85 percent), and the value of that equity was less for black and Hispanic beneficiaries ($53,650 and $67,700, respectively) than for whites ($100,200) in 2012 (“Wide Disparities in the Income and Assets of People on Medicare By Race and Ethnicity: Now and in the Future,” Kaiser Family Foundation, September 2013).

Between 2004 and 2013, the number of Medicare beneficiaries enrolled in costly private Medicare Advantage (MA) plans almost tripled, from 5.3 million to 14.4 million in 2013 (28 percent of all beneficiaries). The plans raise Medicare’s costs by selectively enrolling healthier beneficiaries, gaming the risk adjustment system, and other means. In 2012 alone, private MA plans cost Medicare $34.1 billion more than if their enrollees has stayed in traditional Medicare, or $2,526 per Medicare Advantage enrollee. In 2014, Medicare payments to MA plans are projected to total $154 billion, 26 percent of total Medicare spending (CBO May 2013 Medicare Baseline; Hellander et al., “Medicare overpayments to private plans,” International Journal of Health Services, May 2013).

CORPORATE MONEY AND CARE

• There are 12 new proton-beam therapy centers in the U.S., with 20 more in the works (including two within a 50-mile radius of Baltimore), at a cost of about $230 million per center. Although the beam of protons emitted by the 90-ton cyclotron is more precise than standard radiation and can be useful for rare tumors in the brain, near the eyes, and in children, the main target for the costly technology is the 240,000 men diagnosed with prostate cancer annually, for whom studies have not shown that it is better than standard treatment, although it is much more expensive (“Prostate-Cancer Therapy Comes Under Attack,” Wall Street Journal, 8/28/13).

• Some CEOs of nonprofit hospitals receive lavish pay. In 2009, their average compensation was $595,781 and their median compensation was $404,938. CEOs in the highest 10 percent had average pay of $1.7 million. Some of the most highly paid CEOs (including salary and bonuses) of nonprofits in 2012 included Kaiser Permanente’s George Halvorson ($12.9 million), Providence Health’s John Koster ($10 million), Dignity Health’s Lloyd Dean ($7.1 million), U. Penn. Medical Center’s Jeffrey Romoff ($9.7 million), Carolinas Health System’s Michael Tarwater ($7.5 million), and Advocate Health Care’s James Skogsbergh ($5.5 million) (Herman, Becker’s Hospital Review, 10/15/13; ABC News, “Chart: Hospital Pay and Incentives,” 6/16/13).

Since 2011, when Medicare started to pay dialysis companies a single bundled payment for each patient visit, the dialysis industry has received $530 million to $880 million a year in federal overpayments, audits show. The new bundled payment, intended to eliminate the incentive to over-prescribe epogen, led to a larger drop in the use of epogen and other dialysis drugs than anticipated. Firms’ profits soared as they pocketed the difference between the bundled payment and the cost of the drugs, and their executives reaped a windfall. DaVita CEO Kent Thiry was paid $26.8 million in 2012, up 53 percent from 2011. Congress mandated that HHS eliminate the overpayments, and a final rule from HHS is expected soon. In the meantime, the dialysis industry is spending millions on a campaign to fight the cuts (Eric Lipton, “In Congress, A Bid to Undo Dialysis Cuts,” New York Times, 8/28/13).

• The Department of Health and Human Services, the Office of the Inspector General, and the Department of Justice allocated $583.6 million to fight fraud and abuse in 2012. They recovered $7.90 for the government for every $1 spent on fraud and abuse control activities between 2010 and 2012, according to the General Accountability Office (Health Care Fraud and Abuse Control Program, GAO, September 2013).

• The number of freestanding for-profit emergency rooms has more than doubled in the past four years to over 400. Some hospital chains are using the facilities to generate admissions to their hospitals. HCA Inc. has seven freestanding ERs in Florida, while Wake Med Health and Hospitals has four facilities in the Raleigh, N.C., area. The metro-Houston area alone has 41 freestanding ERs and 10 more under development, including two that sit adjacent to each other. The chain First Choice Emergency Room owns nine ERs in Houston. Another chain, Emerus Hospital Partners, has started converting its facilities into “micro hospitals” with a few beds for patients needing detox or hospice. The firm is partnering with Baylor Health System to operate eight “micro hospitals” in the Dallas area. Emerus, founded by four emergency medicine physicians in 2006, received $30 million from a venture capital firm in 2011 to expand, with the ultimate goal being to take the firm public. The cost of a visit to a freestanding ER can top $1,000, far higher than costs at a clinic or urgent care center; most of the freestanding ERs don’t accept Medicare or Medicaid (Hawkins, “Austin Ventures invests $30 million in emergency room chain,” Austin Statesman, 1/18/11; Galewitz, “Wildfire growth of freestanding ERs raises concerns about cost,” Kaiser Health News, 7/15/13).

• WellPoint, the nation’s second largest health insurer, was fined $1.7 million for exposing health data over the Internet for 612,402 people between October 2009 and March 2010, according to Health and Human Services Department. Since 2009, when HHS started requiring reporting on data breaches, about 27 million people have been affected by major breaches of unencrypted health data (Condon, CBS News, 10/2/13; Reuters, 7/11/13).

• The Florida Department of Corrections, mandated to privatize health services and cut prison health spending by 7 percent, awarded contracts to two firms without looking into their litigation histories. Corizon, awarded a $1.2 billion contract, has been sued for malpractice 660 times in the past five years, including one case in which a jury awarded a 24-year-old patient $1.2 million after he was treated with Tylenol for a back abscess compressing his spine. Corizon also paid a $382,000 fine in Idaho for “failing to meet some of the most basic healthcare requirements” and $1.85 million in Philadelphia for using a front company to pose as a minority-owned business. A second contractor, Pennsylvania-based Wexford Health Services, was awarded a $240 million contract, even though Florida reprimanded the firm in 2002 for poor medical care following the deaths of two inmates. Wexford has paid out $5.7 million to settle 35 malpractice claims since 2008, with about 500 claims outstanding. Arizona terminated its contract with Wexford after an investigation by The Arizona Republic showed the firm was raising costs by skimming the healthier patients and leaving the sicker ones under the state’s care (Christensen, “Florida prison healthcare providers sued hundreds of times,” Miami Herald, 10/2/13).

• The highest profits in the nursing home industry go not to the homes’ operators, but to the hidden, for-profit, investor-owned real estate firms that own and lease out the facilities. Health care “real estate investment trusts” or REITs are growing rapidly, acquiring new properties and aggressively maximizing returns on existing properties, with profits that are double (6-8 percent) the average profit earned by nursing home operators. The three largest firms, with about $60 billion in combined assets and about $6 billion in annual revenues, are HCP, Ventas, and Healthcare REIT (Chart, “10 largest healthcare real estate investment trusts,” Modern Healthcare, 9/9/13).

• While the insurance industry is expected to spend $1 billion on advertising promoting the ACA’s health exchange plans, Tea Party-inspired groups opposed to Obamacare are also well-financed by corporations. The Freedom Partners Chamber of Commerce, a group linked to Koch Industries, gave over $200 million to nonprofit organizations opposing the ACA in 2012. The largest recipient was the Center to Protect Patient Rights (CPPR), which received $115 million. Run by a political consultant with ties to the Koch brothers, the CPPR lists an Arizona post office box as its address, and distributes funds to groups opposing the ACA. Freedom Partners also gave $5 million to Generation Opportunity, which targets college students. The Koch-financed Americans for Prosperity spent $5.5 million on advertisements against the ACA in just three months in 2013, and expects to spend “tens of millions” of dollars on a multifaceted campaign, including efforts to prevent states from expanding Medicaid (Stolberg and McIntire, “A federal budget crisis months in the planning,” New York Times, 10/5/13).

BIG PHARMA

Drug firms fined billions for illegal marketing

A Johnson & Johnson subsidiary was fined $2.2 billion in civil and criminal penalties by the Department of Justice for aggressively marketing the anti-psychotic medication Risperdal for unapproved uses in the late 1990s and 2000s. In addition to aggressively disseminating false information through its sales representatives, Janssen Pharmaceuticals also paid millions in kickbacks in the form of bogus grants and education payments to the nation’s largest nursing home pharmacy, Omnicare. Risperdal annual sales peaked at more than $4.5 billion annually in 2007. The U.S. attorney who prosecuted the case noted that the firm’s “promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society – children, the elderly and those with developmental disabilities.” The agreement is the third-largest settlement with a drugmaker in U.S. history.

Last year British drugmaker GlaxoSmithKline pleaded guilty and paid $3 billion in fines to settle criminal and civil fines for illegal marketing, failing to report safety data, and false price reporting practices involving several of its medications. In 2009, Pfizer paid $2.3 billion in criminal and civil fines for illegally marketing three medications for off-label uses (“Johnson & Johnson agrees to $2.2 billion fine over Risperdal, Invega, and Natrecor marketing,” The Associated Press, 11/4/13).

• The Supreme Court ruled in June 2013 that pharmaceutical companies that pay generic drug manufacturers to delay sales of generic versions of their products (“pay for delay”) may be sued for anti-trust violations. According to the Federal Trade Commission, generic versions of as many as 142 brand-name drugs have been delayed by these deals since 2005, costing consumers and taxpayers $3.5 billion each year in higher drug costs. A study of 20 such deals found that they have delayed the introduction of generic drugs an average of five years, and as long as eleven years in the case of Bristol-Myers Squibb’s Sinemet CR; that the brand-name drugs cost an average of 10 times more than their generic equivalents, and as much as 33 times more in the case of GlaxoSmithKline’s Lamictal ($465 vs. $14 per month); and that pharmaceutical manufacturers reaped an estimated $98 billion in total sales while generic versions were delayed (“Top twenty pay-for-delay drugs,” Community Catalyst and Oregon State Public Interest Research Group, July 2013).

• Johnson & Johnson will pay at least $2.5 billion to settle about 7,500 lawsuits related to its defective metal hip implants, but the final settlement may exceed $4 billion. While databases outside the U.S. showed a soaring failure rate for the implants as early as 2008, the firm did not recall the device until 2010. About 93,000 patients received the devices from its DePuy Orthopedics unit starting in 2003, about one-third of them in the United States. Once projected to last 20 years, internal documents showed the hips failed in 37 percent of patients within 4.6 years, a rate eight times higher than many other hip devices. Last year, the failure rate in Australia climbed to 44 percent within seven years (Daniel Acker, Bloomberg News, 11/20/13).

High cancer drug prices probably explain the reduced 10-year survival rates for Chronic Myeloid Leukemia (CML) in the U.S. compared with Sweden, according to international experts in CML. Treatment with Bcr-Abl tyrosine kinase inhibitors (TKIs) reduces annual all-cause mortality in CML to 2 percent versus a historical rate of 10-20 percent, and improves 10-year survival from less than 20 percent to above 80 percent. All five TKIs approved for CML have annual price ranges of $92,000 to $138,000 in the U.S., twice the prices in Europe. In the U.S., five-year survival is only 60 percent, compared with 10-year survival above 80 percent in Sweden (Kantarjian et al., “The price of drugs for CML,” Blood, 4/25/13).

GALLOPING TOWARDS OLIGOPOLY

Mergers among hospitals and health systems accelerate

The health care system is rapidly consolidating in the wake of the passage of federal health reform. There were 105 hospital and health system mergers in 2012, more than twice as many as in 2009 (“A wave of hospital mergers,” New York Times, 8/12/13).

Mergers involving four huge health systems reduced the number of large, publicly traded hospital corporations from seven to five. Community Health Systems (CHS) paid $3.9 billion to acquire Health Management Associates (HMA), while Tenet paid $4.3 billion to purchase Vanguard Health Systems.

The CHS-HMA deal will create the nation’s largest (in terms of number of facilities) hospital chain with 206 mostly non-urban hospitals in 29 states, with a heavy presence in the South, and $18.9 billion in combined revenues.

With the acquisition of Vanguard, Tenet will operate 77 hospitals, 173 ambulatory surgery and outpatient centers, and five health plans with combined revenues of about $15 billion. It will also oversee six accountable care organizations (ACOs). Tenet is paying about $582,000 per bed for Vanguard’s four Chicago hospitals, well above the median national price of $450,000 per bed in 2012.

The other three large investor-owned hospital chains are Hospital Corporation of America (162 hospitals, $33.0 billion in revenues), Universal Health Services (23 acute-care hospitals and 197 behavioral health hospitals, $7.0 billion in revenues) and Lifepoint Hospitals (52 hospitals, $3.4 billion in revenues).

Not-for-profit systems are also consolidating. Catholic Health East and Trinity Health finalized their merger earlier this year, creating the second largest not-for-profit health system in the country with 82 hospitals (in 21 states), 89 continuing-care facilities, $12.8 billion in revenues and 87,000 employees, of which 4,100 are physicians. Only nonprofit Ascension Health, based in St. Louis, is larger, with over 90 hospitals and $16.6 billion in revenues (Crain’s Chicago Business, 8/1/13; Crain’s Detroit Business, 5/1/13; Herman, “Tenet Closes on $4.3 billion Vanguard Acquisition,” MRA Alerts and Updates, 10/2/13; Herman, “56 Statistics on Major For-Profit Hospital Chain Finances,” Becker’s Hospital Review, 4/5/13).

The health care system in Massachusetts, the state that provided the model for the ACA, is highly consolidated. One insurer, Blue Cross Blue Shield, controls 45 percent of the private insurance market, and just three insurers control 80 percent. 45 percent of all private payments in the state go to doctors working for just three physician groups. Private insurance premiums in Massachusetts rose 9.7 percent between 2009 and 2011, while the value of that coverage shrank 5.1 percent, and deductibles rose 40 percent. The cost of overhead at insurance companies rose 20 percent annually during the same period, to $1.17 billion (Mass. Center for Health Information and Analysis; State House News Services, “Study: Mass. health care costs rise, benefits fall,” 8/15/13).

• Seven health systems in New Jersey and Eastern Pennsylvania including 25 hospitals are forming an alliance without merging assets. AllSpire Health Partners, composed of systems with $10.5 billion in combined revenues, will focus on joint purchasing and population health, “starting with the systems’ own employees.” Similarly, 20 hospitals in Georgia formed Stratus Healthcare, a consortium including 2,000 physicians and 18,700 employees, and three systems in the Philadelphia area formed Lehigh Valley Health Network, a limited liability corporation, to “gain population health management expertise, beginning with managing healthcare benefits for their combined 32,000 employees” (Regional News, Northeast, Modern Healthcare, 9/23/13).

In Idaho, the Federal Trade Commission is suing to reverse the purchase of the state’s largest multispecialty physician group, Saltzer Medical Group, by the state’s dominant health system, St. Luke’s. The FTC says St. Luke’s gained an 80 percent market share for adult primary care in Nampa in order to leverage price increases for patients with private coverage. This is the first such deal the FTC has litigated to the courtroom and the outcome is expected to have far-reaching implications (Modern Healthcare, 9/23/13).

• The Cleveland Clinic and the 135-hospital Community Health Systems are expanding their six-month-old alliance. They are in negotiations to acquire the Akron (Ohio) General Health System and the Sharon (Pa.) Regional Health System, and are exploring a “strategic equity partnership” with a 208-bed hospital, Metro Health Corp., near Grand Rapids, Mich. If consummated, the deals will extend CHS’ reach into 30 states (Modern Healthcare, 9/23/13).

ACA UPDATE

• Two-thirds of uninsured poor blacks and more than half of uninsured low-wage workers are ineligible for aid under the Affordable Care Act. 26 states – primarily in the South – continue to block the law’s Medicaid expansion, leaving a total of 5.2 million people with incomes below the federal poverty line ($19,530 for a family of three) uninsured but ineligible for subsidies on the exchanges because the ACA envisioned that they would be covered by Medicaid. An additional 3.2 million people with incomes between 100 percent and 138 percent of poverty won’t receive Medicaid but may buy subsidized coverage on the exchanges. Medicaid has income ceilings as low as $11 a day in some states; the median income ceiling in states blocking expansion is about $5,600 a year for an individual, less than half the federal poverty line (“The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid,” Kaiser Commission on Medicaid and the Uninsured, October 2013; Tavernise and Gabeloff, “Millions of Poor are Left Uncovered by Health Law,” New York Times, 10/2/13).

• Three of the nation’s largest insurers – Cigna, UnitedHealthcare, and Aetna – are limiting their participation on the new exchanges, offering plans in just 5, 12, and 14 states, respectively. The firms are avoiding the exchanges for now because they fear that people with costly health needs are more likely to enroll early, reducing profits, despite the administration’s promise of risk adjustment and reinsurance programs (Kirchgaessner, Financial Times, 9/4/13).

• In New York as many as 400,000 independent professionals, from physicians to musicians to craftspeople, are losing the group coverage they obtained through their medical society or association, which in many cases provided greater choice of physicians and less cost-sharing than the exchange plans. The ACA prohibits associations from selling insurance because of the risk they will siphon healthy members, who are needed to keep the new health exchanges financially viable (Hartocollis, “With Affordable Care Act, Canceled Policies for New York Professionals,” 12/13/13).

• Large businesses are projected to receive an annual $10 billion windfall from the virtual elimination of the COBRA program by Obamacare. COBRA allows employees to keep their employer-sponsored health insurance after leaving a job for up to 18 months, but the worker has to pay the full cost of coverage each month. There were an estimated 2.6 million COBRA beneficiaries in 2011. COBRA enrollees cost their former employer up to twice as much as active workers, because only sicker former-employees tend to enroll but they pay only the average premium. With the availability of subsidies on the exchanges, COBRA is expected to be virtually eliminated as former employees switch to subsidized coverage. However, some COBRA enrollees with chronic health problems are unlikely to want to switch to exchange plans because such plans have narrow networks of providers and high cost-sharing (Jay Hancock, “Swapping COBRA For Obamacare Likely To Be Windfall For Big Business,” Kaiser Health News, 9/23/13).

Insurance regulation won’t fix health care crisis

About half of the bronze plans sold in six major cities on the health exchanges require beneficiaries to pay their full deductible before any insurance coverage kicks in. In Dallas, 64 percent of bronze plans require policyholders to meet the full deductible, an average of $5,400 in those plans, before they will cover a doctor’s visit or other, non-preventive, care

The ACA intended to ban insurers from excluding patients based on pre-existing conditions. Insurers have responded to the ban by restricting patient choice of doctor to a small pool of doctors and by limiting or excluding coverage of expensive medications needed to treat HIV and other illnesses. While the online marketplace is supposed to facilitate choice of plan by allowing consumers to comparison shop, many plans don’t disclose the medications on their formulary or doctors in their networks until patients formally apply for coverage.

Since HHS ruled that churches and other nonprofit religious organizations don’t have to cover birth control in employees’ health plans, over two dozen courts have ruled that private businesses also have the right to refuse to provide contraceptives. The ACA requires plans to cover preventive care, including contraception, without cost-sharing, including FDA-approved birth control such as levonorgestrel (Plan B emergency contraceptive). Several courts have granted businesses (e.g. Hobby Lobby) injunctions against any fines until the Supreme Court rules on the matter (Julie Appleby, Kaiser Health News, 12/23/13; Pittman, MedPage Today, 12/29/12).

Delays, changes, and rulings affecting the ACA

Although the Republicans tried to repeal Obamacare for three years, and blocked the ACA’s Medicaid expansion in 26 states after a June 2012 Supreme Court ruling effectively made the expansion optional, many changes to the law have come from the Obama administration as it grapples with the difficulty of implementing such a complex plan. Ten of the most significant changes made by the White House:

1. Delayed the large-employer mandate by one year to give businesses more time to comply with the bill’s reporting requirements. Employers with more than 50 workers will have another year before they must provide coverage for employees working more than 30 hours per week. In the meantime, Target and other large employers have announced they will no longer cover part-time workers.

2. Allowed individual and small-group policies that don’t meet the ACA’s benefits standard to be retained for another year, pending insurer and state insurance commissioner approval, after technical problems made the HealthCare.gov website inoperable for many weeks after the Oct. 1 launch date.

3. Delayed launching online enrollment through the federal Small Business Health Options Program (SHOP) exchange for one year to avoid technical problems with the roll out like those that plagued HealthCare.gov.

4. Delayed the availability of a streamlined application for both Medicaid and subsidies for private coverage on the exchanges for one year due to the complexity of synching state and federal enrollment data and means testing.

5. Delayed implementation of the limit on out-of-pocket expenses for plans with a separate administrator for drug coverage for one year to give insurers more time to coordinate how they tally out-of-pocket costs. Many of these plans have a separate cap or no limit on out-of-pocket spending for drugs.

6. Eliminated the law’s voluntary long-term care insurance component, the CLASS Act, because it was inadequately financed.

7. Granted “quality bonuses” and a “payment adjustment” to Medicare Advantage (MA) plans in 2011 and 2012, respectively, effectively reversing the ACA’s cuts of overpayments to MA plans. The additional payments appeased the insurance industry, which ran a multimillion-dollar campaign mobilizing seniors to contact Congress to oppose the ACA’s “Medicare cuts.”

8. Delayed introduction of the Spanish-language version of HealthCare.gov because it was not ready to launch. CuidadoDeSalud.gov started enrollment over two months behind schedule, and continues to frustrate users with grammatical mistakes and links to forms in English.

9. Gave states permission to charge some Medicaid beneficiaries higher copayments and premiums, up to $1,500 for a family of three making $30,000, and allowed Arkansas, Indiana, and possibly other states to use their federal Medicaid money to purchase private coverage on the exchanges for the very poor to appease GOP governors and get more states to expand Medicaid coverage.

10. Ruled that churches and other nonprofit religious organizations may be exempted from the ACA’s mandate that businesses cover birth control in employees’ health plans in response to religious opposition to the ACA. The Supreme Court has accepted a case that will decide whether businesses may also choose not to provide these essential benefits.

Many state exchanges frustrate users

Some of the 14 state-based exchanges frustrated users even more than HealthCare.gov. Despite federal grants to Oregon, Maryland, and Vermont totaling nearly half a billion dollars, those states’ exchanges experienced some of the worst problems.

After two years and $160 million worth of work, Oregon’s exchange was unable to determine if people were eligible for federal subsidies or Medicaid, leaving 400 newly-hired state workers to process paper applications. Using the manual workaround, 20,000 people were enrolled in private insurance, and another 150,000 people were signed-up for the state’s Medicaid program by year’s end, at an additional administrative cost of several million dollars. As of mid-January, the site had not enrolled a single person (Gray, “Kitzhaber Hires Cover Oregon Examiner,” Lund Report, 1/10/14).

In Maryland, a “disastrous” $170 million website crashed on the first day and continues to have so many bugs that the state considered switching to the federal site, HealthCare.gov. Only about 20,000 people successfully signed up for private coverage in Maryland by the end of December (12 percent of the state’s goal by March 31), although 110,000 people enrolled in Medicaid (Johnson, “Maryland Senate committee to again question state official about exchange problems,” Washington Post, 1/15/14).

Users initially couldn’t get onto Vermont’s $168 million, federally-funded exchange, and when they did get on, they couldn’t sign up or pay for coverage. After fixes, the website still doesn’t give users on-line payment options, and has suffered two privacy breaches. About 20,000 people were finally able to enroll in private coverage through the exchange by year’s end; another 30,000 people signed up through their small business employer. Employers with 50 or fewer employees in Vermont are mandated to buy coverage through the exchange, but were allowed to bypass the website and sign up directly with an insurer as the December 24 deadline loomed. Although only two insurers participate in Vermont’s program, the annual cost of running the exchange is projected to be $18.4 million. The state is withholding $5.1 million in penalties – the maximum allowable – from the website contractor for missing deadlines (Freese, “2013 Health Care Recap,” Vtdigger.org, 12/29/13, Goodnough and Abelson, “Some State Insurance Exchanges Continue to Battle Technical Problems,” New York Times, 11/12/13).

POLLS

• A significant proportion of Americans have an unfavorable view of the ACA because it doesn’t go far enough to reform the U.S. health care system. 20 percent of Americans said they wanted Congress to expand the law in a CBS News poll in July. A CNN poll in September found that 11 percent opposed the law because it was not liberal enough, while a Kaiser poll earlier that month found that 7 percent of people who had an unfavorable view of the law said the law did not go far enough (Kipicki, “Closer Look at Polls Finds Views of Health Law a Bit Less Negative,” New York Times, 10/1/13).

INTERNATIONAL

• New Zealand celebrated the 75th anniversary of its National Health Service, with universal coverage, free care at the point of service, and a salaried physician workforce, on Sept. 14, 2013.

The Society of Family and Community Medicine in Spain is leading the opposition to a law prohibiting undocumented immigrants from obtaining medical care in public facilities unless they are under 18, pregnant, or it is an emergency. In May, a Senegalese immigrant died of TB after being refused treatment at a public hospital. Hundreds of doctors have signed a declaration opposing the law, and several of Spain’s 17 regions, which control the provision of health care, have refused to implement it (Cuzin, “Rebel Spanish doctors to keep treating illegal immigrants,” AFP, 8/7/12; Ghosh, “Undocumented African Immigrant In Spain Dies After Hospital Refuses Treatment,” International Business Times, 5/24/13).

• The next chief executive of the U.K.’s National Health Service, Simon Stevens, spent a decade as a top executive at the largest U.S. private insurance company, UnitedHealth. Stevens previously served as an advisor to Tony Blair, pushing market-based reform. With the NHS facing a £30 billion budget cut, he has announced he will take a 10 percent cut in pay on his 211,000 euro salary “in light of NHS spending pressures.” The real question is whether he will use the artificial “crisis” created by large budget cuts to push further privatization and fragmentation of the strained NHS (Toynbee, The Guardian, 10/24/13).

A Crusader on What Ails Artists

By Ben Sisario
The New York Times, February 18, 2014

PITTSBURGH — Beer bottles clinked and indie-rock classics played overhead at a gallery opening here on a Friday night recently, as one artist after another chatted with Julie Sokolow, a filmmaker and health care advocate who has documented the Pittsburgh scene in detail.

There was Eanna Holton, who makes horror masks and props and recalled spending the last five years paying off a $10,000 surgery bill for her toddler. China Horrell, her co-worker, had a pulmonary embolism that cost more than $100,000 to treat. And Daniel McCloskey, a comic-book artist, told of being uninsured when he smashed his teeth in a bicycle accident last year, at a cost of more than $22,000.

These are among the dozens of stories Ms. Sokolow, 26, has collected over the past two years, showing how the lives of Pittsburgh artists are intertwined with their struggles over the costs of medical coverage. Her online video series, “Healthy Artists,” has chronicled the experiences of more than 40 painters, poets and musicians — talented, ambitious and often with a painful story of medical debt — and drawn the attention of national media figures like Michael Moore.

“Everyone in America has a health care story,” said Ms. Sokolow, whose project has culminated in a new 30-minute documentary, “Healthy Artists: The Movie.”

Ms. Sokolow’s films — made on a shoestring budget and uploaded to YouTube — are also a microcosm of the national health care debate as it relates to the young creative class, a group that is disproportionately underinsured. And while her survey of Pittsburgh’s scene is unusual, it is also an example of grass-roots approaches around the country, like the O+ Festival in Kingston, N.Y., and San Francisco, where performers are paid in free health care.

According to one survey last year, 43 percent of artists lacked health insurance, more than double the national average for the uninsured.

“Julie’s work unearthed what was obvious but hidden at the same time,” said Dan Byers, a curator at the Carnegie Museum of Art in Pittsburgh who helped judge a “Healthy Artists” poster competition that is featured in the documentary. “It brought the more abstract national debate into a very specific, concrete, local context.”

Ms. Sokolow, who grew up in New Jersey and studied psychology and fiction writing at the University of Pittsburgh, said the origins of her project came through her volunteer work at a nonprofit organization, HealthCare 4 All PA. Assigned to film interviews with people who had dire health care problems, she was troubled by a lack of involvement among 20-somethings.

In response, the “Healthy Artists” series was conceived as a kind of “indie ‘Cribs’ for social justice,” profiling young creatives in brief vignettes and getting them talking in a personal way about medical issues. The pieces were collected online and publicized through social media.

The goal, Ms. Sokolow said, was not to dwell on tragedies but to approach the problem with some optimism and use the films to advocate for broad reform through the idea that basic health care is a human right.

“I wanted to take a more positive approach, to not just focus on health care horror stories, but the people who would be empowered by a universal health care system,” Ms. Sokolow said. “Look at the work they are able to do without it. Imagine what they’d be able to do if they had a social safety net.”

Yet part of the power of the vignettes is how they detail the frustrations of freelancers in an economy in which health insurance has historically been tied to employment. In one profile, Jennifer Gooch demonstrated some of her work as a “musician, artist, crafter, maker, doer,” before tearfully recounting how she had declared bankruptcy after getting an $18,000 medical bill that included a colonoscopy.

“The procedure I got would have cost $800 in a socialized-medicine country, and I lost 10 years of credit,” Ms. Gooch, whose work has been covered by National Public Radio and the BBC, said in a recent interview. As a result of the bankruptcy, she had to give up her tailoring business. The $180-a-month plan she recently signed up for through the Affordable Care Act is a big help, she said, but still expensive.

The number of people ages 18 to 34 who have signed up for health coverage through federal and state exchanges grew substantially last month. But Ms. Gooch’s view was echoed by many artists who came out for a gallery crawl in the artsy Garfield section of Pittsburgh, some of whom said they had signed up for plans, while others said they still could not afford one.

Ms. Sokolow said that with the completion of the 30-minute documentary, the “Healthy Artists” project in Pittsburgh was now largely finished, and that she hoped it would be a model for activism in other cities. She is also finishing her first feature film, “Aspie Seeks Love,” another documentary about the dating life of a Pittsburgh man who learned in his 40s that he had Asperger’s syndrome, and in her parallel career as a musician, she is recording her second album.

“Julie’s ability to reach out through social media and connect artists and culture to a critical social policy issue is significant,” said Jim Ferlo, a Pennsylvania state senator who has introduced a single-payer health care bill. “I wish we could multiply her around the country.”

A subtext in the “Healthy Artists” films, and in Ms. Sokolow’s wider advocacy, is a challenge to the notion that artists must suffer outside the basic economic protections of society. A single-payer health care system, offering coverage to all, could solve that problem, at least as far as it applies to health. But an important step, Ms. Sokolow said, is persuading artists simply to stand up for themselves and address a problem that is felt by all but rarely talked about.

“I would like for artists to be advocates for themselves and their own health and not buy into stereotypes,” Ms. Sokolow said. “The people I profiled are working hard and trying to be healthy, and working against a society that’s not allowing that for them.”

http://www.nytimes.com/2014/02/19/arts/a-crusader-on-what-ails-artists.html?emc=eta1

In Celebration of Gene Farley: A Founder of Family Medicine and Champion of Justice

By Larry A. Green, M.D., and Tillman Farley, M.D.
Family Medicine, February 2014

Eugene Shedden Farley, Jr, MD, MPH, died November 8, 2013, in Madison, WI. He was one of a small number of intellectual leaders in the first generation of American family physicians. Gene married Linda Winfield Fabry in 1955, and they remained partners for 54 years until her death in 2009. In many ways, one cannot talk of Gene and Lindy separately. They pursued training in general practice in Denver and, after working on the Navajo reservation in Arizona, opened a practice attached to their house in small-town Trumansburg, NY, where they thrived as general practitioners. Gene wrote, “Our original goals were to be rural general practitioners and settle in one spot for the rest of our lives. That was the first place we settled for the rest of our lives.”

As the years passed, and general practice continued a downward spiral in the United States, Gene and Lindy were unable to recruit a partner to help with the never-ending work. The question then became “whether to stay and burn out or learn how other nations handle it when there are not enough doctors.” With much ambivalence about leaving the community, Gene decided to pursue an MPH at Johns Hopkins; a product of that program of study was Gene and Lindy’s plan for an academically rigorous residency to produce family physicians. After finishing his MPH, Gene and Lindy moved to Rochester, NY, where they joined with academic and local leaders to establish one of the first accredited family medicine residencies in the United States. Gene Farley entered the academic arena as an incorrigible optimist, able to imagine more than he could do and see farther than he could go.

Larry Green: Gene Farley was my medical father. I met him on June 30, 1972, having completed my third year of medical school. My family’s Oklahoma general practitioner had inspired my going to Baylor College of Medicine, where I absorbed the rise of sub-specialization sweeping the nation. Enamored with cardiovascular surgery at the Texas Medical Center, surgery was trumping internal medicine residency training when my wife, Margie, suggested that before abandoning what got me interested in medicine, I should talk with someone who knew something about general practice. I never saw a family physician during my entire medical school experience; I only heard about them, usually through disparaging comments. Because four of seven papers about family medicine in Index Medicus at that time were from Rochester, NY, and because I had a sister-in-law living there with whom I could stay, I drove to Rochester after sending a letter indicating my schedule would only allow me to be there on June 30. The letter of reply passed me en route, saying, “Don’t come.” The program was orienting its new residents that day.

They were surprised to see me, but showed no annoyance, and in moments David Metcalf, a British GP who had helped launch the residency, met with me. I indicated that I had been assured that there was no future for family medicine in the United States. I peppered him with questions, and an hour later he directed me to Gene Farley’s office. A few minutes later, probably at a break in orientation, Gene walked in and said, “Hi! How are you?” His presence filled every corner of the room, and I immediately felt safe with him. Twenty minutes later I had heard a compelling vision of where family medicine was headed, why it mattered, and what it would take to develop it as a foundational resource for all people in our country. It changed my life, forever. Gene Farley had that effect on people. Lots of people.

Gene had many gifts, including a stunning ability to see clearly what was needed and possible and to inspire others to work together to achieve intimidating goals. Many people from all walks of life were infused with Gene’s optimism that good people working together can achieve anything. He pioneered the new-fangled medical educational invention now known as “the family medicine center,” an innovation that rotated physician training away from the hospital, toward the community. The “family medicine center” in Rochester was organized into teams made obvious by its architecture, comprised of a receptionist, nurse, nurse practitioner (another contemporary innovation), two residents from each year, and faculty. A social worker, pharmacologist, and dermatologist rounded out the team. On entry into the program, residents were paired together for the duration of the residency, and one or the other returned to the practice 4–5 days/week throughout the 3 years of residency to care for our own continuity patients while the paired partner covered rotation duties elsewhere. When Gene left town, as he often did to spread his ideas and techniques across the country, our team saw his patients, who adored him and knew he cared about them.

Every patient’s year of birth was recorded on entry into the practice on a blue (boys/men) or pink (girls/women) card, providing an accessible age/sex registry for the entire practice. Individual charts were filed in the family chart, which was color coded to reflect the census tract in which these patients lived. At the first visit of each calendar year, a colored sticker was added to individual’s charts, defining active and inactive patients. Residents coded patients’ conditions and problems and used “E-books” to construct a morbidity index of the patients they attended. We thought that all family physicians worked in teams, used registries, tracked morbidity patterns, audited their work, and practiced in the context of family and communities. Gene Farley left no space between primary care and public health, individual and community, the mental and the physical, or personal doctoring and community engagement.

Tillman Farley: Family medicine was only a part of Gene Farley’s scope and reach. He was an artist, drawing coveted doodles, carving shingles for graduating residents, welding metal sculptures. He was a liberal, progressive, political activist; he ran for the US House of Representatives in Wisconsin. Friends noted that “You knew you were fighting for the right cause if Gene and Lindy were there.” The day Lindy died, surrounded by family, she commented, “We’re all excited to see what Gene will do next.” After Lindy’s death, he envisioned with his sons a Center for Peace, Justice, and Sustainability (www.farleycenter.org), providing their six-sided house as meeting space for progressive activist groups, providing land for a farm incubator in which immigrant farmers looking for independence can teach small-scale organic farming techniques, and a green burial cemetery—where he is now buried.

Gene and Lindy used every opportunity to try to build community in the world and correct injustices around them. They saw their own family not as something that separated them from the rest of the world but rather as a strong platform onto which they could invite the world. They had four biologic sons and another essentially adopted son from Uganda. But there were countless others who paraded through their houses over the years, staying for weeks or months—as long as it took to get back on their feet—and who often called them “Mom and Dad.” As one of the sons later said, “You never knew who might answer the phone when you called the commune at 2299 Springrose Road.”

It is impossible to compile a sufficient list of Gene’s achievements, but his impact on family medicine and medicine more broadly can be illustrated. Gene was one of a handful of early family medicine leaders who met to establish the importance of research, resulting in the founding of the North American Primary Care Research Group (NAPCRG), led so effectively by Maurice Wood, MD, in Virginia, now in its 42nd year. Gene proposed the establishment of surveillance and research systems at NAPCRG, from which came the hundreds of practice-based research networks (PBRNs) that inform our understanding of ambulatory care today. He promoted family medicine in Jamaica. He led family medicine at the University of Rochester and chaired departments at the University of Colorado and the University of Wisconsin. In all endeavors, Gene was generous with power, long on trust, and quick to give credit to others.

Near the end of his life, Gene introduced a bit of autobiography with the following quote from Ralph Chaplin:

Mourn not the dead
But rather mourn the apathetic
throng—
The cowed and the meek—
Who see the world’s great anguish and
its wrong,
And dare not speak!

He went on to write, “I have expanded my thoughts about life’s quilt. The quilt is only partially completed when one dies, because others include and add to our life’s quilt at the same time they are living and developing their own.” In the words of Gene’s son, Josh, a professor of ecological economics at the University of Vermont, “I think of society as a continual evolving system, with memes instead of genes. Most people simply pass on existing memes to varying degrees, with some, as a result, becoming more widespread, others less so. Our task in life is to generate and pass on memes that make the world better. Dad not only did an exceptional job of passing on existing memes that are more likely to ensure a sustainable and desirable future, but he also developed important new mutations, new memes, which continue to spread. He will still accomplish a lot.” To paraphrase Lindy, we’re all excited to see what he does next.

Corresponding Author: Address correspondence to Dr Green, University of Colorado, Department of Family Medicine, 12631 East 17th Avenue, Campus Box F496 HSC, Aurora, CO 80045.

Additional Resource

Farley E. Voices from family medicine: Eugene Farley. Interview by William B. Ventres and John J. Frey. Fam Med 1992;24(2):152-5. http://www.aafpfoundation.org/online/etc/medialib/found/documents/programs/chfm/farley.Par.0001.File.dat/FARLEY.pdf.

From the Department of Family Medicine, University of Colorado.

(Fam Med 2014;46(2):137-8.)

http://www.stfm.org/FamilyMedicine/Vol46Issue2/Green137

Community rating shifts costs from private insurers to taxpayers

Regulatory Redistribution in the Market for Health Insurance

By Jeffrey Clemens
National Bureau of Economic Research, Working Paper 19904, February 2014

Abstract

In the early 1990s, several U.S. states enacted community rating regulations to equalize the health insurance premiums paid by the healthy and the sick. Consistent with severe adverse selection pressures, their private coverage rates fell by around 8 percentage points more than rates in comparable markets over subsequent years. By the early 2000s, following substantial public insurance expansions, coverage rates in several of these states had improved significantly. As theory predicts, recoveries were largest where public coverage expanded disproportionately for high cost populations. The analysis highlights that the incidence of public insurance and community rating regulations are tightly intertwined.

Conclusion

This paper studies the relationship between two instruments of health-based redistribution: tax-financed public insurance and premium regulations that generate within-market transfers. The economic incidence of these policies is tightly intertwined. Community rating regulations risk substantial adverse selection when large numbers of unhealthy individuals remain on the private market. When targeted at the unhealthy, Medicaid expansions can relieve this adverse selection. Public coverage of the unhealthy can thus reduce the size of the subsidies and/or tax penalties required to stabilize community-rated insurance markets. It can similarly be viewed as a complement to risk adjustment programs.

The 2010 Patient Protection and Affordable Care Act (PPACA) contains regulatory measures including community rating rules, guaranteed issue requirements, and an individual mandate to purchase insurance. Three of PPACA’s features are designed to go farther than previous regulations to induce pooling of the healthy and sick. First, it taxes healthy individuals who forego insurance. Second, it limits adjustment along the intensive margin of insurance generosity. Specifically, it expands minimum coverage requirements and tightens limits on out-of-pocket spending. Third, its guaranteed issue requirements are more stringent than those typically in place across the states.

PPACA’s regulations may result in significant pressure to shift the cost of unhealthy individuals out of the insurance exchanges. The law would generously finance such efforts, as the federal government will reimburse more than 90 percent of the cost of its associated Medicaid expansions. Both the implementation of these expansions and their impact on states’ insurance markets remain uncertain. These issues will be ripe for study as PPACA’s implementation unfolds.

http://www.nber.org/papers/w19904?utm_campaign=ntw&utm_medium=email&utm_source=ntw

Comment:

By Don McCanne, M.D.

A major problem with financing health care through private insurers is that they will always do whatever they can to avoid insuring people who might need more health care. To prevent insurers from chasing less healthy patients away by charging them much higher premiums, community rating was established in several states. Each person would be charged the same premium regardless of health status. How has that worked out?

In fact, it did not work very well. As high-cost patients enrolled in private plans in greater numbers, premiums went up, and healthier patients dropped out because of the high premiums, which drove premiums even higher because of the concentration of sicker patients (the death spiral of insurance premiums). The net number of people enrolled in the private insurers’ risk pools quite understandably declined.

In some of these states, Medicaid programs were designed to target these high-cost patients, siphoning them off from the private insurers’ risk pools. To no surprise, with the taxpayers picking up the costs of these expensive patients, the private insurers retained the healthier enrollees, and the plans’ membership rates recovered.

This NBER paper notes that the Affordable Care Act contains regulations that “may result in significant pressure to shift the cost of unhealthy individuals out of the insurance exchanges. The law would generously finance such efforts, as the federal government will reimburse more than 90 percent of the cost of its associated Medicaid expansions.”

Why should we support a system that uses a very expensive, administratively complex form of financing health care – private insurers – to cover those with fewer health care needs, while transferring the higher costs of less healthy patients to us, the taxpayers? The issue here is not that taxpayers shouldn’t be financing our health care, but rather that we are retaining a private industry that wastes resources on insuring a less costly, heather population with fewer needs, when a public system would do that more efficiently and at lower cost – simply by placing everyone in the same risk pool.

Community rating is one of those policies in a large complex of inefficient health policies that are designed specifically to keep private insurers in business. Under a single payer system, we wouldn’t need community rating since we wouldn’t break up the financing into individually assigned insurance premiums. With single payer, instead of using individual premiums each of us would be taxed equitably based on ability to pay.

We are overburdened with the costs and workload of endless health policies that are designed to make the highly flawed model of private insurers sort of work for us, though certainly not very well and at an outrageous cost. Let’s dump those flawed policies and enact more efficient and equitable policies that are designed first and foremost to take care of patients. A single payer national health program would do just that.

Labor unions back Gottfried-Perkins plan for universal, publicly-funded health care

By Tiffany Brooks
Legislative Gazette (Albany, N.Y.), Feb. 17, 2014

During a press conference last week labor unions joined the push for a single payer health care program in New York.

The Working Families Party, Service Employees International Union 1199, and the Communication Workers of America District 1 last Tuesday joined Assembly Health Committee Chair Richard Gottfried, D-Manhattan, to support New York Health, a single payer health care program.

“The Affordable Care Act has made good and important improvements to our health care system,” Gottfried said. “But it is very clear that even with all the improvement in the federal health care reform. We’re still in the hands of insurance companies with the high premiums, out-of-sight deductibles, co-pays, numerous limited provider networks, insurance bureaucrats telling us what coverage they’ll pay for, or wont, and what doctor we can go see at what hospital. We need health coverage that is designed for patients, not for insurance companies.”

The proposed New York Health is a publicly funded universal health care plan for all New Yorkers, with no premium, deductibles, or co-pays. Benefits would also include primary and preventive care, outpatient and inpatient medical care, prescription drugs, laboratory tests, rehabilitation, dental, vision, and hearing coverage.

A version of the bill (A.5389-a/S.2978-a) has been introduced every year since the 1990s.

“As Assemblyman Gottfried said, the passage of Obamacare represented a huge advance in this country the principle that almost all Americans are entitled to access to affordable health care, but it’s not enough,” said Bob Master, the political director for the CWA’s District 1.

Currently, the bill has support from groups such as United Auto Workers, Physicians for a National Health Program, New York State Nurses Association, and 87 state legislators.

The Senate Health Committee and Assembly Codes Committee are currently reviewing the bill.

“As tireless advocates of patient care, registered nurses of New York state are proud to stand with Assembly Health Committee Chair, Richard Gottfried, state Senator Bill Perkins, and countless other patient advocates in support of the New York health bill,” said Lisa Blodgett, a registered nurse and member of the New York Nurse’s Association. “There’s a health care crisis throughout our state and the only solution is a single payer system that guarantees quality health care to all.”

http://www.legislativegazette.com/Articles-Top-Stories-c-2014-02-17-86832.113122-Labor-unions-back-GottfriedPerkins-plan-for-universal-publiclyfunded-health-care.html