PNHP

Physicians’ Presidential Poll

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Physicians’ Presidential Poll

Results of the 2012 Physicians’ Presidential Poll

By Jackson & Coker Research Associates
Jackson & Coker Industry Report, October 1, 2012

A new survey of physicians shows that if the Presidential election were held today, 55 percent would vote for Mitt Romney and 36 percent would support President Obama, according to a survey conducted by Jackson & Coker, a division of Jackson Healthcare, the third largest healthcare staffing company in the US.

When asked how they felt about the Affordable Care Act, 55 percent said “repeal and replace” the new law while 40 percent said “implement and improve” the ACA.

http://www.jacksoncoker.com/physician-career-resources/newsletters/monthlymain/des/PresidentialPoll.aspx

Comment:

By Don McCanne, MD

Rather than demonstrating where physicians are on their beliefs and understanding of health policy, this poll merely shows that the debate has been reduced to the politics of the Affordable Care Act (ACA). Of the 55 percent who would replace ACA, there is no breakdown on those who would replace it with Medicare for All (neither candidate)  and those who would replace it with policies that likely would shift more of the financial burden to patients (Romney). Also, of the 40 percent who would improve ACA there is no breakdown of those who would support the dubious strategy of modifying it incrementally as a means of eventually achieving single payer reform (neither candidate). We need surveys of physicians’ views on policy, not politics.

Aaron Carroll repeats meme of access, cost and quality

JAMA Forum — The “Iron Triangle” of Health Care: Access, Cost, and Quality

By Aaron Carroll, MD, MS
news@JAMA, October 3, 2012

When I talk about health policy, I often refer to the iron triangle of health care. The 3 components of the triangle are access, cost, and quality. One of my professors in medical school used this concept to illustrate the inherent trade-offs in health care systems. His point was that at any time, you can improve 1 or perhaps even 2 of these things, but it had to come at the expense of the third.

I can make the health care system cheaper (improve cost), but that can happen only if I reduce access in some way or reduce quality. I can improve quality, but that will either result in increased costs or reduced access. And of course, I can increase access—as the Affordable Care Act (ACA) does—but that will either cost a lot of money (it does) or result in reduced quality.

Anyone who tells you that he or she can make the health care system more universal, improve quality, and also reduce costs is in denial or misleading you.

We can make the system cheaper. We can make it more expansive. We can make it higher in quality. But we can’t do all 3.

http://newsatjama.jama.com/2012/10/03/jama-forum-the-iron-triangle-of-health-care-access-cost-and-quality/

Comment:

By Don McCanne, MD

We have heard for decades the meme that health care access, cost and quality are interdependent. Any change in one or two of them must produce a reciprocal change in either one or both of the others. Any improvement must always be offset with one or two impairments. Yet the single payer model shows that this is merely a replication of a seriously deficient concept that omits consideration of many other important health policies.

Under a properly designed single payer model, access is improved by removing financial barriers to care for absolutely everyone. The comprehensive design features of single payer also significantly improve quality, simply stated, by ensuring that patients receive the care that they need while reducing or eliminating care that is detrimental. And costs are the forte of the single payer system. Single payer reduces waste, redirecting those funds to patient care, and puts into place economic mechanisms that slow the rate of increase in future health care costs. Spending can be contained while both quality and access are improved.

It is time to retire the meme that improving access, costs or quality can be done only by introducing impairments. Don’t let the policy community get away with that claim anymore. Aaron Carroll’s integrity is of such a high caliber that he certainly is not misleading us, but he clearly needs to end his denial.

New report on insurance plans heaping costs on patients

Many Insurance Plans Heap Healthcare Costs on Consumers

Plans with lower premiums burden members with potentially crushing costs

By Steve Sternberg and Chris I. Young
U.S. News & World Report, October 3, 2012

A first-ever U.S News analysis of nearly 6,000 health insurance plans marketed to individuals and families reveals that many of the consumers who enroll in these plans may confront budget-wrecking out-of-pocket costs that deplete their savings.

Each of the plans in the U.S. News database was scored and assigned a rating of one to five stars; plans available to both individuals and families were rated separately for each. A plan’s score depended on completeness of coverage in as many as two dozen benefit categories and subcategories—hospitalization, outpatient surgery, name-brand prescription drugs, and emergency room visits are just a few examples—and how much of the cost consumers have to pay.

The plans U.S. News rated, which are those sold to individuals and families who have no access to employer or public coverage, currently cover some 14 million people. That number could very well double once the major provisions of health reform’s Affordable Care Act take effect in 2014, according to the bipartisan Congressional Budget Office, because the ACA mandates that everyone must have health insurance or pay a penalty.

U.S. News spent several months working with data obtained from the Centers for Medicare and Medicaid Services (CMS), a federal agency that summarizes plan coverage and pricing on a consumer page but does not rate or rank plans against each other. The analysis posed many challenges, including constant flux in the number of plans available in the federal database. That is because of incomplete reporting and because health insurers periodically create new plans and stop enrolling applicants in established ones.

Research into purchasing behavior shows that health insurance shoppers are strongly influenced by the size of the monthly premium. It is a regular outlay, like a mortgage or rent payment, so weighing its impact on one’s monthly budget makes sense—to a point. An individual or family that opts for an easily affordable premium can be blindsided in the event of traumatic injury or major illness. A plan that may seem like a good choice because it has a lower monthly premium may require consumers to pay much more out-of-pocket every time they need medical care.

Plans are often far from transparent about how much consumers must pay for medical services. The term “out-of-pocket maximum,” supposedly meaning the most a consumer will have to pay for medical services, is misleading; 90 percent of plans exclude some combination of deductible, copays (upfront fees paid for service), and coinsurance (the consumer’s share of the charges). Nearly 100 plans exclude all three. A plan member with average coverage who needs surgery could end up paying thousands more than their out-of-pocket cap.

If a hospital’s physicians aren’t members of a health plan’s network, the cost may climb even higher, an expense that often comes as a shock to plan members who assume their care is covered. The same is often true for hospital services, such as occupational therapy, that are not provided by physicians.

The higher you have to climb the deductible ladder before benefits are paid out, the more vulnerable your income and savings. Medical bills tend to come in waves. A routine doctor’s visit that starts with an annual physical and progresses to a tentative diagnosis can trigger a cascade of expenses, from lab tests to prescription drugs to inpatient or outpatient hospital procedures. Plans rarely cover more than a portion of those costs, which may add up to tens of thousands of dollars when severe illness strikes.

http://health.usnews.com/health-news/health-insurance/articles/2012/10/03/many-insurance-plans-heap-healthcare-costs-on-consumers

Comment:

By Don McCanne, MD

No surprise. The title of this article says what we already knew: “Many Insurance Plans Heap Healthcare Costs on Consumers.” Further, individuals and families most often select plans based on how easily affordable the premium is, and those plans can easily exceed the supposed out-of-pocket maximum.

The Affordable Care Act includes some measures that will reduce some of the abuses of these plans, but it still leaves in place the fundamental infrastructure of private health plans. Shoppers in the state health insurance exchanges should understand that the plans they purchase will ensure neither financial security nor health security. We can do far better, beginning with establishing a single payer infrastructure.

Deaths from Uninsurance

'We're not done with health care reform yet'

By Johnathon Ross, M.D.
CommonDreams.org, Oct. 3, 2012

A recently released Census Bureau report reveals that 48.6 million Americans lack health insurance.

We know that being uninsured is dangerous to your physical and fiscal health. Research has shown that for every million uninsured, 1,000 preventable deaths occur due to untreated or undiagnosed illness.

This means 48,000 Americans will die needless deaths this year. To put this in perspective, that’s about the same number of U.S. combat deaths in Vietnam War over a decade.

President Obama and the Democrats fought to get the Affordable Care Act (ACA) passed. This was a remarkable political achievement. For 100 years, American presidents have tried to achieve health system reform. The last significant achievement was the passage of Medicare in 1965. Since then political deadlock has allowed only minor tinkering.

Sadly, the ACA is not remarkable as a policy success. Reform should have been modeled on our successful Medicare program. Instead, the ACA was modeled on the reforms passed by Mitt Romney in Massachusetts.

Massachusetts did expand coverage, as will the ACA, but the Bay State’s reforms, which rely on subsidies for the mandatory purchase of private insurance, have left 200,000 people uninsured to this day, six years later. Costs in Massachusetts have soared and continue to be the highest per capita in the world.

Fully implemented, the ACA will still leave 30 million uninsured in 2022, according to the Congressional Budget Office. That figure may climb even higher if more states decide to turn down federal Medicaid dollars, which several governors have said they may do.

But assuming all goes ahead as planned, 10 years from now we will still see about 30,000 of our friends, neighbors and family members die avoidable deaths from lack of coverage.

Keep in mind these sobering statistics do not account for the terrible suffering and disability that results when treatable illness is allowed to progress untreated, even if it does not result in death. This suffering is unmeasured.

During the debate over the ACA, a different type of reform – an improved and expanded Medicare for all – was shut out of the discussion despite popular support for this approach and despite multiple federal and state-based studies showing that the administrative cost savings from such a program would save about $400 billion yearly. Those savings would be enough to cover all the uninsured, improve benefits for all, and eliminate most out-of-pocket health spending for everyone.

As with the ACA, an improved Medicare for all would have no pre-existing condition exclusions and no lifetime limits for those with chronic conditions. Unlike the ACA, you could go to the doctor or hospital of your choice.

Under our current arrangements, dominated as they are by private health insurance companies and giant, for-profit pharmaceutical companies, we know that medical bills are responsible for over half of personal bankruptcies.

This financial suffering is passed along to all of us as bad debt and these costs are a drag on the economy. The ACA may reduce these bankruptcies somewhat, although in Massachusetts, the model for the ACA, the rate of medical bankruptcies hasn’t changed much at all.

By contrast, under an improved Medicare for all, medical bankruptcies would be a thing of the past. Patients would benefit by having ready access to comprehensive, high-quality care with no more co-pays and deductibles.

Businesses would benefit by being relieved of all the administrative burdens of our dysfunctional insurance system, a source of high costs and endless headaches. Physicians would benefit by being free of insurance company meddling and would be able to return to what they know best – caring for patients.

An improved and expanded Medicare for all will save money that can relieve the deficit. It will be good for business and the economy. It will save lives and relieve suffering.

As far as health reform goes, we are not done yet.

Johnathon Ross, M.D., M.P.H., is past president of Physicians for a National Health Program and an executive committee member of the Single Payer Action Network in Ohio.

http://www.commondreams.org/view/2012/10/03-6

U-Shaped Curve of Health Status and Coverage

Health Status, Health Insurance, and Medical Services Utilization: 2010

By Brett O’Hara and Kyle Caswell
United States Census Bureau: Current Population Reports, October 2012

There is a U-shaped relationship between health status and having any type of health insurance coverage. Among all people who reported excellent health, 85.0 percent were insured. For those who reported good health, 80.2 percent had health insurance coverage. Finally, 85.1 percent of people who reported poor health also had health insurance coverage.

This U-shaped relationship for the overall insurance rate is partially attributable to trends in the type of health insurance coverage. For example, 15.7 percent of people with excellent health reported having only public insurance, compared with 44.7 percent of people with poor health. On the other hand, the percentage of people with excellent health who had private health insurance was 69.3 percent, compared with 40.4 percent of people in poor health.

http://www.census.gov/prod/2012pubs/p70-133.pdf

Comment:

By Don McCanne, MD

This seemingly mundane observation from this Census Bureau report provides great insight into the problems with health care financing in the United States.

It is astonishing that a country that spends so much on health care would have a U-shaped curve, or any curve for that matter, on the relationship between health status and whether or not one is insured.

Considering our financing system, the curve is easy to understand. People in excellent health also tend to have favorable socioeconomic circumstances that would result in higher enrollment in private insurance plans. Likewise, people in poor health tend to have less favorable socioeconomic circumstances that would result in higher enrollment in public insurance programs. People in good health would fall in between and thus would lie in the trough of the U-shaped curve, with lower rates of insurance than those well off and those benefiting from government programs.

If we had a decent health care financing system, wouldn’t those in good health be as well covered as those in excellent health and those with public programs? More importantly, shouldn’t either end of the U-shaped curve reach 100 percent coverage? And wouldn’t the trough be wiped out so everyone with good health were covered as well?

The Affordable Care Act might shift the entire curve up as more are covered, but the 30 million who will remain uninsured will perpetuate the bizarre U-shape of the curve. We need a flat line, at the top, with 100 percent coverage. That’s everyone, like we would have in an improved Medicare for all.

South Carolina chapter of PNHP forming

Health professionals from the Charleston area and around the state are forming a South Carolina chapter of Physicians for a National Health Program to promote a Medicare-for-all approach to health care

By Jonathan Allen
Mount Pleasant Patch, Aug. 28, 2012

While one of the contentious issues in the presidential race will be whether to repeal Obamacare, a growing number of medical professionals is calling for a single-payer, Medicare-for-all approach instead.

David Ball, a nurse at MUSC, is the S.C. Coordinator for the newly formed South Carolina Chapter of Physicians for a National Health Program, a group that has advocated a single-payer health care system for more than 25 years.

Ball is among the more than 18,000 health care professionals across the United States that want to see the U.S. adopt a socialized medicine model that conservatives claim to loathe. He said Obamacare was a positive step in that it extends health insurance to millions of people that wouldn’t have been able to get it otherwise, but that it will fail to control health care costs.

“About half of the people that didn’t have insurance before got it, there are no more lifetime caps, kids can stay on their parents’ plan until they are 26, so there are some really good things in there,” Ball said. “The bad thing is we’re being eaten alive by costs.”

The PNHP position is that the only effective way to control the cost of health care is to cut out the administrative costs incurred by utilizing a private health insurance industry. The group points to statistics like Medicare’s overhead costs are 3.1 percent whereas the overhead for private insurers ranges from 16.3 percent to 26.5 percent.

Between 1970 and 2000, Ball said, the country’s health care costs have risen by 2,700 percent. During the same period the number of doctors in the country has roughly doubled, so most of the growth is coming from administrative costs, he said.

“If you go to Duke Medical Center, they have 900 beds,” Ball said. “And they have 900 billing clerks, one for every bed. It’s wildly inefficient, but in the environment we have today, it is what is necessary.”

The U.S. spends more money per capita on health care, and nearly double next highest spending nation, France, than any other industrialized nation, and has worse overall health outcomes, Ball said.

He adds, Medicare is a program that works and is well liked, and should be expanded to everyone.

“What we’re talking about is the elimination of the private health insurance industry,” he said.

Decoupling health insurance from employment would be a boon for small businesses which may not have been able to afford to offer health benefits to employees, Ball said.

“We talk about choice,” he said. “I want the freedom to choose whatever job I want and not have to worry about health insurance, but you have to.”

Membership in the S.C. Chapter of PNHP is open to doctors, nurses and others in medical fields. For more information on the chapter contact Ball at ballds@musc.edu.

http://mountpleasant-sc.patch.com/articles/s-c-chapter-of-pnhp-forming

Small business owners under the Affordable Care Act

How Small Business Owners Get Health Insurance

By Larry Levitt, Anthony Damico, and Gary Claxton
Kaiser Family Foundation, Health Insurance and Reform, September 28, 2012

As with any economic policy issue, there has been much discussion of how the Affordable Care Act (ACA) will affect small businesses. But, there’s been very little focus on how the health reform law will affect the owners of those businesses as people.

As our recently released Employer Health Benefits Survey shows, small businesses are much less likely than larger businesses to offer health benefits to their workers. Half of businesses with 3-9 workers and 73% of firms with 10-24 workers provide health insurance. That contrasts with 98% of firms with 200 or more workers that offer health coverage.

The workers in these firms that do not offer coverage must rely on employer-based insurance through a family member, buying insurance in the individual market (assuming they can afford the coverage and do not have a pre-existing health condition), or in many cases going uninsured.

But what about the owners of these small businesses? They’re pretty much in the same boat.

A few striking things emerge from this analysis:

• About one in four small business owners is uninsured, roughly the same as for non-elderly adults generally.

• Just 40% of small business owners get job-based insurance, either from their own job or through a family member. In contrast, almost six in ten non-elderly adults get their insurance through an employer.

• Small business owners rely heavily on the individual insurance market, with 30% of them buying “other private insurance” (the vast majority of which is coverage purchased in the individual market).

This suggests that the biggest effects the ACA will have on small business owners may not be changes in the rules for the small business insurance market, but rather the changes in the individual insurance market: guaranteed access to coverage and no premium surcharges for people with pre-existing health conditions, limits on how much premiums can vary by age, a requirement that all insurers cover a set of “essential” benefits, the creation of health insurance exchanges, the requirement to be insured, and tax credits to make premiums more affordable. In fact, an estimated 60% of small business owners now buying insurance in the individual market have incomes up to 400% of the poverty level and would be eligible for tax credits in exchanges or Medicaid, and 83% of owners who are now uninsured would be eligible for subsidized coverage (split about equally between tax credits and Medicaid).

It may be that we can gain more insight into the implications of policy issues like health reform for small business by focusing less on the businesses themselves and more on the people who own them.

http://healthreform.kff.org/en/notes-on-health-insurance-and-reform/2012/september/how-small-business-owners-get-health-insurance.aspx

Census tables on firm sizes, receipts and payrolls:
http://www.census.gov/econ/smallbus.html

Comment: 

By Don McCanne, MD

In both policy and political debates, small business owners have been separated out for special attention as “job creators” who should not have to pay higher marginal income tax rates on the portion of their incomes over $1 million. This deceptive framing that falsely suggests that they are the primary drivers of our economy masks the fact that most small business owners have very modest incomes and are heavily dependent on the dysfunctional individual insurance market, and one-fourth of them aren’t even insured.

Over three-fourths of firms have no payroll, so these represent self-employed business owners, presumably with very modest incomes on average (see Census link above). Of firms with payrolls, over half have total receipts of less than $100,000 which is used for payrolls, all other business expenses, and the net income of the business owner. Most small business owners do not fall into the prototype “job creators” that the politicians keep talking about.

They have a problem with health insurance. This Kaiser reports shows that many of them will benefit from the improvements in the individual insurance market that are required by the Affordable Care Act. But, as we have shown many times in the past, these plans will still have unaffordable premiums and unaffordable out-of-pocket costs, even with the subsidies to be provided by the Act. Many of them will remain in the ranks of the uninsured, estimated by the CBO to be 30 million people. The Affordable Care Act will not meet the health care needs of far too many small business owners.

Our small business owners deserve what all of us deserve: an affordable health care system that takes care of everyone – an improved Medicare for all.

Spiritual side of health care

By Ahmed Kutty, M.D.
Kearney (Neb.) Hub, Letters, Aug. 24, 2012

On Aug. 15 at the dedication of the new west wing and the Cope Heart Center at Good Samaritan Hospital, Bishop William Dendinger of Grand Island paid tribute to the late Cardinal Joseph Bernardin, who held a strong belief that the sacred dimension of the healing professions was just as vital as its scientific foundations.

In November 1996, the cardinal passed away after battling advanced pancreatic cancer, which brought him into direct and personal experience of pain and suffering. While very satisfied with the care he received at Chicago’s Loyola University MedCenter, Bernardin spoke out with anguish and passion regarding the plight of 45 million fellow Americans who were uninsured and often did not receive needed and timely medical care simply because the cost of coverage was unaffordable.

The Affordable Care Act of 2009 (Obamacare), while addressing some of the major flaws in our current dysfunctional system, has a long road to travel before a publicly funded health care financing mechanism is in place, providing necessary, appropriate and evidence-based medical care, both preventive and curative, to all citizens of this country. Achieving universal Medicare (Improved Medicare for All) will take a sustained, hard and bitter fight before the powers that be will concede it.

If we, the people, carry on the struggle for the cause that was very dear to his heart, the cardinal could not have wished for a worthier tribute.

Dr. Ahmed Kutty is a retired Kearney physician.

Wealth redistribution for health care

Redistribution of Wealth in America

By Uwe E. Reinhardt
The New York Times, September 28, 2012

A recent article in The Washington Post and an audio clip accompanying it on the Web featured an excerpt from a speech in 1998 by Barack Obama, then an Illinois state senator, at Loyola University Chicago.

In that speech he remarked, “I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”

The article then quotes Mitt Romney: “I know there are some who believe that if you simply take from some and give to others then we’ll all be better off. It’s known as redistribution. It’s never been a characteristic of America.”

Really?

Aside from hard-core libertarians, who view the sanctity of justly begotten private property as the overarching social value and any form of coerced redistribution as unjust, how many Americans on the left and right of the political spectrum would disagree with Mr. Obama’s very general and cautiously phrased statement?

In fact, I wonder whether even Governor Romney actually disagrees with that general statement, aside from some dispute over “the certain level” at which redistribution takes place. After all, he has promised elderly voters to protect the highly redistributive Medicare program, which would remain highly redistributive, or become more so, under proposals by his running mate, Representative Paul D. Ryan, for restructuring Medicare.

The fact is that redistributive government policy — mainly through benefits-in-kind programs, agricultural policy and the like — has been very much a characteristic of American life, just as it has been in every economically developed nation, albeit at different levels.

At issue between the two political camps in this election season, then, is not redistribution per se, which is as American as apple pie. Rather, at issue is the “certain level” to which that redistribution is to be pushed. An honest and thoughtful debate on that would certainly be useful at this time. It would be useful at any time.

To be respectful to voters, such a debate should proceed at a level concrete enough to allow voters — or at least researchers and news organizations — to estimate fairly precisely how different families would fare under the different visions of that “certain level.”

It is the minimum voters ought to expect from political candidates.

NYT Reader Comments:

Don McCanne, MD
San Juan Capistrano, CA

Even though Mitt Romney derides redistribution, he too actually supports it. “Romneycare” was prompted by an opportunity to use a larger share of federal Medicaid funds if they could design a program that would comply with federal requirements. Although Medicaid is a program with redistribution to the poor, in this instance it was also a redistribution to Massachusetts from the taxpayers of all other states, since Massachusetts would have had to forgo the funds had they not acted.

Romney is now taking pride in that transfer, but at the same time he rejects “Obamacare,” even though it is a program which ensures a similar redistribution as he supported in Massachusetts, but with a greater degree of fairness in the redistribution between states.

We could dismiss this as the silliness typical of electoral politics, except that the politicians carry through with policy once they are in control. That has consequences. We have the most expensive health care system of all nations, yet also one of the most inequitable, partly because of our failure to adopt policies that would ensure the fairest redistribution through an efficient health care financing system.

The most efficient system that eventually would receive the support of the majority of U.S. citizens would be an improved Medicare program that served everyone. That would be the right way to redistribute our wealth to the benefit of our health, if only we citizens had the political wisdom to demand it.

http://economix.blogs.nytimes.com/2012/09/28/redistribution-of-wealth-in-america/

Important! Large self-insured employers are bailing out

Big Firms Overhaul Health Coverage

By Anna Wilde Mathews
The Wall Street Journal, September 26, 2012

Two big employers are planning a radical change in the way they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.

Sears Holdings Corp. and Darden Restaurants Inc. say the change isn’t designed to make workers pay a higher share of health-coverage costs. Instead they say it is supposed to put more control over health benefits in the hands of employees.

The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.

“It’s a fundamental change…the employer is saying, ‘Here’s a pot of money, go shop,’ ” said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that “the money may not be sufficient and it may not keep up with premium inflation.”

Darden did say that employees will pay the same contribution out of their own pockets that they currently do for approximately the same level of coverage. Employees who pick more expensive coverage will pay more from their paychecks to make up the gap. Those who opt for cheaper insurance, which may involve bigger deductibles or more limited networks of doctors and hospitals, will pay less.

“It puts the choice in the employee’s hands to buy up or buy down,” said Danielle Kirgan, a senior vice president at Darden. The owner of chains including Olive Garden and Red Lobster will let its approximately 45,000 full-time employees choose the new coverage in November, to kick in Jan. 1. Darden says that employees with families to cover will be given more money to buy insurance than employees covering just themselves.

The hope is that insurers will compete more vigorously to get workers to sign up, which will lower overall health-care costs. Darden and Sears are both currently self-insured, meaning that the cost of claims each year comes out of company coffers.

Several big benefits consultants and health insurers are betting on the employee-choice model. Major consulting firm Aon Hewitt, a unit of Aon PLC, is behind the insurance exchange that Sears and Darden will use, while rival Towers Watson TW & Co. in May bought Extend Health Inc., an online marketplace used by employers to hook retirees up with Medicare coverage. It plans to expand the marketplace to include active workers buying individual plans, starting in 2014.

“Within the next two or three years, it’s going to be mainstream,” said Ken Goulet, executive vice president at WellPoint Inc. The insurer will roll out a product next year called Anthem Health Marketplace that lets employers offer a variety of its plans to workers, paired with a fixed contribution. Mr. Goulet said it is close to signing up more than 30 midsize and large employers for early next year, including one with more than 50,000 workers.

Exchange operators today say they offer employers more predictable costs, as well as potential savings gleaned from workers’ voluntary choice of skinnier coverage and competition among insurers offering plans on the exchanges.

http://online.wsj.com/article/SB10000872396390444549204578020640220260374.html

Comment: 

By Don McCanne, MD

Many larger employers have said that they do not want to be the first to initiate major structural reforms in their employee health benefit programs – reforms that would bring the employers relief but at a cost to their employees – but that they would quickly follow others out the door. It looks like the door has opened.

This is a very fundamental change in employee health benefit coverage. The Affordable Care Act relies heavily on self-insured large employers maintaining their coverage of a large percentage on America’s workforce, so that the Act can concentrate on lower-income and uninsured individuals. Under the radical change described in this WSJ article, employers will discontinue their self-insured programs and switch to a defined contribution – a specific dollar amount that employees will use to shop for health plans in these employer insurance exchanges.

There has been considerable discussion recently over converting Medicare to a defined contribution – premium support or voucher program – in which the costs to the government would be fixed to some index of inflation, whereas the greater increases in health care costs would be borne by the Medicare beneficiary. Thus health care would become less and less affordable, especially for those with greater health care needs.

With this move by employers, they are putting in place the same perverse defined contribution approach which we have determined would be so destructive to our Medicare program. And, oh yes, the benefits consultants and health insurers are jumping in to draw off even more health care funds in administrative costs – already one of the greatest burdens in our health care system. The executive vice president of WellPoint says, “Within the next two or three years, it’s going to be mainstream.”

Further, as was reported in yesterday’s Quote of the Day, over 90 percent of individuals do not select the Medicare Part D drug plan that would be best in their individual circumstances. It shows that health insurance shoppers really do not know how to shop for health insurance. Obviously comprehensive health plans are much more complex, and it would be virtually impossible for individuals to select the best plan, even with the language of simplified plan descriptions called for in the Affordable Care Act.

In fact, several studies have shown that most individuals select plans based primarily on the lowest net premium, with very little attention paid to plan benefits and cost sharing. The most common strategy for insurers to keep premiums low is to use large deductibles and coinsurance, though they also manipulate benefits and provider networks to reduce costs. Besides the increasing deductibles, coinsurance is particularly a problem since it is a percentage of the charges rather than a dollar copayment which is usually much smaller. Low premium plans tend to set coinsurance rates at very high percentages. As this article states, the savings will be dependent upon “workers’ voluntary choice of skinnier coverage.” It’s all the workers’ fault!

It is likely that the initial defined contributions will be fairly close to the amounts that employers are currently paying for the health benefit programs, so the immediate impact will not be transparent. Only after many employees face bankrupting medical debt – a phenomenon that will increase as the employer contribution buys ever less insurance – will the implications be clear. It is tragic that so many will have to experience financial hardship before we are ready to get serious about fixing our system by enacting an improved Medicare for everyone.