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Employer-sponsored plans have not controlled price inflation

2016 Health Care Cost and Utilization Report

Health Care Cost Institute, January 2018

The Health Care Cost Institute’s (HCCI) 2016 annual report on U.S. health care cost and utilization trends finds that Americans under the age of 65 who were insured through their employer spent more than ever on health care, and spending grew faster in 2016 than in recent years.

The report covers the period 2012 through 2016 and includes claims data from four national insurance companies: Aetna, Humana, Kaiser Permanente, and UnitedHealthcare.

Health Care Spending Trends

Health care spending per person for the commercially insured reached a new high of $5,407 in 2016. Total spending per person in 2016 was 4.6% higher than 2015. This was the highest annual total spending growth observed during the 2012-2016 study period; much greater than the 2.8% growth from 2012 to 2013.

Increasing Prices Drive Health Care Spending Growth

Health care spending is the product of two components: price and utilization. From 2012 to 2016, increases in spending were almost entirely attributable to increases in price. In 2016, high growth in prices was partially offset by a net decrease in utilization.

From 2012 to 2016, we observed increases in prices each year and across nearly all service categories. The greatest cumulative price increase was seen in prescription drugs, with 24.9% price growth. Inpatient services also experienced very high price growth, with prices increasing 24.3% between 2012 and 2016.

In contrast, utilization of most services declined over the 2012-2016 period, with the exception of prescription drugs, which increased 1.8%. The utilization of inpatient services had the largest decline, with admissions rates decreasing 12.9% between 2012 and 2016. This decline in use resulted in relatively low inpatient spending growth despite the high price growth. Conversely, the small increase in use of prescription drugs, coupled with high price growth, led to very high spending growth.

Inpatient Spending Trends

Between 2012 and 2016, spending on inpatient admissions grew 8%.

The biggest driver of the higher inpatient spending in 2016 was surgical admissions.

Inpatient Use Continued to Decline but Prices Rose Substantially

Within the inpatient category, declines in the use of both medical admissions and surgical admissions drove the overall decline in utilization. Every sub-category of inpatient admissions experienced double-digit price increases, with cumulative growth ranging from 18% to 30%. The increase in prices more than made up for the decline in use, causing inpatient spending to increase between 2012 and 2016.

Outpatient Spending Trends

In 2016, outpatient services had the highest annual spending growth of any service category, at 6%.

Within the outpatient services category, emergency room (ER) visits and outpatient surgeries accounted for the largest share of spending.

Outpatient Prices Drove Spending Growth

From 2012 to 2016, utilization of most outpatient services declined, but we did observe modestly higher utilization of ancillary services and emergency room visits towards the end of the study period.

Emergency room visits. Between 2012 and 2016, the price of an outpatient ER visit increased by 31%. The price increase, in combination with the slight increase in use, drove 40% of the increase in total outpatient spending between 2012 and 2016.

Outpatient surgery. Prices rose 19% from 2012 to 2016. Despite the decline in use, surgery continued to account for the largest share of outpatient spending and was responsible for 28% of the cumulative increase in spending on outpatient services.

Professional Services Spending Trends

Professional services—including visits to physicians, administered drugs, anesthesia, radiology, pathology, and related services–made up the largest share of health care spending in 2016, but had relatively low spending growth between 2012 and 2016, rising a cumulative 11%.

Utilization of PCP and Specialist Visits is Shifting

We rarely observe a decline in spending on health services. Within the professional services category, however, two types of services had net declines from 2012 and 2016. Spending on professional radiology services fell by 3%, but more striking was the 6% decrease in spending on office visits to PCPs.

The decline in spending on PCP office visits over the study period was driven by the 18% decline in use of these visits. In contrast, the increased utilization of specialist visits contributed to a 31% spending increase for those visits.

Prescription Drug Spending Trends

Prescription drugs had the highest cumulative spending growth (27%) of any service category during the study period.

Out-Of-Pocket Spending Trends

From 2012 to 2016, total OOP spending per person increased slightly each year. In dollars, the average increase was relatively small – a total of $88. It is important to note that our OOP data does not include consumer spending on premiums, which studies suggest are rising considerably and adding to the overall health care spending burden for consumers. In addition, our per person OOP metrics do not reflect the OOP costs of using a certain service, but consider OOP spending as an average across the population – including those who used no services at all.

The cumulative growth in OOP spending (12%) was outpaced by total spending (15%). However, like total spending, OOP spending growth appears to be on the rise after a few years of relatively low growth. In 2016, we observed a modest increase of 3.6% in OOP spending per person, up from a 2.9% increase in 2015.

http://www.healthcostinstitute.org…

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Comment:

By Don McCanne, M.D.

This study is important because it shows what impact private commercial health plans offered by employers are having on prices and utilization.

The Patient Protection and Affordable Care Act was supposed to protect health care benefits and control excessive price increases. Prices are way up, and utilization is down in spite of the need, indicating that current policies have not achieved either goal.

Another goal was to expand primary care to improve access, efficiency, and value, yet one of the more alarming findings in this report is that primary care office visits declined by 18%, whereas the increase in specialist visits resulted in 31% greater spending for those visits.

The architects of the Affordable Care Act wanted to protect employer-sponsored plans because, they said, these plans were the part of the health care financing system that was already working well. Yet these private commercial insurers have brought us even higher prices, reduced access but with higher net spending, and a shift from efficient primary care to more expensive specialized services.

These private commercial insurers are selling us an awful lot of very wasteful and intrusive administrative services, and yet they are not doing their job of improving efficiency and value in our health care system. They gotta go.

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Health care reform driven by health plans, not physicians

By Stephen B. Kemble, M.D.
Honolulu Star Advertiser, Jan. 24, 2018

At the “2018 Hawaii State of Reform” health policy conference on Jan. 10, I saw only a handful of physicians in the audience of about 300, but plenty of participants representing health plans and their contractors and subcontractors. The conference featured updates on our physician workforce shortage, and the effects of homelessness and social determinants on health.

The only policy solutions offered were new payment models that reward “value,” not volume, and shift insurance risk onto doctors and hospitals. I did not hear anything about the adverse effects of new payment models on physicians, or on the rapidly worsening problems we are seeing with access to care due to physicians leaving practice or refusing new patients with Medicare and Medicaid (MedQUEST).

For psychiatry, the latest workforce data shows an adequate number of psychiatrists on Oahu. However, I recently retired from the private practice of psychiatry, and we could find only two Oahu private- practice psychiatrists still accepting MedQUEST or Medicare patients, and both are completely overloaded. I still work part-time in Queen Emma Clinic, seeing mostly Medicaid patients and doing collaborative care, but the need there is also far greater than I can meet.

My patients report similar problems finding primary care doctors who will accept new Medicare or MedQUEST patients. I strongly suspect this has a lot to do with increasingly burdensome prior authorization policies and the administrative demands and staffing required by new payment models being imposed by Medicare and HMSA.

I have been experiencing much more frequent, gratuitous and absurd formulary restrictions and prior authorization policies by the plans’ pharmacy benefits managers in the past year or two, worst for the MedQUEST plans.

Now MedQUEST wants to follow HMSA and Medicare and move to “value- based” payment models. These were designed to discourage unnecessary care driven by fee-for-service incentives, which has never been much of a problem in Hawaii’s Medicaid program anyhow.

These payment models also happen to discourage taking on sicker, more complex patients with a lot of social problems, which means the Medicaid population. What good are pay-for-performance incentives if almost no doctors are willing to see the patients in the first place?

Hawaii’s health reform initiatives have been driven by the health plans, and skeptical doctors have been ignored or excluded from planning. If those driving policy remain unconcerned with the reasons why almost no psychiatrists and fewer primary care doctors are accepting new Medicare or Medicaid patients, we will end up with a shrinking pool of doctors caring for increasingly restricted patient panels and doing well on quality metrics, while those who need care the most are unable to find any available doctor, leaving them with no access to care except the emergency rooms and urgent care clinics.

This has already happened with psychiatry, and it is a direct result of policies that ignore effects on front-line patient care. We used to have broad acceptance of Medicaid among both private practice psychiatrists and primary care doctors, but psychiatrists have been effectively driven out of MedQUEST, and primary care is not far behind.

This clearly is not good for quality care, or for the total cost of care in the community, regardless of the performance of the limited number of doctors who have invested in the computerization and staffing required for success under new payment models.

We urgently need a dialogue between policy makers — health plan leadership, the Ige administration and legislators — and practicing doctors, or we will soon face a catastrophic collapse of our once exemplary health care delivery system, starting with Medicaid.

Any new Medicaid waiver requests should be delayed until we can find policies that will not continue to drive doctors out of MedQUEST.

Health care reform without doctors is doomed to failure.

www.staradvertiser.com…

Micromanaging medical care contributes to physician burnout

By Arcelita Imasa and Seiji Yamada
Honolulu Star Advertiser, Jan. 24, 2018

Projected increases in health costs in Hawaii are growing public concerns.

The Star-Advertiser published a Jan. 14 editorial and a Jan. 21 story on the rising-cost drivers, identified as “an aging population, prescription drugs, expensive technology and procedures, as well as unhealthy lifestyles that lead to costly chronic illnesses.”

Just this past Saturday, at the medical student-organized “Doctors Create Local Solutions” event, physicians gathered to propose medically informed solutions to Hawaii’s health care crisis. As Dr. Stephen Kemble pointed out: Until 2017, the United Health Foundation’s annual ranking had placed Hawaii as the healthiest state for five years. Furthermore, prior to the Affordable Care Act, Hawaii had among the lowest commercial health insurance costs, and our Medicare costs were the lowest in the country.

That is, Hawaii’s medical community had not been guilty of resource overutilization. Nonetheless, administrative oversight to micromanage physicians has burgeoned in recent decades. Insurance requirements, including prior authorization for tests or therapies and increasing documentation requirements, force physicians to spend two additional hours on electronic health records and desk work for every hour with patients, plus an hour or two in the evenings.

Perhaps you have noticed that your doctor has her eyes glued to her computer screen. Sadly, much of what she is documenting has more to do with coding and billing requirements than with caring for you.

None of us went into medicine in order to stare at a computer screen. We are now forced to. This contributes to physician burnout. Dr. Kelley Withy noted that over 50 percent of physicians admit to burnout, and 15-30 percent of practicing doctors and 29 percent of resident doctors are depressed. Yearly, approximately 400 U.S. physicians commit suicide.

Kemble suggested that elimination of pay-for-documentation would help restore professional autonomy and morale, and that a physician payment system based on time spent would help eliminate the perverse incentive to avoid caring for the sickest patients.

Particularly on the neighbor islands, doctors are acutely aware of the physician shortage. Although Withy noted that the state is short 769 physicians, there are only 121 job openings. Big Island pediatrician Wesley Sugai, for one, listed the variety of management tasks that private practitioners perform. Many will be retiring soon, but most young medical graduates prefer a salaried position.

While it is undeniable that “unhealthy lifestyles” contribute to health care costs, a minority of patients drives those costs. Of Hawaii’s 1.4 million people, 365,000 are covered by Medicaid (MedQUEST). As noted by physician and state Sen. Josh Green, of the $2 billion annual expenditure on Medicaid, $1.2 billion is spent on the 15,000 sickest patients.

To bend the cost curve, we need to identify the sickest and make them healthier, so that they won’t need the emergency department or hospital admission. Dr. Jeffrey Brenner, who applied “hotspotting” to Camden, N.J., suggested strengthening primary care and supportive services. This is, in fact, the mission of federally qualified health centers.

The Jan. 21 Star-Advertiser article (“Health care costs heading for eventual catastrophe”) quoted the owner of Nii Superette as saying that if Hawaii’s employer mandate for health insurance collapses, we may need “a model like universal health care.” After the end of our program Saturday, Dr. Leslie Gise urged the newly formed Hawaii chapter of the Students for a National Health Program to work for “Medicare for all” —and led the students in the cheer, “Everybody in, nobody out!”

Arcelita Imasa, of Honolulu, is a medical student; Seiji Yamada, of Milillani, is a family physician.

http://www.staradvertiser.com…

Dr. Claudia Fegan ‘Medicare for All’ town hall

PNHP national coordinator Dr. Claudia Fegan participated in a “Medicare for All” town hall on Jan. 23, 2018. The first of its kind town hall was hosted by Sen. Bernie Sanders (I-Vt.) in partnership with leading digital media outlets NowThis, ATTN: and The Young Turks. Dr. Fegan’s segment starts at the 11:25 mark below.

Lower out-of-pocket spending after ACA, but much more needed

Out-of-pocket Spending and Premium Contributions After Implementation of the Affordable Care Act

By Anna L. Goldman, MD, MPA; Steffie Woolhandler, MD, MPH; David U. Himmelstein, MD; David H. Bor, MD; Danny McCormick, MD, MPH
JAMA Internal Medicine, January 22, 2018

Key Points

Question: Was implementation of the Affordable Care Act associated with reduced spending on out-of-pocket medical expenses and household premium contributions among nonelderly adults?

Findings: In this nationally representative survey of validated spending data from 83 431 US adults, mean out-of-pocket spending decreased by 11.9% in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges. Premium contributions increased by 12.1%, mainly owing to large increases in the higher-income group, whereas total health spending by households decreased in the Medicaid-eligible (lowest-income) group by 16.0%.

Meaning: Implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.

From the Discussion

In the first 2 years of implementation, the ACA was associated with a decrease in mean out-of-pocket spending for the overall population, driven by decreases among the lowest- and low-income groups and a reduction in high-burden out-of-pocket spending overall and among the lowest-income group. Mean premium payments increased moderately, whereas the prevalence of high-burden combined health spending and income-based inequalities in high-burden spending did not change.

The ACA’s Medicaid expansion, which generally required enrollees to pay neither premiums nor co-payments, likely accounts for our finding that out-of-pocket spending decreased among the lowest-income group after the law’s implementation. This consequence might have been greater if all states had accepted the ACA’s Medicaid expansion. In the analysis of high-burden spending in this group, controlling for use of health care services slightly attenuated the decrease but did not substantially alter our findings. The differences noted for the lowest-income group in our placebo test in the pre-ACA period suggests that our results for this group may also have been influenced by secular trends or early expansions of Medicaid in some states. Because only 17.8% of adults in the lowest-income group paid insurance premiums before the ACA, we are not surprised that the legislation had little effect on premiums in this group.

The reduction in out-of-pocket spending for low-income individuals (139%-250% of FPL) that we observed suggests that the ACA’s exchange plans and cost-sharing subsidies were associated with a decreased burden of health care costs for this population. Our finding from models controlling for use of health care services suggests that decreased use of medical services and drugs did not drive this decrease.

The decrease in mean out-of-pocket expenditures by the middle-income group may reflect the modest 5.1% increase in coverage gained in this group under the ACA. Although individuals in this income group were not eligible for subsidized cost-sharing on the exchange, the ACA’s provision that eliminated cost-sharing for preventive services may have decreased out-of-pocket spending. Although many individuals in this group were eligible for premium assistance through the ACA exchanges, the subsidies were apparently insufficient to prevent growth of premium contributions for this group or to reduce their total health spending.

Previous studies have highlighted the ACA’s successes. About half of the previously uninsured population gained coverage. Several other indicators also improved, such as the likelihood of having access to affordable care and self-reported health status.

The ACA did not have a greater effect on out-of-pocket spending for several reasons. First, only a small proportion of Americans—6.5% according to our data—became newly insured after the ACA. Second, about 28 million Americans remain uninsured. Third, many of those with coverage continued to incur high costs; in 2016, individual deductibles were a mean of $3064 in exchange Silver plans (the metal tier chosen by most exchange enrollees) compared with $1478 in employer-sponsored plans.

Conclusions

Repeal of the ACA was under consideration in Congress several times in the past year, and the future of the ACA remains uncertain. Our findings carry several implications for the health reform debate. First, the ACA was associated with moderate reductions in the cost burden for lowest-, low-, and middle-income households, which represents incremental but important progress. Repealing or otherwise dismantling the legislation without a suitable replacement could cause financial harm to many lower-income families. As of this writing, the Senate tax bill includes a repeal of the individual mandate. If enacted, the numbers of uninsured persons will increase, along with their out-of-pocket costs. Premiums will likely increase because healthier people will exit the insurance pool.

Second, medical expenses currently consume a large share of many families’ incomes and compound income inequalities. Reforms to the ACA that could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans. International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

This well documented analysis confirms that “implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.”

But ACA still falls far short of the reform that we need. The bottom line, as stated in their conclusion: “International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.” ACA isn’t that.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Is Seema Verma violating her ethics pledge?

Excerpts of letter to the Honorable Robert Charrow, General Counsel, U.S. Department of Health and Human Services

From: Senator Ron Wyden, Ranking Member, U.S. Senate Committee on Finance

United States Senate, January 19, 2018

I am writing concerning possible violations by Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma of her ethics agreements. Recent statements by governors representing multiple states indicate that Administrator Verma has personally and substantially participated in waivers submitted to CMS by states that were clients of her previous consulting business. Such participation appears to violate Administrator Verma’s ethics agreement, absent the issuance of written waivers for each of her interactions on a case-by-case basis. Administrator Verma’s actions also appear to violate self-imposed ethics pledge that the Trump Administration requires its appointees to sign pursuant to Executive Order 13770.

I request that you immediately investigate whether Administrator Verma’s actions comply with her agreements as well as applicable federal laws and regulations.

Prior to being confirmed to her current position, Administrator Verma headed a consulting firm, SVC, Inc., a role in which she provided services to the states of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina and Virginia. Federal ethics officials deemed her consulting work with these seven states as significant, and included a provision in her Ethics Agreement requiring special review of future matters involving those seven States. Specifically, pursuant to 5C.F.R.2635.502(d), Administrator Verma agreed to “seek a written authorization to participate personally and substantially in particular matters involving specific parties” in which those states would be “a party or represents a party.” Furthermore, the Trump Administration’s self-imposed ethics pledge provides that a nominee “will not for a period of 2 years from the date of [their] appointment participate in any particular manner involving specific parties that is directly and substantially related to [their] former employer or former clients, including regulations and contracts.”

Recent statements by the governors of three states specifically designated in Administrator Verma’s ethics agreement – Arkansas, Kentucky, and Iowa – strongly suggest she was personally and substantially involved in matters those states brought before CMS. Two of the governors represent states that have submitted Section 1115 waivers seeking to impose work requirements on Medicaid recipients – Arkansas and Kentucky. The third relates to a separate Section 1332 waiver submitted by the State of Iowa.

Administrator Verma’s commitment to recuse herself from work with former clients appears to have fallen short of the mark thus far, which is extremely concerning given that many of her former clients have sought – or plan to seek – waivers to impose unprecedented work requirements in state Medicaid programs.

https://www.finance.senate.gov…

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Kentucky’s new obstacles to Medicaid coverage are crueler than you could imagine

By Michael Hiltzik
Los Angeles Times, January 16, 2018

One can say this about the hoops Kentucky will require low-income residents to jump through to become eligible for Medicaid: If you were deliberately trying to come up with ways to throw people off the program, you couldn’t do better.

It’s been widely reported that the “waiver” of Medicaid rules approved for the state by federal officials last week includes a first-in-the-nation work requirement. But there’s much more to it, none of it good if you are a Medicaid enrollee or someone who believes that the purpose of government healthcare programs is to provide people with healthcare.

“Coverage is at risk for large numbers of low-income adults and families,” says Judith Solomon, a health policy expert at the Center on Budget and Policy Priorities.

Kentucky’s program bristles with paperwork requirements and Catch-22s that could easily lead even those who meet the work requirements to “trip up and become uncovered,” Solomon says. That’s because the program includes a “lockout” if enrollees fail to revalidate their eligibility every year or miss one or another deadline for paperwork: In those cases, they could be denied benefits for as long as six months.

As we reported earlier, Kentucky’s tea-party Gov. Matt Bevin, who took over from Democrat Steve Beshear in 2015, is inordinately proud of this outcome. He calls the changes “transformational.”

Another person who should be ashamed, not proud, of the program is Seema Verma, who oversees Medicaid as administrator of the Centers for Medicare and Medicaid Services. Verma’s department issued the guidelines last week under which Kentucky’s work and other requirements were approved the very next day. More to the point, as a private consultant prior to becoming head of the centers, she helped Kentucky draft the waiver application that her underlings approved. (Verma said she recused herself from ruling on the Kentucky application, which deserves a response of: Pu-leeze.)

http://www.latimes.com…

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Medicaid recipients to get work requirements

By Ricardo Alonso-Zaldivar
ABC News, January 12, 2018

Rewriting the rules on health care for the poor, the Trump administration said Thursday it will allow states to require “able-bodied” Medicaid recipients to work, a hotly debated first in the program’s half-century history.

Seema Verma, head of the Centers for Medicare and Medicaid Services, said requiring work or community involvement can make a positive difference in people’s lives and in their health. The goal is to help people move from public assistance into jobs that provide health insurance. “We see people moving off of Medicaid as a good outcome,” she said.

http://abcnews.go.com…

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Comment:

By Don McCanne, M.D.

CMS Administrator Seema Verma is ideologically driven to make health care an individual responsibility rather than a collective good in which we can all be ensured of health care access and affordability. She made her reputation by recommending to states policies that impair access to health care for the poorest amongst us by erecting barriers to care for their Medicaid populations.

As CMS Administrator she has expanded and accelerated policies that further impair access for the poor, policies that are now being adopted by states for which she served as a consultant. Many of these waiver requests were rejected by the Obama administration, but when Verma first took office, she encouraged her (former) clients and all other states to submit Section 1115 Medicaid waiver applications and assured them that they would be favorably considered.

Whether or not Verma has technically violated her ethics pledge by this conflict of interest is a relatively moot point compared to her efforts to sabotage a program that was designed to help poor people get the health care that they need. That she has orchestrated the process is enough to confirm her ethical lapses. As she says, “We see people moving off of Medicaid as a good outcome.”

As Michael Hiltzik says about her recusing herself, “Pu-leeze.”

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How The ACA Affected Household Medical Spending

By Carey Goldberg and Meghna Chakrabarti
WBUR, CommonHealth, Jan. 22, 2018

A new study out in JAMA Internal Medicine shows that in the years following the implementation of the Affordable Care Act, out-of-pocket spending decreased, while premiums increased. (Click here to read PNHP’s news release on this study.)

http://www.wbur.org…

Has ACA Made Health Care More Affordable?

Yes for some, no for others -- but affordability wasn't the law's only goal.

By F. Perry Wilson, M.D., M.S.C.E.
MedPage Today, Jan. 22, 2018

The Affordable Care Act. We often discuss its impact on reducing the uninsured rate in the US healthcare system, but there’s another salient question. Did the Affordable Care Act make care more affordable?

A new analysis, appearing in JAMA Internal Medicine, is the first to really quantify what has happened to individual health care spending since the ACA was put into effect.

Drawing on data from the Medical Expenditure Panel Survey, a nationally representative sample of more than 83,000 US adults, researchers led by Dr. Anna Goldman (in her first peer-reviewed publication, congratulations Dr. Goldman), determined how much individual expenses changed from the pre-ACA to the post-ACA era.

The study looked at out-of-pocket expenses and premiums and the two combined. But in a conversation with Dr. Goldman, she pointed out to me that out-of-pocket expenses might be more important when it comes to healthcare access:

“Out of pocket spending really can be – in a different way then premiums – a real barrier to care. Since it saves at the point of care.”

So what happened when the ACA was introduced?

Overall, premiums went up and out-of-pocket costs went down. The net effect was that the average American family spent $28.71 less on healthcare in the two years after the ACA compared to the two-years before.

Table 1

But the benefits were not evenly distributed. Families making up to 138% of the federal poverty level spent, on average $160 less on healthcare after the ACA. Families making more than 400% of the poverty level spent around $281 dollars more per year. I should note that this doesn’t include the added cost of some ACA-associated taxes that affected higher income earners.

These numbers may not seem that impressive, but consider two factors. First, healthcare expenditures had been increasing in the run-up to the ACA, so even a modest decrease is somewhat encouraging. Second, even if there were no changes in healthcare spending, 6.5% more of the US population became insured in the two years after the ACA.

So did the Affordable Care Act make care more affordable? For some people, yes, but perhaps that’s not the main point.

Dr. Goldman again:

“Even though it was called the Affordable Care Act, its major intervention was to expand insurance coverage. Experts in the field who I’ve spoken to about this take issue with the idea that it should even be expected to make care more affordable.”

Is “affordability” even the right metric for healthcare? I’m not sure. The effect of the ACA should be measured not in terms of cost, but value – the outcomes achieved for the cost. In other words, this paper gives us the denominator. We’ll need more time before Information on the numerator, particularly any long-term health outcomes, can be put into the equation.

F. Perry Wilson, M.D., M.S.C.E., is an assistant professor of medicine at the Yale School of Medicine. He is a MedPage Today reviewer, and in addition to his video analyses, he authors a blog, The Methods Man. You can follow @methodsmanmd on Twitter.

https://www.medpagetoday.com…

Massachusetts lesson on instability of coverage

Major Mass. Insurers Dropped From State Employee Health System

By Martha Bebinger
WBUR, January 18, 2018

A decision about health coverage for state employees and retirees is shaking the Massachusetts health insurance industry. Harvard Pilgrim Health Care, Tufts Health Plan and Fallon Health, which are the second-, third- and fourth-largest insurers in the state, have been dropped by the state Group Insurance Commission (GIC), which manages coverage for 442,000 members.

The GIC says it’s been talking to insurers about the need to simplify, streamline and save money for more than a year, so Thursday’s 8-5 commission vote should not be a surprise. But dropping three prominent, nonprofit Massachusetts insurers is a major blow.

“Time and again, the Group Insurance Commission has voted to make workers bear the brunt of out of control health care costs, instead of tackling the crisis with providers,” said Peter MacKinnon, president of SEIU Local 509. “It is evident that the GIC has taken a bad situation and made it far worse with this anti-consumer vote.”

http://www.wbur.org…

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Comment:

By Don McCanne, M.D.

We keep hearing that most people are pleased with their current health care coverage so we should reject the disruption that would be caused by changing to a single payer system. What better coverage could there be than that of public employees in Massachusetts whose options include three of the largest nonprofit carriers in the state? Until now that is.

This is the best there is and yet it results in instability, especially in the choice of their health care professionals and institutions. And the reason given for the disruption is that the costs are too high.

This would not occur under a well designed single payer system. Individuals would have permanent free choice of their health care and costs would be contained through patient-friendly policies.

Think of the health care coverage you had twenty years ago. Ten years ago. Even perhaps five years ago. And they say that single payer would be disruptive? It is single payer that finally would bring us stability of coverage – for life!

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

The American Health-Care System Increases Income Inequality

Even with the Affordable Care Act, the premium and payment structure of insurance increases the relative income gap between rich and poor.

By Vann R. Newkirk II
The Atlantic, Jan. 19, 2018

For most people, a single doctor’s visit can be a financial obstacle course.

Many patients throughout the year pay hundreds or thousands of dollars in premiums, most often through workplace contributions. Then, at the doctor’s office, they are faced with a deductible, and they may need to pay coinsurance or make a copayment. If they have prescriptions, they’ll likely fork over cash for those, too.

And that’s just for basic primary care for one person. Repeat that process for an entire family; add in any labs, referrals, specialists, emergency-room visits, and surgeries; and the result for even healthy families is dozens and dozens of payments, and often thousands of dollars. This series of expenditures before, during, and after care is euphemistically called having “skin in the game.” But the reality is, the American insurance system is designed to make health care financially unpleasant, often to the point where patients forego necessary care.

A new study in the forthcoming March issue of the American Journal of Public Health sheds light on just how all that “skin in the game” affects the material conditions of patients. The research—by Andrea Christopher at the Boise Veterans Affairs Medical Center, David Himmelstein and Steffie Woolhandler at the City University of New York at Hunter College, and Danny McCormick at Harvard Medical School—indicates that household spending on health care is a significant contributor to income inequality in the United States. It also indicates that medical expenses push millions of Americans below the federal poverty line, including 7 million people who make more than 150 percent of the poverty level. Four million of those Americans are pushed into the ranks of extreme poverty.

That health-care costs in the country are expensive—often, prohibitively so—is well known. As Vox’s Sarah Kliff notes, the first reason why is the exorbitantly high cost of care, which doesn’t always correspond with measurable increases in quality or demand. Even for routine procedures or precautionary visits, hospital bills can run over $400, an expense that almost half of American households can’t meet without dipping into credit. Additionally, billing is famously opaque, incoherent, and fragmented, creating major barriers to informed care decisions and often resulting in bills going into collections.

Health insurance is supposed to mitigate those cost and information barriers. A 2016 Kaiser Family Foundation analysis found that while significant numbers of Americans have trouble paying medical bills, only 20 percent of insured people had difficulty versus half of all uninsured people. Most of that difficulty for both groups comes from sudden medical events or accidents, or sudden life events like the loss of a job. Medical debt is also a major contributor to bankruptcy in the United States. One of the major arguments for the Affordable Care Act was in its name: a promise to help shield people from the worst financial effects of medical catastrophe or chronic illness.

New avenues of subsidized or free health insurance that sprang from Obamacare—including private insurance offered on the exchanges and expanded Medicaid rolls in many states—have been able to do some shielding. The ACA helped reduce total bankruptcies by as many as 1.5 million between 2010 and 2017. The Centers for Disease Control and Prevention reports that, between 2011 and 2016, the percentage of Americans with trouble paying medical bills dropped precipitously. And a 2017 study by the Urban Institute’s Kyle Caswell and Timothy Waidmann found “improved credit scores, reduced balances past due as a percent of total debt, reduced probability of a medical collection balance of $1,000 or more, … and a reduction in the probability of a new bankruptcy filing” for people in Medicaid-expansion states.

But the new AJPH study complicates some of that rosy analysis. The researchers didn’t split the survey population up based on insurance status; they instead measured income inequality across the population, both before medical expenses were taken into account and after. They found that income inequality in 2014 actually increased by 1.5 points after medical expenses were subtracted from income. Put another way, poor people spent much more of their income on health care than the richest people did, and as a result around 1.5 percent of all relative income shifted toward the higher earners.

The researchers also found that medical spending sent millions of people effectively into poverty or into deeper rungs of poverty. Seven million Americans making more than 150 percent of the federal poverty line—$31,000 for a family of three—dropped below that line if medical expenses were subtracted from their income. That meant that these families spent something like a third or more of all their income on health care. Of the 7 million, 4 million found their post-health-care income reduced below 50 percent of the poverty line, meaning they spent about two-thirds of their total income on health care. The study also found that the ACA decreased the amount of inequality caused by health-care expenses, but only slightly.

There are some limitations to how far these results can be interpreted. It’s possible that, since 2014, continued gains in insurance coverage—at least until the uninsured rate rose in 2017—combined with additional states expanding Medicaid, decreased coverage costs; a more recent study would be needed to say for sure. Also, without insurance-enrollment breakdowns, it’s impossible to see where and why the biggest gaps in income inequality emerge, and the exact role the ACA may have played in fixing them.

Still, the study adds to the body of evidence on the dramatic impact of health-care costs. Even with Medicaid as a safety net, health care is a major burden for low-income people—so much so that it deeply exacerbates differences in income and wealth.

One major reason for this burden, perhaps even especially under the ACA, is deductibles. While almost the whole of the national health-care debate has centered on how to lower premiums, the ACA and other health policies have in many cases purposefully driven deductibles upward. More Americans say they have trouble affording their deductibles than they do affording their premiums. Between 2006 and 2017, the Kaiser Family Foundation found that deductibles for people with employer-sponsored insurance increased fourfold. The out-of-pocket maximums on many of these plans also increased sharply. Many of these hikes came from an across-the-board embrace of so-called high-deductible plans, which have been theorized to limit both utilization of health care and the burden of premiums. The tradeoff for those lower premiums is that those who use their insurance have to pay a lot more to do so.

As a 2017 Atlantic investigation showed, this theory can often create two kinds of adverse outcomes when put into practice. Many people simply spend what they need to to cover health-care costs, draining their savings and income as they go. And many who don’t turn to crowdfunding to pay their bills, or go without care in the first place. Technically, these outcomes reduce the number of medical bankruptcies—a victory for policymakers—because even high-deductible plans place a hard cap on medical expenditures.

Yet even as Americans are better protected from the worst consequences of catastrophic illness, routine care continues to hurt low-income people’s finances.

The ACA isn’t really designed to combat that particular paradox. In fact, the law at times embraces it. It juiced up the comprehensiveness of most plans, and it shields people from the true cost of premiums through a number of mechanisms. But in exchange, the structure of the high-deductible plan was accepted as a basic mechanism for both rationing and budgeting. While cost-sharing reductions were introduced to put a cap on the burden that deductibles, copayments, and coinsurance place on low-income Americans, 90 percent of all people on the exchanges still pay deductibles in excess of $1,300 individually or $2,600 per family, amounts that are often difficult to afford even for middle-class families.

Republican plans to create a new health-care regime would, for the most part, only increase that difficulty, because both the Senate and House bills to repeal Obamacare increased deductibles even further. President Trump, meanwhile, has stopped paying cost-sharing reduction payments and signed a tax law that repealed the individual mandate to purchase insurance. Both of these actions could increase premiums, thus giving some patients yet another financial burden to worry about.

The new study functions as a reminder that policymakers seeking to address income and wealth inequality cannot do so without continuing to address health care, still one of the most constant sources of financial woe in American life. That includes both the absolute cost of health care and the myriad ways the cost is passed onto people with insurance. Until those problems are mitigated, having “skin in the game” for the poorest Americans translates to losing financial ground.

https://www.theatlantic.com…

Household medical expenditures worsen income inequality

The Effects of Household Medical Expenditures on Income Inequality in the United States

By Andrea S. Christopher, MD, MPH, David U. Himmelstein, MD, Steffie Woolhandler, MD, MPH, and Danny McCormick, MD, MPH
American Journal of Public Health, January 18, 2018 (online ahead of print)

Objectives. To assess the effect of households’ outlays for medical expenditures on income inequality and changes since the implementation of the Affordable Care Act (ACA).

Methods. We analyzed data from the US Current Population Surveys for calendar years 2010 through 2014. We calculated the Gini index of income inequality before and after subtracting households’ medical outlays (including insurance premiums and out-of- pocket costs) from income, the financial burden of medical outlays for each income decile, and the number of individuals pushed below poverty by medical outlays.

Results. In 2014, the Gini index was 47.84, which rose to 49.21 after medical outlays were subtracted, indicating that medical outlays effectively redistributed about 1.37% of total income from poorer to richer individuals, a slightly smaller redistribution compared with the years before the ACA. Medical outlays reduced the median income of the poorest decile by 47.6% versus 2.7% for the wealthiest decile and pushed 7.013 million individuals into poverty.

Conclusions. The way we finance medical care exacerbates income inequality and impoverishes millions of Americans. This regressive financing pattern improved minimally in the wake of the ACA.

From the Results

In 2013, medical outlays lowered the median income (calculated after subtracting medical expenditures) for the poorest decile by 49.2% and by 10.7% for the next poorest group versus 2.5% for the wealthiest decile, a markedly regressive pat- tern. This unequal pattern improved only slightly in 2014. In that year, medical outlays lowered median income in the lowest income decile by 47.6% versus 2.7% in the top decile. For those in the top 1.0% of income, medical outlays decreased income by only 1.3%.

In 2014, 9.28 million Americans whose incomes before their medical outlays were above poverty were pushed into near poverty (150% of FPL) when medical outlays were subtracted from their family incomes. Similarly, 7.013 million were lowered into poverty (below 100% of the FPL), and for 3.946 million, medical outlays reduced their incomes into the extreme poverty range (below 50% of the FPL). These numbers were little changed from 2013 (before the main provisions of the ACA took effect), when medical outlays pushed 7.263 million people below the poverty line, 3.809 million into extreme poverty, and 9.576 million below the near-poverty threshold.

From the Discussion

In the United States, most insured families pay premiums, deductibles, and copayments that are not scaled to income. As a result, medical care expenses exacerbate poverty and income inequality, which are key social determinants of health. Although access to high-quality care might narrow the health disparities caused by social inequality, the ways we pay for care—notably, the failure of most insurance programs to scale premiums and deductibles to income—may widen them.

Out-of-pocket health care expenditures are likely to continue increasing under the ACA, as well as under Republicans’ proposed alternatives. The proportion of privately insured employees whose individual coverage carries an annual deductible of $2000 or more has increased 6-fold since 2006. Most of the new private coverage offered on the ACA exchanges carries high deductibles. These could drive many families into poverty despite cost-sharing subsidies that reduce copayments and deductibles for those with incomes below 250% of the FPL.

Equally worrisome, Centers for Medicare & Medicaid Services has allowed several states to impose cost sharing on Medicaid recipients, reversing a long-standing rule against such policies.

In some nations the wealthy pay a larger share of their incomes toward health care than do the poor. In others, health expenditures account for a similar share of incomes for the poor and rich. In the United States, health expenses exact a higher toll from the poor, whereas the wealthy pay relatively little. This regressive financing pattern—which redistributes as much as 1.7% of total income from poorer to richer Americans—lies largely hidden in a complex web of private and public insurance arrangements. We suspect that the opacity of US funding streams helps shield the wealthy from demands for a fairer health-financing pattern.

http://ajph.aphapublications.org…

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Comment:

By Don McCanne, M.D.

The way we pay for health care in the United States is egregiously regressive. In spite of ACA, “medical outlays reduced the median income of the poorest decile by 47.6% versus 2.7% for the wealthiest decile and pushed 7.013 million individuals into poverty.”

Income inequality has reached intolerable levels in the United States bringing ever more riches to the wealthy (how much wine and cheese do they need?) while leaving workers with relatively stagnant wages and leaving the poor without much hope for ever moving up to at least a minimally acceptable standard of living. This astonishing study shows that medical expenditures have worsened this inequity and have shoved another 7 million people into poverty (4 million into extreme poverty!). What a penalty to pay for having the misfortune of needing health care.

Considering the recent tax bill signed into law by President Trump, the nation is moving in the wrong direction in addressing the problem of income inequality. We need new policies, and one of the easiest and most beneficial would be to enact a well designed single payer national health program, funded equitably through the tax system. That way we would ensure that everyone would have health care while shifting from a regressive to a progressive pattern of financing. It would be good for our health and good for our personal finances.

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Is Maryland’s all-payer/global budget program an incremental step toward single payer?

Changes in Health Care Use Associated With the Introduction of Hospital Global Budgets in Maryland

By Eric T. Roberts, PhD; J. Michael McWilliams, MD, PhD; Laura A. Hatfield, PhD; Sule Gerovich, PhD; Michael E. Chernew, PhD; Lauren G. Gilstrap, MD; Ateev Mehrotra, MD, MPH
JAMA Internal Medicine, January 16, 2018

Abstract

Importance

In 2014, the State of Maryland placed the majority of its hospitals under all-payer global budgets for inpatient, hospital outpatient, and emergency department care. Goals of the program included reducing unnecessary hospital utilization and encouraging greater use of primary care.

Objective

To compare changes in hospital and primary care use through the first 2 years of Maryland’s hospital global budget program among fee-for-service Medicare beneficiaries in Maryland vs matched control areas.

Design, Setting, and Participants

We matched 8 Maryland counties (94 967 beneficiaries) with hospitals in the program to 27 non-Maryland control counties (206 389 beneficiaries). Using difference-in-differences analysis, we compared changes in hospital and primary care use in Maryland vs the control counties from before (2009-2013) to after (2014-2015) the payment change, using 2 different assumptions. First, we assumed that preintervention differences between Maryland and the control counties would have remained constant past 2014 had Maryland not implemented global budgets (parallel trend assumption). Second, we assumed that differences in preintervention trends would have continued without the payment change (differential trend assumption).

Main Outcomes and Measures

Hospital stays (defined as admissions and observation stays); return hospital stays within 30 days of a prior hospital stay; emergency department visits that did not result in admission; price-standardized hospital outpatient department (HOPD) utilization; and visits with primary care physicians (overall and within 7 days of a hospital stay).

Results

We matched 8 Maryland counties with hospitals in the program (94 967 beneficiaries; 41.8% male; mean [SD] age, 72.3 [12.2] years) to 27 non-Maryland control counties (206 389 beneficiaries; 42.8% male; mean [SD] age, 71.7 [12.5] years). Assuming parallel trends, we estimated a differential change in Maryland of −0.47 annual hospital stays per 100 beneficiaries (95% CI, −1.65 to 0.72; P = .43) from the preintervention period (2009-2013) to 2015, but assuming differential trends, we estimated a differential change in Maryland of −1.24 stays per 100 beneficiaries (95% CI, −2.46 to −0.02; P = .047). Assuming parallel trends, we found a significant increase in primary care visits (+10.6 annual visits/100 beneficiaries; 95% CI, 4.6 to 16.6 annual visits/100 beneficiaries; P = .001), but assuming differential trends, we found no change (−0.8 visits/100 beneficiaries; 95% CI, −10.6 to 9.0 visits/100 beneficiaries; P = .87). Comparing estimates with both trend assumptions, we found no consistent changes in emergency department visits, return hospital stays, HOPD use, or posthospitalization primary care visits associated with Maryland’s program.

Conclusions and Relevance

We did not find consistent evidence that Maryland’s hospital global budget program was associated with reductions in hospital use or increases in primary care visits among fee-for-service Medicare beneficiaries after 2 years. Evaluations over longer periods should be pursued.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

Making health care payment rates the same for all payers, public and private, and establishing global budgets for hospitals seem like reasonable steps toward establishing a single payer system. So how has Maryland done so far with this program?

The stated goals were to reduce unnecessary hospital utilization and to encourage greater use of primary care. But they “did not find consistent evidence that Maryland’s hospital global budget program was associated with reductions in hospital use or increases in primary care visits among fee-for-service Medicare beneficiaries after 2 years.” As is typical of unsuccessful policy studies, an accompanying editorial suggests that we should give the study five or ten years before we expect to see any transformation of the delivery system. Sure.

This has in common with other health policy studies the major defect that an isolated policy is studied within the background of our highly dysfunctional, fragmented, multipayer system. You cannot study a universal single payer system unless you have a universal single payer system to study (and they do exist elsewhere).

Right now we are seeing proposals such as a public option, a Medicare or Medicaid buy-in, or a change in the age of Medicare eligibility, all of which some hope eventually would lead to single payer. But when added to our current dysfunctional system, little benefit will be evident because the fundamental defects will remain extant. Each such step will reinforce the views of those who profess that single payer can’t work because our system will still be overpriced, too many will still be uninsured or underinsured, and patients will still be deprived of choices of their health care professionals and institutions.

Currently in California there is a proposal for a Medi-Cal Public Option as an incremental step to single payer. That seems to be so far off track that it constitutes a derailment of the Single Payer Express.

We need to end this nonsense of spoon-fed policy and move forward with comprehensive policy that we know works – a single payer national health program. Now. Full steam ahead.

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Kentucky’s new obstacles to Medicaid coverage are crueler than you could imagine

Medicaid recipients to get work requirements

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