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How Paul Ryan enslaves Friedrich Hayek’s ‘The Road to Serfdom’

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How Paul Ryan enslaves Friedrich Hayek’s ‘The Road to Serfdom’

The Republican VP nominee claims Hayek as hero. Did he miss the libertarian economist’s advocacy of universal health care?

By Bernard Harcourt
The Guardian (U.K.), Sept. 12, 2012

“Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong.”

Surprisingly, those are the words of Friedrich Hayek, straight out of “The Road to Serfdom.” And I’m not pulling them out of context: Hayek firmly believed that the government should organize comprehensive systems of social insurance, including health care; should protect citizens against poverty and should ensure, for everyone, “the certainty of a given minimum of sustenance for all.”

With vice-presidential candidate Paul Ryan claiming that his ideas are inspired by Hayek and even handing out copies of “The Road to Serfdom” “to bring new staffers up to speed” – following the earlier highjacking of Hayek by Glenn Beck and Rush Limbaugh – it’s time for some intellectual honesty.

Others have usefully begun to discuss the tension between Paul Ryan’s politics and Hayek’s thought, as well as the internal tensions between Hayek and Ryan’s other guru, Ayn Rand. But here, for a moment, let’s go back to the primary text, open our University of Chicago Press definitive edition of “The Road to Serfdom” and honestly read it in relation to the American health care debate.

By way of background, Hayek was adamant that the central economic function of government is to organize and administer markets in such a way as to promote and protect competition. His central focus was on the neutrality of government rules – or what he called (on page 117), “the Rule of Law, in the sense of the rule of formal law, the absence of legal privileges of particular people designated by authority” – not the elimination of government rules. 

“The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts, not an argument for leaving things just as they are.” (p. 85) 

Hayek emphasized that it is a pure and simple – and highly misleading – mischaracterization of his own thought, and of liberal economic theory, to suggest that government should do nothing. “In no system that could be rationally defended would the state just do nothing,” he stressed in “The Road to Serfdom” (p. 88).

In this sense, Hayek firmly believed that the notion of a “free market” is an illusion:

“The question whether the state should or should not ‘act’ or ‘interfere’ poses an altogether false alternative, and the term ‘laissez faire’ is a highly ambiguous and misleading description of the principles on which a liberal policy is based. Of course, every state must act and every action of the state interferes with something or other.” (p. 118) 

The key question for Hayek was whether the government rules are unbiased. Not that there be no rules, but that they be predictable and neutral – that they not favor the elites. So, for instance: 

“[W]ith respect to most of the general and permanent rules which the state may establish with regard to production, such as building regulations or factory laws: these may be wise or unwise in the particular instance, but they do not conflict with liberal principles so long as they are intended to be permanent and are not used to favor or harm particular people.” (p. 118)

Hayek’s general theory of government was complex, and I am by no means a defender or a disciple. Personally, I believe that Hayek irrationally clung to a notion of natural order – what he called “spontaneous order” – that blinded him to the humanly-constructed nature of the wealth distributions that occur under conditions that he called “competitive.” As a result, Hayek himself fell in the cold war trap, instead of working out the full implications of his own economic theory. Hayek made naturalistic assumptions in the economic realm – about the naturalness of skill and talent, and about natural order – that belong in churches and temples, not in political economy.

But one thing is clear: as applied to the more specific issue of health care, Hayek favored a robust notion of security that included “security against severe physical privation” and “the certainty of a given minimum of sustenance for all.” (p. 147) Hayek was adamant about this. “There is no reason why in a society which has reached the general level of wealth which ours has attained,” Hayek wrote, on the next page. “[This] kind of security should not be guaranteed to all without endangering general freedom.” He continued, “there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.” And for Hayek, this extended to health care: 

“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

Hayek recognized that the provision of health care is complex and that we may disagree as to the exact structure of the assistance necessary:

“But there is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom.” (p. 148) 

Hayek did not subscribe, in his own words, to a “dogmatic laissez faire attitude” (p. 85). He believed in rules “to limit working hours or to require certain sanitary arrangements”, and believed they were “fully compatible with the preservation of competition.” (p. 86) He added on the next page: 

“Nor is the preservation of competition incompatible with an extensive system of social services – so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields.” 

I could go on, but I sense you’ve gotten my point by now. It’s important to read a thinker like Friedrich Hayek closely and honestly – never to idolize, nor to simplify and certainly never to highjack. Equally important, I believe, is to keep a critical perspective, to identify their hidden assumptions, to challenge them when they take a leap of faith. There would be a lot more to say about that and much to contest in Hayek – but it would have to start, at a minimum, from an honest and close reading. 

For now, I propose that we close with another interesting passage:

“Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.” (p. 148)

I hope that staffers from both presidential campaigns will ponder those words. It would actually militate in favor of more universal health care than the Affordable Care Act now provides.

http://m.guardian.co.uk/commentisfree/2012/sep/12/paul-ryan-enslaves-friedrich-hayek-road-serfdom?cat=commentisfree&type=article

AHIP asks for further reduction of minimum benefits

Hearing: Implementation of Health Insurance Exchanges and Related Provisions

Testimony by Daniel T. Durham, Executive Vice President, Policy and Regulatory Affairs, America’s Health Insurance Plans (AHIP)
House Ways and Means Committee, Subcommittee on Health, September 12, 2012

Minimum Coverage Requirements 
 
Beginning in 2014, the ACA will require health plans to provide coverage for an essential health benefits (EHB) package covering a broad range of mandated benefits, some of which are not typically included in individual and small group policies today. The ACA further requires that coverage sold through the exchanges must be at one of four actuarial value levels: 60% (bronze); 70% (silver); 80% (gold); and 90% (platinum). As a result of these provisions, millions of people may be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have.
 
We believe that the EHB package must be affordable for families and small businesses and that affordability should be the cornerstone of consideration in defining the EHB package. The nonpartisan Institute of Medicine – in its recommendations to HHS – underscored the need to ensure affordability in defining the EHB standard and cautioned that “if cost is not taken into account, the EHB package becomes increasingly expensive and, individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA – enabling people to purchase health insurance, and covering more of the population, will not be met.”

The imposition of broader benefit packages than what consumers and small businesses are purchasing today will force consumers to “buy up” coverage that they may not want or need. In recent months, many state departments of insurance and state exchange boards have requested formal actuarial and economic forecasts of the impact of the new insurance reforms on their state. These independent studies have found that several provisions, including the EHB and actuarial value requirements, will result in higher premiums.

Recognizing that these ACA provisions will have a major impact on the cost of coverage, we believe that the important goals of the EHB package can be met if HHS and the states place a high priority on offering affordable coverage options to consumers. In addition, consideration should be given to lowering the minimum actuarial value for coverage sold in the exchanges to ensure the availability of affordable coverage options and to allow smoother transitions to the new benefits packages.

http://waysandmeans.house.gov/uploadedfiles/durham_testimony_final_hl912.pdf

Comment: 

By Don McCanne, MD

As the Affordable Care Act was being drafted, many of us in the policy community were very disappointed with the decision to include in the state insurance exchanges low actuarial value plans, as low as 60 percent (the plan pays 60 percent of covered costs and the patient pays the other 40 percent plus 100 percent of all services and products not covered). Even with the subsidies, the financial barriers to care will be too great for many patients. Now AHIP – the all-powerful health insurance lobby organization – is asking Congress to lower even further the minimum required benefits and the actuarial values of the plans.

The reason is obvious. They explicitly state that “affordability should be the cornerstone of consideration,” but they are not referring to affordability of health care, rather they are referring to the affordability of their own private health insurance plans. They want their premiums to be low enough for middle-income Americans to be able to purchase their plans. They remain silent on the fact that reducing minimum benefits and reducing actuarial values of the plans will shift large portions of the costs to those who need care. (Again, the cost sharing subsidies are not adequate for covered benefits, and the patient is responsible for 100 percent of the costs of excluded benefits which would increase with this proposal.)

The private insurance industry got virtually everything that they asked for when the bill was written. Now they are coming along with a pitch that appeals to members of both sides of the aisle – we should make insurance affordable by allowing individuals to “buy only the insurance you need.” For people who are healthy on December 31, 2013, can they really feel secure with a low actuarial value, minimal benefit plan that begins on January 1, 2014, when they have absolutely no idea what health problems they may face throughout 2014 and into the future? Of course not, though the high premiums of plans with adequate coverage may serve as enough of a deterrent that they would want to or may even have to take the risk that they will remain healthy throughout the year – a safe bet for the insurers but a big gamble for the patient. With time, it becomes even more treacherous for individuals to bet that they will remain healthy forever.

It is particularly appalling when they say that the principal reason for the Affordable Care act was to enable people to purchase health insurance. Some of us thought that the principal reason should have been to remove financial barriers to essential health care for everyone.

Really, haven’t we had enough of Congress and the Obama administration supporting the private insurance industry? How about demanding support for America’s patients instead? Throw out the insurers and enact an improved Medicare for all. We just might have to throw out the politicians to get there.

GOP and Medicare: Moving quickly, but in the wrong direction

By Jack Bernard
Ledger-Enquirer (Columbus, Ga.), Sept. 8, 2012

Rep. Paul Ryan (and, by extension, Mitt Romney) wants to start the process of getting the government out of our health care by going to a voucher program for Medicare. The problem is that the American people are clearly not with him or the GOP — my party — in this crusade.

August surveys by NBC/Wall Street Journal and the Pew Research Center confirm this fact. Pew finds that of the nearly three-fourths of Americans who have heard about the Ryan voucher plan, only 34 percent favor it while 49 percent oppose it. The NBC/WSJ survey finds that only 37 percent of the public believes Medicare needs a complete or major overhaul. When asked about the Ryan voucher concept, only 15 percent think it is a good idea, while 30 percent think it is bad. When asked do they favor Obama’s position against or Romney’s position for vouchers, 50 percent side with Obama as opposed to only 34 percent with Romney.

The response of the GOP to these polls has been to confuse the issue by accusing Obama of cutting $700 billion out of Medicare to fund Obamacare … which, while true, is very misleading. The Democrats have bumbled around, responding poorly to a surprisingly effective, although purposefully vague, Republican Medicare offensive.

Being disingenuous will work for a while for my fellow Republicans, but eventually the Democrats will figure out how to better explain the substantial impact of the voucher proposal on the lives of the voters. The GOP will then lose this battle.

Americans will understand that making Medicare a voucher program is simply a budgetary maneuver proposed by a Washington wonk (Ryan) to shift the constantly increasing cost of health care from one payer (the federal government/Medicare) to another payer (the patient).

It does nothing to make the health care delivery system more efficient or effective, unless you buy into the dubious argument that an individual patient has more power to correct provider behavior than does the government through control of the payment mechanism.

In any case, there is currently a private alternative to traditional Medicare. It is called Medicare Advantage. When it was proposed by Republicans and approved years ago, it was supposed to be the way to gradually get the government out of Medicare and save the government a lot of money. But it did not work; it costs the government 10 percent more than traditional Medicare. It just channels healthier seniors into private HMOs and PPOs, while costing the government (and taxpayers) billions.

By the way, this is a large part of the Obama “cut” in Medicare, bringing seniors out of Advantage and back into traditional Medicare, projected to save $117 billion by 2019.

There is an easier and much more effective way to save Medicare: Expand it to cover everyone, and not just seniors. Right now, Medicare covers only those over 65, the sickest segment of the population and the group which uses the most resources. By expanding it to cover all age groups, the risk is spread, causing average costs and premiums to decrease.

Is this a radical idea? Not really; many of the world’s democracies already have a single-payer system. Canada is just one example. Canadian costs per capita are much lower than ours, and their health care indicators (morbidity and mortality) are much better. As opposed to what you may have heard, providers are well paid and the public likes the program very much.

A full explanation of Medicare For All, including funding, can be found at the website www.pnhp.org, sponsored by the respected group Physicians For A National Health Program (PNHP).

I am a Republican fiscal conservative, and setting a global budget under Medicare for All makes sense to me. So does leveraging the power of the federal government to determine appropriate fee schedules to keep down costs.

From a societal standpoint, we are paying for many of the uninsured right now through our expensive ERs. The problem is that they are not served until they are very sick and require expensive care relative to what could have been given them earlier. A Grady Hospital physician recently told me of one example where an uninsured patient could not afford meds and went blind. After that happened, he was then covered by Medicare … at a much greater financial cost to the system, not to mention the irreparable cost to that person.

If the GOP really wants to do something innovative to control the cost of health care, improve quality and guarantee access, it must abandon ill-conceived private market solutions like vouchers. It should do what much of the rest of the world has already done and advocate a single-payer approach.

Jack Bernard, a Jasper County commissioner and former chairman of the Jasper County Republican Party, is a retired executive of for-profit health care services. He is now a private consultant for small business.

http://www.ledger-enquirer.com/2012/09/08/2192546/gop-and-medicare.html

A Single-Payer System Would Be Far More Efficient

By Robert Reich
Wall Street Pit, Sept. 13, 2012

Employer outlays for workers’ health insurance slowed from a 9 percent jump last year to less than half that — 4 percent — this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it’s good news but blame Obamacare for the fact that employer health-care costs continue to rise faster than inflation. “The new mandates contained in the health care law are significantly increasing the cost of insurance” says Wyoming senator Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations — whose profits continue to be robust despite the anemic recovery — and another loss for American workers.

Those profits aren’t due to a surge in sales. Exports are down (Europeans, Japanese, and Chinese are all pulling in their belts) and American consumers don’t have the dough to buy more.

The profits are largely due to lower corporate costs, especially when it comes to their payrolls. Employer-provided health and pension contributions are shrinking, and the real median wage continues to drop.

High unemployment has given companies more bargaining leverage over their workers, who have to accept lower real pay and benefits or risk losing their jobs.

When it comes to health insurance, employees increasingly have to choose between health-insurance policies with sky-high premiums or with sky-high co-payments and deductibles. And since they can’t afford the former they’re opting for the big co-payments and deductibles – or no insurance at all.

The result is fewer visits to the doctor and less use of other medical services.

This is a new trend, and it comes despite the Affordable Care Act (which hasn’t been fully phased in). And it wouldn’t be worrisome if we were seeing too much of doctors before, and using up medical resources we didn’t need.

But it’s worrisome if it means less preventive care, or health problems going untreated until they become chronic illnesses or crises.

Healthcare costs do have to be better controlled. They now claim 18 percent of our entire economy. But the best way to control them isn’t by cutting back care. It’s by wringing inefficiencies out of the system.

Our healthcare system wastes 30 cents of every dollar spent on health care, according to new calculations by the well-respected Institute of Medicine. Much of it is wasted on repeated tests, and a huge portion wasted on paperwork – between doctors and hospitals and specialists and insurers, to justify expenditures by one group to be paid by another.

A single-payer system would be far more efficient.

So back to my original question. Is the dramatic slowdown in employer health-care costs good news? It all depends. If we and our families are in good health, or we’re high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they’re trimming pay and benefits – or we’re in all three categories – it’s probably good.

But if we’re none of these, it might not be good news – especially if it means we’re getting less care than would otherwise keep ourselves and our families healthy.

At the least, if we’re concerned about the health and well-being of all Americans, we need to find out much more before we celebrate.

Robert B. Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He was Secretary of Labor in the Clinton administration.

http://wallstreetpit.com/96788-a-single-payer-system-would-be-far-more-efficient/

How many "bundles" do we need in health care?

The Arkansas Innovation

By Ezekiel J. Emanuel
The New York Times, September 5, 2012

(Arkansas) is moving toward ending “fee-for-service” payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one “episode-based” or “bundled” payment.

This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient’s care — the “quarterback,” as Andrew Allison, the state’s Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care — a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby’s delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of the services provided to their patients, and will receive quarterly reports on those metrics from the state (for Medicaid patients) or private insurers. If they have delivered good care based on agreed-upon standards, and if their billings come in lower than the agreed-upon level, they can keep a portion of the difference. If their billings come in above an acceptable level — usually because they have ordered too many unnecessary tests, office visits or inappropriate treatments — they will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee replacements, which have similar costs for all patients, have been previously tested. But for other conditions, not every patient’s needs are the same. Some pregnant women are healthy while others have diabetes. The state and insurers will have to provide “risk adjustment” payments — in which providers are reimbursed more for treating sicker patients — and some patients with especially complicated illnesses may need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are treated at widely varying costs, mainly because physicians prescribe different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by providing standards for appropriate care linked to the costs of treatment and the quality of the doctor’s performance compared with that of other doctors.

http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And…

Is ‘Bundled’ Medical Care a Good Idea?

Letters, The New York Times, September 12, 2012

Despite Ezekiel J. Emanuel’s implication, Arkansas isn’t the only state to plan to substitute “bundled” medical payments for fee-for-service. Vermont, Massachusetts and Oregon have similar intentions. But without basic changes in the organization and delivery of care, it is doubtful that “bundled” payments can be successfully distributed among all the providers of care.

A stifling supervisory bureaucracy interfering with medical care and endless disputes among providers and between providers and payers are almost certain to develop. Physicians are unlikely to accept such an arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single public payer guarantees comprehensive care for all, and pays accountable multispecialty physician groups not by reimbursement for specific services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, is a former editor in chief of The New England Journal of Medicine.

http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion

Comment:

By Don McCanne, MD

What a simple idea. Instead of paying a fee for each itemized service – a payment model that supposedly encourages the delivery of excess services – a lump (bundled) fee would be paid for each episode of care. That episode might be as simple as a common cold, or as complex as extensive, prolonged care of a major trauma victim. But because of the single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care are there? How is each one defined? How is an appropriate bundled fee determined for each of these episodes? Which individuals and entities would share in each fee? Would the various providers be bundled together just as the fee for each episode of care is bundled? How many variations of bundled providers would you have? How many bundled groups would each individual provider belong to? How complex would the administrative task be to distribute the bundled fee within the bundled group of providers? Could an accountable care organization (ACO) serve as a single bundled group of providers that could care for each and every episode of care? Would each ACO include providers of tertiary services such as advanced cardiac or oncological surgeries? Would each ACO want to contract for bundled payments for common colds and other brief, single contact services? Would one ACO be the only bundled entity in a community, or could the community support multiple competing ACOs? Could the community support providers outside of the ACO and how would they be bundled? Would each payer – Medicare, Medicaid, and a multitude of private insurers – contract separately with each bundled group of providers for each separate episode of care? If instead the bundled payments were standardized, then why would you want the inefficiency of multiple payers when a single payer would simplify at least that part of the process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more administrative complexity to a health care system that already has the world’s worst administrative excesses. Instead of playing more games with a dysfunctional, fragmented financing system, we should convert to a single payer national health program. Under such a system costs can be budgeted – whether it’s through global budgets for hospitals, capitation payments for integrated multispecialty physician groups, physician-hospital organizations, community health centers, or through fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be free to cooperate with the health care professionals and institutions to establish the best payment arrangements to see that everyone receives the highest quality of care under a system that would provide the nation with greatest health care value attainable. One giant bundle for all of us.

How many “bundles” do we need in health care?

The Arkansas Innovation

By Ezekiel J. Emanuel
The New York Times, September 5, 2012

(Arkansas) is moving toward ending “fee-for-service” payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one “episode-based” or “bundled” payment.

This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient’s care — the “quarterback,” as Andrew Allison, the state’s Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care — a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby’s delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of the services provided to their patients, and will receive quarterly reports on those metrics from the state (for Medicaid patients) or private insurers. If they have delivered good care based on agreed-upon standards, and if their billings come in lower than the agreed-upon level, they can keep a portion of the difference. If their billings come in above an acceptable level — usually because they have ordered too many unnecessary tests, office visits or inappropriate treatments — they will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee replacements, which have similar costs for all patients, have been previously tested. But for other conditions, not every patient’s needs are the same. Some pregnant women are healthy while others have diabetes. The state and insurers will have to provide “risk adjustment” payments — in which providers are reimbursed more for treating sicker patients — and some patients with especially complicated illnesses may need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are treated at widely varying costs, mainly because physicians prescribe different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by providing standards for appropriate care linked to the costs of treatment and the quality of the doctor’s performance compared with that of other doctors.

http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And…

Is ‘Bundled’ Medical Care a Good Idea?

Letters, The New York Times, September 12, 2012

Despite Ezekiel J. Emanuel’s implication, Arkansas isn’t the only state to plan to substitute “bundled” medical payments for fee-for-service. Vermont, Massachusetts and Oregon have similar intentions. But without basic changes in the organization and delivery of care, it is doubtful that “bundled” payments can be successfully distributed among all the providers of care.

A stifling supervisory bureaucracy interfering with medical care and endless disputes among providers and between providers and payers are almost certain to develop. Physicians are unlikely to accept such an arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single public payer guarantees comprehensive care for all, and pays accountable multispecialty physician groups not by reimbursement for specific services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, is a former editor in chief of The New England Journal of Medicine.

http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion

Comment:

By Don McCanne, MD

What a simple idea. Instead of paying a fee for each itemized service – a payment model that supposedly encourages the delivery of excess services – a lump (bundled) fee would be paid for each episode of care. That episode might be as simple as a common cold, or as complex as extensive, prolonged care of a major trauma victim. But because of the single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care are there? How is each one defined? How is an appropriate bundled fee determined for each of these episodes? Which individuals and entities would share in each fee? Would the various providers be bundled together just as the fee for each episode of care is bundled? How many variations of bundled providers would you have? How many bundled groups would each individual provider belong to? How complex would the administrative task be to distribute the bundled fee within the bundled group of providers? Could an accountable care organization (ACO) serve as a single bundled group of providers that could care for each and every episode of care? Would each ACO include providers of tertiary services such as advanced cardiac or oncological surgeries? Would each ACO want to contract for bundled payments for common colds and other brief, single contact services? Would one ACO be the only bundled entity in a community, or could the community support multiple competing ACOs? Could the community support providers outside of the ACO and how would they be bundled? Would each payer – Medicare, Medicaid, and a multitude of private insurers – contract separately with each bundled group of providers for each separate episode of care? If instead the bundled payments were standardized, then why would you want the inefficiency of multiple payers when a single payer would simplify at least that part of the process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more administrative complexity to a health care system that already has the world’s worst administrative excesses. Instead of playing more games with a dysfunctional, fragmented financing system, we should convert to a single payer national health program. Under such a system costs can be budgeted – whether it’s through global budgets for hospitals, capitation payments for integrated multispecialty physician groups, physician-hospital organizations, community health centers, or through fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be free to cooperate with the health care professionals and institutions to establish the best payment arrangements to see that everyone receives the highest quality of care under a system that would provide the nation with greatest health care value attainable. One giant bundle for all of us.

More Americans got health insurance in 2011, Census says

By Maggie Fox
NBC News, Sept. 12, 2012

More Americans got health insurance coverage in 2011 as young adults jumped onto their parent’s health insurance plans, the U.S. government said Wednesday. More people also got public health insurance under the Medicare and Medicaid programs.

The number of people going without health insurance fell, from around 50 million in 2010 to 48.6 million in 2011, the Census Bureau’s David Johnson said. In 2010, 16.3 percent of the population went without health insurance. In 2011, that fell to 15.7 percent of the population, the Census said in its latest report on poverty, employment and health insurance.

One of the main goals of the 2010 health reform was to get more people covered by health insurance, but most of the provisions meant to do that don’t kick in until 2014. One of the most popular requirements did, however –  the requirement that health insurance companies let parents keep their adult children on their plans until they’re 26. Johnson said the numbers show 500,000 young adults took advantage of that.

“You can see a lot of the fall is due to the 19-25 year-old age group,” Johnson told reporters on a conference call. “We also see a large increase in coverage for public coverage. I think those two things are driving the uninsured rate falling.”

About a million more people got coverage under Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and military health care, the report shows.

The Census report suggests that people stopped losing health insurance because they lost their jobs – the report shows more people were working full-time in 2011, compared to 2010.

“This is the first time in the last 10 years that the rate of pri­vate insurance coverage has not decreased,” Johnson said. As has been the case for years, most Americans are covered by a private plan — about 55 percent were in 2011.

Liberal groups said the data showed that fears health care reform would cause employers to stop offering health care coverage are unfounded.

“In fact, the law has expanded coverage, even as we are still recovering from an economic downturn,” said Neera Tanden, a former adviser to the Obama administration who is now president of the Center for American Progress. “These numbers also underscore just how important it is to move forward with implementation of the rest of the law, especially Medicaid expansion which will cover millions of low-income Americans.”

Looking at the numbers another way, 260.2 million people had health insurance in 2011, up from 256.6 million in 2010.

Even critics of the administration said the numbers were good news. Devon Herrick of the National Center for Policy Analysis said 30 million Americans would remain without health insurance even after the Affordable Care Act is fully implemented.

“This is largely because the penalties for forgoing health coverage are less than the cost of coverage,” Herrick said in a statement.

“Moreover, maybe up to one-third of businesses will find it to their advantage to drop the employee health plan once their workers have access to subsidized coverage in the state Health Insurance Exchanges. Another unintended consequence of the ACA is that many people will quite rationally wait until they become sick to enroll in health coverage due to new federal regulations that require insurers to accept all applicants regardless of health status.”

Many studies show that people who go without health insurance have poorer health in general. They go without regular checkups and wait until there’s an emergency, such as a heart attack or a stroke, to get medical care. This ends up costing everybody more, because it’s far more expensive to treat someone for a heart attack, for instance, than to see them early and prescribe cholesterol or blood-pressure drugs.

Physicians for a National Health Program, a group that advocates for universal health insurance, says the Census numbers show 48,000 Americans died needlessly in 2011.

“The estimated death toll is based on a peer-reviewed Harvard study published in the American Journal of Public Health in 2009, widely cited during the health reform debate, which found that for every 1 million persons who were uninsured there were about 1,000 related, preventable deaths,” the group said in a statement.

 “We should adopt a zero-tolerance policy toward lack of health coverage,” the group’s Dr. Steffie Woolhandler said. “Today’s Census Bureau report underscores the urgency of going beyond the federal health law and swiftly implementing a single-payer, improved-Medicare-for-all program.”

http://vitals.nbcnews.com/_news/2012/09/12/13828647-more-americans-got-health-insurance-in-2011-census-says

New Census Bureau numbers on the uninsured

Income, Poverty, and Health Insurance Coverage in the United States: 2011

By Carmen DeNavas-Walt, Bernadette D. Proctor, Jessica C. Smith
United States Census Bureau, September 2012

Health Insurance Coverage – 2011

48.6 million or 15.7% – people without health insurance
• 7.0 million – children under 18 uninsured

193.7 million or 63.9% – people covered by private health insurance
• 170.1 million or 55.1% – people covered by employment-based insurance

99.5 million or 32.2% – people covered by government health insurance
• 50.8 million or 16.5% – people covered by Medicaid
• 46.9 million or 15.2% – people covered by Medicare

Poverty

9.5 million or 11.8% – families living in poverty
• 31.2% – families with a female householder living in poverty

Income Inequality

Income inequality also increased between 2010 and 2011 when measured by shares of aggregate household income received by quintiles. The aggregate share of income declined for the middle and fourth quintiles. The share of aggregate income increased 1.6 percent for the highest quintile and within the highest quintile, the share of aggregate income for the top 5 percent increased 4.9 percent. The changes in the shares of aggregate income for the lowest two quintiles were not statistically significant.

http://www.census.gov/prod/2012pubs/p60-243.pdf

Comment:

By Don McCanne, MD

The numbers of uninsured decreased from 50.0 million in 2010 to 48.6 million in 2011. That might be good news for the net 1.4 million newly insured, but it is terrible news for the 48.6 million who remain without health insurance.

These numbers, of course, are transitional since new private coverage through the state insurance exchanges and the greater expansion of coverage under Medicaid will not take place until 2014. Even then, the new coverage will be either with private underinsurance plans (low actuarial value and inadequate subsidies) or with the chronically underfunded Medicaid program, with even greater impairment of health care access likely. Worse, 30 million will still have no coverage at all (CBO).

Perhaps even more shocking is that 31.2% of families with a female householder live in poverty – right here in the United States!

And income inequality? The aggregate share of household income has decreased for the middle and fourth quintiles. The middle class is being wiped out!

Of course we knew all this. So why aren’t we doing something about it? Howling in the wind doesn’t seem to be getting us very far.

Despite slight drop in uninsured, last year’s figure points to 48,000 preventable deaths: health expert

Persistence of large numbers of uninsured and related deaths shows urgency of enacting an improved-Medicare-for-all system, physician says

FOR IMMEDIATE RELEASE
Sept. 12, 2012

Contact:
Steffie Woolhandler, M.D., M.P.H.
David Himmelstein, M.D.
Garrett Adams, M.D., M.P.H., president PNHP
Mark Almberg, communications director PNHP, (312) 782-6006, mark@pnhp.org. Local physicians in 44 states are available for comment. (Also see historical table of state-by-state uninsured numbers below.)

The Census Bureau’s official estimate that 48.6 million Americans lacked health insurance in 2011 means approximately 48,000 people died needlessly last year because they couldn’t get access to timely and appropriate care, a health policy expert said today.

The estimated death toll is based on a peer-reviewed Harvard study published in the American Journal of Public Health in 2009, widely cited during the health reform debate, which found that for every 1 million persons who were uninsured there were about 1,000 related, preventable deaths.

Dr. Steffie Woolhandler, professor of public health at the City University of New York and visiting professor of medicine at Harvard Medical School, is a co-author of the 2009 study. She said, “The Census Bureau’s latest figure, 48.6 million uninsured, conjures up a very grim picture: a preventable death every 11 minutes.”

She said studies have shown that uninsured people with chronic illnesses like heart disease delay or forgo care, often leading to serious complications of their medical condition and, in many cases, premature death.

Woolhandler continued: “As a physician, I simply cannot accept a situation where tens of thousands of people die every year because they lack insurance coverage. And lest anyone think this problem has been solved by the federal health law, the Congressional Budget Office estimates about 30 million people will still be uninsured in 2022. That figure translates into roughly 30,000 excess deaths annually – again, an intolerable picture.”

The slight drop in this year’s total number of uninsured – to 48.6 million from a record 50 million last year – was largely attributable to an increase in government health insurance coverage, particularly persons covered by Medicaid and Medicare, the Census Bureau said.

There was also a modest gain in coverage among people between the ages of 19 and 25 – 539,000 – approximately 40 percent of whom obtained coverage through their parent’s health plan as a result of the 2010 health law, the bureau reported.

Woolhandler said that while the number of persons covered by private health insurance last year was statistically unchanged from 2010, the share of Americans with private coverage, 63.9 percent, shows a slight drop and continues a three-decade-long trend of diminishing coverage through private insurance.

She also noted that while the national count of uninsured went down slightly, the number of uninsured climbed in 21 states, most significantly in California, where 197,000 additional people became uninsured since 2010. The Census Bureau reported that California’s uninsured numbered 7.4 million in 2011, or 19.7 percent of the population.

“We should adopt a zero-tolerance policy toward lack of health coverage,” Woolhandler said. “Today’s Census Bureau report underscores the urgency of going beyond the federal health law and swiftly implementing a single-payer, improved-Medicare-for-all program.

“Such a program would assure truly universal, comprehensive, high-quality coverage for everyone while simultaneously ridding us of the scourge of insurance-company-related waste, bureaucracy and profiteering. A single-payer system would save both lives and money.”

Woolhandler is co-founder of Physicians for a National Health Program, an organization of 18,000 doctors who advocate for single-payer national health insurance. PNHP played no role in supporting her 2009 research study, which she co-authored with Dr. David Himmelstein, among others.

Historical state-by-state data on the uninsured from 2011-2008, compiled by PNHP staff from the Census Bureau’s newly published data, can be found here.

Physicians for a National Health Program (www.pnhp.org) is an organization of more than 18,000 doctors who advocate for single-payer national health insurance. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Jonathan Gruber gives qualified endorsement to premium support

Mixed Message From Obama Advisers on Medicare

By Meghan McCarthy
NationalJournal, September 10, 2012

President Obama has seized on Republican proposals to overhaul Medicare as a top campaign issue, saying that the GOP plan to add a private insurance option would end seniors’ guarantee of government health care. But behind the election-season politics, influential experts who have advised Obama on health care are open to a future for Medicare that includes competition among private insurance plans.

In e-mail exchanges with the staff of the White House-appointed  fiscal commission  that were obtained by National Journal, David Cutler and Jonathan Gruber, who have both advised Obama, gave qualified support to a Medicare voucher plan offered by Ryan and former Clinton budget director Alice Rivlin in talks to reduce the deficit.

Cutler and Gruber are both hot shots of the health economics world. Cutler is a professor at Harvard, Gruber at MIT. Both advised Obama on health care in the 2008 campaign, and both had major roles in helping develop Democrats’ 2010 health care law. When they offer counsel, the White House is listening.

Cutler now says he was only proposing an idea for Medicare if insurance exchanges are “shown to work well for the non-elderly population,” by getting people into good plans and lowering costs.

Gruber also said he approved of the Ryan-Rivlin plan in 2010 e-mails to fiscal-commission staff, as long as the insurance market reforms of the Democrats’ health care law are kept in place.

Gruber now says that economists don’t know enough yet to move the majority of Medicare enrollees into private-insurance plans.  As part of the effort to expand coverage to the uninsured, President Obama’s health care law would establish insurance exchanges for people younger than 65 to buy private health care. Gruber said that this is a better way of testing out new approaches, adding that it would be “stupid” to experiment first on the older and sicker Medicare population.

“We are getting better, but we are not quite there yet,” Gruber said in an interview. “But premium support is ultimately where we need to be.”

There are three key problems that still must be worked out, Gruber said. First, policymakers have to figure out how to keep insurance companies from cherry-picking healthy people and essentially forcing the sickest patients on to traditional Medicare, which would drain the program of money. Second, policymakers must find a way to make sure insurance companies design benefits so they are easy-to-understand for beneficiaries, and don’t trick seniors into buying more expensive plans that aren’t suitable for them. Third, they have to figure out just how quickly government checks for seniors to buy coverage could grow.

Still, Gruber said he could see Medicare becoming a premium-support-style plan within a five-year timetable, after the Affordable Care Act’s health insurance exchanges start enrolling an estimated 30 million people into insurance plans in 2014.

http://www.nationaljournal.com/healthcare/mixed-obama-message-on-medicare–20120910

Comment: 

By Don McCanne, MD

So Obama advisor, MIT Professor Jonathan Gruber, says, “premium support is ultimately where we need to be.” In other words, we should replace the traditional Medicare program with vouchers that would be used to purchase private plans. Let’s look at the three problems which he says must first be addressed.

He says that policymakers must figure out how to keep insurance companies from insuring the healthy and sending the sick to the traditional government program. Actually that is only one behavior that private insurers engage in to enhance their success as private businesses. They are always going to do everything that they can to maximize revenues and minimize spending, as any reasonable business would do. The drive for profits for passive investors is not in itself inherently evil, except when it is applied to our health care system. Manipulating sick patients for the prime purpose of generating profits is immoral. Investor-owned insurance companies need to be removed from our health care system.

Gruber also says that we have to figure out “just how quickly government checks for seniors to buy coverage could grow” under premium support. This is a problem inherent with government vouchers that cover only a part of the costs. Instead of directing efforts to control total health care costs, government stewards tend to control just the government spending, passively shifting the costs of health care inflation onto the patients. The financial burden on individuals is already too great, and this would make it even worse.

More subtle, but perhaps even more important, Gruber says that the design of insurance products should be easy to understand so that seniors are not tricked into buying “more expensive plans that aren’t suitable for them.” This statement represents one of the great fallacies of private health insurance markets, that somehow there is an insurance product that is just right for you wherein you will not have to pay for benefits that you’ll never use.

There are two problems with this. The obvious one is that future health care needs cannot be predicted. Major acute disorders or the future onset of chronic disease are unknowns. Plans need to be comprehensive to insure against these potential losses, even if you hope that you won’t ever need to use the coverage that is providing you security, though you probably will someday.

The other problem is that an ideal insurance system pools all risks and funds the risk pool equitably. It is less expensive because of the much greater administrative efficiency of a universal risk pool. It also eliminates financial barriers to appropriate health care. Maybe males don’t want maternity benefits. Maybe females don’t want coverage for prostate cancer. Maybe young adults don’t want coverage for cataracts. Maybe the elderly don’t want coverage for organ transplants. Maybe children don’t want coverage for vaccines, even of their parents want them to have it.

The point is that when you start designing plans for different populations – “only the coverage you need” – you break up the universal risk pool and introduce many of the inequities and inefficiencies that characterize our current dysfunctional financing system. The administrative inefficiencies of buying “only what you need” increases costs over the entire system and redistributes those costs inequitably.

There is no substitute for establishing a single universal risk pool, funding the pool equitably based on ability to pay, and using the pool to fund health care based on medical need. And that, in a nutshell, is what a single payer national health program does.

Herding dual eligibles into low quality plans

Obama More Flexible on Medicare Than Rhetoric Suggests

By Margot Sanger-Katz
NationalJournal, September 8, 2012

In his convention speech in Charlotte, President Obama vowed to block the Republican Medicare reform plan because “no American should ever have to spend their golden years at the mercy of insurance companies.”

But back in Washington, his Health and Human Services Department is launching a pilot program that would shift up to 2 million of the poorest and most-vulnerable seniors out of the federal Medicare program and into private health insurance plans overseen by the states.

The administration has accepted applications from 18 states to participate in the program, which would give states money to purchase managed-care plans for people who are either disabled or poor enough to qualify for both Medicare and Medicaid.

Obama’s 2010 health reform law allows experimentation in delivering health care at lower cost through demonstration projects. Many states would like permission to shift their entire population of so-called dual-eligible beneficiaries into the new plans. HHS has indicated that it will enroll about 2 million beneficiaries, out of about 7 million who qualify for full benefits from both government health programs.

California is already counting on more than $500 million in budget savings from its own program this year.

Potential cost savings are a big incentive for states. Patients who qualify for both federal health programs are a costly population and include many who need nursing-home care or other expensive services. About 40 percent of Medicaid’s costs go toward patients who are also eligible for Medicare. Advocates of the pilot program also say it could lead to better coordination of care for patients who often struggle to navigate the two different programs.

To get approval, states must guarantee that both Medicare and Medicaid would save money. They must also agree to accept a fixed payment to cover all care for each patient. While rules say the private plans must cover all standard Medicare benefits, they also waive many Medicare rules and leave insurer selection to the states.

Still, there is powerful opposition to the pilots among doctors, hospitals, nursing homes, patient groups, and key lawmakers, including Sen. Jay Rockefeller, D-W.Va., who wrote the provision in the health law that created the office in charge of the pilot program.

“I urge you to take immediate steps to halt this initiative as currently structured and to take the time necessary to develop a well-designed and thoroughly evaluated care coordination model for dual eligibles that meets the standards outlined in the law,” Rockefeller wrote in a letter to HHS.

The Medicare Payment Advisory Commission, a group of experts who advise Congress on Medicare policy, has also weighed in with an 11-page letter to HHS, warning that the speed and scope of the program raised questions about whether patients would receive the care they need.

The managed-care industry is gearing up for the expansion. Three large insurers have purchased companies that insure Medicaid beneficiaries. For years, states have been moving Medicaid patients into managed-care plans, with mixed results. But this pilot represents a new market: It is the first large program that would pool Medicare and Medicaid benefits in a single, state-administered plan.

“The problem with this population is that all the strategies that the health plans have been used to using historically are going to backfire,” said Chris Duff, executive director of the Disability Practice Institute, an umbrella organization for small programs that provide coordinated care to dual-eligibles. He warned that slashing provider rates, limiting visits, and using other conventional cost-control measures could lead to expensive hospitalizations for frail dual-eligible patients.

But the states are enthusiastic about the pilot programs and believe they will be able to provide better care at lower cost.

http://www.nationaljournal.com/healthcare/obama-more-flexible-on-medicare-than-rhetoric-suggests-20120908

And…

Assessing the Quality of California Dual Eligible Demonstration Health Plans

National Senior Citizens Law Center
May 2012

California has proposed a three-year demonstration project to enroll individuals dually eligible for Medicare and Medi-Cal (dual eligibles) into managed care. An analysis of both Medicare and Medi-Cal quality ratings for the eight health plans selected by the California Department of Health Care Services (DHCS) for the first phase of the project raises cause for concern.

Approved health plans in participating counties would be responsible for providing enrolled dual eligibles with all Medicare and Medi-Cal benefits and services, including all needed medical care, long-term services and supports, and behavioral health care, beginning in January 2013.

According to a DHCS report assessing the quality of health plans in the Medi-Cal Managed Care (MCMC) Program, seven of the eight plans received a global health plan rating of 1 out of 5 stars.

Looking at Medicare evaluations, two of the plans selected have received a notice of non-compliance from the Medicare program. One of those has been marked as a low-performing plan for three consecutive years and is at risk for termination of its Medicare contract. Another plan was recently sanctioned by Medicare as a result of beneficiary access problems. Medicare continues to restrict enrollment of dual eligibles into that plan. All eight proposed demonstration plans were found to be low-performing on a least one composite Medicare quality measure.

http://dualsdemoadvocacy.org/wp-content/uploads/2012/02/Plan-Ratings-Report-May-2012.pdf

Comment: 

By Don McCanne, MD

President Obama is currently campaigning against the Republican proposal to privatize Medicare through a voucher program that would move Medicare patients into private plans. Yet, based on provisions in the Affordable Care Act, the administration is moving Medicare patients whose coverage also is supplemented with Medicaid (dual eligibles) into private managed care plans.

California has been a leader in health care financing innovations. Look at the head start that they have on this program. Seven of the eight plans they have selected to initiate the program have a global health plan rating of only 1 star out of 5!

These plans greatly limit patients’ choices of their providers and will undoubtedly impair access by eliminating choices of most other health care providers within the state. Having to transfer buses three times when you are very ill can make you question whether you have the access that the state has promised to you. And quality ratings? Forget it.

These low-income patients, under the law, have more coverage than do traditional Medicare patients… more, but worse. We can do far better. We can improve Medicare so that it includes the additional benefits provided by Medicaid. Then you wouldn’t need a special “dual eligible” program.

If the improved Medicare program included everyone, then you wouldn’t have to herd patients into inferior managed care programs just to save money (precisely what this new dual eligible program is designed to do). As a beneficent public monopsony, the improved Medicare program would save us all money while being in a position to demand quality throughout the health care delivery system. We couldn’t ask for more – for all of us!

Medical debt still problem in Mass.

Scant change since passage of ’06 health law

By Chelsea Conaboy
The Boston Globe, Sept. 10, 2012

Architects of the pioneering 2006 Massachusetts health law, which required most residents to have insurance, expected it would reduce families’ medical debt. But the most recent data suggest the scope of medical debt has remained largely unchanged.

Temporary lapses in insurance coverage and increasingly common plans with high deductibles and copayments have contributed to medical debt, leaving some people struggling to pay bills for hospitals, doctors, and ambulance companies. Rising health costs and the recession also probably played a role.

Although the law has failed to cut medical debt, some analysts say it may have prevented an increase in Massachusetts.

Of more than 3,000 Massachusetts adults surveyed in fall 2010 — the most recent survey data available — 17.5 percent reported having problems paying medical bills in the previous year. Twenty percent said they were carrying medical debt and paying it over time. Those figures changed slightly from 2006, but researchers said the difference was not statistically significant. The figures are from a report released earlier this year by the Blue Cross Blue Shield of Massachusetts Foundation.

“The 2006 law didn’t eliminate medical debt by a long shot,” said Matt Selig, executive director of Health Law Advocates in Boston, whose office has worked in recent years with hundreds of Massachusetts residents with medical debt. “It’s an underappreciated problem.”

Among his office’s clients is Amy Torro, a 39-year-old mother of two. After a double mastectomy, surgical complications, and rounds of radiation, doctors have told Torro that her body is clear of the cancer she discovered in December 2008 as a lump in her breast.

Torro has had insurance coverage throughout her treatment. Local foundations and a fund-raiser covered some bills. But deductibles and copayments for visits to specialists and prescription drugs have outpaced her ability to pay, leaving Torro with at least $1,800 in outstanding hospital bills and daily calls from collection agencies.

“It got to the point where it was bread or milk for my family or my cancer meds,” she said. An attorney in Selig’s office is working to negotiate a payment plan with Winchester Hospital, where she was treated.

The 2010 survey did find some change in how much debt people reported, according to additional analysis provided for the Globe by Sharon Long, a senior fellow at the Urban Institute’s Health Policy Center and an author of the Blue Cross report. The portion of people who had unpaid medical bills of between $500 and $1,000 dropped about 40 percent between 2006 and 2010. But there was no statistically significant change in people reporting smaller or larger amounts. Long cautioned that the analysis was based on a small group of people.

Research elsewhere has shown that insurance coverage reduces overall financial strain. In Oregon, 35,000 low-income adults randomly selected to receive Medicaid coverage in 2008 were 25 percent less likely, one year later, to have a medical bill sent for collection than those not selected for the program. (That figure reflects the effect of covering a large group of people who were uninsured, while the Blue Cross study analyzes the overall population in Massachusetts, where a large majority of people had coverage before and after the state law.)

“There’s always going to be some issue of some people having medical spending that stretches their budget,” said Jonathan Gruber, a Massachusetts Institute of Technology health economist who was an author of the Oregon study and former consultant to the Obama administration and Massachusetts lawmakers. “The question is, do you make the number smaller with health care reform? And the answer is, undoubtedly, yes.”

Still, small persistent debts can cause big problems for patients, said Chi Chi Wu, a staff attorney for the National Consumer Law Center in Boston who has focused on issues of medical debt. Bills sent to a collection agency may reflect on a person’s credit report for years, often even after they are paid off, she said.

Although ambulance companies, independent physician practices, and other providers also play a role, hospitals are a significant source of medical debt. The Affordable Care Act includes provisions meant to lessen the chance that people will leave the hospital with bills they cannot pay.

The Internal Revenue Service is taking comments until Sept. 24 on draft rules that require nonprofit hospitals to distribute documents explaining their financial assistance program and talk to patients about available help with bills, in order to maintain tax exemption. They would be prohibited from billing patients who qualify for hospital assistance using “gross charges,” or hospital sticker prices. Most patients are charged a significantly lower rate negotiated by their insurance carrier.

The proposed rules, however, do not set income standards dictating who is eligible for hospital assistance, so it is not clear who would benefit from the limit, said Jessica Curtis, director of the Hospital Accountability Project at Community Catalyst, a national consumer advocacy group.

Despite that, she said, the rules have “struck a pretty fair balance,” giving hospitals flexibility and patients more information. The rules also would require hospitals to wait four months before taking any “extraordinary” collection actions, such as placing a lien on a patient’s home.

Most Massachusetts hospitals have filed documents with the state attorney general’s office stating that they follow best practices for debt collection proposed by that office, including a four-month waiting period. Those practices are voluntary.

Officials with the Massachusetts Hospital Association would not comment on the draft IRS rules, which it had not fully reviewed. Tim Gens, executive vice president, said the state already has “very strong, well-tested” protections for patients, though the group has been talking with Selig’s office about areas where hospitals could do more.

Selig’s office also has been working with Representative Jeffrey Sánchez, a Boston Democrat, on a proposal that would, among other things, require hospitals to do more to notify patients of assistance programs and impose limits on the use of gross charges stricter than those in the federal law.

Neither Sánchez’s proposal nor the Affordable Care Act would fully address a thornier issue for Massachusetts: Low-income people commonly lose insurance for brief periods when they move from one state assistance program to another. Others can get lost in a maze of eligibility requirements.

The state is developing a website meant to streamline the enrollment process. Meanwhile, bills can add up during those gaps in coverage.

Carlos Vazquez, of Springfield, moved his family back to Massachusetts last year after leaving the military. The 27-year-old tried unsuccessfully to get coverage from MassHealth, the state’s Medicaid program, and the unemployment office. He did not learn until late last year that he and his wife could qualify for a subsidized plan through Commonwealth Care.

In December, as the family waited for their plan to take effect on Jan. 1, his wife was rushed by ambulance to a Springfield hospital. Vazquez, who is studying criminal justice at Holyoke Community College and is in the Air Force Reserves, said he has not been able to pay the $1,675 bill.

“The bill is inconvenient, and the fact that we went for so long without health insurance is really inconvenient,” said Vazquez, who now has MassHealth coverage because of a change in the program’s income guidelines. “I wouldn’t want this to happen to other veterans.”

http://www.bostonglobe.com/metro/massachusetts/2012/09/09/medical-debt-massachusetts-persists-despite-health-law/QztpbflGjmUfVcf8J8tjbI/story.html