PNHP

FEHBP as a model for exchanges

pnhpf3a

FEHBP as a model for exchanges

Federal Employees Health Program Experiences Lack Of Competition In Some Areas, Raising Cost Concerns For Exchange Plans

By Timothy D. McBride, Abigail R. Barker, Lisa M. Pollack, Leah M. Kemper and Keith J. Mueller
Health Affairs, June 2012

The Affordable Care Act calls for creation of health insurance exchanges designed to provide private health insurance plan choices. The Federal Employees Health Benefits Program is a national model that to some extent resembles the planned exchanges. Both offer plans at the state level but are also overseen by the federal government. We examined the availability of plans and enrollment levels in the Federal Employees Health Benefits Program throughout the United States in 2010. We found that although plans were widely available, enrollment was concentrated in plans owned by just a few organizations, typically Blue Cross/Blue Shield plans. Enrollment was more concentrated in rural areas, which may reflect historical patterns of enrollment or lack of provider networks.

http://content.healthaffairs.org/content/31/6/1321.abstract

Comment: 

By Don McCanne, MD

Supporters of the Affordable Care Act claim that the the state insurance exchanges would provide a robust market of private plans. One need look only as far as the Federal Employees Health Benefits Program (FEHBP) – the largest employer-sponsored private health insurance program in the nation – to see that such markets tend to concentrate dominant players. Instead of the magic of market competition, we can anticipate only more pain characteristic of dysfunctional or non-existent markets.

Single payer, anyone?

Additional comment from QotD reader Joel Segal

I have been on FEHBP plan for the past 12 years, and therefore can credibly speak about the positive and negative aspects of the program.

With the FEHBP plan, I have been able to receive medically necessary care, and the program has covered a good percentage of the costs of my CPAP and bi-pap machines that I use for my severe obstructive sleep apnea. Before I was on the FEHBP plan, I could not receive medically necessary health care services for my sleep apnea and other chronic health conditions. I was forced to become a “health care beggar,” borrowing money from friends, family members, and people of good will just to pay for some of my most serious health care needs. However, despite my charitable friends, for years, I went without the needed care, and remained sick, disabled, and often unable to work a full time job or work at all.

Without the FEHBP plan, I would have become permanently disabled, or developed other serious life-threatening health complications such as heart problems, which often result from untreated sleep apnea. The worst aspect of the FEHBP plan are the steep out-of-pocket costs for hospital visits, doctor’s visits, and other treatment that I need to live a healthy life. Having a chronic illness such as sleep apnea, means high out-of-pocket costs for CPAP masks, sleep studies, and new machines — which are often several hundreds of dollars per year, and sometimes a few thousand dollars per year. My co-pays are often very steep, and there have been many times where providers tried to deny me care that I truly needed, because I could not afford to pay prior balanced billing charges. But, because I demanded that I be treated in their offices (or begged for care!) they let me get the care. Most people are very fearful of their health care providers, and often leave doctor’s offices having been denied medically necessary care due to unpaid bills. This is just a reality of our current for-profit health care system.

I owe approximately $8,000 in co-pays over the last 5 years under the FEHBP, and have paid out-of-pocket approximately $15,000 for medically necessary care over the last 12 years. The problem with the FEHBP plan is that it typically covers 70-80 percent of the bill, leaving the patient who uses the health care system the most with enormous co-pays and medical bills. For young and healthy persons who get sick with the flu or a cold, and see a doctor perhaps twice a year, the program works fine. The people who suffer the most under the FEHBP plan are government employees who have chronic illnesses, or have an emergency surgery or procedure, and must pay the 20 percent of the bill that the plan does not cover.

We need a universal single-payer program like H.R. 676 or H.R. 1200, which will contain rising health care costs, while providing the highest standard of universal health care to all Americans.

Sincerely,

Joel Segal
Universal Single Payer Advocate

OIG catches PacifiCare red-handed

Risk Adjustment Data Validation of Payments Made to PacifiCare of Texas for Calendar Year 2007

Office of Inspector General
Department of Health and Human Services, May 2012

Executive Summary

Background

Under the Medicare Advantage (MA) program, the Centers for Medicare & Medicaid Services (CMS), makes monthly capitated payments to MA organizations for beneficiaries enrolled in the organizations’ health care plans (beneficiaries). Subsections 1853(a)(1)(C) and (a)(3) of the Social Security Act require that these payments be adjusted based on the health status of each beneficiary. CMS uses the Hierarchical Condition Category (HCC) model (the CMS model) to calculate these risk-adjusted payments.

Under the CMS model, MA organizations collect risk adjustment data, including beneficiary diagnoses, from hospital inpatient facilities, hospital outpatient facilities, and physicians during a data collection period. MA organizations identify the diagnoses relevant to the CMS model and submit these diagnoses to CMS. CMS categorizes the diagnoses into groups of clinically related diseases called HCCs and uses the HCCs and demographic characteristics to calculate a risk score for each beneficiary. CMS then uses the risk scores to adjust the monthly capitated payments to MA organizations for the next payment period.

PacifiCare of Texas (PacifiCare) is an MA organization owned by UnitedHealth Group. For calendar year (CY) 2007, PacifiCare had multiple contracts with CMS, including contract H4590, which we refer to as “the contract.” Under the contract, CMS paid PacifiCare approximately $1.3 billion to administer health care plans for approximately 118,000 beneficiaries.

Objective

Our objective was to determine whether the diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations complied with Federal requirements.

Summary of Findings

The diagnoses that PacifiCare submitted to CMS for use in CMS’s risk score calculations did not always comply with Federal requirements. The risk scores calculated using the diagnoses that PacifiCare submitted for 57 of the 100 beneficiaries in our sample were valid. The risk scores for the remaining 43 were invalid because the diagnoses were not supported for one or both of the following reasons:

* The documentation did not support the associated diagnosis.

* The diagnosis was unconfirmed.

PacifiCare did not have written policies and procedures for obtaining, processing, and submitting diagnoses to CMS. Furthermore, PacifiCare’s practices were not effective in ensuring that the diagnoses it submitted to CMS complied with the requirements of the 2006 Risk Adjustment Data Basic Training for Medicare Advantage Organizations Participant Guide (the 2006 Participant Guide) and the 2007 Risk Adjustment Data Training for Medicare Advantage Organizations Participant Guide (the 2007 Participant Guide). UnitedHealth Group officials stated that the providers were responsible for the accuracy of the diagnoses that PacifiCare submitted to CMS.

As a result of these unsupported and unconfirmed diagnoses, PacifiCare received $183,247 in overpayments from CMS. Based on our sample results, we estimated that PacifiCare was overpaid approximately $115,422,084 in CY 2007.

http://www.oig.hhs.gov/oas/reports/region6/60900012.pdf

Comment: 

By Don McCanne, MD

As you know, Medicare beneficiaries have the option of leaving the traditional Medicare program and obtaining their care through private insurers offering Medicare Advantage plans. These private plans receive from the government monthly capitation payments (a set dollar amount for each beneficiary enrolled). To protect the private insurers from the higher spending required for sicker patients, the capitation payments are adjusted upward based on how ill the patients are. This is known as risk adjustment. Sounds reasonable. So what’s the deal here?

Keep in mind that the traditional Medicare program is designed to serve patients whereas the private Medicare Advantage plans are private businesses designed primarily to make money. So how can these private plans meet their business obligation of keeping their spending down while increasing their revenues?

Quite simple. Game risk adjustment. Report many of the patients as having more serious disorders than they really do in order to increase the capitation payments. Although the insurers have denied that they do this, the Office of the Inspector General has caught them red-handed.

Based on this chicanery, UnitedHealth’s PacifiCare was overpaid about $115 million for this one contract alone. That is almost $1000 excess for each of the 118,000 beneficiaries enrolled!

The Affordable Care Act is perpetuating and expanding our fragmented health care financing system which is dependent to a great extent on private insurers. To avoid the problems of favorable selection (insurers enrolling only healthy patients and keeping the extra profits) and adverse selection (the government being stuck with the losses of high cost patients after the healthier are siphoned off), the Act calls for risk selection.

The problem is that we do not know how to detect and correct for all of the games that the insurers play to work risk adjustment to their own advantage. It has been estimated that risk adjustment captures only about 10 percent of the overpayments that the private insurers gain through this gaming. As further adjustments are added, the insurers simply find new ways around the system. These are not necessarily illegal maneuvers but are rather simply “good business practices.”

Our own government stewards from the OIG, working for us, have exposed this scheme that is being used to skim off our tax dollars. So what are we going to do about it? Don’t you think it’s time to get rid of the amoral business ethic in health care financing and instead place in charge people dedicated to a service ethic?  We can do this by establishing our own single payer national health program. But first we have to elect people who place public service above all. Supporting the 1 percent isn’t working.

Insurers, not insured, in driver’s seat

By Rep. Dennis Kucinich
The Hill, Congress blog, June 5, 2012

When the Supreme Court issues its decision on the Affordable Care Act (ACA), the debate will not stop. The ACA brought about immediate relief from some of the worst outcomes of for-profit health care, but it is by no means sufficient to temper the rapacious conduct of insurance companies who are determined to make money by not providing health care.

The Affordable Care Act prevented insurance companies from denying care to a patient who had a pre-existing condition like cancer or heart disease. It allowed young adults to remain on their parents’ family plan until age 26. It required that the kind of care that saves lives but is usually not profitable to cover — preventive care — is covered for free. It provided health care for tens of millions of Americans. It lowered the cost of prescription drugs for seniors. It gave states more authority to challenge exorbitant rate increases by insurance companies. It showed that the health care system can be reformed within the current health care model.

However, health care reform within the current health care model has glaring deficiencies. In the current model, insurance companies increase profits by not providing health care.

They avoid paying bills when their customers need health care. They compete by trying to invent creative ways to deny care, like providing complicated plans with large loopholes buried in the fine print that are only discovered if a person falls ill.

They also refuse to pay bills after care has been delivered, knowing patients often don’t have the time or strength to fight insurance company practices. For-profit health care has produced economic hardship for millions of Americans: it’s estimated 46 percent of all bankruptcies [PNHP note: a 2009 study showed 62 percent of all bankruptcies] are tied to medical bills piling up due to an illness in the family. Three-quarters of those bankrupted by illness were insured when they first got sick, which shows that the insurance policies did not pay the bills. It defeats the purpose of buying insurance.

People buy health insurance expecting that it will protect them from financial disaster. The for-profit model of “care” is fundamentally and inherently flawed.

The Affordable Care Act represented reform only within the context of a for-profit system. We must change the incentives that drive a health care race to the bottom. We must stop insurance companies from making a profit by denying care. We must get the insurance companies out of the doctor-patient relationship, where they influence the practice of medicine by dictating limitations on care. Health care must not be out of financial reach for any American.

There is only one solution: Medicare for All. Embodied in H.R. 676, Medicare for All would cover everyone in the United States for all medically necessary services with no co-payments, premiums or deductibles, for the same amount we currently pay for health care. This not-for-profit system would cover all residents, reduce costs, increase the quality of care, lower costs to businesses and families, increase worker pay and relieve state governments of the significant financial burdens that come with our health care system.

Guaranteed health care systems have repeatedly proven themselves by outperforming alternative health care models. That is one reason states are pursuing them. California’s legislature has passed legislation similar to H.R. 676 twice, only to be vetoed by a Republican governor. Pennsylvania’s bill has strong bipartisan interest, and one of its largest advocacy groups has elected a Republican former member of Pennsylvania’s legislature as its president. Most promising is Vermont, where Gov. Peter Shumlin ran on a platform that called for a Medicare for All-type system. The Vermont legislature is currently working through legislation that is predicted to “produce savings of 25.3 percent of total health expenditure between 2015 and 2024.” Most recently, a report by The Lewin Group showed that Minnesota would save $189.5 billion over 10 years if they adopted a similar guaranteed health care model, adding to a long list of studies commissioned by states that find similar savings.

Guaranteed health care will improve the quality of care, control costs and create jobs. It is only a matter of time until it becomes a reality. It is also the right thing to do.

Kucinich, D-Ohio, serves on the House Education and the Workforce Committee and the Oversight and Government Reform Committee.

http://thehill.com/blogs/congress-blog/healthcare/231075-insurers-not-insured-in-drivers-seat

John Geyman's "Health Care Wars"

Copernicus Healthcare

Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans

By John Geyman, M.D.

From the Preface

We have been told from time immemorial in this country that free markets, unfettered by government interference, are the fix for any of our problems. The notion that a competitive private marketplace gives us more information, choice, efficiency and value has been repeated so often for so long that it has become a meme (a self-replicating idea that is perpetuated regardless of its merits). Although this idea has become as American as apple pie and might work in some sectors of the economy, it does not work that way in health care.

The shared prosperity that followed World War II gave rise to the American dream that brought new hope and opportunities for much of our population. But over the last 30 years, under a relentless attack by conservatives and willing Democrats, this dream is disappearing.

This book takes an evidence-based approach to assess and describe the track record of health care markets as they actually work. As you will see, it is a story of profiteering, greed and waste with very little accountability. I hope that this book is useful in informing the public, policymakers and politicians of the real problems with markets. We will need a strong and powerful unified grassroots movement to push our leaders toward real reform.

http://www.copernicus-healthcare.org/

Comment: 

By Don McCanne, MD

It has long been recognized that health care does not follow the rules of free markets, yet the United States continues to rely on a fragmented, dysfunctional financing system that fails to adequately correct for these market deficiencies. In Health Care Wars, John Geyman shows us how this has been a disaster, while providing us with hope through the prospect of our empowerment as both patients and taxpayers.

John Geyman’s “Health Care Wars”

Copernicus Healthcare

Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans

By John Geyman, M.D.

From the Preface

We have been told from time immemorial in this country that free markets, unfettered by government interference, are the fix for any of our problems. The notion that a competitive private marketplace gives us more information, choice, efficiency and value has been repeated so often for so long that it has become a meme (a self-replicating idea that is perpetuated regardless of its merits). Although this idea has become as American as apple pie and might work in some sectors of the economy, it does not work that way in health care.

The shared prosperity that followed World War II gave rise to the American dream that brought new hope and opportunities for much of our population. But over the last 30 years, under a relentless attack by conservatives and willing Democrats, this dream is disappearing.

This book takes an evidence-based approach to assess and describe the track record of health care markets as they actually work. As you will see, it is a story of profiteering, greed and waste with very little accountability. I hope that this book is useful in informing the public, policymakers and politicians of the real problems with markets. We will need a strong and powerful unified grassroots movement to push our leaders toward real reform.

http://www.copernicus-healthcare.org/

Comment: 

By Don McCanne, MD

It has long been recognized that health care does not follow the rules of free markets, yet the United States continues to rely on a fragmented, dysfunctional financing system that fails to adequately correct for these market deficiencies. In Health Care Wars, John Geyman shows us how this has been a disaster, while providing us with hope through the prospect of our empowerment as both patients and taxpayers.

It would not be the end of health reform, just a chance to get it right

By Rose Ann DeMoro
The Huffington Post, June 4, 2012

If President Obama is now confiding to Democratic donors that he may have to “revisit” health care in a second term if the Supreme Court throws out his first attempt, as Bloomberg News reported June 1, maybe this time we can get it right.

Instead of trying to dress up our broken private insurance-based system, or resuscitating elements of a convoluted plan the court may overturn, it’s time to try something different.

Fortunately, we have a well established, uniquely American model in place, one that meets the legal test. A program that already takes care of the 40 million Americans over 65. That has the added benefits of being universal in coverage and far more cost efficient than our present system.

It’s called Medicare. And it’s been working well for nearly 50 years, and remains wildly popular, even among those hate “Obamacare.”

How do we fix our health care system? Easy, and we don’t need 2,700 pages either. Just open up Medicare to cover everyone, regardless of age.

It’s a step we should take, no matter how the court rules.

Even if the law is upheld, some 27 million Americans would remain uninsured by 2016, according to the Congressional Budget Office, families will continue to struggle with rising out-of-pocket health costs and un-payable medical bills and more employers will drop coverage or shift more costs to employees.

Can our nation stand another fight over health care reform? The better question is, can we afford not to?

Over the past year, nurses have seen an alarming nexus between the economic decline and broad erosions in health status, such as stress-induced heart ailments, anxiety and “gut” disorders, health woes associated with poor nutrition, and illnesses traditionally seen in adults increasingly found in children. Nurses now routinely see patients skipping or delaying not just routine medical visits, but even cancer treatment and other life-saving or life prolonging care due to cost.

A library of surveys and studies document these worrisome trends.

A Centers for Disease Control analysis found a quarter of children age 17 and under were in families struggling to pay medical bills.

In 2010, 30 million Americans were contacted by debt collection companies chasing them to pay medical bills, a jump of 5 million people in just half a decade, the Commonwealth Fund reported. Unpaid bills as small as $250 were ruining credit records for many. Medical bills account for 62 percent of personal bankruptcies, and nearly 80 percent who went broke from health care had insurance.

Fifty million Americans still have no health coverage. Another 29 million are under insured with massive holes in their health plans, an increase of 80 percent since 2003, according to the journal Health Affairs.

What do they do for care? They suffer in silence, until it hurts so bad they go to where it is most expensive, the emergency room. A February report by the Pew Center on the States recorded a 16 percent in the number of people going to the ER for dental care.

A Kaiser Family Foundation survey last December found a majority of those uninsured or with poor coverage delaying needed care, and 75 percent of the unemployed or under employed skipping dental checkups or recommended medical treatment or tests or not filling prescriptions.

Those boasts about how we have the best medical system in the world need a re-write, the best perhaps based on ability to pay. As a nation, we spend twice per person as much as many countries for health care, but get far less. We’re falling farther behind other countries in life expectancy, infant mortality, waits for care, costs for doctor visits, surgeries, and prescription drugs, and health care well-being for our children.

If you want to stew over just one sobering statistic, consider this: According to the World Health Organization, the U.S. ranks behind more than 40 other countries in death rates for child-bearing women.

What distinguishes us is that virtually all those other countries have some form of coordinated national health care system, like our Medicare. We have private insurance companies whose prime directive is earning profits for their investors, not guaranteeing patients get the care they need when they need it.

Let’s take that mulligan on health care reform and do a make over. Just as we fought to provide retirement security, including health care for everyone over 65, we can make the same effort for the rest of our nation. There’s no time to lose.

Rose Ann DeMoro is executive director, National Nurses United, AFL-CIO and California Nurses Association.

http://www.huffingtonpost.com/rose-ann-demoro/it-would-not-be-the-end-o_b_1564139.html

Jonathan Gruber: "We don't know how to fix it."

Health reform gets messy in Massachusetts

By Kyle Cheney and Jason Millman
Politico, June 3, 2012

Jonathan Gruber, an MIT economist who advised the Legislature and Romney on the 2006 Massachusetts law, pleaded with stakeholders to accept that curbing health costs takes time.

“We don’t know the answer. We don’t know how to fix it now, and we have to experiment and be more patient,” Gruber told a health care conference in Boston in late May.

http://www.politico.com/news/stories/0612/76991.html

And…

Hardball with Chris Matthews
MSNBC, March 27, 2012

Chris Matthews:  Single payer. Is that a better economic deal, with no profit motive?

Jonathan Gruber:  I think that single payer, if you could start over, I think that single payer has a lot to recommend it, but we can’t…

http://www.msnbc.msn.com/id/3036697/#46873470

Comment: 

By Don McCanne, MD

MIT economist Jonathan Gruber, speaking on curbing health care costs, told a Boston conference late last month, “We don’t know how to fix it.”

Why do we keep quoting MIT economist Jonathan Gruber? Because he was an authority upon whom both Governor Romney and President Obama relied for advice on comprehensive health reform. Yet his utterances seem to vitiate his previous advice.

He does concede that “single payer has a lot to recommend it,” but, he, like many others who know better, dismisses it simply on the basis of a lack of political feasibility. But in continuing to support a system that “we don’t know how to fix,” does that really represent critical thinking?

Conceding that “single payer has a lot to recommend it” is quite a concession coming from such a noted economist who has so strongly advocated for a system that we don’t know how to fix. If only President Obama and Presidential-candidate Romney would listen to him now – that is when Gruber speaks about the economics of single payer, not the politics.

Suppose the politics changed and we had a President, a Congress and an informed public fully in support of single payer. Do you think that Jonathan Gruber would insist that we continue with a system that we don’t know how to fix? After all, he does understand fundamental economics.

Jonathan Gruber: “We don’t know how to fix it.”

Health reform gets messy in Massachusetts

By Kyle Cheney and Jason Millman
Politico, June 3, 2012

Jonathan Gruber, an MIT economist who advised the Legislature and Romney on the 2006 Massachusetts law, pleaded with stakeholders to accept that curbing health costs takes time.

“We don’t know the answer. We don’t know how to fix it now, and we have to experiment and be more patient,” Gruber told a health care conference in Boston in late May.

http://www.politico.com/news/stories/0612/76991.html

And…

Hardball with Chris Matthews
MSNBC, March 27, 2012

Chris Matthews:  Single payer. Is that a better economic deal, with no profit motive?

Jonathan Gruber:  I think that single payer, if you could start over, I think that single payer has a lot to recommend it, but we can’t…

http://www.msnbc.msn.com/id/3036697/#46873470

Comment: 

By Don McCanne, MD

MIT economist Jonathan Gruber, speaking on curbing health care costs, told a Boston conference late last month, “We don’t know how to fix it.”

Why do we keep quoting MIT economist Jonathan Gruber? Because he was an authority upon whom both Governor Romney and President Obama relied for advice on comprehensive health reform. Yet his utterances seem to vitiate his previous advice.

He does concede that “single payer has a lot to recommend it,” but, he, like many others who know better, dismisses it simply on the basis of a lack of political feasibility. But in continuing to support a system that “we don’t know how to fix,” does that really represent critical thinking?

Conceding that “single payer has a lot to recommend it” is quite a concession coming from such a noted economist who has so strongly advocated for a system that we don’t know how to fix. If only President Obama and Presidential-candidate Romney would listen to him now – that is when Gruber speaks about the economics of single payer, not the politics.

Suppose the politics changed and we had a President, a Congress and an informed public fully in support of single payer. Do you think that Jonathan Gruber would insist that we continue with a system that we don’t know how to fix? After all, he does understand fundamental economics.

U.S. falls short on debt to military vets

By Jonathan D. Walker, M.D.
The Journal Gazette (Fort Wayne, Ind.), May 27, 2012

Here is something worth remembering as we celebrate Memorial Day: The Department of Veterans Affairs estimates that every 80 minutes a veteran takes his or her own life. The problem is so serious that although only 1 percent of Americans have served in the military, former service members represent 20 percent of suicides in the United States. And the news is filled with stories about how the VA is struggling to get the funding it needs to address the problem.

But that is only the tip of the iceberg. A 2007 study in the American Journal of Public Health indicated that almost 2 million veterans are uninsured, along with almost 4 million of their family members, and a Harvard study estimated that more than 2,200 veterans died in 2008 due to lack of insurance. You may have thought that veterans can automatically be treated at a veterans’ hospital, but this is not the case. Veterans who have a service-connected injury can get care, but uninsured veterans face a “means test” based on their income. The test determines their priority level for care and how much they have to pay. And if the system doesn’t have enough money, it can stop enrolling veterans if they fail the means test – as happened from 2003 to 2009.

But even if the VA were able to fully cover every veteran, it would still leave a lot of veterans without care because they do not live near a VA hospital. And even if they live near a hospital, they still may need to drive far away to get services that aren’t available locally; for instance, there are veterans in Fort Wayne who have to go to Indianapolis for treatment. There are laws that make it illegal for an insurance company to force patients to drive an excessive distance to stay in their network, yet we think nothing of making veterans drive long distances simply to get the care to which they are entitled.

Rick Unger, a writer at Forbes Magazine, points out that we make a deal with our veterans: They put their lives on the line when we send them off to fight our wars, and in return we promise to take care of them when they come back. Although the men and women in uniform deliver on their promise on a daily basis, we very much do not. When pollsters try to identify the issues that are important to us, veterans’ health care doesn’t even make the list. Non-profit organizations, such as the Iraq and Afghanistan Veterans of America, try to fill the gap created by our national lack of concern, but their resources are also limited. Unger says it best: “You and I are, at the end of the day, a bunch of deal-breaking, contract-breaching welchers who don’t care enough about our promises to those who would die for us to view this as a concern worthy of making a pollster’s list.” And now one of our veterans chooses suicide every 80 minutes.

It is totally understandable that people want smaller government and lower taxes, but we should still be willing to do whatever it takes to provide these men and women with the resources they need to stay physically and mentally healthy. Sen. John McCain, R-Ariz., has advocated providing veterans a card that would allow them treatment at any health care facility so they would never have to worry about access to care. Only 1 percent of us serve in the military. Why can’t the rest of us take care of them properly?

Dr. Jonathan D. Walker is an assistant clinical professor at Indiana University School of Medicine in Fort Wayne. He wrote this for The Journal Gazette.

http://www.journalgazette.net/article/20120527/EDIT05/305279968/1147/EDIT07

Should Obama’s Health Care Be Opposed?

By Marcia Angell, M.D.
The New York Review of Books, June 7, 2012

I admire Ronald Dworkin greatly, and I certainly defer to him on most legal matters, so it is with some reluctance that I take issue with his essay “Why the Mandate Is Constitutional: The Real Argument” [NYR, May 10]. I have several objections, most of which concern not the legal matters, but his more general comments about the virtues of the Affordable Care Act (ACA).

Dworkin exaggerates the benefits of the ACA. For example, he writes that “the act provides, among other benefits, health care insurance for the 16 percent of citizens who now lack it….” It does not. Of the 50 million uninsured Americans at the time the ACA was enacted, the law was designed to cover just 32 million, leaving 18 million still uninsured. Half of the 32 million would gain coverage simply by virtue of expanding Medicaid eligibility—something that did not require the whole apparatus of the ACA. So the mandate that requires uninsured people to buy private insurance, which is at the heart of the Supreme Court challenge, would cover only 16 million people, a mere 5 percent of the population.

He also refers to the Massachusetts mandate as the core of “that state’s apparently successful health care program, on which the national act was partly based.” But the Massachusetts plan, which has been in effect for five years, is rapidly becoming unsustainable. Health care now consumes 43 percent of the state budget, a percentage that has been growing, while expenditures on every other budgetary category—including education, human services, infrastructure, law, and public safety—have been shrinking. Although Massachusetts began with advantages the rest of the country doesn’t have—an already high rate of insurance and a large “free care pool,” provided by hospital and insurance fees, that was tapped to subsidize the new plan—it is still unable to afford it.

The legislature is now trying to contain costs by devising new payment methods for providers, while insurers are raising premiums, deductibles, and copayments. The problem in Massachusetts is that there was no way to control the costs of an inherently inflationary reform, just as there isn’t in the ACA. Massachusetts should be seen not as an inspiration, but as a warning.

Dworkin argues that there are national precedents for the ACA mandate to purchase health insurance. But is that true? The mandate is not like the requirement to pay for Medicare and Social Security through payroll taxes. Instead, it requires people to buy a commercial product from investor-owned companies at whatever price the companies choose to charge. In short, people are required to contribute to the profits and corporate salaries and marketing costs of companies like WellPoint and UnitedHealthCare. I don’t believe there is any precedent for that.

My objection to the mandate is not that it requires people to purchase insurance, but that it specifies they buy it from investor-owned companies, whose practices have done much to make our health care system the “unjust and expensive shambles” Dworkin accurately describes it as being. No one should be required to enter this treacherous market; it is not the same as paying for publicly administered services, like Medicare or police and fire protection.

Dworkin dismisses concerns that if Congress can make us buy private health insurance, then it can make us buy any other commercial product, arguing that public opinion would prevent Congress from unreasonably extending its power in that way (“politics supplies the appropriate check”). That’s a mighty thin reed to hold on to, given the recent record of Congress and its capture by corporate interests. I would feel better if we didn’t provide the precedent.

He is also too sanguine about the ability of regulations to stop the worst abuses of the private insurance industry, such as denying coverage for people with pre-existing conditions. The fact remains that these companies will profit by avoiding high-risk patients if they possibly can, and they will probably find ways to do so. The ACA does some of that work for them, by allowing them to charge up to three times as much for older patients as for younger ones, age being a good proxy for a higher risk of chronic illness. A few years ago, in a private discussion with a senior executive of America’s Health Insurance Plans, the industry’s trade association, I was told that if the regulations did squeeze the profits of the insurers, they would simply raise the premiums. There is nothing in the ACA to prevent that.

In a press conference on July 22, 2009, while the ACA was being crafted, President Obama said, “Now, the truth is that unless you have what’s called a single-payer system in which everybody is automatically covered, then you’re probably not going to reach every single individual.” He was right. Moreover, a single-payer system is the only way to do so while containing costs. Polls have shown that most Americans favor it, and a Massachusetts survey showed that physicians there prefer it to the state’s current system. I’ve advocated extending Medicare to everyone by dropping the qualifying age one decade at a time, and delivering it in a nonprofit system, something I believe the public would enthusiastically accept.

Dworkin, like many others, dismisses a single-payer system as unrealistic, saying it would be “politically impossible in the United States now, or in the foreseeable future.” But the fact that Congress lags behind public opinion is surely partly due to liberals accepting the premise that a single-payer system is off the table, while what is truly unrealistic is imagining that we can provide universal and affordable health care in a market-based system.

Dr. Marcia Angell is senior lecturer in social medicine at Harvard Medical School.

The web page that contains Dr. Angell’s letter and a reply by Ronald Dworkin can be found here.

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The problems in our health system are well known: Increased morbidity and mortality among patients without adequate coverage (not to mention financial ruin); three straight years of double-digit premium increases; Enron-like criminal fraud among several of the nation’s largest for-profit health firms (e.g. HealthSouth, Columbia/HCA, Tenet); and a continued rise in the number of uninsured and underinsured to 47 million.

We are heartened that the media is increasingly willing to do stories on “the problem,” but we are anxious to see and do more on “the solution” — that is, single payer national health insurance. Not tax credits — as proposed by some Democrats as well as Republican candidates for office. Not mandates to buy private insurance. Not more failed incremental measures – but true reform that will make our health system accessible and sustainable for the next generation.

PNHP is entirely funded by members’ dues and small donations. Your generosity makes everything we do possible. Thanks for being part of this important struggle with us.

Yours truly,

Quentin Young, MD
Volunteer National Coordinator

Himmelstein and Woolhandler explain savings from single payer

Single-payer health care would save billions for Massachusetts

By David U. Himmelstein and Steffie Woolhandler
The Boston Globe, May 30, 2012

The House and Senate health care proposals would set imaginary limits for spending growth enforced by secret “improvement plans” and wrist slaps for hospitals that overcharge; establish tiered payment schemes to consign the poor and middle class to second-tier hospitals and doctors; push most residents of the Commonwealth into HMOs (oops, we forgot, now they’re called “accountable care organizations,” or ACOs); and wipe out small doctor’s offices by “bundling” their pay into ACO payments. Apparently the legislators’ theory is that forcing health care providers to consolidate cuts costs. Oligopoly saves money?

Here are six alternative steps the Legislature could take that would actually save money while still preserving care.

*  Cut out the middlemen. Why exactly do we pay private insurers 10 cents of every premium dollar? The plan that covers all 13 million residents of the Canadian province of Ontario has overhead of only 1 percent. Adopting that single-payer approach in Massachusetts would save about $2 billion in insurance overhead in 2013 alone.

*  Pay hospitals the way we pay fire departments: real global budgets that cover all operating costs, not the per-patient schemes that are masquerading as global payments. Billing, collections, and paperwork consume nearly one quarter of hospitals’ revenues. Eliminate billing for individual patients and you’d cut that nearly in half. The savings: about $3 billion in 2013.

*  End the medical arms race and enforce real health planning. Hospitals and clinics vie for affluent patients needing lucrative high-tech care. They reap surpluses, a.k.a. profit, which they use to buy fancy machines and superluxe buildings – usually situated where there’s already a surplus of such facilities. Inevitably, the surplus facilities induce unnecessary, even harmful overcare. Meanwhile, underserved communities and under-provided services like mental health and substance abuse are starved of investment. Hospital payments should go for patient care, not new buildings. Money for new buildings and technology should flow to a separate fund, and be allocated according to need, not profitability, through a transparent public process. Investing in what’s needed instead of what’s profitable would save billions and improve care for both the poor and the affluent.

*  Right-size the physician work force: more primary care, fewer specialists. Massachusetts hospitals take pride in training super-specialists who go on to provide profitable but often unneeded care (see above). Meanwhile, the primary care shortage persists. The public, through Medicare, already pays for residency training and should use the power of the purse to make hospitals train the doctors that the public needs. And physicians’ fee schedules should be altered to assure that best students are attracted to the most needed, important, and difficult fields – primary care – and that doctors make as much for talking to patients as for putting them through a scanner.

*  Negotiate drug prices statewide. Canadians pay 40 percent less for drugs than we do because they use single-payer buying power to drive down prices from pharmaceutical companies. Why can’t we?

*  Cap health executives’ incomes. Why should a hospital CEO make more than the president of the United States?

(David U. Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H. co-founded Physicians for a National Health Program. They are professors at the City University School of New York School Public Health and visiting professors at Harvard Medical School. They worked as primary care doctors in Massachusetts from 1982-2010.)

http://www.bostonglobe.com/opinion/2012/06/01/single-payer-health-care-would-save-billions-for-massachusetts/yNTLRlKucgdJCUCU3P5arM/story.html

Comment: 

By Don McCanne, MD

To explain simply what is meant by “single payer,” we often allude to an “Improved Medicare for All.” That seems to suggest that we merely need to tweak Medicare and then provide it to everyone – that simply eliminating private insurers is all we need to do. This article by PNHP co-founders David Himmelstein and Steffie Woolhandler briefly describes how the single payer model is much more than that, especially pointing out how it would be tremendously effective in slowing the nearly intolerable increases in health care spending, while dramatically improving the functioning of our health care delivery system.

First, a little background. When the Massachusetts health reform legislation was ready to be enacted, it was criticized for failing to address one of the most important reasons for reform – it did not include effective measures to contain costs, a flaw challenged by single payer supporters. Rather than taking another look at single payer, Gov. Romney’s advisor, MIT economist Jonathan Gruber, famously said that first we should get everyone covered by passing this, and then we’ll work on controlling spending.

Of course not everyone is covered in Massachusetts, while cost increases continue out of control. In response, the Massachusetts House and Senate have prepared separate but similar bills to control spending, while ignoring the remaining uninsured. Instead of adopting structural changes that would reduce waste – as Himmelstein and Woolhandler recommend – they would apply spending restrictions that could threaten solvency of components of the health care delivery system, while compounding the problems of patient access already evident in the inadequacies of the primary care infrastructure.

As everyone knows, the Affordable Care Act (ACA) was patterned on the same model as used in Massachusetts. Single payer advocates were vehemently proclaiming that ACA would leave too many out of the system, and that it would fail to address rising health care costs – the two primary problems that motivated reform. But we were excluded from the process.

As our members of Congress toiled over the markup of the legislation, measures were included that nominally would control costs. However, with the possible exception of the Independent Payment Advisory Board (IPAB), none of the included measures would have a significant impact on health care costs. Even the IPAB would have the serious flaw of cutting solely Medicare and not private insurer payments to the health care delivery system, threatening underfunding and likely impairing access due to the exodus of physicians from the Medicare program.

The primary reason that the meager measures to contain spending are inadequate is that ACA left in place and built upon our existing dysfunctional financing system with its profound waste. What we needed instead was a complete overhaul of the financing infrastructure, including not only changing to an administratively simplified single payer but also measures such as those listed by Himmelstein and Woolhandler.

Eliminating private insurers and switching to a single public insurer is the most important and effective measure of single payer, but the other measures are essential if we want to join the other wealthy nations that provide quality care to everyone at an average of half of what we are currently spending.

When you advocate for single payer by pushing an “Improved Medicare for All,” be sure in the same breath to let your listeners know the extent of our recommendations: “An Improved Medicare for All that would totally overhaul our dysfunctional financing system so that it works best for patients.”

In this age of sound bites, if you have another breath, you can point out that s
ingle payer would also have a highly favorable impact on the health care delivery system, by enhancing primary care, and by efficiently expanding facilities and high-tech capacity based on medical need instead of profit and extravagance.

Above all, it’s crucially important to communicate that single payer is not just your mother’s Medicare.