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Mental care can be hard to find, even for insured

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Mental care can be hard to find, even for insured

Survey shows many roadblocks to aid in Boston facilities

By Chelsea Conaboy
The Boston Globe, July 21, 2011

Massachusetts patients with top-flight medical insurance may still find it difficult to get the mental health services they need, according to research from Harvard doctors released today that provides fresh evidence of a crisis in psychiatric care.

Researchers at Cambridge Health Alliance and Beth Israel Deaconess Medical Center called 64 mental health facilities within a 10-mile radius of downtown, posing as patients with Blue Cross Blue Shield insurance who were evaluated for depression at emergency departments and discharged with instructions to get a psychiatric appointment within two weeks.

Just four facilities could accommodate an appointment that soon, the researchers said. At four others, appointments were available – but more than two weeks later.

Fifteen facilities, about 23 percent, never returned the call, even after a second attempt. Another 23 percent told callers that patients had to have a primary care doctor within that facility’s system to be seen by a psychiatrist.

With those odds, “it’s quite unlikely that a severely depressed person could persevere’’ to get care, said Dr. Steffie Woolhandler, an author and former Cambridge Health Alliance primary care physician now at City University of New York.

The study was submitted to the Annals of Emergency Medicine but declined for publication on the grounds that it needs to be replicated on a larger level. Instead, the journal asked the authors to submit their results as a letter to the editor, scheduled to be published today.

The study grew out of concern from physician trainees in psychiatry that patients seen in the emergency department were unable to get follow-up care, Woolhandler said.

Dr. J. Wesley Boyd, a Cambridge Health Alliance psychiatrist, said he has seen mental health services squeezed in recent years by internal policies and shrinking reimbursements to physicians and clinics.

Cambridge Health Alliance is one of the largest in-patient mental health providers in the state but has scaled back services in recent years. Because of a reduction in state aid, Cambridge Health Alliance cut adult psychiatry beds about 39 percent, to 89. It also limited outpatient services to patients living within the hospital’s direct service area or those with a primary care doctor in the system.

The latter requirement, Boyd said, amounts to “a secretive way of rationing of care.’’ Hospital systems don’t put up such roadblocks for patients seeking high-paying imaging services or surgery, he said.

“Until psychiatry is better reimbursed, and this is not just an insurance issue, this is a social and cultural issue . . . there are going to be extreme limitations on services that are available to patients,’’ said Boyd, whose own private practice is at capacity, requiring him to turn away patients.

The state Legislature is considering a dramatic shift in the way hospitals and doctors are paid. Instead of receiving a payment for each service rendered, providers would receive a lump sum to cover all of a patient’s care. A leading consumer advocacy group, Health Care for All, said it believes the proposed payment system would encourage doctors to forge connections with patients before the onset of a major psychiatric episode, thus keeping people well and avoiding costs.

The Harvard study “reflects the kind of upside-down priorities of our health care payment system, where specialty care is very well remunerated and mental health is almost a stepchild of the health care system,’’ said Brian Rosman, research director of the consumer group.

Woolhandler, an advocate for a single-payer health system, said she worries that the proposed payment system may encourage hospitals to focus on healthy patients and avoid caring for people with high-cost mental illnesses.

Blue Cross Blue Shield spokesman Jay McQuaide took issue with the study, describing the researchers as opponents of private insurers who were trying to extract higher reimbursement rates for themselves.

McQuaide said the study was “an attempt to publicly pressure the state’s health plans, like Blue Cross, to pay these clinicians more money which, frankly, is disappointing.’’

The authors dismissed that claim, saying that only two of the five authors are psychiatrists and the real goal of the study was to examine access to mental health care.

McQuaide said that Blue Cross would be concerned if doctors in its network were turning away patients or, worse, not returning phone calls. Enrollees can call the customer service line listed on their insurance card if they are having trouble.

“We would find them an appointment,’’ he said.

http://www.boston.com/lifestyle/health/articles/2011/07/21/mental_health_care_can_be_hard_to_find_survey_says/

Grow economy by expanding Medicare

By Timothy Shaw
Letters, The Capital Times (Madison, Wis.), July 19, 2011

The Army taught us to follow our compasses instead of our native directional instincts. Former Labor Secretary Robert Reich explains that during the Depression, Utah businessman Marriner Eccles devised an economic compass to guide the nation out of economic catastrophe. Instinctively, conventional wisdom held that enriching the Wall Street/corporate class would eventually allow for economic growth. Hoover, then Roosevelt, followed this path only to find that the economy worsened.

Eccles theorized the problem wasn’t that the corporate class didn’t have enough capital, it was the workers did not have enough money to create the demand for America’s goods and services, and therefore job creation was stalled. Roosevelt eventually followed Eccles’ advice, expanded government spending, put money into the workers’ hands, created jobs, and the economy recovered.

During 1993-2000, Reich employed Eccles’ “compass.” By the time he left office, 23 million jobs had been created, the national debt was being paid down, and there was a budget surplus.

Applying the “Eccles/Reich compass” to health care, we should EXPAND Medicare, not cut it. American business cannot compete globally because of health care costs. A Green Bay small business owner pays $215,000 in health care insurance costs for 14 employees. A Medicare-for-all health system would collectively bargain to reduce medical costs per person, improve consumer confidence, increase workers’ buying power to create more jobs, and thus grow the economy.

The Army also taught us that the battle is won when ALL the soldiers cross the bridge together.

Timothy Shaw, M.D., resides in Fitchburg, Wis.

http://host.madison.com/ct/news/opinion/mailbag/article_31bc2f97-cf8d-5c03-a5ad-5b1c4e4953f7.html#ixzz1SZKpRj1J

Declines in preventable deaths linked to increases in public health spending

Evidence Links Increases In Public Health Spending To Declines In Preventable Deaths

By Glen P. Mays, and Sharla A. Smith
Health Affairs, July 21, 2011

Public health activities in the United States are supported through a patchwork of funding sources and financing arrangements that vary widely across states and communities and that are relatively unstable over time. These arrangements result in large geographic differences in spending for public health activities, even among communities with relatively similar population characteristics and health needs.

At the state level, per capita public health spending varied by a factor of more than thirty in 2010, ranging from a low of less than $4 in Nevada to a high of more than $171 in Hawaii. Local variation in public health spending was even larger, ranging from less than $1 per capita to more than $200 per capita in 2008.

Communities with larger increases in public health spending experienced larger reductions in mortality from leading preventable causes of death over a thirteen-year period. This relationship was consistent across several different mortality measures, and it persisted after accounting for differences in demographic and socioeconomic characteristics, medical resources, and unobserved community characteristics that jointly influence spending and health.

Although our study does not establish a definitive causal link between spending and mortality because of the observational research design we used, it nevertheless provides compelling evidence that differences in public health investments may contribute to differences in community health outcomes.

http://content.healthaffairs.org/content/early/2011/07/19/hlthaff.2011.0196.abstract

Comment: 

By Don McCanne, MD

This study is just a reminder that population health involves much more than just the interaction between patients and their health care professionals and institutions. The importance of the public role is undeniable. It’s too bad that our politicians don’t seem to understand that.

Even privately insured have hard time getting psychiatric care in Mass.: Harvard study

Difficulty in access to outpatient psychiatric care has national implications, researchers say

FOR IMMEDIATE RELEASE: July 21, 2011

Contact: Mark Almberg, communications director, (312) 782-6006, mark@pnhp.org

A new study by Harvard Medical School researchers published today in the Annals of Emergency Medicine finds that access to outpatient psychiatric care in the greater Boston area is severely limited, even for people with reputedly excellent private health insurance. Given that the federal health law is modeled after the Massachusetts health reform, the findings have national implications, researchers say.

Study personnel posed as patients insured by Blue Cross Blue Shield of Massachusetts PPO, the largest insurer in Massachusetts. They called every Blue Cross-contracted mental health facility within a 10-mile radius of downtown Boston, stating they had been evaluated in an emergency department for depression and discharged with instructions to obtain a psychiatric appointment within two weeks – i.e. they signaled they needed urgent care.

Only 8 of the 64 facilities (12.5 percent) listed by Blue Cross as preferred providers offered appointments; only 4 (6.2 percent) offered an appointment within two weeks. These findings indicate that even patients with top-drawer private insurance face grave difficulties in securing mental health services in the Boston area.

According to the study, 23 percent of phone calls seeking appointments were never returned, even after a second attempt. Another common reason appointments were unavailable was that 23 percent of psychiatric providers required that the patient already be enrolled with a primary care doctor affiliated with their psychiatric facility.

“People with mental health problems often can’t advocate for themselves – especially in a crisis,” said lead author Dr. J. Wesley Boyd, an attending psychiatrist at the Harvard-affiliated Cambridge Health Alliance. “Health insurers know this and yet, thanks to their restrictive provider networks and their low reimbursement rates for psychiatric services, they’ve created a situation where a patient with a potentially life-threatening disorder, such as the severe depression portrayed in our callers’ scenario, is essentially abandoned at a time of great need.”

“Despite having private coverage, our simulated patient faced daunting barriers when trying to access psychiatric care,” Boyd continued. “How likely is it that a real patient in the grip of severe depression would persevere through so many unsuccessful attempts?”

Senior author Dr. Rachel Nardin, chief of neurology at Cambridge Health Alliance, said: “The incentives of the current health insurance system are aligned against patients with mental illness. Insurers try to protect their bottom line by reimbursing poorly for psychiatric services and by constraining their in-network provider lists, both of which limit patients’ options so severely as to make services essentially unavailable.”

“Lack of adequate access to mental health care strains our entire health care system,” said Nardin. “Emergency departments are overwhelmed with boarding psychiatric patients for whom no other resources exist.”

“A good first step would be for insurance companies to immediately provide improved reimbursements for psychiatric care,” Nardin said. “A more fundamental solution, however, would be to remove private insurers from the picture altogether and to establish a single-payer national health insurance program – a program that would cover mental health services as part of its comprehensive benefits package.”

*********

“The crisis in mental health care: A preliminary study of access to psychiatric care in Boston,” J. Wesley Boyd, M.D., Ph.D.; Andrew Linsenmeyer, M.D.; Steffie Woolhandler, M.D., M.P.H.; David Himmelstein, M.D.; Rachel Nardin, M.D.  Annals of Emergency Medicine, July 21, 2011.

*********

Physicians for a National Health Program (www.pnhp.org) is an 18,000-member organization advocating a nonprofit, single-payer national health insurance program for the United States. PNHP had no role in funding the study mentioned above. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Single Payer Ahead — Cost Control and the Evolving Vermont Model

By Anya Rader Wallack, Ph.D.
The New England Journal of Medicine, July 20, 2011

Governor Peter Shumlin of Vermont recently signed into law ambitious health care reform legislation that puts Vermont on course to implement a single-payer health care system. The law creates a Health Benefit Exchange, consistent with the federal Affordable Care Act, and anticipates using it as the administrative structure for a publicly funded program of health insurance coverage for all Vermonters. The Shumlin administration believes that a single-payer system offers the greatest promise for reducing administrative waste and hassle in our health care system, guaranteeing coverage to everyone in the state, and relieving employers of the increasingly crushing burden of health insurance costs.

Vermont’s plan would include many features common to single-payer systems around the world: a global budget for health care expenditures, guaranteed coverage that is not linked to employment, and a single system of provider payments and administrative rules. The health care delivery system would remain privately owned, however, and the state could contract with a private insurer to perform some functions required of the single payer. It is not yet clear how far the state can go toward establishing a complete single-payer system. Our administration is exploring the potential relationship between the single payer and federal programs such as Medicare and TriCare (the military’s health plan) and determining how self-insured employer plans will fit into the Vermont system. Other elements yet to be worked out include the specific sources of public financing and detailed specifications for covered benefits. We intend to develop these facets of the plan during the next 2 years and will request federal permission to have the single payer fully operational by 2017.

Admittedly, Vermont is a small state (population about 625,000), but even on that scale, plans to launch a U.S. single-payer system seem noteworthy. Moreover, the single-payer provisions are not the only important components of our legislation; equally significant are the provisions for controlling health care costs. The governor has made clear that he will not pursue public financing for a single payer if Vermont hasn’t found a way to control cost growth — implementing true cost control, not just Medicaid fee cutting or cost shifting.

The law creates a new public board, the Green Mountain Care Board, that will be the locus of responsibility for cost control. The board can wield traditional tools such as fee-for-service rate setting, controls on the acquisition of technology, and reviews of both health insurers’ rates and hospitals’ budgets. However, the law also provides explicit direction to the board to create a global budget for health care spending and develop new payment models that create incentives for providers to stay within the budget. Like most states, we rely almost exclusively on a fee-for-service model to pay health care practitioners. This system creates a financial incentive to deliver more care and does not reimburse on the basis of quality, value, or health outcomes. The board is charged with implementing payment methods that encourage high quality and efficiency and provide the impetus for fundamental changes in the structure of the delivery system. It will apply these methods across all payers, private and public (we will seek permission from the federal government to include Medicare), and will monitor the effects of payment changes on both cost growth and quality indicators.

Achieving measurable cost control while tangibly improving the quality of care is certainly an audacious goal. But health care costs are eating up more and more of our economy even as the value of health insurance is eroding. Health care providers, particularly primary care providers and community hospitals, are financially stressed and drowning in red tape supposedly aimed at cost control. Vermont needs a framework within which providers have the right financial incentives, without all the wrong interference from insurers and government. Moreover, we must align incentives for payers, providers, and consumers so that the risks and rewards embedded in provider payment systems, benefit designs, and cost sharing all promote a higher-value health system and better health.

We have seen that changes in health care payment can drive more fundamental change. Since 2006, Vermont has been pursuing an ambitious project aimed at implementing the “advanced primary care medical home” model for care delivery. The state’s “Blueprint for Health” augments the capacity of physician practices with a community health team that helps manage patients’ care and connects them with social services. It also provides bonus payments, through all payers, whose amount is linked to performance on quality metrics. In January, the project will expand to include “anchor” specialists attached to advanced primary care medical homes, with bonus payments linked to both quality and total cost of care.

The next phase of our payment reforms will build on the Blueprint’s foundation of pay for performance and also move some groups of providers into budgeted or virtually budgeted arrangements. Such groups could include those capable of accepting a single, global payment for the complete care needs of a population, as well as looser affiliations of providers who will receive fee-for-service payments but face some combination of risk and reward if their total payments end up being above or below a targeted per capita level. The board will explore various models, as well as the use of bundled payments by all payers. The key to the board’s success will be focusing on implementing a narrow array of reforms that are predicted to have a high likelihood of success. The reforms must be readily understood by providers and create clear and strong incentives for re-engineering delivery systems and care patterns and making more efficient use of capital, technology, and human resources.

Our biggest challenge will be making the transition to a budgeted world. Much of Vermont’s existing regulation has been aimed at ensuring financial solvency for institutions, both hospitals and insurers. New payment models aimed at reducing waste and improving prevention and chronic care management necessarily shift resources out of the hospital. The Blueprint for Health already confirms this effect: as we have invested in and rewarded good primary care, hospital admissions and readmissions have been reduced. How do we continue this trend but assure Vermonters that they will have appropriate access to specialty and hospital services within their communities?

In addition to the direction and authority provided by the new law, Vermont has some other key ingredients for success in controlling health care costs. We believe we have a more efficient and collaborative health care system than most states. We have 14 community hospitals, all with fairly exclusive service territories. Competition for patients is not a major factor in how they do business. Our physicians did not come to the state to get rich. Our health care system is by no means bloated, and our providers want to do the right thing. We currently don’t reward them for doing the right thing. If we begin to reward them, and we clear away bureaucratic requirements, we believe we can achieve great things and provide an example to the country.

It is worth watching Vermont’s development of its single-payer system as a model for guaranteeing coverage for all citizens, reducing administrative waste, and simplifying insurance for both patients and providers. We can make health insurance simpler and easier for everyone and save money at the same time. But Vermont’s most meaningful work in the near term will be aimed at changing our health care payment and delivery systems. I am convinced that that’s where the real savings, and the sustainabili
ty, lie.

Disclosure forms provided by the author are available with the full text of this article at NEJM.org.

Dr. Wallack is special assistant to the governor for health reform, Montpelier, VT.

This article (10.1056/NEJMp1104562) was published on July 20, 2011, at NEJM.org.

New KFF report confirms negative impact of introducing cost sharing to Medigap

Medigap Reforms: Potential Effects of Benefit Restrictions on Medicare Spending and Beneficiary Costs

By Mark Merlis
Kaiser Family Foundation, July 2011

Among the many proposals under consideration to control the growth in Medicare spending is one that attempts to achieve savings by restricting coverage under Medigap plans to require enrollees to pay a larger share of the costs of Medicare-covered services.

Medicare by itself has relatively high deductibles, and imposes coinsurance for most covered services. Moreover, Medicare does not have any limit on total cost sharing, exposing some beneficiaries to large out-of-pocket (OOP) costs. Medigap policies help cover some or all of Medicare’s cost-sharing requirements. Some analysts contend that comprehensive “first dollar” coverage from Medigap leads enrollees to obtain unnecessary services, which results in excess Medicare spending.

This brief examines the potential effects of three different Medigap reform proposals on Medicare program spending and on beneficiaries’ out-of-pocket costs.

Medigap reforms would have a disproportionately negative impact on enrollees with modest incomes, in relatively poor health, and those with any inpatient hospital utilization. Under all three options, a greater share of beneficiaries reporting fair or poor health than those in better health would experience an increase in total out-of-pocket costs, because their premium savings would not be enough to offset their new spending for direct cost-sharing. Under Options 1 and 2, more than one-third of all Medigap enrollees in fair or poor health would experience a net increase in premiums and other out-of-pocket costs for Medicare covered services, as compared to less than one-fifth of those in relatively good health. Because those in relatively poor health use more services than healthier enrollees, the increase in their direct cost-sharing expenses for Medicare-covered services would more than offset any premium reduction.

Enrollees facing higher net costs are disproportionately those in fair or poor health, those requiring inpatient hospital care, and those with modest incomes. Even enrollees who do not actually see an increase in their total costs could be thought of as suffering a “welfare loss.” Beneficiaries buy comprehensive insurance in part for the peace of mind of knowing that they are fully protected against unpredictable events. They may see the loss of this protection as outweighing any potential premium savings.

http://www.kff.org/medicare/upload/8208.pdf

Comment: 

By Don McCanne, MD

Two days ago we discussed the negative impact of requiring deductibles for Medigap plans – a proposal designed to reduce the moral hazard of insurance (the propensity to obtain more care if it is free at the time of access). This KFF study is timely because it confirms that requiring Medigap cost sharing “would have a disproportionately negative impact on enrollees with modest incomes, in relatively poor health, and those with any inpatient hospital utilization.” Further, even if eliminating cost sharing does not have a net financial benefit, it does provide a “welfare gain” by providing beneficiaries with “the peace of mind of knowing that they are fully protected against unpredictable events.”

CO-OP (Consumer Operated and Oriented Plan) Health Plans under the Affordable Care Act

CO-OP Health Plans: More Competition, New Choices for Consumers and Small Business

Healthcare.gov, July 18, 2011

On July 18, the U.S. Department of Health and Human Services (HHS) proposed standards for establishing CO-OP health insurance plans.

A CO-OP is a private, nonprofit organization that sells health insurance coverage, like a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO), and will be subject to the same rules as other health insurers.

Unlike many health insurance companies today, a CO-OP:

* Gives its enrollees a say in their health plan. CO-OP members elect the board of directors, a majority of whom must also be enrolled in the CO-OP health plan.

* Uses profits to benefit enrollees. CO-OPs are required to use their profits to lower premiums, improve health benefits, improve the quality of health care, expand enrollment or otherwise contribute to the stability of coverage for members.

* Educates enrollees about the plan. Because a CO-OP relies on its enrollees to help decide the direction of the plan, communication about key features of the plan will be a high priority.

HHS is proposing standards for establishing CO-OPs, and for qualifying for $3.8 billion in loans to help start-up and capitalize these new health plans. All CO-OP loans must be repaid with interest and loans will only be made to private, nonprofit entities that demonstrate a high probability of becoming financially viable.

http://www.healthcare.gov/news/factsheets/2011/07/coops07182011a.html

And…

Establishment of Consumer Operated and Oriented Plan (CO-OP) Program

Patient Protection and Affordable Care Act
Department of Health and Human Services, July 18, 2011

Proposed rule.

Subpart F–Consumer Operated and Oriented Plan Program

§ 156.500 Basis and scope.

This subpart implements section 1322 of the Affordable Care Act by establishing the Consumer Operated and Oriented Plan (CO-OP) program to foster the creation of new consumer-governed, private, nonprofit health insurance issuers, known as “CO-OPs.” Under this program, loans are awarded to encourage the development of CO-OPs. Applicants that meet the eligibility standards of the CO-OP program may apply to receive loans to help fund start-up costs and meet the solvency requirements of States in which the applicant seeks to be licensed to issue CO-OP qualified health plans. This subpart sets forth the governance requirements for the CO-OP program and the terms for loans awarded under the CO-OP program.

§156.520 Loan terms.

  (a) Overview of Loans.

    (1) Applicants may apply for the following loans under this section: Start-up Loans and Solvency Loans.

    (2) All loans awarded under this subpart must be used in a manner that is consistent with the FOA, the loan agreement, and all other statutory, regulatory, or other requirements.

    (3) Solvency Loans awarded under this subsection will be structured in a manner that ensures that the loan amount is recognized by State insurance regulators as contributing to the State-determined reserve requirements or other solvency requirements (rather than debt) consistent with the insurance regulations for the States in which the loan recipient will offer a CO-OP qualified health plan.

  (b) Repayment period. The loan recipient must make loan payments consistent with the approved repayment schedule in the loan agreement until the loan is paid in full consistent with State reserve requirements, solvency regulations, and requisite surplus note arrangements. Subject to their ability to meet State reserve requirements, solvency regulations, or requisite surplus note arrangements, the loan recipient must repay its loans and, if applicable, penalties within the repayment periods in paragraphs (b)(1), (2), or (3) of this section.

    (1) The contractual repayment period for Start-up Loans and any associated penalty is five years following each drawdown of loan funds consistent with the terms of the loan agreement.

    (2) The contractual repayment period for Solvency Loans and any associated penalty is fifteen years following each drawdown of loan funds consistent with the terms of the loan agreement.

    (3) Changes to the loan terms, including the repayment periods, may be executed if CMS determines that the loan recipient is unable to repay the loans as a result of State reserve requirements, solvency regulations, or requisite surplus note arrangements or without compromising coverage stability, member control, quality of care, or market stability. In the case of a loan modification or workout, the repayment period for loans awarded under this subpart is the repayment period established in the loan modification or workout. The revised terms must meet all other regulatory, statutory, and other requirements.

http://www.ofr.gov/OFRUpload/OFRData/2011-18342_PI.pdf

Comment:

By Don McCanne, MD

The proposed rule has now been released for the establishment of CO-OPs under the Affordable Care Act. The CO-OPs are private, nonprofit organizations that sell insurance, like HMOs and PPOs, under the same rules as the other private insurers. The most important difference is that a CO-OP is controlled by a board of directors that is elected by the individuals enrolled in the CO-OP.

These are new organizations, and, as such, require a new infusion of capital to meet the reserve requirements for future claims. These are the same requirements that have been established by the states for other private insurers already competing in the marketplace.

Private, for-profit insurers have the capability of establishing start-up costs and solvency reserves by selling shares of stock. Since the CO-OPs are nonprofit, they don’t have this resource to tap. Recognizing this, the Affordable Care Act included provisions for government loans for start-up costs and other loans for solvency (reserve funds for future claims). It is important to understand that these are not grants but are loans that must be repaid, with interest, within five years for start-up loans and fifteen years for solvency loans.

Think about that. The CO-OPs are required to compete with the private insurers under the same terms, while having the additional requirement of paying back these loans. Since their only revenue source is premiums for the insurance they are selling, these loan costs that their competitors don’t have will have to be recovered through higher premiums. Under these terms, how could they possibly compete with the private insurers? It is no wonder that HHS anticipates a default rate of 35 or 40 percent on these loans.

There are many other issues. How long would it take to establish a critical threshold of enrolling enough members to create a viable entity? Since it is likely that the CO-OPs would be subject to adverse selection (enrolling a larger share of patients with greater health care needs), there would be further upward pressure on their premiums (death spiral) since current risk adjustment tools do not recover the full excess losses (as if health care is a “loss”).

There is also the possibility that states will rule that a reserve fund established by a loan does not qualify as a capital reserve, and for good reason. Another problem is that an unstable system of private and public plans with varying and ever changing eligibility requirements would make it very difficult for a CO-OP to maintain a stable patient population, sacrificing much of the benefits of the CO-OP model.

It’s too bad. CO-OPs should have offered us the opportunity to establish altruistic health care organizations. Instead, the politicians bent over backwards not onl
y to keep the government out of these programs, but also to protect the private insurers’ marketplace by being sure that the CO-OPs were not allowed a fair playing field by saddling them with insurmountable debt.

We needed a seat at the table.

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The moral hazard of Medigap plans

FAQ: Seniors May See Changes in Medigap Policies

By Julie Appleby
Kaiser Health News, July 15, 2011

What is Medigap and why do people buy it?

Unlike most job-based health insurance, traditional Medicare does not include “catastrophic” coverage, an annual maximum upper limit on the amount beneficiaries could pay. So enrollees can be liable for thousands of dollars each year, including: $1,132 per-episode deductible for hospital admissions; hundreds of dollars in daily charges for hospital stays of longer than 60 days; a $162-a-year deductible for doctor care, plus 20 percent of charges for office visits or equipment like wheelchairs.

Ten standardized types of supplemental plans offered by private insurers – including AARP’s UnitedHealthcare policies  – cover all or most of such deductibles and copayments.  Some employers also pay all or part of such costs for their retirees.

What changes are under consideration?

It is not clear exactly what’s on the table in the negotiations between congressional leaders and the White House.  But the charts  released show that one such proposal under consideration would bar insurers from offering supplemental policies unless the policies came with an annual deductible. People who didn’t want a deductible could pay $530 a year in additional premium to ensure that they won’t be hit with costs before their coverage kicks in.

What about people who don’t have a Medigap plan?

Only about 10 percent of seniors don’t have some sort of supplemental coverage. Some people have military/VA benefits, others are in Medicaid, and some have coverage through Medicare Advantage plans, which are insurance policies offered by private insurers as an alternative to traditional Medicare.

Would changing supplemental coverage save money?

Some economists and policy experts say that supplemental coverage insulates beneficiaries from medical costs, driving up demand for unnecessary care. A study done for MedPAC in 2009 found that beneficiaries with supplemental insurance used more care and cost the program more money. The increased spending wasn’t for emergency hospitalizations, but for other services such as elective hospital admissions, preventive care, doctor office visits and some types of tests.

What else do people say about the idea?

Advocacy groups like the Medicare Rights Center oppose restricting Medigap plans, saying it would simply shift more costs from the government to elderly and low-income people who can least afford it. “Some in government feel people in Medicare don’t have enough ‘skin in the game,’” says Ilene Stein, federal policy director for the center. In fact, she says, people on Medicare already pay 15 percent of their incomes for health care, well above the level paid by non-Medicare households. While the proposals would cap maximum annual spending per enrollee to $5,500 or $7,500, “that’s a lot of money for someone making $22,000,” the median household income for those on Medicare, she says.

http://www.kaiserhealthnews.org/Stories/2011/July/15/medigap-medicare-supplemental-faq.aspx

And…

Exploring the Effects of Secondary Coverage on Medicare Spending for the Elderly

Study by Direct Research, LLC
For the Medicare Payment Advisory Commission (MedPAC)
June 2009

Our results show that secondary insurance has a substantial impact on Medicare spending, consistent with the prior literature in this area. After removing beneficiaries with any VA use and adjusting for differences in health status, income, education, and demographics, individuals with Medigap coverage had Medicare costs 33 percent higher than those with no secondary insurance. Other private secondary insurance was associated with smaller increases in spending. There was no statistically significant difference in Part A spending, but a large and statistically significant increase in Part B spending.

Out-of-pocket payment reduced spending largely by suppressing elective care (broadly defined) as opposed to emergency care. In particular:

* Emergency care (ambulance use, emergency room visits, emergency and urgent hospitalizations) appeared unaffected by the presence of secondary insurance.

* Elective admissions, preventive care, minor procedures and endoscopies were strongly affected by secondary insurance coverage, with substantially higher use among those with private secondary insurance.

It is not possible to use observational (non-experimental) data to prove beyond a doubt that a causal relationship exists between secondary insurance and spending. For several reasons, however, this analysis strongly suggests secondary insurance (reduced out-of-pocket costs) genuinely causes higher spending, and is not merely associated with secondary insurance due to some other factors affecting both insurance demand and health care use. The following factors suggest that this is a causal relationship. First, beneficiaries themselves report that out-of-pocket costs are a significant reason for delaying care. Nearly 20 percent of beneficiaries without secondary insurance reporting delaying care due to concerns over cost, versus 5 percent of beneficiaries with private secondary insurance. Thus, survey data provide direct evidence that out-of-pocket cost is a mechanism by which secondary insurance increases demand for care.

Second, there was a clear dose-response relationship between depth of insurance coverage and increased spending. Those with first-dollar or nearly first-dollar coverage had much higher spending than others, regardless of secondary insurance status.

Third, only the depth of coverage mattered, not the type of secondary insurance. When a flag for (nearly) first-dollar coverage was included in the regression, the individual types of secondary insurance were no longer statistically significant determinants of spending. Low out-of-pocket cost was a sufficient explanation for all of the observed increase in demand, regardless of the source of the secondary insurance.

This finding of a universal effect of first-dollar coverage regardless of insurance type weakens any alternative explanation based on the specifics of insurance ownership (described below). Ultimately, it did not matter whether beneficiaries chose to purchase coverage or not, or earned coverage as a retirement benefit or not. The only factor that mattered was whether or not their Part B care was free or nearly free. There are two generic counter-arguments that can be used to explain the results of a regression analysis as something other than a causal relationship. The first is omitted variables bias. This is the possibility that some unobserved factors are strongly correlated with insurance and are strong determinants of spending. This could be some unobserved difference in health status, or merely a systematic difference in beneficiaries taste for or preference for health care use. If such factors exist, then the apparent relationship between insurance and spending shown by the regression is merely proxying for these unobserved factors. The second counter-argument is self-selection, for the types of insurance that are individually purchased. If beneficiaries bought secondary coverage in anticipation of having higher spending, then the causality runs from spending causing insurance coverage, and not the other way around.

Unobserved health status differences cannot plausibly explain these results. Any hypothesized health status differen
ces would have to be highly selective and secretive. They would only affect the need for Part B services but not Part A, only require elective care but not emergency care, and would only affect those who have near-first-dollar coverage and not others. Such factors would also have to be undetectable both by physicians (reporting diagnoses used in risk adjustment) and by beneficiaries (in their own self-reported health and functional status). to be strongly correlated with ownership of secondary insurance. That combination is implausible enough that we can reasonably dismiss it from consideration.

Unobserved differences in taste and preference for health care are impossible to rule out as an alternative explanation of the results. It is possible that, on average, beneficiaries who ended up with nearly-complete secondary coverage, regardless of the source of that coverage, had developed a taste for higher levels of health care use prior to becoming eligible for Medicare. Whereas beneficiaries with the same class of coverage, but paying at least 5 percent of costs, did not. We could think of no obvious mechanism that would generate such a strong correlation across all types of secondary coverage. But tastes and preferences are idiosyncratic and unobservable, so there is no obvious data-driven way either to rule that out or to test it as an alternative.

Self-selection as an alternative hypothesis could only apply to individual purchase insurance, not to employer-sponsored coverage. If self-selection is offered as an alternative explanation, it has to be paired with some alternative explanation of higher costs for those with employer-sponsored coverage. Moreover, any self-selection of insurance based on observable factors – observed health status, income, education, or demographics – should largely be accounted for by the regression analysis. For example, any connection between good health and unwillingness to purchase secondary insurance should be captured by the presence of health status measures in the regression analysis.

Finally, we appeal to Occam’s Razor (a principle that generally recommends selecting the competing hypothesis that makes the fewest new assumptions, when the hypotheses are equal in other respects) to argue that the lack of copayment causes the higher spending by those with secondary insurance. On the one hand, one simple explanation – those who receive nearly free care use much more of it – provides a simple, universal explanation for the higher spending by beneficiaries with all types of private secondary insurance. On the other hand, alternative explanations are a hodgepodge of factors that only apply to some types of insurance (self-selection) and unobservable taste and preference factors that (through some unexplained mechanism) apply only to a subset of persons with secondary insurance (those with near-first-dollar coverage). Clearly, lack of copayment is the simpler explanation of what we have observed.

In summary, the evidence is reasonably clear that secondary insurance raises Medicare costs. After eliminating persons with VA use and adjusting for covariates (health, income, education, demographics), beneficiaries with secondary insurance use much more health care than those who have no secondary insurance. The effect is due solely to those with near-first-dollar coverage (defined here as paying less than 5 percent of Part B costs). Beneficiaries without such coverage, by contrast, appear no different from those with no secondary insurance. The differential impact by service type – more on Part B than Part A, more on elective care than emergency care – also suggests that the out-of-pocket cost causes the lower use of care. When asked, beneficiaries themselves say exactly that – those without secondary insurance are far more likely to report having delayed care due to cost. Taken together, this provides a coherent picture that out-of-pocket costs matter significantly to Medicare beneficiaries, and that eliminating those costs raises health care spending.

This analysis does not address whether the increased spending is desirable or undesirable, or whether reduced spending leads to poorer outcomes. That question — whether the value of additional care exceeds its cost – cannot be answered from the analysis of spending data alone, if it can be answered at all. Instead, this analysis merely shows that beneficiaries in fee-for-service Medicare will tend to use much more health care when each additional service is free (to them) than they would if they had to pay a significant portion of the cost of each additional service.

http://www.medpac.gov/documents/Jun09_SecondaryInsurance_CONTRACTOR_RS_REVISED.pdf

Comment: 

By Don McCanne, MD

Although this excerpt from the 44 page MedPAC report on secondary insurance for Medicare beneficiaries (Medigap, etc.) is more than most people want to read, it really is important because this report is being used to try to expand policies that would reduce the moral hazard of insurance. The theory is that people use too much health care if it is “for free” (no deductibles, copayments, or coinsurance), and that they would access only the care that they really needed if they had to pay for at least a portion of it. Is this theory valid?

Although many proposals to reduce the government component of Medicare spending would do so by transferring government costs to the beneficiaries, this proposal to require cost sharing in Medigap plans is quite different. Since Medigap plans are privately funded, the reduction in premiums due to increases in cost sharing would accrue to the beneficiaries and not to the government. The reduction in government spending occurs only indirectly by not having to pay the government’s share of that care which was not received because of the patients’ own concerns about out-of-pocket costs.

The authors of the MedPAC report do confirm that individuals without supplementary coverage (without Medigap) use less care and therefore cost less. Policymakers using this report seem to be extrapolating the conclusion that eliminating cost sharing creates an increased demand for care that patients can do without, even though the authors clearly state that “this analysis does not address whether the increased spending is desirable or undesirable.” Nevertheless, the authors do seem to demonstrate some bias as they dismiss alternative explanations.

A few observations are warranted:

* Above all, the greater amount of care obtained by those with first dollar coverage cannot be dismissed as being excessive or wasteful. Although predominantly elective, these included preventive services and services that may reduce symptoms and improve quality of life. Preventive services were used only half as often by those with no supplemental coverage compared to those with additional coverage. A health care system should provide affordable access to more than just emergency services.

* Only about 10 percent of Medicare beneficiaries have no supplemental coverage, and it was this group that used fewer services. The authors seem to dismiss the facts that these individuals may not be culturally attuned to freely using the health care system, and many would self-select to not purchase additional coverage. They may decide that premiums for the plans are not worth the cost, or they may simply not like doctors and want to avoid all of the health care that they can.

* The fact that those receiving supplemental plans from their employers used less care than those purchasing their own Medigap plans suggests that the former group was diluted with individuals who would not have purchased plans had their employers not provided them. Again, this suggests that individuals averse to health care and not wanting to pay for it should not be used as the standard for the proper level of care.

* An observation buried
in this report is that mortality was higher in those who had no supplemental coverage. Although the authors were not able to explain precisely why, they did state, “In summary, the importance of this finding comes down to a judgment. On the one hand, the finding of excess mortality is based on a single year’s experience, and is inconsistent with the other measures of population health status. On the other hand, it is not explained by demographic or other factors, and it is not obviously an artifact of the methodology used. Finally, excess mortality would be a reasonable outcome from deficiencies of care, for example, from the lack of preventive care for this population.”

* Whether or not increased utilization by those with supplemental coverage provided a medical benefit, the plans clearly provided financial security for users of health care. How could anyone consider that to not be of benefit?

* This report remains silent on the issue of the profound administrative waste in providing plans that supplement the traditional Medicare program. The savings achieved by rolling the benefits of the supplemental plans into Medicare would likely offset much of the cost of services declined because of perceptions of affordability. Of course, once we fix Medicare, we should provide it to everyone.

Blaming our high health care costs on the moral hazard of having free access to health care at the time of need has got to end. Several nations that spend half of what we do nevertheless provide comprehensive health care services with free access. The real moral hazard is not that people might use more health care that they don’t have to pay for at the time of services, the moral hazard we should be concerned about is that people might not get the care that they should have because of financial barriers to that care.

That turns the moral hazard argument upside down, but that’s where it belongs.

For more on cracks in the foundation of moral hazard, citing the work of John Nyman:

https://pnhp.org/news/2007/september/cracks-in-the-moral-hazard-foundation

The Solution to the Federal Debt: Expand Medicare, Don't Cut It

By Miles Mogulescu
Huffington Post, July 15, 2011
 
With the August 2 deadline for increasing the debt ceiling fast approaching, the beltway media is quick to praise the “courage” of politicians who propose cutting Medicare, whether it’s Paul Ryan for proposing to turn Medicare into a voucher program, or President Obama for proposing more modest cuts like increasing the eligibility age from 65 to 67 or “means testing” benefits based on income. But there’s nothing courageous about putting more of the burden of medical care onto the backs of seniors who have spent a lifetime paying Medicare taxes in order to guarantee their medical security when they get older.

If our leaders want to show real political courage when it comes to the federal debt, they should try this statement on for size:

“The government doesn’t have a long-term debt crisis. It has a long-term health cost crisis. The solution isn’t turning Medicare into a voucher program or cutting benefits. The solution is expanding Medicare to cover all Americans.”

If America financed healthcare the way other rich capitalist countries do, there would be no federal deficit — even without other spending cuts or tax increases — and America could still afford to provide healthcare to all its citizens.

As the chart below shows, the CBO estimates that if American healthcare costs continue to grow at current rates (yellow Baseline), deficits as a percentage of GDP will soar to levels so high that no politically acceptable combination of budget cuts and tax increases will be able to control them.


Source: Center for Economic and Policy Research

But if America reduced its healthcare costs to the same percentage of GDP as Canada, France, Germany, Holland or the UK, deficits would disappear and would even turn into surpluses.
America’s per capita healthcare costs are twice those of other developed countries. In 2008 America’s per capita healthcare costs were $7538 compared to $4079 in Canada, $3698 in France, $3737 in Germany, $4063 in Holland and $3129 in the UK. Yet on average, citizens of those countries live two years longer than Americans.

Since the federal government pays approximately half of America’s healthcare costs through Medicare, Medicaid, the VA, tax benefits, and other programs, America’s supersized healthcare costs are the biggest drivers of long-term government debt.

What’s the difference between America and the rest of the developed capitalist world when it comes to healthcare costs? Only America has a system driven by for-profit health insurance. Every other capitalist country has either a form of government-run single payer health insurance (in effect “Medicare for All”) or a highly regulated utility.

Approximately 30% of every dollar spent in the US on private health insurance goes to administrative costs, marketing, executive salaries, and profits (as opposed to 2%-3% to administer Medicare) wasting hundreds of billions a year. Moreover, under a system of multiple payers, it’s impossible to negotiate substantially lower costs from healthcare providers. In contrast, other advanced countries have a government-administered monopsony (the opposite of a monopoly under which there’s one buyer and multiple sellers) so the government can negotiate cost savings, as well as ensure that providers focus their resources where they’re needed (e.g on primary care instead of on more profitable specialties.) That’s the biggest reason why other advanced countries spend half as much per capita on healthcare and get better results.

So there’s nothing politically courageous about proposing to change Medicare from a system of guaranteed care for all elderly Americans to a voucher system in which 65-year-olds would initially have to contribute over $6,000 a year out-of-pocket to private health insurance companies in the first year of the program, as Paul Ryan and House Republicans are advocating. Republicare doesn’t lower the per capita cost of American healthcare or extend healthcare to the uninsured — It simply shifts the cost from the government onto the backs of America’s oldest and most vulnerable citizens.

Though slightly less draconian, there’s nothing politically courageous about the mainstream Democratic approach either. The Affordable Health Care Act — “Obamacare” — subsidizes the private insurance industry while offering little but pilot programs to lower costs. Obama’s recent proposals to increase the Medicare eligibility age from 65 to 67 or to “means test” Medicare — which starts to transform Medicare from a social insurance program to a welfare program — begins to dismantle Medicare as we know it brick-by-brick, rather than in one fell swoop like the Ryan plan.

Although none of these proposals may be enacted right away, the danger is that if medical inflation continues to escalate the cost of Medicare, Medicare will eat up more and more of the federal budget and a few years down the line, there may be little choice but to either significantly cut Medicare benefits or transform it into a voucher system. Reluctant as I am to admit it, I must give a certain amount of credit to Paul Ryan for telling the inconvenient truth that given the rising cost curve, in the long-term Medicare as we now know it may be not financially sustainable.

Republicans and conservatives have no problem making maximalist right-wing proposals — like opposing even one penny in tax increases for the rich, proposing a balanced budget Constitutional amendment, or supporting Ryan’s plan to turn Medicare into an underfunded voucher program — even though they know that their proposals will not be enacted in the short-run. But by loudly trumpeting them, they move the political center to the right. Democrats like Obama respond by moving in a rightward direction, showing a willingness in principle to sharply curtail domestic social programs in return for relatively small tax increases in the form of closing loopholes, or proposing to start the process of reducing Medicare, Medicaid and Social Security with an initial series of relatively small cuts that opens the floodgates to bigger cuts.

To move the center back to the left, Democrats and progressives have to “go long,” too. And “going long” doesn’t mean advocating a “grand bargain” like that proposed by the chairmen of Obama’s Deficit Commission which focuses on reducing the deficit instead of creating jobs, advocates 2/3 (or more) in spending cuts to 1/3 (or less) in revenue increases, and begins to cut the key social safety net programs like Social Security, Medicare and Medicaid.

“Going long” for progressives and Democrats should mean making audacious proposals which shift power back from the wealthy to the middle class like meaningful increases in taxes for the wealthy and corporations, serious government-funded programs to create jobs, a more rapid end to the war in Afghanistan, which is draining the national treasury without making America safer, and major cuts to the American defense budget, which equals the defense budget of the rest of the world combined. These type of proposals might not pass this Congress, or even the next one. But they begin to redefine the nature of the political debate and move at back to the left from its dramatic rightward shift in recent years.

When it comes to health care, “going long” means being truthful with the American people and telling them that to protect Medicare in the long-term while controlling the federal debt, America will have to join the rest of the civilized world and enact Medicare For All.

Miles Mogulescu is an entertainment attorney, writer, and political activist.

http://ww
w.huffingtonpost.com/miles-mogulescu/federal-debt-medicare-cuts_b_900232.html

Medicare proves to be the solution

Letter, Times Union (Albany, N.Y.), July 15, 2011

I just returned from Connecticut, where I had a hip replacement without incident, followed by rehabilitation at my son’s home.

With Medicare on the cutting table, I fear the results of compromises. Traditional Medicare allows free choice of hospital and physician, not circumscribed by place of treatment. This is not true of Medicare Advantage, a privatized form of Medicare.

Medicare has a proven overhead of less than 4 percent, while private insurance overhead is 10 percent to 30 percent.

Hip surgery and medical care and drugs are costly, but need not be as costly if we had a system in which we could negotiate drug prices, hospital fees and medical fees, in which there was only one bill reimbursed by a single payer. The savings would be enough to insure all the uninsured so that we could have improved traditional Medicare for all.

As we celebrate this month of the outstanding 46 years of Medicare accomplishment, we suggest that Medicare is not the problem; it is the solution.

Richard Propp, M.D.
Capital District Alliance for Universal Healthcare
Albany

Read more: http://www.timesunion.com/opinion/article/Medicare-proves-to-be-the-solution-1467154.php#ixzz1SH7FeOEI

Don’t cut Medicare – improve it

By Hrayr Attarian, M.D.
Letters, Chicago Sun-Times, July 8, 2011

One of the July 8 headlines portends cuts to Medicare, the health plan that covers senior citizens over 65 and some chronically disabled  individuals. This is an effort to reduce national debt without increasing taxes.

Medicare, which will turn 46 on July 30, is far from a perfect program. However, having practiced in three states over the span of 12 years, I have spent countless hours pre-authorizing, appealing and trying to negotiate care for my patients with both Medicare and private insurers.

One thing has become clear to me: Medicare, despite its bureaucratic inefficiencies and guidelines that occasionally do not make sense, does not deny payment for medical procedures because of pre-existing conditions while private insurers, with guidelines no less mind-boggling, routinely do.

Medicare is far from ideal, but the solution is not cut it but to improve it and expand it because in the end its goal is to ensure the health of its members not to make a profit and pay dividends.

Hrayr Attarian, M.D., is a neurologist. He resides in Oak Park, Ill.