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Prop 61 – California’s Fight Against Outrageous Drug Prices

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Prop 61 – California’s Fight Against Outrageous Drug Prices

By Paul Y. Song, M.D.
The Huffington Post, Oct. 14, 2016

In the run up to the Affordable Care Act, the pharmaceutical industry’s annual lobbying efforts steadily increased to a peak of $273 million in 2009. Along with private negotiations between then Pharmaceutical Industry President Billy Tauzin and the White House, the ACA was written without any consideration towards making prescription medications more affordable.

On the contrary, the ACA continued to prohibit Medicare from negotiating drug prices and outlawed the importation of cheaper drugs from Canada or Europe. The pharmaceutical industry also received increased patent protections and as a result drug prices are escalating at a much faster clip today than ever before, becoming the fastest growing aspect of all medical costs.

Sadly, it is the American consumer who continues to pay the highest drug prices in the world.

As state governments from New York to Montana struggle to protect consumers from drug company price-gouging, California is taking a leadership role in these efforts with Proposition 61, the measure on the Nov. 8 ballot to put a cap on prescription drug prices, the leading cause of skyrocketing health care costs.

Seven states have passed laws to ease the burden of drug costs on their citizens by limiting the out-of-pocket payments of patients in private health plans.

Californians have explored reforms to control drug industry price-gouging as spending on prescription drugs has been increasing nationally at a rate twice as fast as overall health care spending.

But even the most temperate reforms have hit a wall of resistance from a drug industry hell-bent on protecting its profits. Look at what happened with Sen. Ed Hernandez’ bill, SB 1010. It simply called for greater transparency in drug pricing. It was gutted so badly by the drug industry’s allies and lobbyists that its author unceremoniously yanked it off the table.

It turns out that the pharmaceutical industry did not become one of the most powerful interests on Capitol Hill or in Sacramento with campaign contributions alone. For every $1 the industry spent on contributions during the last election cycle, $7 were spent on lobbying in 2014. Between 1998 and 2016, the pharmaceutical industry spent over $3.3 billion on lobbying. It is clear that they have a clear interest in maintaining the political status quo.

More ambitious still is Prop. 61, the California Drug Price Relief Act. It has made California ground zero in the fight to control drug prices with the industry planning to spend at least $100 million campaign to defeat Prop. 61 with a barrage of misinformation and fear-mongering.

Prop. 61 is endorsed by Democratic presidential candidate Bernie Sanders, former U.S. Secretary of Labor Robert Reich, the Rev. Al Sharpton and scores of progressive organizations, including the California Nurses Assn., AARP California, the Urban League, the Courage Campaign, and Physicians for a National Health Program CA.

If approved, Prop. 61 would require California state government — as the ultimate buyer of drugs used by approximately 5 million Medi-Cal (aka Medicaid) patients, current and retired state employees and prisoners — to pay no more for drugs than what the U.S. Department of Veterans Affairs (DVA) pays for the same drugs. Typically DVA pays 20-24 percent less than market rate for its drugs. Passage of the law would be – so to speak – a difficult pill for Big Pharma to swallow.

But, not to fear, these companies will continue to reap giant profits as Big Pharma relentlessly prioritizes its profits above all, and its greed will not be easily tamed or shamed. This was recently exemplified by the infamous likes of “Pharma Bro” CEO Martin Shkreli of Turing Laboratories and Heather Bresch, the CEO of Mylan, the EpiPen maker.

As an oncologist, I have personally seen the increased financial burden of out-of-pocket spending on my patients as overall spending on cancer drugs increased by 18 percent in 2015 to $39 billion alone, according to IMS Health, a consulting firm that collects data for the drug industry. And some critical cancer drugs cost 600 times more in the United States than in other industrialized nations.

The drug companies have threatened to make Californians miserable if Prop. 61 wins. If approved, the drug companies warn they will 1) initiate cost-shifting (charging other customers more to make up for the revenues lost in selling to California state government); 2) cut their R&D budgets to make ends meet and thus damage their ability to design a new generation of wonder drugs; and/or 3) boost the prices they charge the DVA to nullify the benefits of the California reform measure.

But California voters should not be intimidated by drug company bullying.

The fact is that when Kaiser which currently insures nearly 25 percent of all Californians uses its marketshare to negotiate drug discounts, it is considered good free market business savvy, but when either Medicare or the state of California attempts to do the same, it is considered government interference.

If there’s going to be price-shifting it will only happen because of drug company greed, not because of drug company need. Big Pharma is rolling in dough and are not going to collapse if some reasonable price controls are enacted in California.

The drug companies’ claim Prop. 61 will force them to slash their R&D budgets to make ends meet is also phony. In fact, drug companies spend less than two percent of their revenues to create new drugs and as much as 80 percent of the cost of basic drug research is taxpayer-funded anyway. Just recently, a new prostate cancer drug called Xtandi, which was discovered using taxpayer-funded grants, was sold by UCLA to big Pharma for over $1 Billion and already costs patients $129,000 a year.

Finally, Big Pharma’s veiled threats to hold veterans hostage to protect itself from Prop. 61 is morally revolting. And it’s an empty threat. Federal law is clear: the drug companies cannot arbitrarily raise the prices they charge DVA. But, in reality, the VA drug formulary is relatively limited and Medicaid-HMOs will not be excluded, so Prop 61 is really more of a small overall step to address our grossly broken system.

So, why are the drug companies so scared and desperate? They understand that the only prescription that can break the stronghold of their lobbying efforts is when citizens bypass their beholden legislators to pass an initiative. Thus they fear passage of Prop. 61 in California will spark a “prairie fire” of reform that will spread across the nation. We hope they are right.

Dr. Paul Y. Song is a physician, healthcare activist, and co-chair of the Campaign for a Healthy California.

http://www.huffingtonpost.com…

Prop 61 – California’s Fight Against Outrageous Drug Prices

By Paul Y. Song, M.D.
The Huffington Post, Oct. 14, 2016

In the run up to the Affordable Care Act, the pharmaceutical industry’s annual lobbying efforts steadily increased to a peak of $273 million in 2009. Along with private negotiations between then Pharmaceutical Industry President Billy Tauzin and the White House, the ACA was written without any consideration towards making prescription medications more affordable.

On the contrary, the ACA continued to prohibit Medicare from negotiating drug prices and outlawed the importation of cheaper drugs from Canada or Europe. The pharmaceutical industry also received increased patent protections and as a result drug prices are escalating at a much faster clip today than ever before, becoming the fastest growing aspect of all medical costs.

Sadly, it is the American consumer who continues to pay the highest drug prices in the world.

As state governments from New York to Montana struggle to protect consumers from drug company price-gouging, California is taking a leadership role in these efforts with Proposition 61, the measure on the Nov. 8 ballot to put a cap on prescription drug prices, the leading cause of skyrocketing health care costs.

Seven states have passed laws to ease the burden of drug costs on their citizens by limiting the out-of-pocket payments of patients in private health plans.

Californians have explored reforms to control drug industry price-gouging as spending on prescription drugs has been increasing nationally at a rate twice as fast as overall health care spending.

But even the most temperate reforms have hit a wall of resistance from a drug industry hell-bent on protecting its profits. Look at what happened with Sen. Ed Hernandez’ bill, SB 1010. It simply called for greater transparency in drug pricing. It was gutted so badly by the drug industry’s allies and lobbyists that its author unceremoniously yanked it off the table.

It turns out that the pharmaceutical industry did not become one of the most powerful interests on Capitol Hill or in Sacramento with campaign contributions alone. For every $1 the industry spent on contributions during the last election cycle, $7 were spent on lobbying in 2014. Between 1998 and 2016, the pharmaceutical industry spent over $3.3 billion on lobbying. It is clear that they have a clear interest in maintaining the political status quo.

More ambitious still is Prop. 61, the California Drug Price Relief Act. It has made California ground zero in the fight to control drug prices with the industry planning to spend at least $100 million campaign to defeat Prop. 61 with a barrage of misinformation and fear-mongering.

Prop. 61 is endorsed by Democratic presidential candidate Bernie Sanders, former U.S. Secretary of Labor Robert Reich, the Rev. Al Sharpton and scores of progressive organizations, including the California Nurses Assn., AARP California, the Urban League, the Courage Campaign, and Physicians for a National Health Program CA.

If approved, Prop. 61 would require California state government — as the ultimate buyer of drugs used by approximately 5 million Medi-Cal (aka Medicaid) patients, current and retired state employees and prisoners — to pay no more for drugs than what the U.S. Department of Veterans Affairs (DVA) pays for the same drugs. Typically DVA pays 20-24 percent less than market rate for its drugs. Passage of the law would be – so to speak – a difficult pill for Big Pharma to swallow.

But, not to fear, these companies will continue to reap giant profits as Big Pharma relentlessly prioritizes its profits above all, and its greed will not be easily tamed or shamed. This was recently exemplified by the infamous likes of “Pharma Bro” CEO Martin Shkreli of Turing Laboratories and Heather Bresch, the CEO of Mylan, the EpiPen maker.

As an oncologist, I have personally seen the increased financial burden of out-of-pocket spending on my patients as overall spending on cancer drugs increased by 18 percent in 2015 to $39 billion alone, according to IMS Health, a consulting firm that collects data for the drug industry. And some critical cancer drugs cost 600 times more in the United States than in other industrialized nations.

The drug companies have threatened to make Californians miserable if Prop. 61 wins. If approved, the drug companies warn they will 1) initiate cost-shifting (charging other customers more to make up for the revenues lost in selling to California state government); 2) cut their R&D budgets to make ends meet and thus damage their ability to design a new generation of wonder drugs; and/or 3) boost the prices they charge the DVA to nullify the benefits of the California reform measure.

But California voters should not be intimidated by drug company bullying.

The fact is that when Kaiser which currently insures nearly 25 percent of all Californians uses its marketshare to negotiate drug discounts, it is considered good free market business savvy, but when either Medicare or the state of California attempts to do the same, it is considered government interference.

If there’s going to be price-shifting it will only happen because of drug company greed, not because of drug company need. Big Pharma is rolling in dough and are not going to collapse if some reasonable price controls are enacted in California.

The drug companies’ claim Prop. 61 will force them to slash their R&D budgets to make ends meet is also phony. In fact, drug companies spend less than two percent of their revenues to create new drugs and as much as 80 percent of the cost of basic drug research is taxpayer-funded anyway. Just recently, a new prostate cancer drug called Xtandi, which was discovered using taxpayer-funded grants, was sold by UCLA to big Pharma for over $1 Billion and already costs patients $129,000 a year.

Finally, Big Pharma’s veiled threats to hold veterans hostage to protect itself from Prop. 61 is morally revolting. And it’s an empty threat. Federal law is clear: the drug companies cannot arbitrarily raise the prices they charge DVA. But, in reality, the VA drug formulary is relatively limited and Medicaid-HMOs will not be excluded, so Prop 61 is really more of a small overall step to address our grossly broken system.

So, why are the drug companies so scared and desperate? They understand that the only prescription that can break the stronghold of their lobbying efforts is when citizens bypass their beholden legislators to pass an initiative. Thus they fear passage of Prop. 61 in California will spark a “prairie fire” of reform that will spread across the nation. We hope they are right.

Dr. Paul Y. Song is a physician, healthcare activist, and co-chair of the Campaign for a Healthy California.

http://www.huffingtonpost.com…

Health professionals’ duty in responding to structural racism

Structural Racism and Supporting Black Lives — The Role of Health Professionals

By Rachel R. Hardeman, Ph.D., M.P.H., Eduardo M. Medina, M.D., M.P.H., and Katy B. Kozhimannil, Ph.D., M.P.A.
The New England Journal of Medicine, October 12, 2016

On July 7, 2016, in our Minneapolis community, Philando Castile was shot and killed by a police officer in the presence of his girlfriend and her 4-year-old daughter. Acknowledging the role of racism in Castile’s death, Minnesota Governor Mark Dayton asked rhetorically, “Would this have happened if those passengers [and] the driver were white? I don’t think it would have.”

Disproportionate use of lethal force by law-enforcement officers against communities of color is not new, but now we increasingly have video evidence of the traumatizing and violent experiences of black Americans. Structural racism — a confluence of institutions, culture, history, ideology, and codified practices that generate and perpetuate inequity among racial and ethnic groups — is the common denominator of the violence that is cutting lives short in the United States.

The term “racism” is rarely used in the medical literature. Most physicians are not explicitly racist and are committed to treating all patients equally. However, they operate in an inherently racist system. Structural racism is insidious, and a large and growing body of literature documents disparate outcomes for different races despite the best efforts of individual health care professionals. If we aim to curtail systematic violence and premature death, clinicians and researchers will have to take an active role in addressing the root cause.

Structural racism, the systems-level factors related to, yet distinct from, interpersonal racism, leads to increased rates of premature death and reduced levels of overall health and well-being. Like other epidemics, structural racism is causing widespread suffering, not only for black people and other communities of color but for our society as a whole. It is a threat to the physical, emotional, and social well-being of every person in a society that allocates privilege on the basis of race. We believe that as clinicians and researchers, we wield power, privilege, and responsibility for dismantling structural racism — and we have a few recommendations for clinicians and researchers who wish to do so.

First, learn about, understand, and accept the United States’ racist roots.

Second, understand how racism has shaped our narrative about disparities.

Third, define and name racism.

Finally, to provide clinical care and conduct research that contributes to equity, we believe it’s crucial to “center at the margins” — that is, to shift our viewpoint from a majority group’s perspective to that of the marginalized group or groups.

Addressing violence against black communities can start with antiracist practices in clinical care and research. Do we have the courage and conviction to fight to ensure that black lives do indeed matter?

http://www.nejm.org…

***

Comment:

By Don McCanne, M.D.

The authors note that “most physicians are not explicitly racist and are committed to treating all patients equally,” but, importantly, “they operate in an inherently racist system.” Further, “structural racism is insidious, and a large and growing body of literature documents disparate outcomes for different races despite the best efforts of individual health care professionals.”

They state, “If we aim to curtail systematic violence and premature death, clinicians and researchers will have to take an active role in addressing the root cause.” They then offer some useful suggestions on how we might approach structural racism.

But we should go further. In an internal communication, David Himmelstein and Steffie Woolhandler suggest developing “a list of health financing demands related to fighting racism.”

One of the more obvious places to start would be the enactment of a single payer national health program in which financing of health facilities and health care would be equitable.

But reading the comments published by NEJM in response to this article suggest that we have more to do than simply address structural racism. One physician commented, “The NEJM, a formerly highly respected medical journal, has lowered itself to the level of  a political journal that supports people who advocate the murder of policemen… This journal is now a ‘throwaway’.”

Another commenter from Georgia wrote, “K-12 schools need to teach students how to comply with police orders.”

Sadly, the problems are deeper than just structural racism. That will make our task much more difficult. But as health professionals, it is imperative that we join in leading the way toward improving the health of the nation by implementing structural reform that would improve the health of each and everyone of us. These efforts should be disproportionately directed to the greatest problems until we can achieve a truly egalitarian equilibrium.

For more on this very important topic, see the article below:

***

Single-Payer Health Reform: A Step Toward Reducing Structural Racism in Health Care

By Dominic F. Caruso, MD/MPH Candidate, David U. Himmelstein, MD, and Steffie Woolhandler, MD
Harvard Public Health Review, July 20, 2015

https://www.pnhp.org…

Troubled workers’ comp system shows need for single-payer health care

By Johanna Ryan and Anne Scheetz
Fox Valley (Ill.) Labor News, Oct. 7, 2016

In Illinois and around the nation, big business has labeled workers’ compensation a system in crisis. Illinois Gov. Bruce Rauner has depicted it as a millstone around the necks of Illinois employers, who he claims are shelling out too much money to treat injuries that might not even be work-related. Rauner and other Republican governors have made “reforming” workers’ compensation a key part of their pro-business agenda.

However, any worker who has had to use the system lately knows the real “workers’ comp crisis” is too little health care, not too much. In Illinois, as in most states, your employer is required to carry standard workers’ comp insurance. But it’s private companies like Liberty Mutual, Travelers and AIG/Chartis that provide the coverage — and they would much rather pay lawyers to fight your claim than pay doctors to help you get well.

Under the system they’ve created, a worker hurt on the job is actually at higher risk of being denied medical care (or having their treatment cut short) than a worker who falls getting out of the bathtub at home.

We believe the best way to fight the growing attacks on workers’ compensation is to take private insurance companies out of the picture. A public, single-payer health care system, financed by taxes rather than insurance premiums, would accomplish these goals:

  • Eliminate delays and outright denial of care and the resulting long-term adverse effects on workers’ health;
  • Take medical decisions out of the hands of insurance companies and place them where they belong: in the hands of patients and their doctors; and
  • Make prevention the preferred approach to work-related health problems by strengthening our public health infrastructure.

This is the type of health care system workers in almost every other wealthy industrialized nation take for granted. Here in the USA, it has been endorsed by the United Mine Workers, National Nurses United, the Machinists’ Union, Amalgamated Transit Union and many others. Single-payer health care is a pro-active, rather than a reactive, approach to workers’ health. It is an ambitious program, but workers deserve no less.

To get medical care in a workers’ comp case, it’s not enough to show it’s necessary. You must also prove it’s related to a workplace injury. This can be especially hard for “wear-and-tear” injuries like carpal tunnel syndrome or tendonitis, but it can also affect the worker who falls off a ladder or is struck by a forklift.

Private insurers love to litigate these cases – they know it has a chilling effect on the next worker who thinks about filing a claim. So they’re happy to spend several thousand dollars to have you examined by an employer-friendly medical specialist who will declare your work injury was just a “minor strain,” and your current symptoms are due to chronic arthritis, an old football injury or some other cause. No PT for you, pal, and definitely no surgery.

Rauner wants to make the standard for causation even higher, by requiring that an accident at work must be more than 50 percent responsible for an injury compared to all other causes. He also wants the records made by the treating physician — the one who actually knows the patient and who assessed the problem at the time of its occurrence — to count for less, and the opinions of those employer-friendly “independent medical examiners” to count for more.

Such changes taken together would gut workers’ compensation. Employers who are reckless with workers’ health will be even more confident they can get away with it. Workers’ risk of injury will increase, and their access to care and compensation will decrease.

In theory, workers’ comp expenses should give employers an incentive to make the workplace safer. It would be nice if that were the case. Unfortunately, it’s hard to find anyone in the field who believes it. Workers’ comp costs are much like the legal fines and penalties paid by drug companies — just a cost of doing business, which is never big enough to make them change their ways.

Employers are fond of moaning about the high cost of workers’ comp, and make a public scandal out of any individual case of cheating, real or alleged. But the real root of rising costs is litigation, not featherbedding or fraud. Private workers’ comp carriers have made Illinois a happy hunting ground for insurance defense lawyers, even as the number of workers’ comp claims in the past decade has shrunk by more than a third. The changes Rauner proposes would make this much worse.

Take the example of one injured worker we know: A woman who’s been waiting a year and a half for repair of her torn rotator cuff, precisely because of this type of dispute. She now has neck and back problems too, thanks to months of trying to use her trapezius muscles to compensate for her damaged shoulder. Ask any doctor: when she finally gets her surgery, the results will be worse than average on account of all that delay.

A single-payer health care system would cover the care she needed, with no questions asked. Her lawyers could concentrate on fighting to get her disability payments and an eventual cash settlement; we wouldn’t have to to fight over medical care. Our client could at least get her surgery and physical therapy, even if the workers’ comp carrier denied her weekly benefit checks. She could recover and be working a new job while she waited for her shoulder claim to settle.

Relying on workers’ comp claims filed by individuals (or their next of kin) to enforce respect for workplace safety just doesn’t make sense. Would we depend on lawsuits alone to keep poisoned or spoiled foods off the market? Workplace safety, just like food safety, is a public health issue. We need public enforcement bodies, with real power, and with real penalties for violations.

According to an AFL-CIO report, in 2015, Illinois only had enough Occupational Safety and Health Administration (OSHA) inspectors to inspect all job sites only once every 143 years. The average penalty for a fatality investigation, of which there were 56, was $8,553. This clearly falls short of what’s needed to enforce workplace safety standards and protect workers’ lives. (A few states, such as Washington, have public workers’ compensation insurance funds with some limited powers over workplace safety. Unions in Washington strongly support this system. When Liberty Mutual and other private insurers tried to enter the market a few years ago, labor fought the measure through a statewide referendum and won.)

Wouldn’t we all be better off under a single-payer system that guaranteed treatment for any illness or injury, without a legal battle over the cause? Such a system would not only be cheaper, but it would provide better care. There was a time when most specialists welcomed workers’ comp patients. However, given endless payment delays and litigation hassles, those days are fast becoming history.

Instead of seeing the best doctors, too many injured workers have to put up with pro-employer “occupational health” clinics, or third-rate providers who pad their bills with useless charges to compensate for long payment delays.

Imagine if everyone, from janitors to CEOs, carried the same health insurance card! You would choose your own doctors and other care providers. No specialist would turn you away because of the type of insurance you had. You and your doctor – not your employer’s workers’ comp carrier, or any other insurance company, would make decisions about tests, surgery, physical therapy, medical equipment, and other care.

All care would be paid for by progressive taxes, and free at the point of service. Hospitals would not shut down in low-income neighborhoods if the residents had the same high-quality insurance as everyone else. No one would lose their health insurance through leaving a job, going on strike, or for any other reason.

Also, injured workers could get immediate care without having to prove to anyone exactly where, when or how they got hurt.

Workers’ comp lawyers (and we’d still need them) could concentrate on fighting for compensation – and we wouldn’t see clients dropping their claims or settling for pennies because they were desperate for medical care.

A strong public health system, the foundation on which primary care and specialty care must rest in order to be effective, would make protection of workers’ health a high priority.

That’s what a single payer system could offer all of us, union or nonunion. It sounds like a better way to us.

Please sign up as a supporter, persuade your union to do the same, and make sure to get involved.
http://ilsinglepayer.org/

References:
1. Number of Illinois workers’ comp claims
2. Gov. Bruce Rauner’s turn-around agenda
3. Illinois occupational illness and injury statistics

Johanna Ryan is a workers’ comp paralegal and a member of the Illinois Single-Payer Coalition.

Anne Scheetz, MD, a member of Physicians for a National Health Program and a founding member of the Illinois Single-Payer Coalition, cared for many patients with work-related health problems before her retirement from clinical practice.

Originally published in the 9/15/16, 9/22/16, and 9/29/16 print issues of Fox Valley Labor News.

http://foxvalleylabornews.com…

CMS pilot program for judging breadth of narrow networks

How Narrow Is It? Gov’t Begins Test Of Comparison Tool For Health Plan Networks

By Michelle Andrews
Kaiser Health News, October 14, 2016

The incredible shrinking provider network is nothing new in marketplace plans. One way insurers have kept premiums in check on the individual market is by reducing the number of providers available in a plan’s network. Earlier this year, the federal government said that it would introduce a tool this fall to help consumers who are shopping on HealthCare.gov gauge how narrow a plan’s provider network is compared with others in the area.

But most consumers who want that information will have to wait at least another year. The Department of Health and Human Services recently announced that the pilot project to test the network breadth tool just got a little, well, narrower.

Consumers can already check whether specific doctors or hospitals are included in a marketplace plan’s provider network on HealthCare.gov. But there’s currently no way to easily measure the breadth of a plan’s provider network. This can be an important factor for some consumers, especially given the growing number of plans with no out-of-network benefits.

The new tool will designate marketplace health plan networks as “basic,” “standard” or “broad” based on how they compare with other health plan networks in a county. The label will reflect the availability of three types of providers: primary care, pediatricians and hospitals.

Originally, network-breadth information was going to be available for the 35 states on HealthCare.gov, the federally facilitated marketplace. But in August HHS announced it would make the tool available in just six unnamed states.

In September, HHS said it would shrink the pilot still further, to four states — Maine, Ohio, Tennessee and Texas.

Although the tool will let people compare networks in their area, still, “it’s all relative,” (Georgetown Professor Sabrina) Corlette said. “If you’ve got a market where every single network is narrow, this network breadth rating is less useful.”

http://khn.org…

CMS update on the network breadth pilot program:
https://www.cms.gov…

***

Comment:

By Don McCanne, M.D.

One of the major concerns with the implementation of the Affordable Care Act is that many of the exchange plans have narrow to ultra-narrow provider networks. Since it is difficult to determine the breadth of providers included, CMS is providing a network rating system to provide more transparency, as if the problem of narrow networks wasn’t much more serious than simply lack of adequate information.

The fact that the pilot program was pared back suggests that this will not be a simple process. It will be difficult to match a fluctuating provider list with the medical needs of the plan enrollees. Further, since each enrollee has different medical needs, it will be even more difficult to be certain that the needs of each enrollee will be met, even if the enrollees’ preferences are ignored.

Although a recent report suggests that plans with narrow networks have premiums that are about 7 percent lower than plans with broad networks, once most insurers switch to narrow networks, that differential will go away.

But this is typical of CMS. When the problem is that insurers are limiting patients’ choices in their health care, CMS decides that the solution should be to merely tweak the system with more transparency while keeping it intact. The solution needed is to eliminate the restrictive provider list, allowing patient access to the entire health care delivery system.

Patients often choose their plans based primarily on the lowest premium prices. Secondarily they may sometimes check to be certain that their primary care physician is on the list, if they have one. But both of these are flawed policies. Choice of physicians and hospitals should be unlimited (except for providers expelled for reason). Also the entire health care system should be funded automatically through progressive taxes – a much more equitable system with much less wasteful administrative complexity than assigning varying individual premiums for a market of private plans.

Today CMS released the final rule on MIPS and APMs – a major administrative boondoggle if there ever was one. They just don’t get it. When we need real reform, they simply serve us more “garbage salad” (but not the one Trump serves).

PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

Cutting public employees’ health care is shortsighted

By Anne Scheetz, M.D.
The State Journal-Register, Oct. 12, 2016

Illinois Gov. Bruce Rauner and Chicago Mayor Rahm Emanuel may seem like political adversaries, but they’ve made common cause on at least one issue: public employees’ health insurance.

Unfortunately, they haven’t acted to relieve employees from rising premiums, sky-high deductibles, and unconscionable drug prices.

Instead they’ve sought to diminish workers’ benefits, furthering a trend that began in the private sector and that, unchecked, will end with health care being inaccessible to all but a privileged few.

Rauner wants to double state employees’ share of health care costs, which he calls unaffordable, shifting them from state government to individual workers and their families (who are taxpayers, by the way), ignoring the pain and financial hardship inflicted on people with serious medical needs.

Moreover, the governor’s “turnaround agenda” includes a proposal for changing state law to allow local government units to exclude public workers’ health benefits from collective bargaining entirely.

Given this stance, it is no surprise that Rauner used the Illinois budget impasse as an excuse to threaten to stop, and in some cases even to actually stop for a time, making health benefit payments for state workers, payments to managed-care plans, and payments of the state’s share of health insurance premiums.

Meanwhile, Chicago’s Rahm Emanuel crows that the city “stopped the rise in employee health care costs.” In reality, his administration didn’t eliminate those costs, but shifted them onto workers and retirees.

Emanuel’s plan, like Rauner’s, is divide and conquer: pit taxpayers against public employees, groups of workers against one another, unions against other unions, worker against worker within unions.

The mayor wants newly hired city employees to pay a larger portion of their health care costs than current employees. He wants to push most city retirees onto substandard Obamacare plans. And, he demands “cooperation” from unions as he seeks to degrade their members’ hard-earned health benefits.

In pushing these cuts, Rauner and Emanuel pose as defenders of the taxpayer. Nothing could be further from the truth. Their health policies are part of an agenda of austerity for ordinary people that allows for greater wealth accumulation for the tiny minority of people at the very top.

U.S. health care is too expensive. But the fault lies not with workers, public or private, but rather with our corporatized, for-profit health care system. Consider, for example, the private health insurance industry’s reluctance to pay medical claims (a profit enhancer), the wasteful bureaucracy this afflicts us with, and the profiteering of large pharmaceutical firms (think EpiPen).

While Rauner’s and Emanuel’s bipartisan assault on public employees’ health benefits should be rebuffed, that’s not enough.

To get at the root of the problem we must exclude private health insurance companies from health care, force drug companies to negotiate reasonable prices, and remove corporate profits from the health care equation.

The solution: a nonprofit single-payer health care system. Also known as Improved Medicare for All, such a publicly financed system would slash paperwork, negotiate fair prices for all goods and services, and institute evidence-based cost-control measures.

Studies show that the savings we’d reap from streamlined administration alone would be sufficient to provide everyone with high-quality coverage and eliminate all co-pays and deductibles. And health security would be assured for all workers, public and private.

Other countries do it. By working together, we can do it too.

Dr. Anne Scheetz is a founding member of the Illinois Single-Payer Coalition and a leader of the Illinois chapter of Physicians for a National Health Program. She lives in Chicago.

http://www.sj-r.com…

UnitedHealth absconding with patients’ excessive drug co-payments

Customers sue UnitedHealth over prescription drug co-pay costs

By Brendan Pierson
Reuters, October 5, 2016

UnitedHealth Group Inc has been sued by three customers who accused the largest U.S. health insurer of charging co-payments for prescription drugs that were higher than their actual cost and pocketing the difference.

For example, the lawsuit claims, one class member paid a $50 co-payment for Sprintec, a contraceptive, while UnitedHealth paid the pharmacy only $11.65. The pharmacy was then required to hand the extra $38.85 over to UnitedHealth under its agreement with the insurer, the lawsuit said.

The lawsuit claims that such a co-payment “is not a ‘co-‘ payment for a prescription drug because the insurer is paying nothing,” but is instead “a hidden additional premium.”

The lawsuit says UnitedHealth has hidden this practice from its customers, forcing them to overpay for a wide variety of common, low-cost drugs.

The lawsuit claims UnitedHealth’s co-payments violate the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law used to target illegal conspiracies, and in some cases also violate a federal law governing employee benefit plans.

http://www.reuters.com…

***

Comment:

By Don McCanne, M.D.

Yesterday’s message described how insurers were using the deductibles to avoid paying anything for covered drugs while collecting a significant proportion of the patient’s payment for the prescription. Today’s shows how UnitedHealth is establishing co-payments much larger than the retail value of many of its authorized prescriptions, then requiring a kickback of the balance of the co-payment. In both instances, the insurer’s net payment for the prescriptions is zero whereas the patient is unknowingly making a generous payment to the insurer. The insurer is collecting additional patient funds in exchange for providing…nothing!

These two examples are not a mere coincidence. They are written into the contracts. They are proof of the ongoing conspiracy of the insurers to cheat their own clients – the patients.

A racketeering lawsuit has now been filed. But that is not enough. We need to expel these rip-off artists from our health care system. We need to replace these leeches with our own dedicated public stewards serving us in a financing system that works for patients instead: Single payer.

Insurers, not ColoradoCare, too big for our own good

By Virginia Gebhart
Daily Camera (Boulder, Colo.), Oct. 13, 2016

You’ve seen the countless ads on TV, sponsored by Coloradans for Coloradans. This is the opening line, “Sometimes too big can be bad.” I agree. I invite you to think about who is too big.

Is it ColoradoCare or is it an insurance company (Anthem, valued at $27 billion) and their pharmacy benefits manager (Express Scripts, valued at $59 billion) who continually, year after year, shift more and more costs to customers while making it harder every year to access care and prescription medication?

My son, Michael, is a liver transplant recipient. He takes anti-rejection medication that is expensive, about $600 per month, retail. Yes, it’s generic. He takes another anti-rejection medication that costs about $20 per month. Any pharmacy in the state of Colorado could fill these prescriptions with a few days’ notice. Yet Express Scripts declares that the expensive medication must be obtained from a specialty pharmacy in the state of Rhode Island. Their specialty seems to be the worst customer service in the history of the profession of pharmacy.

Michael has spent hours and hours and hours on the phone trying to understand and fulfill their requirements for a prior authorization for his anti-rejection medication that he has taken for nearly 10 years and will need to take for the rest of his life. Not surprisingly, it’s only the expensive medication that requires a prior authorization and procurement through a specialty pharmacy. His co-pays go up every year. Suddenly this year, he gets only a 30-day supply, so he pays the co-pays monthly, not every three months as in the past. Early this year, the co-pay was $80 per month for his expensive medication. Suddenly in August the co-pay became $500 per month. We don’t really know why and neither do the pharmacists at the specialty pharmacy. Michael got them to admit it was a mistake in August, but they charged the same $500 again in September. So apparently he’ll have to spend hours on the phone each month to get them to charge the correct co-pay.

Or not. Maybe he’ll just have to pay $500 each month going forward. He would have a rejection episode if he stopped taking his medication. At best, he’d land in the hospital, which would cost many thousands of dollars. At worst, he’d die. Who knows what he will have to pay next year? We know his insurance premiums will go up about 25 percent, but we don’t know what his deductible will be, nor his prescription co-pays.

Michael can’t understand why his insurance company makes it harder and harder each year to get his prescriptions filled. As a retired pharmacist, I understand very well. Insurance companies and pharmacy benefit managers have been shifting more and more costs to their customers for over 30 years. It gets worse and worse every year. I explained to Michael that there are two reasons for these immoral business practices which ought to be illegal. The first reason is that they know that as customers must pay more and more for their medications and the process for filling prescriptions in network (i.e. mail order) becomes more and more onerous, people will give up and just go to their neighborhood out-of-network pharmacy to fill prescriptions and pay full price out of pocket.

The second reason is that they are trying to drive him away. They hope he will get fed up with Anthem and search for a different insurance company, hoping for better coverage and service elsewhere. They don’t want him for a customer. However, Michael has learned that the pharmacy benefit managers like Express Scripts who command huge market share across the country are racing to the bottom together to provide the same inadequate coverage and terrible service to customers like Michael who have the bad manners to actually need health care and medication.

So you tell me, who is too big? Is it ColoradoCare, which will have the ability to shift away from perverse incentives that result in inadequate coverage and terrible service? Or is it Anthem (CEO compensation in 2015 was $13.6 million) and Express Scripts (CEO compensation in 2015 was $14.8 million)? Is it ColoradoCare that is too big, or is it Anthem, which has donated $1 million to defeating ColoradoCare?

Virginia Gebhart lives in unincorporated Boulder County.

http://www.dailycamera.com…

Middlemen take rebates, driving up drug prices

Secret Rebates: Why Patients Pay $600 for Drugs That Cost $300

By Robert Langreth
Bloomberg, October 5, 2016

Behind the scenes, drugmakers gave insurers and benefit managers more than $100 billion a year in rebates and other discounts to reduce the skyrocketing cost of drugs.

No one balks when insurers get rebate checks after they actually paid for a drug. But, increasingly, Americans are forced to pay for medication out of their own pockets — at least for part of the year.

That’s because more are enrolling in insurance plans with deductibles as high as $4,000 for a family. In such cases, insurers receive the rebates even though they haven’t paid a dime.

Eight pharmaceutical companies contacted by Bloomberg, including Novo Nordisk A/S, which makes NovoLog; Merck & Co., Pfizer Inc. and EpiPen maker Mylan NV, said their contracts with benefit managers and insurers generally require rebates be paid to them on all prescriptions, even when the patients pay the full cost because of high deductibles.

On a $600 prescription, “if the patient has a high-deductible plan, then the insurer could pocket the $300 rebate and not share it with the patient,” says Adam Fein, president of Pembroke Consulting, which advises drugmakers on sales and distribution.

But why not break up the rebate checks and send the cash back to the patients who paid for the drugs? Representatives of corporate health plans say it would be impractical to do so because they get the money months after employees bought the drugs.

Says Laurel Pickering, chief executive of the Northeast Business Group on Health, a coalition of large employers: “It would be very difficult to figure out how to administer that.”

http://www.bloomberg.com…

***

Comment:

By Don McCanne, M.D.

Drug rebates go to insurers. How does this work? Well, let’s go through this step by step.

1. The patient buys a health insurance plan with a high deductible – a plan that provides drug benefits.

2. The patient is prescribed a $600 medication before having met the deductible.

3. The patient purchases the drug at the pharmacy for the retail price of $600.

4. The insurance company (or pharmacy benefit manager) has previously made a confidential deal with the drug manufacturer that a 50% rebate will be paid to the insurer in exchange for including that drug in the formulary of drugs that are approved for coverage under the plan.

5. The 50% rebate – $300 – is paid to the insurer who keeps it.

6. None of the $600 is refunded to the patient.

7. The pharmaceutical firms jack up the retail prices of their drugs to pay for the rebates and to increase profits.

8. Net result:

  • The insurance provided no benefit to the patient.
  • The insurer paid out nothing.
  • The patient paid $600 for a drug that had a negotiated price of $300.
  • The insurer pocketed $300 which rightfully belonged to the patient.
  • We all pay more for drugs because of these secret deals.

The insurers may argue that they should be rewarded for negotiating the drug discount for the patient. But scooping up the entire discount and running away with it?

Will somebody please explain why our policymakers continue to demand that we maintain the middleman role for the private insurers in our health care financing system? It’s a great deal for the insurer, but wasn’t reform supposed to be about the patient?

Research cited by Trump on numbers of Canadian medical tourists criticized

By Kelly Grant
The Globe and Mail, Oct. 12, 2016

The number of Canadians who traveled abroad for non-emergency medical treatment dropped slightly last year, according to a new report from a think tank whose past research Donald Trump’s campaign cited to support his debate-night claim that when Canadians need “a big operation,” they often head for the United States to avoid long waits at home.

The Fraser Institute’s latest report, released Wednesday, found that an estimated 45,619 Canadians left the country for elective medical care in 2015, down about 13 per cent from 52,513 in 2014.

That works out to about 1 per cent of all Canadian patients receiving non-emergency care outside of Canada’s borders last year, a minor decrease from an estimate of 1.1 per cent the year before.

The right-leaning institute’s new estimates come on the heels of Mr. Trump name-dropping Canadian health care in Sunday night’s presidential debate, and not in a positive way.

The Republican nominee was in the midst of trashing the Affordable Care Act – better known as Obamacare – when he accused his Democratic rival Hillary Clinton of wanting a single-payer health system, which he said, “would be a disaster, somewhat similar to Canada.” (Ms. Clinton is promising to improve Obamacare, not implement a single-payer model.)

“And if you haven’t noticed the Canadians, when they need a big operation, when something happens, they come into the United States in many cases because their system is so slow,” Mr. Trump said. “It’s catastrophic in certain ways.”

The Washington Post reported that the Trump campaign later backed up that assertion by pointing to the Fraser Institute’s estimates on Canadians travelling abroad for medical care in 2014, the most recent year for which figures were available at the time.

The Trump campaign did not respond to a request for comment.

Even before they became a footnote to an American presidential debate, the Fraser Institute’s estimates on wait times and on Canadians seeking medical care abroad have been hotly disputed, with critics calling the institute’s methods flawed and its conclusions suspect.

“They don’t actually measure how many patients leave,” said Karen Palmer, a health-policy analyst and adjunct professor at Simon Fraser University in British Columbia. “They [ask doctors to] guess.”

Jeremy Snyder, an SFU professor who contributes to the school’s medical-tourism research group, said he was concerned that the Fraser Institute report presents a “very speculative narrative,” – namely that long lines at Canadian hospitals and doctors’ offices are to blame for patients going abroad for care, even though the think tank did not ask that question directly.

The Fraser Institute draws its estimates from an annual survey of medical specialists about wait times. The survey includes one question about medical tourism: “Approximately what percentage of your patients received non-emergency medical treatment in the past 12 months outside Canada?”

About 20 per cent of the 11,292 specialists the the Fraser Institute contacted responded to the most recent survey.

Bacchus Barua, a senior economist at the Fraser Institute’s Centre for Health Policy Studies, acknowledged the limitations of the survey, but said the findings are still useful given how few data exist on Canadians travelling abroad for elective medical care.

“Let’s say it’s lower than this estimate,” he said. “Does that really change what the issue at hand is? And that’s that there are Canadians travelling abroad to receive treatment that they cannot find here.”

One 2002 paper, published in the journal Health Affairs and circulated widely online after Sunday’s presidential debate, found that when it comes to Canadians heading to the U.S. for medical care, the numbers, “are so small as to be barely detectible relative to the use of care by Canadians at home.”

http://www.theglobeandmail.com…

PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

Gerald Kominski describes the real-world public option

What Would A Public Insurance Option Look Like In California?

By Pauline Bartolone
California Healthline, October 11, 2016

The “public option,” which stoked fierce debate in the run-up to the Affordable Care Act, is making a comeback — at least among Democratic politicians.

The proposal to create a government-funded health plan, one that might look like Medicare or Medicaid but would be open to everyone, is being reconsidered at both the federal and state levels.

Amid news that two major insurers were pulling out of Affordable Care Act exchanges, 33 U.S. Senators recently renewed the call for a public option. The idea was first floated, then rejected, during the drafting of the federal health reform law, which took effect in 2010.

Democratic presidential candidate Hillary Clinton includes a public option in her campaign platform, and President Barack Obama urged Congress to revisit the idea in a JAMA article published in August.

Dave Jones, the elected regulator of California’s private insurance industry, endorsed the idea of a state-specific public option in an interview last month with California Healthline, though he did not specify how it might work.

California may be uniquely poised for a public plan — but the state may not need one, according to Gerald Kominski, Director of the UCLA Center for Health Policy Research.

“It would look just like an insurance plan,” except that the state would pay for medical care, potentially set up the network of doctors and hospitals, and make rules about paying providers, Kominski said. Private industry could be involved in these or other aspects of running the health plan, much as they do in Medicare Advantage and managed care Medi-Cal.

Creating a public option in California may not be necessary at present, since the state currently has sufficient competition in the private insurance market, Kominski said. But he said policymakers could choose to implement a public option now as a backstop against a potential future scenario in which private insurers scaled back their California plan offerings.

California Healthline interviewed Kominski to better understand how a public option could work in California and on a national level. The interview was edited for length and clarity.

Q: When we talk about a public option, do we mean a health plan for which the government takes the risk, sets the coverage rules and pays out the claims — and enrollees pay premiums just as they would to an insurance company?

That is what the public option would be. But that still leaves out the answer to a lot of questions about how actually that would occur. How would a government agency essentially become the insurer? So we have two examples. We have the Medicare program and we have the Medicaid program.

Medicare establishes the rules. It contracts with insurance companies to pay the bills. And that’s the way that Medicare has operated for over 50 years.

Now we have Medicare Advantage plans, where the contracting is not to pay bills but is basically contracting with insurers to bundle the services. And rather than pay the doctors and hospitals, the government pays the insurer and puts the insurer at risk.

Q: Insurers have opposed this idea in the past, and they’re opposing it again now that it’s being raised by members of Congress.

Private insurers could participate as administrators or providers on behalf of the state. But here’s one concern that I have with that model: California has four large insurance companies in the exchange that account for about 90 percent of the market.

Let’s say the state of California wanted to create a public option and hire an insurance company to administer that product for it. What would be the reason or the incentive for any of those companies to agree to be the plan administrator for the public option when the public option would be competing with the product that they’re already offering? They would be competing with themselves.

Q: Some provider groups may be opposed to a public option because they say that government programs like Medi-Cal pay very little and they believe a public option plan would also pay little. Is this necessarily the case that a government program would pay low rates?

It’s not necessarily the case, but it is in fact what we observe in the Medicare and the Medicaid/Medi-Cal programs.

Q: Do you think a publicly subsidized or operated program would run the risk of having narrower provider networks because of lower payments to providers?

I don’t want to pre-judge that. If the anecdotal evidence that I’ve been told over the last couple years is indicative of what’s going on statewide, then Covered California plans are already paying somewhere around Medicare rates.

Q: Do you think a public plan would help bring down costs in the health care system by negotiating for lower payments to hospitals and doctors?

I think that is possible in other areas of the country, where there are markets with one or two health insurance plans in the exchange. I think California has one of the most competitive ACA marketplaces. And so would the public option in California dramatically reduce premiums? I think the answer is no. It would have little or no effect.

For some people, the advantage is that we think that the public option’s going to be around because the state’s not going to back out of its commitment, whereas private insurers come and go in the marketplace.

Q: Do you think we need a public option in California for any other reason?

In my opinion, a public option isn’t necessary in California, but it might nevertheless be worth exploring as a longer-term mechanism for guaranteeing access and an alternative to relying solely on the private insurance market.

Q: Is there something about California’s health care system that uniquely primes the state for a public option?

I think so. One of the things that’s unique about California is the high percentage of managed care enrollment. The public option in California would probably include or be based on a managed care model and Californians are pretty receptive to that model.

Q: So if the public option could include private insurance, why are the insurers so opposed?

Well, the simple answer is they don’t want more competition. And again it goes back to, why was this battle so intense during the development and enactment of the ACA back in 2009 and 2010? The insurance industry said we cannot compete with a plan, a government plan, that pays doctors and hospitals using Medicare fees or fee schedules.

You remember the fundamental rule of business is you don’t want more competition. You want the market to yourself.

Q: Do you think it would be more effective or easier to implement a public option at a state or national level?

Well that’s where you can’t ignore the political environment. And so the short answer is in the current political environment, doing something at the national level is extremely difficult. Even though there might be arguments to develop a public option at the national level, it’s very challenging in the current political environment to get the agreement.

Q: Is there something that’s more efficient about a national public option?

Potentially. It’s economies of scale. You know, the larger your potential market nationally, the lower the potential costs per person. You just get administrative savings and efficiency. But it’s not easy to create a national program. One issue that’s challenging is how to put together a national network of doctors and hospitals that would participate. That’s a lot of work.

Q: Do you think the idea of a public option is more viable now than it was when it was debated before and ultimately stripped from the Affordable Care Act?

Well, I think that what makes it more attractive right now is the fact that we’ve got two large insurance companies that are pulling out of the exchange marketplaces. And because of that…the idea of a public option to provide stability and protection for people in the exchanges has resurfaced. And I think with good reason.

http://californiahealthline.org…

***

Comment:

By Don McCanne, M.D.

Many public option supporters have this concept that the government would create a public insurance plan that would successfully compete with private insurance plans, eventually displacing them and becoming a single payer national health program. Is this realistic?

Gerald Kominski describes for us precisely what a public option really would look like. Clearly it would be nothing more than one more player in our inefficient, fragmented multi-payer system, only adding further to the administrative excesses that have created a tremendous financial burden for our health care system.

For those who usually skip the source in these messages and only read the comment, you should make an exception this time. It is important to understand that the public option would be crafted to resemble private plans with provider networks. It would not be a free standing public program, like Medicare, if for no other reason than the fact that you could not get the majority of physicians and hospitals to agree to participate unless you promised higher payment rates which then would make the premiums even less affordable. Further, the private insurance industry would be there to ensure that the design of the government insurance product would place it at a competitive disadvantage, just as they did with the co-ops.

Besides, competition is a feature of private markets. A public program is a model based on service. A public insurance model designed for competition in private markets, as Gerald Kominski has described, would be very different than a public model designed to remove financial barriers to care, such as a single payer national health program.

Really. Try to imagine a public option designed to become a single payer. It would have its own separate risk pool, funded with premiums instead of progressive taxes, subject to adverse selection, with pressure to reduce provider payment rates to keep the premiums affordable, with consequent difficulties in ensuring access to an adequate numbers of providers, and greatly burdened with administrative complexity. When you try to design such a system, you keep tweaking it until you end up with the model Gerald Kominski has described – just another private-style plan, public in name only.

It is no wonder that Professor Kominski said to his UCLA health policy students (in a recent Quote of the Day), “I believe that there are people in this room who will one day see a single payer system in this country.”

Letter: Healthcare solution

By Dr. Arthur J. Sutherland III
The Commercial Appeal, Oct. 9, 2016

The CA editorial on Sunday, Oct. 2 needs correcting (“Obamacare needs tweaks, not scrapping”). The editorial was a response to the Blue Cross Blue Shield decision not to sell insurance on the federal ACA exchanges next year in three of Tennessee’s largest cities.

For starters, the ACA was never intended to cover everyone in the U.S. It was just another patch in our dysfunctional and costly healthcare markets which are run for profit by the insurance and pharmaceutical industries. In addition, the data shows that the ACA has not controlled cost, but has added to the problem of affordability for the public.

Why do you think BC/BS canceled coverage in Knoxville, Nashville, and Memphis? It was to avoid the larger concentrations of poor people who live in metropolitan areas who have the most need for adequate healthcare. BC/BS is trying to “cherry pick” customers who are relatively healthy or young, and who would not have the volume of claims for medications or care that a less healthy poorer population experiences.

Senators Alexander and Corker want to continue to use the free market myth to tweak the system, but the insurance and pharmaceutical industries have failed us. Americans know this, and want change that will create equity in healthcare delivery.

What is my plan? Twenty thousand physicians, nurses, and other healthcare providers support Improved & Expanded Medicare for All.

http://www.commercialappeal.com…