PNHP

The Better Medicare Alliance is not what it appears

The Better Medicare Alliance is not what it appears

Former Rep. Allyson Schwartz is fronting for a phony front group

By Wendell Potter
The Center for Public Integrity, April 27, 2015

The health insurance industry took advantage of Washington’s infamous revolving door last week when it named former Rep. Allyson Schwartz of Pennsylvania, perceived by many to be a liberal Democrat, as the face of its latest K Street-operated front group.

Schwartz, a former five-term member of Congress who made an unsuccessful bid for Pennsylvania governor last year, announced in an email blast Tuesday that she had found work again, not back home but back inside the Beltway. “Today I will begin as President and CEO of the Better Medicare Alliance,” she told her “friends and supporters.”

The Better Medicare Alliance is a so-called 501(c)(3) nonprofit that appears to have been created with funding from insurance companies  by APCO Worldwide, a Washington influence firm with a long history of running front groups for its clients. I worked with APCO on several projects during my years at Cigna.

The Better Medicare Alliance’s raison d’etre is to widen the federal spigot of taxpayer dollars already gushing into the bank accounts of insurance companies that operate Medicare Advantage plans, those privately run alternatives to traditional Medicare. Enrollment is concentrated in a small number of companies, among the biggest of which are for-profit insurers UnitedHealth Group, Humana and Aetna.

As the Center for Public Integrity has reported extensively over the past year, the federal government for years has overpaid Medicare Advantage insurers, which has enabled the companies to better reward their shareholders. Insurance firms have also used the overpayments to add benefits not covered by traditional Medicare, like hearing aids, and to offer lower copayments.

Insurers that participate in the Medicare Advantage program devote big chunks of their advertising and sales budgets to lure seniors away from the traditional Medicare program, which costs taxpayers less. For many seniors, the marketing is irresistible. Enrollment in Medicare Advantage plans jumped 10 percent between 2013 and 2014. Thirty percent of Medicare’s 54 million beneficiaries are now in a Medicare Advantage plan.

Insurers insist that Medicare Advantage plans represent a good value for seniors and the country. They say, for example, that because of the managed care techniques they use, they are better able to coordinate care for seniors with chronic conditions.

A downside rarely mentioned is that many doctors and health care facilities, including nursing homes, refuse to participate in Medicare Advantage provider networks. Other providers that might want to participate are often excluded. My own mother didn’t fully appreciate the consequences of her Medicare Advantage plan’s limited network until recently. She decided to switch back to traditional Medicare so she could go to a nursing home of her choice with high quality ratings.

“The purpose of the Better Medicare Alliance is to bring together a national coalition of health plans, providers, advocates and beneficiaries to support and strengthen Medicare Advantage,” wrote Schwartz. Despite being a favorite of Emily’s List and other liberal groups, Schwartz received a third of the $16 million she raised in campaign contributions during her career from people and companies in health care and insurance and from “lawyers and lobbyists,” according to OpenSecrets.org.

Having worked with numerous front groups in the past, I’m betting that the real purpose of the Better Medicare Alliance is to strengthen the profits of health insurers, many of whom contributed to her various campaigns, by making sure that proposed cuts to Medicare Advantage plans never get implemented.

Even though the Better Medicare Alliance lists several nonprofit organizations as allies on its website (and gives them equal billing to Aetna, Humana and UnitedHealth Group), I recognized many of them – the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation and the Healthcare Leadership Council – as groups ever ready to aid and abet the insurance industry.

As an industry executive, I worked with every one of them during the various campaigns we waged whenever a proposed law or regulation surfaced somewhere that might have hurt profits. Know this, though: while those organizations were willing to lend their names to give our front groups the appearance of being genuine coalitions, they expected us to kick in most if not all of the money to cover the front groups’ expenses.

So how can I be so sure the Better Medicare Alliance is a front group, aside from the mention of the usual suspects as allies? There are these other tell-tale signs: no listing of a physical address or phone number on its website; no mention of employees other than Schwartz; no board of directors (I wanted to know who actually hired Schwartz and who she answers to); no apparent way to reach anyone there other than through a generic email address. (The questions I submitted to the group last Wednesday have still not been answered.)

I did finally find the name of a real person, someone I had worked with often during my days in the industry, not on the group’s website but on its press releases. He’s Bill Pierce. Senior Director of, you guessed it, APCO Worldwide.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.

http://www.publicintegrity.org/2015/04/27/17240/former-rep-allyson-schwartzs-new-group-better-medicare-alliance-not-what-it-appears

See also:

Allyson Schwartz named CEO of Medicare Advantage lobbying group

By Bob Herman
Modern Healthcare, April 21, 2015

(Excerpt)

The Better Medicare Alliance bills itself as a not-for-profit, nonpartisan group. It has the financial backing of some of the largest healthcare companies that directly profit from Medicare Advantage. UnitedHealth Group, Humana and Aetna – three of the biggest Medicare Advantage insurers in the country – are all founders of the lobbying group. The American Medical Group Association, which represents physician groups and health systems, and conservative pro-business groups such as the U.S. Chamber of Commerce are also Better Medicare Alliance members. 

The Better Medicare Alliance was one of the most outspoken groups during this year’s Medicare Advantage rate-setting process. The CMS proposed decreasing 2016 baseline Medicare Advantage rates to insurers by 0.95% in February. After six weeks of lobbying – which included vocal bipartisan support for higher rates and bus ads – the CMS decided to raise baseline rates by 1.25% on average. 

“The more cuts there are, the more reduction there is in value,” Krista Drobac, former interim executive director of the Better Medicare Alliance, told Modern Healthcare in February. 

Schwartz received more than $2.1 million in campaign contributions from the healthcare sector during her congressional career, according to OpenSecrets.org. Health insurance companies and HMOs represented more than $215,000 of that total.

full: http://www.modernhealthcare.com/article/20150421/NEWS/150429979

ACA exchanges and private insurance brokers struggle financially

Almost half of Obamacare exchanges face financial struggles in the future

By Lena H. Sun and Niraj Chokshi
The Washington Post, May 1, 2015

Nearly half of the 17 insurance marketplaces set up by the states and the District under President Obama’s health law are struggling financially, presenting state officials with an unexpected and serious challenge five years after the passage of the landmark Affordable Care Act.

Many of the online exchanges are wrestling with surging costs, especially for balky technology and expensive customer call centers — and tepid enrollment numbers.

Most exchanges are independent or quasi-independent entities. For most, the main source of income is fees imposed on insurers, which typically are passed on to consumers.

http://www.washingtonpost.com/national/health-science/almost-half-of-obamacare-exchanges-are-struggling-over-their-future/2015/05/01/f32eeea2-ea03-11e4-aae1-d642717d8afa_story.html

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Insurance Brokers in Calif., Other States Struggling Under ACA

California Healthline, May 4, 2015

Insurance brokers in California and other states have struggled financially since the passage of the Affordable Care Act.

In California, more than 12,600 insurance agents are certified to sell health plans through Covered California. Agents assisted 43% of individuals and families who signed up for coverage during the exchange’s second open enrollment period.

Susie Fabrocini — an insurance broker and owner of Reseda-based Great Life Financials — said selling health insurance is becoming a less sustainable business under the ACA, in part because customers seek significantly more assistance.

http://www.californiahealthline.org/articles/2015/5/4/insurance-brokers-in-calif-other-states-struggling-under-aca

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Comment:

By Don McCanne, MD

The insurance exchanges established under the Affordable Care Act function much like an insurance broker, adding additional administrative costs beyond the administrative costs of the insurers and the costs of the administrative burden placed on the health care professionals and institutions. Private insurance brokers in many states also may sell exchange plans, and, of course, they have their own overhead expenses.

Experience is showing that these additional administrative costs are significant, and the exchanges and brokers are struggling with those costs. The costs are then passed on to the purchasers of the health plans in the form of higher premiums. When the the health care system of the United States was already an outlier with outrageous administrative costs, it seems disingenuous that the reform design selected would add to that administrative burden.

With a single payer, improved Medicare for all, state and federal insurance exchanges and private insurance brokers would not be involved at all. Just as with our current Medicare program, enrollment would be a simple, once-in-a-lifetime process, efficiently accomplished at negligible cost by a government bureaucrat.

For those opposed to government bureaucrats, how could you pass up that kind of a discount?

British Medical Association backs bill to reinstate NHS

As politicians squabble over NHS funding figures, the British Medical Association’s Council has backed the principles of radical legislation which would get the costly ‘market’ out of the NHS

By Allyson Pollock
Our NHS, Open Democracy (U.K.), April 14, 2015

The stated policies of the British Medical Association are to end the market in health care, oppose the purchaser provider split, and to reinstate the Secretary of State’s duty to provide universal health care throughout England. 

The BMA has made its position clear – not only in its general election briefings but in full page advertisements where it has declared that its doctors support a “publicly funded, publicly provided” National Health Service.

The BMA has now gone as far as setting out the principles of the legislation it would expect to see after the election.

On 11th March 2015, the BMA’s Council completed its examination of two sets of legislative proposals on the NHS set out in Private Member’s Bills laid before the House of Commons. 

The purpose of its examination was to analyse two bills – the NHS (Amended Duties and Powers) Bill, presented by Labour MP Clive Efford and supported by 11 Labour MPs; and the proposed NHS Reinstatement Bill subsequently presented – on 11th March 2015 – as the NHS Bill 2015 by Green MP Caroline Lucas and supported by 11 Liberal Democrat, Labour, SNP and Plaid Cymru MPs.

The BMA Council established a large working group, of which I was a member, to identify which proposals in the Bills were in line with and would further BMA policies.

In response to the reports of that working group the Council unanimously agreed to support legislation which furthers implementation of strong and clear policies of the Association concerning:

  • restoration of the Secretary of State’s duty to provide and secure provision of services in accordance with the National Health Service Act 2006 for the purpose of the comprehensive health service that it is his or her duty to promote, and to provide listed services throughout England under section 3 of that Act,
  • limits on the Secretary of State’s powers over operational matters and day-to-day running of the health service,
  • abolition of the purchaser-provider split, the internal and external market and competition,
  • the ending of Private Finance Initiative (PFI) in the NHS,
  • the exemption of the NHS from Transatlantic Trade and Investment Partnership (TTIP), and
  • the moral unacceptability of the Immigration Health Charge
  • ensuring public accountability
  • supporting national terms and conditions.

BMA Council also unanimously insisted that where legislation to abolish the purchaser-provider split, the internal and external market and competition involves structural changes the legislation must be implemented in a flexible and devolved way in order to minimize concerns about potential disruption that might result from implementation of those policies.

BMA policy is made by the annual representatives at its Annual Representative Meeting. 

The BMA is not alone. The King’s Fund has recognised the ‘disastrous’ impact of the Health & Social Care Act, reporting recently that services are deteriorating faster than at any time since the early ’90s, with waiting lists at a record high, morale low, and GP and mental health services under severe strain.

Another Kings Fund report released in the last month has also set out how without a re-organisation that scraps the autonomous nature of Foundation Trusts, it will be impossible for the NHS to avoid EU competition law (even without TTIP).

There is growing concern too over Osborne’s surprise announcement which would shift £6bn of NHS and social care funding and decision making to the yet to be elected Manchester mayor. Responding to that announcement, Dr Mark Porter, Chair of the British Medical Association, said: “We need assurances on who is responsible if these changes go wrong. Doctors believe the Secretary of State for health should have the duty to provide a universal and comprehensive health service.”

Only legislation will do this. And the principles of what is needed is set out in the NHS Bill 2015, which is the product of over two years work by the Campaign for NHS Reinstatement.

It is highly significant that the BMA has said it will support legislation to support its policies. Now it is up to voters to demand that their candidates support the NHS Bill 2015 and the legislation required to restore the duty to provide in the first Queen’s Speech of a new parliament. There is very little time left.

To contact your parliamentary candidates please visit www.nhsbill2015.org and TAKE ACTION.

Allyson Pollock is professor of public health policy and research at Queen Mary, University of London and was previously Director of the Centre for International Public Health Policy at the University of Edinburgh. She is a leading authority on public health and the implications of privatisation for public services, and the author of NHS plc, on the privatisation of our health care under New Labour.

https://www.opendemocracy.net/ournhs/allyson-pollock/bma-backs-principles-of-nhs-reinstatement-bill-to-save-nhs-from-destruction-b

PNHP note: For a May 2, 2015, update on the campaign for the NHS Bill 2015. including a petition, click here.

Vermont Activists Battle Democratic Governor for Single-Payer Health Care

By Steve Early
In These Times, April 23, 2015

Liz Nikazmerad is a rarity in American labor: a local union president under the age of 30, displaying both youth and militancy. For the last two year years, she has led the 180-member Local 203 of the United Electrical Workers (UE), while working in the produce department of City Market in Burlington, Vermont. Thanks to their contract bargaining, full-time and part-time employees of this bustling community-owned food cooperative currently enjoy good medical benefits.

But that wasn’t always the case in Nikazmerad’s past non-union jobs, nor is it any assurance that UE members won’t be forced to pay more for their health care in the future. To curb medical cost inflation and related cost-shifting to workers, the UE has long advocated that private insurance plans be replaced with publicly funded universal coverage.

Four years ago, a newly elected Vermont governor, Peter Shumlin, took a promising first step in that direction at the state level. His Democrat-dominated legislature passed Act 48, which laid the groundwork for creating a comprehensive public insurance plan called Green Mountain Care (GMC).

Not all activists deemed GMC to be truly “single-payer,” because of potential legal or political obstacles to the inclusion of Vermonters currently covered through Medicare, the Veterans’ Administration, and even some “self-insured” plans offered by local employers. However, Act 48’s blueprint for getting everyone else into a more rational, cost-effective healthcare system, financed by taxes, was generally hailed as a great breakthrough.

Unfortunately, the Affordable Care Act (ACA) first required Vermont to operate a private insurance exchange until 2017, when a federal waiver permitting further experimentation might be granted. Despite this delay, Shumlin was still reassuring Vermonters, as recently as last fall, that a brighter health care future lay just a few years ahead.

By January 8, when the governor began his third term, that promise had dimmed so much that Liz Nikazmerad and several hundred others weren’t there to applaud his inauguration in Montpelier. Instead, frustrated advocates of health care reform staged a sit-in at the state capitol, chanting and singing, unfurling banners and refused to leave in protest against the governor’s abrupt abandonment of universal health care six weeks after his re-election.

“People had fought for this a long time,” Nikazmerad says. “It was a huge win and to have the rug yanked out like that was very upsetting. People were very emotional about it.”

Escalating labor protests

By the end of day, the UE leader and 28 others—now known as “The Statehouse 29”—faced multiple criminal charges, including resisting arrest, despite the peaceful nature of their capitol sit-in. The cases against 18 were later dropped; other participants settled by paying a fine or promising to do community service work. Their still controversial reproach to the governor has, since January, become the first in a series of angry labor sorties to Montpelier.

During the current legislative session, the bitter recriminations over the governor’s health care retreat have morphed into broader controversies about workers rights, contract concessions, and what the Vermont Progressive Party (VPP) calls Shumlin’s “austerity budget.” On April 11, 500 state employees, school teachers and other union members rallied at the state house to protest threatened budget cuts and state worker lay-offs. Among the demonstration sponsors were the VPP, the Vermont State Employees Association (VSEA), and the Vermont Workers Center, which is also building for another big labor gathering on May Day in Montpelier.

“I’m tired of being asked to give back more and more of my wages and benefits, “ state highway department plow driver Ed Olsen told the crowd. “The state always wants to balance the budget on the backs of hard-working Vermonters.”

Alison Sylvester, a leader of the Vermont NEA, added her union’s voice to the “Fight Back” rally and hailed public teachers successful defense of their right to strike. After a brief public school work stoppage in South Burlington last fall, Governor Shumlin publicly endorsed the idea of banning such strikes, which have been legal in Vermont for fifty years. It took several months of frantic lobbying by hundreds of teachers to kill this idea, by a two-to-one margin, in a Vermont House vote in early April.

About-face on single payer

Shumlin’s most publicized betrayal of past labor allies occurred, with little advance notice, on December 17. That’s when he called a press conference and declared that “now is not the time to ask our legislature to take the step of passing a financing plan for Green Mountain Care.” The 58-year old governor, a multi-millionaire former business owner, had already postponed the day of reckoning on how to fund universal coverage for more than two years, until he was narrowly elected for the third time. (In last year’s gubernatorial race, Shumlin greatly outspent his Republican challenger, but won by only 2,500 votes; his 46 percent showing would not have been sufficient without conservative vote-splitting by a Libertarian candidate.)

The 2015 session of the legislature was expected to take up the challenge of Act 48 financing in January. With the acquiescence of key legislators, Shumlin short-circuited that debate by issuing a highly unfavorable status report of his own, which seemed to validate past single-payer criticism by the Vermont GOP and conservative Democrats. According to Shumlin, the latest projected cost of universal coverage would double the state budget in its first year alone, while requiring onerous new payroll and income taxes.

“In my judgment,” the governor stated, “the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

The VWC, which helped mobilize statewide support for passage of Act 48 four years ago, countered the governor’s claims by releasing its own plan for financing Green Mountain Care in a manner more equitable than the state’s current market-based system.

One hundred economists endorsed the VWC approach, which relies on progressive taxation. The VWC also struck back with a clever “whiteboard” video, entitled “The Time is Now: Healthcare Financing for Vermont, Explained in Three Minutes.” But, of course, neither that quick tutorial on health care reform math or the VWC’s full report garnered the media attention—or had the same legislative clout—as Shumlin’s self-demolition of Green Mountain Care.

From bad to worse in Montpelier

In his state budget address in January, Shumlin had another surprise for his past labor friends. He presented the 5,500-member VSEA with a choice between re-opening its current contract and agreeing to give-backs or face hundreds of layoffs. These steps were necessary, he announced, to close a fiscal year 2016 budget deficit, projected to be $112 million, which soon become the main preoccupation of his administration and its legislative allies.

Legislators representing the Vermont Progressive Party (VPP), the nation’s most successful third party formation, urged their Democratic colleagues to raise needed revenue by capping tax deductions for the wealthiest Vermonters and taxing capital gains on the same basis as earned income.

Neither the Democratic leadership nor the governor wanted to do that. So his administration is instead seeking $8.8 million in state worker concessions, and the Democrat-controlled House has already approved cuts in social programs like heating assistance for low-income households.

In 2008-9, VSEA members agreed to a 3% pay cut, followed by a freeze, under Shumlin’s Republican predecessor. When Shumlin ran for governor in 2010, he promised to be more labor-friendly and find better ways to pay for state programs, including the projected single-payer-like plan. Now he is scapegoating unions that backed him and health care reform, complaining that state workers’ scheduled pay hike this year is unreasonably high. “There aren’t too many Vermonters who are getting a 5% increase this year,” he told the press on April 11.

Shumlin’s about-face on Green Mountain Care reflected more than revised estimates of its cost and feasibility. The troubled 2013 rollout of Vermont Health Connect, the state’s ACA-mandated private insurance exchange, adversely affected public perceptions of the longer-term goal of single payer. Among those most upset were lower-income people previously covered by state-subsidized plans who ended up paying more out-of-pocket when insured through the new exchange.

“Over the last few years, the Shumlin administration hasn’t done anything to give Vermonters confidence that we could handle being innovators in health care,” says Chris Pearson, a Progressive state rep and vice-chair of the House Committee on Health Care. “There were just too many bad headlines about the nightmare of enrolling, computer problems and cost over-runs.”

As a result, the popularity of Green Mountain Care is not what it was even a year ago. Pollsters working for the Vermont NEA found 55 percent of those surveyed in favor of the concept then, while 42 percent were opposed. A slight majority remained in favor even if implementation required, as it would, a large tax increase to capture health care system revenue currently coming, in myriad forms, from individuals and employers, in both the private and public sector.

After the recent flurry of negative publicity about Green Mountain Care—much of it generated by Shumlin’s own disputed cost estimates— 64-percent of Vermonters polled in February said they supported the governor’s new position, only 20 percent were opposed, and 10 percent were unsure. Even a majority of Democrats polled said they favored his abandonment of single payer, for the time being.

Inside the state legislature, friends of Act 48 still hope to emerge from this legislative session with an authorized study of the VWC’s financing plan, the governor’s contested findings and a publicly funded primary care plan that has been proposed by some single payer advocates as an incremental step toward Green Mountain Care.

Organizing Challenges Ahead

Sometime in May, the legislative wrangling in Montpelier over budget cuts, health care, and workers rights will be over for this year. But the challenges facing Vermont Progressives and labor-community organizers will remain daunting. Chief among them is sustaining a now seven-year-old campaign to make “healthcare a human right” after such a demoralizing setback. While continuing to assist private and public sector workers involved in strikes and contract fights, the Vermont Workers Center plans to do more grassroots organizing around the shortcomings of Vermont Health Connect coverage.

Within the VPP, its statewide organizer Kelly Mangan has “gotten a lot of member feedback about running a candidate for governor next year.” This is something her third party refrained from doing in the last three election cycles, to avoid putting a Republican in office—who would have opposed Act 48 from the outset or shelved it sooner than Shumlin did.

Now, the growing estrangement of labor voters from the Democrats could lead to Shumlin’s replacement by a Republican. One likely candidate for the job is Lieutenant Governor Phil Scott, the affable GOP incumbent who defeated Vermont Progressive Party (VPP) candidate Dean Corren last November by a 62 to 34% margin, with no Democrat on the ballot.

Any backlash against Vermont Democrats next year, though, might be salved by further VPP legislative gains. Last fall, seven Progressive state reps and three senators were elected, creating the VPP’s largest delegation in Montpelier ever. In March, Progressives captured four seats on the Burlington City Council, where the VPP has jousted with a centrist Democrat mayor.

But, next year, personal health problems may prevent state senator Anthony Pollina, the VPP’s most experienced statewide standard-bearer, from running for governor. (In 2008, he placed second in a three-way race). At the moment, Vermont’s most successful progressive politician, U.S. Senator Bernie Sanders, seems more intent on seeking executive office higher than any available in Montpelier, where, as governor, he could help get Vermont back on the single-payer road.

In his not-yet-official campaigning for the White House, Sanders speaks regularly to out-of-state audiences about the need for a “political revolution.” Unfortunately, on his own home turf, the wrong kind of revolution may be brewing, fed by working class alienation from pro-corporate Democrats.

http://inthesetimes.com/working/entry/17871/vermont_activists_battle_democratic_governor_for_single_payer_health_care

The Florida House Speaker’s opposition to Medicaid

Florida House Goes Home Early Over Medicaid Impasse

By Lynn Hatter, WFSU
Kaiser Health News, April 29, 2015

The Florida House – at odds with the state Senate over the expansion of Medicaid – abruptly ended its session three days early on Tuesday, leaving hundreds of bills unrelated to health care unfinished.

The Republican-led state House is firmly against Medicaid expansion, while the Republican-led state Senate, which is still in session, supports it. 

http://kaiserhealthnews.org/news/florida-legislature-goes-home-early-over-medicaid-impasse/

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Why I oppose the expansion of Medicaid

By Steve Crisafulli, Speaker of the Florida House of Representatives
Miami Herald, April 29, 2015

We oppose expanding Medicaid because it is a broken system with poor health outcomes, high inflation, unseverable federal strings and no incentive for personal responsibility for those who are able to provide for themselves.

The Florida Senate disagrees and, unfortunately, has partnered with the Obama administration to demand Medicaid expansion. They suggest existing safety-net funding (the Low Income Pool, or LIP) and our state budget are tied to federal healthcare policy goals.

If we lose the federal LIP funds, we can create a more limited, state-funded program or we can live without LIP by pursuing other policy options aimed at reducing costs and increasing access to quality healthcare.

Such options include ideas that the Florida House has championed for years. We support expanding the use of telemedicine and expanding the scope of practice for advance-practice nurses to treat patients. We support encouraging direct primary care, which restores the doctor/patient relationship so healthcare is available at dramatically lower costs. We support expanding medical malpractice reform to reduce frivolous lawsuits that increase healthcare costs and expanding choices for where patients get their healthcare by eliminating unnecessary government regulations. We support breaking geographic monopolies for hospitals. We support allowing consumers to buy health insurance across state lines.

http://www.miamiherald.com/opinion/op-ed/article19906113.html

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Comment:

By Don McCanne, MD

Florida House Speaker Steve Crisafulli criticizes the Medicaid program, but for the wrong reasons, while failing to acknowledge that Medicaid does improve health care access and affordability for low-income individuals and families.

Where he really reveals his true character is in his support of the policy options he lists that he says would reduce costs and increase access to quality health care. Clearly, substituting these policy options for the Medicaid program constitutes an abandonment of any reasonable effort to meet the health care needs of this vulnerable population.

If he really cared, he would use the right reasons to criticize Medicaid and the other features of the Affordable Care Act, and then he would support reform that would make quality health care truly affordable and accessible for everyone – a single payer, improved Medicare for all. But obviously he doesn’t care.

‘Health care equity key to Ebola fight’: doctors, nurses petition Obama

Health Affairs Blog article highlights petition to President Obama from more than 1,400 health professionals who say Ebola epidemic is linked to global inequality – and that African nations will require sustained U.S. aid to build up their health systems

FOR IMMEDIATE RELEASE
May 1, 2015

Contact:
Ida Hellander, M.D., PNHP director of health policy, 312-782-6006, ida@pnhp.org

The spread of the Ebola virus in West Africa is inextricably linked to “the global inequality that underlies the poverty and dysfunctional health systems” of the affected countries and points to the need for sustained U.S. economic assistance to help control the virus and to aid in the development of Africa’s health system infrastructure, according to an article published today at the Health Affairs Blog.

The article, titled “Health Care Equity Needed to Fight Ebola,” is written by three physicians – Dr. Andrea S. Christopher, David U. Himmelstein and Steffie Woolhandler. Dr. Christopher is an internist at Cambridge Health Alliance and a fellow in general internal medicine at Harvard Medical School; Drs. Himmelstein and Woolhandler are professors at the City University of New York School of Public Health at Hunter College and lecturers in medicine at Harvard Medical School.

The authors recap and expand upon the arguments contained in a petition that was sent to President Obama last month with 1,464 signatures from doctors, nurses, public health workers, educators and others in allied health professions.

After providing some historical background to the conditions that allowed Ebola to thrive in Liberia, Sierra Leone and Guinea – including the decades-long practice of U.S. multinational corporations extracting valuable resources such as diamonds, rubber, iron ore and fertile soil from those nations without sharing the proceeds with the impoverished majorities of those countries – the authors call for several urgent remedial steps, two of which are as follows:

A commitment by the United States to provide $8.4 billion annually (the equivalent to a single day’s health expenditures in the U.S.) to Ebola prevention and treatment efforts in West Africa, and to build up the health infrastructure in Africa.

The establishment of a public pharmaceutical company to develop drugs and vaccines in the public interest, given that private drug companies “failed to pursue an urgently needed Ebola vaccine because it offered little prospect of financial gain.”

Coincidentally, their article appears on the heels of two prominent statements on the epidemic in the past few weeks, one by President Obama and the other by leaders of the World Health Organization, the latter also published at the Health Affairs Blog.

The text of the petition, which was circulated through physician email lists and which was hosted by Physicians for a National Health Program (but which was not its exclusive project), is available here: www.pnhp.org/ebola. A PDF containing the petition text and the list of the signers as of April 7, 2015, is available to media professionals here or upon request from Dr. Ida Hellander at ida@pnhp.org.

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“Health Care Equity Needed to Fight Ebola,” Andrea S. Christopher, M.D., David U. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H. Health Affairs Blog, May 1, 2015.

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Physicians for a National Health Program (www.pnhp.org) is a nonprofit, 19,000-member research and educational organization of doctors and medical students who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the article described above.

The BlueCross BlueShield Association is privatizing Medicare

Blue Cross and Blue Shield Companies to Launch Retiree Health Insurance Exchange

BlueCross BlueShield Association, April 24, 2015

Blue Cross and Blue Shield (BCBS) companies will launch a health insurance exchange this summer that will support employers’ efforts to help retirees transition from group health benefits to individual Medicare coverage that starts Jan. 1, 2016.

BCBS Marketplace will offer Blue Cross and Blue Shield Medicare Supplement Insurance (Medigap), Medicare Advantage Plans and Medicare Part D prescription drug coverage in more than 45 states and Washington, D.C. 

http://www.bcbs.com/healthcare-news/bcbsa/bcbs-companies-to-launch-retiree-health-insurance-exchange.html

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Comment:

By Don McCanne, MD

The BlueCross BlueShield Association is a national federation of 37 independent, community-based and locally-operated Blue Cross and Blue Shield companies that collectively provide health care coverage for nearly 105 million members – one-in-three Americans. They now intend to establish a health insurance exchange that will promote transition of employer-sponsored plans to Blue Cross and Blue Shield Medicare Supplement Insurance (Medigap), Medicare Advantage Plans and Medicare Part D prescription drug coverage.

Some employers are already transitioning to private insurance exchanges (similar to but separate from ACA exchanges), converting their employer-sponsored plans into defined contribution plans. As employees retire and become eligible for Medicare coverage, the BlueCross BlueShield retiree health insurance exchange will simplify the transition from employer sponsored group plans to individual Medicare coverage, but doing it with private plans. Since employer-sponsored plans are the largest sector of health care coverage, this transition could cause a massive influx of plans into the private Medicare insurance market.

The retiree exchanges will offer Medigap plans, Medicare Advantage plans and Part D drug plans.

Medicare Advantage plans (Part C plans) are able to offer greater benefits with minimal or no premiums, and thus they continue to grow in popularity. Enrollees are not concerned that taxpayers are providing greater subsidies for these plans, even if CMS is using accounting gimmicks to do so. Plan beneficiaries will always place their own interests above the collective interests of us all.

As Medicare Advantage enrollment is increasing, enrollment in Medigap plans is declining. The Medigap premiums are relatively high considering the limited benefits. The decline in Medigap enrollment may accelerate even more once the Medigap plans are prohibited from covering Part B deductibles (a provision of the recently enacted Medicare SGR fix).

Medicare Advantage plans frequently include the Medicare Part D drug benefits, obviating the need to purchase a separate Part D plan as Medigap enrollees would have to do if they wanted drug coverage.

You can see where this is headed. Employers will be enabling BlueCross BlueShield to enroll retirees into the private BlueCross BlueShield Medicare plans wherein the Medicare Advantage plans (Part C) will experience preferential enrollment. Thus enrollment in the traditional Medicare program (Part A and Part B) will decline substantially. Once the private Medicare Advantage plans become the dominant player (and they are well on their way already), the traditional Medicare program will lose political support and will be converted to a chronically underfunded welfare program, if it survives at all.

Although the establishment of the BlueCross BlueShield Medicare exchanges will likely be lost in the fog of all of the innovative changes taking place under the Affordable Care Act, they are coming. They will be here in only eight months. As the political and policy communities continue to fiddle with other aspects of implementing the Affordable Care Act, the privatization of Medicare will have taken place right before our eyes, and they do not even need Paul Ryan’s premium support vouchers to do it. (In fact, the Republicans just struck premium support from the budget proposal they agreed to this week.)

Just try to stop this one.

CMS passively rejects any government role in reducing Part D drug costs

Medicaid Rebates for Brand-Name Drugs Exceeded Part D Rebates by a Substantial Margin

Department of Health and Human Services, Office of Inspector General, April 2015

Conclusion

Drug rebates reduce the program costs of both Medicare Part D and Medicaid. Medicaid rebates are defined by statute and include additional rebates when prices for brand-name drugs increase faster than inflation. In contrast, Part D sponsors (or contractors acting on their behalf) negotiate rebates with drug manufacturers, and there are no statutory requirements regarding the amounts of these rebates. In fact, the law establishing the Part D program expressly prohibits the Government from instituting a price structure for the reimbursement of covered Part D drugs.

We found that Part D sponsors and State Medicaid agencies paid pharmacies similar amounts for most brand-name drugs under review. However, Medicaid rebates for brand-name drugs exceeded Part D rebates by a substantial margin. Additionally, Medicaid’s net unit costs (i.e., pharmacy reimbursement minus rebates) were much lower than net unit costs under Part D in 2012 for nearly all selected drugs. Also, more than half of Medicaid rebates owed by manufacturers for selected brand-name drugs were attributed to the inflation-based add-on rebates.

A major driver of the higher Medicaid rebates was the additional amount owed when prices for brand-name drugs increase faster than inflation. This rebate not only produces additional Medicaid rebates, but also helps protect the program from increased costs when manufacturers raise prices. The Part D program does not contain a similar provision.

This is the second OIG evaluation that demonstrates the substantial difference in rebates collected under Medicaid and Medicare Part D. While we recognize the statutory limitations surrounding rebate collection under Part D, we encourage CMS and Congress to explore the costs and benefits of obtaining additional rebates under Part D.

**

Appendix

Agency Comments

To:  Daniel Levinson, Inspector General

From:  Marilyn Tavenner, Administrator, CMS

Subject:  Office of Inspector General (OIG) Draft Report: “Update: Higher Drug Rebates Result in Lower Costs for Medicaid Compared to Medicare Part D” (OEI-03-13-00650)

The Centers for Medicare and Medicaid Services appreciates the opportunity to review and comment on the OIG’s draft report. The Part D program has significantly outperformed cost estimates, resulting in lower than expected premium levels since the inception of the program. Additionally, starting in 2011, brand drug manufacturers provide a 50 percent discount for their products to beneficiaries in the Part D coverage gap phase o f the benefit.

As this report discussed, minimum drug manufacturer rebates under the Medicaid program are defined by statute whereas similar rebates under the Medicare Part D program are determined solely through negotiations between drug manufacturers and Part D sponsors. However, Section !8600-ll(i)(1) of the Social Security Act states that CMS “may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors.” Consequently, absent new legislative authority, CMS cannot interfere in the rebate negotiations between Part D sponsors and drug manufacturers to secure additional rebates.

The Part D program has significantly outperformed cost estimates, resulting in lower than expected premium levels since the inception of the program. Additionally, starting in 20 II, brand drug manufacturers provide a 50 percent discount for their products to beneficiaries in the Part D coverage gap phase of the benefit.

Thank you for the opportunity to review and comment on this draft OIG report.

https://oig.hhs.gov/oei/reports/oei-03-13-00650.pdf

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Comment:

By Don McCanne, MD

Patient advocates were rightfully upset when Congress included a prohibition in the Medicare Part D drug program preventing the government from instituting a price structure for the reimbursement of covered drugs. The OIG has now released another report showing that the net cost of drugs under the Part D program, which relies on private sector negotiations, are much higher than the net cost of drugs under the government-administered Medicaid program.

CMS administrator Marilyn Tavenner has provided a response which is included in the appendix to this report. Whereas her comment appropriately concurs with the OIG observation that CMS cannot interfere in the rebate negotiations between Part D sponsors and drug manufacturers, her unsolicited comment praising the performance of the Part D program warrants concern. (The fact that the “cut and paste” error of including the comment twice shows the importance they place in including this diversionary concept in their response.)

Whenever CMS is challenged on the higher drug costs through the Part D program, their routine response is to report that “The Part D program has significantly outperformed cost estimates, resulting in lower than expected premium levels since the inception of the program.” They never suggest that CMS should be granted the authority to negotiate lower Part D costs, as they already do with Medicaid. Thus, passively, they continue to be supportive of the pharmaceutical industry and the private Part D insurers and pharmacy benefit managers.

This is part of the pattern of CMS supporting the private sector, which includes their devious innovations to increase payments to private Medicare Advantage plans when the unequivocal intent of the law was to reduce their overpayments.

It is clear that CMS, with the full support of President Obama, is providing extra financial support, directly or indirectly, to the private sector administrators of our health care dollars, when the evidence is overwhelming that the public sector would obtain for us much greater value in our health care purchasing. The Obama administration appears to be permeated with industry shills.

It is no wonder that they reject any consideration of single payer. That would ruin the corrupt relationship that they have with the private sector.

Survey: 42% of Texans support single payer

Health care survey yields surprises for the medical community

By Jenny Deam
The Houston Chronicle, April 27, 2015

Not only do the vast majority of Texans think having insurance is important for them and their families, seven in 10 also want health coverage for everyone else.

And they are willing to dig into their pockets to pay for it.

The results of a first-of-its-kind survey measuring attitudes of state residents on health care and insurance coverage elicited surprise and some dismay among the scores of medical professionals gathered Monday at the start of a conference in downtown Houston.

Earlier this year the Texas Medical Center commissioned Nielsen to poll 1,000 Texans over 18 on a variety of topics surrounding the shifting landscape of health care, including how important insurance was to them, whether everyone should have insurance, who should pay for it and what role patients and doctors have in decision making.

Half of those surveyed said having health insurance for themselves and their family was “absolutely essential,” and another 33 percent said it was “very important.” Only 5 percent said coverage was not important at all. 

In addition, 70 percent said they thought it important that the nation have universal health care coverage, with 36 percent calling it “extremely important.” Thirteen percent said coverage for all was “not important at all.”

But the answer to who should pay for coverage seemed to take the doctors and health care executives in the audience by surprise.

Before Dr. Arthur “Tim” Garson Jr., director of the Health Policy Institute for the Texas Medical Center, presented the finding, he asked the audience to guess the result. Many signaled they assumed people wanted insurance to come from employers or the marketplace.

But in fact, the survey showed that 42 percent of Texans favored a tax-supported single-payer plan, something akin to Medicare for everyone. Twenty-seven percent of those polled thought it should come from employer plans and 12 percent answered it should come from the marketplace.

Still, residents did not expect the government to foot the whole bill, the survey showed. Eighty-one percent, including those who earn the least amount of money, were willing to pay at least something out of pocket to guarantee universal coverage.

That lowest-income group, making less than $25,000 per year, said they would pay an average of $47 a month for universal coverage.

“I think that’s a lot,” said Garson, adding that he found it significant that those whose budgets are stretched thinnest were still willing to pay to guarantee coverage for others.

Also stumping the audience was a question about whether patients want everything medically possible done for them at the end of their lives. Nearly two in three survey respondents answered yes, much to the surprise of the gathered medical professionals, who assumed otherwise.

The survey also found a majority of Texans think foods that lead to obesity should be more expensive. Fifty-two percent said they would support a “fat tax.” They also said people with poor health habits should have to pay more for health insurance.

And, despite the crush of medical information now available to online, doctors remain the top source of information across all age groups, including young adults, the survey found.

The health professionals seemed most concerned by the response that not one person of the 1,000 polled thought quality of care was the most important thing about having health insurance. Instead, coverage came first, followed by a tie between access and cost.

“We are totally missing the boat,” lamented Dr. Paul Klotman, CEO and president of Baylor College of Medicine, during a panel discussion after the results were announced.

He said the profession needs to do a better job of not only informing the public what good quality health care is, but also guaranteeing it across facilities.

The second annual Medical World Americas convention runs through Wednesday at the George R. Brown Convention Center in Houston. Last year’s convention attracted more than 2,000 medical professionals from 33 countries.

http://www.houstonchronicle.com/business/medical/article/Health-care-survey-yields-surprises-for-the-6227381.php

Texas Medical Center-Nielsen Survey Reveals Texan’s Attitudes Towards Healthcare

HOUSTON, April 28, 2015 /PRNewswire/ — The Texas Medical Center (TMC) released findings from a healthcare survey of Texans called “TMC 2015 Texas Consumer Health Report: A Texas Medical Center-Nielsen Poll“, a survey funded by TMC and initiated by the Health Policy Institute. Dr. Tim Garson, Director of the Texas Medical Center Health Policy Institute, revealed the survey results during his keynote address at the Medical World Americas conference in Houston. 

“As healthcare becomes more consumer-directed, providers are working to better understand what the public wants. We want to know what consumers think about their health insurance, both personally and for the country, and how they want their healthcare delivered,” said Dr. Tim Garson. “Of course this is fascinating data for Texas. However, Houston is the fourth largest city in the country and has a diverse population, therefore the findings are likely applicable far beyond the state.” 

The statewide survey involved 1,000 respondents, ages 18 and older, to assess their attitudes and behaviors towards health insurance. The Nielsen survey was conducted online through Harris Poll between January 27 and March 3, 2015 and data was weighted by sex, race, ethnicity, income and education.  

“The Texas Medical Center is comprised of 56 member institutions, many of which serve patients. As the world’s largest medical center, it is imperative that TMC provides this type of information to our members so we, as a whole, continue to be the leader in world-renowned patient care, research and education,” said Dr. Robert Robbins, President & CEO, Texas Medical Center.

Key survey findings include:

How important is having health insurance to you and your family?
Respondents value having health insurance. 83% say having health insurance is absolutely essential or very important.

What is most important: having health insurance, the total cost of health care I have to pay, ability to see a physician or nurse when needed, or quality of health care received? 
Just having healthcare trumps cost and quality. 46% feel having health insurance is most important; 27% say the total cost of healthcare is most important; 27% feel the ability to see a physician or nurse when needed is important; quality of healthcare received is dead last in importance with 0%.

In order for you/your family to have health insurance, what would you be willing to give up? (e.g. eating fast food, cable TV, cell phone…)
Respondents will give up some “extras” for insurance. But, most would rather hold on to internet and cell phones. Insured respondents appear more likely to keep their coverage, while uninsured are less likely to sacrifice.  

How important is it to you that all US citizens have health insurance? 
Respondents value universal health insurance. 55% of respondents say it is very or extremely important to all US citizens to have health insurance. Only 13% say it is not at all important.

How much would you be willing to pay, per month, if it meant that all US citizens would have health insurance? 
Respondents will pay to guarantee coverage for all. More lower-income respondents are willing to pay, but they can afford significantly less, versus respondents with the highest income. 

Which one of the following most closely describes how you believe health insurance should be provided: through one’s employer (shared costs), an employee receives money from employer to buy plan on open marketplace, citizens who pay taxes get health insurance (like Medicare or Medicaid), other or not sure? 
Some support for single payer concept in Texas. 42% think citizens who pay taxes should get insurance (i.e., single payer), 27% defer to employers (either insurance or a defined contribution), 12% believe the employee should receive money from their employer to buy a plan on the marketplace.

Which of the following is most important to you when choosing a primary care physician? Reading ratings on the internet/online, recommendation from another doctor, recommendation from family/friends, low cost, other, not sure. 
Word of mouth is key for choosing physicians. 31% say they would choose a physician by asking a friend/family member. 18% would choose from ratings on the internet. 16% would choose based on a recommendation from another doctor.

There are many ways you can get information about your current health. Indicated how important each of the following is as a source of information: doctor or online/internet.
Doctors are the top health information source.  Respondents defer to doctors for information; even in the internet age, only one in four say internet sources are absolutely essential/very important.

Choose: A. I want my physician to make my medical decisions with minimal involvement from me; B. I want to make my own medical decisions with minimal involvement of my physician; C. Not sure.  
43% want to make their own medical decisions with minimal physician involvement; 40% want their physician to make medical decisions with minimal involvement from me; 17% are unsure.  Males are more likely to defer to a physician, while females want to make their own decisions with minimal physician involvement.   

Agree or disagree: for myself or a relative, I would want everything possible done at the end of life, to prolong life. 
63% agree; 37% disagree. 2 in 3 want everything done at the end of life. 

Agree or disagree: People with poor health habits (e.g. smoking, lack of exercise) should have to pay more for health insurance.
59% agree that people with poor health habits should have to pay more for health insurance.  41% disagree. 

Agree or disagree: Foods that lead to obesity (e.g. sugary drinks) should be more expensive.
52% agree that foods that lead to obesity should be more expensive. 48% disagree. Nearly 3 in 4 young adults (18-34) support a “fat tax”. 

About the TMC Health Policy Institute
The TMC Health Policy Institute was established to inform, define and lead health policy, ultimately developing the most effective solutions to improve the health of diverse populations around the globe. Utilizing expertise across the Texas Medical Center’s member institutions, the TMC Health Policy Institute addresses fundamental health policy issues important to Houston, the state and the nation including public health advocacy, health care delivery models, health care funding, patient quality outcomes, patient safety and health ethics.

About Texas Medical Center
The largest medical complex in the world, the Texas Medical Center is internationally recognized and home to many of the nation’s best hospitals, physicians, educational institutions, researchers, and the largest concentration of life-sciences experts. For the first time in its history, the Texas Medical Center has aligned the multi-institutional expertise to formulate five institutions dedicated to: Health Policy, Clinical Trials, Regenerative Medicine, Genomics and Innovation. Together, these institutions will advance the Texas Medical Center as the global leader in human health and life sciences. The Innovation Institute accelerator program, TMCx, launched in March 2015 and the Health Policy Institute executive team and advisory committee first convened in January 2015.

http://www.prnewswire.com/news-releases/texas-medical-center-nielsen-survey-reveals-texans-attitudes-towards-healthcare-300073611.html

Why this U.S. doctor is moving to Canada

After five years of constant fighting with multiple private insurance companies to get paid, Dr. Emily Queenan decided to try her luck up north

By Emily S. Queenan, M.D.
The Toronto Star, April 28, 2015

I’m a U.S. family physician who has decided to relocate to Canada. The hassles of working in the dysfunctional health care “system” in the U.S. have simply become too intense.

I’m not alone. According to a physician recruiter in Windsor, Ont., over the past decade more than 100 U.S. doctors have relocated to her city alone. More generally, the Canadian Institute for Health Information reports that Canada has been gaining more physicians from international migration than it’s been losing.

Like many of my U.S. counterparts, I’m moving to Canada because I’m tired of doing daily battle with the same adversary that my patients face – the private health insurance industry, with its frequent errors in processing claims (the American Medical Association reports that one of every 14 claims submitted to commercial insurers are paid incorrectly); outright denials of payment (about one to five per cent); and costly paperwork that consumes about 16 per cent of physicians’ working time, according to arecent journal study.

I’ve also witnessed the painful and continual shifting of medical costs onto my patients’ shoulders through rising co-payments, deductibles and other out-of-pocket expenses. According to a survey conducted by the Commonwealth Fund, 66 million – 36 per cent of Americans — reported delaying or forgoing needed medical care in 2014 due to cost.

My story is relatively brief. Six years ago, shortly after completing my residency in Rochester, New York, I opened a solo family medicine practice in what had become my adopted hometown.

I had a vision of cultivating a practice where patients felt heard and cared for, and where I could provide full-spectrum family medicine care, including obstetrical care. My practice embraced the principles of patient-centreed collaborative care. It employed the latest in 21st-century technology.

I loved my work and my patients. But after five years of constant fighting with multiple private insurance companies in order to get paid, I ultimately made the heart-wrenching decision to close my practice down. The emotional stress was too great.

It broke my heart to have to pressure my patients to pay the bills their insurance companies said they owed. Private insurance never covers the whole bill and doesn’t kick in until patients have first paid down the deductible. For some this means paying thousands of dollars out-of-pocket before insurance ever pays a penny. But because I had my own business to keep solvent, I was forced to pursue the balance owed.

I spoke with other physicians, both inside and outside my specialty, about alternatives. We invariably ended up talking about the tumultuous time that the U.S. health care system is in – and the challenges physicians face in trying to achieve the twin goals of improved medical outcomes and reduced cost.

The rub, of course, is that we’re working in a fragmented, broken system where powerful, moneyed corporate interests thrive on this fragmentation, finding it easy to drive up costs and outmaneuver patients and doctors alike. And having multiple payers, each with their own rules, also drives up unnecessary administrative costs – about $375 billion in waste annually, according to another recent journal study.

I knew that Canada had largely resolved the problem of delivering affordable, universal care by establishing a publicly financed single-payer system. I also knew that Canada’s system operates much more efficiently than the U.S. system, as outlined in a landmark paper in The New England Journal of Medicine. So I decided to look at Canadian health care more closely.

I liked what I saw. I realized that I did not have to sacrifice my family medicine career because of the dysfunctional system on our side of the border.

In conversations with my husband, we decided we’d be willing to relocate our family so I could pursue the career in medicine that I love. I’ll be starting and growing my own practice in Penetanguishene on the tip of Georgian Bay this autumn.

I’m excited about resuming my practice, this time in a context that is not subject to the vagaries of backroom deals between moneyed, vested interests. I’m looking forward to being part of a larger system that values caring for the health of individuals, families and communities as a common good – where health care is valued as a human right.

I hope the U.S. will get there some day. I believe it will. Perhaps our neighbor to the north will help us find our way.

Emily S. Queenan, M.D., currently resides in Rochester, New York, where she had, for five years, a solo full-spectrum family medicine practice.

http://www.thestar.com/opinion/commentary/2015/04/28/why-this-us-doctor-is-moving-to-canada.html

Stuart Butler on Section 1332 waivers

Why Section 1332 Could Solve the Obamacare Impasse

By Stuart Butler, PhD
The JAMA Forum, April 28, 2015

Section 1332 of the ACA, known as “State Innovation Waivers,” allows states, starting in 2017, to apply to the federal government for 5-year renewable waivers from key provisions of the legislation. For instance, states could request changes to or exemptions from the individual and employers mandate, the market exchanges, the exchange subsidies, the Essential Health Benefits requirements, and other provisions. Moreover, states can combine waivers from ACA provisions with waivers from Medicaid provisions (so-called 1115 waivers), Medicare, the state Children’s Health Insurance Program, and waivers available through “any other Federal law relating to the provision of health care items or services.”

Section 1332, however, is not a blank check for states to ignore the whole intent of the ACA, even assuming the White House or the next administration were open to that. It has important fine print. To obtain a waiver, a state’s proposal must retain important protections, such as guaranteeing that health plans accept an applicant regardless of their health status or other factor. The proposal’s coverage must be “at least as comprehensive” and cover “at least a comparable number of its residents” as the ACA, and insurance must be as affordable. Any state plan must also be budget neutral for the federal government.

Even with these limitations on state plans, section 1332 could lead to state health plans in the future that change the ACA beyond recognition. A Republican state like Arkansas, Utah, or Texas, for instance, could use the section to take the federal money for Medicaid expansion as a block grant and turn it into subsidies for families to buy private coverage. These or other states could also end the mandates on individuals and employers, perhaps using government-encouraged auto-enrollment for insurance to meet the ACA’s coverage projections. Meanwhile, states like Vermont, Oregon, and Hawaii could design waivers to create a form of single-payer health system.

The political ramifications of this wide flexibility under section 1332 are immense. For instance, Republican opponents of the ACA, recognizing that the foreseeable congressional makeup means outright repeal of the ACA is not feasible even if Republicans win the White House in 2016, would have a strategy for states to exit much of the ACA. Meanwhile liberals in other states would have a tool to move closer to their dream of a single-payer system. And the White House could claim that even in the Republican states with sweeping waivers, the ACA had been fully implemented. Moreover, the 1332 waivers would allow many of the technical problems of the ACA to be fixed at the state level without going to Congress.

http://newsatjama.jama.com/2015/04/28/jama-forum-why-section-1332-could-solve-the-obamacare-impasse/

****

Comment:

By Don McCanne, MD

Stuart Butler’s name may be familiar to you as he was the policy expert that described the Heritage Foundation’s model of health care reform that was a counter proposal to the Clinton effort, and later became the model that formed the basis of the Affordable Care Act. We should take heed of his words on the potential of the state innovation waivers authorized by Section 1332 of the Affordable Care Act.

After ultraconservative Sen. Jim DeMint became president of the Heritage Foundation, Stuart Butler moved to the Brookings Institution and was thus less handicapped than he had been with the extreme right-wing political polarization at Heritage. His recent messages have been directed toward solutions that supposedly defuse the politics so that we can move forward on policy.

Without repeating any of his points made above, obviously he believes that the states should move forward with their own concepts of reform that would comply with their respective political climates. However, most of the flexibility he suggests would appeal to conservatives, though he mentions single payer to appease those in liberal states.

The problem is that Section 1332 is quite amenable to piecemeal measures that would gradually move health care further in the direction of a system that places more of the responsibility on the individual, making health care less affordable and less accessible (as if it were not bad enough already). Yet Section 1332 waivers cannot lead to single payer without enabling comprehensive federal legislation. Section 1332 is a setup for conservative policies, yet hardly opens the door for single payer. Acting on a state level alone, liberals cannot expect much more than tweaks to the Affordable Care Act.

Stuart Butler is now even better positioned to drive the dialogue on reform. If the politicians continue to listen to him, forget the dream of a more egalitarian system.

Pharmaceutical firms contribute to wealth inequity

Pharmaceutical Companies Buy Rivals’ Drugs, Then Jack Up the Prices

By Jonathan D. Rockoff and Ed Silverman
The Wall Street Journal, April 26, 2015

On Feb. 10, Valeant Pharmaceuticals International Inc. bought the rights to a pair of life-saving heart drugs. The same day, their list prices rose by 525% and 212%.

Neither of the drugs, Nitropress or Isuprel, was improved as a result of costly investment in lab work and human testing, Valeant said. Nor was manufacture of the medicines shifted to an expensive new plant. The big change: the drugs’ ownership.

“Our duty is to our shareholders and to maximize the value” of the products that Valeant sells, said Laurie Little, a company spokeswoman.

More pharmaceutical companies are buying drugs that they see as undervalued, then raising the prices. It is one of a number of industry tactics, along with companies regularly upping the prices of their own older medicines and launching new treatments at once unheard of sums, driving up the cost of drugs.

Since 2008, branded-drug prices have increased 127%, compared with an 11% rise in the consumer price index, according to drug-benefits manager Express Scripts Holding Co.

Early last year, Mallinckrodt PLC paid $1.4 billion for Cadence Pharmaceuticals, though the Ofirmev pain injections that were the crown jewel of the deal were projected to have just $110.5 million in 2013 revenue, according to a Mallinckrodt conference call with analysts discussing the deal. Three months later, the list price for a package of 24 Ofirmev vials jumped almost 2½ times to $1,019.52, according to health-care data firm Truven Health Analytics.

“It seemed like highway robbery,” said Erin Fox, who directs the drug-information service at University of Utah Health Care.

The price increases can be very lucrative for companies. Horizon Pharma PLC upped the price of Vimovo pain tablets after buying the rights from AstraZeneca in late 2013. On Jan. 1, 2014, its first day selling Vimovo, Horizon raised the list price for 60 tablets to $959.04, a 597% increase. Horizon raised the price again on Jan. 1 this year to $1,678.32 for the tablets.

After Valeant agreed to buy the drugs in early January, the company hired a consultant to look at their prices. The consultant found the prices didn’t reflect the benefits of the drugs to patients and the costs that hospitals save by using the medicines, the person said. Valeant decided to raise the price. The list price of a one-milliliter vial of Isuprel, a treatment for abnormal heart rhythms, jumped to $1,346.62, up from $215.46, according to Truven. Meantime, a two-milliliter vial of Nitropress, which combats dangerously high blood pressure and acute heart failure, increased from $257.80 to $805.61.

http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431

****

Comment:

By Don McCanne, MD

It seems that everywhere you turn these days there are articles covering the skyrocketing prices of pharmaceuticals.

One factor used by the pharmaceutical firms to explain their price increases is the benefit patients receive from the drugs – benefits that the pharmaceutical firms claim are so valuable that the prices should be much higher than their costs of doing business. When you have a superior product, you sell it at a higher price, with the financial benefits accruing to the owners of the firm. That’s the way markets work.

This WSJ article describes an even more nefarious process of market manipulations of drug prices. Pharmaceutical firms are buying the rights to the products of other firms, often buying the firms themselves, paying very high prices for these rights. There are several examples in thus article, but an even more egregious example is the action of Gilead Sciences in buying up the rights to the newer, more effective Hepatitis C drugs, again paying outrageous prices for those rights. They are recovering this capital cost by charging $1,000 or more for each pill sold, when a course of treatment may be 84 pills.

Think about that. A massive amount of capital is paid out, requiring the purchasing firm to charge much higher prices for those drugs to recover the funds paid to acquire the drug rights. Who receives the capital paid out? The wealthiest tier – the tier that holds by far the largest percentage of shares in public and private corporations. Who is paying higher prices to compensate for the capital purchase of the drug rights at inflated prices? It is predominantly middle-income Americans in the form of direct drug purchases or indirectly through insurance premiums, taxes for public programs, or forgone wages to pay for employer-sponsored benefits.

Thus the pharmaceutical firms are compounding the inequitable shift of capital from the workers to the wealthy (described by Piketty, Saez and others). This is being done through financial constructs for which Wall Street is so infamous. As patients, we are powerless to impede this process. It is the responsibility of government to provide the appropriate oversight to correct these injustices. Yet what did they do? Through the Affordable Care Act they handed more power and control over to the insurers and the pharmaceutical firms, leaving us at their mercy, even though mercy is not a quality found in amoral corporations.

These injustices would not be tolerated in a single payer system.