PNHP

Leading Vermont unions, consumer groups urge Legislature and governor forward on Green Mountain Care

Leading Vermont unions, consumer groups urge Legislature and governor forward on Green Mountain Care

Press Release, Vermont for Single Payer, Dec. 2, 2014

MONTPELIER, Vt. – Sixteen of Vermont’s leading unions, consumer advocacy organizations and health care reform groups joined together today to urge Governor Shumlin and the Vermont Legislature to move forward implementing Green Mountain Care, Vermont’s universal publicly funded health care system set to begin in 2017.

Groups participating in the press conference were VSEA, AFSCME Local 93, Vermont NEA, Vermont Workers Center, Vermont CURE, VPIRG, United Professions of Vermont/American Federation of Teachers, Main Street Alliance, Vermont Interfaith Action, League of Women Voters, Green Mountain Self Advocates, Vermont Businesses for Social Responsibility, Vermont Health Care for All, Vermont Leads, Vermont AFL-CIO and UE Northeast Region.

Participants conceded that although Democrats did have a net loss of seats in the House, many of those losses occurred in districts that were not historically strong Democratic seats such as St Johnsbury, Enosburg Falls, Saint Albans City and the Wardsboro area. However, many pro-universal health care challengers won in difficult districts such as Chip Troiano in Hardwick/Walden, Robin Tangerman in Middletown Springs and Steve Berry in Manchester. And many pro-universal health care incumbents survived what were predicted to be strong challenges from opponents of Green Mountain Care such as Sarah Buxton, Jean O’Sullivan, Joanna Cole, Tommy Walz and Susan Hatch Davis. Finally, it was noted that in Democratic primaries in seats for Middlebury, Norwich/Thetford and Windham Senate among others, pro Green Mountain Care candidates were victorious.

Martha Allen, President of Vermont NEA: “You may have heard that this election was about a repudiation of Vermont’s efforts to establish publicly financed, universally available health care. Well, as the president of the state’s largest union, I believe that it is more important than ever to see this through. I and my fellow Vermont-NEA members strongly support Green Mountain Care, and urge the governor and legislature to get down to business right now so that all Vermonters will understand that a publicly financed, universally available health care system is better for all of us.”

Bram Kleppner, CEO, Danforth Pewter and Chairman of the Board, the Vermont CURE: “The election changed the legislature a little bit, but it did not change the fact that our current health care system produces mediocre results at very high cost, and leaves lots of Vermonters without access to basic health care at all. The election also didn’t change the fact that Green Mountain Care, as envisioned in Act 48, represents the best current thinking and experience from around the world on how to provide great care to every Vermonter while containing costs.”

Daniel Barlow VBSR Public Policy Manager: “Delinking heath insurance from employment will allow businesses to do what businesses do best – expand operations, create jobs, and increase the wages of hard-working Vermonters. Our current health care system is a ball and chain around the ankle of our economy.”

Falko Shilling, VPIRG Health Care Advocate: “Vermonters spend almost 20 cents of every dollar they earn on health care, and we need a way to contain out of control costs. Green Mountain Care would guarantee every Vermonter high quality health coverage, and save us all money in the process. Vermont has an incredible opportunity to improve how we deliver health care as a state, and VPIRG fully supports efforts to move forward with the implementation of Green Mountain Care.”

Lindsay DesLauriers, Director of Main Street Alliance: “The rising costs of healthcare are increasingly unaffordable for small businesses and many Vermont businesses can’t afford to provide health insurance for their employees. Green Mountain Care will ensure that everyone has access to healthcare regardless of employment.”

James Haslam, Executive Director, Vermont Workers’ Center: “It’s time for Vermont elected officials to stand up for a health care system that truly works for the people, that is designed and planned with the people. We are going to be organizing on an unprecedented scale to move this forward in the coming year.”

Debbie Ingram, Director of Vermont Interfaith Action: “The concept that we are meant to care for our neighbors, common to all faith traditions, extends to health care. We must all pull together and create a new system where everyone can get preventive care and necessary treatment, no matter their job or situation.”

Mari Cordes, RN and VP Healthcare AFT-Vermont: “What we as health care providers want most is for anyone who needs medical attention be able to do so as early as possible with no barriers to accessing care, not when their condition worsens or becomes life threatening (and much more costly to treat). Get the insurance companies out of our exam rooms and get our hard earned money out of administrative waste and exorbitant CEO compensation. A universal publicly funded health care system is the only way to do that. It’s simple, it’s less expensive, and it’s time. As strong union members, we will continue to stand on the right side of history and work with our elected leaders to ensure that we succeed in being the first state to lead the nation with a single payer system.

Dr. Deb Richter of Vermont Health Care for All: “The quality of health care in Vermont is good. We are rated near the top compared with other states. Unfortunately, many people can’t afford to access that care. We need to change that.  And the time is now. We are in a unique political moment in time. Vermont is poised to enact the first publicly funded universal health care system .We are asking our legislature to fulfill their promise to enact a financing plan that pays for Vermonters health care in a way that is fair to all and based on ability to pay.”

Peter Sterling, Director of Vermont Leads: This past election cycle, I worked with many candidates for the Vermont House and Senate and talked to hundreds of Vermonters statewide in the process. Nowhere did I hear an overwhelming sentiment that Vermont should not continue on its path towards a universal, publicly funded health care system. If anything, this election seems to reinforce that Vermonters are finding the Exchange too costly, too confusing and difficult to understand. It’s clear to me we need to abandon the Exchange in 2017 and move to Green Mountain Care.”

One year into Obamacare: where is it now?

By Jeanne Lenzer
BMJ, Dec. 5, 2014

[Excerpts]

About one year since the launch of the Patient Protection and Affordable Care Act’s insurance exchange program, the overwhelming majority of the 48 million people who were uninsured in 2012, remain uninsured — a problem that will persist for the next 10 years, according to government projections. The Congressional Budget Office estimates that 37 million people will not have health insurance in 2015 and 31 million will be uninsured in 2024.

About 6.7 million (corrected from an earlier estimate of 7.3 million) were newly insured under the act known as Obamacare during 2014.

Access to insurance has been liberalized in several ways: insurers may no longer deny coverage to individuals with pre-existing illnesses; young adults under age 26 may remain on their parents’ policy; and Medicaid has been extended to include some poor single adults and adults without children. …

According to a study by the Kaiser Family Foundation, “The ACA [Affordable Care Act] establishes an affordability standard for health insurance premiums, but not for out-of-pocket medical expenses. Even with limits on cost-sharing established under the ACA, deductibles and other cost-sharing will continue at a level above what many people could afford if a significant illness or injury strikes.”

It was hoped that reducing the number of uninsured people would also reduce the number of people putting off medical care because of costs. However, according to a Gallup poll conducted in early November 2014, the proportion of families who put off medical treatment rose from 30 percent in 2013 to 33 percent in 2014. The proportion of people with serious medical problems who put off treatment increased from 19 percent to 22 percent. …

Progressive challenges to Obamacare include a bill introduced in Congress (HR 676) to establish a universal single payer healthcare system. Physicians for a National Health Program supports the bill, which it says could slash administrative costs by more than $400bn annually and solve many of the problems of the act — including providing care for the estimated 31 million people who will still be uninsured in 2024 under Obamacare.

Full text of article, including citations: http://www.bmj.com/content/349/bmj.g7405

Renewal time – and now the fine print

Big Changes in Fine Print of Some 2015 Obamacare Plans

By Charles Ornstein, Lena Groeger and Ryann Grochowski Jones
ProPublica, December 4, 2014

Millions of people nationwide bought health insurance this year through the federal government’s health insurance exchange, often through the website Healthcare.gov. Now, as they pick plans for next year, they face a complex battery of choices and changes.

They have until Dec. 15 to select a new plan or they’ll be re-enrolled automatically in the one they currently have. Or, if that plan no longer exists, they’ll be enrolled in another product offered by the same insurer, when available. But even if they get the same plan — of the nearly 2,800 health plans offered in 2014, about 1,700 of them will exist in the same form next year — their benefits may not stay the same.

Much attention has focused on changes to plans’ monthly premiums, but changes to other kinds of benefits — affecting the cost of things like doctors’ visits and prescriptions — can be trickier to understand and make a huge difference in annual health care costs.

Some policy changes appear subtle, just a matter of adding or subtracting a few words, but are actually quite significant. This year, many insurers charged members a set fee of a few hundred dollars for emergency room visits. For next year, some of those plans changed the wording of their benefit, adding “co-pay after deductible.” That means the insurers won’t pay for any portion of an emergency room visit until consumers meet their deductible, spending thousands of dollars.

What ProPublica’s analysis suggests is that even those who would be willing to pay higher premiums to keep their current plan may be surprised to learn that substantial details have changed. They should go back to Heatlhcare.gov or to ProPublica’s news app to make sure their plan is still the best choice.

Changes to insurance benefits are hardly exclusive to the Affordable Care Act marketplaces. They happen regularly in health plans offered by employers.

http://www.propublica.org/article/big-changes-in-fine-print-of-some-2015-obamacare-plans

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Comment:

By Don McCanne, MD

Will everyone who is surprised that the the private insurers are changing the fine print on the plans offered through the exchanges please raise your hands. (Sorry, I can’t see your hands, just as most of those purchasing plans on the exchanges won’t see the fine print either.)

Private insurers are shafting patients who need speciality drugs

Exchange Plans Increase Costs of Specialty Drugs for Patients in 2015

By Caroline F. Pearson
Avalere, December 2, 2014

A new analysis from Avalere Health finds that patients accessing specialty medications – drugs often used to treat life threatening illnesses, such as cancer, rheumatoid arthritis, or multiple sclerosis – through exchange plans are more likely to experience higher out-of-pocket costs in 2015 than in 2014.

In particular, the incidence of plans charging coinsurance greater than 30 percent for specialty medications has increased from 27 percent of Silver plans in 2014 to 41 percent in 2015. Coinsurance is the practice of charging consumers a percentage of the total cost of the medication, as opposed to a set co-payment fee. Approximately two-thirds of exchange enrollees picked Silver plans in 2014.

“Health plans continue to focus on managing drug costs to keep premiums low,” said Dan Mendelson, CEO at Avalere Health. “Competitive premiums are key to a sustainable exchange marketplace, which has led plans to pursue more significant cost-sharing. In some cases this could make it difficult for patients to afford and stay on medications.”

Percent of Exchange Plans with Coinsurance Above 30% for Specialty Tier drugs

Bronze (60% actuarial value)
2014  38%
2015  52%

Silver (70% actuarial value)
2014  27%
2015  41%

Gold (80% actuarial value)
2014  20%
2015  22%

Platinum (90% actuarial value)
2014  17%
2015  26%

Exchange Plans Increase Costs of Specialty Drugs for Patients in 2015

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Comment:

By Don McCanne, MD

Specialty drugs are a problem for private insurers for two reasons. They are very expensive, and they are taken by individuals with serious high-cost disorders such as cancer, rheumatoid arthritis and multiple sclerosis. It is important to understand the insurers’ responses to their concerns.

Although set-dollar copays were common for drugs covered by insurance plans, the modest patient payments left the insurer responsible for the high costs of expensive drugs. So the insurers established different tiers of drugs covered, ranging from the bottom tier of very low cost generic drugs which were not a burden for the insurers, to the highest tier with the most expensive drugs – specialty drugs. For the more expensive tiers, the insurers now use coinsurance – a percentage of the cost – instead of copays, so that the patient is paying much more of the costs of the drug. A coinsurance of 30% soon became the standard. The patient would pay $3000 toward a $10,000 drug, or maybe about $25,000 toward an $82,000 drug such as Sovaldi (for chronic hepatitis C).

This addressed to some degree the two concerns that the insurers had. For the very high costs of these drugs, either patients would be paying a very significant portion or they would simply not fill the prescription simply because it was unaffordable, in either case saving the insurer considerable costs.

The even more important problem for the insurers was that these seriously ill patients would continue to have very high health care costs. By assigning high coinsurance payments for specialty drugs, patients who were on them would go elsewhere for their insurance coverage when they found out that the coinsurance amount was unaffordable. Although the insurers are now prohibited from turning away anyone because of preexisting disorders, this was a deceptive, dishonest way of avoiding adverse selection – avoiding covering patients with more expensive disorders. Understandably, competing insurers are adopting the same coinsurance practices so they do not get stuck with the high cost patients. It is the patients who are on the losing end.

This has not gone unnoticed. Patients are being deprived of these specialty drugs. The government is now considering options on how to make these drugs more accessible for those who need them, including the option of imposing new regulations which the insurers would oppose.

In a single payer system dedicated to patient service, the prices of the drugs would be negotiated, and they would be made readily available to those who need them. But what is the response of the private insurance industry that operates under a business model rather than a service model – even though they know they are under a cloud of suspicion? Make the patient responsible for even more of the costs by increasing the coinsurance rates well above the 30% level, impairing further access to these drugs.

Look at the table above and you will see the percentage of plans that have moved beyond a 30% coinsurance in this year alone. Over 40% of benchmark-level silver plans now have a coinsurance rate of over 30%. Over 50% of the cheapest plans – the bronze plans that are more attractive to low-income individuals – now have coinsurance in excess of 30% – pricing these drugs totally out of the reach of the purchasers of these plans. Even the plans for the wealthy – the platinum plans – are not unaffected. Over one-fourth of them exceed a coinsurance of 30% – not likely to be well received by this group who thought they were buying the best. You would think that the insurers would tread lightly with this group that has significant political voice.

The solution is obvious. Dump the business model of the private insurers and replace it with our own patient service model – a single payer national health program. Then everyone would get the drugs they need.

Exploring the shortcomings and fault lines of the Affordable Care Act

The case for single payer – Medicare for All

By Jeoffry B. Gordon, M.D., M.P.H.
December 3, 2014

The Patient Protection and Affordable Care Act (ACA) has as its main and overriding purpose the expansion and subsidization of health insurance coverage for many (usually poor and uninsured) Americans who were previously unable to reliably access medical services. Under its auspices, the federal law has provided for health insurance enrollment for 1 million to 3 million additional 19- to 26-year-olds; 6 million new, expanded Medicaid enrollees; and 7.2 million commercial Qualified Health Plan enrollees. Of the latter, about 80 percent qualify for financial subsidy. Taking into account additional factors, e.g. the fact that some of the new enrollees were previously insured, there has been a net gain of about 10 million people who have coverage. Yet even at full expansion, it is estimated that the ACA will not insure another 30 million U.S. residents.

It is now five years since the ACA came into being and one year since it started financing patient care. Thus it is an excellent time to review its inadequacies from a health policy point of view.

As will be seen from the compilation of observations below, the ACA expansion, which is based upon the commercial health insurance model, is extraordinarily complex, inefficient, and monstrously expensive. And in the end, under the ACA, having health insurance is not a guarantee of receiving needed medical care nor, in many cases, is it truly affordable and providing financial security for American families. It is not a universal national health scheme which allows full access to the broad capabilities of American medicine. An expanded Medicare-for-all system (single payer), built on nearly 50 years of successful experience, would be far less complex, more equitable, and hugely less expensive. The single-payer paradigm would totally eliminate as unnecessary the many complex, confusing, expensive, and wasteful characteristics listed below by instituting universal coverage, eliminating the insurance middleman, and allowing all licensed providers.

1. The ACA assumes patients are consumers and a market mechanism is the best way to organize health care

Even among the well-educated, there is a tremendous asymmetry between the doctor and the patient in the esoteric technical knowledge and judgment needed for the application of competent and effective medical care.

A person who has an accident or an illness has very little opportunity or capacity to shop around and compare either price or quality. Usually the sicker and more acutely ill the patient, the less this capacity will be. (See: Arrow, Kenneth J. “Uncertainty and the welfare economics of medical care,” The American Economic Review 1963; 53:941-73.)

2. The ACA depends upon and subsidizes the commercial health insurance companies

Health insurance companies, both for-profit and nominally not-for-profit, necessarily always seek to maximize income rather than expand necessary medical services or expand compassion and caring. Their basic functions are business functions consisting of collecting fees (premiums), paying bills, and marketing, which, along with profits, generally consume 20 percent to 25 percent of premiums. Thus the money spent on patient care, the “medical loss ratio” (their term), is generally 80 percent or more of premiums. The ACA legally caps this waste and inefficiency at 20 percent. AHIP (America’s Health Insurance Plans) negotiated with the government to allow the plans to count “medical management” as “health care,” not administration, for the purposes of calculating the so-called medical loss ratio, MLR. This means health insurance companies can spend unlimited amounts of money on the bureaucracy of managed care, formulary benefits management, “Accountable Care Organizations,” pay-for-performance, and other schemes to restrict or deny care or shift insurance risk onto the providers of care, and they can count it all as “health care” for purposes of calculating the MLR. Also seven states (Georgia, Iowa, Kentucky, Maine, Nevada, New Hampshire, and North Carolina) received waivers from the Department of Health and Human Services, allowing them to have lower regulated medical loss ratios so as to keep insurers from leaving the market. In addition, the ACA federally mandates an ongoing large incremental enrollment in these private commercial enterprises which previously had a progressively declining business.

The federal government also reinsures the commercial health insurance companies. Under the ACA’s risk corridor program, if insurers that offer marketplace plans experience higher-than-expected costs, the federal government will pick up part of those costs. If insurers’ costs are lower than expected, the federal government will share in those savings. This temporary program will exist for three years (2014-2016).

3. The ACA reinforces an unequal and unjust five-tier medical system

The first tier is Medicare, a 50-year-old program for most Americans over 65 and many handicapped and disabled people (50 million in July 2012). Medicare has simple categorical enrollment (all USA residents over 65 with qualifying employment), extensive national benefits standards, many insurance characteristics (premiums, co-pays and deductibles), is federally subsidized and has reasonable reimbursement for any willing, licensed provider.

The second tier includes most Americans (60 million in January 2013) who obtain commercial health insurance through their employment. This allows varying levels of access to a wide variety of providers, has varying but usually broad benefits and has a large range of possible financial out-of-pocket costs through insurance premiums, deductibles and co-pays.

Now the ACA has added a third tier of commercial insurance with basic minimum benefits, generally restricted or narrow networks of providers, lower levels of provider reimbursement, and high-deductible (but often subsidized) insurance plans.

The fourth tier, varying by state rules, is the Medicaid system for the poor (34 million people in January 2013) which has been greatly expanded by ACA. Insurance costs are generally fully subsidized and benefits are theoretically extensive. Since provider reimbursement is universally meager, access to needed medical care can be haphazard, difficult, or unavailable. (For instance, the American Medical Association says that between 85 and 105 specialists are needed for every 100,000 patients to sufficiently serve a population. However, a 2010 report by California Health Care Foundation found that California had just 65 specialists per 100,000 Medi-Cal beneficiaries.)

Finally there remain a large number of American residents (46 million in January 2013) who are uninsured and who thus lack ready access to health care except from safety-net programs in dire emergencies. This complex arrangement is most onerous for the poor and less educated, often minorities, and is the underlying basis for our nation’s overall poor performance in vital statistics and levels of disease morbidity and mortality.

4. The ACA’s potential for subsidized universal health insurance for all poor legal residents was destroyed by the Supreme Court

A central (although mostly unstated) goal of the ACA was to significantly reduce the number of poor uninsured by providing fully subsidized health insurance through Medicaid for most low-income adults earning up to 138 percent of the federal poverty level (FPL) ($15,856 for an individual or $26,951 for a family of three in 2013). Following the June 2012 Supreme Court decision, states were given the option to adopt or reject the Medicaid expansion. Currently 23 states, all governed by Republicans, have not expanded Medicaid. This leaves out about 6 million Americans, including two-thirds of the poor blacks and more than half of the low-wage workers without insurance, the very kinds of people that the program was intended to help, according to an analysis of census data by The New York Times. Another study projects that this will result in between 7,000 and 17,000 more deaths annually than had all states opted in.

Furthermore, because ACA as written did not anticipate that there would be states not expanding Medicaid, nearly 5 million poor uninsured adults in those 23 states will have incomes above Medicaid eligibility levels but below federal poverty levels who will fall into a “coverage gap” of earning too much to qualify for Medicaid but not enough to qualify for ACA Marketplace premium tax credits.

5. The ACA has extraordinary start-up costs – for the federal government, state governments, and private and civic organizations, as well as medical providers

In the USA as a whole, ACA Exchange Planning Grants cost $44,137,908; Exchange Establishment Grants cost $4,360,477,611; and Early Innovator Grants cost $138,122,850 for a total cost of $4,342,738,369, or $4.3 billion. California alone received $1,065,212,950. The California Department of Health Services and the state Health Benefit Exchange hired a total of 1,600 employees from 2011 to 2013, according to an analysis of state payroll records by the Sacramento Bee. This does not include expenses to establish the botched federal Internet exchange.

Not one cent of this huge sum was spent on patient care. These amounts do not include additional expenses in time, money and personnel allocated by state governments, medical providers, insurance companies, businesses, and civic organizations (e.g. the Chamber of Commerce.) to understand and participate in the ACA.

Nearly five years after passage, the Affordable Care Act and a companion electronic health records (EHR) program have run a start-up tab of more than $73 billion, a Bloomberg Government analysis finds. The costs for both HealthCare.gov and the broader reform effort are far greater than anything publicly discussed. They’re also substantially greater than what the Congressional Budget Office (CBO) initially estimated health reform would cost by this point, although not what the agency’s more recent piecemeal estimates suggest. (Bloomberg, Peter Gosselin, Sept. 24, 2014)

6. The ACA contains no public policy relating to controlling overall health care costs     

At 17 percent of GDP, total health expenditures in the U.S. are a higher portion of national income than in all other developed nations. It must be recognized that resources spent on health care are diverted from other important public goods, such as education, infrastructure, research and development, and public safety. The ACA does not contain any proven macroeconomic policies to significantly curtail or roll back overall health expenditures.

7. Gaps in ACA coverage prevent major savings by still requiring safety-net programs

The ACA will only minimally alter the demographic composition of the uninsured, regardless of whether undecided states opt-in or out of Medicaid expansion. While blacks and Hispanics will continue to be overrepresented among the uninsured, the majority will be non-Hispanic, white, low-income, working-age adults, many of them employed. The majority (around 80 percent) of the uninsured will be U.S. citizens. More than 4.3 million children and nearly 1 million veterans will remain uninsured. The 11.7 million undocumented immigrants living in the United States are ineligible for ACA health care coverage. Since about 30 million people resident in the USA will remain uncovered after full implementation of ACA, such institutions as public hospitals, community clinics, etc., will still need tax and charity support to cover the uninsured.

Before the ACA, the Children’s Health Insurance Program (CHIP) helped plug one of the many coverage holes in the nation’s health insurance system. At an annual cost of $13 billion, most of which comes from Congress and the rest from state governments, CHIP covers some 8 million children in families too well-off to qualify for Medicaid but too poor to afford private insurance. The Internal Revenue Service defined eligibility for subsidies on the ACA exchanges in such a way as to exclude some families with children who are currently served by CHIP or are still uninsured. The American Action Forum, a conservative think tank, estimates that this “family glitch” could affect more than 2.2 million children if funding for CHIP isn’t extended past 2015. Even families that get subsidized coverage through the ACA may find that benefits for their children will be narrower and cost more out of pocket than does CHIP.

8. The ACA institutionalizes underinsurance

In the ACA, Congress chose market-based cost controls over measures that are common internationally, such as global budgets. Mandating coverage while requiring affordable premiums without enacting other cost-control mechanisms almost inevitably gives rise to increased cost sharing as the simplest mechanism for reducing premiums. The ACA is a major expansion of high-deductible health insurance. This has substantial implications for patients, health care providers, and employers. High-deductible health plans (HDHPs) are often considered “blunt instruments” that indiscriminately reduce utilization of necessary essential and appropriate as well as discretionary medical care, and require annual out-of-pocket payments of $1,000 to $10,000 for many services before more comprehensive coverage begins. The way you pay your portion of these costs is in deductibles and co-payments or co-insurance. Under the ACA, the Bronze Plan covers 60 percent, Silver Plan: 70 percent, Gold Plan: 80 percent, Platinum Plan: 90 percent of your actuarially projected health care costs. The bronze level of ACA – the “affordable” care – is a mirage, a simulacrum of insurance rather than actual insurance. Bronze level features total out of pocket expenses (after premiums) of up to $6,000. In other words, you have to spend $6,000 before your insurance kicks in. In an economy in which two-thirds of all households live paycheck to paycheck, this is the equivalent of no insurance.

9. The ACA encourages insurance companies to use narrow provider networks

Since enrollment is mandated for all eligible Americans and commercial health insurance companies are incentivized to minimize and compete on their premiums, they are highly motivated to reduce their costs, i.e. expenditures on medical care. They have chosen to do this primarily by reducing reimbursements across the board and by limiting (narrowing) their provider networks. Experience has shown that narrow networks have been chosen in an opaque fashion with more emphasis on past cost experience than quality of care. In 2014, a McKinsey & Co. analysis of 120 silver-level exchange plans found that 70 percent were narrow network plans, in which at least 30 percent of the area’s largest hospitals are not in the plan, or ultra-narrow network plans, in which that number grows to at least 70 percent. ACA requires QHP (Qualified Health Plans) to contract with only 30 percent of local Essential Health Providers. Before Jan. 1, 2014, insurance companies offered doctors, hospitals and other providers “all products” contracts which did not reveal that this would bind them to seeing ACA patients and did not reveal the (often lower) reimbursement schedules. Thus many doctors on provider lists have turned away ACA patients, since they did not know and did not choose to be contracted or were unhappy with their payments. Thus, even after 10 months of operation in California, ACA physician provider networks are still uncertain. In addition, in many areas unique, necessary (but expensive) specialty resources, e.g. children’s or university hospitals were not on provider lists. More devastating, commonly a hospital might be an in-network provider, but its ER and anesthesiology physicians in their monopoly status in the hospital as independent contractors had never contracted with insurance companies and thus unknowing sick patients requiring their care would be personally liable for their high out-of-network fees. In addition, the more expensive ACA metal plans, unlike more expensive commercial health insurance contracts, cover more out-of-pocket costs but do not provide expanded provider networks.

10. Depending on commercial insurance adversely affects rural residents

There is a large variation across America in both premium and other insurance costs as well as provider availability based on small local markets which is built into the system. Enrollment at home is not portable for care in other locations except in true medical emergencies. Rural America is understaffed medically and generally less well-off economically. Since ACA depends on the existing commercial health insurance model rural residents generally have to pay higher premiums. Researchers found that for silver plans, rural residents in 2014 paid an average monthly premium of $387, compared with $369 for urban residents. Further, in states with more than 50 percent of residents living in rural areas, premiums averaged $452, compared with $402 in states with less than 5 percent of the population in rural areas.

11. Ordinary Americans are largely ignorant of the ACA and insurance details

Only 46 percent of ACA enrollees in the new insurance marketplaces say they’re getting a subsidy from ACA when official numbers indicate about 85 percent actually get them. 37 percent of enrollees don’t know the amount of their deductible. If people don’t understand their deductibles and co-pays they may pick a plan based solely on the premium and be in for a nasty surprise when they begin to use care and their deductible hits. Anticipated co-pays and deductibles when you become sick are usually obscure or of little import at the time of purchase. Some physician visits and tests (especially for preventive care) or generic drugs are exempt from the deductible. Like private commercial health insurance plans, ACA plans often don’t cover some key medications for HIV, cancer, multiple sclerosis, rheumatoid arthritis and autoimmune diseases or they require patients to pay as much as 50 percent of the cost per prescription in co-insurance, which may amount to more than $1,000 a month.

12. There are huge complexities in the individual mandate and tax penalties imposed

There are 14 categories of Americans who are exempt from the mandate and penalties. CBO estimates that 23 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 7 million uninsured people, many will be granted exemptions from the penalty because of hardship or for other reasons.

13. The ACA contains complex rules for patient eligibility for subsidies and tax credits   

The ACA “marketplace” is based on Internal Revenue Code definitions of income and household. The basic guide for ACA “navigators” runs to 34 pages. As of the end of May 2014, there were 1.2 million applicants who had inconsistencies with their reported incomes, 461,000 had to verify their citizenship status; and 505,000 needed to prove their immigration status. IRS forms 1094-C and 1095-C will be used by large employers with more than 50 full-time or full-time-equivalent employees to determine whether the employer is responsible for penalties under the employer shared responsibility requirements of the ACA. Employers are required to provide each full-time employee with a form 1095-C. The instructions for the 1094-C and 1095-C are by far the most complex of the instructions, filling 13 pages with dense, two column, print.

Rules for subsidies can be very complex. Covered California includes both premium tax credits and cost-sharing subsidies under their definition of subsidies. The type of subsidy can influence whether or not an individual chooses a silver plan. Anyone with an income below 400 percent of the federal poverty level [FPL] can receive a    premium tax credit if the plan is purchased through the exchange. Those with incomes below 250 percent of the FPL can also qualify for cost-sharing subsidies when they use their plans, but only if they purchase a silver plan through the exchange. The necessary shopping decisions are not a problem for the wealthy because they can buy the best, but they are a problem for the majority who will buy lower actuarial value plans because their personal finances and cash flow are limited. Congress selected a plan with the relatively low actuarial value of only 70 percent (silver plan) to serve as the benchmark, especially for those with incomes below 250 FPL. When those shoppers who chose bronze plans start accessing health care, their out of pocket cash responsibilities could easily amount to 25 percent of their annual income. The potential for individual and family bankruptcy due to illness and medical expenses will still be substantial.

14. So-called rational insurance design, based on basic benefits and standard out-of-pocket expenses, is inadequate to meet the needs of the seriously, chronically ill, especially children

Typical health insurance benefit designs that limit access, such as restrictive formularies and inadequate provider networks, high cost-sharing, and a lack of plan transparency deprive consumers, especially the chronically ill, of information that is essential to making informed enrollment choices. For example, if the families of handicapped children in California Crippled Children’s Service (CCS) are administratively forced into ACA, (1) the family may not qualify due to income, (2) the insurance’s narrow network may require changing long-standing provider teams or may not include qualified providers at all, (3) regularly used medications may not be on the formulary, (4) typical therapeutic modalities, e.g. physical therapy, would be subject to standard insurance limits, (5) newly required co-pays and deductibles could be substantial burdens on the family. Other chronically ill adult patients will face the same barriers and constraints.

15. The ACA’s focus is on organization, management and cost, without any heed to compassion and caring

Morale is so low among American physicians and turmoil is so great that the AMA has surveyed its members and instituted a major initiative on the “sustainability and survivability of medical practice.”

16. The ACA creates Accountable Care Organizations (ACOs) with the stated aim of coordinating and improving medical services

The ACO is the newly formulated medical care provider system created by ACA which is designed to include a comprehensive roster of all medical facilities, providers and services in order to provide more coordinated and higher-quality care while being more efficient and saving money. It should be noted that while the ACO is modeled after long-standing eminent American medical institutions (for example the Mayo Clinic), the possibility of its replication and its general ability to improve care and save money remains completely theoretical. In addition this model requires a tremendous upfront investment in resources. Thus, through the ACO paradigm, the ACA has begun the process of consolidating medical practice into an industrialized corporate business model. Unfortunately, this is highly likely to make medical care even more anonymous and bureaucratically distant from its compassionate-caring origins.

Dr. Jeoffry Gordon recently retired from his solo family practice in San Diego after 35 years. He came to San Diego to help start the San Ysidro Community Health Center. He was the first medical director of the Beach Area Community Clinic and helped develop the San Diego Council of Community Clinics. He spent eight years on the California Board of Medical Quality Assurance which licenses and disciplines all physicians in California. In the run-up to the enactment of the ACA, he gave over 40 community presentations, including five medical grand rounds, supporting single-payer health reform. He also lectures on social justice issues. He now sees patients in a clinic for the homeless and is a special consultant in Bioethics at a local community hospital.

Tom Harkin says that Congress should have enacted single payer

ObamaCare author Tom Harkin: Health law is ‘really complicated’

By Alexander Bolton
The Hill, December 3, 2014

Sen. Tom Harkin, one of the co-authors of the Affordable Care Act, now thinks Democrats may have been better off not passing it at all and holding out for a better bill.

The Iowa Democrat who chairs the Senate Health, Education, Labor and Pensions Committee, laments the complexity of legislation the Senate passed five years ago.

He wonders in hindsight whether the law was made overly complicated to satisfy the political concerns of a few Democratic centrists who have since left Congress. 

“We had the power to do it in a way that would have simplified healthcare, made it more efficient and made it less costly and we didn’t do it,” Harkin told The Hill. “So I look back and say we should have either done it the correct way or not done anything at all.

“What we did is we muddled through and we got a system that is complex, convoluted, needs probably some corrections and still rewards the insurance companies extensively,” he added.

Harkin said the sweeping healthcare reform bill included important reforms such as preventing insurance companies from discriminating against people with pre-existing conditions and keeping young adults on their parents’ health insurance plans until age 26.

But he believes the nation might have been better off if Democrats didn’t bow to political pressure and settle for a policy solution he views as inferior to government-provided health insurance.

He believes Congress should have enacted “single-payer right from the get-go or at least put a public option would have simplified a lot.”

“We had the votes to do that and we blew it,” he said.

Harkin and other liberals are now faced with the bitter irony that the centrists tried to placate five years ago by crafting a labyrinthine market-based reform are now all out of the Senate.

“So as a result we’ve got this complicated thing out there called the Affordable Care Act,” he said.

He believes Congress should have moved legislation in the first 100 days after Obama’s inauguration, which drew over a million people to the National Mall on a frigid January day.   

“There’s this old saying, ‘If you have the votes, vote. If you don’t, talk.’ We had the votes but we talked,” he said.

http://thehill.com/homenews/senate/225812-harkin-dems-better-off-without-obamacare

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Comment:

By Don McCanne, MD

No comment.

Vermont advocates continue push for single-payer health

By Lisa Rathke
The Times Argus (Barre & Montpelier, Vt.), Dec. 3, 2014

MONTPELIER, Vt. (AP) — Supporters of a plan to make Vermont the first state in the country to enact a single-payer health care system urged Gov. Peter Shumlin and the Legislature on Tuesday to move forward with the overhaul, despite Shumlin’s close call in the November election.

Sixteen groups, including the state employees and teachers unions, held a State House press conference to rebut critics of Green Mountain Care who say the election was a referendum on the publicly funded system. They say the election was so close because of property taxes and other issues.

But they acknowledged that garnering support for the plan will be an uphill battle following the debacle with Vermont’s health exchange website.

Shumlin said Tuesday he remains committed to the proposal and hopes to provide a financing plan and timeline to legislators before the session opens in January.

The administration will outline in the next several weeks what’s wrong with how the current system is funded and the challenges the state faces to sustain current spending, he said.

“One of the toughest things that I’ve tried to do is … be the first state in the country that moves from a premium-based health care system to one that’s based upon ability to pay,” the governor said.

“We’ve been working hard to try to get it right,” he said. “Now the economists are drilling down into it to make sure that it helps our economy, helps grow jobs and improves quality of life and that work is still being done.”

But Darcie Johnston, leader of Vermonters for Health Care Freedom, a group opposed to the state’s health care plans, said the fact that advocates held a press conference to urge the governor to move forward confirms that they have a public relations problem with the public.

“Vermonters are taxed enough, and a $2 billion to $3 billion tax increase, a financing plan that has not been disclosed that is two years late by law, lack of transparency, and Peter Shumlin’s mismanagement of Vermont Health Connect were issues that dominated the election,” Johnston said.

The state temporarily shut down the state health care exchange website this year to fix several problems that plagued it since its launch, including trouble with pages loading, security issues and the inability for enrollees to make some changes online.

A survey of the 3,000-member Vermont Federation of Nurses and Health Professionals showed overwhelming support for singer payer, said Mari Cordes, a nurse member of the union.

Health care providers want anyone who needs medical attention to get it as early as possible, she said, with no barriers to accessing care when their condition worsens or becomes life-threatening and costlier to treat.

“Get the insurance companies out of our exam rooms and get our hard-earned money out of administrative waste and exorbitant CEO compensation,” Cordes said. “A universal publicly funded health care system is the only way to do that.”

Such a system will also benefit businesses by disconnecting insurance from employment and allowing them to expand and create jobs, said Dan Barlow of the Vermont Businesses for Social Responsibility.

“If we don’t stem the rising costs of health care and we don’t expand coverage to all Vermonters and de-link employment and insurance, health care costs will overwhelm our economy and we’ll lose jobs here in the state,” he said.

http://www.timesargus.com/article/20141203/NEWS03/712039997

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Single payer advocates rally support in Statehouse

By Morgan True
VTDigger.com, Dec. 2, 2014

The November election that unseated a number of Democratic lawmakers and nearly cost Gov. Peter Shumlin his job was not a referendum on the state’s plans for a single payer health care system, according to proponents of reform.

Historically low voter turnout and frustration with rising property taxes were larger factors on Election Day, said Peter Sterling, director of the health care reform group Vermont Leads.

Sterling and others held a press conference to counter the narrative that the election amounted to a vote of no confidence on health care reform.

On the contrary, Sterling and others said, the public demand for a universal, taxpayer financed health care program in Vermont has not waned. Sterling emphasized that most Democrats and Progressives in competitive races prevailed. Rep. Mike Fisher, D-Lincoln, chair of the House Health Care Committee, and a key proponent of single payer, however, was voted out of office on Election Day.

Representatives from labor, consumer and health care advocacy groups gathered at the Statehouse in Montpelier on Tuesday to call on elected leaders to press forward with Green Mountain Care, as the so-called single payer program is known.

“Get the insurance companies out of our exam rooms and get our hard-earned money out of administrative waste and exorbitant CEO compensation,” said Mari Cordes, a nurse and member of the American Federation of Teachers, which represents many health care workers in the state.

“A universal, publicly funded health care system is the only way to do that,” she added.

The election is an “enormous wake-up call” for the governor and legislative leaders to take action and “move forward in bold ways to address the health care crisis,” said James Haslam, director of the Workers Center, which coordinates the Health Care as a Human Right campaign for the advocacy group.

Elected officials have a clear, moral choice, Haslam said — they can either continue to support a market-based system to drive insurance company profits, or they can lead the country by transitioning to a universal system that is “adequately and equitably financed through taxes.”

Martha Allen, president of Vermont’s chapter of the National Education Association, said it’s time for leaders to begin the conversation about what health benefits Green Mountain Care will cover.

The state should model the Green Mountain Care benefit on the state employee health plan, according to Leslie Matthews of the Vermont State Employees Association.

“We believe that every Vermonter deserves the same level of care that we receive,” Matthews said. The state employee health plan “can and should serve as a baseline for Green Mountain Care,” she added.

The state employee health plan offers a more generous benefit than many other states, according to a recent Pew study.

Pressure to set the Green Mountain Care benefit at a high level could meet resistance from fiscally conservative Democrats who will likely question taxpayers’ ability to pay for more generous benefits. Many Republicans oppose the concept of single payer altogether.

Members of the American Federation of Teachers and the National Education Association stand to lose generous health benefits — or pay more for them — when an Affordable Care Act tax on high-value health plans takes effect in 2018.

Both unions fund health reform advocacy groups that helped sponsor Tuesday’s news conference.

Matthews said any universal health care program should be transparent and accountable, and for that to happen it should be administered by the VSEA.

Shumlin has said the program is likely to be administered by a third party, and many people close to the reform effort believe that Blue Cross Blue Shield of Vermont, the state’s largest health insurer, is a likely candidate to fulfill that role.

Concerns raised about the involvement of MIT economist Jonathan Gruber in developing Shumlin’s financing plan won’t prevent it from being debated on its merits, Sterling said. Gruber has come under fire for disparaging remarks he made about the intelligence of the American public.

Sterling also dismissed the idea that the governor’s process of developing a financing plan has not been transparent, acknowledging that Shumlin may be late delivering it, but that once it’s released, he expects a robust public debate.

The governor delayed a self-imposed deadline for his financing plan last legislative session and is now expected to release the plan in January. Since the election, Shumlin has promised an inclusive and transparent process for vetting it.

Progress for Sterling and other reform proponents would mean the Legislature passing a financing plan this year. Despite other priorities for lawmakers, such as education reform, the group appeared optimistic the state could position itself to move forward with Green Mountain Care in 2017.

Haslam said the proposal will impact every Vermonter, and the public should demand a role in its development.

“This is something that’s only going to happen if thousands of people come out and push for it,” he said.

The proposal won’t get a rubber stamp from advocates, Haslam said; they are eager to see if the governor’s plan is worth defending.

Single payer advocates rally support in Statehouse

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Health reform advocates urge Vt. move to single-payer system

Unions, some business groups push lawmakers for early ’15 vote

By Stewart Ledbetter
WPTC.com, News Channel 5 (Colchester, Vt.), Dec. 2, 2014 

MONTPELIER, Vt. — Supporters of a plan for Vermont to become the first state in the country to enact a single-payer health care system are urging the governor and Legislature to move forward with the plan without delay.

Sixteen groups, including the state employees’ and teachers’ unions said Tuesday that the November election results should not slow the push to adopt Green Mountain Care, the state’s universal, publicly funded system.

“We need to do this,” Vermont NEA President Martha Allen said. 

Once its champion, Gov. Peter Shumlin has seemed less outspoken about advancing a $2 billion reform plan in recent weeks.

Shumlin barely survived a re-election challenge from Republican Scott Milne Nov. 4. 

The administration is scheduled to release details on projected costs and coverage benefits when lawmakers return to Montpelier in January.

Supporters think that will galvanize public support. 

“Listen to the people,” said James Haslam of Vermont Workers Center. “Give us something worth fighting for.” 

Dan Barlow of Vermont Businesses for Social Responsibility said decoupling health insurance from employment will allow businesses to expand and create jobs while providing coverage to uninsured Vermonters will reduce health care costs by reducing emergency room visits.

Even critics of single-payer expect lawmakers might approve it, especially if the state gets an extra nudge from the Obama administration. 

“This is really what (President Barack Obama) wanted in health care reform and he wants Vermont to be the first to do it,” said Darcie Johnston, president of Vermonters for Health Care Freedom. “So they’ll push this ahead. When has this legislature said no to this governor?”

http://www.wptz.com/news/health-reform-advocates-urge-vt-move-to-singlepayer-system/30021038#ixzz3KqkyjL4C

Amy Finkelstein: Moral Hazard in Health Insurance

Moral Hazard in Health Insurance

By Amy Finkelstein
Columbia University Press, December 2014

In 1963, Ken Arrow proposed the concept of moral hazard in health insurance, the idea that health insurance may increase the demand for medical care. That creates a fundamental tension for health policy that is trying both to cover the uninsured and simultaneously reduce the level and growth of health spending.

The challenge posed in Arrow’s paper to subsequent generations of economists was whether we could verify that this theoretical notion of moral hazard and health insurance actually existed, and whether we could quantify its magnitude and explore its nature and implications.

How have we risen to this challenge? There is compelling evidence from randomized trials that health insurance affects medical spending. Those who say otherwise are ignoring the evidence at their own peril. This is a fact of life. It mat not be what we wished for, but we have to think about it, grapple with it, and think about its implications for policy.

http://cup.columbia.edu/book/moral-hazard-in-health-insurance/9780231163804

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The RAND Health Insurance Experiment, Three Decades Later

By Aviva Aron-Dine, Liran Einav, and Amy Finkelstein
Journal of Economic Perspectives, Winter 2013

Our reexamination concludes that despite the potential for substantial bias in the original estimates stemming from systematically differential participation and reporting across experimental arms, one of the central contributions of the RAND experiment is robust: the rejection of the null hypothesis that health spending does not respond to the out-of-pocket price. Naturally, however, these potential biases introduce uncertainty about the magnitude of the impact of the different insurance plans on medical spending. Moreover, the translation of these experimental estimates into economic objects of interest—such as a price elasticity of demand for medical care—requires further assumptions and machinery, which go beyond the “raw” experimental results. While economic analysis has made progress in the intervening decades in developing techniques that may offer new approaches to the economic analysis of moral hazard effects of health insurance, it will always be the case that, like the famous –0.2 price elasticity of demand estimate produced by the original RAND investigators, any attempt by researchers to apply the experimental estimates out of sample will involve more assumptions—and hence scope for uncertainty—than the direct experimental estimates themselves. This point, while straightforward and uncontroversial (we’d think), may have become somewhat lost in the intervening decades of use of the RAND estimates. Our hope is that this essay may help put both the famous experiment and its results back in context.

http://economics.mit.edu/files/8400

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Comment:

By Don McCanne, MD

This short book by Amy Finkelstein, “Moral Hazard in Health Insurance,” provides an excellent update that can be used to better understand the application of the concept of moral hazard to the design of health care financing. But more must be said.

The book is based on the fifth annual Kenneth J. Arrow Lecture presented at Columbia University in April 2012. Finkelstein’s lecture is covered in 30 pages. An introduction is provided by Joseph P. Newhouse (RAND HIE). Commentaries are provided by Jonathan Gruber (provider-side moral hazard), Kenneth J. Arrow himself (asymmetry of information), Joseph E. Stiglitz (markets and health care), and a brief discussion follows. Finally, Kenneth Arrow’s seminal 1963 paper, “Uncertainty and the Welfare Economics of Medical Care,” is included. This book should be in every library covering health policy.

As applied to health insurance, the concept of moral hazard is quite simple: many people will use more health care if they are protected from the out-of-pocket costs of that care. What is not so simple is how much of an impact that has and what the ramifications are. Amy Finkelstien helps us by explaining that there is much unknown, and that even the classical studies must be interpreted with great care as they are applied to today’s insurance models. Nevertheless, she makes the case that the evidence that health insurance affects medical spending is compelling.

One important concern about her presentation is that she attacks what she calls “the rhetorical case against the notion of moral hazard and health insurance” by criticizing the “alternative view” that “medical care is determined not by price but by needs.” She then seems to dismiss the great work by John Nyman plus the input by Uwe Reinhardt, not directly, but by merely including them in a quote from Malcolm Gladwell’s New Yorker article, “The Moral-Hazard Myth.” When she writes, “Those who say otherwise are ignoring the evidence at their own peril,” it seems that she is referring to Gladwell, Nyman and Reinhardt.

Unfortunately, she seems to be guilty of using a straw man analogy. I do not recall ever reading that either Nyman or Reinhardt said that price was not a factor in medical care. In fact, Reinhardt is coauthor of the Health Affairs article, “It’s the Prices, Stupid.” However, they have both made the point that need is a very important factor in accessing medical care, even when there are price barriers. Moral hazard enthusiasts need to address medical need.

The greatest problem with this book is that it advances, without requisite criticism, the widely accepted thesis that having insurance increases health care spending . This concept has resulted in the widespread application of countermeasures that erect financial barriers to care – high deductibles, greater coinsurance, tiering of benefits, and narrow networks. All of these impair patient access to beneficial care – the opposite of what a well-functioning system should be providing for us.

Is depriving patients of beneficial care harmful? Many economists seem to glibly dismiss the potential harm if it is effective in reducing spending. They cite the RAND HIE and the Oregon natural experiment as showing that harm is negligible or non-existent. Yet Finkelstein and her colleagues, in the Journal of Economic Perspectives paper on the RAND HIE, state, “attempt by researchers to apply the experimental estimates out of sample will involve more assumptions – and hence scope for uncertainty – than the direct experimental estimates themselves.” 

It is frequently stated in the lay literature that the RAND HIE and the Oregon experiment showed that the decrease in care caused by patient out-of-pocket spending does not result in adverse outcomes. That statement is incorrect. There were some adverse outcomes in both studies, but, more importantly, the studies concentrated on spending and were not powered to detect impaired health outcomes. The facts are that we do not have studies that can reliably assure us that no harm is done. Such studies would be complex, expensive and unethical.

We have a century of experience with our health care delivery system. The beneficial effects of modern health care far outweigh the detrimental effects. We do not need policy studies to try to counter this observation. It is intuitive that having better access to health care is beneficial, and, in this case, intuition is more than enough to drive policy.

From the  perspective of optimal patient care, the thesis of this book is upside-down. Rather than looking at the increase in spending that occurs when a person is covered with insurance, we should be looking at the impaired access that results from the reduction in spending due to ill-advised financial barriers erected through insurance innovations. Our efforts should be directed toward removing those barriers.

But then what about the spending that economists characterize as “increases” due to moral hazard? The answer is simple. Instead of depriving patients of beneficial care we should turn to the other methods of containing costs that have been proven to be effective in other nations.

We could start with the administrative waste that would be recovered simply by converting to a single payer system (not to mention the many other financial benefits of single payer). Just the administrative savings alone would be far more than could ever be saved through the application of moral hazard policies.

We already have high deductibles and coinsurance, and yet our health care costs are much higher than in those nations that do not use such detrimental interventions. Application of moral hazard theory has been a failure primarily because it diverted our attention away from social policies that would advance health care justice.

Underinsurance Remains Big Problem Under Obama Health Law

By Aaron E. Carroll, MD
The New York Times, December 1, 2014

The Affordable Care Act, like most health care reform efforts, focuses on people without insurance. That’s fine, because those people do face significant problems obtaining health care in the United States.

But underinsurance is a real concern, too, and it’s often ignored.

Before the A.C.A. was passed, underinsurance was prevalent. Of adults age 19-64 in 2010, 16 percent, or 29 million, met the Commonwealth Fund’sdefinition of being underinsured: one’s out-of-pocket health care costs exceeding 10 percent of income (5 percent when income is less than 200 percent of the federal poverty line), or one’s insurance deductible being more than 5 percent of income. The number of underinsured Americans had grown by 80 percent from 2003 to 2010.

Some of the A.C.A.’s regulations, such as removing annual or lifetime limits on reimbursements, were aimed at reducing the out-of-pocket spending that people might have to make. When the act went into effect and some people found their policies had been canceled (despite President Obama’s now-infamous assurance that “if you like your health care plan, you can keep it”), it was often because those policies left them underinsured, even if they didn’t realize it.

But the A.C.A. has not done as much as many had hoped it would to reduce underinsurance. In fact, it may be helping to spread it. And proposed modifications to the law, like those that would introduce a new tier of “copper” plans in addition to bronze, silver, gold and platinum, might make underinsurance worse.

This is important, because research shows that those who are underinsured are more likely to go without needed care.

In the most recent update of the Commonwealth Fund survey, conducted in September and October of this year, investigators found that 13 percent of all adults 19-64 spent more than 10 percent of their income on out-of-pocket health care costs. Poor adults were the most likely to spend this amount. More than 30 percent of nonelderly adults earning less than the poverty line spent more than 10 percent of their income on out-of-pocket costs, and 18 percent of those making between 100 percent and 200 percent of the poverty line did so. All of these people were insured.

Deductibles remain high for Americans as well. Over all, 13 percent of people age 19-64 had a deductible that was 5 percent of their income or more. Since Medicaid traditionally doesn’t have deductibles, pretty much all of these people had private insurance. Still, those at the lowest end of the socio-economic spectrum were hit the hardest. A full quarter of nonelderly adults below the poverty line had deductibles this large, and 20 percent of those making between 100 percent and 200 percent of the poverty line did.

This is too much for many to spend. More than 40 percent of people who were surveyed said their deductibles were unaffordable. Almost two-thirds of people making between 100 percent and 200 percent of the poverty line said they were unaffordable.

The point of having insurance is to be able to get care when you need it, without too large a financial burden. Underinsured Americans are not receiving this benefit, though. They can’t get the care they need. Twenty-seven percent of adults with a deductible large enough to render them underinsured didn’t see the doctor when they were sick; 23 percent didn’t get a preventive care test; 29 percent skipped a test, treatment or follow-up appointment; and 22 percent didn’t see a specialist to whom they were referred. Forty percent of them had at least one of these cost-related access problems.

These are people who had private health insurance for the full year. They are not the uninsured.

Last year, the average deductible for a silver-level plan offered in the exchanges was more than $2,500. Some plans had deductibles as high as $5,000. These figures are most likely at least 5 percent of income for many, if not most, Americans (half of American households earn less than $53,046 per year), even for those who qualify for cost-sharing subsidies. If people choose bronze plans, things are even worse. The average deductible for such plans was more than $5,000, with some plans hitting the out-of-pocket maximum of $6,350. Almost anyone purchasing such plans would be, by definition, underinsured.

Moreover, efforts are underway to go even further. The Expanded Consumer Choice Act, co-sponsored by six Democratic senators and one independent, seeks to add a new level of insurance coverage. “Copper” plans would have 50 percent actuarial value. Such plans would have significantly lower premium costs than bronze plans, which might increase the number of people who will buy insurance.

But this would be accomplished at the expense of higher out-of-pocket costs. Deductibles for these plans might have to be as high as $9,000, which would mean increasing the out-of-pocket maximum allowable by law. This would lead to even more people being underinsured.

As I’ve highlighted in previous Upshot articles, people who have chronic illnesses fare worse when they have more cost-sharing. They are also more likely to be underinsured. The Commonwealth Fund found that 17 percent of people who were in fair or poor health, or who had a chronic condition, spent at least 10 percent of their income on out-of-pocket costs. This was on top of the cost of their insurance premiums, because all of them were insured.

Just a month ago, Gallup asked Americans to identify the “most urgent health problem facing this country at the present time.” Eighteen percent replied that it was access to health care, or universal health coverage; but 19 percent replied that it was affordable health care or costs.

In the quest for universal coverage, it’s important that we not lose sight of “coverage” in order to achieve “universal.” The point of improving access is, after all, to make sure that people can get, and afford, care when they need it.

Aaron E. Carroll is a professor of pediatrics at Indiana University School of Medicine. He blogs on health research and policy at The Incidental Economist, and you can follow him on Twitter at @aaronecarroll.

Prevalence of underinsurance unimproved and likely worse under ACA

Cost Still a Barrier Between Americans and Medical Care

By Rebecca Riffkin
Gallup, November 28, 2014

One in three Americans say they have put off getting medical treatment that they or their family members need because of cost. Although this percentage is in line with the roughly 30% figures seen in recent years, it is among the highest readings in the 14-year history of Gallup asking the question.

Last year, many hoped that the opening of the government healthcare exchanges and the resulting increase in the number of Americans with health insurance would enable more people to seek medical treatment. But, despite a drop in the uninsured rate, a slightly higher percentage of Americans than in previous years report having put off medical treatment, suggesting that the Affordable Care Act has not immediately affected this measure.

The percentage of Americans with private health insurance who report putting off medical treatment because of cost has increased from 25% in 2013 to 34% in 2014.

This year, 22% of Americans say they have put off medical treatment for a “very” or “somewhat serious” condition. 

Bottom Line

One of the goals of opening the government exchanges was to enable more Americans to get health insurance to help cover the costs of needed medical treatments. While many Americans have gained insurance, there has been no downturn in the percentage who say they have had to put off needed medical treatment because of cost.

http://www.gallup.com/poll/179774/cost-barrier-americans-medical-care.aspx

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Underinsurance Remains Big Problem Under Obama Health Law

By Aaron E. Carroll
The New York Times, December 1, 2014

The A.C.A. has not done as much as many had hoped it would to reduce underinsurance. In fact, it may be helping to spread it. And proposed modifications to the law, like those that would introduce a new tier of “copper” plans in addition to bronze, silver, gold and platinum, might make underinsurance worse.

The point of having insurance is to be able to get care when you need it, without too large a financial burden. Underinsured Americans are not receiving this benefit, though. They can’t get the care they need. Twenty-seven percent of adults with a deductible large enough to render them underinsured didn’t see the doctor when they were sick; 23 percent didn’t get a preventive care test; 29 percent skipped a test, treatment or follow-up appointment; and 22 percent didn’t see a specialist to whom they were referred. Forty percent of them had at least one of these cost-related access problems.

These are people who had private health insurance for the full year. They are not the uninsured.

In the quest for universal coverage, it’s important that we not lose sight of “coverage” in order to achieve “universal.” The point of improving access is, after all, to make sure that people can get, and afford, care when they need it.

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Comment:

By Don McCanne, MD

Health care reform should have eliminated underinsurance, not create more of it. The private insurance industry will not fix this problem but only compound it as it strives to keep its premiums competitive.

We need to replace the private insurers with our own single payer program. For some, Medicare is also underinsurance. We need to fix that and then provide it to everyone.

OECD: United States is first in private social spending

Social spending is falling in some countries, but in many others it remains at historically high levels

OECD, November 2014

In 2014, OECD countries devote more than one-fifth of their economic resources to public social support.

Countries on average spent more on cash benefits (12.3% of GDP) than on social and health services (8.6% of GDP).

Cash income support to the working age population accounts for 4.4% GDP on average across the OECD, of which 1% GDP towards unemployment benefits, 1.8% on disability/sickness benefits, 1.3% on family cash benefits and another 0.4% on other social policy cash supports.

Public expenditure on health is another important social policy area. On average across the OECD, public expenditure on health has increased from 4% in 1980 to 6% of GDP.

In terms of spending, public pension payments constitute the largest social policy area with spending at just below 8% of GDP.

In the United States public social spending is relatively low, but total social spending is the second highest in the world

Thus far, the discussion focussed on public social spending on cash benefits and social and health services, and in the United States and other non-European OECD countries such spending is lower than in most European countries. However, a focus on public budgets misses two important features that affect social spending totals and international comparisons of social expenditure: 1) private social expenditure and 2) the impact of tax systems.

Private social expenditure

Private social expenditure concerns social benefits delivered through the private sector (not transfers between individuals) which involve an element of compulsion and/or inter-personal redistribution, for example through the pooling of contributions and risk sharing in terms of health and longevity. Pensions constitute an important part of both public and private social expenditure. Private pension payments can derive from mandatory and voluntary employer-based (sometimes occupational and industry wide) programmes (e.g. in the Netherlands or the United Kingdom), or tax-supported individual pension plans (e.g., individual retirement accounts in the United States).

Individual out-of-pocket spending on health services is not regarded as social spending, but many private health insurance plans across the OECD involve pooling of contributions and risk sharing across the insured population. On average across the OECD, such private social health expenditure amounted to 0.6% of GDP in 2012. It was 1.5% of GDP in France and 2.5% of GDP in Chile, but across OECD countries private health insurance is most important in the United States where it amounted to 5.7% of GDP. Taken together with public spending on health amounting to 8% of GDP in the same year, and the value of revenue foregone on tax breaks on health premiums (just over 0.5% of GDP), total social health spending in the United States amounted to over 14% of GDP – 4 percentage points higher than in France which is the second biggest “health spender” among OECD countries.

Private social spending plays the most important role in the United States where it amounted to almost 11% of GDP.

Cross-country rankings

The combination of small “net tax effects” and considerable private social spending ensures that Australia, Canada, Japan and in particular the United States move up the international social spending ladder. As private social spending (including health) is so much larger in the United States compared with other countries, its inclusion moves the United States from 23rd in the ranking of the gross public social spending to 2nd place when comparing net total social spending across countries.

http://www.oecd.org/els/soc/OECD2014-Social-Expenditure-Update-Nov2014-8pages.pdf

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Comment:

By Don McCanne, MD

The character of a nation is determined by support of its social programs. Medicare and Social Security are two social insurance programs that are revered by U.S. citizens. Yet those programs, combined with other public social programs, leave us ranked only 23rd amongst OCED nations. It is our unique private social spending programs that move us from 23rd to 2nd place.

At almost 11% of our GDP, private social spending was by far the highest in the United States, as compared to other nations. Contributing to this are our private pension plans (5% of GDP) and especially spending on private health insurance (5.7% of GDP). In fact, our total public and private social spending on health care (private insurance @ 5.7%, public spending @ 8%, and tax breaks on health premiums @ 0.5%) amount to 14% of GDP, making us by far the biggest health spender of all nations.

Is it wise for us to rely so heavily on private social spending? First of all, administration of private retirement accounts is much more expensive and complex than administration of our Social Security system, and administration of private health insurance plans is also much more expensive and complex than is administration of Medicare. We are wasting private social funds on these inefficient intermediaries.

But more than that, as a percentage of income, contributions to private retirement accounts and private health insurance are regressive. For comparable benefits, lower-income individuals pay a higher percentage of their incomes for private pensions and private health insurance than do higher-income individuals. The fact that we rely much more heavily on private social spending demonstrates how inegalitarian the United States has become, in contrast to other nations.

Imagine folding the benefits of individual retirement accounts into Social Security and folding the benefits of private health insurance plans into Medicare, and then fund both programs with equitable progressive taxes. We would have the finest retirement and health programs in the world.

Tomorrow – Thanksgiving – we can give thanks for having the wisdom to do that as a nation (or did I get something wrong here?).