PNHP

Time to end co-pays

Time to end co-pays

They are one of many reasons that U.S. health care has the world’s highest overhead costs

By David Cay Johnston
Al Jazeera America, Sept. 8, 2014

American hospitals spend a huge and growing share of their revenue on overhead, a study published today in Health Affairs shows. Getting those costs down should be a national priority.

American hospitals on average spend 25.3 cents out of each dollar of revenue on overhead, with for-profit hospitals spending 27 percent and nonprofits a bit below the average.

By contrast, the Netherlands and England, which have the next highest overhead costs, spend 19.8 percent and 15.5 percent, respectively. Both are moving toward market-based financial models, so as with the U.S. overhead costs are likely to rise.

Compare Canada and Scotland, which have single-payer health care systems. Their hospital administrative costs are half those in America. 

The new study helps explain why for each $1 the 33 other countries with advanced economies spend per person on universal health care, the United States spends $2.64 — and yet more than one-fifth of Americans has no or poor health insurance.  A significant reason America’s health care system is so expensive and inefficient turns out to be those annoying co-pays. 

For the full article, visit http://america.aljazeera.com/opinions/2014/9/health-care-costscopaysoverhead.html.

David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law. He is the best-selling author of “Perfectly Legal,” “Free Lunch” and “The Fine Print” and editor of the new anthology “Divided: The Perils of Our Growing Inequality.”

Support Medicare for All bill, H.R. 676

By Richard A. Damon, M.D.
The Missoulian (Mont.), Letters, Sept. 5, 2014

If you experienced a time when you had no health care coverage, or tire of paying out-of-pocket costs for unpredicted illness, have been financially blindsided by an insurance company, are fed up with escalating costs, or are forced to accept unexpected premium raises in your employer-based insurance, you soon realize that this nation has not been wise in choosing our current health care reform.

Now that the Affordable Care Act is implemented and the dust is settling, you may begin to ask what can be done. If you are thoughtful and farsighted, you will see we are headed down the road of a completely market-based system of health care that basically forces purchase of private health insurance.

Market rhetoric telling how great choices are in the ACA marketplace, calling insurance plans “products” and us “consumers,“ is just rhetoric, and many are learning that having health insurance does not guarantee access to health care. In reality, hundreds of billions of dollars are being transferred to the private insurance industry to subsidize plans that leave people underinsured, unable to afford care, and at risk of financial ruin from serious accident or illness. ACA regulations are no match for insurance company strategies to find and exploit loopholes.

The underinsured continue to self-ration, delay or avoid care due to cost. Insurance enrollees cannot be dropped, but insurers can stop offering plans in non-profitable areas. Cancer centers and major medical centers are being left out of insurance networks. Remember, nations that consider health care a public good, not a commodity, have universal coverage that costs less and produces better outcomes.

Health care is a human right, but real health care reform faces barriers because legislators cave to private insurers. Medicare for all, HR 676, is a much better system.

Dr. Richard A. Damon resides in Bozeman.

http://missoulian.com/news/opinion/mailbag/house-resolution-support-medicare-for-all-bill/article_f55f61e2-350a-11e4-be83-0019bb2963f4.html

U.S. far out in front again – in hospital administrative waste

A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far

By David U. Himmelstein, Miraya Jun, Reinhard Busse, Karine Chevreul, Alexander Geissler, Patrick Jeurissen, Sarah Thomson, Marie-Amelie Vinet and Steffie Woolhandler
Health Affairs, September 2014

Abstract

A few studies have noted the outsize administrative costs of US hospitals, but no research has compared these costs across multiple nations with various types of health care systems. We assembled a team of international health policy experts to conduct just such a challenging analysis of hospital administrative costs across eight nations: Canada, England, Scotland, Wales, France, Germany, the Netherlands, and the United States. We found that administrative costs accounted for 25.3 percent of total US hospital expenditures—a percentage that is increasing. Next highest were the Netherlands (19.8 percent) and England (15.5 percent), both of which are transitioning to market-oriented payment systems. Scotland and Canada, whose single-payer systems pay hospitals global operating budgets, with separate grants for capital, had the lowest administrative costs. Costs were intermediate in France and Germany (which bill per patient but pay separately for capital projects) and in Wales. Reducing US per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion in 2011. This study suggests that the reduction of US administrative costs would best be accomplished through the use of a simpler and less market-oriented payment scheme.

From the Discussion

Hospitals’ administrative overhead varied more than twofold across the nations we studied as a share of total hospital costs and more than fourfold in absolute terms. These costs were far higher in the United States than elsewhere.

In all nations, hospital administrators must procure and coordinate the facilities, supplies, and personnel needed for good care. In nations where administrators have few responsibilities beyond these logistical matters, administration seems to require about 12 percent of hospital expenditures.

Modes of hospital payment can increase the complexity and costs associated with two additional management tasks: garnering operating funds and securing capital funds for modernization and expansion.

Garnering operating funds requires little administrative work in nations such as Canada, Scotland, and Wales, where hospitals receive global, lump-sum budgets. In contrast, per patient billing (for example, using DRGs) requires additional clerical and management personnel and special-purpose IT systems. This is true even in countries—such as France and Germany—where payment rates, documentation, and billing procedures are uniform.

Billing is even more complex in nations where each hospital must bargain over payment rates with multiple payers, whose documentation requirements and billing procedures often vary, as is the case in the United States and the Netherlands.

Differences in how hospitals obtain capital funds also appear to affect administrative costs. The combination of direct government grants for capital with separate global operating budgets—as in Scotland and Canada—was associated with the lowest administrative costs. (Wales has recently transitioned to such a system, reversing previous market reforms.) Hospitals in France and Germany, where direct government grants account for a substantial share of hospital capital funding, have relatively low administrative costs despite per patient, DRG-based billing.

Administration is costliest in nations where surpluses from day-to-day operations are the main source of hospital capital funds: the United States and, increasingly, the Netherlands and England. In such health care systems, the need to accumulate capital funds for modernization and expansion stimulates administrators to undertake the additional work that is needed to identify and pursue profit opportunities.

http://content.healthaffairs.org/content/33/9/1586.abstract

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Bureaucracy consumes one-quarter of US hospitals’ budgets, twice as much as in other nations: Health Affairs study

PNHP Press Release, September 8, 2014

A study of hospital administrative costs in eight nations published today in the September issue of Health Affairs finds that hospital bureaucracy consumed 25.3 percent of hospital budgets in the U.S. in 2011, far more than in other nations.

Administrative costs were lowest (about 12 percent) in Scotland and Canada, whose single-payer systems fund hospitals through global, lump-sum budgets, much as a fire department is funded in the U.S.

The article attributes the high administrative costs in the U.S. to two factors: (1) the complexity of billing a multiplicity of insurers with varying payment rates, rules and documentation requirements; and (2) the entrepreneurial imperative for hospitals to amass profits (or, for nonprofit hospitals, surpluses) in order to fund the modernization and upgrades essential to survival.

“We’re squandering $150 billion each year on hospital bureaucracy,” said lead author Dr. David Himmelstein, a professor at the CUNY/Hunter College School of Public Health and lecturer at Harvard Medical School. “And $300 billion more is wasted each year on insurance companies’ overhead and the paperwork they inflict on doctors.”

He added: “Only a single-payer reform can squeeze out the bureaucratic waste and use the money to give patients the care they need. Instead, we’re layering on more bureaucracy in insurance exchanges and ‘accountable care organizations.’”

https://www.pnhp.org/news/2014/september/bureaucracy-consumes-one-quarter-of-us-hospitals’-budgets-twice-as-much-as-in-ot

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Comment:

By Don McCanne, MD

This international comparison of hospital administrative costs further documents the profound administrative waste that characterizes U.S. health care financing. This study is particularly important because it clarifies the two major factors resulting in this waste: 1) the administrative complexity of interacting with a multitude of insurers, and 2) “the entrepreneurial imperative for hospitals to amass profits or surpluses” in a system with market-driven pricing.

Although all other nations waste less than we do on administration, they do so in varying degrees. Thus we can learn lessons from them, especially the two lessons above. Extrapolating from this Health Affairs article, the solution for hospital financing is obvious: switch to single payer and use global budgets for hospitals and separate budgeting for capital improvements. But don’t stop there. Apply single payer principles to the financing of our entire health care delivery system. That would free up perhaps $400 billion or more that could be used to ensure appropriate health care for everyone.

Urban Institute and Bankrate on high deductibles

QuickTake: Nonelderly Workers with ESI Are Satisfied with Nonfinancial Aspects of Their Coverage but Less Satisfied with Financial Aspects

By Adele Shartzer and Sharon K. Long
Urban Institute, September 4, 2014

The Urban Institute’s Health Reform Monitoring Survey has been tracking health insurance coverage, including employer-sponsored insurance coverage (ESI), since the first quarter of 2013. This QuickTake reports on nonelderly (ages 18–64) workers’ ESI in June 2014. In June 2014, most workers (88.6 percent) were insured and, among those who were insured, most (80.7 percent) had ESI (data not shown). When asked to assess their ESI, workers were generally satisfied with their ESI in terms of available health care services, choice of doctors and other providers, and the quality of the care available under the plan; less than 5 percent of nonelderly workers with ESI coverage report being dissatisfied with any of these factors. However, satisfaction levels are much lower for the financial aspects of coverage, with workers more concerned about premiums, co-payments, and their potential financial risk from high medical bills. Nearly one in four nonelderly workers with ESI (23.4 percent) is dissatisfied with the premium they pay for coverage, and 27.2 percent are dissatisfied with the deductibles they pay when receiving care. The protection that ESI provides against high medical bills may be particularly limited for low-income nonelderly workers (those with family income at or below 138 percent of FPL): 32.1 percent of low-income workers with full-year ESI report having problems paying medical bills in the past 12 months. Overall, 14.2 percent of nonelderly workers with full-year ESI report having problems paying medical bills over the past 12 months.

http://hrms.urban.org/quicktakes/Nonelderly-workers-with-ESI.html

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How People Feel About Their Employer-Sponsored Health Plans

By Margot Sanger-Katz
The New York Times, September 4, 2014

There are new results from the Urban Institute’s Health Reform Monitoring Survey, which asked people with employer-based coverage how they liked what they had.

For people earning between 138 percent and 400 percent of the federal poverty limit, or between $33,000 to $95,000 — the income range of people who are most likely to buy insurance on the public marketplaces — more than 23 percent of workers with employer coverage reported having problems paying their medical bills in the last year. 

Sharon Long, a senior fellow at Urban, said that the results suggested that consumers might not be prepared for what happened when they combined a high-deductible insurance plan with big medical bills.

“What we’ve heard anecdotally from people with health plans is more people are signing up for high-deductible health plans and then being surprised that they have to pay the deductible,” she said. That’s a concern on the new health insurance marketplaces, too. Early evidence suggests that people tended to opt for cheaper plans, many of which came with high deductibles — meaning that the newly insured may face some of the same financial strain if they become seriously ill.

Deductibles and co-payments have been rising, as a growing number of employers embrace the idea that giving workers more of a financial stake in their medical care will help reduce overuse. “It’s been going up over the past few years,” said Gary Claxton, a director of the Health Care Marketplace Project at the Kaiser Family Foundation, which runs a comprehensive annual survey of the employer insurance market. And no one likes paying high insurance premiums or out-of-pocket costs

Over all, Ms. Long said, the rising costs of health care are likely to remain a concern for consumers, wherever they get their insurance. “I expect what we’ll see over time, unless we are able to get costs under control, is that all the cost questions are going to be an issue,” she said.

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Worried about health insurance? That’s common

By Jay MacDonald
Bankrate.com, September 4, 2014

Bankrate’s Health Insurance Pulse survey was conducted Aug. 21-24 by Princeton Survey Research Associates International.

Tom Baker, a professor of insurance law at the University of Pennsylvania Law School, points out that a majority of working adults receive their health insurance through their employer and thus have largely been spared a direct impact from the Obama health care law. But the survey’s concerned majority may partially reflect uneasiness about employer-based plans.

“There is research being done on liquidity, or ‘financial fragility,’ where they asked people if they could come up with $2,000 to pay for a major medical bill in the next month,” he says. “I think 40 percent of respondents said they either couldn’t or it would be very difficult. That suggests that people are financially fragile.”

David Cusano, a senior research fellow at Georgetown University’s Health Policy Institute in Washington, D.C., suspects some of the fear over health costs may stem from growing first-hand experience with how health insurance works.

“With the Affordable Care Act, anybody who now wants insurance can get it,” Cusano says. “The question now becomes: ‘Can I afford to use it?’ When you think about people confronting out-of-pocket maximums at around $7,000 or deductibles of $5,000 for a family, that’s a lot of money. You throw prescription drug copays into the mix, and I can see where you would be worried.”

http://www.bankrate.com/finance/insurance/health-insurance-poll-0814.aspx

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Comment:

By Don McCanne, MD

These two surveys are of people who have employer-sponsored health insurance – the very large market of health plans that was protected by the Affordable Care Act (“you can keep the insurance you have”). The most significant change in employer-sponsored plans is in the increased use of high deductibles as a means of slowing premium growth for the employers.

The trade off is that employees and their families are exposed to greater out-of-pocket costs whenever they access health care. These surveys demonstrate that this exposure is not merely theoretical but is actually creating significant financial insecurity for the insured.

But isn’t the primary purpose of insurance to relieve you of financial hardship should you have health care needs? Instead, these newer insurance product designs are increasing the risk of financial hardship, both in the employer-sponsored market, and especially, by design, in the plans offered by the ACA insurance exchanges. That is why they selected a lower actuarial value plan as the benchmark plan in the exchanges.

Reform should have been about fixing the problems with our health care financing, not making them worse. A far better system would simply provide access to health care when needed, without linking that care to specific financial transactions controlled by a third party insurance intermediary. We don’t need private insurance programs. We would do far better with prepaid health care, financed equitably through progressive tax policies.

It’s in our name. PNHP is Physicians for a National Health Program, not physicians for private health insurance.

What do health care cost trends mean for us?

National Health Expenditure Projections, 2013–23: Faster Growth Expected With Expanded Coverage And Improving Economy

By Andrea M. Sisko, Sean P. Keehan, Gigi A. Cuckler, Andrew J. Madison, Sheila D. Smith, Christian J. Wolfe, Devin A. Stone, Joseph M. Lizonitz and John A. Poisal (all affiliated with CMS Office of the Actuary)
Health Affairs, September 2014

Abstract

In 2013 health spending growth is expected to have remained slow, at 3.6 percent, as a result of the sluggish economic recovery, the effects of sequestration, and continued increases in private health insurance cost-sharing requirements. The combined effects of the Affordable Care Act’s coverage expansions, faster economic growth, and population aging are expected to fuel health spending growth this year and thereafter (5.6 percent in 2014 and 6.0 percent per year for 2015–23). However, the average rate of increase through 2023 is projected to be slower than the 7.2 percent average growth experienced during 1990–2008. Because health spending is projected to grow 1.1 percentage points faster than the average economic growth during 2013–23, the health share of the gross domestic product is expected to rise from 17.2 percent in 2012 to 19.3 percent in 2023.

Model And Assumptions

These projections remain subject to substantial uncertainty and reflect the variable nature of future economic trends, as exemplified by the prolonged and comparatively sluggish nature of the recovery from the 2007–09 recession. In addition, the United States has experienced only the initial effects of the ACA’s coverage expansions. The impacts of reform on the behavior of consumers, insurers, employers, and providers will continue to unfold throughout the projection period and beyond. In particular, the supply-side effects of the ACA remain highly speculative and are not included in these estimates.

Conclusion

Since the end of the Great Recession in 2009, economic growth in the United States, as measured by GDP, has remained slow: just 3.9 percent per year, on average, which is well below the average rate experienced in the four years following the three previous recessions. The fact that recent health spending increases have not returned to their prerecession rates is consistent with the long-standing relationship between overall economic growth and health spending growth.

Growth rates for both the economy and health spending have been slow. However, the health share of GDP has remained relatively constant since 2009 and is expected to be 17.2 percent in 2013. Contributing to the stable share in 2013 are continued low use of medical care and provisions of both sequestration and health reform that constrain payments to Medicare providers.

The period in which health care has accounted for a stable share of economic output is projected to end in 2014, primarily because of the coverage expansions of the ACA. It is anticipated that by 2017, once the mostly one-time transition effects of expanded coverage have fully transpired, the health share of GDP will increase, albeit at a slower rate than its historical average, as an improving economy and the aging of the baby-boom generation lead to faster health spending growth.

http://content.healthaffairs.org/content/early/2014/08/27/hlthaff.2014.0560.abstract

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Comment:

Don McCanne, MD

When people ask how much the United States is spending on health care, it is the numbers from this report that are usually cited. So how much are we spending now, and what will that spending grow to a decade from now?

Projected spending for 2014:

  • National health expenditures (NHE):  $3.057 trillion
  • NHE per capita:  $17,354
  • NHE as a percent of GDP:  17.6%

Projected spending for 2023:

  • National Health expenditures (NHE):  $5.159 trillion
  • NHE per capita:  $26,691
  • NHE as a percent of GDP:  19.3%

With the Affordable Care Act (ACA) the changes in spending represent not only the usual factors that the actuaries consider each year, they also include the changes in coverage due to the establishment of the insurance exchanges and the expansion of Medicaid, along with other direct and indirect results of implementing ACA. Considering all of the variables, the actuaries once again have done a commendable job in arriving at their estimates.

Although the authors do make it clear that there is substantial uncertainty in these predictions, especially due to the variable nature of economic trends, there is one aspect that should raise our concern. Their results depend on the prediction that there will be faster growth in disposable personal income. Yet when you read the work of Thomas Piketty, Emmanuel Saez, Joseph Stiglitz, Robert Reich and others, there is a very real concern that, though the economy may continue to reward the rentiers generously, personal incomes for workers may well remain stagnant. Many will have no discretionary income and may have to continue to cut into the portions of their budgets that pay for essential needs.

This will be of particular concern because of the increases in out-of-pocket spending that will be required as more people are shifted into lower actuarial value plans with higher cost sharing, especially higher deductibles. Many policy experts believe that a significant portion of the recent slowing in health care spending has been due to the high out-of-pocket costs for upfront health care, causing patients to decline care that they should have. This is not the way we should be trying to put a lid on health care spending. People will suffer and some will die simply because of their perception that health care is personally not affordable because of the high upfront costs.

Another important consideration is that predictions of future health care spending are dependent not only on expansion of health care coverage and on the other variables, but they also are dependent on the baseline costs of the existing health care financing system. As we all know, the administratively complex multi-payer system that we have in the United States is the most expensive model of financing health care with its tremendous built in waste. If we were to change to an efficient single payer system, not only would everyone have affordable access to health care, we would not be talking about a trend in national health expenditures that in a decade will consume almost one-fifth of our gross domestic product.

High Health Plan Deductibles Weigh Down More Employees

By Tara Siegel Bernard
The New York Times, September 1, 2014

Anita Maina was working on an arts and crafts project she found on Pinterest — creating a table out of wood and cork — when she ripped off a fingernail while removing staples from a piece of wood.

“It is one of those things that really hurt, and I thought I should go to urgent care,” said Ms. Maina, 27.

But she ultimately skipped the visit since she had not met the $6,000 deductible on her health plan, and she knew she probably did not have much left in her health savings account, a type of tax-advantaged savings vehicle that is often used with high-deductible plans to help defray out-of-pocket costs.

Ms. Maina, an associate in a health and human services consulting agency, said her employer added the high-deductible plan earlier this year; though her monthly premiums are only $34, these plans require employees to pay for a greater share of their medical expenses upfront, before the plan starts making payments.

Next year, even more corporate workers are likely to be offered high-deductible plans — sometimes known more benignly as consumer-directed plans — and at a rising share of large companies, it will be the only option remaining.

“You can’t sugarcoat this,” said Paul B. Ginsburg, a professor of the practice of health policy and management at the University of Southern California’s Sol Price School of Public Policy. “This is a more challenging situation for consumers and it’s a reflection of how difficult it is to afford health care.”

Just as employers replaced pensions with retirement savings plans, more large companies appear to be in a similar cost-sharing shift with health plans. Besides making workers responsible for more of their care, employers hope these plans will motivate employees to comparison-shop for medical services — an admirable goal but one that some say is hard to achieve.

Several big companies started offering consumer-driven plans as their only option in the last couple of years, including JPMorgan, Wells Fargo, General Electric and Honeywell, among others; it is the only choice for Bank of America employees earning more than $100,000.

Next year, nearly a third of large employers will offer only high-deductible plans — up from 22 percent in 2014 and 10 percent in 2010, according to a study by the National Business Group on Health, which included 136 large companies that collectively employ 7.5 million workers. And 81 percent of those large employers will have added one of these plans to their lineup of choices, up from 53 percent in 2010.

With high-deductible health plans, consumers pay for all their medical services — at the insurer’s negotiated rate — until they meet their deductible. After that, consumers typically pay coinsurance, which is a percentage of each service — say 10 to 35 percent — until they reach the out-of-pocket maximum.

That is scheduled to be generally capped at $6,450 for singles and $12,900 for families in 2015, according to the Kaiser Family Foundation, and includes items like deductibles, coinsurance and co-payments, but not premiums, which tend to be lower in these plans.

So it is easy to see how shopping for an M.R.I. of the lower back — which canrange from roughly $415 to $4,530 — would suddenly pay off for both the employee and the employer.

“There are different approaches to cost containment,” said Professor Ginsburg. “One is having a lot of skin in the game, or just having to pay for a lot of your health care.”

Insurers and independent providers, including Castlight and Healthcare Bluebook, offer tools that help consumers estimate their costs and the quality of the providers. But shopping around can still be challenging.

“Castlight and others like it make a valiant effort to provide price and quality information,” said Uwe E. Reinhardt, a health policy expert and professor at Princeton.

“But the question is whether the prices they give you are binding. To really shop around effectively, prospective patients need binding prices.”

Castlight — working with more than 130 large employers — provides consumers with tools that offer personalized pricing and quality information for services within their insurer’s network. But even the most diligent shoppers can run into problems.

“They may have done everything right,” said Dr. Dena Bravata, Castlight’s chief medical officer. “They may have picked an in-network gastroenterologist for a colonoscopy. But then you don’t know if you need to have a biopsy, which then goes to a lab or pathologist who is out of network.”

And using the tools can simply be impractical in certain circumstances. “Most health care costs are incurred by very sick patients, such as those with heart attacks, strokes, cancer, mental illness, injuries — often under emergency conditions,” said Sara Collins, vice president for health care coverage and access at the Commonwealth Fund.

Another concern is that some people will be ill prepared to handle large bills, and will forgo care as a result. “If you go to the pharmacy and there is a $1,000 deductible on your drug benefit, they aren’t going to write you a five-year loan,” said Karen Pollitz, a senior fellow at Kaiser.

High-deductible plans are often used with health savings accounts. As long as the plan deductibles in 2015 exceed $1,300 for single people or $2,600 for families, and meet other criteria, employers and workers can deposit money into the H.S.A.; in 2015, individuals will be allowed to contribute up to$3,350 in pretax dollars (or $6,650 for family coverage). The money grows tax-free and can be used to pay for out-of-pocket health care expenses. (Health reimbursement accounts can also be used, but those are largely controlled by employers, and workers cannot keep the money if they leave.)

The National Business Group on Health’s study found that the vast majority of large employers make deposits. But Kaiser’s 2013 survey, which covers both small and large employers, found that about half of employers do not fund these accounts. Of those that do, Kaiser found they deposit $950 for singles with health savings accounts, on average, and $1,680 for families.

Kaiser also found that the average deductible for single people in a high-deductible plan paired with a health savings account was $2,098 in 2013, while it was about $4,037, in aggregate, for families.

Employers can insulate their workers by depositing more generous amounts into their H.S.A.s, which employees keep even if they leave the company. “Once it becomes their money, they treat it like their money, and there is that desire to shop,” said Brian Marcotte, president of the National Business Group on Health. “And that is what employers are trying to do.”

That was one of the attributes that was most attractive to Matt Van Horn, a 46-year-old senior software engineer who lives in Lafayette, Calif., with his wife and 13-year-old son. His employer, an online apparel company, contributes $1,500 into an H.S.A., or half of his family’s $3,000 deductible. “I like having the H.S.A., and the fact that it will survive the insurance policy,” he said, adding that the policy feels more like catastrophic coverage, although preventive care is fully covered (as it is with all high-deductible plans).

Given the increased adoption of the plans — Kaiser estimates about 20 percent of workers covered by plans were enrolled in a high-deductible plan with a savings account option in 2013, up from 8 percent in 2009 — consumers will need to weigh their options more closely during open-enrollment season.

“Understanding the mechanics of these plans is really important,” Mr. Marcotte said. “When you walk into the pharmacy and all of a sudden it costs $200 as opposed to $20, there is sticker shock.”

When evaluating these plans, consumers need to ask themselves several questions: Do you have the money to pay for all medical expenses until the deductible is met? What is the out-of-pocket maximum — can you afford that? And are you the type of person who will skip needed care if you need to pay out of pocket?

Many workers may not have a choice — a high-deductible plan may be their only option. “If the deductible is very high, all of a sudden the financial protection part of insurance, you are losing that,” Professor Ginsburg said. “You still have protection against very high claims, but you have people who may have to pay $5,000 during one year toward the cost of their care or more. And a lot of people don’t have that kind of savings.”

http://www.nytimes.com/2014/09/02/business/increasingly-high-deductible-health-plans-weigh-down-employees.html

8 facts that explain what’s wrong with American health care

By Sarah Kliff
Vox, September 2, 2014

1) Americans pay way, way, way more for health care than anyone else

Health care in the United States is expensive. Insanely, outlandishly expensive.

We spend $2.8 trillion on healthcare annually. That works out to about one-sixth of the total economy and more than $8,500 per person — and way more than any other country.

If the health-care system were to break off from the United States and become its own economy, it would be the fifth-largest in the world. “It would be bigger than the United Kingdom or France and only behind the United States, China, Japan and Germany,” says David Blumenthal, executive director of the non-profit Commonwealth Fund.

Or here’s another way to put it in its (insane) perspective: The US, which has a mostly private health-care system, manages to spend more on its public health-care system than countries where the health-care system is almost entirely public. America’s government spends more, as a percentage of the economy, on public health care than Canada, the United Kingdom, Japan or Australia. And then it spends even more than that on private health care.

The reason that we spend so much money isn’t because we go to the doctor a ton. On average, Americans actually see the doctor less than people in other countries.

The reason that American health care is expensive is all about the price: when we go to the doctor, it costs more than when, say, someone in Canada goes to the doctor.

Part of this is about the price per unit of health care in the United States. From prescription drugs to imaging scans, nearly everything costs more when it’s prescribed in America. Take the heartburn medication Nexium: the exact same medication costs $215 here and $23 in the Netherlands.

Most other countries have some form of price controls; the government negotiates with drug companies and device makers for lower prices, and the government has the power to win those negotiations. The United States doesn’t do that. It leaves the negotiations up to individual insurers. And they tend to lose.

Defenders of the American system argue that price controls stifle innovation. Many say that our higher spending creates financial incentives for drug companies to come up with wonderful new drugs. And they’re probably right. But that means we’re paying higher prices to subsidize drugs for the rest of the world.

There are more nuanced ways that our health-care prices are more expensive, too. Harvard University’s David Cutler points out that we have much higher administrative costs than most other countries — and those costs get tacked onto the bill when we go to the doctor. The average American doctor spends All those extra billing specialists’ salaries have to get paid somehow — and that gets worked into our prices.

Lastly, American hospitals tend to throw more technology at health problems — a heart attack, for example, is treated with more scans and tests in America than elsewhere, and that also drives up the price of going to the doctor in the United States.

The net price of a heart attack in the United States, then, is more expensive because of the unit price of each service delivered, the more intense treatment and the additional administrative costs of processing the ultimate insurance claim.

2) We pay doctors when they provide lots of health care, not when they provide good health care

The best way for a doctor to make money in the United States right now is simple: prescribe treatments.

The American health-care system by and large runs on what experts describe as a “fee-for-service” system. For every service a doctor provides — whether that’s a primary care physician conducting an annual physical or an orthopedic surgeon replacing a knee — they typically get a lump sum of money.

That’s how most businesses work. Apple gets more money when it sells more iPads and the Ford gets more money when it sells more cars. But health care isn’t like iPads or cars. Or, at least, it’s not supposed to be.

When patients buy knee replacements, for example, what they’re buying isn’t really knee surgery itself. What they’re trying to buy is an improvement in their health.

But here’s the thing: most American doctors aren’t paid on whether they deliver that improved health. Their income largely depends on whether or not they performed the surgery, regardless of patient outcomes. Their patient’s knee could be good as new or busted as always at the end — but, in most cases, that doesn’t factor into their surgeon’s ultimate pay.

There are certainly many non-financial incentives for doctors to help their patients get better; it’s hopefully a big part of why they got into medicine in the first place. But those intrinsic motivations are often in tension with most doctors’ financial interests.

There is a growing movement in health care to change this and tether payments to patients’ outcomes. The non-profit Catalyst for Payment Reform estimates that 10.6 percent of all health care dollars paid are paid in some type of value-based arrangement, where the patient’s outcome factors into how much the health care provider earns.

Obamacare is running dozens of little experiments in the Medicare program that also try to pay doctors more when they provide higher quality care. There are now penalties, for example, if a patient returns to the hospital after something was screwed up the first time. Those seem like they might be working; the number of preventable readmissions has steadily dropped since late 2010.

But all these experiments are on the margins of the American healthcare system. For most doctors, the bargain is as it’s always been: do more stuff, get more money.

3) Half of all healthcare spending goes towards 5 percent of the population

Americans are not equal health care spenders. There’s a handful of patients who use lots of medical services — and tens of millions of people who barely go to the doctor at all.

The National Institute for Health Care Management estimates that, in 2009, about half of health spending ($623 billion) went towards 5 percent of the population. On average, these are people who use $40,000 of health care annually.

The lower-spending half of the population, meanwhile, spent a paltry $236 per person during that same year.

High health-care spenders aren’t richer Americans buying up lots of health care. Instead, these tend to be the sickest patients. They are older and living with multiple chronic conditions, like diabetes and high blood pressure. These are people who take multiple trips to the hospital per year and many prescription drugs every day.

For health-care experts, this spending pattern suggests that the real space to save money is focusing on these high spenders. “What it says to me,” Commonwealth Fund’s Blumenthal says, “is we have a huge opportunity to do something that’s humane and practical by focusing extra attention these parts of the population.”

This is the approach that Atul Gawande described in his influential New Yorker article, “The Hot Spotters.” There, Gawande looked at a New Jersey practice that put extra resources towards a handful of patients who kept turning up in the emergency room. It would have nurses check up on patients to make sure they took their medications — and it worked. Patients got better, and their spending went down.

Whether that type of hands-on, labor-intensive intervention can scale up in a big way remains to be seen. But the spending patterns of the health-care system suggest that the biggest gains are to be made by focusing on the sickest patients.

4) Our health insurance system is the product of random WWII-era tax provisions

If you want to understand why we are the only developed country with an employer-based health insurance — really, the only one — then you had better get familiar with the 1954 Internal Revenue Service Tax Code.

The 1954 Internal Revenue Service Tax Code is the document in which the federal government codified into law that companies can provide health insurance benefits to workers tax-free. This affirmed a 1943 IRS Tax Court ruling that had also decreed health benefits to be non-taxable.

The early decisions were made in the context of a wartime tax code. There were overwhelming taxes meant to stop wartime profiteering and keep unions from shutting down production to extract wage gains. But when health care was protected from these taxes, it immediately became incredibly valuable to workers, and companies were able to keep it tax-free even after the war. The result is that a dollar in health benefits is worth more to a worker than a dollar in wages, because the dollar in health benefits is untaxed and the dollar in wages is taxed.

“That’s a huge discount off the price of health insurance,” says Melissa Thomasson, an economist at Miami University who has written extensively on the history of health insurance. “And it happened very quietly. I looked a few years ago to find out the name of who made the decision, and it’s been lost to history.”

Flash forward about 80 years or so, and the health insurance tax break is the biggest in the federal budget; the government loses out on $260 billion annually by not taxing health benefits. The majority of non-elderly Americans get their health insurance at work, and with good reason: the tax-free dollar can buy a lot more medical care.

But economists on both sides of the political spectrum hate this tax break.

For one thing, it’s regressive. As a rule, people who have jobs that offer healthcare benefits are paid more than people who don’t have jobs that offer healthcare benefits — or who don’t have jobs at all. And remember that someone is ultimately paying for this tax break. In short, we’ve created a tax system where the people with good jobs are getting their health care subsidized by the people with worse jobs or even no jobs.

The tax exclusion also drives up demand for expensive health insurance. Partly, this is because of the subsidy. But partly, it’s because employees usually don’t know the real prices of their health benefits. Though ultimately economists believe that the money employers spend on health benefits comes from the money they would have spent on wages, workers don’t feel the direct cost of their health-insurance choices, and so they have little reason to try to keep spending low.

Doing away with the tax exclusion might seem like a no-brainer, but it’s very politically difficult. It would mean a huge price increase on employer-sponsored insurance, which is not a popular platform to run on (John McCain got nailed for suggesting capping, not eliminating, this particular tax exclusion).

Obamacare did manage to make some inroads. It includes a 40 percent tax on the most expensive insurance plans that starts in 2018. Know as the “Cadillac tax,” this fine will hit any insurance plans that cost more than $10,200 for an individual or $27,500 for a family. That tax is meant to push back against the too-generous plans that the tax exclusion encourages.

What the Cadillac tax does not do is eliminate the tax-exclusion for employer-sponsored coverage. Instead, it puts a dent in a 60-year-old policy — one that was set up with little forethought and is pretty much universally derided by health economists on both ends of the political spectrum.

5) Insurance companies have small profit margins

Health insurance companies are an incredibly easy target for any antipathy towards the American health care system. They’re the ones that deny claims for the care that we want, but still charge an always rising premium for their coverage.

But here’s one fact about insurers that often gets lost in the debate over health care: their profit margins tend to be relatively small. Yahoo Business estimates that the health-care sector as a whole runs a 15.4 percent profit margin. Health plans, meanwhile, have an average profit margin of 3.2 percent.

“I’ve asked an audience of doctors what share of the money that goes to insurance companies gets kept there, and most audiences will guess the company keeps about 50 percent of it,” Harvard’s Cutler says. “The truth is, they keep about 10 to 15 percent of it, and most of that goes towards claims processing and administration.”

As to who makes the most money, it’s mostly drug companies and device manufacturers — the people who make the things that insurance companies buy. They typically run profit margins around 20 percent.

One reason the cost of American health care is so high is that insurers are so weak. Having hundreds of different carriers, for example, means no one insurer has lots of negotiating power — hence those high prices drug and device makers can charge.

This suggests that tamping down on insurers’ profits won’t do much to tamp down on overall healthcare costs. They’re not pocketing a large amount of premiums; instead, they’re spending those premiums on a really expensive medical products.

“Only a nickel of your premium dollar stays with the insurance company,” says Uwe Reinhardt, a health economist at Princeton University. “The profits of insurance companies are truly a trivial part of national health spending.”

Video break!

We have covered a lot of territory — and still have a little ways to go. So now’s as good of a time as any to take a short breather and be thankful for how well the airline industry works.

Or, at least grateful for the fact air travel isn’t like health care. Even with the lengthy delays, terrible food and undignified battles over reclining chairs, just imagine how much worse your flights would be if a hospital called a shots. That, as this video underscores, would be utterly horrifying.

6) Getting health care in the United States is dangerous

We don’t know exactly how many Americans are killed in hospitals each year, but we do know that it is a lot.

In 1999, the Institute of Medicine published a seminal report titled To Err is Human, which estimated that at least 44,000 patients — and as many as 98,000 — die in hospitals each year as results of medical errors.

Even using the lower-bound figure, that would mean medical errors in hospitals kill more people annually than “such feared threats as motor-vehicle wrecks, breast cancer, and AIDS.”

A follow-up study published in 2013 argued that the IOM numbers were a vast underestimate, and that medical errors contribute to the deaths of between 210,000 and 440,000 patients. At the lower bound, that’s the equivalent of nearly 10 jumbo jets crashing every week — or the entire population of Birmingham, Alabama dying every year.

“It’s a big problem,” says Commonwealth Fund’s Blumenthal. “There has not been anything like the progress we should have expected or could have had since the To Err is Human report.”

He argues that the problem with hospital errors has much to do with medical culture, in which doctors rarely discuss their mistakes. Blumenthal remembers, shortly after the landmark IOM report came out, trying to start up a consulting business that would teach hospitals how to reduce errors.

“I thought it was this great little consulting opportunity,” he says. “But there was just no interest. It was sobering, and it made clear that abstract data was not going to change the behavior of complicated health care institutions.”

And on their own, patient deaths are small events that often happen with little notice or fanfare, making them less noticeable than other events.

“Even here in Houston, if a small plane crashes by the airport, that makes the evening news,” says John T. James, founder of Patient Safety America, who authored the 2013 report. “But people dying in hospitals are happening one at a time and in insolation, and we pay less attention.”

James has argued that the United States should have something akin to the National Transportation Safety Board, which investigates every plane crash in the United States, except for patient deaths from medical errors. Even if it couldn’t get to each and every case (there are thousands more patient deaths than airplane accidents), it would create some federal oversight that, right now, does not exist.

7) One third of healthcare spending isn’t helping

The United States spends $765 billion annually (about one third of our overall health care dollars) on things that do not make Americans any healthier.

“I’m always amazed at these conversations I have with physicians,” says Amitabh Chandra, a health economist at Harvard. “They’ll openly say that about 50 percent of what happens in medicine is waste, but it’s hard to always know which care was wasteful and which wasn’t.”

Much of the waste in our system has to do with the fact that we run an inefficient health-care system, in which hundreds of health insurance plans all charge different prices for the same surgeries and scans. That requires lots of billing staff: for every three doctors in the United States, there are two administrative staff to handle all the paperwork. That’s unique to the US system.

In addition, there’s unnecessary care: of the $765 billion wasted each year, the Institute of Medicine estimates that $210 billion is spent on medicine we don’t need.

Aside from being a waste of money, this extra medicine can be harmful.

Take the example of prescribing antibiotics for acute bronchitis. Researchers have known for decades this isn’t an effective treatment, but nearly three-quarters of doctors do so anyway. Those prescriptions are actively harmful, as overuse of antibiotics can speed up the creation of deadly, antibiotic-resistant superbugs. Wasteful spending doesn’t just mean extra dollars put towards health care — in cases like this, it also means worse care.

Unfortunately, most situations of waste aren’t as easy to recognize as the overprescribing of antibiotics. At many appointments, doctors have difficulty knowing when treatment is needed — and when it won’t provide help at all.

The medical community tries to address these issues with comparative effectiveness research. As the name suggests, these studies compare the effectiveness of one treatment against another for a given patient population. Many national health insurance programs use comparative effectiveness research, for example, to decide which drugs they will cover, aiming to pick the medication that gives the best results at the most affordable price.

But comparative-effectiveness research doesn’t always offer clear directions. Study methods can be faulty and results contradictory; one drug might work great for certain patients but terribly for others. These studies can also be controversial and met with outcry over rationing.

When the government, for example, recommended lowering the frequency of breast cancer screenings — more screenings, decades of research had found, didn’t save any more lives — there was public outcry.

And that’s one of the really tough issues with cutting down on waste in medicine: there are lots of healthcare treatments that we want, even when it might not actually be health-care treatment that we need.

8) Obamacare is not universal health care

The United States does have a very recent, very large expansion of health insurance coverage — that’s the program we all call Obamacare. It’s expected to cover an additional 26 million people by 2024.

What the United States does not have, however, is universal coverage.

Obamacare doesn’t eliminate uninsurance in America; instead, it cuts the number of people lacking coverage about in half. Even after Obamacare is fully implemented, budget forecasters still expect that 31 million Americans will lack insurance coverage — a bigger group than the people buying coverage on the exchanges. Our uninsured rate will still be in the double digits, hovering around 11 percent.

This group includes people who are locked out of the insurance expansion and those who do have access but decide not to participate.

Among the groups left out of the healthcare law are undocumented workers, who are not eligible to purchase any healthcare plans from the new insurance exchanges, and people who live in states that are not expanding Medicaid. For a sense of how big a population that is, the 10 largest states not expanding Medicaid are leaving out an estimated 3.6 million low-income residents.

There will also be millions of people who do have access to health insurance, maybe at work or through the new exchanges, but decide not to enroll. Maybe they think its too expensive — lots of shoppers felt that way during Healthcare.gov’s open enrollment — or maybe they don’t think health insurance will help them. Many of these people will face a penalty for not purchasing insurance coverage.

This will continue to set the United States apart from most other industrialized nations, in which universal coverage is the standard. And it means there will still, in decades to come, be people who can’t afford health insurance. That means there will be millions who rely on free clinics for medical care.

http://www.vox.com/2014/9/2/6089693/health-care-facts-whats-wrong-american-insurance

Instruction sheets for completing ACA tax forms – a proxy for ACA complexity

Implementing Health Reform: Tax Form Instructions

By Timothy Jost
Health Affairs Blog, August 29, 2014

On August 28, 2014, the Internal Revenue Service re-released the draft forms that will be used by employer, insurers, and exchanges for reporting Affordable Care Act tax information to individuals and to the IRS for 2014 and 2015, as well as the instructions for completing those forms.  The IRS also released in the Federal Register requests for public comments on three of those forms – the 1094-B, the 1094-C, and the 1095-C – under the Paperwork Reduction Act.  This post reports on these forms and instructions and on a guidance released by the Centers for Medicare and Medicaid Services.

The tax forms had been published earlier and are described in an earlier post.  The instructions for the forms, however, had not been available and had been eagerly awaited by employers, insurers, exchanges, and tax professionals. 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.  They will also be used to determine whether employees have received an affordable and adequate offer of coverage, rendering them ineligible for premium tax credits.  Employers are required to provide each full-time employee with a form 1095-C and to file each of these together with a transmittal form 1095-B form with the IRS.

The instructions for the 1094-C and 1095-C are by far the most complex of the instructions released on August 28, filling 13 pages with dense, two column, print.  Most of the complexity derives from the options for complying with the employer mandate and the transition exceptions to that mandate that the administration has created…

Implementing Health Reform: Tax Form Instructions, by Timothy Jost: http://healthaffairs.org/blog/2014/08/29/implementing-health-reform-tax-form-instructions/

IRS – 2014 Instructions for Forms 1094-C and 1095-C (Draft): http://www.irs.gov/pub/irs-dft/i109495c–dft.pdf

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Comment:

By Don McCanne, MD

If you enjoy minutia, click on the links to the full blog post and the draft instructions and read away.

Although today’s message deals with only one minor provision of the Affordable Care Act –  the instructions for tax forms used to report ACA tax information to individuals and to the IRS – the administrative detail required is mind-boggling. Extrapolate that to all aspects of ACA and it becomes obvious that, instead of gaining administrative simplicity, ACA greatly increased administrative complexity – on top of the most administratively complex health financing system in the world. What a waste!

Timothy Jost’s comment from yesterday’s message can be repeated again today: “We are doomed to continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.”

Single payer.

Timothy Jost analyzes Avik Roy’s “Transcending Obamacare”

Transcending Obamacare: A Patient-Centered Plan for Near-Universal Coverage and Permanent Fiscal Solvency

By Avik Roy
Manhattan Institute for Policy Research, August 2014

The proposal contained herein — dubbed the Universal Exchange Plan (“the Plan”) — seeks to substantially repair both sets of health-policy problems: those caused by the ACA and those that predate it.

The Universal Exchange Plan would introduce major changes to the broad set of federal health care entitlements: Obamacare, Medicare, and Medicaid. The Plan uses a reformed version of the ACA’s health insurance exchanges as the basis for far-reaching entitlement reform.

The Plan would repeal many of the ACA’s cost-increasing insurance mandates, including the individual mandate. But it would preserve the ACA’s guarantee that every American can purchase coverage regardless of preexisting conditions. And it would utilize the concept of using federal premium support subsidies, on a means-tested basis, to defray the cost of private health coverage.

It would gradually migrate most Medicaid recipients, along with future retirees (N.B.: Medicare), onto these reformed exchanges.

The plan has its roots in real-world examples of market-oriented, cost-effective health reform. Notably, two wealthy nations — Switzerland and Singapore — spend a fraction of what the United States spends on health care subsidies; yet they have achieved universal coverage with high levels of access and quality.

http://www.manhattan-institute.org/pdf/mpr_17.pdf

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Following is a posted response by Don McCanne to an August 13, 2014 Forbes article in which Avik Roy introduced his reform proposal:

“A 2011 OECD & WHO report of the Swiss health system revealed that it is highly inefficient with profound administrative waste. It is inequitably funded using regressive financing. It has excessive out-of-pocket costs that can create financial hardships. And it has an increasing prevalence of managed care intrusions through a private insurance industry that has learned how to game risk selection. The problems are severe enough that current polls indicate that a majority of the Swiss support their upcoming ballot measure (September 28) that would convert Swiss health care financing to a single payer system. Obviously the current failed Swiss system should not serve as a model for U.S. reform.”

http://www.forbes.com/sites/theapothecary/2014/08/13/transcending-obamacare-an-introduction-to-patient-centered-consumer-driven-health-reform/

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Transcending Obamacare? Analyzing Avik Roy’s ACA Replacement Plan

By Timothy Jost
Health Affairs Blog, September 2, 2014

Avik Roy’s proposal, “Transcending Obamacare,” is the latest and most thoroughly developed conservative alternative for reforming the American health care system in the wake of the Affordable Care Act.

Roy’s proposal is a curious combination of conservative nostrums (limiting recoveries for victims of malpractice), progressive goals (eliminating health status underwriting, providing subsidies for low-income Americans), and common sense proposals (enacting a uniform annual deductible for Medicare).

Most importantly, however, Roy proposes that conservatives move on from a single-minded focus on repealing the ACA toward building upon the ACA to accomplish their policy goals. He supports repealing certain features of the ACA—including the individual and employer mandate—but would retain others, such as community rating and exchanges. As polling repeatedly shows that many Americans are not happy with the ACA, but that a strong majority would rather amend than repeal it, and as it is very possible that we will have a Congress next year less supportive of the ACA than the current one, Roy’s proposal is important.

Much of Roy’s proposal is taken up with traditional conservative talking points on health care reform. It is tempting to respond to these point by point. For example, Roy trots out the health systems of Switzerland and Singapore as models for the United States because they depend heavily on consumer-funded health financing. The bottom line, however, is that we are not Switzerland and we are certainly not Singapore, and we cannot have their health care systems.

Roy also has his own hobby horses. He claims that people are better off being uninsured than on Medicaid and trots out a long list of studies that he claims show negative effects from Medicaid coverage.

Roy’s Universal Exchange Plan

Rather than respond to Roy point by point, however, this review will focus on the heart of Roy’s proposal; his universal exchange plan. (To access Jost’s critique of Roy’s universal exchange plan, use the link below.)

Projecting The Benefits And Costs Of Roy’s Proposal

In sum, higher cost-sharing should result in lower premiums for health plans — a 40 percent actuarial value plan should cost less than a 60 percent plan. Skinnier benefits could also reduce premiums. Reduced premiums should in turn draw more uninsured into the market and reduce federal subsidy costs. But higher cost-sharing would reduce access to care, decrease treatment adherence, and increase provider bad debt. The savings Roy touts come at a high cost.

The Stubborn Problem Of Complexity

Another important point about the Roy plan must be noted: It does not reduce the complexity of the ACA. Indeed, it might increase it.

The ACA has been woven inextricably into the fabric of our health care system, and even ignoring, if that were possible, the millions of Americans who are now covered under the ACA, it is simply not possible to return to status quo ante through repeal. Roy reasonably recognizes this and proposes instead to build on the ACA to move toward a system that he finds more sympathetic.

But “transcending Obamacare” will not be easy. One of the greatest defects of the ACA is its complexity. That complexity has required the Obama administration to exercise considerable creativity in implementing the law.  But the law’s complexity simply follows from the fact that the drafters of the ACA attempted to build on, rather than to radically change, our current, impossibly complex, health care system.

Much of Roy’s proposal is still a broad conceptual framework. Even that framework is complicated, but were the proposal reduced to actual legislation, much less regulation, it would become far more convoluted and politically contested. We are doomed to  continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.

http://healthaffairs.org/blog/2014/09/02/transcending-obamacare-analyzing-avik-roys-aca-replacement-plan/

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Comment:

By Don McCanne, MD

Avik Roy presents his model of health care reform as a plan that does not require the repeal of the Affordable Care Act, but rather represents a reform of the ACA insurance exchanges along with the eventual elimination of Medicaid and Medicare. His proposed system is not yet fleshed out, but to achieve his stated ends, tremendous administrative complexity would have to be introduced.

There is much to criticize about Roy’s conservative, consumer-directed approach to health care financing – the worst flaw being the great financial burden that would be placed on those requiring health care. Should his proposal ever be seriously considered by Congress, a detailed response should be effective in countering it.

But for now, Timothy Jost summarizes the fatal flaw of his approach in two sentences:

“But the law’s complexity simply follows from the fact that the drafters of the ACA attempted to build on, rather than to radically change, our current, impossibly complex, health care system.”

and

“We are doomed to  continue to struggle with this complexity as long as we stubbornly cling to a private health insurance-based health care financing system.”

Avik Roy has contributed to the cause by showing us a proposal that makes it ever more clear why we must change to a single payer national health program. And we can thank Timothy Jost for clarifying that for us.

Single payer will simplify

By Ellen Oxfeld
Rutland (Vt.) Herald, Aug. 28, 2014

In his Aug. 24 column, Middlebury’s outgoing state Rep. Paul Ralston raises some questions about the state’s road map to single payer. However, his conclusions are based on assumptions that need more probing. Here are a few of the issues raised that need more careful examination:

1) The column asserts that the state has performed poorly in its “first attempt at health care reform” and that therefore people must now be cautious. However, it is important to make clear that the health care exchanges were federally mandated and not a state idea. Furthermore, single payer is a simpler concept than the health care exchange, as it does not involve different levels of coverage for different people, changing subsidies as your life situation changes, restricted enrollment periods that can leave you in the lurch, and all the rest of the exchange complexity, including a long and less than dependable application process. Rather, with single payer we are all enrolled automatically by virtue of our Vermont residence, and then our coverage is guaranteed. As Act 48 states, Green Mountain Care will cover all Vermonters regardless of any other coverage they may also hold (such as Medicare, for which it will act as a wraparound).

2) As stated above, single payer detaches payment from coverage. We are covered regardless of whether we lose a job, get a job, get a divorce, or undergo any other change in our life circumstance, so long as we are a Vermont resident. As far as payment, we have figured out how to pay for other state services equitably, and we can do so for single payer as well.

3) The column states that the program for Green Mountain Care, the proposed single-payer plan has no “clear definition.” That is incorrect. Act 48 specifies the minimum cost sharing and coverage for Green Mountain Care, the state’s future single-payer plan. The benefit package, by law, must include primary and specialty care, mental health and substance abuse, hospitals and prescription drugs. Under Green Mountain Care everyone will be eligible for these broad benefits, and out of pockets must be kept to a minimum because the “actuarial value,” or the amount that the plan pays, must be kept high. What is still undecided are the categories of adult dental and vision, and this is something on which citizens will need to weigh in about as the Legislature considers the financing package in the next session.

4) So what about the financing parameters? In fact, we already know them. Every professional study has estimated a cost of between $1.6 billion and $2.1 billion for the tax package to fund single payer. That is less than Vermonters already pay in private premiums and out of pockets ($2.6 billion in 2012), and most importantly, it will replace them. Of course, how the tax package is crafted, how progressive it is, what portion will be payroll and what portion income, etc., are important questions. They will be carefully thought about and debated once the administration presents its proposal, the Legislature considers and weighs it, and revisions are suggested based on citizen input.

5) Of course, as Ralston’s column indicates, voters do not want their representatives to act like “lemmings” marching into the sea. We expect them to consider carefully how to craft a single-payer health care tax package (which will replace premiums) that is as comprehensive and equitable as possible. But since Act 48 has been passed and is the law, we should insist that our legislators complete the road map it laid out. If anything, the problems with the exchange demonstrate how complicated things get when health care remains tethered to the private insurance system.

To insure seamless coverage for all Vermonters we will need the guaranteed inclusion that is part of a universal publicly financed health care system. That is the goal of the road map laid out in Act 48.

Ellen Oxfeld is a resident of Middlebury.

http://rutlandherald.com/article/20140828/OPINION04/708289999

Health care can be affordable and accessible

By Gordon D. Fiedler Jr.
The Salina (Kan.) Journal, Aug. 26, 2014

Affordable, accessible health care for all is not a dream but can be a reality, according to David Kingsley, who represents Physicians for a National Health Plan.

Kingsley, of Kansas City, Mo., who has a doctorate in public policy, addressed about 40 people who attended the Salina League of Women Voters Fall Issues Forum Monday night at the Salina Public Library.

He had little good to say about American medical care.

Ours, he said, “is the most complicated health care system ever devised on the face of the Earth.”

And it’s not producing the desired results.

The United States is 51st among nations in life expectancy, yet spends $8,950 per capita on medical care. This is more than twice that of Canada and nearly three times that of Japan. The Japanese average 12 doctor visits per capita per year, whereas in the United States, visits per capita per year are less than four.

Access to medical care should be a human right, he said.

“Everybody should get treatment on an equal basis. They could get all the care they need, not all the care they want,” he said.

Kingsley said there is a need for more doctors in the system and fewer administrative staff. Now, there are about 500,000 practicing physicians but more than 2.5 million office support positions.

One of his PowerPoint slides drew chuckles with the quote, “It takes a lot of people to impede access to health care.”

Not a fan of ACA

Lest the audience think he’s a staunch backer of the federal Affordable Care Act, also known as ObamaCare, Kingsley made it clear that for all the good it has done, it has a serious problem.

“The ACA’s biggest flaw is that it preserves the insurance industry,” he said.

The plan that the PNHP proposes would be “Medicare for all” and would offer universal coverage, with no economic barriers to care — meaning no copays, no deductibles — and would be similar to the system in Canada, where hospitals remain private and for profit. That’s different from the system in Great Britain, where the government owns the hospitals and employs the doctors.

The plan, he said, would be fair, fiscally prudent and patriotic.

Plan based on Medicare

It would be based on the Medicare model, which he said is popular among those 65 and older who are on the plan, and he said he would caution any politician who considers tampering with it.

“Most people like Medicare, so why not make it for everybody,” he said.

He has little hope of seeing the ACA get better.

“I hear people say we can improve on it. I’m not a big believer in that idea,” he said.

The question becomes what should be done.

“Do we want to continue spending $9,000 per capita and still have 37 million people (without access to care) who are going to get sicker and that really will cost us more money?” he said.

Questions to ponder

He said people have to get beyond the notion that privatizing services is better.

“A lot of things government does, it does well,” he said.

Kingsley said it’s time to have a conversation and left the audience with some questions to ponder.

“Let’s begin to think about what we’re going to do about these uninsured people, what are we going to do about paying double for drugs, what are we going to do about an ongoing concentration of industry which maybe 30, 40 years ago would have brought an antitrust lawsuit but isn’t happening now,” he said.

Cost is in advancements

To the relief of those of a certain age in the audience, he dispelled the myth that the elderly are largely responsible for increases in health care costs.

“The biggest cost in health care that’s coming down the road is medical advancements,” he said. “This is just the beginning. This is where we have to talk to each other. What are our values? What are our ethics? How are we going to deal with a society that can make a new kidney in the laboratory? It won’t be cheap.”

Already, cancer patients are receiving “designer” chemotherapy, he said.

“What are we going to do? Who’s going to get this? How much can we do?” he said.

–Gordon D. Fiedler Jr. can be reached at 822-1407 or by email at gfiedler@salina.com. This article was distributed by McClatchy-Tribune Information Services. It was originally published under the title of “Health care is topic for speaker.”

http://salina.com/search/health-care2014-08-26T01-09-48