PNHP

KFF update on Medicare out-of-pocket spending

KFF update on Medicare out-of-pocket spending

How Much Is Enough? Out-of-Pocket Spending Among Medicare Beneficiaries: A Chartbook

By Julliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, July 21, 2014

As part of efforts to rein in the federal budget and constrain the growth in Medicare spending, some policy leaders and experts have proposed to increase Medicare premiums and cost-sharing obligations.  Today, 54 million people ages 65 and over and younger adults with permanent disabilities rely on Medicare to help cover their health care costs.  With half of all people on Medicare having incomes of less than $23,500 in 2013, and because the need for health care increases with age, the cost of health care for the Medicare population is an important issue.

Although Medicare helps to pay for many important health care services, including hospitalizations, physician services, and prescription drugs, people on Medicare generally pay monthly premiums for physician services (Part B) and prescription drug coverage (Part D).  Medicare has relatively high cost-sharing requirements for covered benefits and, unlike typical large employer plans, traditional Medicare does not limit beneficiaries’ annual out-of-pocket spending.  Moreover, Medicare does not cover some services and supplies that are often needed by the elderly and younger beneficiaries with disabilities—most notably, custodial long-term care services and supports, either at home or in an institution; routine dental care and dentures; routine vision care or eyeglasses; or hearing exams and hearing aids.

Many people who are covered under traditional Medicare obtain some type of private supplemental insurance (such as Medigap or employer-sponsored retiree coverage) to help cover their cost-sharing requirements.  Premiums for these policies can be costly, however, and even with supplemental insurance, beneficiaries can face out-of-pocket expenses in the form of copayments for services including physician visits and prescription drugs as well as costs for services not covered by Medicare.  Although Medicaid supplements Medicare for many low-income beneficiaries, not all beneficiaries with low incomes qualify for this additional support because they do not meet the asset test.

Because people on Medicare can face out-of-pocket costs on three fronts—cost sharing for Medicare-covered benefits, costs for non-covered services, and premiums for Medicare and supplemental coverage—it is important to take into account all of these amounts in assessing the total out-of-pocket spending burden among Medicare beneficiaries.  Our prior research documented that many beneficiaries bear a considerable burden for health care spending, even with Medicare and supplemental insurance, and that health care spending is higher among older households compared to younger households.

Key Findings

  • Premiums for Medicare and supplemental insurance accounted for 42 percent of average total out-of-pocket spending among beneficiaries in traditional Medicare in 2010
  • Out-of-pocket spending rises with age among beneficiaries ages 65 and older and is higher for women than men, especially among those ages 85 and older.
  • As might be expected, beneficiaries in poorer health, who typically need and use more medical and long-term care services, have higher out-of-pocket costs, on average.
  • Just as Medicare spends more on beneficiaries who use more Medicare-covered services, more extensive use of services leads to higher out-of-pocket spending.
  • Among beneficiaries in traditional Medicare, those with a Medigap supplemental insurance policy pay more in premiums for this additional coverage, on average, than beneficiaries with employer-sponsored retiree health benefits ($2,166 vs $1,335, on average, in 2010).
  • Analysis of ‘high out-of-pocket spenders’ finds a disproportionate share of certain groups, including older women, beneficiaries living in long-term care facilities, those with Alzheimer’s disease and ESRD, and beneficiaries who were hospitalized, in the top quartile and top decile of total out-of-pocket spending (including both services and premiums).
  • Between 2000 and 2010, average total out-of-pocket spending among beneficiaries in traditional Medicare increased from $3,293 to $4,734, a 44 percent increase.

Implications

The typical person on Medicare in 2010 paid about $4,700 out of pocket in premiums, cost sharing for Medicare-covered benefits, and costs for services not covered by Medicare.  Even with financial protections provided by Medicare and supplemental insurance, some groups of Medicare beneficiaries incurred significantly higher out-of-pocket spending than others, which could pose challenges for those living on fixed or modest incomes.  Out-of-pocket spending tends to rise with age and number of chronic conditions and functional impairments, and is greater for beneficiaries with one or more hospitalizations, particularly those who receive post-acute care.

How Much Is Enough? Out-of-Pocket Spending Among Medicare Beneficiaries: A Chartbook

****

Comment:

By Don McCanne, MD

This KFF update on the financial burden placed on Medicare beneficiaries shows that average out-of-pocket costs are $4,734 when half of all people on Medicare have incomes of less than $23,500. Although Medicaid supplements Medicare for some low income beneficiaries, destitution is a prerequisite for qualifying for Medicaid. The wealthy should have no problems, but should affordable access to health care be granted only to those with modest or low incomes who must give up what little fungible assets they have been able to accumulate through life?

Another concern in this report is that those with a Medigap supplemental insurance plan pay considerably more in premiums than do those with an employer-sponsored retiree health benefit program. Although Medigap benefits are quite modest, the premiums charged make them one of the worst values in the health insurance market.

Medicare benefits need to be expanded to a level at which Medicare becomes a prepaid health care program. When you need health care, you get it.

Beyond Obamacare: Universalism and Health Care in the Twenty-first Century

By A.W. Gaffney, M.D.
New Politics, Summer 2014

The Affordable Care Act commentariat—including those confidently awaiting the day when all its promises are vindicated, those rooting for its ignominious demise, and those of us in a separate camp—have been kept occupied in recent months. Between autumn’s website drama and winter’s enrollment saga, the news cycle has been full of stories of IT dysfunctions tackled, right-wing challenges thwarted, enrollment goals met, electoral prospects threatened, and individuals newly insured (or variously dissatisfied). 

Yet however important such details, stories, and analyses may sometimes be, we lose sight of the larger meaning of the ACA if we narrow our vision to its technological travails or to the latest enumeration of the insured. For those of us who are seeking a more fundamental and egalitarian change within the U.S. health care system, it seems particularly important at the current juncture to instead take a step back and appreciate the larger political, historical, and health policy significance of the ACA, to appreciate how we’ve come to have it, what it achieves, and what it leaves entirely undone. Understanding where we are and where we came from is, however, only the beginning of the story.

Moving forward, a focus on alternatives to the ACA, and of ways to achieve them, must increasingly be at the forefront of our discussions. A crucial question in this regard relates to how the struggle for true universal health care could fit within—and potentially propel—a larger popular mobilization against inequality. But to ask these questions, we should begin by looking back, to understand the road already travelled, as we seek to break off on a new, and bolder, path. 

The Politics of Passage

The ACA fell well short of what many of us had hoped for at the end of the hundred-year war for health care reform, which had begun with the Progressive-era campaign of the 1910s. It eliminates neither uninsurance nor underinsurance, as we shall soon examine in greater depth. It also leaves intact a grossly inefficient (if profitable) system of funding and organization. 

But why did the ACA fail to achieve what most construe as “universal health care”? I would argue that there are two ways to interpret the outcome. The first is to emphasize the particular proximate political conditions at the time it was passed, namely the role of corporate interests, the machinations of partisan politics, and so forth. The second interpretation—and one that has received less attention—would be to understand the ACA in the context of the dynamics of a much larger and lengthier neoliberal turn within the United States—and, arguably, global—political economy of health care. 

Now with respect to the first approach, it seems fair to conclude that disappointment could have been predicted before the health care reform brawl even broke out. The boundaries of health care reform had been largely drawn by the time that the 2008 election delivered the presidency and both houses of Congress to the Democratic Party (including, by July 2009, 60 votes in the Senate). As sociologist Paul Starr put it, Democrats had committed to only “minimally disruptive” reforms going into the election.1 Obama’s health care proposal during the primaries, for instance, was less expansive than that of Hillary Clinton, and in some respects narrower than the ACA itself.

But why? The role of the so-called “stake-holders” is one crucial factor here. In the years leading up to the election, a “rapprochement on health reform,” as Starr calls it, had formed between mainstream liberal groups and key industries. The corporate interests within this rapprochement seem to have perceived that the status quo of rising costs and uninsurance was politically—and economically—unsustainable. In 2008 the Board of Directors of America’s Health Insurance Plans (AHIP)—the national lobbying group for the health insurance industry—released a statement that actually endorsed “universal coverage,” which it defined as a combination of “guarantee-issue coverage with no pre-existing condition exclusions with an enforceable individual mandate.”2 In other words, if the government required everyone to buy private insurance, the industry would be happy to provide it, and would even stop discriminating against the sick. The document additionally endorsed government subsidies for those making less than 400 percent of the federal poverty level to enable them to buy private health insurance. These proposals, (“guaranteed issue,” an individual mandate, and subsidies for the purchase of private insurance) were core elements of the ACA, together with a limited employer mandate and a large expansion of Medicaid.

Other ideas that were not contained in the AHIP statement—for instance the proposal for a “robust” public option—had a less successful career. AHIP was, not surprisingly, rather lukewarm about the prospect of a competing public insurance plan, however “robust” or puny it might be. Though AHIP’s president Karen Ignagni had earlier pledged support for Obama’s health care reform, AHIP actually surreptitiously funneled some $86.2 million to the U.S. Chamber of Commerce for lobbying against the law in 2009 alone—just as debates about the “public option” got underway.3 AHIP thereby succeeded in keeping its place at the bargaining table, while simultaneously working against the bill, which had the effect of making the final product more amenable to its interests. 

The pharmaceutical industry similarly perceived it could both win and lose through health care reform. Most importantly, the industry needed to protect the great and treasured prize it had won in 2003, namely the clause in George W. Bush’s Medicare Modernization Act (MMA) that explicitly prohibited Medicare from bargaining with insurance companies over drug prices. By some estimates, the elimination of that clause could have saved the public purse—and cost the industry—upwards of $500 billion over a decade.4 The other option would have been to re-import drugs—allowing them to be purchased much more cheaply abroad where such negotiations do take place—which would be a more roundabout way to achieve a portion of these savings. However, after some tense negotiations between the drug industry lobby group (the Pharmaceutical Research and Manufacturers of America, known as PhRMA) and the administration, neither Medicare-drug negotiation nor re-importation was included in the ACA.5 This was, one supposes, the “politics of the possible,” though this merely speaks to the sadly impoverished range of possibilities in a political system permeated by corporate dollars.

Neoliberalism and the Political Economy of American Health Care

While these machinations (and many others) are important to appreciate, it’s also worth evaluating the Affordable Care Act in the context of the much longer neoliberal turn in American health care policy and thought. Though this is a separate and much larger story than can be told here, we can capture a glimpse of this multi-decade transformation simply by looking at the shift of the health care political center. In 1969, Edward Kennedy proposed legislation that would have created a program of national health insurance, with no copays, means testing, or cost sharing of any type. Nixon’s counterproposal in 1971, on the contrary, looked very much like the ACA, with an employer mandate and an expanded Medicaid-like program for the poor. Like the ACA, it also involved copayments and cost sharing, not just to save money, but as a “matter of principle.” To paraphrase the historian Beatrix Hoffman, health care couldn’t be made a right; it had to remain something you paid for.6

But as corporate and business interests began their powerful push for renewed preeminence in the late 1970s, the Democratic health care proposal—which in 1969 was basically a social-democratic universal system in line with those enacted by left and labor governments in Europe—quickly transmogrified into Nixon’s plan. Jimmy Carter, though he argued in an interview in late March 2014 that “Medicare-for-all” would have been preferable to the ACA, during his presidency actually made no substantial effort to pursue health care reform. Health care reform didn’t return to the national agenda until the administration of Bill Clinton, who again didn’t seriously consider a national health insurance system. Even his less ambitious plan for universal coverage via way of “managed competition” sunk. Mitt Romney’s health care reform in Massachusetts, which drew heavily from Nixon’s “mandate model” plan, was, conversely, successful. 

However, evaluating the rise and fall of the health care reform agenda only tells part of the story. These same decades, as the work of Thomas Piketty has so clearly laid out, were also characterized by soaring inequalities in income and wealth; this was the result, in part, of amplified corporate dominance of the political system and the interrelated decline of the power of labor. It would almost be surprising if alongside these dynamics there had not been a corresponding shift within health care thought, policy, and organization that favored these ascendant interests. Such a shift is indeed visible, and the manifestations of it are multifold: the corporate takeover of the Health Management Organization (HMO) during the 1980s and 1990s; a move by health policy experts and economists away from support for universal national health insurance to an obsession with the “moral hazard” of free health care; the growth of for-profit health care companies (hospices, hospitals, dialysis-centers, nursing homes); and soaring profits for pharmaceutical companies, which was mediated by key legislative victories (for instance, the Bayh-Dole Act of 1980 and the MMA of 2003).7

As the result of these changes, by the twenty-first century, the corporate health care sector had both unprecedented capital to spend and imperative interests to defend: there shouldn’t be any surprise that lobbying money would flood—and not merely season—the health care reform debate of 2009. According to the Center for Responsive Politics, lobbying from the health industry reached an all-time high of $554 million in 2009 alone. Physicians’ organizations—which once were the central lobby that could single-handedly make or break a health care reform initiative—were relegated to a bit part. Yet though it placated powerful interests, the ACA still contained some redistributionist elements, particularly with respect to the Medicaid expansion. In yet another sign of the shift of the political center, it thereby managed to deeply offend the Republican Party, even though (as Obama pointed out) its roots were to be found on their side of the aisle. To summarize, after all was said and done, a social-democratic alternative was barely considered, a Nixonian health care plan was barely passed, and more stayed the same than changed. 

The ACA: Accomplishments and Shortfalls

Among those working towards more fundamental health care change (for instance, as I’ll discuss below, a single-payer system), an assessment of the overall impact of the ACA is a frequent cause for disagreement. Is the law a (possibly wobbly) step in the right direction to be embraced and expanded, a harmful compromise to be denounced and discarded, or something in between? My own sense here is that global assessments are problematic and not that helpful: the massive law does many different things for many different people, and so is better dissected (and criticized) with respect to its specific effects and shortcomings rather than rejected or championed en toto. 

For instance, whatever the failures of the law may be and whatever injustices will persist, moving individuals out of the vulnerable ranks of the uninsured is clearly a good thing, and no amount of political analysis should belittle the benefit to—and relief felt by—these individuals. The ACA reduces uninsurance mainly via two mechanisms. First, as mentioned, it expands Medicaid to everyone below 138 percent of the federal poverty level. Unfortunately, as a result of the June 2012 Supreme Court ruling that made state participation optional, only 26 states (and the District of Columbia) are participating in the expansion, excluding millions from the benefits of Medicaid. Second, the ACA requires the establishment of an insurance “exchange” where private insurance can be sold to those without Medicare, Medicaid, or employer-based insurance; those with incomes below 400 percent of the federal poverty level will receive government subsidies to purchase insurance on these exchanges. However, between these programs and the employer and individual mandate, the ACA will still leave an estimated 31 million uninsured (compared with an estimated 57 million without it).8 In other words, triumphant proclamations notwithstanding, the ACA does not create universal health care in the United States. 

Now if eliminating the problem of uninsurance was our only goal, it seems that the ACA would be at least be a clear step in the right direction. Unfortunately, however, there is another phenomenon that has been evolving for some time, that the ACA neither created nor fixed but to some extent codifies, and which confers a highly inegalitarian element to our health care system: underinsurance. Underinsurance is often defined as having insurance but still having substantial out-of-pocket costs for medical care (i.e. greater than 10 percent of family income after premiums); it’s clearly a growing problem, and it is by no means eliminated by the ACA.9 The plans on the exchanges, for instance, incorporate high levels of cost sharing, or copays, deductibles, and coinsurance. They are graded into four metallic tiers based on their actuarial value (i.e. the percent of your health care expenses that insurance covers), beginning at a paltry 60 percent for the “bronze plans.” Putting aside the deeply inegalitarian concept of dividing a population into different grades of metal (the allusion to Plato’s Republic has somehow not yet been made), such plans fulfill the long-held concern of health policy “experts” that patients need more “skin in the game” (i.e. cost exposure), such that they don’t whimsically procure medically unnecessarily procedures and diagnostic studies. Families will be subject to as much as $12,700 annually in additional out-of-pocket costs for health care (after premiums are paid) to keep the dreaded “moral hazard” of “free care” at bay.10

Putting aside what happens to the level of strictly defined “underinsurance,” I would argue that there is a larger problem on the rise, which one might call “malinsurance,” namely insurance that compromises the physical and economic health of the bearer. Malinsurance encompasses an even broader scope of problematic insurance plans: insurance where the price of the premiums impinges on a reasonable standard of living; insurance with unequal and inferior coverage of services, drugs, or procedures; insurance with “cost sharing” that forces individuals to decide between health care and other necessities; insurance with inadequate and inequitable access to providers or facilities; and insurance that insufficiently protects against financial strain in the case of illness. 

Today, many (if not most) of us could in some ways be considered underinsured, while most (or maybe all) of us might be considered malinsured. This will, unfortunately, remain the case in coming years, even with the full and unimpeded enforcement of the ACA. 

But what are the alternatives, and are they viable? 

Moving Forward: A Single-Payer Solution?

A “single-payer system” is probably the best-studied alternative for the United States. Conceptually, it is quite simple: national health insurance, with a single entity (the government) providing health insurance for the country. Its core principles (as generally agreed upon within the single-payer movement) can be briefly summarized. First, everyone in the country would be covered by national health insurance. Second, the system wouldn’t impose “cost sharing,” so health care would be free at the point of care, with underinsurance thereby eliminated (assuming an adequate level of funding). Third, it would drastically reduce spending on health care administration and bureaucracy through elimination of the fragmented multi-payer system, and also through the global budgeting of hospitals. It would also contain costs through health care capital planning, and through other measures like direct negotiations with pharmaceutical companies over drug prices. Putting this together, a single-payer system would constitute a markedly egalitarian turn in American health care. Access to health care would be made not only universal but also equal, with free choice of provider and hospital to everyone in the country, provided as a right.

Now, in light of the formidable resistance that could be expected from a wide-spectrum of powerful and well-funded “stake-holders” (for instance, AHIP and PhRMA), the actual realization of such a system is, to put it mildly, daunting. We can predict that the impressive resources that have been deployed in opposition to the ACA might be multiplied many times to counter even the specter of true universal health care. However, while our political prospects must always be judged soberly, there are also reasons for guarded optimism. The confluence of several of the following dynamics (and many others) may, for instance, create a political opening for such a project in the coming years. 

First, dissatisfaction with our health care system will almost certainly rise, which I think will occur as we become more and more a “copay country,” with high-deductible, high-premium, and narrow-network health plans becoming the new normal. One could imagine considerable public outrage and mobilization against this new commodified status quo, just as there was against corporatized HMOs in the 1990s. 

Second, though politics at the federal level may remain inhospitable to the cause for some time, single-payer campaigns at the state government level may provide an opening for the construction of more limited single-payer state systems, while also providing an opportunity for grassroots organizing and movement building that would, in turn, strengthen the larger national campaign.11

Third, support for a single-payer system among physicians (which already has majority support in some polls) might be translated into more vocal outrage in coming years. In particular, as patients pay more and more out-of-pocket at the time of care, physicians will increasingly be forced into the role of “merchants of health,” basing medical decisions not only on clinical evidence, but on their patients’ income and wealth. I believe—and deeply hope—that such class-based medicine will be rejected by the profession.

Fourth, and perhaps most important, a broader mobilization against the politics of inequality now seems to be in the making. As it is perceived that the excessive costs of American health care are actually contributing to the problem of inequality—for instance, insofar as high premiums indirectly reduce income or as cost sharing directly consumes a greater portion of already stagnant wages—one can imagine that the drive for a single-payer system might become closely linked with a much larger, and more powerful, political mobilization. 

Of course, the precise road by which fundamental change in the health care system could be achieved remains obscure. Currently, the ACA remains at center stage, drowning out discussions of alternatives. With time, however, the changes instituted by the ACA will become subsumed within the fabric of the health care system: we’ll no longer be debating the benefits or shortcomings of Obama’s signature legislation; we’ll be declaiming the persistent injustices of our overall health care system. However powerful the opposition, if allied with a larger popular movement against ever-rising inequality, true universal health care may yet have its day in the sun.

At the same time, I believe that the struggle for health care justice—the fight for universal and equal health care for all—could, in turn, powerfully inform, and bolster, this larger movement. In polls, universal health care (and single-payer) garners support from a surprisingly large proportion of the country, generally a majority. In addition, Medicare has long remained a highly popular program, even (to some extent) across class and political lines. Perhaps, one might conjecture, this is because the need for health care speaks to our intuitive commonalities as human beings. 

We may have soaring inequality and a political system more and more indebted to corporate sponsors. But I believe that we’ll ultimately reject the notion of class-based health care. The ideal of universalism still has great potential power; in time, we’ll learn to harness it.

A.W. Gaffney is a physician and writer whose work has appeared in Salon, Dissent, Jacobin, and In These Times. He blogs at www.theprogressivephysician.org.

Footnotes

  1. Paul Starr, Remedy and Reaction: The Peculiar American Struggle over Health Care Reform (New Haven: Yale University Press, 2011), 195.
  2. “Board of Directors’ Statement: Now Is the Time for Health Care Reform: A Proposal to Achieve Universal Coverage, Affordability, Quality Improvement and Market Reform.,” (America’s Health Insurance Plans, 2008).
  3. Drew Armstrong, “Insurers Gave U.S. Chamber $86 Million Used to Oppose Obama’s Health Law,” Bloomberg.
  4. Dean Baker, “Reducing Waste with an Efficient Medicare Prescription Drug Benefit” (Center for Economic and Policy Researcb, 2013).
  5. Peter Baker, “Obama Was Pushed by Drug Industry, E-Mails Suggest,” New York Times, June 9, 2012.
  6. Beatrix Rebecca Hoffman, Health Care for Some: Rights and Rationing in the United States since 1930 (University of Chicago Press, 2012).
  7. On the Bayh-Dole Act, see H. Markel, “Patents, Profits, and the American People—the Bayh-Dole Act of 1980,” New England Journal of Medicine 369, no. 9 (2013). On moral hazard, a good review can be found in J. A. Nyman, “American Health Policy: Cracks in the Foundation,” Journal of Health Politics, Policy and Law, vol. 32, no. 5 (2007). 
  8. “Effects of the Affordable Care Act on Health Insurance Coverage—Baseline Projections,” ed. Congressional Budget Office (2014).
  9. The devil is very much in the definition here (i.e. what arbitrary cutoff defines sufficient versus insufficient coverage); using a conservative threshold, a recent study found that 12 percent of the U.S. population was insured but underinsured (in addition to the 18 percent uninsured). C. Schoen et al., “America’s Underinsured: A State-by-State Look at Health Insurance Affordability Prior to the New Coverage Expansions,” (The Commonwealth Fund, 2014).
  10. In all fairness, however, we were already becoming a “copay country” even before the ACA. Those of us with employer-provided health insurance have, for instance, seen growing copay and deductibles in recent years. G. Claxton et al., “Health Benefits in 2013: Moderate Premium Increases in Employer-Sponsored Plans,” Health Affairs, vol. 32, no. 9 (2013). I discuss the issue of “copay country” in greater depth in “Your doctor copays are too high!” Salon, August 5, 2013.
  11. That being said, state single-payer requires federal waiver to allow for the incorporation of Medicare into the system, and so requires federal cooperation.

http://newpol.org/content/beyond-obamacare

A. W. Gaffney: “Malinsurance” may drive reform

Beyond Obamacare: Universalism and Health Care in the Twenty-first Century

By A. W. Gaffney
New Politics, Summer 2014

Among those working towards more fundamental health care change (for instance, as I’ll discuss below, a single-payer system), an assessment of the overall impact of the ACA is a frequent cause for disagreement. Is the law a (possibly wobbly) step in the right direction to be embraced and expanded, a harmful compromise to be denounced and discarded, or something in between? My own sense here is that global assessments are problematic and not that helpful: the massive law does many different things for many different people, and so is better dissected (and criticized) with respect to its specific effects and shortcomings rather than rejected or championed en toto.

Now if eliminating the problem of uninsurance was our only goal, it seems that the ACA would be at least be a clear step in the right direction. Unfortunately, however, there is another phenomenon that has been evolving for some time, that the ACA neither created nor fixed but to some extent codifies, and which confers a highly inegalitarian element to our health care system: underinsurance. Underinsurance is often defined as having insurance but still having substantial out-of-pocket costs for medical care (i.e. greater than 10 percent of family income after premiums); it’s clearly a growing problem, and it is by no means eliminated by the ACA. The plans on the exchanges, for instance, incorporate high levels of cost sharing, or copays, deductibles, and coinsurance. They are graded into four metallic tiers based on their actuarial value (i.e. the percent of your health care expenses that insurance covers), beginning at a paltry 60 percent for the “bronze plans.” Putting aside the deeply inegalitarian concept of dividing a population into different grades of metal (the allusion to Plato’s Republic has somehow not yet been made), such plans fulfill the long-held concern of health policy “experts” that patients need more “skin in the game” (i.e. cost exposure), such that they don’t whimsically procure medically unnecessarily procedures and diagnostic studies. Families will be subject to as much as $12,700 annually in additional out-of-pocket costs for health care (after premiums are paid) to keep the dreaded “moral hazard” of “free care” at bay.

Putting aside what happens to the level of strictly defined “underinsurance,” I would argue that there is a larger problem on the rise, which one might call “malinsurance,” namely insurance that compromises the physical and economic health of the bearer. Malinsurance encompasses an even broader scope of problematic insurance plans: insurance where the price of the premiums impinges on a reasonable standard of living; insurance with unequal and inferior coverage of services, drugs, or procedures; insurance with “cost sharing” that forces individuals to decide between health care and other necessities; insurance with inadequate and inequitable access to providers or facilities; and insurance that insufficiently protects against financial strain in the case of illness. 

Today, many (if not most) of us could in some ways be considered underinsured, while most (or maybe all) of us might be considered malinsured. This will, unfortunately, remain the case in coming years, even with the full and unimpeded enforcement of the ACA. 

Moving Forward: A Single-Payer Solution?

A “single-payer system” is probably the best-studied alternative for the United States. Conceptually, it is quite simple: national health insurance, with a single entity (the government) providing health insurance for the country. Its core principles (as generally agreed upon within the single-payer movement) can be briefly summarized. First, everyone in the country would be covered by national health insurance. Second, the system wouldn’t impose “cost sharing,” so health care would be free at the point of care, with underinsurance thereby eliminated (assuming an adequate level of funding). Third, it would drastically reduce spending on health care administration and bureaucracy through elimination of the fragmented multi-payer system, and also through the global budgeting of hospitals. It would also contain costs through health care capital planning, and through other measures like direct negotiations with pharmaceutical companies over drug prices. Putting this together, a single-payer system would constitute a markedly egalitarian turn in American health care. Access to health care would be made not only universal but also equal, with free choice of provider and hospital to everyone in the country, provided as a right.

The confluence of several of the following dynamics (and many others) may, for instance, create a political opening for such a project in the coming years. 

First, dissatisfaction with our health care system will almost certainly rise, which I think will occur as we become more and more a “copay country,” with high-deductible, high-premium, and narrow-network health plans becoming the new normal. One could imagine considerable public outrage and mobilization against this new commodified status quo, just as there was against corporatized HMOs in the 1990s. 

Second, though politics at the federal level may remain inhospitable to the cause for some time, single-payer campaigns at the state government level may provide an opening for the construction of more limited single-payer state systems, while also providing an opportunity for grassroots organizing and movement building that would, in turn, strengthen the larger national campaign.

Third, support for a single-payer system among physicians (which already has majority support in some polls) might be translated into more vocal outrage in coming years. In particular, as patients pay more and more out-of-pocket at the time of care, physicians will increasingly be forced into the role of “merchants of health,” basing medical decisions not only on clinical evidence, but on their patients’ income and wealth. I believe—and deeply hope—that such class-based medicine will be rejected by the profession.

Fourth, and perhaps most important, a broader mobilization against the politics of inequality now seems to be in the making. As it is perceived that the excessive costs of American health care are actually contributing to the problem of inequality—for instance, insofar as high premiums indirectly reduce income or as cost sharing directly consumes a greater portion of already stagnant wages—one can imagine that the drive for a single-payer system might become closely linked with a much larger, and more powerful, political mobilization. 

http://newpol.org/content/beyond-obamacare

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Comment:

By Don McCanne, MD

As A. W. Gaffney points out in this article, underinsurance or “malinsurance” may drive us to demand single payer as we mobilize against the politics of inequality. The entire article is well worth downloading and reading when you have a free moment.

Note on word usage:  Gaffney’s neologism, “malinsurance,” is sometimes used to refer to medical malpractice insurance. To avoid confusion, we should continue to use the already established term, “underinsurance,” as the label for the rapidly expanding menace of inadequate health care coverage.

Is Insurance Bureaucracy Lengthening Physician Workdays?

By Steve Jacob
Dallas/Fort Worth Healthcare Daily, July 21, 2014

The U.S. spends about three times as much on healthcare administration and insurance per capita as Canada. Brookings Institution economist Henry Aaron estimated in 2003 that the U.S. would save more than $213 billion annually in administration and insurance costs if it had a single-payer system similar to that nation’s.

In fact, the entire healthcare system is inflated with costly administrative tasks. According to the Institute of Medicine (IOM), the United States spends $361 billion annually on healthcare administration — double the treatment costs of heart disease and triple the cost of cancer. The IOM estimates half of these expenditures are unnecessary.

Aaron described the U.S. healthcare system as “an administrative monstrosity, a truly bizarre mélange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as staggeringly complex public systems with mind-boggling administered prices and other rules expressing distinctions that can only be regarded as weird.”

Donald Berwick, former director of the Centers for Medicare and Medicaid Services, estimated that needless administrative complexity created $107 billion to $389 billion in wasteful health-system spending in 2011. He cited “government, accreditation agencies, payers and others (who) create inefficient and misguided rules. For example, payers may fail to standardize forms, thereby consuming limited physician time in needlessly complex billing procedures.”

For example, Johns Hopkins Health System in Baltimore deals with about 700 different health plans, employers and other payers. Each payer has an annually negotiated rate for each service. Each also has different payment cycles and eligibility rules that must be tracked. The sheer complexity creates its own redundancies in several Johns Hopkins departments, which the organization calculated to be more than $40 million annually.

According to a study by a University of Massachusetts professor, a single-payer system would save the U.S. $1.8 trillion over a decade—including $592 billion in 2014 alone. Those savings would stem from eliminating the administrative burden of the current system and using the government’s bargaining power to drive down the cost of pharmaceuticals.

According to a 2008 study, 59 percent of U.S. physicians support a single-payer system. That is no doubt a measure of the enormous frustration physicians feel toward the nation’s insurance bureaucracy. In a 2011 survey of physicians who said they were “moderately to severely stressed or burned out on an average day,” the leading cause cited was the administrative demands of the job.

The AMA has been leading an effort to cut in half the number of medical claims paid incorrectly by large insurers.

The percentage of claims incorrectly processed by health plans fell for the third straight year, to about 7 percent, in 2013, according to the AMA’s sixth National Health Insurer Report Card. That compares with a 2011 rate of more than 19 percent. The AMA estimated that more than $43 billion could have been saved if commercial insurers had paid all claims correctly since 2010.

The AMA created an Administrative Burden Index to rank insurers based on unnecessary costs. The index rates commercial plans using a “star rating” based on delayed remittance, prior authorization requirements, claim edits and claim denials.

According to its fifth annual National Health Insurer Report Card, error rates for private health insurers on paid medical claims dropped from 19.3 percent in 2011 to 9.5 percent in 2012. This improvement resulted in $8 billion in health system savings, because of the reduction in unnecessary administrative work to reconcile errors. While dramatic improvements were made in 2013, the commercial health-insurance industry still paid the wrong amount for nearly 1 out of 14 medical claims.

Doctors’ workdays

According to a 2010 American Medical Association (AMA) survey, a typical physician office spends 20 hours a week on insurance administrative tasks. It found that more than 2 out of 3 physicians typically wait several days for pre-authorization for medications and 1 out of 10 wait more than a week. A 2009 Health Affairs study found that interactions with insurance companies cost U.S. physicians $23.2 billion to $31 billion a year.

The average physician spends nearly three weeks per year dealing with health plans. In addition, 23 weeks of nursing staff time and 44 weeks of clerical staff time are spent on insurance claims.

Physicians spend 45 percent of their workday outside the exam room, much of it devoted to documentation and follow-up. Every minute a physician spends outside direct patient care costs the average practice $4 to $6 in lost revenue.

With the widespread use of electronic health records (EHR), Health Affairs researchers estimated that at least half of a physician’s time during a patient visit is spent on low-value clerical work.

Insurance companies have been employing tactics reminiscent of managed care in the 1990s, according to The Wall Street Journal. They subtly are erecting more barriers to care through tighter networks and by requiring more referrals and authorizations prior to care.

In 2012, the AMA found a 23 percent increase over 2011 in claims that reflected an insurer pre-authorization review—increasing the total to 4.7 percent of claims. The AMA estimated that prior authorization policies added $728 million in administrative costs in 2012.

Doctors must follow strict health-plan guidelines or they will not be reimbursed. State and federal health-insurance programs continue to squeeze the rates they pay physicians. Many practices lose money when they treat Medicaid and Medicare patients.

Physicians have to hustle to cover their costs. Laurie Green, a San Francisco obstetrician and gynecologist, told the Journal, “I live my life in seven-minute intervals.” She estimated that she needed to earn $70 every 15 minutes to cover her office overhead.

Physicians’ workdays generally are brutal. A Philadelphia practice kept track of what its physicians did in a day’s time. The average doctor saw 18 patients, wrote 12 prescriptions, reviewed 14 consultation reports from specialists, studied 11 X-rays or other imaging reports, and wrote or answered 17 emails.

Of the time physicians spend outside of office visits, about one-third was spent on activities that saved an average of five visits a day, such as telephone calls and email communication with patients. The good news is that these activities reduce health-care costs, save time for patients and improve care coordination. The bad news for physicians is that these activities usually are not reimbursed.

Primary care, especially, is larded with unpaid work. An Archives of Internal Medicine study found that a typical general internist’s day included 70 laboratory tests, images and consultations; writing or signing 31 prescriptions; responding to seven messages related to patient care; and reviewing, editing and signing 17 electronic health records. This work is largely invisible and off the clock. Such administrative tasks add to an already crushing workload and can hasten physician burnout.

According to a 2013 physician survey by Medscape, nearly 40 percent reported at least one symptom of burnout, such as emotional exhaustion and a diminished sense of accomplishment. The top two reasons were “too many bureaucratic tasks” and “spending too many hours at work.”

Many health systems unwittingly are pushing more work onto the physician because they fear violating institutional or federal compliance issues. In some cases, only the physician can turn on the computer, reconcile a patient’s medications, record the history, enter orders for tests, compose the after-visit summary and complete the billing invoice—tasks that could be done by other staff members.

More than 3 out of 4 physicians believe insurers demand excessive pre-authorization for tests, procedures and medications, according to an AMA survey. More than 1 out of 3 have a rejection rate of 20 percent for first-time pre-authorization on tests and procedures, and more than half of physicians have a 20 percent rejection rate on prescriptions. About half of physicians have difficulty obtaining pre-authorization from insurance plans. About 2 out of 3 typically wait several days for permission. About the same proportion report difficulty in determining which tests, procedures and medications require pre-authorization.

This kind of workflow leads to low physician satisfaction. Nearly 1 out of 3 primary-care physicians say they intend to leave their practices within two years. The irony is that most physicians find interacting with patients outside of reimbursed office visits satisfying, and this kind of activity clearly enriches the primary-care environment. Unfortunately, no one is footing the bill for it.

Providers are attempting to push back against administrative burdens by becoming more efficient in other areas. Two process-improvement methodologies, such as Lean and Six Sigma, have migrated from other industries into health care.

http://healthcare.dmagazine.com/2014/07/21/is-insurance-bureaucracy-lengthening-physician-workdays/

ACA and racial and ethnic disparities

Barriers to Care in an Ethnically Diverse Publicly Insured Population: Is Health Care Reform Enough?

By Call, Kathleen T. PhD; McAlpine, Donna D. PhD; Garcia, Carolyn M. PhD, MPH, RN; Shippee, Nathan PhD; Beebe, Timothy PhD; Adeniyi, Titilope Cole MS; Shippee, Tetyana PhD
Medical Care, August 2014

Abstract

Background:

The Affordable Care Act provides for the expansion of Medicaid, which may result in as many as 16 million people gaining health insurance coverage. Yet it is unclear to what extent this coverage expansion will meaningfully increase access to health care.

Objective:

The objective of the study was to identify barriers that may persist even after individuals are moved to insurance and to explore racial/ethnic variation in problems accessing health care services.

Research Design:

Data are from a 2008 cross-sectional mixed-mode survey (mail with telephone follow-up in 4 languages), which is unique in measuring a comprehensive set of barriers and in focusing on several select understudied ethnic groups. We examine racial/ethnic variation in cost and coverage, access, and provider-related barriers. The study adhered to a community-based participatory research process.

Subjects:

Surveys were obtained from a stratified random sample of adults enrolled in Minnesota Health Care Programs who self-report ethnicity as white, African American, American Indian, Hispanic, Hmong, or Somali (n=1731).

Results:

All enrollees reported barriers to getting needed care; enrollees from minority cultural groups (Hmong and American Indian in particular) were more likely to experience problems than whites. Barriers associated with cost and coverage were the most prevalent, with 72% of enrollees reporting 1 or more of these problems. Approximately 63% of enrollees reported 1 or more access barriers. Provider-related barriers were the least prevalent (about 29%) yet revealed the most pervasive disparities.

Conclusions:

Many challenges to care persist for publicly insured adults, particularly minority racial and ethnic groups. The ACA expansion of Medicaid, although necessary, is not sufficient for achieving improved and equitable access to care.

http://journals.lww.com/lww-medicalcare/Abstract/2014/08000/Barriers_to_Care_in_an_Ethnically_Diverse_Publicly.8.aspx

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Comment:

By Don McCanne, MD

This is yet one more study that shows that insurance alone will not achieve equitable access to care, particularly for minority racial and ethnic groups. Let’s provide a little bit more perspective.

When we say that health care should be equitable, what do we mean? Does that mean that we compromise the quality of care for those who are receiving the very best in order to free up resources for those who are experiencing barriers to access? No, it means that we should bring everyone up to the same high standard. One important step is to improve the performance of the financing system by eliminating much of the administrative waste. That would free up resources that could be used to reduce the barriers of cost, coverage and capacity – barriers that the populations in this and other studies face.

Does equitable health care mean that we should prohibit allowing individuals to buy their way to the front of the queue? No, it means that we should use regional planning, capacity adjustment, and queue management techniques so that we reduce excessive queues for everyone.

Often the claim is made that there are many other socioeconomic factors besides insurance coverage that result in impaired access to care. That is true. Merely providing optimal coverage will not in itself correct all of the other factors. But in that claim is the implicit suggestion that we should accept deficiencies in coverage and access because we can’t fix the access problems anyway. That view represents an unacceptable ethical compromise in our current dialogue on reform.

Insurance systems that include financial barriers to care due to both cost sharing and uncovered services, and that impair access due to limitations of networks and limitations in regional capacity are a major cause of inequitable access and coverage. Creating an equitable financing system is the first and perhaps most important step in improving access to high quality care for everyone. Society has an obligation to address the other socioeconomic issues, but not by tossing aside the assurance that health care will be there for those who need it.

Are we getting enough bang for our healthcare buck? Hardly.

By Philip Caper, M.D.
Bangor (Maine) Daily News, July 17, 2014

The U.S. healthcare system costs each of us about twice as much as those in other wealthy countries. Are we getting our money’s worth? Not by a long shot.

According to the fifth and most recent of a series of reports spanning the past decade by The Commonwealth Fund, one of the world’s most respected independent health care think tanks, “the U.S. is last or near last on dimensions of access, efficiency, and equity” and last on overall quality of our system. The nations studied include Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States.

Although the U.S. does have some advanced medical technology, as do most of the other countries studied, we do a lousy job of getting it to many of our people, leading to our poor scores on access.

We don’t compare particularly favorably when it comes to quality either. We score relatively poorly on safe and coordinated care, and while we score well on access to (lucrative) specialized care (but not primary care), that access does not translate into better outcomes. “The U.S. ranks last overall with poor scores on all three indicators of healthy lives — mortality amenable to medical care, infant mortality and healthy life expectancy at age 60.”

The Commonwealth report goes on to observe that, “The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes.”

Even though the Affordable Care Act does result in a modest expansion of coverage for many people, even if it were to work exactly as designed (which it won’t) it would leave 25 million to 35 million people uninsured. Many more are underinsured due to high deductibles and co-pays, and restrictive physician and hospital networks. Both impede access to timely care. This will still leave us trailing most if not all other wealthy countries in the overall performance of our healthcare system.

Which causes me to think about Medicare, the closest thing we have to a universal health insurance system. Once you qualify for Medicare, it is good for life without any means test, and without regard to age, health status, employment status, gender or place of residence.

That kind of security cannot be achieved through private insurance.

Medicare was enacted by Congress and signed by President Johnson on July 1, 1965. Because of its simplicity, Medicare was smoothly rolled out to 19 million beneficiaries on July 1, 1966. No confusing websites or glitchy software needed. Since then, it has proven to be one of the most effective and efficient federal programs ever enacted, and has become politically untouchable. Even the most conservative politicians refuse to attack it, although some try to make the spurious (and ridiculous) claim that it is not really a federal program.

By following Medicare’s example, we could do a lot better. It would be very nice if we lived in a political culture where we could simply improve the ACA by replacing it with Medicare for everybody. But we don’t and won’t — at least not yet. We will have to wait a few more years, until the bewildering complexity, unfairness and arbitrariness of the ACA become more apparent to more people.

That shouldn’t stop us from preparing for the inevitable. The next landmark in the evolution of U.S. health care policy could come as soon as 2017, when the ACA provides the states an opportunity to replace many of its provisions with a simplified and improved system of their own.

Vermont has already enacted legislation that starts it on the path to do just that. Maine could be in the next wave of states to follow their example. If the Legislature is unwilling or unable to do that, the people could, through our initiative process.

We should celebrate the 49th (and soon 50th) anniversary of Medicare by starting the process of furthering the national movement toward universal health care as a human right.

We could create a simpler, more efficient, more equitable and less costly healthcare system that would turn us away from our current system of money-driven medicine and back toward the goal of healthcare with the sole mission of preventing and healing disease.

It would be the right thing to do.

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.

Are we getting enough bang for our healthcare buck? Hardly.

Hobby Lobby unravels one more thread of our inequitable quilt

Money, Sex, and Religion — The Supreme Court’s ACA Sequel

By George J. Annas, J.D., M.P.H., Theodore W. Ruger, J.D., and Jennifer Prah Ruger, Ph.D., M.S.L.
The New England Journal of Medicine, July 16, 2014

The Supreme Court decision in the Hobby Lobby case is in many ways a sequel to the Court’s 2012 decision on the constitutionality of the Affordable Care Act (ACA). Like the 2012 case, the decision was decided by a 5-to-4 vote, but in the initial ACA decision, Chief Justice John Roberts acted to “save” the ACA. Not this time. To simplify, the choice facing the Court in the Hobby Lobby case was whether to favor the exercise of religion by for-profit corporations (whose owners believe contraceptives that may prevent fertilized eggs from implanting violate their religious beliefs) over the federal government’s attempt to create a uniform set of health care insurance benefits.

(This article goes on to discuss the issues in the Hobby Lobby decision, including the ACA and the Religious Freedom Restoration Act, religion and birth control, and religion and women’s health. The authors end with the following section on medical care and the ACA.)

Medical Care and the ACA

In terms of health care, the reaction of the American College of Obstetricians and Gynecologists (ACOG) to the Court’s opinion seems just about right to us: “This decision inappropriately allows employers to interfere in women’s health care decisions . . . [which] should be made by a woman and her doctor, based on the patient’s needs and her current health.” ACOG went on to underline that contraceptives and family planning are mainstream medical care and should be treated as such. In their words, “access to contraception is essential women’s health care.”

The Court’s ruling can also be viewed as a direct consequence of our fragmented health care system, in which fundamental duties are incrementally delegated and imposed on a range of public and private actors. The Court is correct on one dimension of its opinion: if universal access to contraceptives is a compelling societal interest, then the provision of such access ought to fall first and foremost on the national government and only secondarily be transferred to private parties. Our systemic reliance on health insurance that is based on private employment provokes just this sort of clash between public and private values.

Our incremental, fragmented, and incomplete health insurance system means that different Americans have different access to health care on the basis of their income, employment status, age, and sex. The decision in Hobby Lobby unravels only one more thread, perhaps, but it tugs on a quilt that is already inequitable and uneven. A central goal of the ACA was to repair some of this incremental fragmentation by universalizing certain basic health care entitlements. In ruling in favor of idiosyncratic religious claims over such universality, the Court has once again expressed its disagreement with this foundational health-policy goal.

http://www.nejm.org/doi/full/10.1056/NEJMhle1408081?query=TOC#t=article

George Annas: http://www.bu.edu/sph/profile/george-annas/

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Comment:

By Don McCanne, MD

The last paragraph says it all:

“Our incremental, fragmented, and incomplete health insurance system means that different Americans have different access to health care on the basis of their income, employment status, age, and sex. The decision in Hobby Lobby unravels only one more thread, perhaps, but it tugs on a quilt that is already inequitable and uneven. A central goal of the ACA was to repair some of this incremental fragmentation by universalizing certain basic health care entitlements. In ruling in favor of idiosyncratic religious claims over such universality, the Court has once again expressed its disagreement with this foundational health-policy goal.”

Need we say, single payer?

Implement Medicare for All program

By Austin Curry
Sun Sentinel (Fort Lauderdale, Fla.), Letters, July 17, 2014

Medicare, the most successful health care program ever to come out of Congress, will begin its 50th year of service to millions of older Americans this month, with an overhead rate of only 1.4 percent. Yet some are calling for a voucher system. Why?

Private insurers have overhead rates of 25 to 30 percent, which continue to push health care costs higher.

Certainly, issues require attention, such as providers blatant “upcoding,” which leads to even higher prices. Also, fraudulent practices that siphon off much-needed dollars. But with a few tweaks, Medicare can be sustainable well into the future. We should all recognize Medicare for the great value it represents to our aging society.

We could even go a step further and save over $400 billion a year by implementing Medicare for All. Such a program, in the form of a single-payer plan, would be efficient and beneficial to all parties. It would provide quality health care with cost-effective methodology.

Do not cut Medicare. Protect it. Expand it. Improve it. Cover all Americans with it. Eliminate the political bickering and implement the Medicare for All program.

Austin Curry is a member of the Florida chapter of Physicians for a National Health Program. He resides in Tampa.

http://www.sun-sentinel.com/news/opinion/letters/fl-letter2-austin-curry-20140717,0,4267959.story

Will Medicaid push us into a single payer system?

Fewer Doctors Enrolled in Low-Income Insurance Program Despite Surge in Patients

By Hannah Guzik
California Health Report, July 14, 2014

Nearly 25 percent fewer physicians were signed up to treat low-income patients in the state’s insurance program this spring compared to a year prior, despite the surge in patients enrolled in Medi-Cal.

The drop in providers is due to the Department of Health Care Services’ efforts to remove doctors who haven’t complied with application requirements or billed the program in a year, spokesman Anthony Cava said.

“This has not resulted in a decrease in access to care,” he said.

More than 2 million people have signed up for Medi-Cal, the state’s low-income health plan, since the program was expanded under the Affordable Care Act. In total, 10.6 million people are enrolled — a quarter of the state’s population.

An additional 600,000 people are still waiting for the state to process their applications.

About 109,000 physicians were enrolled in Medi-Cal last spring, according to the Health Care department. But by this May, that number had dropped to 82,605.

Of the doctors enrolled in May, 38,845 were primary-care providers and 43,760 were specialists.

On its own, the agency’s list of providers isn’t necessarily a reflection of whether Medi-Cal patients have sufficient access to doctors. The list doesn’t specify whether the doctors are accepting new patients or how many they can accept, Cava said. While some doctors on the list may have up to 2,000 Medi-Cal patients, others might see only a handful or none.

http://www.healthycal.org/archives/16231

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Comment:

By Don McCanne, MD

Medi-Cal, California’s Medicaid program, serves as an example of the consequences of using Medicaid to expand coverage for the exceptionally poor. After the backlog of applications are processed, over 11 million people will be enrolled in Medi-Cal – about 29 percent of the state’s population. At the same time, 25 percent fewer physicians will be listed as Medi-Cal providers (a result of culling, not voluntary disenrollment). Further, many of the physicians enrolled already limit or exclude Medi-Cal patients from their practices. We should learn soon what impact this will have on access, and the news will not be good.

California has the additional problem that it has the lowest per patient Medicaid funding, with an additional 10 percent reduction in payment rates – a Great Recession cut which Gov. Brown refuses to restore. Think of the options that physicians have when they are being paid significantly less than their overhead expenses for taking care of these patients. None of their options are very good.

The latest CBO projections (April 2014) indicate that nationally 48 million people will be enrolled in Medicaid and CHIP – 13 million more than would have been enrolled had the Affordable Care Act (ACA) not been enacted. The number of uninsured will be 31 million – a number that includes those who would have been eligible for Medicaid had their governors not refused to expand Medicaid in their states. As if access for Medicaid patients were not bad enough, access for the uninsured will be much worse.

As has been said here before, building on the current system, as ACA did, is the most expensive and one of the least effective models of achieving reform goals. The least expensive comprehensive model, and one that achieves the desired goals, is single payer.

Although progressives are tooting their horns about how well ACA is working, the Medicaid program is only one example of how miserably short we have fallen in our efforts to achieve a premier performing system. Put away the horns and get to work.

More on a business case for universal health care

A Business Case for Universal Healthcare: Improving Economic Growth and Reducing Unemployment by Providing Access for All

By David Sterret, Ashley Bender, David Palmer
American University, Health Law & Policy Brief, Spring 2014

From the Introduction

This report will illustrate that the United States economy is currently hampered in numerous ways by having an inefficient, inequitable healthcare system. The research on which we relied was completed before the full implementation of the Patient Protection and Affordable Care Act (ACA). However, we expect that even if the law works as intended, it will not resolve the problems that we raise because the law largely preserves our employment-based healthcare system. In Part I, we discuss specific harms to the economy inflicted by our system’s reliance on employers to provide healthcare benefits. Part II examines how the United States economy compares through the lens of several indices, including some published by conservatives. These comparisons illustrate that most countries with more vibrant economies than the United States have government- directed, universal healthcare systems.

II. Implementing a Universal Care System Would Improve American Competitiveness Internationally

A. The United States Trails Many of Its Competitors by Various Economic Measures
B. How the Employer-Funded United States Healthcare System Harms Businesses
C. Why a Universal Care System Would Lessen Burdens on Businesses

No universal care systems, including pure single-payer systems, are a free lunch for businesses. In one way or another, often through a payroll tax, businesses end up providing at least some of the money to finance the system.

There are several reasons to believe that a universal care system would mitigate this impact on businesses. Primarily, such a system would cause future costs to be lower, or at least stem the trend of cost-increases far exceeding inflation. Secondly, businesses’ overall share of healthcare bills would likely be lower. Finally, a universal care system would distribute costs far more equitably among businesses.

Conclusion

If the United States were to implement a system to ensure universal care, American companies would no longer face a disadvantage in competing with businesses from countries, such as Canada, that provide national healthcare systems. Additionally, healthcare would cease to be a large factor guiding individuals’ career decisions. A national, universal care system would level the playing field among domestic businesses, and eradicate the free-rider problem. For all of the above reasons, economic growth would likely improve, which would yield additional self-perpetuating benefits.

There is an argument that the taxes to finance such a system would constrain business. This claim is seriously undercut by examples from around the world. For instance, Hong Kong, viewed by many as a “beacon of capitalism,” has universal healthcare. So does Denmark, which has higher levels of entrepreneurship than the United States. What is becoming increasingly clear now is that the current employer-sponsored healthcare system in the United States does hurt business.

http://jts.hbp.com/pdf/design/135358_AU_HLP_3.pdf

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Comment:

By Don McCanne, MD

The majority of Americans obtain their insurance through their employment. Business has a vital concern in the financing of health care. This report adds to the plethora of evidence that business owners would be better off if they were relieved of their responsibilities of providing health benefit programs for their employees. So why is there not an outcry to switch to a proven financing system that would serve their employees well? Is it ideology?

The Affordable Care Act (ACA) calls for a financial penalty for larger employers who do not provide health care coverage for their employees. Could that be the reason? No, the resistance to change existed before ACA was enacted. Further, there are now so many experts in the policy community across the political spectrum who are calling for repeal of the penalty that it is likely that it will be eliminated anyway.

If so, what are employers likely to do? We are already seeing much interest in private health insurance exchanges. If ACA requirements on employers were lifted, they may be willing to provide their employees with a voucher to purchase plans in the private exchanges. Since that converts the benefit into a defined contribution, that would pass on to their employees the burden of future health care inflation.

Another possibility is that they might want to give their employees raises and then let them select their own plans in the state-based ACA exchanges. That would remove the employer entirely from the responsibility of supporting a health benefit program.

A concern that employers might have is that health care costs are now too high and income inequality has increased to the level such that health care benefits must be progressively financed if people are to receive the care they should have. Employers could be concerned that their tax burden may be increased to pay for the higher subsidies that will be needed for premiums and cost-sharing in the exchange programs. Not knowing what that tax burden might be could cause some reluctance to change from a system that at least they understand.

Most employers are well aware of the inefficiencies and high costs of our private insurance-based system. Would employers be ready to embrace a more efficient government-financed and government-administered single payer system? This may be their greatest fear because the financing would no doubt be through explicit progressive tax policies. Most proposals would reduce total health spending for 95 percent of us, but would increase it for those in the top 5 percent of income. 

Although some in the business community might be opposed simply because of ideology, for most it’s the money. We’ve learned the lessons that Thomas Piketty has for us, but we can’t apply them until we are willing to exercise democracy by changing the politics. That push for change will not come from the business community.

Why doctors run late

By David U. Himmelstein, M.D.
The New York Times, Letters, July 13, 2014

The best way to shorten waits to see a doctor (editorial, July 8) is to reduce physicians’ crushing paperwork burden. The average American doctor spends almost nine hours each week on billing and bureaucratic tasks, twice the time spent by physicians in Canada.

The difference stems from the complex, business-oriented payment system in the United States, and Canada’s simple, single-payer system.

David U. Himmelstein, an internist, is a professor at the CUNY School of Public Health at Hunter College.

The meme of interdependency of access, quality and cost

Why Improving Access to Health Care Does Not Save Money

By Aaron E. Carroll
The New York Times, July 14, 2014

One of the most important facts about health care overhaul, and one that is often overlooked, is that all changes to the health care system involve trade-offs among access, quality and cost. You can improve one of these – maybe two – but it will almost always result in some other aspect getting worse.

You can make the health care system achieve better outcomes. But that will usually cost more or require some change in access. You can make it cheaper, but access or quality may take a hit. And you can expand access, but that will increase cost or result in some change in quality.

More people being able to get care was the point of the A.C.A. It’s possible that overall health care spending may remain flat or even decrease because of other changes to the health care system, or economic factors outside the system entirely. But with respect to emergency care, prevention and procedures, we should expect that increasing access will lead to more spending, not less.

It’s understandable that supporters of the law want it to increase access, increase quality and decrease spending all at the same time, but that’s very unlikely. Trade-offs occur; we need to be honest, and prepared, for what’s likely to happen.

Comment:

By Don McCanne, MD

The supposedly inevitable trade-offs between access, quality and cost ignore one important intervention regarding cost. The health care financing system in the United States is unique in its profound, costly administrative waste due to the highly inefficient, fragmented financing through a multitude private insurers and public programs (and no programs at all for the uninsured).

Merely changing to a universal single payer program or a national health service model dramatically reduces costs without having a negative impact on access and quality. The future trajectory of cost increases would be shifted downward – achieving that elusive bending of the cost curve. That is one way other nations provide truly universal health care at a per capita cost averaging only half of that of the United States.

In fact, the monopsonistic purchasing of a public program can actually improve quality by obtaining greater value in health care purchasing.

Some of the savings that would accrue by changing to a universal program such as an improved Medicare for all would be redirected to much needed improvements in access.

The important bottom line is that we really can achieve improved access, improved quality, and lower costs by structural reform of our highly dysfunctional financing system – a system that was only expanded by the Affordable Care Act.