PNHP

Blue Cross parent firm sued over big profits, big bonuses

Blue Cross parent firm sued over big profits, big bonuses

By Mike Dennison
Independent Record (Helena, Mont.), May 28, 2014

The parent firm of Blue Cross and Blue Shield of Montana has been sued by a benefits-administration group that says the Chicago-based insurance giant is hoarding excess profits and unduly enriching its executives.

The lawsuit, filed last week in federal court in Chicago, said Health Care Service Corp. is breaching its contract with customers by running up excess profits of nearly $5 billion.

The Chicago Tribune first reported on the lawsuit, which said that money should have been distributed to HCSC customers as a paid dividend, reduced prescription drugs costs or lower premiums. Instead, HCSC used some of the money to pay nearly $100 million in bonuses to its top executives from 2011-2013, the suit said.

The Lee Newspapers State Bureau reported last year that HCSC Chief Executive Patricia Hemingway Hall received $16 million in compensation in 2012, including a $14.9 million bonus.

In all, the company’s top 10 executives took home $53 million in bonuses for 2012, when the company reported $1 billion in net revenue.

Figures on HCSC’s executive pay for 2013 weren’t immediately available Wednesday.

HCSC, which has 8.5 million fully insured customers, owns Blue Cross plans in Montana, Texas, Illinois, New Mexico and Oklahoma.

The company bought Blue Cross and Blue Shield of Montana last year for $40 million. In Montana, HCSC has about 250,000 customers.

John Doran, a Blue Cross spokesman in Montana, said Wednesday that HCSC is “in the process of analyzing the pending litigation and will determine (its) next steps.”

The suit was filed by Babbit Municipalities Inc., a Chicago-based benefits administration company that does business as Group Benefits Associates, working primarily with labor unions. The company asked the court to certify the lawsuit as a class-action that would include all of HCSC’s fully insured business.

The Chicago law firm representing Babbit is one of the largest consumer class-action firms in the country, according to the Tribune, and has brought dozens of consumer lawsuits against large, prominent companies.

The lawsuit said HCSC had a $10.3 billion reserve at the end of last year when it needs only $5.4 billion in reserves.

Holding such a large reserve “obliterates (the company’s) purpose as a nonprofit mutual corporation and exceeds the bounds of proper business judgment,” the lawsuit said, and makes the company effectively a for-profit firm that provides “no substantial mutual benefit to its members.”

HCSC posted net income of $684 million last year and $1 billion a year in 2010, 2011 and 2012, the Tribune reported.

http://helenair.com/news/local/blue-cross-parent-firm-sued-over-big-profits-big-bonuses/article_fa4b9036-e6a9-11e3-8a18-0019bb2963f4.html

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2013 salaries for Blue Cross executives in Montana

By IR State Bureau
Independent Record (Helena, Mont.), May 29, 2014

While Blue Cross and Blue Shield of Montana’s parent company is being sued over allegedly excessive bonuses paid to its executives, its top executives in Montana actually saw a pay cut last year.

Mike Frank, who’s now president of the Montana Division of Health Care Service Corp., received about $228,000 in compensation last year, including a $224 bonus.

In 2012, the year before Montana Blue Cross was purchased by HCSC, Frank was paid $635,000 as president and CEO of the Montana health insurer, including a $213,000 bonus.

HCSC, based in Chicago, bought Blue Cross and Blue Shield of Montana last year. A lawsuit filed last week alleges that HCSC has made excessive profits and used some of that money to pay millions of dollars in bonuses to its executives.

Last year, after HCSC bought Montana Blue Cross, its highest-paid executive in Montana was Mark Burzynski, the vice president for provider services. He received $334,700 in compensation, including a $190,000 bonus. That amount is $14,000 less than he was paid the previous year by Blue Cross.

Other top HCSC Montana executives’ salaries last year were:

  • Frank Cote, vice president of Montana sales, $184,000 – about $37,000 less than he received in 2012.
  • Monica Berner, vice president and chief medical officer, $164,000, or $47,000 less than in 2012.
  • James Spencer, chief actuary, $159,300 – about $121,000 less than in 2012.

http://helenair.com/news/local/salaries-for-blue-cross-executives-in-montana/article_2ac38e18-e6f4-11e3-ba31-0019bb2963f4.html

Health policy experts versus everyone else: Why do the experts believe themselves?

Unnecessary Tests and Procedures In the Health Care System: What Physicians Say About The Problem, the Causes, and the Solutions: Results from a National Survey of Physicians

ABIM Foundation, May 1, 2014

Nearly three-quarters (73 percent) of physicians say the frequency of unnecessary tests and procedures in the health care system is a very (29 percent) or somewhat (44 percent) serious problem. ….

The top reasons physicians say they order unnecessary tests and procedures are concern about malpractice issues (52 percent say a major reason), just to be safe (36 percent), and wanting more information for reassurance (30 percent). …

The second-tier influences are patients’ insistence (28 percent) and wanting to keep patients happy (23 percent). Third-tier reasons include other factors such as … the fee-for-service system (5 percent)…. [p 5]

http://www.choosingwisely.org/wp-content/uploads/2014/04/042814_Final-Ch…

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Phasing out fee-for-service payment

By William Frist and Steven Schroeder
New England Journal of Medicine, 2013; 368:2029-2032

The fee-for-service mechanism of paying physicians is the major driver of higher health care costs in the United States [citation omitted] ….. The long-range solution is [to] shift from a payment system based on a fee-for-service model to one based on value through mechanisms such as bundled payment, capitation, and increased financial risk sharing.

http://www.nejm.org/doi/full/10.1056/NEJMsb1302322

There is an enormous gap between the opinions of the health policy elite in this country and those of the public, including physicians. The health policy elite find this gap too boring to analyze. They know why this gap exists. The problem is not them, it’s the hoi polloi and the doctors. Patients are bewitched by “technology” and think “more is better,” and doctors’ minds are warped by the incentives of the fee-for-service system. It does not occur to health policy experts that there might be something very wrong with their culture. The idea that there is even a “culture” within the health policy establishment would strike the establishment as at best uninteresting and at worst silly. That this culture might be dysfunctional is unthinkable. In their view, the only “culture” that needs analysis is that of the medical profession and of the unwashed masses.

Although the gap between public and expert opinion was documented by the early 1990s, the health policy community has shown no interest in understanding its cause. For the health policy elite, there is nothing to explain: The public is wrong and they are right. Pollster Daniel Yankelovich articulated the establishment point of view in a 1995 paper on the muddled debate about the Clintons’ Health Security Act. “The nation’s leadership and the public are carrying out a bizarre dialogue of the deaf,” Yankelovich wrote. “The nation’s elites have little trouble conversing with one another, but when it comes to engaging the public, there is an astonishing lack of dialogue.” [p. 8]

http://content.healthaffairs.org/content/14/1/7.full.pdf+html?sid=fa42b8…

The problem, said Yankelovich, is the public does not agree with the experts’ diagnosis of the health care crisis. Virtually the entire health policy establishment thinks US expenditures are high because the volume of health care is excessive. But the public disagrees. As Yankelovich put it, “[M]ost Americans attribute the rising costs of health care to waste, fraud, greed, and inefficiency, [and] they assume that whatever is wrong can be fixed by cracking down on these expressions of venality….” [p. 14] The public, Yankelovich concluded, is “on a collision course with the majority of experts”. [p. 14] Yankelovich’s explanation for this standoff was “lack of realism” and “wishful thinking” by the masses. The elite couldn’t possibly be wrong.

The health policy cognoscenti treat the gap between physician and expert opinion with the same incuriosity and arrogance. The latest evidence of how drastically physician opinion departs from that of the establishment appeared in a poll published by the ABIM Foundation (created by the American Board of Internal Medicine) on May 1. The poll found that only 5 percent of physicians believe the fee-for-service payment method is a major cause of overuse of medical care. The three most common explanations doctors offered were variations on the same theme: Reducing uncertainty. Other polls report similar resultshttp://www.unitedhealthgroup.com/~/media/UHG/PDF/2012/UNH-Working-Paper-…(see p. 8) http://jama.jamanetwork.com/article.aspx?articleid=1719740 (see Table 3).

The health policy elite emphatically disagrees. “The fee-for-service model is like asking a butcher how much steak you should eat,” Jonathan Gruber, a prominent advisor to the Obama administration, “explained” to NPR.

http://www.npr.org/templates/story/story.php?storyId=106859968

According to former Senator William Frist and Steven Schroeder (see article quoted above), the “fee-for-service mechanism is the major driver of higher health care costs.”

How do we explain this divergence of opinion? I propose a modest hypothesis: That the health policy community is as deeply influenced by incentives peculiar to their profession as physicians are by incentives peculiar to their profession. I propose that researchers both inside and outside the health policy community begin their analysis of my hypothesis by documenting the pattern I have outlined above – the experts’ habit of issuing pronouncements on the allegedly irresponsible behavior of doctors as the chief cause of the health care crisis – and comparing that pattern with analogous patterns in physician explanations. Investigators would then examine the evidence behind the different world views.

Let me offer an illustration.  The paper from the New England Journal of Medicine quoted above – “Phasing out fee-for-service payment” – contained one of those extremely rare instances in which proponents of the FFS-is-to-blame diagnosis tried to document their claim. The authors, Frist and Schroeder, cited one and only one paper – a paper published in 2011 by Laugeson and Glied entitled, “Higher fees paid to US physicians drive higher spending for physician services compared to other countries.”http://content.healthaffairs.org/content/30/9/1647.abstract The paper didn’t merely fail to support Frist and Schroeder’s claim, it contradicted it. It demonstrated that volume of services (in other words, overuse) could not explain why expenditures on physicians are so much higher in the US than in other countries that also rely primarily on the FFS method, and that higher physician fees in the US explained the difference. To paraphrase Gerard Anderson et al. http://content.healthaffairs.org/content/22/3/89.full.pdf+html, it’s the prices stupid, not FFS.

Researchers investigating my hypothesis might ask, What incentives are Frist and Schroeder exposed to that would incline them to make such a sloppy mistake? Do proponents of the FFS-is-to-blame mantra and managed care in general make more money, publish more often, advance faster within the ranks of politics and academia, have greater access to the media, or have more luck raising money from foundations than, say, single-payer advocates or observers who are less passionate about their criticism of doctors and patients?

I’m not proposing to exempt doctors and patients from similar scrutiny. I’m proposing that the scrutiny, at long last, become even-handed. I have little doubt even-handed scrutiny would either force the health policy illuminati to honor the rules of scientific discourse and stop promoting diagnoses and solutions with little or no evidence, or it would lower the credibility of the illuminati in the eyes of the public and the media. In either event, the decks would be cleared for a real debate about single payer. Then the most profound gap between the public (including physicians) and the experts would become more visible: By large majorities the public supports single-payer.https://pnhp.org/system/assets/drupal/docs/2011/Kip-Sullivan-Two-third…

It’s time for single-payer, universal health care

By Pat Barcas
Fox Valley Labor News, May 15, 2014

CHICAGO — Discussion about single payer, universal health care has been ongoing for the last 100 years. Now, Dr. Andrew Coates says the fight is about to come to an impasse — this country needs universal health care to move forward.

“This is something that every first world, civilized country has,” said Coates at a special Chicago conference entitled “Beyond Obamacare” May 8.

Dr. Coates is president of Physicians for a National Health Program. He is chief of hospital medicine at Samaritan Hospital in Troy, N.Y., and an assistant professor of medicine and psychiatry at Albany Medical College. He previously served on the statewide executive board of the Public Employees Federation, AFL-CIO, and founded Single Payer New York, a statewide grassroots coalition of single-payer organizations and activists.

He criticized the Affordable Care Act, saying it will leave 30 million uninsured once fully implemented. It’s also wasteful, costing $368 million just to set up the New York state marketplace.

Under the current system, Coates said, 60 percent of those filing for bankruptcy due to health care bills have health insurance. Deductibles eat up savings. Households have to pick which bills to pay, or permanently forgo necessary surgeries.

There are fewer people going to the emergency room now, said Coates, but admissions into the hospital are on the rise.

“There are fewer ER visits because it’s so expensive, but people are becoming much sicker,” he said.

Coates said there are no legitimate downsides to single-payer: It’’s cheaper in the long run, it levels racial and wealth disparities, it makes for a healthier populace, and there’s a reliable model right next door in Canada.

“Imagine the liberation of working people. It’s very profound,” he said. “We’re up against the whole establishment. They don’t want it. This is a basic economic right.”

He called on unions to lead the charge in changing public opinion, and turn the political tide toward voting for single-payer.

“Unions have the expertise — how to organize, how to lead the fight,” he said.

A major argument against the single-payer system in Canada, Coates said, is that there can be a waiting list for non life-threatening surgery, such as knee surgery.

“In Canada, sure, you may wait weeks to get elective surgery, but it’s free at the point of service. Here in America, the wait time is infinity if you can’t afford it,” he said. “Imagine if you don’t have to worry about paying for you or your child’s care — we have the expectation that we’re free, but we aren’t until we all have health care. We just don’t have the political will.”

The event was co-sponsored by Physicians for a National Health Program and the Illinois Single Payer Coalition.

It’s time for single-payer, universal health care

Is the Urban Institute asking the right question on ending the employer mandate?

Why Not Just Eliminate the Employer Mandate?

By Linda J. Blumberg, John Holahan, and Matthew Buettgens
Urban Institute, May 2014

Controversy over the Affordable Care Act’s employer mandate continues. The requirement’s implications for coverage are small, and yet the negative labor market effects of keeping it in place could harm some low-wage workers.

Under the law, employers of 50 or more workers are subject to a penalty if at least one of their full-time workers obtains a Marketplace subsidy. Employees offered coverage deemed affordable and adequate are prohibited from obtaining subsidies, as are their family members, and employers can avoid penalties by offering coverage to at least 95 percent of workers. However, the Administration has delayed the requirements until 2016 for employers of 50-99, for larger employers until 2015, and softened requirements for that first year. Yet there are anecdotal reports of employers changing labor practices even though penalties have yet to be implemented.

Our analyses as well as that of others find that eliminating the employer mandate will not reduce insurance coverage significantly, contrary to its supporters’ expectations. Eliminating it will remove labor market distortions that have troubled employer groups and which would harm some workers. However, new revenue sources will be required to replace that anticipated to be raised by the employer mandate.

Conclusion

In summary, eliminating the employer mandate would eliminate labor market distortions in the law, lessen opposition to the law from employers, and have little effect on coverage. Alternative sources of revenue would have to be found to compensate for the federal loss of penalties. Both the elimination of the mandate and creating a new source of revenue to replace it will require legislation. Current legislation before Congress proposes to move the employer requirement from employers of 50 or more workers to employers of 100 or more. While this approach would help those firms between 50 and 99 employees and decrease the exposure to adverse incentives within that group, it shifts the threshold where labor market effects could take place to a different point and does not address the concerns of large, low-wage firms. The individual mandate, together with the Medicaid expansion and income related subsidies, is, as we have shown elsewhere,14 critical to expanding coverage under the ACA; the employer mandate is not.

http://www.urban.org/UploadedPDF/413117-Why-Not-Just-Eliminate-the-Employer-Mandate.pdf

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Study Questions Need For Employer Health Care Requirement

By John Ydstie
NPR, May 28, 2014

A study called “Why Not Just Eliminate the Employer Mandate?” has been published by the Urban Institute, a center-left think tank based in Washington, D.C. It lists a number of reasons why dropping the mandate might be a good idea.

Linda Blumberg, one of the authors, says first of all, requiring firms to offer health insurance could be a bad deal for lots of low-wage workers.

“A lower-income worker is going to do better, most likely — financially — by getting subsidized coverage through one of the health insurance marketplaces instead of through their employer,” she says.

That’s because many of those workers make so little that they qualify for free coverage under Medicaid. Even workers making as much as 2 1/2 times poverty-level wages would get subsidies in the Obamacare exchanges, and that could make it a better deal than the coverage provided by their company.

Employer-sponsored plans do make sense for lots of workers because they allow those workers to buy their insurance with tax-free dollars. But for low-income workers who may not pay any income tax, there’s little benefit.

The Urban Institute study also concludes that the employer mandate won’t be very helpful in increasing insurance coverage. It finds that only about 200,000 more people will be covered under the mandate.

So, with these kinds of negatives, what’s the incentive for hanging on to the employer mandate?

Jon Gruber is an economist at the Massachusetts Institute of Technology who helped design the Massachusetts health care exchange under then-Gov. Mitt Romney. Gruber, who also consulted with the Obama administration on the Affordable Care Act, says that the most important incentive is money.

“The right way to think about the employer mandate is really as a revenue-raising tool,” Gruber says. “It does raise a lot of money.”

Gruber says the mandate has its pluses and minuses, but he says there’s about an even chance it won’t ever take effect.

“The strongest argument probably for getting rid of this is political, which is that while this is really not a very fundamental piece of the law, it’s catching a huge share of the flak around the law,” he says.

The Obama administration continues to stand behind the employer mandate, arguing that it will help get health insurance to more people and save taxpayers money.

http://www.npr.org/2014/05/28/316692125/study-questions-need-for-employer-health-care-requiremen

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Comment:

By Don McCanne, MD

The Affordable Care Act is a highly inefficient, expensive, and administratively complex method of expanding health care coverage. One of the complexities is the mandate for employers to provide health insurance for their employees. The Urban Institute asks if the employer mandate should be eliminated, but is this the right question?

Once it was decided to use a multi-payer model of a multitude of private health plans and public programs to expand health care coverage, it was recognized that the funds provided by employers for their health benefit programs were an important revenue source in funding our national health expenditures. To ensure that those funds would still be there, the mandate for employer participation was included in the legislation.

This analysis by experts at the Urban Institute reveals that eliminating the employer mandate would result in only a modest increase in the numbers of uninsured – maybe 200,000 – though other estimates are higher. Of course, those individuals who would not be covered may not agree that this would be only a “modest” impact of this policy change.

The primary benefit would be to end the opposition of the business community. Some businesses would encourage their employees to obtain their coverage though government-subsidized exchange plans or the government-financed Medicaid program.

The Obama administration is opposed to this change since it would reintroduce the problem they were trying to avoid – finding new sources of government revenue to pay for the increases in enrollment in these tax-supported programs. But Jonathan Gruber suggests that the politics behind this unpopular provision may force the change.

So should we be asking if eliminating the employer mandate is a wise decision? It would be only one tweak in a highly complex system which supporters agree requires a great multitude of tweaks. The problem with incremental repair of this system is that the basic structure will still remain highly inefficient and will continue to waste tremendous resources, while falling short on on the goals of universality, equity, and affordability.

No, the correct question is, should we replace our highly dysfunctional health care financing system with an efficient, equitable, truly universal, affordable single payer national health program? Presumably only uncaring ideologues would answer in the negative.

Is the Urban Institute asking the right question on ending the employer mandate?

Why Not Just Eliminate the Employer Mandate?

By Linda J. Blumberg, John Holahan, and Matthew Buettgens
Urban Institute, May 2014

Controversy over the Affordable Care Act’s employer mandate continues. The requirement’s implications for coverage are small, and yet the negative labor market effects of keeping it in place could harm some low-wage workers.

Under the law, employers of 50 or more workers are subject to a penalty if at least one of their full-time workers obtains a Marketplace subsidy. Employees offered coverage deemed affordable and adequate are prohibited from obtaining subsidies, as are their family members, and employers can avoid penalties by offering coverage to at least 95 percent of workers. However, the Administration has delayed the requirements until 2016 for employers of 50-99, for larger employers until 2015, and softened requirements for that first year. Yet there are anecdotal reports of employers changing labor practices even though penalties have yet to be implemented.

Our analyses as well as that of others find that eliminating the employer mandate will not reduce insurance coverage significantly, contrary to its supporters’ expectations. Eliminating it will remove labor market distortions that have troubled employer groups and which would harm some workers. However, new revenue sources will be required to replace that anticipated to be raised by the employer mandate.

Conclusion

In summary, eliminating the employer mandate would eliminate labor market distortions in the law, lessen opposition to the law from employers, and have little effect on coverage. Alternative sources of revenue would have to be found to compensate for the federal loss of penalties. Both the elimination of the mandate and creating a new source of revenue to replace it will require legislation. Current legislation before Congress proposes to move the employer requirement from employers of 50 or more workers to employers of 100 or more. While this approach would help those firms between 50 and 99 employees and decrease the exposure to adverse incentives within that group, it shifts the threshold where labor market effects could take place to a different point and does not address the concerns of large, low-wage firms. The individual mandate, together with the Medicaid expansion and income related subsidies, is, as we have shown elsewhere,14 critical to expanding coverage under the ACA; the employer mandate is not.

http://www.urban.org/UploadedPDF/413117-Why-Not-Just-Eliminate-the-Emplo…

****

Study Questions Need For Employer Health Care Requirement

By John Ydstie
NPR, May 28, 2014

A study called “Why Not Just Eliminate the Employer Mandate?” has been published by the Urban Institute, a center-left think tank based in Washington, D.C. It lists a number of reasons why dropping the mandate might be a good idea.

Linda Blumberg, one of the authors, says first of all, requiring firms to offer health insurance could be a bad deal for lots of low-wage workers.

“A lower-income worker is going to do better, most likely — financially — by getting subsidized coverage through one of the health insurance marketplaces instead of through their employer,” she says.

That’s because many of those workers make so little that they qualify for free coverage under Medicaid. Even workers making as much as 2 1/2 times poverty-level wages would get subsidies in the Obamacare exchanges, and that could make it a better deal than the coverage provided by their company.

Employer-sponsored plans do make sense for lots of workers because they allow those workers to buy their insurance with tax-free dollars. But for low-income workers who may not pay any income tax, there’s little benefit.

The Urban Institute study also concludes that the employer mandate won’t be very helpful in increasing insurance coverage. It finds that only about 200,000 more people will be covered under the mandate.

So, with these kinds of negatives, what’s the incentive for hanging on to the employer mandate?

Jon Gruber is an economist at the Massachusetts Institute of Technology who helped design the Massachusetts health care exchange under then-Gov. Mitt Romney. Gruber, who also consulted with the Obama administration on the Affordable Care Act, says that the most important incentive is money.

“The right way to think about the employer mandate is really as a revenue-raising tool,” Gruber says. “It does raise a lot of money.”

Gruber says the mandate has its pluses and minuses, but he says there’s about an even chance it won’t ever take effect.

“The strongest argument probably for getting rid of this is political, which is that while this is really not a very fundamental piece of the law, it’s catching a huge share of the flak around the law,” he says.

The Obama administration continues to stand behind the employer mandate, arguing that it will help get health insurance to more people and save taxpayers money.

http://www.npr.org/2014/05/28/316692125/study-questions-need-for-employe…

The Affordable Care Act is a highly inefficient, expensive, and administratively complex method of expanding health care coverage. One of the complexities is the mandate for employers to provide health insurance for their employees. The Urban Institute asks if the employer mandate should be eliminated, but is this the right question?

Once it was decided to use a multi-payer model of a multitude of private health plans and public programs to expand health care coverage, it was recognized that the funds provided by employers for their health benefit programs were an important revenue source in funding our national health expenditures. To ensure that those funds would still be there, the mandate for employer participation was included in the legislation.

This analysis by experts at the Urban Institute reveals that eliminating the employer mandate would result in only a modest increase in the numbers of uninsured – maybe 200,000 – though other estimates are higher. Of course, those individuals who would not be covered may not agree that this would be only a “modest” impact of this policy change.

The primary benefit would be to end the opposition of the business community. Some businesses would encourage their employees to obtain their coverage though government-subsidized exchange plans or the government-financed Medicaid program.

The Obama administration is opposed to this change since it would reintroduce the problem they were trying to avoid – finding new sources of government revenue to pay for the increases in enrollment in these tax-supported programs. But Jonathan Gruber suggests that the politics behind this unpopular provision may force the change.

So should we be asking if eliminating the employer mandate is a wise decision? It would be only one tweak in a highly complex system which supporters agree requires a great multitude of tweaks. The problem with incremental repair of this system is that the basic structure will still remain highly inefficient and will continue to waste tremendous resources, while falling short on on the goals of universality, equity, and affordability.

No, the correct question is, should we replace our highly dysfunctional health care financing system with an efficient, equitable, truly universal, affordable single payer national health program? Presumably only uncaring ideologues would answer in the negative.

Another Green Flag for Single Payer

Reflections on the VA Scandal

By Andrew D. Coates, M.D.

KevinMD — Dr. Kevin Pho — the popular physician blogger, suggests that single-payer advocates reevaluate the single-payer idea in light of the scandal now unfolding within the Veterans Health Administration. He calls the scandal “a red flag for those who want a national single-payer system in the United States.”

While his thoughtful essay teases out crucial details hidden in the mainstream discussion over the failures at the VA health system, the conclusion he draws seems to point in a direction opposite from the observations he makes.

Dr. Pho offers a succinct and powerful analysis of what led to the inability to keep up with the needs of many VA patients: “underfunding.” He adds several statistics (including data compiled by the libertarian Cato Institute) to demonstrate that the VA has been underfunded.

“While there are certainly advantages to a single-payer system, what happens if that single-payer doesn’t adequately fund the system?” Dr. Pho asks. “Lengthy waiting times and rationed care. The VA is a case study of that scenario.”

“The government,” Dr. Pho further observes, “has a track record of underfunding their single-payer health models.” Also, like many people, he equates “single-payer” with any publicly funded health care system.

Some of us might take pains to characterize the VA system as a publicly owned, publicly funded health system, analogous to the Scottish National Health Service, in order to distinguish it from a privately owned but publicly funded delivery system, like Canada’s Medicare. But KevinMD still has a point — if the public chooses not to provide adequate funds for its own system, it won’t work for its patients or its caregivers.

It is true that government austerity programs — programs to reduce taxes upon the wealthy that we’ve seen across the world and over several recent decades — have gutted a panoply social programs. Like millions of recipients of public health and safety-net programs worldwide, VA patients (and caregivers) have suffered the consequences of austerity.

But it is not true that “the government” always and everywhere underfunds public health programs. Take two very recent examples: the Scottish National Health Service and the health system in Madrid, Spain.

In February 2014, Scotland’s territorial health boards, which run the Scottish NHS, found their funding raised by an amount equal to the rate of inflation plus 1 percent. Announcing the funding increase, Health Secretary Alex Neil said, “The Scottish Government is committed to protecting spending on health.”

In January 2014, in Madrid, following months of sustained and vigorous public rebellion, the region’s government abandoned efforts to privatize the health system, a scheme to cut public funding for health care by over 700 million euros annually.

Dr. Patricia Alonso of the Madrid Physicians Association explained the essence of the matter on behalf of patients and caregivers alike when she said, “We were not going to allow somebody else to sell our system.”

Dr. Alonso’s remark illuminates an important aspect of taxpayer-financed health programs (in any democracy worthy of the name):  the patients and caregivers within the system are also its owners.

Dr. Pho introduces his piece saying that “Some are eager to link the VA scandal to Obamacare, and more broadly, government-run health care. Others extol the virtues of the VA, holding it as an ideal of what our health care system should look like. The truth, as always, probably lies somewhere in the middle.”

He concludes that the narrow political goal of Republicans fanning the flames of scandal is to “indict Obamacare” — and points out that this make little sense. KevinMD also recognizes a larger ideological goal — to use the VA scandal to impugn the idea that “the government” can provide healthcare (or anything worthwhile to the public.)

Right-wing ideologues often assert that “the government” is the enemy of “the public” — for in their view, there is no social or personal issue that the profit motive can’t fix, if only the hidden hand of the market could be free of government regulation.

And yet no one has been calling for the closure of the VA — nor has anyone suggested that either the public or the government abandon veterans by forcing them to purchase their care on the “free market,” individually, with their own money, instead.

The starting point for all sides in the debate over the VA scandal is the remarkable idea that every veteran deserves ready access to comprehensive health care, without a personal financial burden. It is significant that public funding for veterans’ healthcare is assumed. The idea that all the patients in the system deserve care — that no one deserves to be left out — is also assumed.

Some leading Republicans have called for a system that would allow veterans to use VA resources to purchase their care privately — with public funds — in addition to getting care from the VA hospitals and clinics. This would be change the VA into a system more analogous to the way that Medicare works (in the U.S. as well as Canada) than, to repeat the example, the Scottish National Health Service. Even this proposal would keep (and perhaps expand) public funding for veterans’ healthcare.

It is overall quite significant Dr. Pho (and many others) see so clearly that the fundamental problem for patients at the the VA amounts to underfunding. And true to form as a blogger, KevinMD traces the contours of the mainstream debate from a doctor’s point of view. In doing so he helps reveal that within the United States establishment, an important shift is underway when it comes to the debate over healthcare.

To use a NASCAR analogy, it may well turn out that the VA scandal really suggests a green flag moment for single payer.

Dr. Andrew D. Coates practices hospital medicine in upstate New York. He is president of Physicians for a National Health Program.

Aflac: American workers are at the edge of a financial cliff

American workers are at the edge of a financial cliff

2014 Aflac WorkForces Report

The economy is showing signs of improving, but Americans’ bank accounts are in need of resuscitation: Put simply, anemic pay raises combined with sharp increases in out-of-pocket health care costs have creditors knocking on many consumers’ doors.

  • 66 percent of employees would not be able to adjust to the large financial costs associated with a serious injury or illness.
  • 13 percent of workers are currently dealing with high medical bills.
  • 49 percent of employees have less than $1,000 on hand to pay out-of-pocket medical expenses.
  • 53 percent of workers would need to borrow from a 401(k) and/or use a credit card to cover unexpected medical costs.
  • 8 percent say high medical bills have hindered their ability to save.
  • 10 percent say high medical costs have negatively affected their credit scores.
  • 13 percent have been contacted by collection agencies about outstanding medical bills.

http://workforces.aflac.com/financial-facts.php

Comment:

By Don McCanne, MD

A well functioning health care system should make all appropriate health care accessible to everyone, and paying for the system should not lead to financial insecurity. The sector of health care financing that the Affordable Care Act was designed to protect was employer-sponsored coverage, based on the belief that this was the sector that was functioning well. Yet the 2014 Aflac WorkForces Report shows that this sector often is not providing the financial security that patients need.

We should quit trying to finance health care though a multitude of private and public plans that apply to individuals based on their continually evolving personal circumstances. That approach creates tremendous costly and wasteful administrative inefficiencies. Worse, even what are supposedly the best programs – employer-sponsored health plans – too often fail to provide the financial security that patients want and need.

Medical bill related financial insecurity would disappear for everyone if we would replace our current fragmented financing system with a single payer national health program that included first dollar coverage. Since it would use progressive financing, each of us would be able to afford it.

This is a simple concept. We don’t need the Aflac duck to explain it to us.

Make patients the priority, not profits

By Scott Goldberg
Chicago Tribune, May 27, 2014

As a medical student, I appreciated Tribune reporter Peter Frost’s story, “Lawsuit accuses Blue Cross and Blue Shield parent of funneling profit to execs” (May 22).

Nominally nonprofit health insurers are reaping huge financial gains by employing the same practices as for-profit insurers (claim denials, restrictive networks) and paying for as little actual health care as possible. They then use these gains to pay multimillion-dollar executive salaries and bonuses and to construct lavish buildings like the BCBS Illinois Tower along East Randolph Street in downtown Chicago. Frost’s article demonstrates that the problem with our healthcare system is not whether insurers are for-profit or nonprofit, but that they exist at all.

That is why myself and 80 other medical students from across the country demonstrated outside that tower on May 12 to denounce our healthcare system for putting the interests of private insurance companies over patient needs. We were there as part of a national movement of medical students, physicians, nurses and other health professionals calling for a single-payer national health program. The idea is straightforward — eliminate private insurers and have the government pay all medical claims directly, much like Medicare works for seniors today.

Every other industrialized country has a similar mechanism for providing universal, affordable and high-quality healthcare. The problem with the Affordable Care Act (also known as Obamacare) is that it entrenches insurers like Blue Cross Blue Shield and even mandates that taxpayers purchase their broken product.

Single-payer health care is not “socialized medicine.” It is simply the best way to reform our deeply flawed healthcare system.

Scott Goldberg is a medical student at the University of Chicago Pritzker School of Medicine.

http://www.chicagotribune.com/news/opinion/letters/chi-letter-patients-the-priority-not-profits-20140527,0,5623032.story

Single-payer system will cover everyone, save money and improve quality

By Laura Helfman, M.D.

PNHP note: The following is a letter that Dr. Laura Helfman sent to Sen. Bob Corker, R-Tenn., on May 23, 2014. 

Dear Senator Corker:

I am an emergency physician at Children’s Hospital (Erlanger) and a member of the Physicians for a National Health Program. I live in Coalmont, Tenn., in Grundy County where my husband has been a teacher for 28 years.

Although I was unable to join PNHP with their lobbying efforts yesterday, I wanted to let you know how I feel about our crisis in health care. I strongly support The American Health Security Act of 2013, Senate Bill S. 1782.

We have already seen in the first few months of the ACA (Obamacare) that competition is not keeping costs down. Out-of-pocket expenses have risen for all but a few Americans. An average family of four now spends more than $23,000 annually on health care costs, more than double what it was 10 years ago. This is unsustainable and unconscionable.

I think you will find that Republicans and Democrats of note are beginning to stand behind a public national single-payer insurance program which will cover everyone in America, save money and improve the quality of health care delivery. 

Senator Corker, I think you owe it to the people of Tennessee to critically look at this bill. I believe it is in keeping with your fiscal sensibilities as it eliminates waste and unnecessary administrative clutter. It is a sensible way to deliver health care. A healthier population will be a productive population. We cannot afford as a nation to continue to spend more than double the health care dollars than every other OECD nation and still have worse outcomes. The time is now to innovate for real change in health care.

Please review the synopsis of the bill below:

The American Health Security Act of 2013 (S. 1782) provides every American with affordable and comprehensive health care services through the establishment of a national American Health Security Program (the Program) that requires each participating state to set up and administer a state single payer health program. The Program provides universal health care coverage for the comprehensive services required under S. 1782 and incorporates Medicare, Medicaid, the Children’s Health Insurance Program, the Federal Employees Health Benefits Program and TRICARE (the Department of Defense health care program), but maintains health care programs under the Veterans Affairs Administration. Private health insurance sold by for-profit companies could only exist to provide supplemental coverage.

The cornerstones of the Program will be fixed, annual, and global budgets, public accountability, measures of quality based on outcomes data designed by providers and patients, a national data-collection system with uniform reporting by all providers, and a progressive financing system. It will provide universal coverage, benefits emphasizing primary and preventive care, and free choice of providers. Inpatient services, long-term care, a broad range of services for mental illness and substance abuse, and care coordination services will also be covered.

A seven-member national board (the Board) appointed by the President will establish a national health budget specifying the total federal and state expenditures to be made for covered health care services. The Board will work together with similar boards in each of the fifty states and the District of Columbia to administer the Program.

A Quality Council will develop and disseminate practice guidelines based on outcomes research and will profile health care professionals’ patterns of practice to identify outliers. It will also develop standards of quality, performance measures, and medical review criteria and develop minimum competence criteria. A new Office of Primary Care and Prevention Research will be created within the Office of the Director of the National Institutes of Health (NIH).

The Program is designed to provide patient-centered care supported through adequate reimbursement for professionals, a wealth of evidence-based information, peer support, and financial incentives for better patient outcomes. The Program seeks to ensure medical decisions are made by patients and their health care providers.

The Program amends the tax code to create the American Health Security Trust Fund and appropriates to the Fund specified tax revenues, current health program receipts, and tax credits and subsidies under the Affordable Care Act. While the final structure of the financing component is still under consideration and is subject to change, the tax revenues in the draft include a new health care income tax, an employer payroll tax, a surcharge on high income individuals, and a tax on securities transactions.

The federal government would collect and distribute all funds to the states for the operation of the state programs to pay for the covered services. Budget increases would be limited to the rate of growth of the gross domestic product. Each state’s budget for administrative expenses would be capped at three percent.

Each state would have the choice to administer its own program or have the federal Board administer it. The state program could negotiate with providers and consult with its advisory boards to allocate funds. The state program could also contract with private companies to provide administrative functions, as Medicare currently does through its administrative regions. State programs could negotiate with providers to pay outpatient facilities and individual practitioners on a capitated, salaried, or other prospective basis or on a fee-for service basis according to a rate schedule. Rates would be designed to incentivize primary and preventive care while maintaining a global budget, bringing provider, patients, and all stakeholders to the table to best determine value and reimbursement.

Finally, the Program also relieves businesses from the heavy administrative burdens of providing health care coverage, puts all businesses on an even playing field in terms of healthcare coverage, and increases the competitiveness of American companies in the global marketplace. Every other industrialized nation has been able to use the power of a public authority to provide universal health care. The American Health Security Act of 2013 seeks to do just that for all Americans and their businesses.

Thank you for your time.

Laura Helfman, M.D., is clinical instructor at the UT College of Medicine and practices emergency medicine at Children’s Hospital in Erlanger, Tenn.

Aflac: American workers are at the edge of a financial cliff

American workers are at the edge of a financial cliff

2014 Aflac WorkForces Report

The economy is showing signs of improving, but Americans’ bank accounts are in need of resuscitation: Put simply, anemic pay raises combined with sharp increases in out-of-pocket health care costs have creditors knocking on many consumers’ doors.

  • 66 percent of employees would not be able to adjust to the large financial costs associated with a serious injury or illness.
  • 13 percent of workers are currently dealing with high medical bills.
  • 49 percent of employees have less than $1,000 on hand to pay out-of-pocket medical expenses.
  • 53 percent of workers would need to borrow from a 401(k) and/or use a credit card to cover unexpected medical costs.
  • 8 percent say high medical bills have hindered their ability to save.
  • 10 percent say high medical costs have negatively affected their credit scores.
  • 13 percent have been contacted by collection agencies about outstanding medical bills.

http://workforces.aflac.com/financial-facts.php

A well functioning health care system should make all appropriate health care accessible to everyone, and paying for the system should not lead to financial insecurity. The sector of health care financing that the Affordable Care Act was designed to protect was employer-sponsored coverage, based on the belief that this was the sector that was functioning well. Yet the 2014 Aflac WorkForces Report shows that this sector often is not providing the financial security that patients need.

We should quit trying to finance health care though a multitude of private and public plans that apply to individuals based on their continually evolving personal circumstances. That approach creates tremendous costly and wasteful administrative inefficiencies. Worse, even what are supposedly the best programs – employer-sponsored health plans – too often fail to provide the financial security that patients want and need.

Medical bill related financial insecurity would disappear for everyone if we would replace our current fragmented financing system with a single payer national health program that included first dollar coverage. Since it would use progressive financing, each of us would be able to afford it.

This is a simple concept. We don’t need the Aflac duck to explain it to us.

Time bureau chief not informed on health care

By Joseph Sparks
Sparks Remarks blog, May 24, 2014

Which statement is true?

  1. The earth is flat.
  2. The sky is red.
  3. “Health care, especially in this country, is an enormously expensive laborious undertaking, and … no one’s figured out how to do it economically and efficiently.” – Michael Scherer, Washington Bureau Chief, Time Magazine on “Now with Alex Wagner” on May 22, 2014 (at about 5:45 minutes into the video).
  4. None of the above.

The correct answer is: “None of the above.” The earth is nearly spherical; the sky is blue, and there are at least 19,000 people who know how to make health care efficient and economical in this country. It can be done with a single-payer system, and legislation has been proposed that would implement single-payer, H.R. 676.

It is downright frightening that a Washington bureau chief would make such an egregious error.

A single-payer system has several advantages. They include:

  • Covers everybody – Single-payer provides universal coverage. There are no signups because everyone is automatically covered.
  • Eliminates co-pays and deductibles for medical care and pharmaceuticals – Since co-pays and deductibles are not required, out-of-pocket expenses are eliminated making health care affordable for everyone. Imagine going to a doctor or hospital and not needing your wallet. Further, when you are admitted, no clerk needs to check on your insurance status. That becomes a reality with single-payer.
  • Allows you to choose any caregiver or hospital – Single-payer provides more freedom because there are no restrictions imposed by limited insurance networks.
  • Stabilizes costs – Single-payer would lower or maintain costs at current levels making health care affordable now and in the future.

(A more detailed description of the problems with the current health care system and the benefits of a single-payer system can be found here.)

So, to say that nobody’s figured out how to do health care economically and efficiently is flat out wrong. When journalists do not discuss single-payer as the solution to the current health care crisis, they perform a disservice to their profession and the public.

In fact, when discussing any alternative health care system in this country, the questions that need to be asked are:

  • “Would this system cover everybody as a single-payer system would?”
  • “Would this system eliminate out-of-pocket expenses as a single-payer system would?”
  • “Would this system allow patients to choose any caregiver or hospital as a single-payer system would?”

When (not if) the answers are no, then next question needs to be, “Could you explain how your proposal is better than a single-payer system?”

If a Washington bureau chief does not know about single-payer, then it is unlikely that the public knows. It is vital that journalists inform other journalists of the single-payer option, and it is the responsibility of all journalists to inform the public because it is the only viable solution for economic and efficient health care.

(I urge everybody to go here and demand that MSNBC correct their mistake. If enough people protest, networks might start discussing single-payer.)

Joseph Sparks is a freelance journalist who resides in Washington, D.C. He covers health care, politics, and technology. 

Bureau Chief Not Informed On Health Care

ACA exchange plans are creating new administrative headaches for physicians

MGMA ACA Exchange Implementation Survey Report

Medical Group Management Association, May 2014

Medical Group Management Association (MGMA) conducted member research in April 2014 to better understand the impact of the Affordable Care Act’s (ACA) insurance exchange implementation on medical group practices. 

Summary of Findings

MGMA noted three main themes within the findings.

OBTAINING COVERAGE INFORMATION

Practices have experienced difficulty identifying patients with ACA exchange coverage and obtaining essential information related to that coverage.

  • 62% of respondents reported moderate to extreme difficulty with identifying a patient that has ACA exchange coverage as opposed to traditional commercial health insurance.
  • Compared to patients with traditional commercial coverage, nearly 60% of respondents indicated that for patients with ACA exchange coverage it is somewhat or much more difficult to:
  • Verify patient eligibility
  • Obtain cost-sharing or network information
  • Obtain information about the plan’s provider network in order to facilitate referrals

“We are going to have to hire additional staff just to manage the insurance verification processs.”

“Identification of ACA plans has been an administrative nightmare.”

“We thought we would be able to identify ACA insurance exchange products by their insurance card, but quickly found out this isn’t so. “

PATIENT COST-SHARING

Practices are facing a number of challenges related to patient cost-sharing for ACA exchange coverage.

  • 75% of respondents reported that patients with ACA exchange coverage are very or extremely likely to have high deductibles compared to patients with traditional commercial coverage.
  • Practices reported significant patient confusion about the substantial cost-sharing related to many ACA exchange products, and practices are working to help patients understand the complexities of their coverage.
  • Practices cited some of the main reasons for not participating with ACA exchange products were related to concerns about financial burdens from patient collections (such as burdens related to collecting high deductibles from patients and concerns about financial liability from the 90-day grace period).

“Patients have been very confused about benefits and their portion of the cost. Once the patients find out their deductible, they’ve cancelled appointments and procedures.”

“The at-risk piece of eligibility is tremendously hard to determine and explain to patients.”

“Patients don’t always understand how health insurance works, so we’ve been engaging in educational events for the community.”

NETWORK LIMITATIONS

Practices have concerns about the impact of the network design of many ACA exchange products.

  • Almost half of respondents reported they have been unable to provide covered services to ACA exchange patients because the practice is out of network.
  • 20% of respondents reported that their practice was excluded from a narrow network that they would have liked to participate in and 10% of respondents chose not to participate in a narrow network.
  • Narrow networks may create challenges related to patient referrals for appropriate treatment and hospital care. Even if the practice is included in the network, without robust representation by a wide range of providers, it may be difficult for a practice to coordinate a continuum of care consistent with the patient’s needs.

“Many patients purchased products with a very narrow network and didn’t understand the ramifications. They are very upset once they learn that they can’t go to the specialist or hospital of their choice. As primary care providers, we are now faced with the extra burden of trying to find them care within their new narrow network. Payer directories are woefully inaccurate and impossible to rely on.”

“Former patients were shocked to learn about their very narrow network of providers. It was terrible to have to inform them of their lack of coverage.”

“We are consistently denied ‘out of network’ approvals for the very sick who truly need to continue their care with providers who have worked with the patient for years.”

http://www.mgma.com/government-affairs/issues-overview/aca/aca-exchange-implementation-report/aca-surveyreport_online_2?ext=.pdf

Statement of Susan Turney, MD, MS, FACP, FACMPE, president and CEO of MGMA:

“Physician group practices are expressing dissatisfaction with the complexity and lack of information associated with insurance products sold on ACA exchanges. The more administrative complexity introduced into the healthcare system, the less time and resources practices can devote to patient care. Even though there hasn’t been a huge influx of patients into physician offices as many predicted, simple tasks such as obtaining patient insurance coverage information or finding specialists for in-network referrals have proven to be significant challenges.”

http://www.mgma.com/about/mgma-press-room/press-releases/2007-2012/mgma-statement-on-effect-of-aca-exchange-implementation-on-medical-group-practices

****

Comment:

By Don McCanne, MD

Much has been written about the consequences of the high deductibles and narrow networks of the ACA exchange plans in impairing access and affordability for patients. This new survey demonstrates that these same features add more administrative headaches for physicians who are already overburdened by the administrative complexity of our dysfunctional health care financing system. For those who could care less about the physicians, keep in mind that these ACA plan features are preventing physicians from assisting patients in obtaining the health care that they should have. It is really about the patients.

The quotations in the report above are especially helpful to our understanding of the problems because they reveal the real world consequences of the highly flawed ACA exchange infrastructure.

Single payer would eliminate the confusion over coverage, the barriers of patient cost sharing, and the loss of choice due to network limitations. People would simply get the care that they need when they need it.