PNHP

Which metal tier plans are people selecting, and why?

Which metal tier plans are people selecting, and why?

Strong Enrollment Numbers Released by Covered California and Department of Health Care Services

Covered California, February 19, 2014

Covered California™ and the California Department of Health Care Services (DHCS) announced today that as of Jan. 31, 2014, more than 1.6 million Californians have signed up for either Covered California health insurance plans or for low-cost or no-cost Medi-Cal.

Nearly half of those covered — 728,410 Californians — selected a Covered California health insurance plan.

Most subsidy-eligible consumers who enrolled — 451,074, or about 62 percent — signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86 percent of consumers across all tiers received some sort of financial assistance.

Metal Level of Individuals Enrolled: Oct. 1 to Jan. 31:

Subsidy eligible (626,210):

0.4% – Minimum Coverage

21.1% – Bronze

67.3% – Silver

6.0% – Gold

5.1% – Platinum

Unsubsidized (102,200):

5.5% – Minimum Coverage

33.8% – Bronze

28.7% – Silver

14.4% – Gold

17.7% – Platinum

http://news.coveredca.com/2014/02/strong-enrollment-numbers-released-by.html

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40 Percent Of Enrollees Through eHealth Website Are Young Adults

By Julie Appleby
Kaiser Health News, February 21, 2014

During a call with Wall Street analysts Thursday, eHealth CEO Gary Lauer said 40 percent of the 169,000 consumers who used the site to obtain insurance from October through December were in the young adult category (18-34), “a highly sought-after demographic.”

http://capsules.kaiserhealthnews.org/index.php/2014/02/40-percent-of-enrollees-through-ehealth-website-are-young-people/

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Private exchange sees surge in health care enrollment

By Kelly Kennedy
USA TODAY, February 20, 2014

Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012.

Premium rates, (eHealth v.p. Brian) Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.

http://www.usatoday.com/story/news/nation/2014/02/20/fourth-quarter-reports-show-high-insurance-enrollment-in-private-sector/5639725/

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Comment:

By Don McCanne, M.D.

Of the 728,000 people already enrolled in Covered California – California’s insurance exchange established under the Affordable Care Act – over two-thirds of those who were eligible for subsidies purchased silver plans, whereas well less than one-third who were not eligible for subsidies also selected silver plans. Why might that be?

(First, a clarification on subsidies: The Covered California report includes both premium tax credits and cost-sharing subsidies under their definition of subsidies. However, the type of subsidy can influence whether or not an individual chooses a silver plan. Anyone with an income below 400 percent of the federal poverty level [FPL] can receive a premium tax credit if the plan is purchased through the exchange. Those with incomes below 250 percent of the FPL can also qualify for cost-sharing subsidies when they use their plans, but only if they purchase a silver plan through the exchange.)

(Clarifying metal tiers: The actuarial value of a plan is the percent that the plan pays for for health care services provided within the insurer-selected networks, leaving the rest to be paid by the patient, sometimes with subsidies. Bronze covers 60 percent, silver 70, gold 80 and platinum 90 percent. The standard for the exchanges is silver, whereas the standard for Congress is gold.)

It is likely that the conservatives are right in one regard with their consumer-driven health care in that people will shop prices when purchasing health plans. For the Covered California purchasers who were not eligible for any subsidies, more chose the lower priced bronze or minimal coverage plans (plans with very high deductibles) – 39 percent combined. Since the unsubsidized group included wealthier plan purchasers, it is no surprise that 32 percent chose the high end gold and platinum plans. Since only 29 percent of the unsubsidized purchasers selected the intermediate silver plans, it appears that these purchasers were more interested in either lower prices or better coverage, but not so much both. Consumer shopping seemed to play a role.

What about those who were eligible for subsidies – those below 400 percent of FPL? It is likely that the majority were eligible for both premium and cost-sharing subsidies, but would have to purchase silver plans to receive both. Since the spreads between the premiums for the silver and bronze plans were not that great after the premium credits were applied, most shoppers likely decided that the additional cost-sharing subsidies were well worth the small differences in the premiums. So 67 percent of this group were smart shoppers and bought the silver plans. Only 21 percent bought the bronze or minimum coverage plans, and likely many of those were above 250 percent FPL that disqualifies them from receiving cost-sharing subsidies. Only 11 percent sprung for the gold or platinum plans – not surprising that it was this low since members of this group all fall under 400 percent FPL.

Now let’s look at purchases of health plans through private exchanges that are not eligible for any subsidies, using eHealth as our example. We do not have a breakdown of the precise numbers that chose the various tiers, but the price shopping impact had to be very great. eHealth reports that their average premiums dropped 25 percent because so many individuals chose the cheap bronze-level plans. The percentage has to be huge. With no subsidies to consider, these shoppers chose price.

What can we make of all of this? Everyone should have essential health care coverage automatically. Instead we have inserted shopping decisions that are not a problem for the wealthy because they can buy the best, but they are a problem for the majority who will buy lower actuarial value plans because their personal finances are limited. Our policymakers have selected a plan with the relatively low actuarial value of only 70 percent (silver plan) to serve as the benchmark, especially for those with incomes below 250 FPL. They reduce the impact with subsidies, but this does not correct what is a fundamentally flawed policy in health care financing.

Wait until those shoppers who chose bronze plans start accessing health care. When they’re left broke, maybe they will finally understand our message – that we all can have essential health care, and we can pay for it easily through equitable taxes. Nobody has to shop plans, everyone gets care, and nobody goes broke.

How can the physician workforce be diversified?

By Lyndonna Marrast, M.D., and Danny McCormick, M.D., M.P.H.
KevinMD.com, Feb. 22, 2014

The Affordable Care Act (ACA) will increase insurance coverage for the poor, uninsured and minorities, but will it improve access to care and population health? The answer depends critically on whether or not physicians are available to care for the newly insured. Many health policy experts fear there may not be.

While the ACA contains some modest pay increases for doctors willing to see patients with Medicaid (the means-tested joint federal-state program that the ACA will expand), these incentives are likely to be too small to dramatically boost physicians’ willingness to care for disadvantaged patients or to affect the underlying national shortage of primary care physicians.

How then can we help ensure that the health care needs of disadvantaged patients are better met as ACA implementation proceeds? In the February 1st, 2014 print issue of JAMA Internal Medicine we reported the results of a study that may provide part of the answer: train more minority physicians.

Our study analyzed data from a federal survey of 7,070 patients and found that compared to other patients, the disadvantaged were more likely to be cared for by a minority physician. This was true regardless of how “disadvantaged” was defined, i.e. by low income, minority race/ethnicity, having Medicaid, being uninsured, being non-English speaking, or being in less-than-good health. For instance, patients with Medicaid were one and a half to two times more likely to be cared for by a minority physician than a white physician. Black, Hispanic and Asian patients were 19-26 times more likely to be cared for by a minority physician of the same race. And patients in fair to poor health were 20-44 percent more likely to see a minority physician.

We hope to one day live in a fully integrated society where everyone has the same, comprehensive health coverage, race and ethnicity matter less, and everyone has access to high quality health care professionals. However, until that day comes, we need to recognize the disproportionate role of minority physicians in meeting the health care needs of the poorest and sickest Americans.

Organizations such as the Institute of Medicine, the American Medical Association and the Association of American Medical Colleges have affirmed a need to train more minority physicians. In spite of this, African-Americans, who represent 12 percent of the population, only account for 6.3 percent of U.S. physicians. Hispanics make up 16 percent of the population but account for just 5.5 percent of physicians. These proportions have changed little in 20 years.

How can the physician workforce be diversified? Increased efforts to identify talented minority students and help prepare them for medical careers are needed. In addition, decreasing the exorbitant tuition costs of medical schools would disproportionately benefit minority students.

However, the change that would have the most direct impact is a revamping of medical school admissions priorities. Although a recent Supreme Court decision requires admissions committees to show that diversity could not be achieved by other means before resorting to race-conscious selection criteria, it nonetheless affirmed a compelling government interest in achieving diversity. All medical schools should set diversity as an explicit institutional priority and adopt admissions criteria that give preference to students (of any race/ethnicity) who bring diversity to the profession. Such policies might also favor students with a history of volunteering or working in underserved communities and those who seek careers serving disadvantaged patients.

In the United States today, the poor die six years younger than the affluent, blacks die nearly four years younger than whites, and patients from most ethnic minorities have markedly worse access to needed medical care. Medical schools need to do more than bemoan these grim realities; they should act to change them. America’s medical schools have just completed another application cycle and have decided who will or will not become a physician. In the next few years, they must be willing to commit to training more high-quality minority health care providers. By changing the complexion of the nation’s physician workforce, medical schools prepare a physician workforce to better meet the needs of all Americans.

Lyndonna Marrast is a primary care physician, Cambridge Health Alliance. Danny McCormick is an associate professor, Harvard Medical School and a primary care physician, Cambridge Health Alliance.

http://www.kevinmd.com/blog/2014/02/physician-workforce-diversified.html

Life and health will suffer in states opting out of the Medicaid expansion

By Samuel L. Dickman
Scholars Strategy Network, Feb. 24, 2014

The Patient Protection and Affordable Care Act of 2010 – popularly called ObamaCare – was designed to increase access to health insurance. The law does this in several ways, including by setting up exchange marketplaces where uninsured Americans can comparison shop for private health plans and (if they have low or moderate incomes) get subsidies to help pay the premiums. Medicaid expansion is another, equally important, method by which the Affordable Care Act will enlarge health insurance coverage.

The original law called for every state to expand its Medicaid program to include not just poor individuals and families, but all with earnings up to 138% of the federal poverty line (the poverty line was set at $19,530 for a family of three in 2013). But when the Supreme Court upheld most of the Affordable Care Act in June 2012, it ruled that states can decide whether to take new federal funding to implement the Medicaid expansion or not. As of early 2014, 25 states plus the District of Columbia are going ahead, but 25 others states are not agreeing so far.

States refusing to expand Medicaid are creating a coverage gap for at least five million low-income Americans. That is because, according to the original 2010 health reform law, subsidies to help people purchase insurance plans on the exchanges are only available to those with incomes over the level that was planned for expanded Medicaid eligibility. If they live in the 25 states not expanding Medicaid, people who were supposed to be covered by the expansion and are below the poverty line will be left with no options. They will watch some poorer neighbors get enrolled in Medicaid and some slightly better off neighbors use subsidies on the exchanges, while they are left with no way to obtain affordable health insurance.

So what? Will this coverage gap for so many low-income Americans have adverse health consequences? To answer this question, my research collaborators and I estimated the number and demographic characteristics of people likely to remain uninsured, and then drew on recent studies to spell out the likely health consequences.

Crunching the numbers

As matters now stand, Affordable Care reforms are expected to expand health insurance to about 16 million out of 48 million uninsured Americans (almost 8 million more would have been insured if all states had opted into the Medicaid expansion). As of early 2014, states opting in to Medicaid expansion are projected to experience a decrease of 48.9 percent in their uninsured population, versus an 18.1 percent decrease in the opt-out states. Our breakdowns for individual states choosing not to expand Medicaid are developed from several data sources and previous studies.

* We used Census data to estimate for each state the number of uninsured before and after Affordable Care implementation, depending on whether the state is expanding Medicaid. We do not assume that all people eligible for new insurance coverage will sign up; instead we rely on previously published Congressional Budget Office estimates of sign up rates.

* For some health estimates, we drew from the Oregon Health Insurance Experiment, a randomized study of the effects of expanding Medicaid to low-income adults. The study measured effects on health, financial strain, health care use, and self-reported well-being. It found that after an average of 17 months on Medicaid, people were less likely to suffer depression or face catastrophic medical expenses, and they were more likely to get treated for diabetes and to get recommended cancer screening tests.

* To figure out whether more deaths might occur in states not expanding Medicaid, we drew high-end estimates from a recent study by Benjamin Sommers and his colleagues at Harvard. By comparing mortality trends in states that earlier expanded Medicaid to trends in states that did not, this study estimated that Medicaid expansions were associated with a 6.1% decrease in mortality, or 19.6 fewer deaths per year for every 100,000 non-elderly adults. For our low-end estimates, we drew from research on the mortality of participants in the National Health and Nutrition Examination Study, where the mortality effect was estimated at about two-fifths as large as in the Sommers study.

The real world consequences of not expanding Medicaid

Here are important examples of the adverse effects likely to be visited upon low-income people living in states that do not expand Medicaid:

* Between 7,115 and 17,104 extra, unnecessary deaths can be expected.
* Some 712,037 additional people are likely to be diagnosed with depression.
* An additional 240,700 people will be faced with catastrophic medical bills.
* Some 422,553 diabetics will not get medications they need to treat their illness.
* Women will go without life-saving tests: among those aged 50 to 64, 195,492 will fail to get mammograms; and among those aged 21 to 64, 443,677 will not get pap smears.

There are some caveats that could affect our estimates in one direction or another. We could not adjust for the fact that the patients studied in the Oregon experiment were slightly older, more urban, and more often female than the uninsured poor in states currently opting out of the Medicaid expansion. Furthermore, the new Oregon beneficiaries had gone without insurance for at least six months and were relatively small in number. States that are now expanding Medicaid under the Affordable Care Act will include larger numbers of new beneficiaries whose needs could initially put a strain on health care providers, delaying people’s access to extra care or preventive tests. On the other hand, the Affordable Care Act boosts reimbursement rates for primary care, so it may ease access for new Medicaid recipients.

The bottom line remains: states refusing to expand Medicaid will harm health and access to care for many low-income people that the Affordable Care Act is supposed to help.

Samuel L. Dickman is a Third Year Medical Student at Harvard Medical School. Dickman’s research focuses on disparities in access to care, prisoner health, substance abuse, and HIV/AIDS. He completed his Bachelor of Arts in mathematics at Brown University.

Read more in Samuel L. Dickman, David Himmelstein, Danny McCormick, and Steffie Woolhandler, “Opting Out of Medicaid Expansion: The Health and Financial Impacts.” Health Affairs Blog (January 2014).

http://thesocietypages.org/ssn/2014/02/24/medicaid-expansion/

Which metal tier plans are people selecting, and why?

Strong Enrollment Numbers Released by Covered California and Department of Health Care Services

Covered California, February 19, 2014

Covered California™ and the California Department of Health Care Services (DHCS) announced today that as of Jan. 31, 2014, more than 1.6 million Californians have signed up for either Covered California health insurance plans or for low-cost or no-cost Medi-Cal.

Nearly half of those covered — 728,410 Californians — selected a Covered California health insurance plan.

Most subsidy-eligible consumers who enrolled — 451,074, or about 62 percent — signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86 percent of consumers across all tiers received some sort of financial assistance.

Metal Level of Individuals Enrolled: Oct. 1 to Jan. 31:

Subsidy eligible (626,210):

0.4% – Minimum Coverage

21.1% – Bronze

67.3% – Silver

6.0% – Gold

5.1% – Platinum

Unsubsidized (102,200):

5.5% – Minimum Coverage

33.8% – Bronze

28.7% – Silver

14.4% – Gold

17.7% – Platinum

http://news.coveredca.com/2014/02/strong-enrollment-numbers-released-by….

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40 Percent Of Enrollees Through eHealth Website Are Young Adults

By Julie Appleby
Kaiser Health News, February 21, 2014

During a call with Wall Street analysts Thursday, eHealth CEO Gary Lauer said 40 percent of the 169,000 consumers who used the site to obtain insurance from October through December were in the young adult category (18-34), “a highly sought-after demographic.”

http://capsules.kaiserhealthnews.org/index.php/2014/02/40-percent-of-enr…

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Private exchange sees surge in health care enrollment

By Kelly Kennedy
USA TODAY, February 20, 2014

Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012.

Premium rates, (eHealth v.p. Brian) Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.

http://www.usatoday.com/story/news/nation/2014/02/20/fourth-quarter-repo…

Of the 728,000 people already enrolled in Covered California – California’s insurance exchange established under the Affordable Care Act – over two-thirds of those who were eligible for subsidies purchased silver plans, whereas well less than one-third who were not eligible for subsidies also selected silver plans. Why might that be?

(First, a clarification on subsidies: The Covered California report includes both premium tax credits and cost-sharing subsidies under their definition of subsidies. However, the type of subsidy can influence whether or not an individual chooses a silver plan. Anyone with an income below 400 percent of the federal poverty level [FPL] can receive a premium tax credit if the plan is purchased through the exchange. Those with incomes below 250 percent of the FPL can also qualify for cost-sharing subsidies when they use their plans, but only if they purchase a silver plan through the exchange.)

(Clarifying metal tiers: The actuarial value of a plan is the percent that the plan pays for for health care services provided within the insurer-selected networks, leaving the rest to be paid by the patient, sometimes with subsidies. Bronze covers 60 percent, silver 70, gold 80 and platinum 90 percent. The standard for the exchanges is silver, whereas the standard for Congress is gold.)

It is likely that the conservatives are right in one regard with their consumer-driven health care in that people will shop prices when purchasing health plans. For the Covered California purchasers who were not eligible for any subsidies, more chose the lower priced bronze or minimal coverage plans (plans with very high deductibles) – 39 percent combined. Since the unsubsidized group included wealthier plan purchasers, it is no surprise that 32 percent chose the high end gold and platinum plans. Since only 29 percent of the unsubsidized purchasers selected the intermediate silver plans, it appears that these purchasers were more interested in either lower prices or better coverage, but not so much both. Consumer shopping seemed to play a role.

What about those who were eligible for subsidies – those below 400 percent of FPL? It is likely that the majority were eligible for both premium and cost-sharing subsidies, but would have to purchase silver plans to receive both. Since the spreads between the premiums for the silver and bronze plans were not that great after the premium credits were applied, most shoppers likely decided that the additional cost-sharing subsidies were well worth the small differences in the premiums. So 67 percent of this group were smart shoppers and bought the silver plans. Only 21 percent bought the bronze or minimum coverage plans, and likely many of those were above 250 percent FPL that disqualifies them from receiving cost-sharing subsidies. Only 11 percent sprung for the gold or platinum plans – not surprising that it was this low since members of this group all fall under 400 percent FPL.

Now let’s look at purchases of health plans through private exchanges that are not eligible for any subsidies, using eHealth as our example. We do not have a breakdown of the precise numbers that chose the various tiers, but the price shopping impact had to be very great. eHealth reports that their average premiums dropped 25 percent because so many individuals chose the cheap bronze-level plans. The percentage has to be huge. With no subsidies to consider, these shoppers chose price.

What can we make of all of this? Everyone should have essential health care coverage automatically. Instead we have inserted shopping decisions that are not a problem for the wealthy because they can buy the best, but they are a problem for the majority who will buy lower actuarial value plans because their personal finances are limited. Our policymakers have selected a plan with the relatively low actuarial value of only 70 percent (silver plan) to serve as the benchmark, especially for those with incomes below 250 FPL. They reduce the impact with subsidies, but this does not correct what is a fundamentally flawed policy in health care financing.

Wait until those shoppers who chose bronze plans start accessing health care. When they’re left broke, maybe they will finally understand our message – that we all can have essential health care, and we can pay for it easily through equitable taxes. Nobody has to shop plans, everyone gets care, and nobody goes broke.

Private exchanges are sending us in dangerous directions

Employers Turn to Private Health Exchanges to Cut Costs

By Caroline Chen
Bloomberg, February 19, 2014

One-third of U.S. employers plan to move their workers’ health-care coverage to a private exchange in the next few years, a survey found, following the lead of companies like Walgreen Co. seeking to reduce costs.

While 95 percent of employers said they would continue to offer health care in the next three to five years, 33 percent may use a private exchange to provide the benefit up from 5 percent currently, according to a survey released today by a unit of Aon Plc.

Traditionally, most large employers are self-insured, meaning they take on the financial risk of their employees’ health costs. Under a private exchange, workers are given a subsidy to pick from a limited number of health plans and the insurer takes on the risk.

“Employers are telling us they are losing confidence in their traditional approaches, like vendor changes or employee cost-sharing,” which only deliver “incremental” improvement, Jim Winkler, Aon’s chief innovation officer for health benefits, said in a telephone interview. “Employers are saying, ‘I need to do something different.’”

About 38 percent of the companies surveyed by Aon said they would offer no benefits to part-time workers within the next three to five years.

Retiree benefits are also being reworked. International Business Machines Corp. (IBM) said last year that it would send 110,000 retirees to Towers Watson’s Extend Health, the largest private Medicare exchange.

The Aon survey found that two-thirds of employers who wanted to make changes in retiree benefits were looking to follow IBM’s lead.

Only 25 percent of large employers offer subsidized retiree health benefits, Aon said, down from about 50 percent in 2004.

http://www.bloomberg.com/news/2014-02-19/employers-turning-to-private-health-exchange-to-cut-costs.html

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Aon Hewitt Research: Employers Will Continue Sponsoring Health Benefits for Employees and Retirees, but Deliver Those Benefits in New Ways

Aon, February 19, 2014

According to Aon Hewitt’s soon-to-be-released Health Care Survey of more than 1,230 employers covering more than 10 million employees, 95 percent of employers say they plan to continue providing health care benefits to active employees in the next three-to-five years. However, a growing number plan to move away from their traditional “managed trend” approach, which includes aggressively managing costs through vendor management and employee cost sharing.

Thirty-three percent said offering group-based health benefits to active employees through a private health exchange will be their preferred approach in the next three-to-five years.

Despite having the ability to direct part-time employees to purchase health coverage through the public marketplaces, Aon Hewitt’s survey shows very few employers plan to do so in the near future.  Almost two-thirds plan to continue to offer the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38 percent plan to offer no benefits to part-time workers in the next three-to-five years.

According to Aon Hewitt’s annual Retiree Health Care survey of 424 employers covering 3.8 million retirees, 20 percent said they are favoring moving all or a portion of their pre-65 retiree population to the individual market/state exchanges to purchase coverage in the next three-to-five years. Today, just 3 percent of employers do so.

According to Aon Hewitt, the number of employers offering subsidized retiree health benefits has slowly declined over the past decade, with just 25 percent of large employers doing so today, compared with approximately 50 percent in 2004.

Of those companies that offer health benefits to post-65 retirees, a growing number of organizations now provide or are seriously considering providing health benefits coverage through the individual Medicare plan market. Aon Hewitt’s annual Retiree Health Care Survey found that 30 percent of companies have already sourced benefits through the individual market―most through a multi-carrier private health exchange. Of those companies contemplating future changes to their post-65 retiree strategies, two-thirds are considering this approach.

“A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries because they see the value in both the competitive mix of plans offered and the Medicare-specific navigation and advocacy offered by these private exchanges,” said John Grosso, leader of Aon Hewitt’s Retiree Health Care Task Force.

http://aon.mediaroom.com/2014-02-19-Aon-Hewitt-Research-Employers-Will-Continue-Sponsoring-Health-Benefits-for-Employees-and-Retirees-but-Deliver-Those-Benefits-in-New-Ways

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OneExcahnge (previously Extend Health)

OneExchange has helped more than 300,000 retirees find the perfect Medicare plan for their needs and budget. We are the trusted leader in private Medicare exchanges.

https://medicare.oneexchange.com

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Private exchange sees surge in health care enrollment

By Kelly Kennedy
USA TODAY, February 20, 2014

The number of customers on the nation’s largest private health insurance exchange increased by 50% in the final three months of 2013, a direct result of demand created by the Affordable Care Act, the company’s CEO said Thursday.

Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012, from 113,600 applications in the last three months of 2012 to 169,800 in 2013.

The site operates much like the federal and state exchanges, and now that people have a better understanding of what “exchange” means, they’re drawn to the private sites, as well. In fact, many employers offer private exchange coverage, so employees may pick a plan, and many insurers are creating their own private “exchange” sites, so they can offer more products to consumers.

Those shopping on private exchanges might include business owners who make more than 400% of the federal poverty level, but who couldn’t get insurance before; retirees who are not eligible for Medicare; or people who simply disagree with the Affordable Care Act and choose to find insurance outside the federal and state exchanges — even if those plans are also through private insurers.

Premium rates, Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.

http://www.usatoday.com/story/news/nation/2014/02/20/fourth-quarter-reports-show-high-insurance-enrollment-in-private-sector/5639725/

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Comment:

By Don McCanne, M.D.

The activity around the implementation of the Affordable Care Act and the initiation of federal and state insurance exchanges has seemed to stimulate much interest in private insurance exchanges, in all of their various forms. While some may praise the private sector for coming to the fore, we should take a closer look at what this means for patients.

Perhaps the greatest concern is the fact that this Aon survey shows that about 33 percent of employers will be eliminating their own health benefit programs within the next three to five years and start sending their employees to private exchanges to shop for their plans. This gives their employees greater choices in health care coverage, so why should we be concerned?

By providing their employees with what amounts to a voucher, employers are able to control their future health benefit costs by limiting the rate at which the value of the voucher increases. As health care costs continue to increase at rates greater than inflation, the employees will have to bear the additional costs, either through higher premiums or through further cost sharing and limitations in benefits offered by the plans.

This extends the national trend of converting employee benefit programs from defined benefit to defined contribution programs in which both risk and higher costs are shifted from employers to employees. The nation’s workforce is being left behind while the productivity gains are now all going to the top.

eHealth is the largest private insurance exchange, and many are now turning to it to purchase their plans now required by the individual mandate, but there is an important difference between the public and private exchanges. Most people purchasing plans in the federal and state exchanges are purchasing silver plans to qualify for the government cost-sharing subsidies – subsidies which are not provided for bronze plans. But what are people purchasing in the private exchanges?

Silver plans have an actuarial value of 70 percent, leaving 30 percent of costs to be paid by the patient (though adjusted down for credits and out-of-pocket caps, but up for out-of-network care). Bronze plans have an actuarial value of only 60 percent, but these are the plans selected by those shopping the eHealth market simply because they are the cheapest (i.e., they have the lowest premiums). So the concern about the surge in eHealth sales is that far too many individuals will be underinsured – having a plan that will leave them with excessive medical debt should they need significant amounts of health care.

Another form of private exchanges is represented by Towers Watson’s OneExchange – the largest private Medicare exchange – which has found a great market created by employers’ termination of employee retirement health benefit programs. Employers can now send their over-65 retirees to OneExchange where they can select from a variety of Medigap, Medicare Advantage and Part D Medicare drug plans. If you go to their website (link above) you will find that most Medigap plans charge a significant premium whereas most of the Medicare Advantage plans have no premium at all. Just as eHaelth shoppers buy the cheapest plans, no doubt the Medicare shoppers on the private Medicare exchanges will buy the cheapest plans as well – forgoing traditional Medicare and buying the private Medicare Advantage plans instead. Privatization of Medicare marches on.

So these various private exchanges are shifting us to defined contributions, to lower actuarial value plans with greater exposure to health costs, to privatization of Medicare, and to compounding the great divide between the few super-wealthy and the rest of us. This is what we want out of the private market!?

When you think about it, all of this is because we continue to insist that we have a health care financing system in which each individual is shoved into a slot with a given insurance program – a system that has proven to be so expensive and complex that the sources of the funds to pay for health care are looking for ways out. They are taking what deceptively appear to be the cheapest exits when, in reality, total costs just keep going up.

How about getting rid of the concept of a separate plan for each individual. It would be less wasteful, far less complex, and would provide us with much greater value if we had just one comprehensive plan for everyone – an improved Medicare for all. And it would actually work.

Vermont-NEA puts $80,000 into pro-single-payer advocacy group

By Peter Hirschfeld
Vermont Public Radio, Feb. 20, 2014

The state’s largest union is throwing its weight, and its money, behind the push for single-payer health care. And the move by the Vermont teachers union lends considerable strength to what will be the heaviest political lift of Gov. Peter Shumlin’s career.

Labor groups have had good reason to be skeptical of single-payer. Their members already tend to enjoy premium health insurance benefits. And many union members fear they’ll be asked to pay more money for fewer benefits under Shumlin’s plan for a publicly financed system.

But as those organizations learn more about life under the Affordable Care Act, their strategic calculations are shifting. And the union that represents Vermont teachers is now going all-in on single payer.

“We know that the rest of the country is looking at Vermont to see how well it does,” says Martha Allen, president of the Vermont-NEA. “And if we don’t make it work, I don’t know where it will be able to work.”

Allen heads a politically powerful union that has 12,000 members, and covers more than 40,000 people through its insurance program, called the Vermont Education Health Initiative. The Vermont-NEA has long said it supports the move toward public financing in concept. But now it’s joining the push for single-payer in earnest.

With financial support from its national umbrella, the Vermont-NEA has committed $80,000 over the next six months to staff a single-payer advocacy organization based in Montpelier. The NEA spent another $35,000 on a poll that it says spotlights continuing support for single-payer among the Vermont electorate, even after the glitch-filled rollout of the state’s new online insurance exchange.

According to the poll, which was conducted by the Boston firm Kaley & Company, 51 percent of survey respondents say they support single payer, even when told that it might result in the largest tax increase in state history.  43 percent said they opposed the plan. The poll conducted between Jan. 14 and 16.

Peter Sterling will serve as the director of the new advocacy group, called Vermont Leads. It’s neither the first time Sterling has served in this capacity, nor the first go-round for Vermont Leads. In 2012, a chapter of the Service Employees International Union spent about $100,000 to create the group, which performed education and outreach in support of the single-payer mission. The organization went dormant when the SEIU lost its bid to represent home care workers in the state, and subsequently ended its financial support for the single-payer initiative.  

The money from the NEA has resurrected the organization, which Sterling says will function in a similar fashion as it did under its previous iteration.

Sterling says the margin of support shown in the poll is even more impressive given that a plurality of respondents said they think they’ll pay more for health insurance under the single-payer plan. Sterling says the results show that it’s the single-payer ethic that voters support, even if the program doesn’t benefit them financially.

“The most important conclusion from the poll I think is that consistently Vermonters support moving toward a universal, publicly funded health care system, even when it’s described as the largest tax increase in history, even when they realize they may not personally benefit,” Sterling says.

The NEA’s advocacy for single-payer will be critical in the Statehouse, where the union exerts serious influence over the Democratic majority that Shumlin will need to approve his public financing plan. House Speaker Shap Smith says advocacy from the Vermont-NEA on this issue will help underscore the need for reform.

“I think it’s a big deal for an organization that has health benefits now amongst its members to acknowledge that we need to have access for everyone, portability of benefits, and fairness for all Vermonters in access to health care,” Smith says.

Vermont Leads is a nonprofit advocacy group that is prohibited from engaging in electioneering. But Allen says the Vermont-NEA could flex its political might on the single-payer issue as Vermont heads into the last election cycle before Shumlin’s public financing plan will be voted on by the Legislature.

“We are in an election year and so as the months go on and more work is done on Green Mountain Care, with Vermont Leads, that’ll come into play a little bit more,” Allen says.

The poll surveyed 502 Vermont voters. Tom Kiley, head of the firm that conducted the poll, said the survey methodology ensured representative samples for both counties and gender. The poll used random-digit dialing to reach land line users, in addition to calls to cell phones, according to Kiley.

Kiley & Company is a Democratic polling firm that has done work nationally but is best known for its extensive work with Massachusetts candidates, including former Sen. Ted Kennedy and current U.S. Sen. Elizabeth Waren. Kiley says he served as lead pollster for John Kerry’s 2004 presidential campaign.

The poll guages support for single-payer in different ways, each time generating different results. At the outset of the survey, respondents are asked, without prompting about what the plan entails, “are you inclined to favor or oppose a single-payer system for Vermont, or do you feel you don’t know enough about it yet to have a firm opinion.”

The question yielded favorable responses from 24 percent of respondents; 25 percent said they would be inclined to oppose the program, and 51 percent said they aren’t sure.

Public opinion shifts dramatically when the question includes varying descriptions of what single-payer would entail. Sterling says even when the description includes warnings that some believe single-payer would result in the largest tax increase in state history, the plan nonetheless gets majority support from respondents. 

http://digital.vpr.net/post/vermont-nea-puts-80000-pro-single-payer-advocacy-group

Doctor favors a single-payer health care system

By Ed Weisbart, M.D.
The Lawton (Okla.) Constitution, Feb. 2, 2014 

I am a proudly patriotic, fiscally prudent, family physician. For those three reasons, I support a national health insurance program. 

Patriots like me prefer to think that America leads the world. Unfortunately, statistics show that we lag far behind in health care. Our diabetics are more likely to get an amputation, our maternal and infant mortality rates are among the worst, and our life expectancy ranks 51st in the world. 

We have many of the world’s best doctors and hospitals. So how do we explain our poor health outcomes?

It’s our deeply flawed way of paying for care.

We should demand an explanation for why we continue to spend double any other nation per person on health care, despite our dreadful results. 

Nearly two-thirds of that spending comes from our tax dollars. Our public funds for health care are already higher than the total health spending in any other nation. We’re paying more than enough for universal comprehensive health care, but we’re not getting it.

Even more striking, 31 percent of what we spend on health care has nothing to do with actual care. That 31 percent goes to the paperwork and administration inherent in an insurance model designed to be confusing to patients and profitable for big insurance companies.

In contrast, all other nations spend less than 10 percent on overhead. Our own Medicare program has overhead of  roughly 2-5 percent.

Thirty-one percent. That means that of my $1,300 monthly premium, $403 dollars is squandered every month just to prop up the bureaucracy inflicted on us by the health insurance industry.

As a practicing physician, I see the ravages of living with inadequate insurance. I’ve seen my diabetics take their insulin every other day, my hypertensives choosing between prescription and eviction, and my 64-year-old stroke patients choosing to wait until they turn 65, get Medicare, and can afford what they need to stay alive. 

This is not the United States I was brought up to believe in.

Yes, we have emergency rooms as a last resort. But patients often defer or forgo care, sometimes with fatal consequences. Further, by limiting universal access to the ER means that we pay the $48,000 average cost of a stroke, but we refuse to pay for a $4 bottle of pills to prevent that stroke. This is both terrible health care and fiscal imprudence. It is inconsistent with our nation’s alleged culture of life.

The good news is that there is a solution, hiding in plain sight. Most seniors love their Medicare program, despite its limitations. Many seniors purchase a wrap or supplement to fill Medicare’s gaps. We could simply embed those supplements into the Medicare program and provide that to all Americans, not just seniors.

Every serious economic analysis shows that the savings from an “improved Medicare for all,” otherwise known as single-payer national health insurance, would more than outstrip its new expenses. 

By slashing the administrative waste and redirecting that money to care, and by eliminating premiums, copays and deductibles, 95 percent of Americans would spend less, not more, on health care.

For businesses, these savings would spill over into reductions in workers comp, liability, and even auto insurance. Such a system would also provide more predictable future costs.

Only through a single-payer model can we establish a business case for improving the health of all Americans. With everyone (including Congress) in the same program, we would reap the benefits of timely, effective care, treating hypertension and diabetes rather than continually courting preventable medical disasters.

What are we waiting for?

Ed Weisbart, M.D., is chair of the Missouri chapter of Physicians for a National Health Program.

Why we need a single-payer health system

By Thomas Clairmont, M.D.
WFEA AM1370 Radio (Manchester, N.H.), Feb. 19, 2014

PNHP note: Dr. Thomas Clairmont, a leader of the Granite State chapter of Physicians for a National Health Program, appeared on the Feb. 19 edition of the WFEA AM1370 radio show called “On Call,” a program sponsored by the New Hampshire Medical Society (NHMS), to discuss why the United States needs a single-payer health system. You can listen to the 50-minute audio recording or download the podcast here. The host is Scott G. Colby, the executive vice president of the NHMS; the interview took place at WFEA’s studio in Manchester.

Private exchanges are sending us in dangerous directions

Employers Turn to Private Health Exchanges to Cut Costs

By Caroline Chen
Bloomberg, February 19, 2014

One-third of U.S. employers plan to move their workers’ health-care coverage to a private exchange in the next few years, a survey found, following the lead of companies like Walgreen Co. seeking to reduce costs.

While 95 percent of employers said they would continue to offer health care in the next three to five years, 33 percent may use a private exchange to provide the benefit up from 5 percent currently, according to a survey released today by a unit of Aon Plc.

Traditionally, most large employers are self-insured, meaning they take on the financial risk of their employees’ health costs. Under a private exchange, workers are given a subsidy to pick from a limited number of health plans and the insurer takes on the risk.

“Employers are telling us they are losing confidence in their traditional approaches, like vendor changes or employee cost-sharing,” which only deliver “incremental” improvement, Jim Winkler, Aon’s chief innovation officer for health benefits, said in a telephone interview. “Employers are saying, ‘I need to do something different.’”

About 38 percent of the companies surveyed by Aon said they would offer no benefits to part-time workers within the next three to five years.

Retiree benefits are also being reworked. International Business Machines Corp. (IBM) said last year that it would send 110,000 retirees to Towers Watson’s Extend Health, the largest private Medicare exchange.

The Aon survey found that two-thirds of employers who wanted to make changes in retiree benefits were looking to follow IBM’s lead.

Only 25 percent of large employers offer subsidized retiree health benefits, Aon said, down from about 50 percent in 2004.

http://www.bloomberg.com/news/2014-02-19/employers-turning-to-private-he…

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Aon Hewitt Research: Employers Will Continue Sponsoring Health Benefits for Employees and Retirees, but Deliver Those Benefits in New Ways

Aon, February 19, 2014

According to Aon Hewitt’s soon-to-be-released Health Care Survey of more than 1,230 employers covering more than 10 million employees, 95 percent of employers say they plan to continue providing health care benefits to active employees in the next three-to-five years. However, a growing number plan to move away from their traditional “managed trend” approach, which includes aggressively managing costs through vendor management and employee cost sharing.

Thirty-three percent said offering group-based health benefits to active employees through a private health exchange will be their preferred approach in the next three-to-five years.

Despite having the ability to direct part-time employees to purchase health coverage through the public marketplaces, Aon Hewitt’s survey shows very few employers plan to do so in the near future.  Almost two-thirds plan to continue to offer the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38 percent plan to offer no benefits to part-time workers in the next three-to-five years.

According to Aon Hewitt’s annual Retiree Health Care survey of 424 employers covering 3.8 million retirees, 20 percent said they are favoring moving all or a portion of their pre-65 retiree population to the individual market/state exchanges to purchase coverage in the next three-to-five years. Today, just 3 percent of employers do so.

According to Aon Hewitt, the number of employers offering subsidized retiree health benefits has slowly declined over the past decade, with just 25 percent of large employers doing so today, compared with approximately 50 percent in 2004.

Of those companies that offer health benefits to post-65 retirees, a growing number of organizations now provide or are seriously considering providing health benefits coverage through the individual Medicare plan market. Aon Hewitt’s annual Retiree Health Care Survey found that 30 percent of companies have already sourced benefits through the individual market―most through a multi-carrier private health exchange. Of those companies contemplating future changes to their post-65 retiree strategies, two-thirds are considering this approach.

“A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries because they see the value in both the competitive mix of plans offered and the Medicare-specific navigation and advocacy offered by these private exchanges,” said John Grosso, leader of Aon Hewitt’s Retiree Health Care Task Force.

http://aon.mediaroom.com/2014-02-19-Aon-Hewitt-Research-Employers-Will-C…

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OneExcahnge (previously Extend Health)

OneExchange has helped more than 300,000 retirees find the perfect Medicare plan for their needs and budget. We are the trusted leader in private Medicare exchanges.

https://medicare.oneexchange.com

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Private exchange sees surge in health care enrollment

By Kelly Kennedy
USA TODAY, February 20, 2014

The number of customers on the nation’s largest private health insurance exchange increased by 50% in the final three months of 2013, a direct result of demand created by the Affordable Care Act, the company’s CEO said Thursday.

Gary Lauer, CEO of eHealth Insurance, said individual memberships rose 50% in the fourth quarter of 2013 compared with the same period in 2012, from 113,600 applications in the last three months of 2012 to 169,800 in 2013.

The site operates much like the federal and state exchanges, and now that people have a better understanding of what “exchange” means, they’re drawn to the private sites, as well. In fact, many employers offer private exchange coverage, so employees may pick a plan, and many insurers are creating their own private “exchange” sites, so they can offer more products to consumers.

Those shopping on private exchanges might include business owners who make more than 400% of the federal poverty level, but who couldn’t get insurance before; retirees who are not eligible for Medicare; or people who simply disagree with the Affordable Care Act and choose to find insurance outside the federal and state exchanges — even if those plans are also through private insurers.

Premium rates, Mast said, dropped 25% when the law went into effect, as more people chose the less expensive bronze-level plans.

http://www.usatoday.com/story/news/nation/2014/02/20/fourth-quarter-repo…

The activity around the implementation of the Affordable Care Act and the initiation of federal and state insurance exchanges has seemed to stimulate much interest in private insurance exchanges, in all of their various forms. While some may praise the private sector for coming to the fore, we should take a closer look at what this means for patients.

Perhaps the greatest concern is the fact that this Aon survey shows that about 33 percent of employers will be eliminating their own health benefit programs within the next three to five years and start sending their employees to private exchanges to shop for their plans. This gives their employees greater choices in health care coverage, so why should we be concerned?

By providing their employees with what amounts to a voucher, employers are able to control their future health benefit costs by limiting the rate at which the value of the voucher increases. As health care costs continue to increase at rates greater than inflation, the employees will have to bear the additional costs, either through higher premiums or through further cost sharing and limitations in benefits offered by the plans.

This extends the national trend of converting employee benefit programs from defined benefit to defined contribution programs in which both risk and higher costs are shifted from employers to employees. The nation’s workforce is being left behind while the productivity gains are now all going to the top.

eHealth is the largest private insurance exchange, and many are now turning to it to purchase their plans now required by the individual mandate, but there is an important difference between the public and private exchanges. Most people purchasing plans in the federal and state exchanges are purchasing silver plans to qualify for the cost-sharing government subsidies – subsidies which are not provided for bronze plans. But what are people purchasing in the private exchanges?

Silver plans have an actuarial value of 70 percent, leaving 30 percent of costs to be paid by the patient (though adjusted down for credits and out-of-pocket caps, but up for out-of-network care). Bronze plans have an actuarial value of only 60 percent, but these are the plans selected by those shopping the eHealth market simply because they are the cheapest (i.e., they have the lowest premiums). So the concern about the surge in eHealth sales is that far too many individuals will be underinsured – having a plan that will leave them with excessive medical debt should they need significant amounts of health care.

Another form of private exchanges is represented by Towers Watson’s OneExchange – the largest private Medicare exchange – which has found a great market created by employers’ termination of employee retirement health benefit programs. Employers can now send their over-65 retirees to OneExchange where they can select from a variety of Medigap, Medicare Advantage and Part D Medicare drug plans. If you go to their website (link above) you will find that most Medigap plans charge a significant premium whereas most of the Medicare Advantage plans have no premium at all. Just as eHaelth shoppers buy the cheapest plans, no doubt the Medicare shoppers on the private Medicare exchanges will buy the cheapest plans as well – forgoing traditional Medicare and buying the private Medicare Advantage plans instead. Privatization of Medicare marches on.

So these various private exchanges are shifting us to defined contributions, to lower actuarial value plans with greater exposure to health costs, to privatization of Medicare, and to compounding the great divide between the few super-wealthy and the rest of us. This is what we want out of the private market!?

When you think about it, all of this is because we continue to insist that we have a health care financing system in which each individual is shoved into a slot with a given insurance program – a system that has proven to be so expensive and complex that the sources of the funds to pay for health care are looking for ways out. They are taking what deceptively appear to be the cheapest exits when, in reality, total costs just keep going up.

How about getting rid of the concept of a separate plan for each individual. It would be less wasteful, far less complex, and would provide us with much greater value if we had just one comprehensive plan for everyone – an improved Medicare for all. And it would actually work.

“Value-based insurance”: The journey from hype to evidence-based policy

Value-based insurance design program in North Carolina increased medication adherence but was not cost neutral

By Matthew L. Maciejewski et al.
Health Affairs, February 2014

Value-based insurance design (VBID) … is based on the premise that higher medication and administrative expenses incurred by insurers will be offset by lower nonmedication expenditures that result from better disease control. This article examines Blue Cross Blue Shield of North Carolina’s VBID program, which began in 2008. The program eliminated copayments for generic medications and reduced copays for brand-name medications. Patient adherence improved 2.7–3.4 percent during the two-year study period. Hospital admissions decreased modestly, but there were no significant changes in emergency department use or total health expenditures. The insurer incurred $6.4 million in higher medication expenditures; total nonmedication expenditures for the study population decreased $5.7 million. Our results provide limited support for the idea that VBID can be cost-neutral in specific subpopulations…..

[S]tatistically insignificant short-term changes in expenditures fall short of demonstrating that VBID can bend the cost curve as anticipated by its proponents.

http://content.healthaffairs.org/content/33/2/300.full

Comment:

By Kip Sullivan JD

In the space of a decade and a half, the concept of “value-based insurance design” has undergone a rapid transformation: from an idea few had heard of; to the latest health policy fad; to the subject of some very good research that refuted claims that VBID will cut costs. It is not unusual for unproven health policy notions to leap onto center stage. It is unusual, however, to see them subjected to unbiased, rigorous analysis so soon after they have been loosed on the public. For cultural anthropologists who like to study the mores of the US health policy community, the VBID fad provides an interesting case study because its treatment has to date proven to be the exception to the rule.

At the turn of this century, the label “value-based insurance design” had not been invented, and discussion of the underlying concept was limited to a few professional journals. Judging from several of the early papers on the concept http://www.ncbi.nlm.nih.gov/pubmed/11570020, its advocates were motivated by a desire to counteract the destructive effects of yet another health policy fad – the “consumer-driven” health policy.

In 2004, thanks largely to an article in the Wall Street Journal, the VBID idea burst out of obscurity and quickly became another hyped nostrum in the managed care pharmacopeia. The article described a successful experiment by Pitney Bowes, a self-insured Fortune 500 company, designed to reduce its total health care spending on employees with asthma and diabetes by reducing copayments on asthma and diabetes drugs. http://www.sph.umich.edu/vbidcenter/news/pdfs/2004_WSJ%20article%20%20(2).pdf

By 2005 the VBID label had been invented and a VBID “center” had been created at the University of Michigan. By 2006 the VBID label was appearing regularly in the professional literature. For the next several years the lay and professional literature published claims that VBID was not just good for patients but would also lower spending http://content.healthaffairs.org/content/26/2/w204.full  By 2009 congressional Democrats had incorporated VBID into legislation that would become the ACA and, when the ACA was enacted in March 2010, VBID was engraved into US law. (The phrase appears in the third full paragraph of the ACA under a paragraph entitled, “Coverage of preventive services.” http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf  It reads: “The Secretary [of Health and Human Services] may develop guidelines to permit a group health plan and a health insurance issuer … to utilize value-based insurance designs.”)

But at about the time the ACA was enacted, research was beginning to demonstrate that VBID, at least as it applied to drugs, did not save money. A paper co-authored by, among others, people affiliated with Pitney Bowes concluded that Pitney Bowes’ VBID program did not cut costs http://content.healthaffairs.org/content/29/11/1995.full?ijkey=V1BuR15ZDc2.o&keytype=ref&siteid=healthaff.  A literature review published in Health Affairs in 2013 concluded VBID programs “were consistently associated with improved adherence (average change of 3.0 percent over one year),” but they did not lead to “significant changes in overall medical spending for patients and insurers.” http://www.ncbi.nlm.nih.gov/pubmed/23836741 The study by Maciejewski et al. quoted above, which examined the first VBID program run by an insurance company (as opposed to a self-insured company), reached the same conclusion. The insurance company, Blue Cross Blue Shield of North Carolina, lowered copayments for medications prescribed for hypertension, hyperlipidemia, diabetes, and congestive heart failure. Adherence rates rose 3 percent over the first two years (2008-2009), but total spending did not fall.

It is instructive to ask at this point what it is about the VBID proposal that distinguishes it from other long-lived managed care fads such as the HMO, “coordination,” utilization review, report cards, and electronic medical records, all of which were and still are promoted as cost-containment ideas. A closer look at the VBID’s evolution suggests three features account for VBID’s different treatment:

•  It was clearly defined; 

•  its costs, including the indirect costs, were much easier to measure; and 

•  the great majority of all costs were paid by the same payer (a self-insured employer and, more recently, an insurance company). 

By contrast, many managed care fads are poorly defined, their indirect costs (for example, the administrative costs that utilization review imposes on providers) are harder to track, and the costs (as opposed to the savings) are absorbed by multiple parties.

A few payers have recently begun to experiment with applying the VBID concept beyond prescription drugs and using the “stick” approach (higher copayments for “lower valued” services) rather than the “carrot” approach (lower copayments for “higher valued” services). If that practice becomes widespread, the VBID concept may become more amorphous and its costs more difficult to track. In that event, we may see a resurgence in evidence-free claims about the potential for VBID to cut costs. If that happens, researchers should insist that analyses of VBID must continue to include an examination of all costs generated by VBID, including patient out-of-pocket expenses and higher medical costs caused by any damage to patient health.

Analysis: Single Payer Needs A Political Quarterback

By Hamilton E. Davis
VPR News, Feb. 19, 2014

From the opening days of Gov. Peter Shumlin’s single payer health care initiative, House Speaker Shap Smith has been a rock-solid supporter of the campaign. In 2011, he delivered Act 48, arguably the most far-sighted health care reform blueprint in the country, by lining up his huge Democratic house majority behind it.

In the early weeks of the current legislative session, however, the tone in the Statehouse around health care reform has turned remarkably sour, raising questions partly about the details of the project itself, but mainly about the political management of it. In fact, the actual engineering of the Shumlin design is going quite well – but the political operation of it is a mess.

Political Reality

Smith is Exhibit A for this conclusion. In late January, the speaker hired a consultant to advise him and the Legislature on the whole progress of health care reform so far and to assess whether the state should adopt a single payer plan.

“Everybody agrees that we want to make sure that we have quality health care. We’re doing things to bring down the rate of growth for costs,” Smith told VPR’s Peter Hirschfeld recently. “And if we don’t have those two things, we don’t want to move ahead with the single payer.”

The actual engineering of the Shumlin design is going quite well – but the political operation of it is a mess.

If taken at face value, this is a striking piece of commentary by the most important member of the Legislature. In other words, if the consultant finds in the next four months that the Vermont effort that has been underway since early 2011 isn’t good enough, then you give up on single payer? What does that mean?

Do you repeal Act 48? Do you leave the regulatory structure based on the Green Mountain Care Board in place? What about the extensive effort now underway to reorganize the whole delivery system and change the way providers are paid? Do you return the $45 million federal grant that is paying for that project?

In point of fact, Smith undoubtedly did not intend any such cataclysmic reading of the reform situation. The remarks to Hirschfeld were made in a brief, fast moving interview in a busy day. In the normal course of things, they wouldn’t have caused a ripple. But the course of things in the Legislature now is quite far from normal, and Smith’s comments clearly reflect that political reality.

Financing And Payment Reform

The underlying problem in the rhetoric that encompasses health care reform is how enormously complex and multifaceted the issue is. The term “single payer” is used to refer to the whole spaghetti ball, but in fact there is a whole cluster of issues that make up the whole.

The Green Mountain Care Board, for example, regulates hospital budgets, and some other issues such as benefit packages and insurance rates, which are two complex subject areas.

But the board is also the locus of an extraordinarily complex program that seeks to change the whole infrastructure of the health care delivery system, reworking the way that doctors and hospitals relate to one another – do they compete, or cooperate? – and, equally gnarly, how doctors and hospitals get paid.

The term ‘single payer’ is used to refer to the whole spaghetti ball, but in fact there is a whole cluster of issues that make up the whole.

At the same time, the health care reform office inside the governor’s suite on the fifth floor of the Pavilion Building in Montpelier has to figure out how to build a new state financing system that pulls together the money streams now paying for health care in the state. It also must design a system to shift a major piece of the money now going into the private insurance system to a state financing system.

Meanwhile, of course, Shumlin’s health services bureaucrats have to wrestle the federally financed insurance exchange into some semblance of competent operation. Referring to this policy cement mixer as “single payer” doesn’t really get at the entirety of the effort.

As Speaker of the Vermont House, Shap Smith has a relatively narrow, but vital, role in the reform plan. He knows perfectly well that the regulatory effort and the design work at the Green Mountain Care Board have to continue. Smith knows that you unless you get costs under control, no reform is possible.

There isn’t much he can do about the difficulties with the exchange; Shumlin himself has to manage that. What Smith has to worry about is ultimately one of the most intractable obstacles to reform: the need for the Legislature come up with a state-run, publicly financed mechanism for the new system. That bill is estimated at this point to run somewhere between $1.7 and a little over $2 billion.

Collateral Damage From Exchange

That number will exceed the entire general fund budget of Vermont. It’s not just a “big lift;” it is a gargantuan lift and it will take every ounce of skill that Smith has to get it passed. The financing bill is now scheduled to come into the Legislature a little less than a year from now, and the situation could be different then. But as of today, a bill of the single payer magnitude has little to no chance of passage. So, why is that true? How has the project gone off the rails? And what will it take to get it back on the rails? 

As of today, a bill of the single payer magnitude has little to no chance of passage.

The troubled rollout out of the federal health insurance exchange has to have been a major part of the problem. It wasn’t just that the rollout was a mess – it was that Shumlin and his team failed to inform the Legislature about what was going on. The inevitable outcome of a mistake like that is the loss of both trust and confidence that the Shumlin Administration can handle a huge, technically complex issue like single payer.

Consultant Comfort

In his tenure to date, Smith has managed the House with a deft touch, but that political skill alone won’t suffice. So Smith hired a consultant, Ken Thorpe, a health care economist from Emory University earlier this winter. It doesn’t cost much, and can be justified by the relative lack of staffing at the legislative level and by the need to help legislators frame questions and begin to learn the complexities of health care reform.

Of course, it makes sense that Smith would want a green eyeshade type to examine the cost of single payer as part of the Legislature’s due diligence. But the risk is that people will see Thorpe as some sort of a referee or a judge of the quality of the work done so far by the Shumlin designers. That risk was illuminated by Thorpe’s comments in the Statehouse shortly after he was hired. 

In his tenure to date, House Speaker Shap Smith has managed the House with a deft touch, but that political skill alone won’t suffice.

Thorpe made two key points in his first presentation. First, he credited the Vermont Blueprint for Health for important help in bringing down the rate of health care inflation in the last few years. His second point was that the state has to get costs for chronic care under control or its reform efforts are doomed to failure.

Neither of these claims makes much sense. The Blueprint for Health, which essentially provides social service support for vulnerable sick people in a way that leverages the actual medical work done by doctors, is an interesting initiative and may be saving money, but there is no way that it begins to match the other forces that have been acting on health care inflation.

The most powerful of those was the 2008 great recession, which hammered down costs in Vermont just like it did all over the country. That was followed by two years of caps on Vermont health care cost inflation to rates that were half the historic trend. The Green Mountain Care Board’s mandated hospital budgets for the current fiscal year came to 2.7 percent, the lowest level of increase since the launch of Medicare and Medicaid in the mid-1960s.

As for the comments about chronic care, they were far more true 10 or 15 years or ago than they are now. Two of the very important issues in that arena are the management of diabetes and asthma. The essence of the problem with those diseases is that the patients themselves can manage much of the problem themselves – if they know how. If they do, that means they don’t have to rush to their doctor or to a hospital emergency room if they are having a problem.

Inflationary Pressures

This leads to another point: the underlying reason why doctors some years ago dragged their feet over solving this problem was that to the extent they succeeded, they also succeeded in reducing their incomes. No care, no payment.

Inflationary cost pressures suffuse the entire health care delivery system. There is no panacea – fix this one little glitch and the whole problem goes away. And even if you believe that the costs of chronic care are the key to everything, you still face the question of what to do about them.

Even if you believe that the costs of chronic care are the key to everything, you still face the question of what to do about them.

If your analysis reaches that point, the answer that much of the health policy community now endorses is that you have to reorganize the delivery system and change the payment mechanism. The system has to be moved away from fee-for-service – no care, no payment. Instead, it should favor some sort of “capitated,” or fixed price per patient, mechanism that allows – or forces – doctors and hospitals to take financial risk for the system that they operate.

If this analysis is valid, then why would Smith bother to hire Thorpe in the first place? The reason can only be that the speaker can’t get what he needs from the Shumlin team, even though it exists there. And it isn’t mainly substance he can’t get: his house members don’t really trust what they do get from the Shumlin team.

Earlier Lessons

As to what can be done about it, you can gain some insight into that question by considering two earlier “heavy lifts” that were successfully undertaken by Vermont legislatures.

One was the civil unions-gay marriage campaign; another was the passage of Act 60, which drastically reworked the way that Vermonters finance their public school systems.

Neither of these was actually as complex as the health reform project. For one thing, both the earlier “lifts” were driven by the lash of Vermont Supreme Court decisions that something had to be done. Another is that they were nowhere near as technically complex.

Neither civil unions and gay marriage nor Act 60 were as complex as the health reform project, but their political management was illuminating.

Still, their political management was illuminating. The civil union and gay marriage campaign that spanned some eight year was managed by two people primarily. The lead was Beth Robinson, a Middlebury attorney who also led a statewide advocacy group pressing for change. The second was Steve Kimbell, then a veteran lobbyist from the Montpelier-based firm Kimbell, Sherman and Ellis.

Whenever the issue was “live” in the Legislature, Robinson, who knew every detail of the relevant law, was there to deal with it. Kimbell, meanwhile, spent much of those eight years walking the halls of the statehouse with a checklist of names of every senator and representative in his pocket. He knew, every day, where the members stood.

If a Democratic representative, for example, began to get shaky about losing his seat, Kimbell could talk to one of the Democratic leaders and they would try to find a way to help encourage him or her to hold firm.   

The “management” of the school issue was different superficially, but based on the same in principle. The real “manager” was Paul Cillo, a representative from Hardwick who was a member of the Ways and Means Committee, the linchpin for any tax issue. Cillo knew all the legislators, and moreover, had an encyclopedic grasp of the financing involved. Cillo could also respond instantly to a query from a legislator about how the new education funding plan would affect his or her town. And Cillo could also keep track of the running count of supporters and opponents of the bill.

Right now, the Shumlin Administration has no one person in the Statehouse directing the political strategy and messaging necessary to move the health care reform measure.

Right now, the Shumlin Administration has no one person in the Statehouse directing the political strategy and messaging necessary to move the health care reform measure. The administration believes that they don’t need anyone like that because the Legislature doesn’t have to pass anything this year.

They are wrong about that. The fact is that opposition to and doubt about the Shumlin initiative are settling like a miasma over the Legislature. That doesn’t mean that single payer is doomed at this point, but it is clearly worse off than at any time since Shumlin launched his initiative. For evidence of that you don’t have to look any further than Shap Smith’s hiring of Thorpe. If that’s not enough, try sitting in on the House Ways and Means committee when it’s working on health care and take the temperature.

A reasonable conclusion from all this is that Shumlin needs to get a grip on the political management of his pet project – and he better do it sooner than later. He has some very strong players, but he has no quarterback.

Without one he is risking failure, because there has never been as heavy a lift as health care reform. And if this chance is lost, we won’t see another for at least a generation. 

http://digital.vpr.net/post/analysis-single-payer-needs-political-quarterback