PNHP

Timothy Jost reviews what four years have brought us

Timothy Jost reviews what four years have brought us

Implementing Health Reform: Four Years Later

By Timothy S. Jost
Health Affairs, January 2014

Despite enormous potential, the Affordable Care Act has been plagued by controversy and confusion from day one.

Looking Ahead

It is likely that more complaints will be heard once people actually use their ACA coverage. Many exchange carriers are offering limited provider networks. Narrow networks allow insurers to reduce premiums as they exclude the most expensive providers and negotiate steep discounts with those who remain. Consumers will like the low premiums but will be unhappy to learn that their doctors are not available and shocked to discover charges from out-of-network specialists when they go to in-network hospitals.

Consumers may also be surprised by the magnitude of cost sharing under ACA plans. Bronze plans may have $6,000 deductibles, and silver plans can have deductibles of $2,000 or more. Even at these levels, of course, cost-sharing obligations will be lower than many policies found now in today’s nongroup market. But this is not free care, or anything close to it.

Millions of low-income Americans in states that refuse to expand Medicaid will find themselves too poor to receive any help. This is, of course, not the fault of the ACA but rather of its opponents. But the public may not grasp this distinction.

Other problems will also attend the implementation of the 2014 reforms, and all will be widely reported. Employers may continue to reduce employees to thirty hours or otherwise try to avoid offering health insurance to their employees. Insured and self-insured plans will bear part of the cost of expanding coverage and reinsuring high-cost enrollees in the individual market, increasing their costs. Finally, public outrage is sure to hit the headlines again when tax filing time arrives in 2015 as some individuals will be assessed the penalty for remaining uninsured, while others will face a repayment demand for overpaid premium tax credits.

Going forward, one of the most important challenges facing the ACA will be whether its benefits become apparent quickly and dramatically enough to offset the problems that are currently dominating the news coverage of the health reform law. Even more important may be the question of how much it will matter that the greatest beneficiaries of the ACA are likely to be low-income Americans, who are less likely to be politically active than many of the higher-income Americans who will be adversely affected by higher insurance premiums and taxes.

In the end, the most important fact is that the ACA addresses a real and dramatic problem: nearly fifty million uninsured Americans. Its opponents in Congress have failed to put forth any credible proposal to address this problem since the law was enacted. As disruptive as it may in fact be, the ACA does address this problem. If it succeeds, America will be a better place. If it fails, it is unlikely that another solution will be forthcoming any time soon, perhaps not for another generation.

http://content.healthaffairs.org/content/33/1/7.full

Timothy Jost is one of the most astute, objective analysts and observers of the unfolding of the Affordable Care Act. We should listen to him when he describes the negative impact that ACA will have on moderate- and higher-income Americans. They will be especially unhappy with their loss of choice of physicians and hospitals because of the narrow or ultra-narrow networks, and they will be greatly displeased with out-of-pocket costs that are much greater than they previously experienced.

Although Jost suggests that the determination of the success or failure will be based on how successful the enrollment of the 50 million mostly lower-income uninsured Americans will be, it is more likely that those with incomes above 400 percent of the federal poverty level who will be bearing the full costs of their insurance, directly or through wage concessions, will consider the shift in employer-sponsored plans toward narrow networks and high cost sharing to be a failure of policy.

Although Jost also discusses the positive features of ACA, they do not offset the negative since we did not have to accept such a compromised system.

Although he suggests that another solution is unlikely for a generation, once the politically active people with good jobs and decent incomes realize what happened and what they could have had, the demand for single payer Medicare for all will move the process much earlier. At least for their benefit, and for the benefit of all U.S. residents, we hope so.

Financial burden on Medicare households

Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households

By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, January 9, 2014

The Medicare program offers health and financial protection to more than 50 million seniors and younger people with disabilities.  However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package can result in beneficiaries spending a substantial share of their household budgets on health care.  

Medicare households devoted nearly 14% of total household spending to health-related expenses in 2012, on average — a substantially larger share than non-Medicare households.

Spending on health insurance premiums, including for Part B, Part C (Medicare Advantage), Part D and supplemental coverage (such as Medigap and retiree health plans), was about two-thirds (65.4%) of Medicare households’ average health care spending in 2012, and 9.1% of Medicare household spending overall.  Medical services (such as hospital stays, physician services, lab tests, and X-rays) were the next largest component of Medicare households’ health spending (18.5%), followed by prescription drugs (13.0%) and medical supplies (3.1%). 

The financial burden of out-of-pocket health spending is felt disproportionately by some subgroups of Medicare households, including older beneficiaries and those with incomes between 100% and 399% of poverty.

As policymakers consider options to address federal budget concerns, including policies to rein in Medicare spending, these findings highlight the importance of assessing the effects of such proposals on out-of-pocket health care spending among Medicare beneficiaries — a majority of whom already live on tight budgets.

http://kff.org/medicare/issue-brief/health-care-on-a-budget-the-financial-burden-of-health-spending-by-medicare-households/

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Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News

By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.
Employee Benefit Research Institute, October 2013

Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 60 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 12 percent. Furthermore, the percentage of private-sector establishments offering retiree health benefits has been falling, and where benefits are offered, they are becoming less generous. This is true even in the public sector.

Couples at the 90th percentile in drug expenses would need $220,000 to have a 50 percent chance of having enough money to cover health care expenses in retirement. They would need $295,000 to have a 75 percent chance of covering their expenses and $360,000 to have a 90 percent chance of covering their expenses.

However, it should be noted that many individuals will need more than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare.

Finally, issues surrounding retirement income security are certain to become an even greater challenge in the future, as employers continue to scale back retiree health benefits and as policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.

http://www.ebri.org/pdf/notespdf/EBRI_Notes_10_Oct-13_RetSvgs-IRAs.pdf

Comment:

By Don McCanne, M.D.

The bad news is that out-of-pocket expenses for those on Medicare are significant and fall disproportionately on older individuals and those with incomes between 100% and 400% of the federal poverty level. Although some relief is anticipated with the closing of the Part D donut hole, the overall burden is expected to increase, especially with proposed policies that would increase spending on Medicare insurance premiums.

A far more equitable system would be to completely separate payments for the financing of health care from the benefits received. That is, eliminate premiums, deductibles, co-payments and coinsurance and instead use a single public fund for health care to which individuals contribute based on ability to pay (i.e, progressive taxes). Then care is accessed based only on medical need, not on ability to pay.

As long as Medicare remains a separate program exclusively for the elderly and for individuals with long term disabilities, we are going to see efforts made to try to limit federal spending on Medicare, passing more costs onto the beneficiaries. Increases in premium revenues is quite likely, not only for Part B and Part D of Medicare, but also for private Medigap, Medicare Advantage, and retiree health plans. Also, proposed taxes on Medigap premiums are on the agenda.

Both of today’s articles demonstrate that the burden is already too great, especially for the majority who are on tight budgets. Rather than shifting yet more responsibility for health care costs onto the backs of Medicare beneficiaries, we should be reducing it. If we were all in this together, as we would be with an improved Medicare for all, we would be demanding relief from excessive out-of-pocket costs while begrudgingly paying our taxes.

Financial burden on Medicare households

Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households

By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, January 9, 2014

The Medicare program offers health and financial protection to more than 50 million seniors and younger people with disabilities.  However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package can result in beneficiaries spending a substantial share of their household budgets on health care.

Medicare households devoted nearly 14% of total household spending to health-related expenses in 2012, on average — a substantially larger share than non-Medicare households.

Spending on health insurance premiums, including for Part B, Part C (Medicare Advantage), Part D and supplemental coverage (such as Medigap and retiree health plans), was about two-thirds (65.4%) of Medicare households’ average health care spending in 2012, and 9.1% of Medicare household spending overall.  Medical services (such as hospital stays, physician services, lab tests, and X-rays) were the next largest component of Medicare households’ health spending (18.5%), followed by prescription drugs (13.0%) and medical supplies (3.1%).

The financial burden of out-of-pocket health spending is felt disproportionately by some subgroups of Medicare households, including older beneficiaries and those with incomes between 100% and 399% of poverty.

As policymakers consider options to address federal budget concerns, including policies to rein in Medicare spending, these findings highlight the importance of assessing the effects of such proposals on out-of-pocket health care spending among Medicare beneficiaries — a majority of whom already live on tight budgets.

http://kff.org/medicare/issue-brief/health-care-on-a-budget-the-financia…

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Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News

By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.
Employee Benefit Research Institute, October 2013

Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 60 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 12 percent. Furthermore, the percentage of private-sector establishments offering retiree health benefits has been falling, and where benefits are offered, they are becoming less generous. This is true even in the public sector.

Couples at the 90th percentile in drug expenses would need $220,000 to have a 50 percent chance of having enough money to cover health care expenses in retirement. They would need $295,000 to have a 75 percent chance of covering their expenses and $360,000 to have a 90 percent chance of covering their expenses.

However, it should be noted that many individuals will need more than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare.

Finally, issues surrounding retirement income security are certain to become an even greater challenge in the future, as employers continue to scale back retiree health benefits and as policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.

http://www.ebri.org/pdf/notespdf/EBRI_Notes_10_Oct-13_RetSvgs-IRAs.pdf

The bad news is that out-of-pocket expenses for those on Medicare are significant and fall disproportionately on older individuals and those with incomes between 100% and 400% of the federal poverty level. Although some relief is anticipated with the closing of the Part D donut hole, the overall burden is expected to increase, especially with proposed policies that would increase spending on Medicare insurance premiums.

A far more equitable system would be to completely separate payments for the financing of health care from the benefits received. That is, eliminate premiums, deductibles, co-payments and coinsurance and instead use a single public fund for health care to which individuals contribute based on ability to pay (i.e, progressive taxes). Then care is accessed based only on medical need, not on ability to pay.

As long as Medicare remains a separate program exclusively for the elderly and for individuals with long term disabilities, we are going to see efforts made to try to limit federal spending on Medicare, passing more costs onto the beneficiaries. Increases in premium revenues is quite likely, not only for Part B and Part D of Medicare, but also for private Medigap, Medicare Advantage, and retiree health plans. Also, proposed taxes on Medigap premiums are on the agenda.

Both of today’s articles demonstrate that the burden is already too great, especially for the majority who are on tight budgets. Rather than shifting yet more responsibility for health care costs onto the backs of Medicare beneficiaries, we should be reducing it. If we were all in this together, as we would be with an improved Medicare for all, we would be demanding relief from excessive out-of-pocket costs while begrudgingly paying our taxes.

Changing the structure of health care delivery systems: to benefit the patient, the providers, or the insurers?

By Joshua Freeman, M.D.
Medicine and Social Justice blog, Jan. 12, 2014

In an important series of three articles beginning on the Sunday before the New Year, “Doctors Inc.”, Alan Bavley of the Kansas City Star looked at the increasing acquisition of physician practices by hospitals, and the impact this has on access to, quality of, and cost of health care for patients. The first article, “Medicine goes corporate as more physicians join hospital payrolls,” describes the “what,” that:

“Since 2000, the number of doctors on hospital payrolls nationwide has risen by one-third, according to the American Hospital Association. In the Kansas City area, fully 55 percent of physicians are now employed by hospitals, Blue Cross and Blue Shield of Kansas City estimates. That includes virtually all cardiologists and most cancer specialists.” 

These changes are not limited to the KC area; he cites both national data and that from disparate regions such as Spartanburg, SC, and Phoenix, AZ. Part of the reason, the “financial model”, which is described in this first article, is that such “integrated” practices generate internal referrals, keeping patients within the system, as well as generating lucrative procedures. Physicians get a piece of the action; they get guaranteed salaries paid in part by the hospital or health system which is getting downstream revenue for their referrals.

And it makes these hospitals and health systems a lot of money, because they can now charge a lot more money. Bavley quotes “Robert Zirkelbach, vice president of America’s Health Insurance Plans, the industry’s trade association. ‘When a hospital buys a practice, its rates will increase in the following year’s contract. Increases of 20, 30 or 40 percent are not uncommon. It’s not 3 or 4 percent, that is for sure.’” 

It is also not always good for patients, as Bavley illustrates with examples of people who were referred internally and had delayed diagnosis. (One story discusses a woman discouraged from going to the academic medical center at which I work – full disclosure – for a second opinion regarding her lung cancer; the “reasons” given were both that she “didn’t have time”, and because she would see “young doctors still in training”.) Sometimes it is fine to see doctors within the system, and certainly this can be, and is, encouraged, but discouraging people from seeking outside referrals can also be hazardous to their health.

The Affordable Care Act (ACA) encourages the creation of “Accountable Care Organizations” (ACOs), which would be responsible (at least hopefully, in the best of scenarios) for the health of a population. At a minimum, they would seek to decrease the degree to which the delivery of health care is a series of episodic events paid for individually, instead taking on a global responsibility including inpatient, outpatient, and long-term care. This would, in theory, change the usual patient experience from seeing one (or many) doctors or having one (or many) ER visits, each charged and paid separately, culminating in a hospitalization, and then discharge to one (or many) doctors, or a long-term care facility (paid separately), and failure of care resulting in readmission to the hospital (paid again). The idea is that all levels would be coordinated to provide the best care at the most appropriate (inpatient, outpatient, long-term, home based) level.  In some settings, particularly for fully-integrated plans (where the providers of care are also the insurers) such as Kaiser, this works relatively well.

However, as Bavley makes clear in his series, written as part of a yearlong Reporting Fellowship on Health Care Performance sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund, particularly in the second article, “’Facility fees’ add billions to medical bills”, there is often a great cost to those who are paying, the patient and their insurer (including Medicare and Medicaid). This is because Medicare (and, following their lead, private insurers) pays an additional fee (the “facility fee”) for services, and especially procedures, done in a hospital outpatient facility beyond what they would pay for it to be done in a doctor’s office. (This is also addressed in the series by Elisabeth Rosenthal, “The $2.7 Trillion Medical Bill” in the New York Times.) 

Why? The original intent (as is often the case) was good, intended to both save money and improve care, by having many procedures done in outpatient rather than inpatient settings, where the cost would be even higher. And (as also so often is the case) the providers realized that this system could be gamed as well. The physician fee for a visit or procedure done in an office is greater than that done in a hospital clinic, but is expected to include all the overhead. In a hospital-based clinic (which just has to be owned by the hospital or health system; it doesn’t have to be on the campus and can be in the same doctor’s office that used to be separate) there is a somewhat lower doctor’s fee, but there is also a facility fee that, together with the doctor’s fee, is much higher in total than the office-based reimbursement; indeed, the facility fee can be far higher than the physician fee. Thus, the hospital makes money, and can share some of that with the physician, allowing the physician to make a lot more money without the overhead and risk. Voilà! Physicians are incented to become employed by hospitals!

I am a doctor and work in a medical center, so I understand the impetus for this from the point of view of providers, both doctors and hospitals. Medicare is ratcheting down its reimbursement, and a particular form of support for hospitals caring for a disproportionate share of uninsured is being cut back, and operating margins for many hospitals are getting thin or negative. Doctors are making less money (arguably some of them were making far too much, but they still don’t like making less) and will thus endorse efforts to have hospitals support them and maintain their incomes. The problem is that the cost to consumers goes up, especially when co-pays and co-insurances that come out of patients’ pockets, even when they are insured, go ever upward. 

Medicare is, sadly, responsible for much of this situation, as illustrated by the following: seeking to reduce costs for unnecessary admissions, Medicare has empowered bounty hunters (called “RACs”) to go after Medicare “fraud” by reviewing admissions to hospitals for patients who could have been care for in the hospital on “observation” status, which will save Medicare money. Hospitals are thus very careful to only officially “admit” people who meet very strict criteria. However, because “observation” status is officially “outpatient”, while Medicare saves money the patient pays more out of pocket, because this is under Medicare Part B, not the Part A that covers hospitalization. Complicated, but what it comes down to is what is financially good for Medicare is financially bad for the patient. Is this what we want?

I hope not. Yes, some of the fault is Medicare, and the fault is also providers (hospitals and doctors) seeking to maximize profit (even if “not-for-profit”) by manipulating the rules of the system. The fault is that we have Rube Goldberg-type complex constructs put in place to encourage behavior by providers, and providers are figuring out ways to work the system to their benefit. The real problem is that we do not have a straightforward system to deliver the highest-quality, necessary, health care to all people but a mess of conflicting incentives where gain to one component (i.e., insurers) is a loss to another (i.e., providers) and that they then take actions that benefit them and the overall loser is the patient. Bavley quotes an email from a board member of a hospital system to the Chief Financial Officer that said “Let’s be realistic. Employing physicians is not achieving better cost, it’s achieving better profit.”

That is not what our national health policy should be doing. A health system that did not permit gaming but straightforwardly paid for health care,  and eliminated the profit motive, would solve these problems. The answer is to put everyone in Medicare, in a single-payer system, so some patients are not “more desirable” than others. And to have Medicare, which is now covering everyone, pay for the appropriate level of care for every patient, where doctors and hospitals have no incentive to label a person’s hospitalization as “admission” or “observation”, or an outpatient visit as “hospital based” or “office based” because there is a difference in the reimbursement.

It can be done. It is done in Canada. It is done in some fashion in every other developed country. If we decide that the health of our people is more important than the profit of the health care industry, we can do it also. 

Dr. Joshua Freeman is chairman of the department of family medicine at the University of Kansas School of Medicine and a member of Physicians for a National Health Program (www.pnhp.org).

http://medicinesocialjustice.blogspot.com/2014/01/in-important-series-of-3-articles.html

Medicare for all a poverty solution

By James Besante
Albuquerque Journal, Jan. 12, 2014

Fifty years ago on Jan. 11, President Lyndon B. Johnson declared a “War on Poverty” on behalf of the “many Americans [who lived] on the outskirts of hope.”

His vision embraced an unprecedented expansion of health insurance coverage, which Congress achieved by enacting Medicare and Medicaid the following year.

In the case of Medicare, millions of Americans age 65 and older were given access to health care overnight. The new law went far beyond insuring the uninsured elderly; it reduced poverty by lifting crushing medical debt from the shoulders of America’s seniors and their families.

In the years that followed, Medicare continued to dramatically reduce poverty among the elderly. The scope of benefits expanded, and the health of America’s seniors improved, regardless of race or income.

Congress eventually extended Medicare coverage to the severely disabled, and today the program covers approximately 51 million Americans.

As a third-year medical student, every day I take part in the care of New Mexicans who live on the “outskirts of hope”: An uninsured mother with cervical cancer. An asthmatic who cannot afford his medication.

Their stories and suffering are real. My patients are the victims of physical and financial hardships. They are among the Americans for whom Johnson waged his unfinished war.

On this anniversary, I look back at Johnson’s 50-year-war and propose a simple remedy to address the persistent problem of unequal health care access, a solution supported by the majority of American physicians: a single-payer national health care system, or better known as “Improved Medicare For All.”

But wait. Some critics claim Medicare is “broken,” that it’s “bleeding the American economy.”

It is true the American health care system is hemorrhaging money.

But Medicare, with overhead costs of 2 percent, operates far more efficiently than any private health insurance plan, with overhead costs of anywhere from 15 percent to 25 percent.

The private insurance middlemen are the ones raising the costs of the system, without adding value.

Despite this fact, “free-market” advocates push for further privatization by corporate insurers whose primary goal is to maximize profits for their stockholders by raising premiums, restricting services and denying claims.

But others say, “We can’t afford Improved Medicare For All.” Wrong. The U.S. spends twice as much per person when compared to other developed nations on a dysfunctional health care system built around restricting access to care, rather than providing it. The money is already in the system – it just takes a detour through the private sector, which manufactures complexity, administrative waste and profits.

What does our sky-high health spending – 18 percent of the gross domestic product – get us? The U.S. has the worst health indicators of any First World country. The leading cause of bankruptcy in America is medically incurred debt.

The sad reality is that our current system weighs heaviest on the poor and working class. In the U.S., the poor live sicker and die younger, and the sick die poorer. Illness is both a condition of the poor and a structural barrier, which recreates poverty in America.

Medicare is not the problem, but the solution. The cure for the American health care system and the secret weapon to win the War of Poverty is to expand Medicare to every American: Improved Medicare For All.

Obamacare is not the answer because it relies on an inefficient patchwork system of private health insurers who are the cause of our current troubles.

At the end of each day, I ask myself: “How would this day have been different if my patients had Improved Medicare For All?” Perhaps appropriate cancer screening would have saved the life of the mother with cervical cancer. Maybe asthma medication would have prevented the hospitalization of the asthmatic.

America can win the War on Poverty. We can fix our health care system. A streamlined, publicly financed program, like “Improved Medicare for All,” is the answer.

James Besante is a resident of Albuquerque.

http://www.abqjournal.com/335125/opinion/medicare-for-all-a-poverty-solution.html

Advocating for a Single Payer System

Passionate students spread their message to their peers

By Anna Zelivianskaia
Chicago Medicine, January 2014 

Imagine these all-too-likely scenarios: Lisa Palmson recently lost her mother to breast cancer. Due to her family history, the physician recommends tamoxifen as a chemoprevention therapy. However, Lisa is unable to afford the co-pay. Paul Johnson has felt a burning sensation around his stomach for several weeks and it has recently gotten worse. Visits to his primary care physician are mostly covered by his insurance but his PCP refers him to a gastroenterologist whose services are not covered until Paul reaches a large annual insurance deductible. As a result, Paul cannot afford a visit. A year later he is diagnosed with gastric carcinoma due to Helicobacter pylori infection, a preventable cancer when caught early.

These types of scenarios happen every day in physician offices in America. Our health care system allows for high numbers of uninsured and underinsured, which prevents us from achieving the degree of care we are capable of. Medical decisions are no longer between the patient and doctor. Instead, every therapy and test must be approved by insurance companies, which operate with the goal of making a profit. Fortunately, many passionate medical students in Chicago are stepping up to advocate for changes.

Driven by the desire to improve patient care, medical students are educating other students and the public about the merits of a publicly funded, privately delivered, single-payer health care system. Scott Goldberg, an MS2 at the University of Chicago, has advocated for a single-payer system for several years and is now training other students to do so. He has set up workshops on how to write a political op-ed, trained students in community organizing, and even began educating undergraduates on the merits of a single payer. “For me,” he says, “it just made complete sense. Why can’t the richest country in the history of the world provide equitable, comprehensive insurance to all of its citizens? Until we eliminate private health insurance companies, we will never be able to fully achieve the ideal doctor-patient relationship in the American health care system.”

Similarly, Margaret Russell, an MS2 at Northwestern University, educates students on how our health care system works as well as teaches them the skills to change it. She recently presented an informational session on the federal bill for a single-payer system, H.R. 676. For Margaret, the fight is close to home: “I have seen firsthand how our fragmented and unjust insurance system stands in the way of patients receiving adequate care when they need it. … It is morally and ethically wrong for a patient’s insurance status to dictate the quality of their care.”

This passion comes from a fundamental belief that patients are more than their presenting symptoms and vital signs. These students realize that each patient has a unique set of circumstances but is part of a homogenizing system obsessed with profit. However, it is noteworthy that the most fervent student advocates, such as Scott and Margaret, tend to enter medical school believing in the urgent need for health care reform. As a medical community, we must try harder to make advocates out of other students who did not enter with such beliefs or background knowledge. Student-to-student advocacy is inspiring but not enough.

Medical education has changed drastically over the last several years in very commendable ways. Curriculum changes at some schools include education on systematic flaws. However, classroom information often stops at the problems and not at potential solutions or opportunities for student advocacy. Medical schools should constantly improve training in this area since student empowerment is a key step toward patient empowerment. Every medical school should provide systematic education on the inner workings of the medical system and reform options. We need to fix the system together for the sake of our patients.

Anna Zelivianskaia will graduate in 2016 from the University of Illinois at Chicago College of Medicine. The opinions expressed in this column are strictly those of the author and do not necessarily reflect those of the Chicago Medical Society. All members are encouraged to submit opinion pieces.

http://www.cmsdocs.org/news-publications/chicago-medicine-magazine/2014-issues/January2014.pdf

Maryland moving toward global budgets for hospitals

Maryland All-Payer Model to Deliver Better Care and Lower Costs

Centers for Medicare and Medicaid Services, January 10, 2014

On January 10, 2014, the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland jointly announced a new initiative to modernize Maryland’s unique all-payer rate-setting system for hospital services that will improve patient health and reduce costs.

Maryland operates the nation’s only all-payer hospital rate regulation system.  This system is made possible, in part, by a 36 year old Medicare waiver (codified in Section 1814(b) of the Social Security Act) that exempts Maryland from the Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) and allows Maryland to set rates for these services.  Under the waiver, all third party purchasers pay the same rate.  The State of Maryland and CMS believe that the new model test announced today will provide an opportunity for Maryland to reform its delivery system to align with the goals of delivering better health, better care, and lower cost.  

Terms of the Model

Maryland’s all-payer rate setting system for hospital services presents an opportunity for Maryland and CMS to test a unique model that has the potential to inform CMS and other states.  This opportunity is available through the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.

Under the terms of the Maryland All-Payer Model:

• Maryland will agree to permanently shift away from its current statutory waiver, which is based on Medicare payment per inpatient admission, in exchange for the new Innovation Center model based on Medicare per capita total hospital cost growth.  

• This model will require Maryland to generate $330 million in Medicare savings over a five year performance period, measured by comparing Maryland’s Medicare per capita total hospital cost growth to the national Medicare per capita total hospital cost growth.

• This model will require Maryland to limit its annual all-payer per capita total hospital cost growth to 3.58%, the 10-year compound annual growth rate in per capita gross state product.

• Maryland will shift virtually all of its hospital revenue over the five year performance period into global payment models, incentivizing hospitals to work in partnership with other providers to prevent unnecessary hospitalizations and readmissions.  

• Maryland will achieve a number of quality targets designed to promote better care, better health and lower costs.  Under the model, the quality of care for Maryland residents, including Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries will improve as measured by hospital quality and population health measures.  

• If Maryland fails during the five-year performance period of the model, Maryland hospitals will transition over two years to the national Medicare payment systems.  

• Before the start of the fourth year of the model, Maryland will develop a proposal for a new model based on a Medicare total per capita cost of care test to begin no later than after the end of the five year performance period.

This model will test whether an all-payer system for hospital payment that is accountable for the total hospital cost of care on a per capita basis is an effective model for advancing better care, better health and reduced costs.  CMS expects that this model will be used to engage all Maryland hospitals, as well as other care providers, in payment reform and innovation.  

CMS and Maryland expect that the All-Payer Model will be successful in improving the quality of care and reducing program expenditures for Maryland residents, including Medicare, Medicaid, and CHIP beneficiaries.  Moreover, the Maryland system may serve as a model for other states interested in developing all-payer payment systems.

http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-Sheets/2014-Fact-sheets-items/2014-01-10.html

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Guiding Principles for Implementation of Population­-Based and Patient Centered Payment Systems: A Report from the Advisory Council to the Maryland Health Services Cost Review Commission, January 31, 2014

The State of Maryland is leading a potentially transformative effort to lower health care spending in the State while at the same time improving access to care and quality of care. Stated in terms of the “Three Part Aim,” the goal is a health care system that enhances patient care, improves health outcomes, and lowers total costs.

To achieve this goal, the State of Maryland worked closely with the Centers for Medicare and Medicaid Services (CMS) throughout 2013 to craft an innovation plan that would make Maryland a national leader achieving the Three Part Aim and permit the federal government to continue to participate in the four‐decade long all‐payer system that has proven to be both successful and enduring. The federal government is anticipated to approve Maryland’s new Model Design application and implementation begins in January 2014.

Building on the Commission’s existing authority to regulate and set hospital rates across all payers including Medicare, the State is preparing to tie system‐wide hospital inpatient and outpatient payment to economic growth. Effectively, the State is instituting a plan to shift from payment based on inpatient hospital cost per admission to total hospital cost per capita. The ultimate goal is to tie total health care spending per capita to the per capita growth of the state’s economy. New health care delivery and payment models will be aligned with numerous existing initiatives to help meet the goals.

Advisory Council Recommendations

2.  Hospital Global Payment Models are the best strategy for the first phase of implementation.

The HSCRC anticipates that most hospitals will be operating under global payment models by early 2014. These models hold the most promise for meeting the revenue targets in the early years because they move away from incentives in fee‐for‐service payment that foster a greater volume of services and offer strong budget discipline. In addition, global payments provide clear and simple revenue targets with flexibility for hospitals to manage within these macro goals. In the long‐run, these models will need to evolve to ensure that the revenue in the system follows the patients.

(DISCLAIMER: This is a draft document for discussion purposes which has been prepared by consultants to the Advisory Council. The contents of this draft have not been reviewed or approved by Advisory Council members.)

Draft Report: http://www.hscrc.state.md.us/documents/md-maphs/ac-meet-2014-01-09/hscrc-advisory-council-initial-draft-report-2014-01-07.pdf

Maryland Health Services Cost Review Commission

All Payer Hospital System Modernization: Advisory Council: http://www.hscrc.state.md.us/hscrc-advisory-council.cfm

Overview of Proposed New All-Payer Model: http://www.hscrc.state.md.us/documents/md-maphs/ac-meet-2013-11-13/hscrc-overview-of-maryland-all-payer-model-proposal.pdf

Comment:

By Don McCanne, M.D.

The model for a single payer national health program, as proposed by Physicians for a National Health Program, includes placing hospitals on global budgets. Just as police and fire departments are funded by single, publicly-financed global budgets rather than being paid for each fire or crime intervention as they arise, hospitals would likewise be placed on single, publicly-financed global budgets that are adjusted based on some reasonable index of inflation. Not only does that cost less, partly by dramatically reducing administrative waste, it also improves quality by providing the hospital administration with the flexibility to improve the allocation patient care dollars, plus it slows health care inflation to a sustainable level.

Maryland is the only state that currently has an all-payer hospital rate regulation system. Under this system, all payers, including Medicare, Medicaid, CHIP, private insurers, and individuals pay the same rates for the same hospital services. This has reduced administrative complexity, made payment for hospital services more equitable, and has slowed the increases in hospital spending from one of the most expensive states down to average.

Since their all-payer system pays for services provided, incentives remain to increase volume of services. Under the new system just approved by CMS, payment will still be all-payer but will not be based on volume of services, but rather will be based on “the Medicare per capita total hospital cost growth.” In essence, that establishes “global budget” as a form of hospital financing in the United States, though it is limited to Maryland under the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.

We certainly have many questions about the details that have not yet been revealed. It does fall short of hospital global budgets as envisioned by PNHP. For instance, this model still seems to pool funds from multiple public and private sources, whereas the PNHP model would use only public funds from a single pool funded by equitable taxes. That is a crucial difference since multiple sources leads to administrative complexity and inequities in funding.

In general though, it seems that we can celebrate this step towards a more equitable and just financing system. It won’t get us in the back door of single payer, but it will provide us with another talking point on policy – the fact that global budgets are an improvement but that we can make them even better when we mesh them in with a bona fide, comprehensive single payer system – an improved Medicare that covers everyone.

Maryland moving toward global budgets for hospitals

Maryland All-Payer Model to Deliver Better Care and Lower Costs

Centers for Medicare and Medicaid Services, January 10, 2014

On January 10, 2014, the Centers for Medicare & Medicaid Services (CMS) and the state of Maryland jointly announced a new initiative to modernize Maryland’s unique all-payer rate-setting system for hospital services that will improve patient health and reduce costs.

Maryland operates the nation’s only all-payer hospital rate regulation system.  This system is made possible, in part, by a 36 year old Medicare waiver (codified in Section 1814(b) of the Social Security Act) that exempts Maryland from the Inpatient Prospective Payment System (IPPS) and Outpatient Prospective Payment System (OPPS) and allows Maryland to set rates for these services.  Under the waiver, all third party purchasers pay the same rate.  The State of Maryland and CMS believe that the new model test announced today will provide an opportunity for Maryland to reform its delivery system to align with the goals of delivering better health, better care, and lower cost.

Terms of the Model

Maryland’s all-payer rate setting system for hospital services presents an opportunity for Maryland and CMS to test a unique model that has the potential to inform CMS and other states.  This opportunity is available through the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.

Under the terms of the Maryland All-Payer Model:

• Maryland will agree to permanently shift away from its current statutory waiver, which is based on Medicare payment per inpatient admission, in exchange for the new Innovation Center model based on Medicare per capita total hospital cost growth.

• This model will require Maryland to generate $330 million in Medicare savings over a five year performance period, measured by comparing Maryland’s Medicare per capita total hospital cost growth to the national Medicare per capita total hospital cost growth.

• This model will require Maryland to limit its annual all-payer per capita total hospital cost growth to 3.58%, the 10-year compound annual growth rate in per capita gross state product.

• Maryland will shift virtually all of its hospital revenue over the five year performance period into global payment models, incentivizing hospitals to work in partnership with other providers to prevent unnecessary hospitalizations and readmissions.

• Maryland will achieve a number of quality targets designed to promote better care, better health and lower costs.  Under the model, the quality of care for Maryland residents, including Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries will improve as measured by hospital quality and population health measures.

• If Maryland fails during the five-year performance period of the model, Maryland hospitals will transition over two years to the national Medicare payment systems.

• Before the start of the fourth year of the model, Maryland will develop a proposal for a new model based on a Medicare total per capita cost of care test to begin no later than after the end of the five year performance period.

This model will test whether an all-payer system for hospital payment that is accountable for the total hospital cost of care on a per capita basis is an effective model for advancing better care, better health and reduced costs.  CMS expects that this model will be used to engage all Maryland hospitals, as well as other care providers, in payment reform and innovation.

CMS and Maryland expect that the All-Payer Model will be successful in improving the quality of care and reducing program expenditures for Maryland residents, including Medicare, Medicaid, and CHIP beneficiaries.  Moreover, the Maryland system may serve as a model for other states interested in developing all-payer payment systems.

http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-Sheets/2014-Fact-s…

****

Guiding Principles for Implementation of Population­-Based and Patient Centered Payment Systems: A Report from the Advisory Council to the Maryland Health Services Cost Review Commission, January 31, 2014

The State of Maryland is leading a potentially transformative effort to lower health care spending in the State while at the same time improving access to care and quality of care. Stated in terms of the “Three Part Aim,” the goal is a health care system that enhances patient care, improves health outcomes, and lowers total costs.

To achieve this goal, the State of Maryland worked closely with the Centers for Medicare and Medicaid Services (CMS) throughout 2013 to craft an innovation plan that would make Maryland a national leader achieving the Three Part Aim and permit the federal government to continue to participate in the four‐decade long all‐payer system that has proven to be both successful and enduring. The federal government is anticipated to approve Maryland’s new Model Design application and implementation begins in January 2014.

Building on the Commission’s existing authority to regulate and set hospital rates across all payers including Medicare, the State is preparing to tie system‐wide hospital inpatient and outpatient payment to economic growth. Effectively, the State is instituting a plan to shift from payment based on inpatient hospital cost per admission to total hospital cost per capita. The ultimate goal is to tie total health care spending per capita to the per capita growth of the state’s economy. New health care delivery and payment models will be aligned with numerous existing initiatives to help meet the goals.

Advisory Council Recommendations

2.  Hospital Global Payment Models are the best strategy for the first phase of implementation.

The HSCRC anticipates that most hospitals will be operating under global payment models by early 2014. These models hold the most promise for meeting the revenue targets in the early years because they move away from incentives in fee‐for‐service payment that foster a greater volume of services and offer strong budget discipline. In addition, global payments provide clear and simple revenue targets with flexibility for hospitals to manage within these macro goals. In the long‐run, these models will need to evolve to ensure that the revenue in the system follows the patients.

(DISCLAIMER: This is a draft document for discussion purposes which has been prepared by consultants to the Advisory Council. The contents of this draft have not been reviewed or approved by Advisory Council members.)

Draft Report: http://www.hscrc.state.md.us/documents/md-maphs/ac-meet-2014-01-09/hscrc…

Maryland Health Services Cost Review Commission

All Payer Hospital System Modernization: Advisory Council:http://www.hscrc.state.md.us/hscrc-advisory-council.cfm

Overview of Proposed New All-Payer Model:http://www.hscrc.state.md.us/documents/md-maphs/ac-meet-2013-11-13/hscrc…

The model for a single payer national health program, as proposed by Physicians for a National Health Program, includes placing hospitals on global budgets. Just as police and fire departments are funded by single, publicly-financed global budgets rather than being paid for each fire or crime intervention as they arise, hospitals would likewise be placed on single, publicly-financed global budgets that are adjusted based on some reasonable index of inflation. Not only does that cost less, partly by dramatically reducing administrative waste, it also improves quality by providing the hospital administration with the flexibility to improve the allocation patient care dollars, plus it slows health care inflation to a sustainable level.

Maryland is the only state that currently has an all-payer hospital rate regulation system. Under this system, all payers, including Medicare, Medicaid, CHIP, private insurers, and individuals pay the same rates for the same hospital services. This has reduced administrative complexity, made payment for hospital services more equitable, and has slowed the increases in hospital spending from one of the most expensive states down to average.

Since their all-payer system pays for services provided, incentives remain to increase volume of services. Under the new system just approved by CMS, payment will still be all-payer but will not be based on volume of services, but rather will be based on “the Medicare per capita total hospital cost growth.” In essence, that establishes “global budget” as a form of hospital financing in the United States, though it is limited to Maryland under the authority of the Innovation Center, which was created by the Affordable Care Act to test payment and service delivery models.

We certainly have many questions about the details that have not yet been revealed. It does fall short of hospital global budgets as envisioned by PNHP. For instance, this model still seems to pool funds from multiple public and private sources, whereas the PNHP model would use only public funds from a single pool funded by equitable taxes. That is a crucial difference since multiple sources leads to administrative complexity and inequities in funding.

In general though, it seems that we can celebrate this step towards a more equitable and just financing system. It won’t get us in the back door of single payer, but it will provide us with another talking point on policy – the fact that global budgets are an improvement but that we can make them even better when we mesh them in with a bona fide, comprehensive single payer system – an improved Medicare that covers everyone.

Maine advocates push for single-payer care system

By Alanna Durkin
The Associated Press, Jan. 9, 2014

AUGUSTA, Maine (AP) — A government-run health care system in Maine would provide universal coverage to residents, cut down on administrative costs and free businesses from the complexities of providing insurance for their employees, supporters of a single-payer model said Thursday.

Advocates of a single-payer system have long been trying to implement the model in Maine with little success, but said they are hopeful that the steps Vermont officials have recently made to spearhead the effort there can help make it a reality in Maine.

“Our current health care system is complicated, is inefficient, unfair and pretty much broken,” said Julie Pease, president of Maine AllCare, the group behind the measure, which she said will “return our system to one where … our medical profession treats our patients based on their health care needs not on their ability to pay or what kind of insurance they have.”

The bill, sponsored by Democratic Rep. Charlie Priest of Brunswick, aims to create a single-payer health care system in Maine by 2017, as officials are trying to do in Vermont. Beginning in 2017, Vermont will offer a set package of coverage benefits to every resident under the program.

But the idea in Maine faces fierce opposition from insurance companies and questions remain about how the state could afford such an endeavor.

Dan Bernier, a lobbyist for the Maine Insurance Agents Association, said that government should focus its limited resources on the poor, elderly and disabled instead of those who can afford coverage.

“It is not the role of government to provide someone like myself, a lawyer and lobbyist, free health insurance,” he told the Insurance and Financial Services Committee on Thursday.

Supporters argue it would ultimately save the state as much as $1 billion down the line by eliminating unnecessary paperwork and administrative costs. The program would be paid for through taxes like people already do for Medicare and Medicaid, they said.

But the state first has to make a commitment to universal health care before every single detail can be worked out, said Joe Lendvai, a Brooklin resident who advocates on behalf of the bill with Maine AllCare.

“Unless we conceptually agree that we need to cover everyone, that every Maine resident deserves access to health care without any barriers, we are not going to succeed,” he said.

But any proposal to raise taxes would likely be rejected by Republican Gov. Paul LePage, who has vowed not to do so while he’s in office and vetoed the state budget last year because it included tax increases.

Democratic Sen. Geoff Gratwick of Bangor acknowledged that it will be tough to pass the measure in this political and economic environment, when budgets are especially tight. But he said that Maine lawmakers have long-understood the serious problems with the current health care system and want a change.

“This is going to happen whether or not we get it now, two years from now, 10 years from now,” he said. “It’s inevitable because our current system is broken,” he said.

[This wire story appeared in the San Francisco Chronicle, among other newspapers.]

http://www.sfgate.com/news/article/Maine-advocates-push-for-single-payer-care-system-5128457.php

Medicare for all

By Carol Krohm and Scott K. Summers
Northwest Herald (Crystal Lake, Ill.), Letters, Jan. 7, 2014

Thank you for your recent series about poverty in McHenry County.

As your reporters ably demonstrated, financial instability leads to overwhelming challenges in securing housing, food and transportation. Many among us suffer in silence.

Health care for the poor is another dimension warranting comment. Fortunately, the new Affordable Care Act will help some of our neighbors in need. Under the ACA, community clinics are expanding. Medicaid eligibility has been broadened.

Yet there also are problems. Those near the poverty line who do not qualify for financial aid now are obligated to take out health-insurance policies. In order to hold costs down, many people will select bare-bones plans.

For some, this will be completely counterproductive. They will pay premiums, yet they will receive no benefits because of high deductibles. Worse, this added financial demand will come on top of the everyday struggle to put food on the table and shoes on the kids.

In short, health care for some of the working poor might become a hollow promise. Under the ACA, it exists in concept. But from a practical standpoint, it may not exist in fact.

There’s a better approach. The Expanded and Improved Medicare for All Act (H.R. 676) now is before the Congress. Although unlikely to pass soon, it points the way.

We hope that someday, every American – poor and rich alike – will have comprehensive health-care coverage. Let us embrace the best of the ACA, and carry it forward to a Medicare for all program.

Carol Krohm and Scott K. Summers reside in Harvard.

http://nwherald.com/2014/01/07/medicare-for-all/a14vgnc/

The Oregon Medicaid ED “experiment” and the overuse myth

Emergency visits seen increasing with health law

By Sabrina Tavernise
The New York Times, January 2, 2014

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance. …

In remarks in New Mexico in 2009, Mr. Obama said: “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.” …

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard … and one of the authors of the study….

Comment:

By Kip Sullivan, JD

Last Friday the New York Times, the Wall Street Journal and other media outlets trumpeted the news that a recent study shows that low-income people newly insured through Medicaid use 40 percent more emergency room services than a control group of low-income people who remained uninsured. In a sane world, this finding would not have deserved any coverage, much less headlines on front pages. The conditions that would cause Medicaid enrollees to visit the ER more than the uninsured have been known for a long time, and it’s well known that some of these conditions have been getting worse. The conditions include:

•  the uninsured use roughly half as many health care services as the insured,

•  the uninsured are in worse health than the insured and have more unmet medical needs, and 

•  Medicaid enrollees have much more trouble finding primary care doctors and specialists who will take Medicaid than the privately insured.

Anyone familiar with these facts could have predicted that if the State of Oregon were to offer Medicaid coverage to 10,000 of its poor people those people would make more visits to emergency rooms than an uninsured control group. But the media’s fascination with this paper suggests the study’s results were indeed surprising to “many in the [health] policy debate,” as Ms. Baicker asserted.

How do we explain the surprise? I nominate the overuse myth – the conventional wisdom that the main reason America’s per capita health care costs are double those of the rest of the industrialized world is that doctors order, and patients demand, great volumes of unnecessary medical services. The overuse myth has led far too many policymakers on the left and the right to think that emergency rooms are vastly overused. Liberals like Obama use the myth to claim better coverage will reduce all that unnecessary ER use and free up money to insure the uninsured. Conservatives use the myth to decry more coverage. According to conservatives, better coverage will just encourage poor people to consume even more unnecessary care. As conservative blogger Avik Roy wrote on the Forbes blog about the new study, “Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking – and receiving – lots of inappropriate care.”

http://www.forbes.com/sites/theapothecary/2014/01/02/new-oregon-data-expanding-medicaid-increases-usage-of-emergency-rooms-undermining-central-rationale-for-obamacare/

In fact, researchers have determined (with the luxury of hindsight, it should be noted) that only 10 percent of Medicaid enrollees go to emergency rooms for non-urgent matters, which is close to the 7 percent rate seen in the privately insured http://www.hschange.com/CONTENT/1302/.

Like all sturdy myths, the overuse myth has a kernel of truth to it – some overuse of medical services does occur. But underuse is far more common than overuse, even among the insured, possibly four times worse according to a 2003 study by Elizabeth McGlynn et al. in the New England Journal of Medicine. Even for some expensive procedures like heart surgery underuse is far worse than overuse.

The media’s surprise at the new study’s finding and reporters’ and right-wing bloggers’ eagerness to report the political winners and losers of this story concealed the real problems, notably:

•  Because America sequesters its poor people in a separate program called Medicaid, it has never found the political will to pay the providers who care for poor people anywhere near as much as we pay providers for taking care of everyone else;

•  this policy has made it difficult for Medicaid recipients to find doctors;

•  this difficulty is further aggravated by the widespread use of managed care in Medicaid programs which forces recipients to pick doctors from “preferred” lists; and

•  Despite these facts, Oregon sought to increase coverage under Medicaid while doing little to increase the supply of primary care providers or the resources available to those who treat Medicaid enrollees.

In a sane world, we wouldn’t be debating whether a rich nation should be attempting to insure a minor portion of its uninsured through a separate and underfunded program for the poor. But if we must debate whether to do that, the least we can do is focus on the real issues, not promises of cost containment based on a false assumption, in this case, that overuse is our main problem and underuse, high prices and excessive administrative costs are nonexistent or trivial.

The truth is we are going to need to put more money into primary care in this country, and it will have to come from somewhere. Single-payer supporters propose that it come from reduced prices and reduced administrative waste. By clinging to their pet version of overuse, managed-care and high-deductible advocates dodge the issue. Managed care advocates claim that even within the underfunded world of Medicaid greater access to primary care can be paid for without harm to patients by reducing overuse via capitation, report cards, pay-for-performance, ACOs and other vaguely defined “changes to the delivery system.” High-deductible advocates claim consumption of medical services by poor people can be reduced without harm (because the foregone services weren’t necessary), and the savings can be directed to lower taxes or a lower deficit. Neither claim is credible.

The Oregon Medicaid ED “experiment” and the overuse myth

Emergency visits seen increasing with health law

By Sabrina Tavernise
The New York Times, January 2, 2014

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance. …

In remarks in New Mexico in 2009, Mr. Obama said: “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.” …

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard … and one of the authors of the study….

http://www.nytimes.com/2014/01/03/health/access-to-health-care-may-incre…

Comment:

By Kip Sullivan, JD

Last Friday the New York Times, the Wall Street Journal and other media outlets trumpeted the news that a recent study shows that low-income people newly insured through Medicaid use 40 percent more emergency room services than a control group of low-income people who remained uninsured. In a sane world, this finding would not have deserved any coverage, much less headlines on front pages. The conditions that would cause Medicaid enrollees to visit the ER more than the uninsured have been known for a long time, and it’s well known that some of these conditions have been getting worse. The conditions include:

•  the uninsured use roughly half as many health care services as the insured,

•  the uninsured are in worse health than the insured and have more unmet medical needs, and

•  Medicaid enrollees have much more trouble finding primary care doctors and specialists who will take Medicaid than the privately insured.

Anyone familiar with these facts could have predicted that if the State of Oregon were to offer Medicaid coverage to 10,000 of its poor people those people would make more visits to emergency rooms than an uninsured control group. But the media’s fascination with this paper suggests the study’s results were indeed surprising to “many in the [health] policy debate,” as Ms. Baicker asserted.

How do we explain the surprise? I nominate the overuse myth – the conventional wisdom that the main reason America’s per capita health care costs are double those of the rest of the industrialized world is that doctors order, and patients demand, great volumes of unnecessary medical services. The overuse myth has led far too many policymakers on the left and the right to think that emergency rooms are vastly overused. Liberals like Obama use the myth to claim better coverage will reduce all that unnecessary ER use and free up money to insure the uninsured. Conservatives use the myth to decry more coverage. According to conservatives, better coverage will just encourage poor people to consume even more unnecessary care. As conservative blogger Avik Roy wrote on the Forbes blog about the new study, “Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking – and receiving – lots of inappropriate care.”

http://www.forbes.com/sites/theapothecary/2014/01/02/new-oregon-data-exp…

In fact, researchers have determined (with the luxury of hindsight, it should be noted) that only 10 percent of Medicaid enrollees go to emergency rooms for non-urgent matters, which is close to the 7 percent rate seen in the privately insuredhttp://www.hschange.com/CONTENT/1302/.

Like all sturdy myths, the overuse myth has a kernel of truth to it – some overuse of medical services does occur. But underuse is far more common than overuse, even among the insured, possibly four times worse according to a 2003 study by Elizabeth McGlynn et al. in the New England Journal of Medicine. Even for some expensive procedures like heart surgery underuse is far worse than overuse.

The media’s surprise at the new study’s finding and reporters’ and right-wing bloggers’ eagerness to report the political winners and losers of this story concealed the real problems, notably:

•  Because America sequesters its poor people in a separate program called Medicaid, it has never found the political will to pay the providers who care for poor people anywhere near as much as we pay providers for taking care of everyone else;

•  this policy has made it difficult for Medicaid recipients to find doctors;

•  this difficulty is further aggravated by the widespread use of managed care in Medicaid programs which forces recipients to pick doctors from “preferred” lists; and

•  Despite these facts, Oregon sought to increase coverage under Medicaid while doing little to increase the supply of primary care providers or the resources available to those who treat Medicaid enrollees.

In a sane world, we wouldn’t be debating whether a rich nation should be attempting to insure a minor portion of its uninsured through a separate and underfunded program for the poor. But if we must debate whether to do that, the least we can do is focus on the real issues, not promises of cost containment based on a false assumption, in this case, that overuse is our main problem and underuse, high prices and excessive administrative costs are nonexistent or trivial.

The truth is we are going to need to put more money into primary care in this country, and it will have to come from somewhere. Single-payer supporters propose that it come from reduced prices and reduced administrative waste. By clinging to their pet version of overuse, managed-care and high-deductible advocates dodge the issue. Managed care advocates claim that even within the underfunded world of Medicaid greater access to primary care can be paid for without harm to patients by reducing overuse via capitation, report cards, pay-for-performance, ACOs and other vaguely defined “changes to the delivery system.” High-deductible advocates claim consumption of medical services by poor people can be reduced without harm (because the foregone services weren’t necessary), and the savings can be directed to lower taxes or a lower deficit. Neither claim is credible.