PNHP

Why are health insurance premiums higher for public employers?

Why are health insurance premiums higher for public employers?

Why are Health Insurance Premiums So Much Higher for Public Employers Compared to Private Employers?

Co-author: Tom Buchmueller
Presenter: Alice Zawacki, Ph.D., Senior Economist, Center for Economic Studies, Bureau of the Census
AcademyHealth, 2013 Annual Research Meeting, June 23-25, 2013

Research Objective:

The Great Recession of 2007-2009, which took a major toll on the U.S. economy, was especially hard on state and local governments. The fiscal crises have led to increased scrutiny of public sector compensation practices and renewed debate about how the compensation of public sector employees compares to that of private sector workers. Employer-sponsored health insurance represents a substantial share of non-wage compensation and rising health care costs are a pressing concern for both public and private employers. According to data from the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC), average health insurance premiums in the late 1990s until 2000 were similar for public and private employers. In subsequent years, public sector premiums grew more than private sector premiums. In 2000, premiums for large public sector plans were $705 or 22% higher than premiums for large private sector plans. By 2009, this difference grew to $1580 or 35%. This paper examines changes in employee demographics, plan type and plan benefit design with the goal of explaining why premiums in the private and public sectors have diverged over the past decade.

Study Design:

To study the premium differences between sectors, we conduct regression analyses on plan-level data from the 1996-2009 MEPS-IC augmented with additional worker demographic characteristics we impute from the 2000 Decennial Census and the 2009 American Community Survey. Population Studied: Health insurance plans offered by state and local governments and private sector employers with at least 100 employees.

Principal Findings:

Early work shows that over 40 percent of the premium difference for all plans in 2009 is attributable to demographic factors: public workers are older, more likely to be female and are more educated than workers in the private sector. Some of the gap is also explained by the fact that cost sharing increased more in the private than the public sector.

Conclusions:

These findings are consistent with the idea that private employers were more aggressive in increasing cost sharing in the health plans offered to employees. Increases in cost sharing can lead to lower utilization of services for which benefit is low relative to the cost, implying an increase in economic welfare. Alternatively, if utilization is not significantly affected, increases in deductibles, co-payments and co-insurance will merely shift costs from low risk employees who use relatively little care (but pay premiums in the form of reduced wages) to higher risk employees who use more care.

Implications for Policy, Delivery or Practice:

While the growing gap in health benefits spending in the public and private sector does not necessarily imply that public sector benefits are excessive, it is natural for policy makers to look to health insurance costs as a potential area for reform and savings. It is important that efforts in this area be guided by a clear and detailed understanding of the health benefits that are provided to public sector employees and how those benefits compare to those in the private sector.

http://www.academyhealth.org/files/ARM/2013/All%20Podium%20Presentations.pdf

Comment:

By Don McCanne, M.D.

In the past decade, health insurance premiums for state and local government employers have grown more than premiums for employers in the private sector. Although some of this is due to demographic characteristics, a significant portion has been due to an increase in the use of cost sharing in the private sector. Plans for public employers have maintained the same level of benefits, whereas the coverage in plans for private sector employers has deteriorated.

The policy implications of this should have us concerned. As explained in a message earlier this week, the trend in the private sector has been to expand the use of cost sharing, especially high-deductible plans, with a detrimental impact on employees. It is highly unlikely that private employers would support a reversal of this trend.

State and local governments have faced difficult budget decisions, so it is logical that they would look at the high costs of their employee health benefit programs as a source for reducing budget deficits. Many have already tapped into their programs for retirees. Although unions for public employees have been more effective in protecting benefits, there will be considerable pressure to follow the lead of the private sector and expand the use of cost sharing.

There is a far better option other than simply trying to adjust the differences in plans for public and private employees. Instead of thinking about traditional private insurance design options, especially those that emphasize catastrophic coverage, we should consider changing everyone to a prepaid health care system in which financial barriers to care are removed – a single payer system.

Not only is single payer coverage much better, it also provides the greatest value in health care. If we adopted a single payer system, both public and private employers would no longer be placed in the role of trying to control their budgets by hacking away at employees’ well earned health benefit programs.

High-cost Medicare patients are wrong target for savings

Contribution of Preventable Acute Care Spending to Total Spending for High-Cost Medicare Patients

By Karen E. Joynt, MD, MPH; Atul A. Gawande, MD, MPH; E. John Orav, PhD; Ashish K. Jha, MD, MPH
JAMA, June 24, 2013

Objective

To quantify preventable acute care services among high-cost Medicare patients.

Discussion

We found that more than 70% of the roughly $91.7 billion in acute care costs in the Medicare population in 2010 were for the 10% of patients that comprise the high-cost cohort. Approximately 10% of these costs were for what were deemed potentially preventable causes as calculated using standard algorithms; the percentage was slightly higher for the persistently high-cost cohort. Hospital referral regions with a higher primary care or specialist physician supply had higher annual preventable costs per capita.

The biggest drivers of inpatient spending for high-cost patients were catastrophic events such as sepsis, stroke, and myocardial infarction, as well as cancer and expensive orthopedic procedures such as spine surgery and hip replacement. These findings suggest that strategies focused on enhanced outpatient management of chronic disease, while critically important, may not be focused on the biggest and most expensive problems plaguing Medicare’s high-cost patients. Indeed, while a proportion of these very expensive inpatient episodes may be potentially preventable (such as acute myocardial infarction or degenerative joint disease leading to orthopedic procedures), their prevention would likely require a long time horizon and substantial investments in population wellness. Such investments are critically important for ensuring the health of the population, but the time frame needed to see cost savings is likely years, not weeks or months.

These findings may shed light on why many recent efforts to control costs for these very medically complex, high-utilizing patients, including the Medicare Coordinated Care Demonstration programs, have failed to do so, even in cases in which there was a small decrease in hospital admissions. The majority of these programs have focused on providing enhanced outpatient services, such as frequent telephone and in-person contact, patient education, enhanced medication management services, and assistance with transitional care following a hospitalization. These types of services are targeted toward reducing ambulatory care–sensitive hospitalizations, and investing further in disease management programs may lead to reductions in avoidable ED visits and hospitalizations. Although these visits are still very expensive in aggregate, our findings suggest that they make up a small proportion of the total acute care spending among the costliest of patients. As a result, while disease management may yield cost savings, even a substantial reduction in these preventable hospitalizations is unlikely to have a large effect on overall spending levels within this cohort.

Conclusions and Relevance

Among a sample of patients in the top decile of Medicare spending in 2010, only a small percentage of costs appeared to be related to preventable ED visits and hospitalizations. The ability to lower costs for these patients through better outpatient care may be limited.

http://jama.jamanetwork.com/article.aspx?articleid=1699911

Comment:

By Don McCanne, M.D.

The experts keep talking about the 30 percent of spending that is wasted on clinical services, and they keep proposing and implementing solutions to squeeze that waste out of our system. Yet when we look closer at the waste and at the methods being used to reduce it, we find that most efforts are relatively ineffective, and, further, that much of that suspect care may not be wasteful after all. This study adds to the data showing how elusive the goal of eliminating clinical waste has been.

Yet the savings that they are looking for are potentially recoverable, but not in the clinical services. They are to be found primarily in the financing infrastructure. The non-clinical administrative waste is profound in our current financing system. It could be dramatically reduced by adopting a single payer system (eliminating the administrative excesses of the private insurers and the administrative burden they place on the delivery system, placing hospitals on global budgets, negotiating rates with health care professionals, bulk purchasing of pharmaceuticals, and separate planning and budgeting of capital improvements).

We should continue to make efforts to improve clinical services. But we should not look upon these improvements as a source of savings that would allow us to continue to unjustly enrich the superfluous vested interests who are diverting our finite funds from health care. Why would we want to continue to reward them anyway? Let’s fix what we do know is wrong with the system… especially since we know how to do that.

Large employers moving en masse to high deductibles

Medical Cost Trend: Behind the Numbers 2014

PwC Health Research Institute, June 2013

Each year, HRI issues its projection for the following year’s medical cost trend based on activity in the market that serves employer-based insurance.

Consumer-driven health plans – insurance coverage with a high-deductible – are set to go mainstream in 2014. According to the 2013 PwC Touchstone Survey of major US companies, 44% of employers are considering offering high-deductible health plans as the only benefit option to their employees in 2014. Already, 17% of employers offer high-deductible plans as their only option in 2013, a 31% increase over 2012.

High-deductible health plans, which place greater responsibility on consumers, are designed to promote cost-conscious decisions. A recent study reported families that switched from a traditional health plan to a high-deductible plan spent an average of 21% less on healthcare in the first year.

The ACA, with its new insurance marketplaces, accelerates the move to consumer-driven plans. Many of the newly insured say they are willing to accept plan features such as higher deductibles in return for lower monthly premiums – as found in the new bronze and silver plans.

2013 – Average deductibles

$1,230 – In-network
$2,110 – Out-of-network

http://www.pwc.com/en_US/us/health-industries/behind-the-numbers/assets/medical-cost-trend-behind-the-numbers-2014.pdf

Comment:

By Don McCanne, M.D.

The forces supporting consumer-driven health care (CDHC) have incessantly asserted emphatically that the answer to our health care spending problem is to place the consumer (i.e., patient) in charge of health care spending. Although some of us have been trying to explain the horrible consequences of this approach, the mainstream media disseminated the message of the CDHC advocates so effectively that it has now become a meme. The CDHC camp has won the policy battle.

How can we say this? CDHC has now become virtually synonymous with high-deductible health plans (HDHP). Whether or not the deductible passes through a health savings account or is paid directly really doesn’t make much difference since the designated cash account is simply a matter of tax policy rather than health policy. Let’s look at a very brief history of HDHPs to see if we can understand why we lost.

Large employer-sponsored group plans have been the mainstay of health coverage in the United States for decades. They have provided comprehensive coverage through high actuarial value plans which required only modest cost sharing by the patient. As health care costs increased, large employers depended more on controlling spending by creating networks of providers with contracted rates. In contrast, individuals, and to a certain extent smaller employers, were unable to afford the premiums for high actuarial value plans and so the insurers heavily marketed high-deductible plans that had much more competitive premiums; so that’s what people bought.

When the Affordable Care Act was written, it was recognized that high actuarial value plans would be unaffordable unless the government subsidies were much larger than members of Congress were willing to budget. Thus the decision was made to make the benchmark plan for the insurance exchanges a low actuarial value plan (silver), made possible only by using high deductibles.

Large employers have been looking for relief from the very high costs of their employee health benefit programs. It looks like they’ve found it, now that HDHPs are becoming the new standard set by our government for the plans in the exchanges. This report from PwC shows that 12 percent of employers used HDHPs as their only option in 2012, and that may increase to 44 percent next year! That is a phenomenal shift in such a short period, and is the basis for saying that the CDHC (HDHP) camp has won the policy battle.

Not only are patients assessed a significant financial penalty for seeking health care (an average $1,230 deductible), that penalty is almost doubled if the patient obtains care out of network ($2,110 deductible) – a greater likelihood as narrower networks become more prevalent.

HDHPs have become popular for one reason only, and that is not because they make patients better shoppers. It is only because the premium to purchase the health plans is more affordable (or for self-insured employers the amount paid out in benefits is less).

There are two important trade-offs for the lower premiums. One is that people will decline to obtain appropriate health care since they will have to pay full fees until the deductible is met. A properly designed financing system should make it easier for people to obtain the care they need, not more difficult. The other is that far too many people have little or no discretionary income, and high deductibles create a financial hardship for them. The health care financing system should reduce or eliminate financial hardship, not create it.

And the out-of-network penalties? A financing system should increase health care choices for patients, not reduce them.

This boat is not going to turn around. Within two or three years, HDHPs will be the standard for employer-sponsored coverage. More people will suffer. The media knew that this change had to come, but only because they didn’t listen to us. They simply dismissed single payer because of another meme – “it isn’t feasible.”

I’m not a violent person, but the next time I hear, “skin in the …,” watch out!

Swiss support single payer

Swiss voters back single-payer health insurance

Swiss Broadcasting Corporation
swissinfo.ch, June 24, 2013

The proposal of creating a single fund for health insurance would be accepted by voters if the ballot for the initiative were held today, according to a poll commissioned by the pharmaceutical lobby group Interpharma.

About 65 per cent of the population would approve the proposal and 28 per cent would reject it, according to the first poll conducted on the issue. The result is still not very conclusive, as only about 31 per cent of people surveyed said they would actually participate in the vote.
 
In 2014 or 2015, the initiative for public health insurance will be put to a nationwide vote, which if accepted will see current providers of basic cover replaced by a single public fund. Under Swiss law, health insurance is compulsory, and residents currently may choose between offerings of about 60 companies which provide coverage.

The initiative – supported by the centre-left Social Democrats and by the Greens as well as by patient and consumer organisations – would leave only supplemental insurance in the hands of private companies.
 
The survey was conducted as part of the 2013 Health Monitor by GfS Bern research and polling institute.  The Health Monitor also showed that three out of four people in Switzerland view the health system in Switzerland positively, the highest share ever.

http://www.swissinfo.ch/eng/swiss_news/Swiss_voters_back_single-payer_health_insurance.html?cid=36250986

swissinfo.ch, April 19, 2013

According to the 2012 Health Monitor of the GfS Bern research and polling institute, 40 per cent of those questioned were in favour of a change, while 45 per cent preferred to stick with the current system.

http://www.swissinfo.ch/eng/swiss_news/Seeking_a_political_cure_for_rising_health_costs.html?cid=35544180

Comment:

By Don McCanne, M.D.

Whereas last year 40 percent of Swiss voters supported change in the health insurance system, the same poll this year shows that 65 percent support a single fund for health insurance – single payer. It is difficult to know if this support is malleable, and whether it would hold up under the political rhetoric of campaigns. A similar measure in 2007 was rejected by 70 percent of their voters.

Nevertheless, it should make us challenge those who keep telling us that we need a system just like the Swiss have – a mandate to purchase plans from a market in which about 60 insurers participate. Clearly, though they view their system positively, there is very strong support for a single public health insurance program.

CMS’s new website (https://www.healthcare.gov/) promotes the “Health Insurance Marketplace.” Sounds sort of like the Swiss system. If we’re going copy the Swiss, why don’t we skip their mistakes and go directly to single payer?

The good news on reference pricing isn't all good

CalPERS Members Had Similar to Better Outcomes at Facilities Charging Less for Hip and Knee Replacements

WellPoint
Press Release, June 23, 2013

A pilot program for the California Public Employees’ Retirement System lowered the price of members’ hip and knee replacement surgeries by 19 percent in one year while also demonstrating similar to better outcomes at lower-cost hospitals.

The analysis, conducted by HealthCore, WellPoint’s outcomes research company, will be presented at the AcademyHealth Annual Research Meeting today in Baltimore. The study is based on findings for the referenced-based purchasing design program for CalPERS members developed by CalPERS and WellPoint’s affiliated health plan in California.

As part of the CalPERS intervention program, members of the California Public Employees’ Retirement System were given a list of designated facilities that charged less than $30,000 for in-patient costs associated with each knee and hip replacement surgery.

To qualify for the list, hospitals had to have already contracted with the network of WellPoint’s California affiliated health plan, which manages a robust credentialing process.

Members were able to either choose from 46 facilities on the list that would result in them paying little to no out-of-pocket costs beyond deductible or co-insurance or pay the difference if they used another facility that charged more than $30,000.

The result was that CalPERS health plan costs dropped significantly – by 19 percent from $35,408 to $28,695, per surgical-related admission.

http://ir.wellpoint.com/phoenix.zhtml?c=130104&p=irol-newsArticle&ID=1832119&highlight=

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Hospitals cut some surgery prices after CalPERS caps reimbursements

By Chad Terhune
Los Angeles Times, June 13, 2013

When the California Public Employees’ Retirement System told its Anthem Blue Cross members it would pay only up to $30,000 for a knee or hip replacement surgery, some patients shopped around for a cheaper hospital.

What may be more surprising is that about 40 higher-priced hospitals in the state cut their surgery prices significantly to avoid losing patients. That response accounted for about 85% of the $5.5 million CalPERS saved over two years, researchers at UC Berkeley found, with the rest of the savings coming from patients opting for lower-cost hospitals.

It works essentially as a reverse deductible for employees and their families. Their employer will pay up to a certain amount for a surgery, colonoscopy or lab test and anything above that amount comes out of the patient’s pocket.

http://www.latimes.com/business/money/la-fi-mo-calpers-hospital-surgery-prices-20130623,0,6571991.story

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Effects of a Reference-Based Purchasing Design Program on Healthcare Utilization and Outcomes of Knee and Hip Replacement Surgeries

Co-authors: Sze-jung Wu, HealthCore, Inc.; Michael Belman, Anthem Blue Cross; Andrea DeVries, HealthCore, Inc.
Presenter: Chia-hsuan Li, M.S., Senior Research Analyst, Health Plan Research, HealthCore, Inc.
AcademyHealth, 2013 Annual Research Meeting, June 23-25, 2013

Research Objective:

Controlling healthcare expenditure while ensuring the delivery of high-quality care is a priority for payers. Recognizing the wide discrepancies in cost for joint replacement procedures, a large employer group in California implemented a RBPD program (Reference-Based Purchasing Design program) beginning in 2011 for total knee replacement (TKR) and total hip replacement (THR) based on a threshold facility payment of $30,000. Members were given a list of designated facilities meeting the threshold and were told that they would be responsible for cost differences above the threshold if they chose non-designated facilities. This study is aimed at evaluating the impact of the RBPD program on utilization and patients’ health outcomes, relative to a comparison population.

Study Design:

A retrospective observational study was conducted using administrative claims. We compared TKR and THR rates at RBPD-designated facilities in the intervention group to a comparison group without the RBPD program at baseline year (2010) and intervention year (2011). The change in average cost per procedure was measured. We also compared postsurgery infection, complication, and hospital readmission rates between two cohorts. The difference in utilization and health outcomes between groups were examined by ANOVA and chi-square tests. Multinomial logistic models were fitted to examine the likelihood of unfavorable health outcomes between groups adjusted for age, gender, and comorbid conditions.

Population Studied:

Adults under age 65 diagnosed with osteoarthritis and receiving a unilateral TKR or THR. The intervention cohort consisted of members of the employer group where the RBPD program was implemented (N=799), whereas the comparison cohort contained individuals not covered by the employer health plan but living in the same geographic area (N= 5,279). Each patient was followed for 30 and 90 days following the surgery or until their health plan eligibility ended.

Principal Findings:

Use of RBPD-designated facilities rose 21% among the intervention group (from 45.7% in 2010 to 55.5% in 2011, p<.01) while decreasing 24% among the comparison group (46.5% & 35.4%, p<.01). Average allowed cost (sum of plan paid and patient out-of-pocket) decreased 20.6% for TKR (p<.01) and 13% for THR (p=.01) for the entire intervention group. Patients in the intervention group using RBPD-designated facilities experienced reductions in allowed cost, so did those using non-designated facilities. The reductions were greater for non-designated facilities users (p<.01 both procedures). Out-of-pocket cost remained unchanged (p>.5 both). RBPD-designated facilities were associated with lower adjusted likelihood of 30-day general infection and complication (OR: 0.47, 95% C.I.: 0.24 – 0.94 infection; 0.68, (0.47, 0.98) complication), and a statistical insignificant adjusted rate of 90-day hospital readmission (1, (0.58,1.77) ).

Conclusion:

The RBPD program increased the use of designated facilities by 21% for the entire intervention group, achieving allowed cost reductions of 18% per procedure while out-of-pocket cost to members remained relatively flat. The quality was unaffected. Implications for Policy, Delivery or Practice: Traditional cost-sharing strategies have shown little effect on member’s choice in providers, most likely because members are insensitive to procedure costs and unaware of cost variation. RBPD addresses these barriers. This study suggests that a RBPD program can engage members to choose high-value services with lower cost but unaffected quality.

Funding Source(s): WellPoint, Inc.

AcademyHealth Podium Presentation Abstracts (page 33 for this report): http://www.academyhealth.org/files/ARM/2013/All%20Podium%20Presentations.pdf

Comment:

By Don McCanne, M.D.

Reference pricing controls spending by setting a price near the low end of market prices for a given health care service or bundled service, and then requiring the patient to pay any amount over the reference price. It is a reversal of charging the patient a deductible, in that the patient pays any excess at the top, rather than a set amount at the bottom. It is a form of defined contribution, and as such could expose the patient to potentially much higher costs above the reference price.

California Public Employees’ Retirement System (CalPERS) and WellPoint’s Anthem Blue Cross joined together in this pilot program on reference pricing. Prices for the services covered wer
e reduced – 13% for total hip replacement and and 21 percent for total knee replacement – and out-of-pocket costs did not change for patients. It worked. Facilities reduced their prices to reference levels, and patients used facilities that adhered to reference prices, and therefore they were not penalized financially.

The primary trade off appeared to be that 21 percent of patients switched to facilities that were not their initial choices. This has a potential of disrupting established, integrated care patterns, though this was not evaluated in the study. An example might be of a reference price for diagnostic imaging that is available only in an institution not associated with your usual sources of care, leading you to either disrupt your care or suffer higher out-of-pocket spending.

There also can be a problem establishing a reference price. The insurer may set a price available only in distant urban regions – a price that is not available in your community. You could have a $50,000 procedure that might cost you $1,000 under a high-deductible PPO, but have a price of $30,000 under reference pricing, leaving you stuck with a bill of $20,000 if you find that a reference-based institution is not readily accessible. Reference pricing is not a perfect solution.

There is a much more fundamental problem with reference pricing that is not so obvious. In a September 2012 Health Affairs article on reference pricing (in centers of excellence), James Robinson and Kimberly MacPherson write, “Both reference pricing and centers-of-excellence contracting can be used by Medicare Advantage health plans because they have the ability to impose differential cost-sharing requirements and exclude providers altogether from their contractual networks. However, the new benefit designs will be applicable to traditional Medicare only if the program becomes willing and able to use consumer cost sharing to channel patients to particular providers based on quality and efficiency.”

From this comment, it is obvious that reference pricing is a creation of those who believe that the consumer (patient) should be in charge of making purchasing decisions based on price. It is the obsession of the policy community with this market concept of health care purchasing that has led to the highly dysfunctional, egregiously expensive, and poorly allocated health care system that we have today.

Think about it. The traditional Medicare program has been far more effective than the private insurers at getting health care priced appropriately, and yet they say that we should abandon that approach and “use consumer cost sharing to channel patients.” That is, we should shift risk to the patients – exposing them to financial penalties should they not make perfect decisions in their health care purchasing, even as the private insurers create yet more barriers to perfectly priced health care!

Forget reference pricing. Let’s let our public administrators obtain the best value for us through global budgeting of our hospitals and negotiated rates for professional services and products, as we would have with a single payer system. A “reference price” wouldn’t make any sense in such a logical system. There would be only one price, paid by our public administrator, based on legitimate costs and fair margins.

Republicans should back a single-payer health care system

By Jack Bernard
The Augusta (Ga.) Chronicle, June 23, 2013

My party, the Republican Party, has staked out amazingly naïve positions on two of the key domestic issues facing us: immigration and health reform. These issues are intertwined.

Health Affairs, one of the most influential professional health care journals, has published a new Medicare study, conducted by Harvard and City University of New York researchers. It found that immigrants were responsible for 8 percent of Medicare expenditures – no surprise there.

What was astounding to me and many others was that nearly 15 percent of Medicare trust fund collections came from this same group of people. In other words, immigrants put in nearly twice the amount of money that was paid out to them.

In 2009 alone, the net gain to Medicare from immigrants was $13.8 billion, whereas native-born Americans had a deficit of $30.9 billion. Much of this difference can be accounted for because of low birth rates and the aging of our U.S.-born population, while immigrants are a much younger cohort. Further, immigrants cost Medicare less on health care because of a variety of reasons.

The bottom line: We need immigration to balance the books for Medicare, as is also true with Social Security. Without it, we will either have to cut benefits or dramatically raise taxes on a proportionally smaller and smaller work force.

So, at least for these programs, the fiscal side is clear. Immigration is a net plus.

What about the political side?

Many GOP strategists finally are seeing what I have said all along: In 2012, the party shot itself in both feet regarding immigration. Pandering in primaries may win you the nomination, but advocating for ridiculously impractical positions will not win the presidency. In any case, the deportation of 11 million people is something that will never happen, no matter who is president.

By opposing true immigration reform, including a path to citizenship, the uncompromising right wing of the GOP has accomplished two things. Both are long-term negatives for the party.

First, these “nativists” alienated legal immigrants and their families for generations to come. Hispanic voters are being driven to the Democrats, which will cause increased losses in key swing states, such as Texas and Georgia, over time.

Second, as U.S. Sen. Marco Rubio of Florida has correctly stated, by blocking congressional action the right-wingers are in effect continuing unrestrained immigration. Since there has been no national progress on immigration reform, including border security, the illegal problem just gets worse and worse.

Similarly, Republicans have staked out a losing long-term health care position: Just repeal the Affordable Care Act (Obamacare) and simply let competition reign. But voters are skeptical of the same old worn-out GOP slogans: Medicaid block grants, Medicare vouchers and weakened regulations.

None of these measures will significantly stop rapidly escalating systemic health care costs or control premiums. Most simply shift risk and/or expenses to the patient or the states – something voters do not like.

This is not to say that the ACA is the solution for our ills. The financial basis for universal care via private insurance is the unpopular requirement that everyone buy insurance or be taxed. It is questionable as to how many healthy young people will actually buy insurance, mandate or not. And many “red” states have not agreed to add more Medicaid patients to their roles, citing dubious fiscal issues.

Obamacare does not deal with a key root problem – the private health-insurance model itself. Family premiums already are at $15,000 per year and rising, with a greater proportion picked up by employees every year. The voter will see his/her premiums, copays and out-of-pocket costs increase dramatically as the insurance companies continue to maximize their profits under Obamacare.

Health care as a proportion of gross national product – already completely out of control – will continue to rise. The government will see greater red ink along with growing deficits, while tens of millions remain uninsured.

Richard Nixon once called Medicare “socialism,” but now it is supported by almost all Americans. Further, Medicare administrative costs are 3 percent while private insurance is more than 20 percent.

What should be proposed by the GOP to contain costs and improve access? My advice to my fellow Republicans is to employ your reason vs. your ideology.

Government health insurance is the solution, not the problem. The GOP should promote a single-payer system – Medicare for all.

The writer is a retired senior health care executive with several national for-profit firms, and was the state of Georgia’s first director of health planning. He lives in Monticello, Ga.

http://chronicle.augusta.com/opinion/opinion-columns/2013-06-23/republicans-should-back-single-payer-health-care-system

Decoding the language of health-care financing: a primer

By Dr. Dimitri Drekonja
MinnPost.com, June 21, 2013

It would be helpful if the public, and certainly medical professionals, understood the basic ways in which we finance health care.

After what seemed like a short hiatus, health-care stories are creeping back into the news, with numerous (and often contradictory) claims: The Affordable Care Act (aka  Obamacare) will stop small businesses from hiring. It is slowing the rise in health-care costs. It will destroy the American medical system. It is a huge gift to the insurance industry. It is socialized medicine. What to believe?

To start, it would help if more people could speak the arcane language of health-care financing. I recently was the attending physician at a local hospital. Since this piece is about translating the language of medicine into plain English, I should clarify that this means that medical students and residents (doctors-in-training) see and examine the patients first, then we talk about them, adjust plans as needed, and thus they learn the practice of medicine.

During these discussions, the topic of health-care financing recently came up, and I was surprised that the medical students had little understanding of how we pay for health care in the United States. They were well aware that we spend more than any other country, and that our outcomes are certainly not better because of this spending. But when asked about the differences between universal coverage, private insurance, Medicare, Medicaid, single-payer health care, socialized medicine, and Obamacare they quickly became confused.

This is not surprising — the topic is confusing, the terms often overlap, and they are frequently used incorrectly by public figures, including politicians and the media. However, it is unfortunate. We need the public to understand the language of health-care financing, since what path we ultimately choose has enormous implications for the physical and financial health of the U.S. population.

To this end, it would be helpful if the public, and certainly medical professionals, understood the basic ways in which we finance health care, and examples of each one. So, here is a primer. People more versed in health policy than I am will likely find errors (hopefully small ones) or oversimplifications, but I hope this will be offset by the fact that more casual readers will understand the difference between socialized medicine and single-payer health care, and that universal coverage can be achieved in many different ways.

Universal coverage. This is not a type of financing. Rather, it is a description, and most people agree, a goal. It means that everyone has some sort of insurance coverage to pay for health care. It can be achieved via private insurance, public insurance, charity, or some combination. People disagree about just how far the U.S. is from universal coverage, but only the most dishonest of observers would say that we have it with our current system.

Private health insurance. This comes in many flavors, and indeed is provided by many (hundreds) of companies. Some are for-profit. Our hometown UnitedHealth Group is one. Minnesota does not allow for-profit insurers to sell plans in Minnesota, so I’ll skimp on details. Suffice it to say that the name is descriptive, and reflects the fact that the primary focus of such insurers is to make money. This introduces an inherent conflict of interest (if care is denied, profits rise), and this is largely why Minnesota does not allow for-profit insurers to sell their products here.

The private health insurers we do have selling their plans in Minnesota include Blue Cross Blue Shield, HealthPartners, and many others. As nonprofits, they are supposed to return excess revenues to their policy-holders, or to invest such revenues in providing better care. These nonprofit private insurers negotiate different reimbursement rates both with care providers (local hospitals, clinics, nursing homes, etc.) and with customers (large businesses, small businesses, and individuals). This negotiation (on both ends) is why comparison shopping between plans is difficult, and entails reading multiple 90-100 page PDF’s describing each plan. If the company you work for is large and has good negotiators, you likely have a cheaper plan than the small business with 75 employees, let alone than an individual.

Public health insurance. Public insurance also comes in two main flavors: Medicare and Medicaid. Both are ways to pay for coverage — they are not government-run health care, they are government-run insurance plans that pay for health care. That care is delivered in the same facilities where people with private insurance go — next time you are in a clinic waiting room, you are likely sitting among patients with both private and public insurance. The care they get is the same. It is simply how the payment is handled that differs. Because Medicare and Medicaid cover many people, and because the government can negotiate rather well, the rates they pay are almost invariably cheaper than the rates private insurers pay.

Medicare is available to all those 65 and older (plus some others, including those with end-stage kidney disease), without restrictions based on pre-existing conditions, ability to pay, etc. In overly simple terms, Medicare part A covers hospital costs, Medicare part B covers outpatient costs, Medicare part C (Medicare+choice) is an option allowing beneficiaries to instead opt for plans provided by private insurers, and Medicare part D is a prescription drug benefit. Parts C and D were added later; thus, Medicare A and B are sometimes called “traditional Medicare.” A little-known feature of Medicare is that it also funds the majority of graduate medical education in the U.S. — i.e., the salary of the physicians-in-training.

The other main public health-insurance plan, Medicaid, is aimed at those with low-incomes, the disabled, and their children. Whereas Medicare is funded through federal payroll taxes, Medicaid is funded by a combination of federal and state dollars. Those people who have low incomes and are over 65 are “dual-eligible,” meaning they can receive benefits from both programs. Since those on Medicaid are by definition without a lot of financial resources, copayments and out-of-pocket expenses are generally smaller than those seen with Medicare, or private insurance plans.

Single-payer health care. This is something that does not exist in the U.S. For full disclosure, I think it should be, and I belong to Physicians for a National Health Program, a group that advocates for a single-payer approach. The closest example is to the north (Canada), but many others exist around the world. Under a single-payer plan, instead of negotiating with and billing several hundred nonprofit and for-profit private insurers, hospitals and doctors bill a single government-run organization, just as they do now with Medicare. The funds come from a population-based tax, again, just as with Medicare. Given the similarities, some have referred to single-payer care as “Medicare for all.”

Socialized medicine. Socialized medicine, which can occasionally be the “S word” of health-care reform, actually does exist in the U.S. In contrast to single-payer health care, where many different hospitals and providers provide care but send the bills to a single insurer, socialized medicine is government-run-and-owned health care. The U.S. example is the Veterans Affairs Administration (again, full disclosure, I am a physician at the Minneapolis VA). This means that the buildings and equipment are owned by the government, and the providers are government employees. In addition to providing health care, the VA also administers disability payments, something that needs to be taken into account when looking at what the VA spends for medical care. The British
National Healthcare System is another example of socialized medicine, among many others.

Finally, Obamacare. What is it? Grossly oversimplified, it is a plan to move toward universal coverage, primarily through an expansion of private health insurance. It expands private health insurance by several means, including: allowing young people to stay on their parents’ plans for a longer time, eliminating the ability of insurers to exclude patients with pre-existing conditions, subsidizing the cost of private insurance for those making too much for Medicaid (but not enough to afford private insurance on their own), and creating insurance exchanges that are supposed to allow for easier comparing of plans. As written, it will not reach universal coverage, and the financial implications are uncertain.

Which system will ultimately help us reach the obvious goal of universal coverage? Who knows. The current system leads to the U.S. spending twice the money of any other country, for inferior results. Obamacare will improve access to health insurance, but will not lead to universal coverage without significant changes. If costs are not decreased, it seems unavoidable that something else will have to be tried, since the alternative would be unaffordable. In my opinion, a single-payer system is the logical next thing to try. If we do, we may want to remember the words of Winston Churchill: “We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities.”

Dimitri Drekonja, MD, MS, FACP, is a staff physician, Minneapolis VA Health Care System, and an assistant professor of medicine, University of Minnesota. The views expressed are his own, and not necessarily representative of the VA, the University of Minnesota, or Physicians for a National Health Program.

http://www.minnpost.com/community-voices/2013/06/decoding-language-health-care-financing-primer

When insurance is too expensive no matter what

By Dan Gorenstein
Marketplace, American Public Media, June 21, 2013

Sunday marks 100 days until millions of Americans can start signing up for subsidized health insurance for the first time in their lives.

The whole point of the Affordable Care Act is to expand health insurance. But here’s the thing, even after the law has taken effect, about 30 million people — almost all of them U.S. citizens — still won’t be covered.

Dr. Steffie Woolhandler, who co-authored a recent report about the uninsured under the new health care law in the journal Health Affairs, explains who will be out of luck.

“The majority are white. Eighty percent are citizens. The majority are employed,” she says. Woolhandler notes most of the 30 million people would get federal money to help pay for insurance. But, she says, with salaries averaging $22,000 for most of them, that won’t be enough.

“Even if you are subsidized, you still have to pay thousands of dollars out of pocket and lots of low- and middle-income people won’t be able to do that,” she says. Woolhandler says many of these people work in industries that don’t offer insurance, such as agriculture, forestry, and the service sector. She says between premiums, co-pays and deductibles, health costs will easily run into the thousands.

“That would be hard,” says Russ, a New York-based musician who says he already has trouble paying his medical bills.

Russ has a bad heart. He says because he only brings in $30,000 a year, some months he skips his blood thinners, other months it’s the cholesterol pills.

“When you have very few alternatives, you tend to take the choice you have to take. The best of a lousy bunch,” he says.

For people like Russ, less insurance means less care. According to the Urban Institute, the uninsured get about half the care they would get if they had insurance.

What does that mean for the rest of us?

“Strictly economically, having 10 percent uninsured means that health care spending will be lower,” says economist Paul Ginsburg, who runs the Center for Studying Health System Change.

And most economists agree lowering health care costs is good for the nation’s economy. But, it might not be that simple.

“We usually want to save money through delivering care more efficiently. Not by having people who need care go without,” says Ginsburg. Ginsburg adds while 30 million uninsured people will save money, there will be costs: sicker patients.

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

You can listen to this story here: http://www.marketplace.org/topics/economy/health-care/when-insurance-too-expensive-no-matter-what

AcademyHealth's ill-judged choice of the 2013 Article-Of-The-Year

From: Health Affairs <healthaff@projecthope.org>
Date: Thu, Jun 20, 2013 at 4:37 PM
Subject: Health Affairs Wins AcademyHealth’s ‘Article-of-the-Year’ Award

AcademyHealth has chosen a Health Affairs article as its 2013 Article-Of-The-Year!

The ‘Alternative Quality Contract,’ Based On A Global Budget, Lowered Medical Spending And Improved Quality
By Zirui Song, Dana Gelb Safran, Bruce E. Landon, Mary Beth Landrum, Yulei He, Robert E. Mechanic, Matthew P. Day and Michael E. Chernew
Web First July 11, 2012; print August 2012

****

The ‘Alternative Quality Contract,’ Based On A Global Budget, Lowered Medical Spending And Improved Quality

By Zirui Song, Dana Gelb Safran, Bruce E. Landon, Mary Beth Landrum, Yulei He, Robert E. Mechanic, Matthew P. Day and Michael E. Chernew
Health Affairs, August 2012

Abstract

Seven provider organizations in Massachusetts entered the Blue Cross Blue Shield Alternative Quality Contract in 2009, followed by four more organizations in 2010. This contract, based on a global budget and pay-for-performance for achieving certain quality benchmarks, places providers at risk for excessive spending and rewards them for quality, similar to the new Pioneer Accountable Care Organizations in Medicare. We analyzed changes in spending and quality associated with the Alternative Quality Contract and found that the rate of increase in spending slowed compared to control groups, more so in the second year than in the first. Overall, participation in the contract over two years led to savings of 2.8 percent (1.9 percent in year 1 and 3.3 percent in year 2) compared to spending in nonparticipating groups. Savings were accounted for by lower prices achieved through shifting procedures, imaging, and tests to facilities with lower fees, as well as reduced utilization among some groups. Quality of care also improved compared to control organizations, with chronic care management, adult preventive care, and pediatric care within the contracting groups improving more in year 2 than in year 1. These results suggest that global budgets with pay-for-performance can begin to slow underlying growth in medical spending while improving quality of care.

From the Discussion

In year 1, total Blue Cross Blue Shield payouts to groups in the contract probably exceeded savings under the global budget. In year 2, savings achieved by the intervention group were generally larger than the surplus payments received. However, total payments to groups from Blue Cross Blue Shield of Massachusetts, including surplus sharing, quality bonuses, and infrastructure support, probably exceeded the savings achieved by most groups that year. This outcome reflects the design of the contract, which set targets based on actuarial projections to save money over its five-year duration, accounting for anticipated quality bonuses and other payments.

In addition, health care spending growth in Massachusetts slowed in this period as a result of general economic factors.

This model is informative for the broader movement toward accountable care organizations.

http://content.healthaffairs.org/content/31/8/1885.abstract

Published response:

Misleading Title And Abstract

By Kip Sullivan

In this article about the effect of the Alternative Quality Contract (AQC) administered by Blue Cross Blue Shield of Massachusetts (BCBS), the authors reported savings in what they variously referred to as “medical spending” and just “spending,” but they also reported that non-medical payments to providers (“surplus sharing, quality bonuses, and infrastructure support”) “probably” exceeded the savings in medical spending. They concluded: “Our findings do not imply that overall spending fell” (p. 1891).

In an earlier paper published in the New England Journal of Medicine, these authors offered the identical caveat.

Despite the authors’ warnings, Health Affairs’ editors permitted the phrase “lowered medical spending” to appear in the title of the paper, they permitted the unadorned word “spending” to appear numerous times in the abstract and text, and they failed to include in the title or the abstract the warning that “overall spending” (medical plus nonmedical costs) probably rose. This combination of errors was extremely misleading.

Health Affairs’ editors compounded these errors by permitting authors of two papers published in the next edition (the September edition) to make misleading statements about Song and colleagues’ article. Citing them, Markovich asserted that the AQC “slowed the…growth in medical spending” (p. 1974), and Sood and Higgins claimed the AQC has “demonstrated…a slowdown in the growth rate of health care spending” (p. 2043). Neither paper warned readers that medical spending is not synonymous with total spending, and that BCBS’s total spending may have gone up.

In a letter to the editor published in the November edition of Health Affairs, Rachel Nardin et al. criticized Song et al. for inserting “lowered medical spending” into the title when in fact total spending probably rose. In their reply, Song and Chernew agreed that “total payments are important” and that they probably rose. But rather than simply conceding that their title and abstract were misleading and that a few simple edits would have fixed the problem, Song and Chernew presented an illogical justification for confusing readers about the difference between medical and total spending. They argued that the need to know how providers respond to the AQC somehow justifies conflating medical with total spending. There is no justification for such an easily avoidable error.

Finally, I note that Song et al. made no effort to measure the cost to the providers of participating in the AQC, or if they did, they did not inform their readers of the outcome of this effort.

The three Health Affairs articles I have cited here are not isolated examples of scholars and editors downplaying or totally ignoring administrative or intervention costs and blurring the distinction between medical and total spending. This problem has plagued the health policy literature for four decades. It reached epidemic proportions in the 1990s.

There is an illogical but widespread assumption within the health policy community that if an intervention, such as the AQC, lowers medical spending, it must also have lowered total spending. But interventions designed to change provider behavior, be they HMOs, pay-for-performance schemes, electronic medical records, utilization review, or “medical homes,” are not free. They create new costs for both insurers and providers. Ignoring these costs, or obscuring them by celebrating reductions in medical spending and saying little or nothing about increases in total spending, should be no more acceptable than ignoring the side effects of drugs and procedures.

http://content.healthaffairs.org/content/31/8/1885.full/reply#healthaff_el_475857

****

Medical Spending And Global Budgets

By Rachel Nardin, David Himmelstein and Steffie Woolhandler
Health Affairs, November 2012

The title of the article by Zirui Song and colleagues (Aug 2012) claims that “The ‘Alternative Quality Contract,’ Based on a Global Budget, Lowered Medical Spending and Improved Quality.” But the Alternative Quality Contract (AQC) only lowered spending if you accept the authors’ idiosyncratic definition of the term medical spending.

In calculating medical spending, the authors exclude three categories of payments that Blue Cross Blue Shield of Massachusetts made to AQC providers: “surplus payments” to providers who kept fee-for-service billing below targets; bonuses for meeting quality goals; and special p
ayments to support providers’ infrastructure to implement the AQC. The authors note, in passing, that these extra payments probably exceeded the “medical” savings. Unfortunately, they report no actual figures for the extra payments (although these figures were presumably available to the two coauthors who are executives at Blue Cross Blue Shield). In other words, Blue Cross Blue Shield’s total costs under the AQC went up by some undisclosed amount, not down.

Global budget payment strategies are currently being promoted as a way to lower total health care costs. The fact that the AQC failed to do this was probably overlooked by many readers and was clearly lost in media reports of these findings and hence in the policy debate.

The case for global budget payment strategies such as the AQC remains unproven.

http://content.healthaffairs.org/content/31/11/2592.3.full

Comment:

By Don McCanne, M.D.

The health policy community has hung its hat on accountable care organizations as being the be-all and end-all for reducing spending and improving quality in health care. Little does it matter that there is a dearth of objective evidence for this concept; they have continued to push it anyway in their support for the Affordable Care Act.

The ultimate gall of the policy community is shown in their selection of this article by Song et al, trumpeting the savings of this Massachusetts Blue Cross Blue Shield Alternative Quality Contract, when, buried in the article, we learn that the savings were burnt up by “surplus sharing, quality bonuses, and infrastructure support.”

Although the program costs, including additional administration, wiped out the medical savings, it is important to look at what the actual medical savings were. These savings were primarily due to “lower prices achieved through shifting procedures, imaging, and tests to facilities with lower fees.” There was virtually no accountable care magic here. They merely extracted better prices from some of the providers. At that, it was only 2.8 percent, a negligible amount when considering how much more effective publicly administered pricing is than pricing through private insurers. But, again, the all important bottom line is that this savings was lost through the non-medical costs of the program.

This AcademyHealth award should serve as a proxy for the compromised integrity that the policy community has shown in their efforts to push the highly flawed Affordable Care Act.

These authors, along with the Health Affairs editors who approved the misleading title, and the committee members who selected this article for the award are no doubt good people, but they did not have the courage to stand up and say, “This conclusion is (expletive deleted)!”

We know what they should have said: “Although we have shown that the promise of the accountable care organization is not fulfilled, nevertheless we do know how to control spending while improving quality and that is through the enactment of a single payer national health program.” But, no, they didn’t have the courage.

Single-Payer Healthcare May Go Before Voters in 2016

A previous ballot measure to create a single-payer system failed in 2002, but activists say they'd try to head that off with a better education campaign

By Christen McCurdy
The Lund Report (Portland, Ore.), June 20, 2013

Supporters of a single-payer healthcare system may decide to put the issue before voters in 2016, depending on what members of the statewide coalition who were behind this year’s failed single-payer bill in the Oregon Legislature decide at next week’s annual meeting.

Peter Shapiro, who serves as organizational development co-chair for Health Care for All Oregon – which will bring members from all over the state to Eugene to discuss the successes and failures of this legislative session, as well as to plan for the future – intends to go over a “fairly detailed political agenda” including some brainstorming about how to proceed in the coming year and beyond.

The group is likely to lobby for another single-payer bill next session, like the one introduced by Rep. Michael Dembrow (D-Portland) this year. That bill failed to make it out of committee due to an impasse over the state budget, which activists said was not surprising.

Earlier this week, a bill that would require the Oregon Health Authority to contract with a third party to study the best way to finance healthcare in the state passed out of the Ways and Means Committee. Health Care for All Oregon wasn’t as active in lobbying for the bill, but activists hope it will help their cause.

“It’s a bipartisan bill, and not just a single payer thing,” because it would require investigation of other systems as well,” Shapiro said.

Still, organizers have been enthusiastic about the bill, because it has the potential to be budget-neutral – the Oregon Health Authority may be able to procure private foundation funding rather than tax dollars to conduct the research – and the bill has had broad support so far.

As for the continued push for single-payer, Shapiro said he has mixed feelings about the possibility of a ballot initiative campaign, though that’s likely to come up in next week’s discussion.

A previous ballot measure – Measure 23 – went before Oregon voters in 2002 and failed, an outcome Shapiro attributed to a “flood of insurance money coming from around the country” which funded an advertising campaign that caused the measure’s majority support to tank to 23 percent.

“We want to be sure, before we go to the voters, that people know what kind of arguments to expect,” Shapiro said.

Still, Shapiro has mixed feelings about the idea of a ballot initiative.

“The problem I have with the initiative campaign, aside from the fact that they’re expensive and time consuming, is that once it’s passed, it’s written in stone” and can’t be amended, he said.

Bill Whitaker, Health Care for All Oregon’s board treasurer, who’s organized a chapter of the organization in La Grande that has 60 people on its roster — 20 to 25 of whom regularly participate in meetings or other activities — said he hopes the study bill passes because he believes it will show – as similar studies have in other states – that a single-payer system is “more fiscally conservative” than other ways of paying for healthcare.

“What we’ve found is that when we ask people if they think that everyone should have access to affordable healthcare, we find most people – regardless of their political persuasion – think that makes sense,” Whitaker said of his efforts to organize a chapter in Union County, where the majority of voters with a party affiliation are registered as Republican. “I think what ultimately will happen is that Republicans are going to realize that the only fiscally responsible way we can provide universal coverage is to go to a universal payer system,” he added.

“Some of the Republican criticisms of the Affordable Care Act are correct. It’s expensive,” Shapiro said, and will still leave nearly 300,000 Oregonians uninsured once it’s fully implemented. Shapiro argued that neither the Affordable Care Act nor the state’s healthcare transformation efforts will adequately address the needs of certain workers, including undocumented immigrants, as well as some workers in the building trades.

“A lot of union health plans could be seriously undermined by the exchanges,” Shapiro said, such as the Taft-Hartley plans offered to union construction workers. “Apart from the practical matter of their ending up in the emergency room which costs more, it’s fundamentally immoral.”

http://www.thelundreport.org/resource/single_payer_healthcare_may_go_before_voters_in_2016

Canadians pay taxes for universal health care, and now they’re richer than us

By Philip Caper, M.D.
Bangor Daily News, June 20, 2013

I’ve been watching with some dismay the wrestling match going on between the governor and the Maine Legislature over the opportunity offered by the federal Affordable Care Act to expand our MaineCare program.

Proponents of expansion of MaineCare make their argument on both moral and economic grounds. Such expansion would provide health care coverage for almost 70,000 low-income Mainers who will otherwise receive no assistance from the ACA. More coverage would result in better management of our burgeoning level of chronic illness as our population ages. That will drive down the use of expensive crisis-oriented emergency services as well as the illness-inducing stress produced by out-of-control health care bills in low-income patients already afflicted by poor health.

Since 100 percent of the costs of the proposed expansion would be borne by the federal government for at least the first three years of the program (gradually reduced to 90 percent by 2020), MaineCare expansion under the ACA would also provide significant economic benefits to Maine in the form of federal dollars and the jobs they will create in every county in the state. According to a new study released last week by the Maine Center for Economic Policy and Maine Equal Justice Partners, if MaineCare were expanded under the terms of the ACA it would stimulate more than $350 million in economic activity, lead to the creation of 3,100 new jobs, and result in the generation of up to $18 million in state and local taxes.

Since the Legislature has now refused to override the governor’s veto of the expansion, those federal dollars (including those originating from Maine taxpayers) and their associated benefits will go to other states that accept the deal.

Some opponents of expansion claim that they don’t trust the feds to keep their word (even though it’s now written into law) and that we won’t be able to get rid of the extra costs should they renege on their commitment. Others are simply philosophically opposed to bigger government. It seems as though some are opposing MaineCare expansion simply out of spite.

This fight could be avoided, and is just a symptom of a more fundamental underlying disease — the way we pay for health care in the U.S. Our insurance-based system requires that we slice and dice our population into “risk categories.”

This phenomenon was made worse by PL 90, the “pro-competition” health insurance reform law passed by the Republican legislature in 2011. Now we’re seeing older, rural Mainers pitted against younger, urban ones. This type of discrimination is the very basis of the insurance business.

Many conservatives still characterize Medicaid as “welfare,” and many think of it as such. Presumably other types of health care coverage have been “earned” (think veterans and the military, highly paid executives, union members and congressional staff). We resent our tax dollars going to “freeloaders.” Until the slicing and dicing is ended, the finger pointing, blame shifting and their attendant political wars will continue.

In sharp contrast, our Canadian neighbors feel much differently. Asked if they resent their tax dollars being spent to provide health care to those who can’t afford it on their own, they say they can’t think of a better way to spend them. “Isn’t that what democracy is all about?” I’ve heard Canadian physicians say, “Our universal health care is the highest expression of Canadians caring for each other.”

Here in Maine, the response tends to be much different. Canadians seem to think health care is a human right. We don’t — yet.

If everybody was in the same health care system in the U.S., as is the norm in most wealthy nations, we would be having a much different and more civil conversation than what we are now witnessing in Augusta. No other wealthy country relies on the exorbitantly expensive and divisive practice of insurance underwriting to finance their health care system. They finance their publicly administered systems through broad-based taxes or a simplified system of tax-like, highly regulated premiums. Participation is mandatory and universal.

Taxation gets a bad rap in the U.S. and consequently is politically radioactive. Yet it is the most efficient, most enforceable and fairest way to finance a universal health care system.

In her excellent New Yorker essay called “Tax Time,” Jill LePore points out that taxes are what we pay for civilized society, for modernity and for prosperity. Taxes insure domestic tranquility, provide for the common defense, promote the general welfare, and take some of the edge off of extreme poverty. Taxes protect property and the environment, make business possible and pay for roads, schools, bridges, police, teachers, doctors, nursing homes and medicine.

Oliver Wendell Holmes once said, “Taxes are what we pay for a civilized society.” The wealthy pay more because they have benefited more.

Canada’s tax-financed health care system covers everybody, gets better results, costs about two-thirds of what ours does and is far more popular than ours with both their public and their politicians. There is no opposition to it in the Canadian Parliament.

What’s not to like about that?

Oh yes, and the average Canadian is now wealthier than the average American. Their far more efficient and effective tax-based health care system is part of the reason.

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

http://bangordailynews.com/2013/06/20/opinion/canadians-pay-taxes-for-universal-health-care-and-now-theyre-richer-than-us/print/

Redesigning Medicare cost sharing

Restructuring Medicare

Health Affairs, Health Policy Briefs, June 20, 2013

To reduce federal spending, advance entitlement reform, and simplify benefits, policy makers have proposed redesigning Medicare cost sharing.

What’s The Issue?

Some policy makers have recommended redesigning the program to protect beneficiaries from high out-of-pocket spending, better align incentives to reduce overuse of services, and potentially lower costs for the federal government. Opponents of such reform efforts fear that, in trying to reduce federal spending, reforms will shift costs onto beneficiaries and could make them less likely to seek needed care.

What’s The Debate?

Supporters of redesign believe that cost sharing under a redesigned Medicare program will be more predictable and simpler for beneficiaries to understand and better align incentives to reduce any overuse of services. Others fear that, if designed to reduce federal spending, restructuring the benefit design would likely shift costs onto many Medicare beneficiaries. Critics note that Medicare beneficiaries already spend three times as much of their income on health care as do people under age 65. Critics believe most beneficiaries cannot afford to pay more for their health care and are particularly concerned about proposals that include even higher deductibles or out-of-pocket caps.

Reforms of supplemental coverage, particularly efforts to limit first-dollar coverage, are also controversial. Opponents particularly question the wisdom of Medigap reforms that would likely reduce beneficiaries’ use of both necessary as well as unnecessary services.

The National Association of Insurance Commissioners (NAIC) recently recommended that the Department of Health and Human Services not add cost sharing to Medigap plans. NAIC noted that supplemental plans have little ability to change what care Medicare beneficiaries seek as well as how effective it is: The Medicare program determines what services are covered or not covered, and physicians guide individual beneficiaries on what particular care they need. NAIC expects that beneficiaries are unlikely to disagree with physicians about whether specific care is necessary, regardless of financial incentives.

What’s Next?

Medicare redesign remains a topic of interest on Capitol Hill. The House Ways and Means and Energy and Commerce Health Subcommittees held hearings on this subject on February 26 and April 11, respectively. Ways and Means Subcommittee Chair Kevin Brady (R-TX) indicated that he expected to hold more hearings on the future of Medicare and hoped to forge a bipartisan approach to reforming the program.

http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=95

Comment:

By Don McCanne, M.D.

The topic of “entitlement reform” doesn’t go away. Regarding Medicare, virtually all proposals under current consideration include mechanisms of shifting more costs onto the beneficiaries. As this policy brief states, “Medicare beneficiaries already spend three times as much of their income on health care as do people under age 65.” We cannot place this additional burden on those who need health care the most.

The National Association of Insurance Commissioners agrees that cost sharing should not be added to Medigap plans, for the reasons mentioned above. Why should only those with Medigap plans be protected? The Medigap benefits need to be folded into the traditional Medicare program so that all can benefit by having financial barriers to care removed.

Sadly, the political momentum is moving in the opposite direction – “saving” Medicare by making it less affordable and therefore less accessible for those who need it. Do we simply sit back and watch it happen? If so, “Improved Medicare for All” will continue to wither as a health care justice goal for the nation.