PNHP

Lower wage employees have greater out-of-pocket expenses

Lower wage employees have greater out-of-pocket expenses

Health Benefits In 2012: Moderate Premium Increases For Employer-Sponsored Plans; Young Adults Gained Coverage Under ACA

By Gary Claxton, Matthew Rae, Nirmita Panchal, Anthony Damico, Heidi Whitmore, Kevin Kenward and Awo Osei-Anto
Health Affairs, September 2012 (online)
Health care premiums rose moderately for single and family employer-sponsored coverage this year, the 2012 annual Kaiser Family Foundation/Health Research and Educational Trust (HRET) Survey of Employer Health Benefits found.
In 2012 the average annual premium cost was $5,615 for single health coverage and $15,745 for family coverage. The average premiums were about 3 percent higher for single coverage and 4 percent higher for family coverage than in 2011. During the same period, general inflation was 2.3 percent, and wages rose by 1.7 percent.
There continue to be important differences between the health benefits offered by small and large firms. Workers at small firms (those with 3–199 workers) face higher cost sharing, including higher copayments for office visits and higher general annual deductibles for single coverage. These workers are also responsible for a larger premium contribution for family coverage than are workers at large firms (those with 200 or more workers).
Compared to workers in large firms, workers in small firms have a slightly lower average percentage contribution for single coverage but a far higher average percentage contribution for family coverage.
Workers in firms with a large share of lower-wage workers face higher contributions for family coverage than workers in firms with a small share of lower-wage workers.
The enrollment distribution varies by employer size, with preferred provider organizations being relatively more popular among large firms, and point-of-service plans and high-deductible plans with a savings option being relatively more popular among small firms.
Looking across all plan types, 49 percent of workers in small firms and 26 percent of workers in large firms are in a plan with a general annual deductible of at least $1,000.
The largest firms are much more likely than the smallest firms to offer health benefits: Virtually all firms with more than 5,000 workers offer benefits to at least some of their employees, whereas only half of firms with 3–9 workers do so. Firms with a smaller percentage of lower-income workers are more likely to offer coverage than firms with a larger percentage of those workers.
An employer-sponsored health plan can be grandfathered if it provided coverage to a worker when the act became law and if the plan does not make major changes that reduce benefits or increase employee costs.
From the Conclusion
There are important differences between the health plans being offered at small firms and those offered at large firms. Although the average family premium is lower at small firms than at large firms, workers at small firms are often responsible for paying a larger share of the premium than workers in large firms. Also, workers at small firms typically face higher cost sharing and out-of-pocket maximums—which means that in addition to higher premium contributions, they are also left with a higher financial burden when using services.
http://content.healthaffairs.org/content/early/2012/09/07/hlthaff.2012.0708.abstract

The Affordable Care Act was designed to perpetuate as much as possible enrollment in employer-sponsored plans. This study demonstrates that lower-income workers face greater out-of-pocket costs through a higher share of premiums and through greater deductibles and other cost sharing, especially if they are employed by a small firm. Private employer-sponsored plans do not serve well the needs of workers with lower incomes.
An improved Medicare for everyone would resolve these differences.

How Paul Ryan enslaves Friedrich Hayek’s ‘The Road to Serfdom’

The Republican VP nominee claims Hayek as hero. Did he miss the libertarian economist’s advocacy of universal health care?

By Bernard Harcourt
The Guardian (U.K.), Sept. 12, 2012

“Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong.”

Surprisingly, those are the words of Friedrich Hayek, straight out of “The Road to Serfdom.” And I’m not pulling them out of context: Hayek firmly believed that the government should organize comprehensive systems of social insurance, including health care; should protect citizens against poverty and should ensure, for everyone, “the certainty of a given minimum of sustenance for all.”

With vice-presidential candidate Paul Ryan claiming that his ideas are inspired by Hayek and even handing out copies of “The Road to Serfdom” “to bring new staffers up to speed” – following the earlier highjacking of Hayek by Glenn Beck and Rush Limbaugh – it’s time for some intellectual honesty.

Others have usefully begun to discuss the tension between Paul Ryan’s politics and Hayek’s thought, as well as the internal tensions between Hayek and Ryan’s other guru, Ayn Rand. But here, for a moment, let’s go back to the primary text, open our University of Chicago Press definitive edition of “The Road to Serfdom” and honestly read it in relation to the American health care debate.

By way of background, Hayek was adamant that the central economic function of government is to organize and administer markets in such a way as to promote and protect competition. His central focus was on the neutrality of government rules – or what he called (on page 117), “the Rule of Law, in the sense of the rule of formal law, the absence of legal privileges of particular people designated by authority” – not the elimination of government rules. 

“The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts, not an argument for leaving things just as they are.” (p. 85) 

Hayek emphasized that it is a pure and simple – and highly misleading – mischaracterization of his own thought, and of liberal economic theory, to suggest that government should do nothing. “In no system that could be rationally defended would the state just do nothing,” he stressed in “The Road to Serfdom” (p. 88).

In this sense, Hayek firmly believed that the notion of a “free market” is an illusion:

“The question whether the state should or should not ‘act’ or ‘interfere’ poses an altogether false alternative, and the term ‘laissez faire’ is a highly ambiguous and misleading description of the principles on which a liberal policy is based. Of course, every state must act and every action of the state interferes with something or other.” (p. 118) 

The key question for Hayek was whether the government rules are unbiased. Not that there be no rules, but that they be predictable and neutral – that they not favor the elites. So, for instance: 

“[W]ith respect to most of the general and permanent rules which the state may establish with regard to production, such as building regulations or factory laws: these may be wise or unwise in the particular instance, but they do not conflict with liberal principles so long as they are intended to be permanent and are not used to favor or harm particular people.” (p. 118)

Hayek’s general theory of government was complex, and I am by no means a defender or a disciple. Personally, I believe that Hayek irrationally clung to a notion of natural order – what he called “spontaneous order” – that blinded him to the humanly-constructed nature of the wealth distributions that occur under conditions that he called “competitive.” As a result, Hayek himself fell in the cold war trap, instead of working out the full implications of his own economic theory. Hayek made naturalistic assumptions in the economic realm – about the naturalness of skill and talent, and about natural order – that belong in churches and temples, not in political economy.

But one thing is clear: as applied to the more specific issue of health care, Hayek favored a robust notion of security that included “security against severe physical privation” and “the certainty of a given minimum of sustenance for all.” (p. 147) Hayek was adamant about this. “There is no reason why in a society which has reached the general level of wealth which ours has attained,” Hayek wrote, on the next page. “[This] kind of security should not be guaranteed to all without endangering general freedom.” He continued, “there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.” And for Hayek, this extended to health care: 

“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

Hayek recognized that the provision of health care is complex and that we may disagree as to the exact structure of the assistance necessary:

“But there is no incompatibility in principle between the state’s providing greater security in this way and the preservation of individual freedom.” (p. 148) 

Hayek did not subscribe, in his own words, to a “dogmatic laissez faire attitude” (p. 85). He believed in rules “to limit working hours or to require certain sanitary arrangements”, and believed they were “fully compatible with the preservation of competition.” (p. 86) He added on the next page: 

“Nor is the preservation of competition incompatible with an extensive system of social services – so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields.” 

I could go on, but I sense you’ve gotten my point by now. It’s important to read a thinker like Friedrich Hayek closely and honestly – never to idolize, nor to simplify and certainly never to highjack. Equally important, I believe, is to keep a critical perspective, to identify their hidden assumptions, to challenge them when they take a leap of faith. There would be a lot more to say about that and much to contest in Hayek – but it would have to start, at a minimum, from an honest and close reading. 

For now, I propose that we close with another interesting passage:

“Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.” (p. 148)

I hope that staffers from both presidential campaigns will ponder those words. It would actually militate in favor of more universal health care than the Affordable Care Act now provides.

http://m.guardian.co.uk/commentisfree/2012/sep/12/paul-ryan-enslaves-friedrich-hayek-road-serfdom?cat=commentisfree&type=article

AHIP asks for further reduction of minimum benefits

Hearing: Implementation of Health Insurance Exchanges and Related Provisions

Testimony by Daniel T. Durham, Executive Vice President, Policy and Regulatory Affairs, America’s Health Insurance Plans (AHIP)
House Ways and Means Committee, Subcommittee on Health, September 12, 2012

Minimum Coverage Requirements 
 
Beginning in 2014, the ACA will require health plans to provide coverage for an essential health benefits (EHB) package covering a broad range of mandated benefits, some of which are not typically included in individual and small group policies today. The ACA further requires that coverage sold through the exchanges must be at one of four actuarial value levels: 60% (bronze); 70% (silver); 80% (gold); and 90% (platinum). As a result of these provisions, millions of people may be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have.
 
We believe that the EHB package must be affordable for families and small businesses and that affordability should be the cornerstone of consideration in defining the EHB package. The nonpartisan Institute of Medicine – in its recommendations to HHS – underscored the need to ensure affordability in defining the EHB standard and cautioned that “if cost is not taken into account, the EHB package becomes increasingly expensive and, individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA – enabling people to purchase health insurance, and covering more of the population, will not be met.”

The imposition of broader benefit packages than what consumers and small businesses are purchasing today will force consumers to “buy up” coverage that they may not want or need. In recent months, many state departments of insurance and state exchange boards have requested formal actuarial and economic forecasts of the impact of the new insurance reforms on their state. These independent studies have found that several provisions, including the EHB and actuarial value requirements, will result in higher premiums.

Recognizing that these ACA provisions will have a major impact on the cost of coverage, we believe that the important goals of the EHB package can be met if HHS and the states place a high priority on offering affordable coverage options to consumers. In addition, consideration should be given to lowering the minimum actuarial value for coverage sold in the exchanges to ensure the availability of affordable coverage options and to allow smoother transitions to the new benefits packages.

http://waysandmeans.house.gov/uploadedfiles/durham_testimony_final_hl912.pdf

Comment: 

By Don McCanne, MD

As the Affordable Care Act was being drafted, many of us in the policy community were very disappointed with the decision to include in the state insurance exchanges low actuarial value plans, as low as 60 percent (the plan pays 60 percent of covered costs and the patient pays the other 40 percent plus 100 percent of all services and products not covered). Even with the subsidies, the financial barriers to care will be too great for many patients. Now AHIP – the all-powerful health insurance lobby organization – is asking Congress to lower even further the minimum required benefits and the actuarial values of the plans.

The reason is obvious. They explicitly state that “affordability should be the cornerstone of consideration,” but they are not referring to affordability of health care, rather they are referring to the affordability of their own private health insurance plans. They want their premiums to be low enough for middle-income Americans to be able to purchase their plans. They remain silent on the fact that reducing minimum benefits and reducing actuarial values of the plans will shift large portions of the costs to those who need care. (Again, the cost sharing subsidies are not adequate for covered benefits, and the patient is responsible for 100 percent of the costs of excluded benefits which would increase with this proposal.)

The private insurance industry got virtually everything that they asked for when the bill was written. Now they are coming along with a pitch that appeals to members of both sides of the aisle – we should make insurance affordable by allowing individuals to “buy only the insurance you need.” For people who are healthy on December 31, 2013, can they really feel secure with a low actuarial value, minimal benefit plan that begins on January 1, 2014, when they have absolutely no idea what health problems they may face throughout 2014 and into the future? Of course not, though the high premiums of plans with adequate coverage may serve as enough of a deterrent that they would want to or may even have to take the risk that they will remain healthy throughout the year – a safe bet for the insurers but a big gamble for the patient. With time, it becomes even more treacherous for individuals to bet that they will remain healthy forever.

It is particularly appalling when they say that the principal reason for the Affordable Care act was to enable people to purchase health insurance. Some of us thought that the principal reason should have been to remove financial barriers to essential health care for everyone.

Really, haven’t we had enough of Congress and the Obama administration supporting the private insurance industry? How about demanding support for America’s patients instead? Throw out the insurers and enact an improved Medicare for all. We just might have to throw out the politicians to get there.

GOP and Medicare: Moving quickly, but in the wrong direction

By Jack Bernard
Ledger-Enquirer (Columbus, Ga.), Sept. 8, 2012

Rep. Paul Ryan (and, by extension, Mitt Romney) wants to start the process of getting the government out of our health care by going to a voucher program for Medicare. The problem is that the American people are clearly not with him or the GOP — my party — in this crusade.

August surveys by NBC/Wall Street Journal and the Pew Research Center confirm this fact. Pew finds that of the nearly three-fourths of Americans who have heard about the Ryan voucher plan, only 34 percent favor it while 49 percent oppose it. The NBC/WSJ survey finds that only 37 percent of the public believes Medicare needs a complete or major overhaul. When asked about the Ryan voucher concept, only 15 percent think it is a good idea, while 30 percent think it is bad. When asked do they favor Obama’s position against or Romney’s position for vouchers, 50 percent side with Obama as opposed to only 34 percent with Romney.

The response of the GOP to these polls has been to confuse the issue by accusing Obama of cutting $700 billion out of Medicare to fund Obamacare … which, while true, is very misleading. The Democrats have bumbled around, responding poorly to a surprisingly effective, although purposefully vague, Republican Medicare offensive.

Being disingenuous will work for a while for my fellow Republicans, but eventually the Democrats will figure out how to better explain the substantial impact of the voucher proposal on the lives of the voters. The GOP will then lose this battle.

Americans will understand that making Medicare a voucher program is simply a budgetary maneuver proposed by a Washington wonk (Ryan) to shift the constantly increasing cost of health care from one payer (the federal government/Medicare) to another payer (the patient).

It does nothing to make the health care delivery system more efficient or effective, unless you buy into the dubious argument that an individual patient has more power to correct provider behavior than does the government through control of the payment mechanism.

In any case, there is currently a private alternative to traditional Medicare. It is called Medicare Advantage. When it was proposed by Republicans and approved years ago, it was supposed to be the way to gradually get the government out of Medicare and save the government a lot of money. But it did not work; it costs the government 10 percent more than traditional Medicare. It just channels healthier seniors into private HMOs and PPOs, while costing the government (and taxpayers) billions.

By the way, this is a large part of the Obama “cut” in Medicare, bringing seniors out of Advantage and back into traditional Medicare, projected to save $117 billion by 2019.

There is an easier and much more effective way to save Medicare: Expand it to cover everyone, and not just seniors. Right now, Medicare covers only those over 65, the sickest segment of the population and the group which uses the most resources. By expanding it to cover all age groups, the risk is spread, causing average costs and premiums to decrease.

Is this a radical idea? Not really; many of the world’s democracies already have a single-payer system. Canada is just one example. Canadian costs per capita are much lower than ours, and their health care indicators (morbidity and mortality) are much better. As opposed to what you may have heard, providers are well paid and the public likes the program very much.

A full explanation of Medicare For All, including funding, can be found at the website www.pnhp.org, sponsored by the respected group Physicians For A National Health Program (PNHP).

I am a Republican fiscal conservative, and setting a global budget under Medicare for All makes sense to me. So does leveraging the power of the federal government to determine appropriate fee schedules to keep down costs.

From a societal standpoint, we are paying for many of the uninsured right now through our expensive ERs. The problem is that they are not served until they are very sick and require expensive care relative to what could have been given them earlier. A Grady Hospital physician recently told me of one example where an uninsured patient could not afford meds and went blind. After that happened, he was then covered by Medicare … at a much greater financial cost to the system, not to mention the irreparable cost to that person.

If the GOP really wants to do something innovative to control the cost of health care, improve quality and guarantee access, it must abandon ill-conceived private market solutions like vouchers. It should do what much of the rest of the world has already done and advocate a single-payer approach.

Jack Bernard, a Jasper County commissioner and former chairman of the Jasper County Republican Party, is a retired executive of for-profit health care services. He is now a private consultant for small business.

http://www.ledger-enquirer.com/2012/09/08/2192546/gop-and-medicare.html

A Single-Payer System Would Be Far More Efficient

By Robert Reich
Wall Street Pit, Sept. 13, 2012

Employer outlays for workers’ health insurance slowed from a 9 percent jump last year to less than half that — 4 percent — this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it’s good news but blame Obamacare for the fact that employer health-care costs continue to rise faster than inflation. “The new mandates contained in the health care law are significantly increasing the cost of insurance” says Wyoming senator Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations — whose profits continue to be robust despite the anemic recovery — and another loss for American workers.

Those profits aren’t due to a surge in sales. Exports are down (Europeans, Japanese, and Chinese are all pulling in their belts) and American consumers don’t have the dough to buy more.

The profits are largely due to lower corporate costs, especially when it comes to their payrolls. Employer-provided health and pension contributions are shrinking, and the real median wage continues to drop.

High unemployment has given companies more bargaining leverage over their workers, who have to accept lower real pay and benefits or risk losing their jobs.

When it comes to health insurance, employees increasingly have to choose between health-insurance policies with sky-high premiums or with sky-high co-payments and deductibles. And since they can’t afford the former they’re opting for the big co-payments and deductibles – or no insurance at all.

The result is fewer visits to the doctor and less use of other medical services.

This is a new trend, and it comes despite the Affordable Care Act (which hasn’t been fully phased in). And it wouldn’t be worrisome if we were seeing too much of doctors before, and using up medical resources we didn’t need.

But it’s worrisome if it means less preventive care, or health problems going untreated until they become chronic illnesses or crises.

Healthcare costs do have to be better controlled. They now claim 18 percent of our entire economy. But the best way to control them isn’t by cutting back care. It’s by wringing inefficiencies out of the system.

Our healthcare system wastes 30 cents of every dollar spent on health care, according to new calculations by the well-respected Institute of Medicine. Much of it is wasted on repeated tests, and a huge portion wasted on paperwork – between doctors and hospitals and specialists and insurers, to justify expenditures by one group to be paid by another.

A single-payer system would be far more efficient.

So back to my original question. Is the dramatic slowdown in employer health-care costs good news? It all depends. If we and our families are in good health, or we’re high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they’re trimming pay and benefits – or we’re in all three categories – it’s probably good.

But if we’re none of these, it might not be good news – especially if it means we’re getting less care than would otherwise keep ourselves and our families healthy.

At the least, if we’re concerned about the health and well-being of all Americans, we need to find out much more before we celebrate.

Robert B. Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He was Secretary of Labor in the Clinton administration.

http://wallstreetpit.com/96788-a-single-payer-system-would-be-far-more-efficient/

AHIP asks for further reduction of minimum benefits

Hearing: Implementation of Health Insurance Exchanges and Related Provisions

Testimony by Daniel T. Durham, Executive Vice President, Policy and Regulatory Affairs, America’s Health Insurance Plans (AHIP)
House Ways and Means Committee, Subcommittee on Health, September 12, 2012
Minimum Coverage Requirements
Beginning in 2014, the ACA will require health plans to provide coverage for an essential health benefits (EHB) package covering a broad range of mandated benefits, some of which are not typically included in individual and small group policies today. The ACA further requires that coverage sold through the exchanges must be at one of four actuarial value levels: 60% (bronze); 70% (silver); 80% (gold); and 90% (platinum). As a result of these provisions, millions of people may be forced to purchase health insurance that is more comprehensive – and more expensive – than they currently have.
We believe that the EHB package must be affordable for families and small businesses and that affordability should be the cornerstone of consideration in defining the EHB package. The nonpartisan Institute of Medicine – in its recommendations to HHS – underscored the need to ensure affordability in defining the EHB standard and cautioned that “if cost is not taken into account, the EHB package becomes increasingly expensive and, individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA – enabling people to purchase health insurance, and covering more of the population, will not be met.”
The imposition of broader benefit packages than what consumers and small businesses are purchasing today will force consumers to “buy up” coverage that they may not want or need. In recent months, many state departments of insurance and state exchange boards have requested formal actuarial and economic forecasts of the impact of the new insurance reforms on their state. These independent studies have found that several provisions, including the EHB and actuarial value requirements, will result in higher premiums.
Recognizing that these ACA provisions will have a major impact on the cost of coverage, we believe that the important goals of the EHB package can be met if HHS and the states place a high priority on offering affordable coverage options to consumers. In addition, consideration should be given to lowering the minimum actuarial value for coverage sold in the exchanges to ensure the availability of affordable coverage options and to allow smoother transitions to the new benefits packages.
http://waysandmeans.house.gov/uploadedfiles/durham_testimony_final_hl912.pdf

As the Affordable Care Act was being drafted, many of us in the policy community were very disappointed with the decision to include in the state insurance exchanges low actuarial value plans, as low as 60 percent (the plan pays 60 percent of covered costs and the patient pays the other 40 percent plus 100 percent of all services and products not covered). Even with the subsidies, the financial barriers to care will be too great for many patients. Now AHIP – the all-powerful health insurance lobby organization – is asking Congress to lower even further the minimum required benefits and the actuarial values of the plans.
The reason is obvious. They explicitly state that “affordability should be the cornerstone of consideration,” but they are not referring to affordability of health care, rather they are referring to the affordability of their own private health insurance plans. They want their premiums to be low enough for middle-income Americans to be able to purchase their plans. They remain silent on the fact that reducing minimum benefits and reducing actuarial values of the plans will shift large portions of the costs to those who need care. (Again, the cost sharing subsidies are not adequate for covered benefits, and the patient is responsible for 100 percent of the costs of excluded benefits which would increase with this proposal.)
The private insurance industry got virtually everything that they asked for when the bill was written. Now they are coming along with a pitch that appeals to members of both sides of the aisle – we should make insurance affordable by allowing individuals to “buy only the insurance you need.” For people who are healthy on December 31, 2013, can they really feel secure with a low actuarial value, minimal benefit plan that begins on January 1, 2014, when they have absolutely no idea what health problems they may face throughout 2014 and into the future? Of course not, though the high premiums of plans with adequate coverage may serve as enough of a deterrent that they would want to or may even have to take the risk that they will remain healthy throughout the year – a safe bet for the insurers but a big gamble for the patient. With time, it becomes even more treacherous for individuals to bet that they will remain healthy forever.
It is particularly appalling when they say that the principal reason for the Affordable Care act was to enable people to purchase health insurance. Some of us thought that the principal reason should have been to remove financial barriers to essential health care for everyone.
Really, haven’t we had enough of Congress and the Obama administration supporting the private insurance industry? How about demanding support for America’s patients instead? Throw out the insurers and enact an improved Medicare for all. We just might have to throw out the politicians to get there.

How many "bundles" do we need in health care?

The Arkansas Innovation

By Ezekiel J. Emanuel
The New York Times, September 5, 2012

(Arkansas) is moving toward ending “fee-for-service” payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one “episode-based” or “bundled” payment.

This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient’s care — the “quarterback,” as Andrew Allison, the state’s Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care — a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby’s delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of the services provided to their patients, and will receive quarterly reports on those metrics from the state (for Medicaid patients) or private insurers. If they have delivered good care based on agreed-upon standards, and if their billings come in lower than the agreed-upon level, they can keep a portion of the difference. If their billings come in above an acceptable level — usually because they have ordered too many unnecessary tests, office visits or inappropriate treatments — they will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee replacements, which have similar costs for all patients, have been previously tested. But for other conditions, not every patient’s needs are the same. Some pregnant women are healthy while others have diabetes. The state and insurers will have to provide “risk adjustment” payments — in which providers are reimbursed more for treating sicker patients — and some patients with especially complicated illnesses may need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are treated at widely varying costs, mainly because physicians prescribe different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by providing standards for appropriate care linked to the costs of treatment and the quality of the doctor’s performance compared with that of other doctors.

http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And…

Is ‘Bundled’ Medical Care a Good Idea?

Letters, The New York Times, September 12, 2012

Despite Ezekiel J. Emanuel’s implication, Arkansas isn’t the only state to plan to substitute “bundled” medical payments for fee-for-service. Vermont, Massachusetts and Oregon have similar intentions. But without basic changes in the organization and delivery of care, it is doubtful that “bundled” payments can be successfully distributed among all the providers of care.

A stifling supervisory bureaucracy interfering with medical care and endless disputes among providers and between providers and payers are almost certain to develop. Physicians are unlikely to accept such an arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single public payer guarantees comprehensive care for all, and pays accountable multispecialty physician groups not by reimbursement for specific services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, is a former editor in chief of The New England Journal of Medicine.

http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion

Comment:

By Don McCanne, MD

What a simple idea. Instead of paying a fee for each itemized service – a payment model that supposedly encourages the delivery of excess services – a lump (bundled) fee would be paid for each episode of care. That episode might be as simple as a common cold, or as complex as extensive, prolonged care of a major trauma victim. But because of the single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care are there? How is each one defined? How is an appropriate bundled fee determined for each of these episodes? Which individuals and entities would share in each fee? Would the various providers be bundled together just as the fee for each episode of care is bundled? How many variations of bundled providers would you have? How many bundled groups would each individual provider belong to? How complex would the administrative task be to distribute the bundled fee within the bundled group of providers? Could an accountable care organization (ACO) serve as a single bundled group of providers that could care for each and every episode of care? Would each ACO include providers of tertiary services such as advanced cardiac or oncological surgeries? Would each ACO want to contract for bundled payments for common colds and other brief, single contact services? Would one ACO be the only bundled entity in a community, or could the community support multiple competing ACOs? Could the community support providers outside of the ACO and how would they be bundled? Would each payer – Medicare, Medicaid, and a multitude of private insurers – contract separately with each bundled group of providers for each separate episode of care? If instead the bundled payments were standardized, then why would you want the inefficiency of multiple payers when a single payer would simplify at least that part of the process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more administrative complexity to a health care system that already has the world’s worst administrative excesses. Instead of playing more games with a dysfunctional, fragmented financing system, we should convert to a single payer national health program. Under such a system costs can be budgeted – whether it’s through global budgets for hospitals, capitation payments for integrated multispecialty physician groups, physician-hospital organizations, community health centers, or through fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be free to cooperate with the health care professionals and institutions to establish the best payment arrangements to see that everyone receives the highest quality of care under a system that would provide the nation with greatest health care value attainable. One giant bundle for all of us.

How many “bundles” do we need in health care?

The Arkansas Innovation

By Ezekiel J. Emanuel
The New York Times, September 5, 2012

(Arkansas) is moving toward ending “fee-for-service” payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one “episode-based” or “bundled” payment.

This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient’s care — the “quarterback,” as Andrew Allison, the state’s Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care — a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby’s delivery, as well as some care before and after).

The quarterbacks will also be responsible for the cost and quality of the services provided to their patients, and will receive quarterly reports on those metrics from the state (for Medicaid patients) or private insurers. If they have delivered good care based on agreed-upon standards, and if their billings come in lower than the agreed-upon level, they can keep a portion of the difference. If their billings come in above an acceptable level — usually because they have ordered too many unnecessary tests, office visits or inappropriate treatments — they will have to pay money back to the state or insurer.

Still, it will be a challenge. Bundled payments for hip and knee replacements, which have similar costs for all patients, have been previously tested. But for other conditions, not every patient’s needs are the same. Some pregnant women are healthy while others have diabetes. The state and insurers will have to provide “risk adjustment” payments — in which providers are reimbursed more for treating sicker patients — and some patients with especially complicated illnesses may need to be excluded from the bundling system.

Even some low-cost conditions, like upper respiratory infections, are treated at widely varying costs, mainly because physicians prescribe different tests, numbers of office visits and medications.

But this is exactly what the new program will work to change, by providing standards for appropriate care linked to the costs of treatment and the quality of the doctor’s performance compared with that of other doctors.

http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And…

Is ‘Bundled’ Medical Care a Good Idea?

Letters, The New York Times, September 12, 2012

Despite Ezekiel J. Emanuel’s implication, Arkansas isn’t the only state to plan to substitute “bundled” medical payments for fee-for-service. Vermont, Massachusetts and Oregon have similar intentions. But without basic changes in the organization and delivery of care, it is doubtful that “bundled” payments can be successfully distributed among all the providers of care.

A stifling supervisory bureaucracy interfering with medical care and endless disputes among providers and between providers and payers are almost certain to develop. Physicians are unlikely to accept such an arrangement, and nothing can succeed without their agreement.

Eventually, they will accept a different health system in which a single public payer guarantees comprehensive care for all, and pays accountable multispecialty physician groups not by reimbursement for specific services but through prepaid budgets on a per capita basis.

Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, is a former editor in chief of The New England Journal of Medicine.

http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion

Comment:

By Don McCanne, MD

What a simple idea. Instead of paying a fee for each itemized service – a payment model that supposedly encourages the delivery of excess services – a lump (bundled) fee would be paid for each episode of care. That episode might be as simple as a common cold, or as complex as extensive, prolonged care of a major trauma victim. But because of the single fee no excessive services would be provided, so the theory goes.

This does bring up a few questions. How many distinct episodes of care are there? How is each one defined? How is an appropriate bundled fee determined for each of these episodes? Which individuals and entities would share in each fee? Would the various providers be bundled together just as the fee for each episode of care is bundled? How many variations of bundled providers would you have? How many bundled groups would each individual provider belong to? How complex would the administrative task be to distribute the bundled fee within the bundled group of providers? Could an accountable care organization (ACO) serve as a single bundled group of providers that could care for each and every episode of care? Would each ACO include providers of tertiary services such as advanced cardiac or oncological surgeries? Would each ACO want to contract for bundled payments for common colds and other brief, single contact services? Would one ACO be the only bundled entity in a community, or could the community support multiple competing ACOs? Could the community support providers outside of the ACO and how would they be bundled? Would each payer – Medicare, Medicaid, and a multitude of private insurers – contract separately with each bundled group of providers for each separate episode of care? If instead the bundled payments were standardized, then why would you want the inefficiency of multiple payers when a single payer would simplify at least that part of the process? But then, why make it this complicated in the first place?

Arnold Relman is right. The bundling concept adds much more administrative complexity to a health care system that already has the world’s worst administrative excesses. Instead of playing more games with a dysfunctional, fragmented financing system, we should convert to a single payer national health program. Under such a system costs can be budgeted – whether it’s through global budgets for hospitals, capitation payments for integrated multispecialty physician groups, physician-hospital organizations, community health centers, or through fee-for-service when appropriate such as for solo, rural practices.

Our own public administrators of an improved Medicare for all would be free to cooperate with the health care professionals and institutions to establish the best payment arrangements to see that everyone receives the highest quality of care under a system that would provide the nation with greatest health care value attainable. One giant bundle for all of us.

How many "bundles" do we need in health care?

The Arkansas Innovation

By Ezekiel J. Emanuel
The New York Times, September 5, 2012
(Arkansas) is moving toward ending “fee-for-service” payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one “episode-based” or “bundled” payment.
This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient’s care — the “quarterback,” as Andrew Allison, the state’s Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care — a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby’s delivery, as well as some care before and after).
The quarterbacks will also be responsible for the cost and quality of the services provided to their patients, and will receive quarterly reports on those metrics from the state (for Medicaid patients) or private insurers. If they have delivered good care based on agreed-upon standards, and if their billings come in lower than the agreed-upon level, they can keep a portion of the difference. If their billings come in above an acceptable level — usually because they have ordered too many unnecessary tests, office visits or inappropriate treatments — they will have to pay money back to the state or insurer.
Still, it will be a challenge. Bundled payments for hip and knee replacements, which have similar costs for all patients, have been previously tested. But for other conditions, not every patient’s needs are the same. Some pregnant women are healthy while others have diabetes. The state and insurers will have to provide “risk adjustment” payments — in which providers are reimbursed more for treating sicker patients — and some patients with especially complicated illnesses may need to be excluded from the bundling system.
Even some low-cost conditions, like upper respiratory infections, are treated at widely varying costs, mainly because physicians prescribe different tests, numbers of office visits and medications.
But this is exactly what the new program will work to change, by providing standards for appropriate care linked to the costs of treatment and the quality of the doctor’s performance compared with that of other doctors.
http://opinionator.blogs.nytimes.com/2012/09/05/the-arkansas-innovation/

And…

Is ‘Bundled’ Medical Care a Good Idea?

Letters, The New York Times, September 12, 2012
Despite Ezekiel J. Emanuel’s implication, Arkansas isn’t the only state to plan to substitute “bundled” medical payments for fee-for-service. Vermont, Massachusetts and Oregon have similar intentions. But without basic changes in the organization and delivery of care, it is doubtful that “bundled” payments can be successfully distributed among all the providers of care.
A stifling supervisory bureaucracy interfering with medical care and endless disputes among providers and between providers and payers are almost certain to develop. Physicians are unlikely to accept such an arrangement, and nothing can succeed without their agreement.
Eventually, they will accept a different health system in which a single public payer guarantees comprehensive care for all, and pays accountable multispecialty physician groups not by reimbursement for specific services but through prepaid budgets on a per capita basis.
Arnold S. Relman
Cambridge, Mass., Sept. 7, 2012
The writer, professor emeritus of medicine and social medicine at Harvard Medical School, is a former editor in chief of The New England Journal of Medicine.
http://www.nytimes.com/2012/09/13/opinion/is-bundled-medical-care-a-good-idea.html?ref=opinion

What a simple idea. Instead of paying a fee for each itemized service – a payment model that supposedly encourages the delivery of excess services – a lump (bundled) fee would be paid for each episode of care. That episode might be as simple as a common cold, or as complex as extensive, prolonged care of a major trauma victim. But because of the single fee no excessive services would be provided, so the theory goes.
This does bring up a few questions. How many distinct episodes of care are there? How is each one defined? How is an appropriate bundled fee determined for each of these episodes? Which individuals and entities would share in each fee? Would the various providers be bundled together just as the fee for each episode of care is bundled? How many variations of bundled providers would you have? How many bundled groups would each individual provider belong to? How complex would the administrative task be to distribute the bundled fee within the bundled group of providers? Could an accountable care organization (ACO) serve as a single bundled group of providers that could care for each and every episode of care? Would each ACO include providers of tertiary services such as advanced cardiac or oncological surgeries? Would each ACO want to contract for bundled payments for common colds and other brief, single contact services? Would one ACO be the only bundled entity in a community, or could the community support multiple competing ACOs? Could the community support providers outside of the ACO and how would they be bundled? Would each payer – Medicare, Medicaid, and a multitude of private insurers – contract separately with each bundled group of providers for each separate episode of care? If instead the bundled payments were standardized, then why would you want the inefficiency of multiple payers when a single payer would simplify at least that part of the process? But then, why make it this complicated in the first place?
Arnold Relman is right. The bundling concept adds much more administrative complexity to a health care system that already has the world’s worst administrative excesses. Instead of playing more games with a dysfunctional, fragmented financing system, we should convert to a single payer national health program. Under such a system costs can be budgeted – whether it’s through global budgets for hospitals, capitation payments for integrated multispecialty physician groups, physician-hospital organizations, community health centers, or through fee-for-service when appropriate such as for solo, rural practices.
Our own public administrators of an improved Medicare for all would be free to cooperate with the health care professionals and institutions to establish the best payment arrangements to see that everyone receives the highest quality of care under a system that would provide the nation with greatest health care value attainable. One giant bundle for all of us.

More Americans got health insurance in 2011, Census says

By Maggie Fox
NBC News, Sept. 12, 2012

More Americans got health insurance coverage in 2011 as young adults jumped onto their parent’s health insurance plans, the U.S. government said Wednesday. More people also got public health insurance under the Medicare and Medicaid programs.

The number of people going without health insurance fell, from around 50 million in 2010 to 48.6 million in 2011, the Census Bureau’s David Johnson said. In 2010, 16.3 percent of the population went without health insurance. In 2011, that fell to 15.7 percent of the population, the Census said in its latest report on poverty, employment and health insurance.

One of the main goals of the 2010 health reform was to get more people covered by health insurance, but most of the provisions meant to do that don’t kick in until 2014. One of the most popular requirements did, however –  the requirement that health insurance companies let parents keep their adult children on their plans until they’re 26. Johnson said the numbers show 500,000 young adults took advantage of that.

“You can see a lot of the fall is due to the 19-25 year-old age group,” Johnson told reporters on a conference call. “We also see a large increase in coverage for public coverage. I think those two things are driving the uninsured rate falling.”

About a million more people got coverage under Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and military health care, the report shows.

The Census report suggests that people stopped losing health insurance because they lost their jobs – the report shows more people were working full-time in 2011, compared to 2010.

“This is the first time in the last 10 years that the rate of pri­vate insurance coverage has not decreased,” Johnson said. As has been the case for years, most Americans are covered by a private plan — about 55 percent were in 2011.

Liberal groups said the data showed that fears health care reform would cause employers to stop offering health care coverage are unfounded.

“In fact, the law has expanded coverage, even as we are still recovering from an economic downturn,” said Neera Tanden, a former adviser to the Obama administration who is now president of the Center for American Progress. “These numbers also underscore just how important it is to move forward with implementation of the rest of the law, especially Medicaid expansion which will cover millions of low-income Americans.”

Looking at the numbers another way, 260.2 million people had health insurance in 2011, up from 256.6 million in 2010.

Even critics of the administration said the numbers were good news. Devon Herrick of the National Center for Policy Analysis said 30 million Americans would remain without health insurance even after the Affordable Care Act is fully implemented.

“This is largely because the penalties for forgoing health coverage are less than the cost of coverage,” Herrick said in a statement.

“Moreover, maybe up to one-third of businesses will find it to their advantage to drop the employee health plan once their workers have access to subsidized coverage in the state Health Insurance Exchanges. Another unintended consequence of the ACA is that many people will quite rationally wait until they become sick to enroll in health coverage due to new federal regulations that require insurers to accept all applicants regardless of health status.”

Many studies show that people who go without health insurance have poorer health in general. They go without regular checkups and wait until there’s an emergency, such as a heart attack or a stroke, to get medical care. This ends up costing everybody more, because it’s far more expensive to treat someone for a heart attack, for instance, than to see them early and prescribe cholesterol or blood-pressure drugs.

Physicians for a National Health Program, a group that advocates for universal health insurance, says the Census numbers show 48,000 Americans died needlessly in 2011.

“The estimated death toll is based on a peer-reviewed Harvard study published in the American Journal of Public Health in 2009, widely cited during the health reform debate, which found that for every 1 million persons who were uninsured there were about 1,000 related, preventable deaths,” the group said in a statement.

 “We should adopt a zero-tolerance policy toward lack of health coverage,” the group’s Dr. Steffie Woolhandler said. “Today’s Census Bureau report underscores the urgency of going beyond the federal health law and swiftly implementing a single-payer, improved-Medicare-for-all program.”

http://vitals.nbcnews.com/_news/2012/09/12/13828647-more-americans-got-health-insurance-in-2011-census-says

New Census Bureau numbers on the uninsured

Income, Poverty, and Health Insurance Coverage in the United States: 2011

By Carmen DeNavas-Walt, Bernadette D. Proctor, Jessica C. Smith
United States Census Bureau, September 2012

Health Insurance Coverage – 2011

48.6 million or 15.7% – people without health insurance
• 7.0 million – children under 18 uninsured

193.7 million or 63.9% – people covered by private health insurance
• 170.1 million or 55.1% – people covered by employment-based insurance

99.5 million or 32.2% – people covered by government health insurance
• 50.8 million or 16.5% – people covered by Medicaid
• 46.9 million or 15.2% – people covered by Medicare

Poverty

9.5 million or 11.8% – families living in poverty
• 31.2% – families with a female householder living in poverty

Income Inequality

Income inequality also increased between 2010 and 2011 when measured by shares of aggregate household income received by quintiles. The aggregate share of income declined for the middle and fourth quintiles. The share of aggregate income increased 1.6 percent for the highest quintile and within the highest quintile, the share of aggregate income for the top 5 percent increased 4.9 percent. The changes in the shares of aggregate income for the lowest two quintiles were not statistically significant.

http://www.census.gov/prod/2012pubs/p60-243.pdf

Comment:

By Don McCanne, MD

The numbers of uninsured decreased from 50.0 million in 2010 to 48.6 million in 2011. That might be good news for the net 1.4 million newly insured, but it is terrible news for the 48.6 million who remain without health insurance.

These numbers, of course, are transitional since new private coverage through the state insurance exchanges and the greater expansion of coverage under Medicaid will not take place until 2014. Even then, the new coverage will be either with private underinsurance plans (low actuarial value and inadequate subsidies) or with the chronically underfunded Medicaid program, with even greater impairment of health care access likely. Worse, 30 million will still have no coverage at all (CBO).

Perhaps even more shocking is that 31.2% of families with a female householder live in poverty – right here in the United States!

And income inequality? The aggregate share of household income has decreased for the middle and fourth quintiles. The middle class is being wiped out!

Of course we knew all this. So why aren’t we doing something about it? Howling in the wind doesn’t seem to be getting us very far.

Despite slight drop in uninsured, last year’s figure points to 48,000 preventable deaths: health expert

Persistence of large numbers of uninsured and related deaths shows urgency of enacting an improved-Medicare-for-all system, physician says

FOR IMMEDIATE RELEASE
Sept. 12, 2012

Contact:
Steffie Woolhandler, M.D., M.P.H.
David Himmelstein, M.D.
Garrett Adams, M.D., M.P.H., president PNHP
Mark Almberg, communications director PNHP, (312) 782-6006, mark@pnhp.org. Local physicians in 44 states are available for comment. (Also see historical table of state-by-state uninsured numbers below.)

The Census Bureau’s official estimate that 48.6 million Americans lacked health insurance in 2011 means approximately 48,000 people died needlessly last year because they couldn’t get access to timely and appropriate care, a health policy expert said today.

The estimated death toll is based on a peer-reviewed Harvard study published in the American Journal of Public Health in 2009, widely cited during the health reform debate, which found that for every 1 million persons who were uninsured there were about 1,000 related, preventable deaths.

Dr. Steffie Woolhandler, professor of public health at the City University of New York and visiting professor of medicine at Harvard Medical School, is a co-author of the 2009 study. She said, “The Census Bureau’s latest figure, 48.6 million uninsured, conjures up a very grim picture: a preventable death every 11 minutes.”

She said studies have shown that uninsured people with chronic illnesses like heart disease delay or forgo care, often leading to serious complications of their medical condition and, in many cases, premature death.

Woolhandler continued: “As a physician, I simply cannot accept a situation where tens of thousands of people die every year because they lack insurance coverage. And lest anyone think this problem has been solved by the federal health law, the Congressional Budget Office estimates about 30 million people will still be uninsured in 2022. That figure translates into roughly 30,000 excess deaths annually – again, an intolerable picture.”

The slight drop in this year’s total number of uninsured – to 48.6 million from a record 50 million last year – was largely attributable to an increase in government health insurance coverage, particularly persons covered by Medicaid and Medicare, the Census Bureau said.

There was also a modest gain in coverage among people between the ages of 19 and 25 – 539,000 – approximately 40 percent of whom obtained coverage through their parent’s health plan as a result of the 2010 health law, the bureau reported.

Woolhandler said that while the number of persons covered by private health insurance last year was statistically unchanged from 2010, the share of Americans with private coverage, 63.9 percent, shows a slight drop and continues a three-decade-long trend of diminishing coverage through private insurance.

She also noted that while the national count of uninsured went down slightly, the number of uninsured climbed in 21 states, most significantly in California, where 197,000 additional people became uninsured since 2010. The Census Bureau reported that California’s uninsured numbered 7.4 million in 2011, or 19.7 percent of the population.

“We should adopt a zero-tolerance policy toward lack of health coverage,” Woolhandler said. “Today’s Census Bureau report underscores the urgency of going beyond the federal health law and swiftly implementing a single-payer, improved-Medicare-for-all program.

“Such a program would assure truly universal, comprehensive, high-quality coverage for everyone while simultaneously ridding us of the scourge of insurance-company-related waste, bureaucracy and profiteering. A single-payer system would save both lives and money.”

Woolhandler is co-founder of Physicians for a National Health Program, an organization of 18,000 doctors who advocate for single-payer national health insurance. PNHP played no role in supporting her 2009 research study, which she co-authored with Dr. David Himmelstein, among others.

Historical state-by-state data on the uninsured from 2011-2008, compiled by PNHP staff from the Census Bureau’s newly published data, can be found here.

Physicians for a National Health Program (www.pnhp.org) is an organization of more than 18,000 doctors who advocate for single-payer national health insurance. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.