PNHP

Concentration of health care spending

Concentration of health care spending

The Concentration of Health Care Spending

National Institute for Health Care Management
July 2012

Spending for health care services in the United States is highly concentrated among a small proportion of people with very high use. For the overall civilian population living in the community, the latest data indicate that more than 20 percent of all personal health care spending in 2009 — or $275 billion — was on behalf of just 1 percent of the population. The 5 percent of the population with the highest spending was responsible for nearly half of all spending. At the other end of the spectrum, 15 percent of the population recorded no spending whatsoever in the year, and the half of the population with the lowest spending accounted for just 3 percent of total spending.

With numbers like these, it is clear that per-person spending among the highest users is substantial and represents a natural starting point when thinking about how to curb health care spending. For instance, the average expenditure for each of the approximately 3 million people comprising the top 1 percent of spenders was more than $90,000 in 2009. The top 5 percent of spenders were responsible for $623 billion in expenditures or nearly $41,000 per patient. In contrast, mean annual spending for the bottom half of distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people.

Implications of Concentrated Spending

The concentration of health care spending has several implications for health policy, particularly as we think about how to control overall spending for health services. First is the obvious need to “follow the money.” With half of the population incurring just $36 billion in health care costs, it simply is not possible to realize significant contemporaneous or short-term savings by directing cost-control efforts at this group.
 
Strategies to improve management of chronic conditions, end-of-life care, and expensive episodes hold more promise, but raise challenges as well. To begin, accurate prospective identification of patients who can most benefit from disease management can be tricky since many of the same chronic conditions associated with higher spending are also present — and in the case of the elderly, highly prevalent — among lower-spending groups. Furthermore, even when these conditions are less prevalent for low spenders, the number of low spenders with the condition will be high simply because many more people are low spenders. Thus, interventions based solely on the presence of a chronic condition are bound to include a significant number of people who would not incur high costs, at least in the short term. Managing high spending at the end of life can also be problematic. Not all persons with high spending will die soon, and predicting timing of death and distinguishing between care that may extend life in a meaningful way and care that does little good is something that is often accomplished only in retrospect. Societal reluctance to discuss end-of-life care and fears of rationing only complicate the matter. Finally, although it might be possible to manage some of the expensive episodes more efficiently through use of clinical pathways, for example, it is virtually impossible to predict or avoid these random high-cost events.

A second implication of the highly concentrated spending pertains to the acceptance of risk by providers and payers. Emerging payment and delivery system reforms, such as accountable care organizations, rely on integrated provider organizations to accept some degree of risk for a defined patient population. These organizations will need a patient base that is large enough to balance out the sizeable downside risk of attracting just a few high spending cases. Additional risk-adjustment and other means of protection against high-cost outlier cases may also be needed. Similarly, in a world of community rating and guaranteed issue, insurers face a significant risk of adverse selection and negative financial implications if they happen to attract a disproportionate number of high spending patients. Here, too, adequate means of protecting against adverse selection and the risk posed by high spenders are required.

http://www.nihcm.org/images/stories/DataBrief3_Final.pdf

Comment: 

By Don McCanne, MD

The healthier half of our population accounts for only 3 percent of health care spending, whereas the top 5 percent was responsible for nearly half of the spending. This study also confirms the 20/80 rule: 20 percent of the population is responsible for 80 percent of health care spending. This concentration of spending is of great importance as we evaluate methods of containing costs.

Perhaps the most significant factor is that cost-containment strategies targeting healthier individuals will have very little impact on total health care spending since so little is spent on this sector in the first place. This explains why the current trend to increase price sensitivity through high-deductible health plans will produce very little savings even though it will act as a barrier to beneficial health care services. Reducing spending by 10 percent in the 150 million people who use only 3 percent of health care will reduce total health care spending by only 0.3 percent – a drop in the bucket of our national health expenditures. It is a small price to pay for being certain that people will seek appropriate care when they should.

What about high-deductible plans for the 5 percent who account for half of our health care spending? The costs for each patient would far exceed the deductibles, thus most care in this group – that provided after the deductible is met – would not be reduced since price is no longer a factor.

The brief mentions problems with other strategies to control costs in populations with skewed concentrations of health care needs.  Many strategies under consideration would be ill-advised, both because of the paucity of savings and because of the distortions in access and equity.

We really don’t need to look for inevitably-flawed strategies to try overcome these distortions. A single payer system – improved Medicare for all – is an ideal model to cover all appropriate health care expenses no matter how much they are skewed within a population.

What a single-payer health insurance plan looks like

By Paul Jay
The Real News Network, July 31, 2012

PNHP note: The following is an unofficial transcript of a video interview with Gerald Friedman, professor of economics at the University of Massachusetts, Amherst. Friedman recently prepared an economic impact study of how a single-payer system would affect the state of Maryland, a link to which you will find here. You can watch the 10-minute video interview corresponding to the text below here.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore.

The debate about health care is continuing. Supreme Court has found what people call Obamacare constitutional. It will come into full force in 2014. But proponents of what’s called single-payer health care or government-run health insurance plans are continuing to fight, and the evidence seems to be on their side. Those countries that have government health insurance plans, people live longer and the cost of the health care is less. Now the fight in the United States seems to be moving to the state level, because there doesn’t seem to be much that’s going to happen at the national level, at least in the foreseeable future. And one of those states is Maryland. And a recent study looks at what would single-payer health care look like in the state of Maryland.

And now joining us is the author of that study, Gerald Friedman. He’s a professor of economics at the University of Massachusetts in Amherst, and he did this study for Health Care for All Maryland. Thanks for joining us, Gerald.

GERALD FRIEDMAN, PROF. ECONOMICS, UMASS AMHERST: Thank you for having me.

JAY: So before we dig into some of your research, just sort of give us the bigger picture of why this would make sense for Maryland.

FRIEDMAN: Well, the big picture is that health insurance provided by competing private companies is inherently inefficient and destructive of people’s health. I mean, that’s a strong statement, but I think it is well founded.

The problem with private health insurance is that it’s not like selling shoes. If you’re a shoe company, you want to sell more shoes, you want to make a better quality shoe at a better price to attract more business. Health insurers don’t want more business. They want to get rid of sick people. Eighty percent of your costs as a health insurer are incurred for about 20 percent of your people. You know, in some places it’s 90-10 — 90 percent of your costs go to 10 percent of the people. If you can find those people, identify those people, and figure out a way to get them to go away, go to a different company, then you will be in a position to lower your prices and increase your profits. That is what health insurers try to do.

JAY: Let me interject for a second. There kind of is that in Maryland, is there not, where the state actually takes people that a lot of the private insurance companies don’t want and puts them through this Maryland plan.

FRIEDMAN: Yes, exactly, exactly. One aspect of — the president’s law, Obamacare, the Affordable Care Act, has provisions to try to restrict this behavior by companies. Until those provisions, the ban on pre-existing conditions, until that kicks in, states have been subsidized from the federal government to set up these care pools for special insurance for people who can’t get insurance otherwise.

Overall throughout the United States about 100 million people have some condition that an insurance company would look twice at or three times at before giving you insurance. Certainly if you’ve ever had cancer, insurance companies don’t want you. If you have HIV, insurance companies don’t want you. If you have an obsessive-compulsive disorder, a history of chronic depression, if you’re overweight, if you have heart disease, if you have high blood pressure —

JAY: Or if you’re pregnant.

FRIEDMAN: Or if you’re pregnant, that’s right, or if you’re pregnant, insurance companies don’t want you.

JAY: Unless they already have you. Like, if you haven’t been insured — and I happen to know this through personal experience recently — if you haven’t been insured, you can’t go out and get new insurance if you’re pregnant, except through this pool that the state creates. So isn’t this some form of indirect subsidy to the insurance companies? Like, we’ll take the most serious conditions, publicly finance them one way or the other, and you can keep your pool nice and profitable.

FRIEDMAN: Exactly. Exactly. The high-risk pool is a subsidy to the insurance companies during this interregnum until 2014 when the whole law kicks in, and then they are supposed to take everybody. But in fact they’ll still find ways. They’ll — the fastest-growing cost center in American health care is administration of the health insurance industry. That has risen in cost eightfold since the 1970s. And that — if you compare the United States and Canada, two-thirds of the extra increase in cost for health care in the United States is accounted for by rising administrative burden in the United States compared to Canada.

JAY: Now, I know in one of the papers you wrote, there’s a cartoon, and it’s kind of ironic, that one of the arguments against a government insurance plan is it would be too bureaucratic. But the facts don’t lead you there, do they?

FRIEDMAN: No, they don’t. They don’t. Just to give you the raw number, the cost of administering the existing Medicare system, the traditional fee-for-service Medicare, is 2 percent — that is, 98 cents out of every dollar that goes into Medicare goes out to pay for services, health care services. By contrast, the mandate in the Affordable Care Act is that insurance companies get up to 80 percent.

So the health insurance industry admits that it is ten times less efficient than Medicare. They have ten times as high an administrative burden in the private insurance system. And the reason they do that is not because they like to waste money; it’s that they use their bureaucratic apparatus to screen out sick people. They make it hard for you, they try to identify you, they try to scare you away from procedures that you need, in the hope that you will leave after a while.

JAY: I’ll give it a — I can give a — now let me just explain the parameters of all of this interview we’re doing for our viewers. We’re going to do a series one after the other where we’re going to dig into this proposal for Maryland and talk about this health care issue. So this is part one. And I won’t know how many parts it is until we get to the end.

I’ll give you one example recently. We’ve just had two little twins, and they’re in the neonatal unit, and the decision to move them from the neonatal unit to a lesser-care facility is essentially going to be made by the insurance companies. The insurance companies have people that are micromanaging these files, and they’re looking at exact — studying individual care of people and then deciding what the next step should be. I mean, they won’t fight it based on a hospital saying the hospital must keep the kid here, but they’ve created the criteria when the kid should move, not the hospitals.

FRIEDMAN: Yeah, yeah, as if they have a license to practice medicine. I mean, this is standard practice in America these days, that health insurers are practicing medicine, they’re dictating which drugs are approved on their list, so that if your doctor wants to prescribe a different — give you a different prescription, well, sure they can prescribe, but the insurance company won’t necessarily cover it. They say, no, you should take this other drug. They want to prescribe how long you’re going to stay in the hospital, which second opinion, which specialist opinions are needed, which procedures are appropriate. I mean, this is all done by insurance companies.

JAY: And let me add, because people that watch The Real News know I’m a dual citizen, and I still get health care in Canada as well, and you don’t get the micromanaging that — like this in the Ontario health care system, for example. There’s very broad parameters that are established by the insurance system, but then all the decisions are really made by doctors after that, not, you know, getting phone calls from the insurance company.

FRIEDMAN: And we see the difference. The United States and Canada had about the same life expectancy in 1971 when Medicare, Canada’s health insurance, was enacted. You know, about the same life expectancy, and we were both paying about 7.5 percent of our gross domestic product to pay for health care. So we have very similar situations.

Now, since then, Canada has added 6.5 years of life expectancy, compared to five years of life expectancy added in the United States. So Canadians now live longer than people in United States, a year longer, and Canada’s expenses have gone up to 10 percent of gross domestic product while we’ve gone up to 17 percent.

So we’re spending a lot, lot more to get less than Canada’s doing. The difference is the cost of administering these health insurance companies, all those people supervising the doctors, and all the time that the doctors have to spend dealing with the health insurers.

JAY: So I’m going to jump in. So we’re going to pick this up in part two of this series of interviews and we’re going to dig into this proposal for Maryland and just see where these cost savings would be and compare what a single-payer plan in Maryland would look like compared to the existing for-profit insurance plans. So join us for the next in this series of interviews with Gerald Friedman on The Real News Network.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8638

What a single-payer health insurance plan looks like (cont’d)

Transcript of Part 2. You can watch the video version here.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore, Maryland.

A recent study looking at a potential single-payer or government-run health insurance plan for Maryland comes to the conclusion there’d be enormous savings over the existing plan.

Now joining us to talk about all of this is Gerald Friedman. Gerald is a professor of economics at the University of Massachusetts Amherst, and he did this study for Health Care for All Maryland. Thanks for joining us again, Gerald.

GERALD FRIEDMAN, PROF. ECONOMICS, UMASS AMHERST: Thank you for having me.

JAY: So this is part two in a series. If you haven’t watched part one, well, you should, and then come back and watch part two.

So let’s dig in into your study and what you found. So you have a section on savings, and point one is administrative costs. So explain what you found there.

FRIEDMAN: Okay. Well, first of all, there are the administrative costs of the health insurers themselves, who devote a great deal of energy and resources to, first, screening people and supervising what doctors do in order to drive away people who will need extensive care.

The average health insurer in Maryland has what they call a medical loss ratio of 85 percent. Now, the medical loss ratio is the proportion of health insurance premiums that are actually paid out to provide the health care. In Medicare, the medical loss ratio is 98 percent.

Wall Street doesn’t like high medical loss ratios. To them, to Wall Street, a high medical loss ratio means that you have too many sick people, you’re not running enough profit. They like the medical loss ratios to be low. We, the consumers of health care, normal people, we like a high medical loss ratio. We want the money we put into the insurance plan to be paid out in benefits.

JAY: So just to be clear, 98 percent of the money in Medicare is going to pay for health care and 2 percent for administration. And in Maryland I think you said 15 percent is going for administration in Maryland.

FRIEDMAN: That’s right. That’s right. And that’s a difference of billions of dollars.

JAY: Yeah, I think you say $3.1 billion in Maryland alone.

FRIEDMAN: Yeah. Yeah.

JAY: And how much of that is profit in what you’re saying is administration costs?

FRIEDMAN: Oh, some of that is profit. You can’t tell for sure how much is profit. You know, health insurance companies aren’t very forthcoming about that. But a rough estimate would be about $1 billion of that is going as profits to the owners of the health insurance companies. And they would lose out with a single-payer system.

JAY: Why is there such savings, then? I mean—.

FRIEDMAN: Okay. Well, first there are the savings because you wouldn’t be supervising doctors the way private health insurance companies do. You wouldn’t be paying for advertising. You wouldn’t—you’d have much more efficient billing. Medicare’s really efficient at paying bills because it’s a very large system; so, as you get more people into one plan, you get some of these what economists call economies to scale in the billing and administration operations.

JAY: Back up on the billing. You get a figure of $1.6 billion of savings in your report. How do you get to that number?

FRIEDMAN: Okay. Okay. Now, the second area of savings is within doctors’ offices, because doctors these days incur enormous expense for billing and insurance-related operations. If you go into your doctor’s office, look around. There’s people there who work full-time dealing with the insurance companies, processing claims.

In Maryland in the 1990s there was a study that found about 15 percent of clean insurance claims submitted by doctors were automatically returned by one of the insurance companies. They were just sent back. There was nothing wrong with the bill—they just sent it back in the hopes that the doctor and the, you know, individual would give up. You know, if they resubmitted the claim, the insurance company paid it. There was a bit of a stink about this and an investigation in the legislature. But I think things like that go on all the time.

So you get a lot of savings in providers’ offices. To give you a Canadian example, Toronto General Hospital—well, I first gave this using numbers from the 1990s. Toronto General Hospital back then had two people working on insurance claims. Massachusetts General Hospital in Boston, with about the same number of doctors and about the same number of patients, had 250 people working on insurance claims. Now, when I gave this to a legislative committee in Massachusetts, one of the people there came up to me afterwards and told me that my numbers were out of date because her husband worked at Mass General and they now have 450 people working in billing and insurance operations. That’s 450 people in Mass General who are not providing care. They’re being paid to process paper because the insurance companies want—every insurance company has different forms, has different numbers, different codes.

JAY: And I guess this also goes back to something we talked about in the first part of our interviews, the amount of micromanaging that takes place from the insurance companies. I suppose that creates a counterpart having to deal with the micromanaging on the side of the hospitals.

FRIEDMAN: And the doctors. My family physician—you know, we have a family doctor—he spends Friday afternoons, a couple of hours every week, filling out forms for the insurance company, the stuff that he has to do. He has to write things out, he has to sign them, he has to make sure, you know, the T’s are crossed and the I’s are dotted and all that.

JAY: Okay. So, now, in your paper you—so you come up with, I think, a $4.6 billion saving in administrative costs when you compare a single payer to existing. And then your next point is something—savings from reduced monopolistic pricing. What is that?

FRIEDMAN: Now, here—there are two aspects here. The first is pharmaceuticals, drugs. McKinsey Global Institute, hardly a left-wing body, estimates that U.S. drug prices are 60 percent higher than the prices paid by people in other advanced capitalist economies—Canada and Western Europe, Japan. The reason is we are the only country that has a decentralized system of buying drugs. You know, every pharmacy negotiates its own drugs, insurance companies all negotiate, and the drug companies are in a very strong position to bargain and to drive hard bargains and high prices.

I take stuff for my thyroid. It happens my dog takes chemically the same thing. My drug is twice as expensive as his. My wife said, well, why don’t you take the dog’s? I was like, ah, well, okay.

JAY: I think it’s important to point out, too, that when President Obama was stickhandling his health care legislation, which—at the time, he was still supporting public option, eventually gave up on that. But as part of the keeping public option, he made a deal with PHrMA not to undercut PHrMA’s prices in the U.S., not to let Canadian drugs into the United States. And they wound up giving up on the public option, but he never went back and undid the deal with PHrMA.

FRIEDMAN: That’s right. That’s right. You know, you can only take on so many battles politically. I’m not going to argue about his handling of that. But it’s—a lot of people in northern New England cross the border to Canada to by their drugs. It’s cheaper, about 60 percent cheaper.

I’m saying that if the state of Maryland set up a single drug purchasing agency, it could go to, you know, the drug companies (and there are only a handful of them) and, you know, bargain down the prices. Then people from Delaware and Virginia would start crossing the border into Maryland to buy their drugs.

JAY: Now, in your report you talk about elite hospitals and providers—. What is that point about?

FRIEDMAN: That is a very low number that I use. Massachusetts Attorney General Martha Coakley—who has a bit of a history in health care, given that she lost a Senate race to Scott Brown. But Martha Coakley has been putting out these reports showing the enormous range in pricing for the same procedures, for a CAT scan, for an MRI, for a simple appendectomy, for a simple birth—not talking about the complicated births of prenatal units, etc., but for a simple birth—and the range will be two-, three-to-one, going from a local hospital in Northampton to a more elite hospital in Springfield, Massachusetts, or not to mention going to Johns Hopkins or Massachusetts General Hospital.

And it’s not just the elite hospitals. It’s also certain medical suppliers, you know, certain wheelchair manufacturers and, you know, producers of MRI machines, whatever, have serious market power and they’re overcharging.

So I put in we could drive down their prices 5 percent. You know, that’s a low number, I think.

JAY: And the number you come up with is about $1 billion, and you think that it could be significantly more than that, you’re saying.

FRIEDMAN: There are two other aspects of that. One is that these elite hospitals are seriously overcharging. The second is that they engage in practices that lead to duplication of services, etc. A certain unnamed physician (I won’t say who told me this) who used to practice at an elite hospital in Boston told me that if you walk into his hospital holding a CAT scan that just—at a facility in Northampton or Massachusetts or someplace else, you know, but a respectable facility, you walk in with your CAT scan, they will insist on doing another CAT scan, because they will charge for that other CAT scan. You know, it’s a complete waste, it means extra radiation for the patients, but they will make money from it and they will charge twice as much for that CAT scan, or three times as much, according to Martha Coakley, as your local hospital.

JAY: Now, in your next point you talk about some kind of integration of this single-payer plan with Medicaid, which the states are already spending money on, and you come up with another $1.2 billion. How do you get that?

FRIEDMAN: Well, there are extra expenses associated with a single government-run health care system. Part of the problem we have now—and this shows up for people in the cities and—you know, more and more Americans are on Medicaid. And the doctors are very reluctant to take on Medicaid patients, and when they do, they provide worse care.

There was just a recent study by the Organization for Economic Co-operation and Development about this, that American—poor people in the United States get significantly worse care compared to other people in the United States relative to the situation of poor people in other countries, other advanced countries. And part of that is because Medicaid underpays. In Maryland I believe it’s something on the order of 19 percent—prices provided by our Medicaid are that much lower than prices paid for the same service by Medicare.

The result is doctors avoid Medicaid patients, Medicaid patients have to travel further to find a doctor, often cannot find any doctor at all. Now, if we had a single—a one-payer system, then you couldn’t discriminate against people on the basis of, you know, whether they were rich or poor. That would be a boon for the doctors providing for Medicaid patients, and it would be a boon for Medicaid patients, who would be in a better position to get decent care.

JAY: Right.

FRIEDMAN: But it would cost money.

JAY: Okay. Now, in the final analysis, you total up all the savings you found. You come up with something like just over 24 percent saving over the existing system in terms of the overall expenditure on health care in Maryland. So in the next part of our interview, we’ll pick up on this. And we’ll also have to go a little further, because even with all this saving, if I understand things correctly, that still doesn’t really pay for all the costs of what a single-payer system would be in Maryland. And we’ll talk about, well, then, how does that get addressed.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8648

What a single-payer health insurance plan looks like (cont’d)

Transcript of Part 3. You can watch the video version here.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore.

This is a continuation of our series of interviews looking at single-payer or government-run health insurance plan and focusing particularly on Maryland. And as I said, I’m in Baltimore, and I guess I should have said earlier in this series of interviews that I guess we have some kind of conflict of interest here because we live in Maryland and if there was a single-payer plan system, I guess we would benefit from it. Oh, we’re ordinary people. We would benefit from this. Oh, terrible thing, isn’t it that? Okay.

So now we’re going to continue our series of interview, and now joining us again is Gerald Friedman. Gerald is a professor of economics at the University of Massachusetts Amherst and we’re—if you haven’t watched part ones and two and—. I can’t remember. Are we three or four now? Anyway, you’ll see all the other parts down below this video player. So thanks for joining us again, Gerald.

GERALD FRIEDMAN, PROF. ECONOMICS, UMASS AMHERST: Thank you.

JAY: Alright. So in the last segment we went through your report and we looked at the savings, which came to just over 24 percent over existing insurance coverage and health care expenditure. But that doesn’t cover everything, does it? And then so what isn’t paid for out of these cost savings, and how are you going to pay for it?

FRIEDMAN: Okay. Well, first of all, the cost savings are there. There are also extra expenses, as we were saying, with the Medicaid rate fix. Also, we would be covering everybody. Now, 15 percent of the population of Maryland is currently without health insurance. Extend health insurance to them, they’re extra expenses. Also, the plan for the Maryland Health Security Act does away with copayments, deductibles, and all of those expenses. We expect that people would use health services more.

JAY: And let me just—I may not have made this clear enough in the earlier segments, or I may have missed in one of the segment, but this Maryland Health Security Act is an actual piece of legislation. It’s been proposed in the Maryland assembly. It’s not been passed yet, and this debate is sort of going on. Okay, go on, Gerald.

FRIEDMAN: Okay. Yeah. Yeah. The study I did projects that it would be enacted this year and looks at the savings and expenses for next year. And as I said, covering everybody, doing away with copayments would lead to greater utilization of health care. That’s a good thing. You know. So, you know, people would be healthier. They would live longer. They would be more productive. They wouldn’t be sick as much, so they wouldn’t miss as much work. Kids would be healthier in school and would do better.

JAY: And if I understand correctly, infant mortality amongst the poor in Maryland is actually getting worse.

FRIEDMAN: Yes. Yes. It’s really quite appalling. Overall the United States is about 45th in the world in life expectancy and infant mortality with one of the richest countries in the world. How is it that we’ve gotten to a position where we’ve gone from second or third in the world 35, 40 years ago to 45th? We’re obviously doing something wrong. We’re putting tons of money inefficiently into the health care system. So fixing that would involve spending some extra money.

Now, even taking account of those extra costs, there would be savings of billions of dollars for Maryland, but we’d also be reallocating what we’re spending. Much of the spending now comes through premium dollars paid by individuals or companies. We would do away with those. There would be no private insurance. You wouldn’t be buying private insurance. Instead, that bill for that, for what used to be paid for by the private insurance, would be picked up by the government, by this health security trust, which would be funded through taxes. We could try to use a better word, a general word than taxes, but that’s—.

JAY: [unintel.] I mean, it’s funded through taxes, and where I—you know, I still spend a lot of my time and grew up in Ontario. Yeah, you pay your taxes, you get a health card, you go see the doctor. And it’s a progressive tax system, so that people that are richer pay a little more—or, hopefully, a lot more, one wishes.

FRIEDMAN: That’s right. And, in fact, what we’ve proposed here would be we would use payroll taxes and progressive income taxes to pay for the health insurance plan. What happens now is if you have health insurance, you buy it yourself or you pay for it through work, a certain fixed amount gets paid for everybody. And that is a trivial amount for the heads of large companies but is a very large amount for people who are earning minimum wage or something close to it. So what happens now is poor people and working people pay a very high proportion of their earnings for health coverage. We would switch that by taking a percentage of people’s payroll and then a percentage of your earnings. We would be taxing the rich more than the poor. It would be a little bit progressive. But compared to the current system, it would be a huge gain for working people and certain loss for people at the very highest income.

JAY: And what would it mean for businesses? One of the arguments that’s often given against this is that it would make, for example, Maryland uncompetitive compared to other states that don’t have this.

FRIEDMAN: I so want to go to chambers of commerce and to businesses and talk to them about what a great savings this is for them. This is the best thing that could happen for Maryland business that the Maryland state government could do, because, first of all, businesses would get this off their to-do list. Small businesses around Amherst that I talked to, they hate having to do health insurance. They feel obligated to provide health insurance to their workers. They’ve been providing it. They have to keep providing it. But dealing with it is a gigantic hassle. Also, it’s a big expense and it’s an unknown expense. Every year you find out, oh my God, my insurance premiums are going to go like this.

We would take care of that. It would be handled every year by the state. It would be—you wouldn’t have to think about it. You wouldn’t have to explain to your worker why this thing is not covered. Also, because it would be more efficient—remember the 24 percent savings—because it would be more efficient, Maryland would be able to provide health care to its population at lower cost than their businesses are paying now. Businesses in Maryland would save several percentage points of payroll every year because of this, the single-payer system.

JAY: Yeah. If people want some evidence of this, they should go look at—one of the biggest supporters of the Ontario health care plan was General Motors, which found that their costs towards health care and their costs per employee in Ontario was far lower than it was, like, for example, in Windsor, right across the border in Detroit. And General Motors was very much in favor of this kind of system.

FRIEDMAN: That’s right, because it’s saving them money. And I would expect that businesses in Maryland, when they realize how much they’d be saving and how they would be able to outcompete businesses in Virginia or Pennsylvania—I mean, a restaurant in Maryland would be less expensive to operate than a restaurant across the border in D.C. or in Virginia.

JAY: Well, one of the arguments will be is that there’s a lot of businesses that don’t provide health care at all and they will become less competitive if all of a sudden they have to start making some payments towards this plan.

FRIEDMAN: That’s right. That’s right. Small businesses and some large businesses don’t provide health care. Now their workers are getting free care, are getting Medicaid, are getting some sort of subsidized care, and their workers are not getting care at all and are being unhealthy and sick. They would benefit if their employees were healthier and had a more reliable source of care. On the other hand, they would be paying somewhat more in the payroll tax than they’re paying now.

JAY: But in your study you looked at the overall jobs affect. What did you find?

FRIEDMAN: Oh, the overall jobs—Maryland would benefit. It’s a little hard to say exactly, but I would estimate over 100,000 additional jobs would be created by this because of this competitive interstate effect that Maryland employers would be able to outcompete employers in Pennsylvania and Virginia and elsewhere.

Probably some businesses would move to Maryland. You know, if you are in Northern Virginia, hey, locate in Montgomery County, get the cheaper health insurance—your life is easier and it’s cheaper. So you’d get maybe 100,000 extra jobs. And also, though I didn’t put this in, I didn’t factor this in, if you actually did get those 100,000 extra jobs, the tax rate could be lower for health care. So that would—the effects would become more [crosstalk]

JAY: Because the bigger the pool, the more economy of scale.

FRIEDMAN: As the economy expands, yes, exactly, exactly, costs become lower and you get on this virtuous cycle.

The biggest beneficiaries would be employers who are currently providing health care, and the biggest group there are local governments, because local governments not only provide health care to their workers, but they provide health care to their dependents. What I found was the so-called pickup rate, the proportion of people actually using the health insurance that’s offered, it’s only about 60 percent of private employers, but it’s over 90 percent for public employers. So local governments would be benefiting even more, which would mean lower taxes, lower [inaud.] and better-supported public schools.

JAY: Okay. So this whole thing’s a no-brainer. I mean, if you look at the data, it’s really a no-brainer. And, you know, as someone who, again, grew up in Canada, we always shook our heads and just could not understand how Americans can live with the system they have. But what are the politics of this in Maryland now? What do you get a sense of? Is there support for this? And what’s the role of the insurance companies?

FRIEDMAN: Well, what I hear in Maryland, what I hear in other places as well, is politicians saying, yes, yes, you’re right, this has been studied before. I’m not the first one to find these sorts of savings. And we’ll get there eventually, but we need incremental steps.

And right now the major focus is on working out how to implement the Affordable Care Act, which is a little bit of a step towards universal coverage and single-payer, but it’s a small step in that direction. What I think will happen in the next couple of years is people are going to learn that the Affordable Care Act covers a lot of people; it doesn’t cover everybody, so it doesn’t provide the universal coverage that we want. And it doesn’t control costs, which is something that the people involved in writing the Affordable Care Act admitted. You know, they have a lot of things in there that they hope will maybe help control costs, but it’s not expected to control costs very much, with the result that the share of income going to health insurance and health care is going to keep on rising. We’ll still have the private insurers with rising administrative burden, and in five years were going to be back where we are now, except instead of 17 percent of our income going to health care, it will be 25 percent.

JAY: And one of the points you make in your paper is that one way or the other these costs are going to have to be contained. So if you’re not getting this out of the private insurance plan, you’re going to have to get it by not providing as much health care.

FRIEDMAN: Yes, which is the point we’re getting to in Massachusetts, where there’s talk about ways to cut back on health care. A lot of the talk about consumer-driven health care is basically how can we get people to stop asking for health care. As it is, Americans go to the doctor and go to dentists less often than people in other countries. We’re less healthy. We go to the doctor less often. I mean, it’s like, put the two together and it starts to make sense.

But it’s—we’re already underserved as a population, and we will be in a worse position in several years, spending more, getting worse service. And I think at that point a lot of the people who have been looking for incremental gains will say we’ve got to go all out.

JAY: Okay. And we’re going to—you’ll find below this video player a link to Gerald’s report, and it’s worth looking at the detail of this, because it’s about time we had this discussion based on public policy with research and not just some rhetoric in either direction. Thanks very much for joining us, Gerald.

FRIEDMAN: Thank you. Bye-bye.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8670

No gold medal coverage for our athletes, Aurora victims, others

By National Nurses Movement
Daily Kos, July 27, 2012

It’s been one month, almost exactly, since the U.S. Supreme Court upheld the Affordable Care Act.

But almost every day provides a fresh reminder of the need to go much farther to permanently fix our broken health care system.

Most notable has been the flurry of news reports about the uninsured hospitalized victims of the terrorist mass shooting in Aurora, Colo., many of whom are now facing medical bills that in some cases that could top $1 million or more.

One prominent case is 22-year-old Petra Anderson, hit four times, including a shotgun pellet in the face that might have been fatal except for a rare birth defect that, reportedly, fortunately deflected the path of the shotgun buck shot.

While her recovery comes first, says her sister Chloe, the next question is how will they pay for her treatment, estimated to run at least hundreds of thousands of dollars, if not millions, as told in this NBC News report.

Petra has insurance – but like so many others, it is woefully inadequate.  So Petra’s family had to go on the web with a video that went viral across the world pleading for contributions. Many have come.  

But is begging for help on the internet really the best societal response to un-payable medical bills?

ER Dr. Camilla Sasson, who treated Petra and other shooting victims doesn’t think so. “I think it is actually wrong,” she told NBC News. “We’re one of the only countries where people don’t have insurance or are they are under insured and having something tragic happen to them when they’re going to the movie theater can actually send them into bankruptcy.”

NBC’s report came first on its coverage of the opening of the Olympic Games in London. The Washington Post, looking for a different angle on that mega story, found an interesting anomaly. The athletes we root for face their own problems if they get hurt.

Health coverage for the athletes is all over the board. Different plans for different sports. Most with a major shortcoming.

Many are “covered” by Elite Athletes Health Insurance Plan, administered by Blue Cross Blue Shield. But this plan, notes Kliff, while covering “the basics, things like doctors’ visits and preventive care,” has a rather notable missing element – “big, expensive sports injuries.”

Such as befell Canadian world class skier Sarah Burke, in January who suffered a fatal accident while training in Utah, leaving her family with massive bills they would not have had if the accident had occurred at home in Canada that prompted them as well to ask for financial help on the internet.

Nearly all the athletes, Kliff writes in the Post, have to take out a second plan to cover catastrophic injuries. And guess how our private insurance system tracks them: “The less experienced athletes can get a rawer deal: the U.S. Bobsled and Skeleton Federation varies its deductibles from $250 to $2,500, with the least accomplished athletes paying the highest amount.”  

Kind of a perverse twist on a private system that always finds a way to discriminate against somebody, usually on the basis of age, gender, ability to pay or other socio-economic factors.

Most Americans, fortunately, do not get shot while going to the movies, nor are they under the spotlight of international Olympic focus. But away from the media glare, so many others face similar problems.

Will the ACA repair the damage? No. The positives in the law do not erase it’s gaping holes. Most notably the millions it leaves with no coverage – a number upgraded to 30 million by the Congressional Budget Office this week – and the very weak constraints the law sets for ever rising insurance costs and hospital bills.

While the U.S. athletes may win the most medals, athletes in many of the other countries already have an edge U.S. athletes do not, the one Dr. Sasson alluded to – guaranteed healthcare through national health plans, such as our Medicare assures for people 65 and over.

Nurses will not stop the campaign to expand, and improve, Medicare to cover everyone. Whether you are a high profile shooting victims, Olympic athletes, anyone else, no one in this country should have to worry about their health security ever again.

http://www.dailykos.com/story/2012/07/27/1114343/-Gold-medal-coverage-for-our-athletes-Not-for-them-or-Aurora-victims-or-so-many-others

Mass. Experience: Even $1 Co-Pay Can Block Needed Care

By Carey Goldberg
CommonHealth, WBUR, July 27, 2012

It’s not enough to get everybody insured. You have to get everybody insured well enough so that they get the care they need. And in the case of very poor people, even a $1 or a $3 co-pay can be a barrier to care.

That’s my take on a new Massachusetts-based study, done by Harvard Medical School researchers and just out in the Journal of General Internal Medicine. Other states may want to take heed, now that the federal health overhaul has been upheld by the Supreme Court and they’re moving towards getting more people insured. All insurance is not the same, and for some, even the relatively generous Massachusetts Medicaid benefits may not be enough.

More on the study soon, but first, here’s the human side from its lead author, Dr. Danny McCormick of the Cambridge Health Alliance:

“For people who aren’t in the position of being at 133% of poverty, it’s inconceivable that [a $1 or $3 co-pay] would inhibit you from getting a medication if the doctor prescribed it. But I saw a patient last week, a young man with a chronic medical condition, who works at a deli, earns minimum wage, and rides his bike to work because he can’t afford a car.
‘I have actually no dollars in my pocket.’

“I had seen him two months before and told him, ‘Your blood pressure is dangerously high, here’s a prescription for medication. You’ve really got to take it.’

“So he comes back last week and he says, ‘You’re going to be unhappy with me but I didn’t take it.’

“I said, ‘Okay, what were the problems?’

“He said, ‘I’ve got Medicaid but I’m so far behind on bills I have actually no dollars in my pocket. I’m waiting for a check from work, and as soon as that gets here I can get that medication.’”

Moral of the story: “Even very small co-payments — and this is borne out in the literature — can inhibit extra-low-income people. This was a particularly striking case because he had such high blood pressure, and he showed up again and it was worse, and I ended up sending him to the ER, and that ends up costing fantastically more than the minimum co-pay he would have had to pay. I see it all the time as a primary care doctor: even very low co-payments inhibit needed care.”

The new study turns anecdote into data, with a survey of 431 patients who sought emergency care. From the press release:

The study authors surveyed 431 adult patients visiting the emergency room of Massachusetts’ second largest safety-net hospital. They found that patients with Commonwealth Care and Medicaid – the two programs through which most of the uninsured in Massachusetts gained coverage – reported similar or higher levels of access to and utilization of outpatient visits compared with the privately insured, as well as similar access to preventive care.

However, compared with the privately insured (7.0%), a significantly higher proportion of patients with Medicaid (30.0%) or Commonwealth Care Type 1 (26.8%) reported delaying or not getting a medication. Similarly, patients with Commonwealth Care (51.2%) and Medicaid (42.2%) were substantially more likely to report delaying or not getting dental care due to cost compared with the privately insured (27.1%). Those with Medicaid also experienced more cost-related barriers than privately insured patients when it came to seeing a specialist (14.6% vs 3.5%) or getting recommended tests (15.6% vs. 5.9%). This is despite relatively low patient cost-sharing requirements in these insurance types.

Patients with Commonwealth Care Types 2 and 3, which have greater cost sharing requirements, reported significantly more cost-related barriers to obtaining care, generally, than the privately insured (45.0% vs. 16.0%), as well as greater barriers to seeing a primary care doctor (25.0% vs. 6.0%), dental provider (58.3% vs. 27.1%), and to obtaining medication (20.8% vs. 7.0%).

The uninsured in the study fared substantially worse on every measure of access to care when compared with the privately insured.

“These findings illustrate that the insurance plans that most previously uninsured patients received in Massachusetts as part of health care reform had a mixed effect in terms of access to care” said the study’s lead author, Dr. Danny McCormick, an Assistant Professor at Harvard Medical School. “While patients with Medicaid and Commonwealth Care had difficulty finding physicians who would accept their insurance type, they were ultimately able to see primary care doctors at the same rates as privately insured patients”. However, he said, “our findings also suggest that these forms of insurance may leave low-income patients with substantial cost-related barriers to care not faced by the privately insured”.

Senior author Dr. Rachel Nardin, an Assistant Professor at Harvard Medical School, said: “Health policy experts often assume that because Massachusetts health care reform decreased the percentage of uninsured in our state, that access to care would follow suit. However, our study illustrates that all forms of insurance are not equal. While Medicaid and publicly subsidized private insurance play a critical role in improving access to care for low-income people, our study shows that there is still work to be done to ensure equality of access”.

Dr. McCormick emphasizes that Medicaid and other public forms of insurance “play an absolutely essential role in improving access to care for low-income people. There’s no question about that …and any attempt to dismantle that or roll it back would result in substantially worse access to care for low-income people.”

“But the study also showed that Medicaid and Commonwealth Care plans leave patients facing challenges in finding a physician who accepts their insurance, and confronting a wide range of barriers of costs to care.”

http://commonhealth.wbur.org/2012/07/mass-low-co-pay

Concentration of health care spending

The Concentration of Health Care Spending

National Institute for Health Care Management
July 2012
Spending for health care services in the United States is highly concentrated among a small proportion of people with very high use. For the overall civilian population living in the community, the latest data indicate that more than 20 percent of all personal health care spending in 2009 — or $275 billion — was on behalf of just 1 percent of the population. The 5 percent of the population with the highest spending was responsible for nearly half of all spending. At the other end of the spectrum, 15 percent of the population recorded no spending whatsoever in the year, and the half of the population with the lowest spending accounted for just 3 percent of total spending.
With numbers like these, it is clear that per-person spending among the highest users is substantial and represents a natural starting point when thinking about how to curb health care spending. For instance, the average expenditure for each of the approximately 3 million people comprising the top 1 percent of spenders was more than $90,000 in 2009. The top 5 percent of spenders were responsible for $623 billion in expenditures or nearly $41,000 per patient. In contrast, mean annual spending for the bottom half of distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people.
Implications of Concentrated Spending
The concentration of health care spending has several implications for health policy, particularly as we think about how to control overall spending for health services. First is the obvious need to “follow the money.” With half of the population incurring just $36 billion in health care costs, it simply is not possible to realize significant contemporaneous or short-term savings by directing cost-control efforts at this group.
Strategies to improve management of chronic conditions, end-of-life care, and expensive episodes hold more promise, but raise challenges as well. To begin, accurate prospective identification of patients who can most benefit from disease management can be tricky since many of the same chronic conditions associated with higher spending are also present — and in the case of the elderly, highly prevalent — among lower-spending groups. Furthermore, even when these conditions are less prevalent for low spenders, the number of low spenders with the condition will be high simply because many more people are low spenders. Thus, interventions based solely on the presence of a chronic condition are bound to include a significant number of people who would not incur high costs, at least in the short term. Managing high spending at the end of life can also be problematic. Not all persons with high spending will die soon, and predicting timing of death and distinguishing between care that may extend life in a meaningful way and care that does little good is something that is often accomplished only in retrospect. Societal reluctance to discuss end-of-life care and fears of rationing only complicate the matter. Finally, although it might be possible to manage some of the expensive episodes more efficiently through use of clinical pathways, for example, it is virtually impossible to predict or avoid these random high-cost events.
A second implication of the highly concentrated spending pertains to the acceptance of risk by providers and payers. Emerging payment and delivery system reforms, such as accountable care organizations, rely on integrated provider organizations to accept some degree of risk for a defined patient population. These organizations will need a patient base that is large enough to balance out the sizeable downside risk of attracting just a few high spending cases. Additional risk-adjustment and other means of protection against high-cost outlier cases may also be needed. Similarly, in a world of community rating and guaranteed issue, insurers face a significant risk of adverse selection and negative financial implications if they happen to attract a disproportionate number of high spending patients. Here, too, adequate means of protecting against adverse selection and the risk posed by high spenders are required.
http://www.nihcm.org/images/stories/DataBrief3_Final.pdf

The healthier half of our population accounts for only 3 percent of health care spending, whereas the top 5 percent was responsible for nearly half of the spending. This study also confirms the 20/80 rule: 20 percent of the population is responsible for 80 percent of health care spending. This concentration of spending is of great importance as we evaluate methods of containing costs.
Perhaps the most significant factor is that cost-containment strategies targeting healthier individuals will have very little impact on total health care spending since so little is spent on this sector in the first place. This explains why the current trend to increase price sensitivity through high-deductible health plans will produce very little savings even though it will act as a barrier to beneficial health care services. Reducing spending by 10 percent in the 150 million people who use only 3 percent of health care will reduce total health care spending by only 0.3 percent – a drop in the bucket of our national health expenditures. It is a small price to pay for being certain that people will seek appropriate care when they should.
What about high-deductible plans for the 5 percent who account for half of our health care spending? The costs for each patient would far exceed the deductibles, thus most care in this group – that provided after the deductible is met – would not be reduced since price is no longer a factor.
The brief mentions problems with other strategies to control costs in populations with skewed concentrations of health care needs.  Many strategies under consideration would be ill-advised, both because of the paucity of savings and because of the distortions in access and equity.
We really don’t need to look for inevitably-flawed strategies to try overcome these distortions. A single payer system – improved Medicare for all – is an ideal model to cover all appropriate health care expenses no matter how much they are skewed within a population.

Time to save Medicare from extinction

By Richard Propp, M.D.
Times Union (Albany, N.Y.), July 30, 2012

One doesn’t hear that much about Medicare’s amazing 47-year record of paying for the care of seniors and disabled people. We are concentrating more on learning and arguing about the benefits and problems with the current health care reform of the Affordable Care Act, also known as Obamacare.

We are confronted, too, with early analyses of the effect of the Supreme Court’s ruling that states have flexibility on the proposed Medicaid expansion that will affect millions of uninsured.

But wait; what is happening with Medicare reform?

This must be prefaced by the writer Peter Heinegg’s dictum: “Culture, when left to its own devices, constantly lies.”

Conservative legislators proclaim loudly that they want to save Medicare by voucherizing it. They would make it into a defined contribution program, thus leaving the elderly and disabled liable for higher out-of-pocket expenses. I believe that this would, for all intents and purposes, destroy Medicare as we know it. Medicare needs constant improving, and parts of the Affordable Care Act aim at that.

We get so busy with our lives, so distracted by entertainments and so lazy from denial, that the things we take for granted are up for grabs. We forget that there are misguided people who by word or deed will take away our fundamental rights, rights that were won in decades of struggle.

I am a senior, and twice a week I eat dinner with seniors. I see that eventually we all become seniors or disabled. This is the time of the year that we should thank President Lyndon Johnson and his staff and Congress, who enacted Medicare on July 30, 1965, and implemented it in 1966. If seniors, the disabled and their families stand up and fight for Medicare as we know it, we shall have it for many years more.

And perhaps, if Americans study health care and think about what kind of country we want, we will one day have improved Medicare for all. Happy Birthday, Medicare!

Richard Propp is a retired physician and chairman of the Capital District Alliance for Universal Healthcare.

http://www.timesunion.com/opinion/article/Time-to-save-Medicare-from-extinction-3747897.php#ixzz22DDWcDFw

Universal coverage is not universal access

By Sarah Kliff
The Washington Post, Ezra Klein’s Wonkblog, July 27, 2012

It’s well known that the Massachusetts health law increased health insurance coverage. The picture on how it changed access to health care is a little bit less clear. Some research has suggested that access has increased – a 2011 study found a 6.6 percent increase in residents with primary care doctors. At the same time, other research has shown access gains eroding.

New research from a team of Harvard researchers sheds some light on what might be happening: While access to care has improved, those in public programs have more difficulty finding doctors and paying for care.

“Most of the narrative about Massachusetts has been that we solved the coverage problem and the access problem,” says Harvard’s Danny McCormick, the study’s lead author. “We show that people with Medicaid and CommonWealth Care face challenges confronting a wide range of cost-related barriers not faced by the privately insured.”

CommonWealth Care is Massachusetts’ publicly-subsidized health insurance program, which covers those with incomes below 300 percent of the federal poverty line. About three-quarters of those who gained insurance through the Massachusetts expansion did so through a public program – CommonwealthCare and Medicaid – while the other quarter purchased private, unsubsidized policies.

McCormick and his colleagues interviewed 431 Massachusetts residents at a safety-net hospital in Boston. Their results, published in the Journal of General Internal Medicine, showed everyone was using outpatient care, such as prevention and normal doctor visits, at about the same rates.

But there were other barriers that showed up primarily among those with public coverage. They report higher rates of delaying or not getting medications: This happened with 30 percent of Medicaid patients, compared to 7 percent of the privately insured. Dental care was also an issue, with 51 percent of CommonWealth Care subscribers delaying or forgoing care due to cost. That number stood at 27 percent for the privately insured.

“Even though the co-pays for medication in Medicaid are between $1 and $3, that can represent a substantial barrier,” says McCormick. “If you’re a person with several chronic conditions, and get six prescriptions, it adds up.”

McCormick says he sees this in his own work as a primary care physician in the Boston area. About two months ago, he prescribed two hypertension medications for a Medicaid patient with high blood pressure. The patient showed up in his office again last week; he had never filled the prescriptions.

“I asked him what happened, and he said he just couldn’t pay for them,” McCormick recalls. “He had no money coming in. I ended up having to admit him to the emergency room. It illustrates what happens when low income people can’t get medication. It ended up costing several thousands of dollars.”

McCormick stresses that his report isn’t meant to attack the value of public programs. He wholeheartedly agrees with the findings his colleagues published on Wednesday showing increased Medicaid coverage to correlate with lower mortality rates. Medicaid, he says, is still better than no coverage at all. His research showed that the small number of uninsured Massachusetts residents fared even worse than those on public programs.

“I think the two studies are consistent,” he says. “Public programs do provide substantial benefit. At the same time, there could be cost barriers that get in the way of access.”

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/27/universal-coverage-is-not-universal-access/

J Gen Intern Med. 2012 Jul 24. (Epub ahead of print)
“Access to Care After Massachusetts’ Health Care Reform: A Safety Net Hospital Patient Survey.” McCormick D, Sayah A, Lokko H, Woolhandler S, Nardin R.

Insurance Companies Gaming the System — Don’t Be Fooled

By Donna Smith
MichaelMoore.com, July 29, 2012
 
Has your insurance company called you recently to ask you to sign up for a wellness or disease management program? Has that same company told you it’s a free service to policyholders and promised you that they do not share the information with the departments and people who administer your benefits and claims? You – like me and millions of other Americans – are being scammed.
 
Follow the money, my friends, and do not believe for one minute that the same company that would deny medications, health treatments and care to you would suddenly have your best interests at heart. It’s the money. It’s always been the money.
 
As soon as the Patient Protection and Affordable Care Act (PPACA) was passed, we were all told that finally the insurance companies would have to spend more of the premium dollars they collect on actual health care. Look it up here for the nitty-gritty.
 
In short, The Kaiser Family Foundation writes, “The provision requires most insurance companies that cover individuals and small businesses to spend at least 80 percent of their premium dollars on health care (i.e. medical claims) and quality improvement, leaving no more than 20 percent for administration, marketing, and profit. Large group plans must spend at least 85 percent of premium dollars on health care. Insurers failing to meet these standards will have to pay rebates to consumers beginning later this year.”
 
And those rebate checks some policyholders are getting are also attributable to this provision of the Affordable Care Act. Sounds great, eh? What’s not to like about making the for-profit insurance companies spend more on actual health care or give us some money back?
 
What’s not to like is that never doubt for one instant that the for-profit insurance companies have found ways to subvert that well-intentioned – or at least well-scripted – nod to more accountability. Insurance companies like to make money – it is what they are for and what they are all about.
 
Health insurance is not health care. Health insurance is a financial product sold to you and to me to protect our health and our wealth which may well do neither thing. Health insurance companies do not exist to make you healthy but to make their stockholders wealthy. If you think otherwise, you are not understanding the fundamentals of corporate life or the laws governing what corporate CEOs are to do for their primary customers – their shareholders.
 
So, if required to provide more actual care that might reduce actual profits, what’s a good health insurance executive to do? Well, go to work changing what qualifies as actual health care under the new rules and then find ways to make even more money by providing that while denying more real health care services. And that’s exactly what is being done to you and to me.
 
Wellness and disease management programs now qualify under the ACA as part of what insurance companies can call “medical loss” for purposes of meeting the criteria required to be spent on health care. Having that nurse or other insurance company employee call you and me monthly and recount which medications we take and for what conditions and then set an appointment to do it again every month is considered spending on health care. That’s right.
 
Just last week, on the same day my insurance company, Aetna, was denying medications ordered by my doctor during the diagnostic and early care phases of my latest cancer journey, I was being absolutely dogged by the Aetna Connection folks (their wellness and disease management plan) wanting me to reconnect with the nurse who “needs” to engage with me on a monthly basis. Imagine, on one call I am begging Aetna to approve a medication needed to help me and relieve gut pain while on another call, I am telling the front person for Aetna Connection that I really don’t care about setting a new appointment with the wellness plan while Aetna is denying my care. I even told the caller I was groggy from the general anesthetic and that I couldn’t talk because of a sore throat from the intubation tube and that I hoped they’d call back another time when I could think more clearly, but she didn’t care. Like a collector of a very serious debt of some kind, she needed to get me assigned to a call date.
 
Imagine how many millions, if not billions, of dollars Aetna and every other insurer can now claim are being spent on health care through these programs. And imagine then how they will be actually able to deny real health care services when those millions spent on non-care figure into the totals they are required to spend on the new law.
 
We are screwed. At least I know I am. Aetna didn’t care for one moment if I got through this weekend in pain or was able to eat or rest comfortably. Aetna did care if I stayed in the Aetna Connection program. So, beware, fellow Americans. There is big money at stake in our health care system until it is changed to a more sane and honest system that values human life over cash. We need an improved and expanded Medicare for all for life system that cannot be gamed for profit.
 
Right now, we are still just part of the profit base for large health insurance companies and other health care corporations. We are not patients. Not yet. Follow the money.
 
Donna Smith, American SiCKO, is a national single-payer health care advocate and community organizer with the California Nurses Association/National Nurses Organizing Committee.
 
http://www.michaelmoore.com/words/mike-friends-blog/insurance-companies-gaming-system-dont-be-fooled

Republicans dismiss the uninsured, but what about the Democrats?

GOP Says Coverage For The Uninsured Is No Longer The Priority

By Julie Rovner
NPR, July 27, 2012

For decades, the primary goal of those who would fix the U.S. health system has been to help people without insurance get coverage. Now, it seems, all that may be changing. At least some top Republicans are trying to steer the health debate away from the problem of the uninsured.

Take this exchange between Fox News Sunday host Chris Wallace and Senate Minority Leader Mitch McConnell (R-Ky.) earlier this month, just after the Supreme Court upheld most of President Obama’s health law.

Wallace: “What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?”

McConnell: “That is not the issue. … The question is how can you go step by step to improve the American health care system? It is already the finest health care system in the world.”

But McConnell isn’t the only top Republican saying covering the uninsured should no longer be the top priority.

“Conservatives cannot allow themselves to be browbeaten by failing to provide the same coverage numbers as Obamacare,” Sen. Orrin Hatch, R-Utah, told a conference at the conservative American Enterprise Institute. “To be clear, it is a disgrace that so many American families go without health insurance coverage. But we cannot succumb to the pressure to argue on the left’s terms.”

“Every once in a while, the Republicans have rare moments of honesty. And so when they say that they don’t want to expand coverage, this is one of those rare moments,” says Ethan Rome, who runs Health Care for America Now, an advocacy group working to promote and defend the health care law.

“They look around and they see middle-class families and others in need, and what do they want to do? They want to give tax breaks to the super rich,” he says. “That’s who they are and what they do. And I think that’s why they’re starting to talk about how they don’t want to expand coverage. Because they at least want to be truthful about a couple of things. And those are the ways in which they want to abandon certain populations and be frank about it.”

http://www.npr.org/blogs/health/2012/07/27/157439331/gop-says-coverage-for-the-uninsured-is-no-longer-the-priority

Comment:  

By Don McCanne, MD

So the Republicans contend that the problem of the uninsured “is not the issue,” but the Democrats have enacted a program that pretends to provide universal coverage when they are leaving 30 million uninsured. Who is being honest here?

Because the issue of national health insurance has been associated with liberal/progressive politicians, some have mistakenly assumed that Physicians for a National Health Program (PNHP) has aligned itself with the Democratic Party. This is a non sequitur.

PNHP is a 501(c)3 organization, and, as such, does not support any political candidate nor any political party.

More importantly, PNHP is a single issue organization, exclusively supporting a single payer national health program – an improved Medicare for all. Neither the Democratic Party nor the Republican Party supports single payer.

During the political season, it is tempting for single payer supporters to select a party that might be more open to single payer, and then to support candidates of that party in the election. But top down doesn’t work, as those who supported the Democrats can now see. The top rejected single payer.

We need a bottom up approach by joining together in coalitions, by educating the public, and by promoting grassroots efforts to bring a loud and clear single payer message to all would-be politicians, regardless of political affiliation. As individuals, we can support candidates that lead on the single payer issue, but as an organization, PNHP will lead on policy, not politics.

Happy birthday Medicare: Now, let's expand it to everyone

By William M. Fogarty Jr., M.D.
St. Louis Post-Dispatch, Letters, July 30, 2012
 
Today Medicare celebrates its 47th birthday. The system has served our elderly and disabled citizens well and could be a vehicle to serve all Americans. In a recent article published by the Commonwealth Fund, satisfaction with coverage, quality of care, access and out-of-pocket expenses was far greater for Medicare beneficiaries than those of the group or individual insurance markets. If Medicare were expanded to cover all Americans, some $400 billion now lost to administrative overhead and insurance company profits could be saved annually. Those savings could cover the 50 million people who lack coverage at present or the 25 million who will remain uncovered under the Patient Protection and Affordable Care Act.
 
As a physician who practiced under Medicare for 30 years and has been a beneficiary for 12 years, I can assure you that dealing with Medicare is far less stressful and wasteful of time and effort than any insurance company.
 
Efforts to turn Medicare over to private insurance companies are being made. Why would it make sense to convert an efficient system with high satisfaction to one with higher costs and lower performance? Medicare isn’t perfect, but with some improvements it could be made available to all at far lower cost and with significant improvements in quality and patient satisfaction.
 
Happy birthday, Medicare. I hope that all Americans will soon have the opportunity to choose “Medicare for all.”
 
Dr. William M. Fogarty Jr. is a member, member, Leadership Committee, Physicians for a National Health Program-St. Louis. He resides in Webster Groves, Mo.

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor-july/article_74d9ee7a-fbdb-5cbb-92cc-41fb219d9046.html

Happy birthday Medicare: Now, let’s expand it to everyone

By William M. Fogarty Jr., M.D.
St. Louis Post-Dispatch, Letters, July 30, 2012
 
Today Medicare celebrates its 47th birthday. The system has served our elderly and disabled citizens well and could be a vehicle to serve all Americans. In a recent article published by the Commonwealth Fund, satisfaction with coverage, quality of care, access and out-of-pocket expenses was far greater for Medicare beneficiaries than those of the group or individual insurance markets. If Medicare were expanded to cover all Americans, some $400 billion now lost to administrative overhead and insurance company profits could be saved annually. Those savings could cover the 50 million people who lack coverage at present or the 25 million who will remain uncovered under the Patient Protection and Affordable Care Act.
 
As a physician who practiced under Medicare for 30 years and has been a beneficiary for 12 years, I can assure you that dealing with Medicare is far less stressful and wasteful of time and effort than any insurance company.
 
Efforts to turn Medicare over to private insurance companies are being made. Why would it make sense to convert an efficient system with high satisfaction to one with higher costs and lower performance? Medicare isn’t perfect, but with some improvements it could be made available to all at far lower cost and with significant improvements in quality and patient satisfaction.
 
Happy birthday, Medicare. I hope that all Americans will soon have the opportunity to choose “Medicare for all.”
 
Dr. William M. Fogarty Jr. is a member, member, Leadership Committee, Physicians for a National Health Program-St. Louis. He resides in Webster Groves, Mo.

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor-july/article_74d9ee7a-fbdb-5cbb-92cc-41fb219d9046.html

Happy birthday to Medicare

By Margaret A. Nosek
Houston Chronicle, July 30, 2012

With all the commotion surrounding the Supreme Court and the Affordable Care Act (ACA), it would be easy to overlook an important birthday: Today is the 47th anniversary of Medicare, the public health insurance program that covers our nation’s seniors and people with severe disabilities.

It’s a birthday that deserves to be celebrated, including here in the Lone Star State. Medicare provides 48 million Americans — about 3 million of them in Texas — with reasonably good access to health care, thereby easing their suffering, prolonging their lives, and reducing financial pressures on them and their families. Before Medicare was enacted in 1965, most retired older people were at risk of financial ruin when they got sick. Medicare changed that picture, and our state and nation are much better for it.

The Medicare program is not perfect, of course. It has burdensome co-pays and deductibles, and its benefits could be better. But it remains immensely popular, and it’s not hard to figure out why. A new study in the journal Health Affairs found that “Medicare beneficiaries age 65 and older are more satisfied with their health insurance, have better access to care, and are less likely to have problems paying medical bills than working-age adults who get insurance through employers or purchase coverage on their own.”

Keep that in mind the next time you hear a politician or pundit argue that the Medicare program should be converted to a private voucher program, where seniors would get a flat amount to buy a health policy from a commercial insurance company. Such schemes are lucrative for the big private insurers but would be bad for most seniors, leaving them with inferior and progressively deteriorating coverage.

The pretext for privatizing Medicare is the claim that it is financially unsustainable. While it’s true the program faces big financial challenges, it’s more of a victim than a cause of skyrocketing health costs. Privatizing the program would only make matters worse as the insurers, notorious for their inability to control costs, would skim more premium dollars off the top.

Yes, there are some partial, short-term solutions. For example, Congress could tweak the payroll tax by a fraction of a percentage point to make Medicare’s reserves flush again. Or lawmakers could give Medicare the power to negotiate lower drug prices, something the ACA currently prohibits.

Ironically, the best way to save Medicare is to improve and expand it to cover everybody. By establishing an improved Medicare for all, a single-payer health-care financing system, we could recoup about $400 billion that is wasted each year on unnecessary, private-insurance-related profits, paperwork and bureaucracy. That’s enough money to provide health care to everyone in the U.S. with no co-pays or deductibles and without spending a penny more than we do now.

We would also acquire other cost-control tools like the market clout needed to negotiate lower prices for medical supplies, and the ability to set global budgets for hospitals.

This type of system would bring back free choice of doctor and hospital – the one thing everyone agrees is among the top goals of health-care reform.

Polls show an improved-Medicare-for-all approach enjoys the support of about two-thirds of the public and more than half of all physicians. Yet up to now, this commonsense solution has been blocked by private insurers, pharmaceutical companies and their allies in Congress.

On Medicare’s anniversary, what do you say we give them a run for their money? Tell your elected officials the ACA doesn’t go far enough. Cut the private insurers out of the picture. We need an improved and expanded Medicare for all.

Nosek is a professor in the Department of Physical Medicine and Rehabilitation at Baylor College of Medicine and president of Health Care for All Texas.

http://www.chron.com/opinion/outlook/article/Happy-birthday-to-Medicare-3741814.php