PNHP

Medicare Is More Efficient Than Private Insurance

Medicare Is More Efficient Than Private Insurance

By Diane Archer
Health Affairs Blog, September 20th, 2011

Editor’s note: Robert B. Wohl, B.A., Wesleyan 2011, assisted Diane Archer in the preparation of this response to an earlier Health Affairs Blog “Contributing Voices” post by John Goodman and Thomas Saving. See also Austin Frakt’s post at the Incidental Economist and John Geyman’s post at the Physicians for a National Health Program blog for additional responses to the Goodman-Saving post.

Contrary to claims made by John Goodman and Thomas Saving in an earlier Health Affairs Blog post, non-partisan data from the Congressional Budget Office (CBO) and the Center for Medicare and Medicaid Services (CMS) demonstrate definitively that private insurance is increasingly less efficient than Medicare. The data show that Congress should examine and address the role that private insurance is playing in driving up overall health care costs.

Medicare Has Controlled Costs Better Than Private Insurance.

Medicare Has Lower Administrative Costs Than Private Plans.

So-called “competition” in the private health care market has driven costs up.

  • In most local markets, providers have monopoly power. Consequently, private insurers lack the bargaining power to contain prices.
  • In most areas, two or three dominant insurers dominate the regional market, limit competition and make it extremely difficult if not impossible for new insurers to enter the marketplace and stimulate price competition.
  • Medicare Advantage, which enrolls seniors in private health plans, has failed to deliver care more efficiently than traditional fee-for-service Medicare. Both the CBO and the Medicare Payment Advisory Commission (MedPAC), the commission which advises congress on Medicare’s finances, have calculated that Medicare Advantage plans covering the same care as traditional Medicare cost 12 percent more.
  • Karen Ignagni, who heads America’s Health Insurance Plans (AHIP), the insurance industry’s trade association, has admitted that private plans cannot bargain down provider costs and has asked Washington to intervene.

Medicare Is Publicly Accountable, Private Plans Are Not

When it comes to how much it costs private plans to deliver care, or individual insurer innovations that deliver value, the publicly available data are scarce. Goodman and Saving present only one study on the ways that insurers try to control costs, and this was published by AHIP. Because Medicare is publicly accountable, it allows us to study what works so that we can improve the health care system.

  • The authors cite a number of innovations that could lower the cost of care, but all of them have been introduced by doctors and clinics, not insurers. Because insurance companies treat their claims data as trade secrets, we do not know if they have adopted such innovations.
  • Even government-funded Medicare Advantage plans don’t release payment and coverage data.

A closer look at the data shows that, contrary to Goodman and Saving’s claims, Medicare delivers health care more efficiently than private insurers. Medicare’s public accountability and bargaining power give it the ability to drive system change and control skyrocketing health care costs, while profit-driven private insurers have offered no solution.

http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/

Who Remains Uninsured In Mass.? Mostly Working Poor. Why? Money.

By Carey Goldberg
CommonHealth, WBUR, September 19, 2011

You figure that when a press release comes in from Physicians for a National Health Program, it has an agenda. But that doesn’t negate the value of the research it highlights — which, in this case, was a paper from Harvard Medical School researchers just out in the Journal of General Internal Medicine.

It’s titled “Reasons why patients remain uninsured after Massachusetts’ health care reform: A survey of patients at a safety-net hospital.” And here’s its summary:

After full implementation of the Massachusetts health reform, those remaining without insurance are largely the working poor who do not have access to, or cannot afford, either employer sponsored insurance or state subsidized insurance.

The reasons why people lacked insurance varied, from having recently lost coverage through a job to fear of giving their personal data. From the Physicians For a National Health Program press release:

To understand why people remained uninsured after the reform, the study authors surveyed 431 patients, ages 18-64, who were visiting the emergency room of Massachusetts’ second largest safety-net hospital.

The researchers found that of the 189 patients without health insurance, two-thirds (65.9 percent) were employed, but only a quarter had access to employer-sponsored insurance. In addition, about one-third (35.2 percent) of uninsured patients reported having lost previous insurance coverage, with the majority of these (51.9 percent) having lost their coverage due to loss of a job or transition from one job to another.

“These findings illustrate that tying insurance to employment can be an unstable mechanism for providing coverage,” said the study’s lead author, Dr. Rachel Nardin, a neurologist at Cambridge Health Alliance. “We found that employer-based coverage failed the self-employed; those who worked for firms that did not offer insurance, especially small firms exempt from a requirement to offer insurance; and the poor who could not afford employer-sponsored insurance even when it was offered to them. The system of coverage also failed those who lost their job, which is particularly problematic with the current economic downturn.”

More than 85 percent of the uninsured patients interviewed had incomes low enough to qualify them for free or low-cost, state-subsidized private insurance. Nonetheless, one-third reported being uninsured because they could not find affordable insurance.

In fact, although the majority of the uninsured were aware of the new legal requirement that they carry health insurance, nearly half reported that it motivated them to try to find insurance but that they had been unable to find insurance they could afford.

Senior author Dr. Danny McCormick, an internist at Cambridge Health Alliance, said: “It appears that for people with very low incomes, even state plans with subsidized insurance premiums may be too costly. Also, under the reform law workers who are offered employer sponsored insurance but decline it due to cost are not eligible for state subsidized insurance, no matter how poor they are.”

And an interesting footnote: the study found few free riders.

The study also found that another common reason for losing previously held insurance was having had it cancelled without notice or because of lapsed paperwork. Only 5.6 percent of the interviewees were uninsured because they didn’t think they needed insurance, suggesting there were few seeking a so-called free ride.

http://commonhealth.wbur.org/2011/09/uninsured-massachusetts/

President Obama's political positioning on Medicare

Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction

Office of Management and Budget
September 2011

Health Savings

Increase income-related premiums under Medicare Parts B and D.

Under Medicare Parts B and D, certain beneficiaries pay higher premiums as a result of their higher levels of income. Beginning in 2017, the Administration proposes to increase income-related premiums under Medicare Parts B and D by 15 percent and maintain the income thresholds associated with income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. This will help improve the financial stability of the Medicare program by reducing the Federal subsidy of Medicare costs for those beneficiaries who can most afford them.

Modify Part B deductible for new beneficiaries.

Beneficiaries who are enrolled in Medicare Part B are required to pay an annual deductible. This deductible helps to share responsibility for payment of Medicare services between Medicare and beneficiaries. To strengthen program financing and encourage beneficiaries to seek high-value health care services, the Administration proposes to apply a $25 increase in the Part B deductible in 2017, 2019, and 2021 for new beneficiaries. Current beneficiaries or near retirees would not be subject to the revised deductible.

Introduce home health co-payments for new beneficiaries.

Medicare beneficiaries currently do not make co-payments for Medicare home health services. This proposal would create a home health copayment of $100 per home health episode, applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This would apply to new beneficiaries beginning in 2017.

Introduce a Part B premium surcharge for new beneficiaries that purchase near first-dollar Medigap coverage.

Medigap policies sold by private insurance companies provide beneficiaries additional support for covering healthcare costs by covering most or all of the cost sharing Medicare requires. This protection, however, gives individuals less incentive to consider the costs of health care services and thus raises Medicare costs and Part B premiums. Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest co-payments for routine care that most beneficiaries can afford to pay out of pocket. To encourage more efficient health care choices, the Administration proposes a Part B premium surcharge equivalent to about 15 percent of the average Medigap premium (or about 30 percent of the Part B premium) for new beneficiaries that purchase Medigap policies with particularly low cost-sharing requirements, starting in 2017. Current beneficiaries and near-retirees would not be subject to the surcharge.

http://www.whitehouse.gov/system/assets/drupal/omb/budget/fy2012/assets/jointcommitteereport.pdf

Comment: 

By Don McCanne, MD

Having been burned repeatedly in negotiations with the Republicans, and fully aware of that the election season has already begun, President Obama stepped away from conducting negotiations over in their territory and has now released his own list of policies not tainted by compromise. Since there is no hope of passing this intact in the current Congress, releasing this proposal obviously was a political maneuver. Nevertheless, it is important to see where he stands on Medicare, if only he could have his way.

Although he had been in discussions on raising the Medicare eligibility age to 67, it is a relief to see that this is absent from his wish list. Also there is not even a hint that he might consider a privatization scheme such as the Republican premium support/voucher program. So what is in his proposal?

He would increase both Medicare Part B (physician) and Part D (drug) premiums for higher-income individuals and expand the number of beneficiaries who would be subject to these higher premiums. It is entirely appropriate for higher-income individuals to contribute more in taxes to the funding of Medicare, but once individuals are in the program they should all be treated the same. Requiring higher payments for higher-income individuals reduces their support for the traditional program and increases the political pressure to privatize. If more money is needed from higher-income Medicare beneficiaries then it should be collected through progressive income taxes and not through income-indexed premiums.

He would increase Part B deductibles for younger Medicare beneficiaries, but not for those already in the program. Just as assigning different premiums based on income decreases solidarity, the assignment of different deductibles based on age also takes a toll on solidarity.

Introducing co-payments for Medicare home health services shifts costs from the government to Medicare beneficiaries. In fact, new co-payments, higher premiums, and larger deductibles all expand the cost burden for beneficiaries, which can have the detrimental impact of impairing access.

Medicare already is a program with inadequate coverage that leaves patients with excessive out-of-pocket costs. The costs can be high enough such that Medicare beneficiaries have not been immune to personal bankruptcy associated with medical debt. Several previous Quote of the Day messages have shown that cost sharing has only a negligible impact in reducing our national health expenditures, yet it often does cause financial hardship and can impair access.

The proposal to introduce a Part B surcharge for individuals purchasing Medigap plans is yet another means of shifting more costs to the patient. It is designed to discourage patients from buying Medigap plans that would significantly reduce the burden of cost sharing. Instead of increasing cost sharing, the financial burden should be reduced by folding Medigap benefits into the traditional Medicare program.

Even though President Obama and his handlers are trying to create an image that he is standing firm for middle-income Americans and against the right wing anti-government extremists, on Medicare he is actually moving to the right! He has violated the first rule of negotiation. You never compromise any of your basic policy positions before you begin.

Where should he have begun? He should have eliminated all cost sharing in Medicare, converted the financing infrastructure into a single payer system, and then moved the eligibility age to birth. But no. Free of the bonds of the right wing extortion, he drifted to the right anyway.

President Obama’s political positioning on Medicare

Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction

Office of Management and Budget
September 2011

Health Savings

Increase income-related premiums under Medicare Parts B and D.

Under Medicare Parts B and D, certain beneficiaries pay higher premiums as a result of their higher levels of income. Beginning in 2017, the Administration proposes to increase income-related premiums under Medicare Parts B and D by 15 percent and maintain the income thresholds associated with income-related premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. This will help improve the financial stability of the Medicare program by reducing the Federal subsidy of Medicare costs for those beneficiaries who can most afford them.

Modify Part B deductible for new beneficiaries.

Beneficiaries who are enrolled in Medicare Part B are required to pay an annual deductible. This deductible helps to share responsibility for payment of Medicare services between Medicare and beneficiaries. To strengthen program financing and encourage beneficiaries to seek high-value health care services, the Administration proposes to apply a $25 increase in the Part B deductible in 2017, 2019, and 2021 for new beneficiaries. Current beneficiaries or near retirees would not be subject to the revised deductible.

Introduce home health co-payments for new beneficiaries.

Medicare beneficiaries currently do not make co-payments for Medicare home health services. This proposal would create a home health copayment of $100 per home health episode, applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This would apply to new beneficiaries beginning in 2017.

Introduce a Part B premium surcharge for new beneficiaries that purchase near first-dollar Medigap coverage.

Medigap policies sold by private insurance companies provide beneficiaries additional support for covering healthcare costs by covering most or all of the cost sharing Medicare requires. This protection, however, gives individuals less incentive to consider the costs of health care services and thus raises Medicare costs and Part B premiums. Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest co-payments for routine care that most beneficiaries can afford to pay out of pocket. To encourage more efficient health care choices, the Administration proposes a Part B premium surcharge equivalent to about 15 percent of the average Medigap premium (or about 30 percent of the Part B premium) for new beneficiaries that purchase Medigap policies with particularly low cost-sharing requirements, starting in 2017. Current beneficiaries and near-retirees would not be subject to the surcharge.

http://www.whitehouse.gov/system/assets/drupal/omb/budget/fy2012/assets/jointcommitteereport.pdf

Having been burned repeatedly in negotiations with the Republicans, and fully aware of that the election season has already begun, President Obama stepped away from conducting negotiations over in their territory and has now released his own list of policies not tainted by compromise. Since there is no hope of passing this intact in the current Congress, releasing this proposal obviously was a political maneuver. Nevertheless, it is important to see where he stands on Medicare, if only he could have his way.

Although he had been in discussions on raising the Medicare eligibility age to 67, it is a relief to see that this is absent from his wish list. Also there is not even a hint that he might consider a privatization scheme such as the Republican premium support/voucher program. So what is in his proposal?

He would increase both Medicare Part B (physician) and Part D (drug) premiums for higher-income individuals and expand the number of beneficiaries who would be subject to these higher premiums. It is entirely appropriate for higher-income individuals to contribute more in taxes to the funding of Medicare, but once individuals are in the program they should all be treated the same. Requiring higher payments for higher-income individuals reduces their support for the traditional program and increases the political pressure to privatize. If more money is needed from higher-income Medicare beneficiaries then it should be collected through progressive income taxes and not through income-indexed premiums.

He would increase Part B deductibles for younger Medicare beneficiaries, but not for those already in the program. Just as assigning different premiums based on income decreases solidarity, the assignment of different deductibles based on age also takes a toll on solidarity.

Introducing co-payments for Medicare home health services shifts costs from the government to Medicare beneficiaries. In fact, new co-payments, higher premiums, and larger deductibles all expand the cost burden for beneficiaries, which can have the detrimental impact of impairing access.

Medicare already is a program with inadequate coverage that leaves patients with excessive out-of-pocket costs. The costs can be high enough such that Medicare beneficiaries have not been immune to personal bankruptcy associated with medical debt. Several previous Quote of the Day messages have shown that cost sharing has only a negligible impact in reducing our national health expenditures, yet it often does cause financial hardship and can impair access.

The proposal to introduce a Part B surcharge for individuals purchasing Medigap plans is yet another means of shifting more costs to the patient. It is designed to discourage patients from buying Medigap plans that would significantly reduce the burden of cost sharing. Instead of increasing cost sharing, the financial burden should be reduced by folding Medigap benefits into the traditional Medicare program.

Even though President Obama and his handlers are trying to create an image that he is standing firm for middle-income Americans and against the right wing anti-government extremists, on Medicare he is actually moving to the right! He has violated the first rule of negotiation. You never compromise any of your basic policy positions before you begin.

Where should he have begun? He should have eliminated all cost sharing in Medicare, converted the financing infrastructure into a single payer system, and then moved the eligibility age to birth. But no. Free of the bonds of the right wing extortion, he drifted to the right anyway.

Government health spending is fiscally unsustainable?

Census Numbers: The Trend Toward Government Coverage Continues

By Nina Owcharenko
Health Affairs Blog, September 14, 2011

(Condensed)

In its yearly survey of health insurance coverage, the U.S. Census Bureau published figures that underscore the trend toward greater dependence on government for coverage.

Most analysts, regardless of political views, generally agree that to make the system work better, there needs to be greater portability and continuity in health care coverage.

This, however, is where the philosophical divide occurs. Those on the left generally see a larger role for government-based coverage, while those on the right see a greater role for individuals. One only needs to look at the Patient Protection and Affordable Care Act (PPACA) to see this take shape. The PPACA puts the trend toward government-based coverage on the fast track. The law will add an estimated 26 million people to Medicaid alone.

Even without PPACA, existing government-based coverage (Medicare and Medicaid) is fiscally unsustainable.

Those on the right (including myself) who oppose the government-based model see an alternative path toward portability and continuity based on individual ownership and market-based competition. The Heritage Foundation’s Saving the American Dream plan empowers individuals and families to own and control their health insurance. It establishes individual tax relief for people to buy coverage in a marketplace where insurers and providers are accountable to meeting consumers’ needs of higher quality at lower costs. It also reforms Medicare and Medicaid, putting them on a sustainable path forward.

While discussion of the Census numbers typically focuses on changes affecting  the uninsured, the real story is the slow but steady trend away from private coverage and toward government coverage. Recent estimates by the CMS actuaries project that by 2020, government will control 50 percent of all health care spending in the country. Americans should take note that the health care system is moving to the tipping point where it will be more government-run than private.

http://healthaffairs.org/blog/2011/09/14/census-numbers-the-trend-toward-government-coverage-continues/

Response:

Don McCanne
September 18th, 2011

Why would health care be fiscally unsustainable when it is paid for through a government program, yet sustainable when it is paid for privately?

The fiscally unsustainable argument is based on the assumptions that the government would not introduce adequate cost containment measures, and that the government would not impose adequate taxes or tax equivalents to pay for the system. Based on the experience of other nations, both assumptions should be challenged.

Other nations use either government ownership or robust government regulation to slow the growth in health care costs. They also use government taxing authority or regulatory mandates to ensure that the health system is fiscally sustainable. Directly or indirectly, they function as a public monopsony. Although they may complain about their own rising costs, they certainly spend less money than we do, yet they are able to include essentially everyone in their comprehensive programs.

How would private control of health spending produce a fiscally sustainable system? The answer is that it would be fiscally sustainable only for the government. With a median household income of $49,000 and average health care expenditures of an insured family at $18,000 (Milliman Medical Index), health care costs for individuals and families are already unsustainable. (Median households and families with employer-sponsored plans are not the same, but these numbers still illustrate the enormity of the problem.)

Health consumer empowerment is being achieved by shifting more of the responsibility for payment directly to patients, especially through increased deductibles and other cost sharing. At today’s high heath care costs that means that many more patients would be foregoing beneficial health care services, simply because they can’t pay for them.

Now Medicare and Medicaid are being threatened with proposed reforms that allegedly would put them on the path of sustainability. Again, that might be sustainable for the government, but the proposed changes would shift more costs to patients, further impairing access because of increasing financial barriers to care.

Many of us were shocked recently during the Republican candidates’ debate when the moderator asked if a thirty year old, critically ill man should be allowed to die because he was uninsured, and members of the audience shouted, “Yes.” But that was only a very few voices from an anti-government Tea Party audience. Not only would citizens of other nations emphatically reject this view, it also decidedly violates American values.

Nina Owcharenko offers us the choice between consumer empowerment in which we can reject the health care we need but can’t pay for, or our own beneficent government monopsony that would ensure value in our health care purchasing so that all of us could have the health care that we need.

Although her blog entry and this response may appear to be merely a rhetorical game, the choice really is a matter of our nation’s health.

http://healthaffairs.org/blog/2011/09/14/census-numbers-the-trend-toward-government-coverage-continues/#comment-50117

Health Care Versus Wealth Care: Investors with a Conscience Should Divest from Health Insurance Companies

By Rob Stone
Tikkun Magazine, September 16, 2011

I was the doctor on duty one night in August when the ambulance rushed a man into our Midwestern hospital ER. As I walked into the room, the scene was right out of TV. A nurse was trying to start an IV. Someone was running an EKG. A student had just put oxygen in the patient’s nose. The room seemed crowded. The paramedics were sweating and slightly out of breath.

But my attention was on a pale, thin, fifty-five-year-old man sitting bolt upright on a gurney, clutching his chest and straining to breathe. Cold sweat dripped off his nose. I asked a couple of quick questions as I leaned him forward to listen to his lungs. Someone handed me his EKG showing an acute heart attack.

I slipped out of the room for a second to get the cardiologist on the phone. He would be right in, along with the rest of his team. But it was a Thursday night, late, and they were coming in from home. It would be at least twenty minutes until high-tech medicine could work its wonders, until the cardiologist could thread a thin plastic catheter into the patient’s heart and put in a stent to open his blockage.

I was back to the room in a flash, and he looked no better. We gave him intravenous nitroglycerin, morphine, and powerful blood thinners. He began to look less frightened and some color crept back into his face. We still had a few minutes before they would be ready for him in the cardiac catheterization lab.

Just then I became aware of a woman quietly sobbing in a chair in the corner of the room, probably his wife. I walked over toward her and, as I neared, I reached out to touch her shoulder. She suddenly turned a fierce face up at me, saying: “When he told you he’d been having pain for two hours, he was lying! He’s been having chest pains for the last two weeks!”

She didn’t let up: “We were in the ER six months ago with his chest hurting, and they told him to see his cardiologist, but we don’t have any insurance. They won’t see him again without cash up front! What are we supposed to do?”

Her voice rising, she added: “And you know what else? They’re suing us in small claims court right now over the bill from our last ER visit!”

Here was this poor woman, in my ER, not only deathly afraid that she might lose her husband tonight, but also afraid that whether he lived or died they might face an impossibly huge medical bill and lose their house, their car, everything.

The patient was a self-employed house painter, and he’d had a previous heart problem. Self-employed and a pre-existing condition — in America today with those two strikes, you are out. There is no way to afford health insurance. Is the Affordable Care Act going to fix this?

The Affordable Care Act and the Health Care Lobby

The Affordable Care Act (ACA) faces an uncertain future. The 11th Circuit Court of Appeals in August ruled the individual mandate unconstitutional. Judge Hull, who cast the deciding vote, was a Clinton appointee. Theverdict states:

This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives.

The ACA was essentially written in the Senate Finance Committee chaired by Max Baucus. The actual author was his chief health care aide, Liz Fowler. Her job before working for Baucus? Vice president of WellPoint/Anthem/Blue Cross, the country’s largest health insurer.

The health insurance industry played both sides against the middle during the congressional debate. While publicly claiming to be in favor of reform, they secretly funneled millions to front groups and organizations like the Chamber of Commerce, which fought the bill tooth and nail. What the insurers wanted most out of the deal was the individual mandate — a federally enforced requirement that all Americans buy their defective products, with taxpayer-financed subsidies for those who couldn’t afford the premiums. What they wanted least were regulatory burdens that might limit their profitability.

Not being able to buy insurance if you are sick is one of the catch-22 aspects of our crazy system. In the eyes of insurance bureaucrats, it seems that life itself is a pre-existing condition. The ACA’s ban on the use of pre-existing conditions to deny insurance coverage is scheduled to go into effect in 2014. Preventing that will be the next target of their lobbying fury.

It’s Good to Be an Insurance Company

In this down economy, there are few bright spots for investors. Thank God for health insurance.

The Big Five health insurers — WellPoint, UnitedHealth, Aetna, Humana, and CIGNA — together cover almost 100 million of us. Their profitsfrom April to June 2011 totaled over $3.3 billion, 13 percent over their second quarter profits in 2010. Last year was their best year ever. For the twelve months ending in July 2011, these giants saw their average stock price rise almost 50 percent. These are huge corporations: WellPoint and UnitedHealth are in the top fifty of the Fortune 500.

What to do with all that profit? WellPoint, the behemoth created a decade ago from formerly nonprofit Blue Cross plans in fourteen states, spent $67 million on lobbying over the past three years. They paid their CEO, Angela Braly, $13 million in 2010, but that was paltry compared to the reimbursement package of UnitedHealth CEO Stephen Hemsley, who cleared $37 million, including the stock options he exercised.

Those stock options take on extra significance when company stock repurchases are considered. WellPoint, to take only one example, spent $21.6 billion of patients’ premium dollars to buy back its own stock from 2003 through 2010.

Spending billions on stock buybacks benefits a tiny elite of CEOs, board members, and top officers, who are compensated largely with stock options. They buy the stock back to push the price upward. Their options increase in value as the share price rises. This is an enormous transfer of wealth from individuals and employers to top management. It benefits the largest Wall Street stockholders as well, but not you, not me, not patients.

This industry exists to collect premiums and process claims, and while they have no problems collecting our premiums, it’s a different story when they have to pay. The June 2011 AMA Health Insurer Report Card revealed commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of 2 percent compared to last year. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year and added an estimated $1.5 billion in unnecessary administrative costs to the health system. Medicare, by comparison, had an error rate of less than 4 percent.

They are obviously not using their piles of cash to improve service. What about lowering premiums? In our dreams.

Health insurance premiums have more than doubled over the last ten years, rising at four times the overall rate of inflation. (Over the same period Medicare premiums have barely risen at all, with no increase in out-of-pocket expenses.) While premiums have risen, coverage has shrunk. Copays and deductibles increase every year. People with individual coverage can have annual deductibles of $10,000 and more. No wonder illness leads to bankruptcy, even if you have insurance.

Bankruptcy, Moral and Financial

Every business day in America, 3,700 families file for bankruptcy caused by illness and medical bills, and that number is rising. This shameful situation happens in no other wealthy democracy. It would be a scandal anywhere else. Most medically bankrupt families were middle-class before they suffered financial setbacks. Roughly 60 percent of them had attended college; twenty percent of families included a military veteran or active-duty soldier.

Most astoundingly, 60 percent of the individuals whose illness led to bankruptcy had private health insurance when they got sick. Don’t we buy health insurance to avoid financial ruin? High deductibles lead directly to bankruptcy and foreclosure. To make matters worse, they cause people to postpone needed care. All of which lead to higher insurance company profits.

The insurers don’t like to tell their customers this, but when they talk to their Wall Street masters, they sing a different tune. Angela Braly of WellPoint, speaking during a conference call for financial analysts in 2008, was asked if she would consider lowering premiums if that would increase enrollment in Anthem policies. Her reply, “We will not sacrifice profitability for membership,” was just what they wanted to hear.

That sentiment hasn’t changed. Recently Aetna’s chief financial officer, Joseph Zubretsky, made similar comments on a conference call. Concerned that investors might think Aetna was willing to grow by adding people to its rolls who could have substantial medical needs, Zubretsky soothed their fears, “We would like to have both profit and growth, but if you have to choose between one or the other, you take margin and profit and you sacrifice the growth.”

Recall that these are the same companies that developed algorithms to target women diagnosed with breast cancer so they could scour their health records for an excuse to cancel their policies. This inhuman practice, known as rescission, has supposedly been banned by the ACA.

Buying Doctors

If insurance companies are not lowering premiums to attract more customers or investing in infrastructure to reduce errors, what else besides their own stock (and some politicians) are they buying? Doctors! UnitedHealth is quietly buying medical groups who treat patients covered by its plans in several areas of the country. WellPoint announced in June that it would acquire CareMore, which operates twenty-six clinics in the Los Angeles area. CIGNA claims that it saves 9 percent on patients treated by doctors in a Phoenix medical group it controls. Is this a good thing?

In July, Kaiser Health News, in an article titled “Managed Care Enters The Exam Room As Insurers Buy Doctor Groups” said:

Some observers watching the developments say the health law, which in part was sold as a way to rein in insurers, has had the opposite result, opening the door for the companies to take control of even more parts of the health system.

“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a California-based health care consultant who does some work for United, as well as most of its competitors. “The very people who were the demons in all of this, that the public can’t stand — managed-care firms — are the big winners.”

And the losers? Patients, and those of us paying premiums.

Health, Health Care, and Health Insurance

No other wealthy democracy spends as much on health care as we do. It’s not even close. Most of our peer countries spend about half as much per capita as we do.

If you hear politicians proclaim “America has the best health care in the world,” you can stop listening to them at that point. They are not reality-based. We may be paying the most on the planet for health care, but there is no objective evidence to support the claim that our health care is the best. Again, it’s not even close. The World Health Organization ranks U.S. health care thirty-seventh, just below Costa Rica.

No other wealthy democracy relies on for-profit insurance companies. Here we stand alone.

On August 10, 2011, the Saint Louis Post-Dispatch editorialized, “IfAmerica truly is serious about dealing with its deficit problems, there’s a fairly simple solution. But you’re probably not going to like it: Enact a single-payer health care plan.” The editorial goes on to explain that the “way for government to address its health costs is not to shift them, but to reduce them. This is what a single-payer health care system would do, largely by taking the for-profit players (insurance companies for the most part) out of the loop.”

The editorial asserts, “the ACA didn’t go far enough,” and concludes: “Eventually, the United States will have a single-payer plan. But we’ll waste a lot of money and time getting there.” Its authors could have added “and waste a lot of lives” too.

What is a “single-payer plan” like the Post-Dispatch endorses? Robert Reich, author, professor, and secretary of labor under Bill Clinton, explained it this way in February 2011:

If the individual mandate to buy private health insurance gets struck down by the Supreme Court or killed off by Congress, I’d recommend President Obama immediately propose what he should have proposed in the beginning — universal health care based on Medicare for all.

Medicare is a single-payer plan. Everyone over age sixty-five is covered by this simple, single plan, which is publicly financed and privately delivered. How would a single-payer plan save money? The Post-Dispatchexplains, “Streamlining payment through a single nonprofit payer would save more than $400 billion per year, enough to provide comprehensive, high-quality coverage for all Americans.”

The respected journal Health Affairs published more evidence of the economic advantage of a single payer system on August 19, 2011. The article “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting With Payers” found that U.S. physicians’ office staff “spent 20.6 hours per physician per week interacting with health plans — nearly ten times that of their Ontario counterparts. If U.S. physicians had administrative costs similar to those of Ontario physicians, the total savings would be approximately $27.6 billion per year.”

The evidence is overwhelming: the for-profit insurance industry adds a huge amount of inefficiency, bureaucracy
and cost to our system while adding no value, only hassle. These companies are parasitic middlemen we would be better off without. Their interest is in wealth care, not health care.

On top of that, the insurance industry is the single greatest barrier to achieving an efficient and affordable system to cover all Americans. If you have any doubt, read Wendell Potter’s Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans. During the debate over the ACA, health insurance lobbyists sank the president’s public option, even though 70 percent of the public favored it. Their war chests overflow with money and their influence grows every day.

Hoping Congress will fix this leads only to despair. We need new ways to weaken the death grip this powerful industry has on us.

Divestment

There is a battle going on for the soul of America. Before he died, Ted Kennedy wrote to President Obama about health care reform, calling it “the great unfinished business of our society.” Kennedy avowed, “What we face is above all a moral issue; that at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”

Back in the ER on that hot August night, I sent my man to the cath lab and they successfully stented his blockage. He went home the next day with a bill for $25,000. I tried to call him a few months later, but the phone number was “no longer in service.”

Congress and the politicians are “no longer in service.” We’ve got to look elsewhere.

Could we simply boycott health insurance? No, over 50 million are without insurance now, and they are living sicker and dying younger because they have barriers to care.

Stockholders with a conscience have tried for years to engage corporate leadership and have attempted shareholder resolutions to reform the industry from the inside. Despite their best efforts, they have had no significant positive effect so far.

It is time to move beyond resolutions and on to divestment.

The Divestment Campaign for Health Care is one group that is organizing a push in that direction.

From 1985 to 1990, over two hundred U.S. companies cut all ties with South Africa, resulting in a loss of $1 billion in direct American investment. This economic pressure hastened the fall of apartheid. It happened as a result of people power, democracy in action. Pension funds divested from companies doing business with South Africa. Faith communities declared they would not support injustice. Students called on their universities to cleanse their endowments. An idea was born — “socially responsible investing.”

There is nothing socially responsible about investing in the health insurance industry.

Up to now, they have received little scrutiny from investors. One exception is Domini Social Investments, whose Global Investment Standards give “support [for] government’s responsibility to provide basic public goods that are as varied as health care, prisons, primary school education, and national security.” Domini is “concerned about the extent to which health insurance privatizes a public good.”As a result, Domini has disqualified most health insurers from their portfolios.

In contrast, the $4 billion TIAA-CREF Social Choice Equity Fund holds $24 million in WellPoint stock, as well as Aetna and Humana from the health insurance Big Five. WellPoint stock may only represent 0.6 percent of the total fund, but in this large, diversified mutual fund, which includes over 800 individual stocks, WellPoint is in the top 5 percent of the fund’s largest holdings. TIAA-CREF has refused to exclude health insurance companies.

The Presbyterian Church USA, often in the vanguard of the faith community, is there again. Their General Assembly meets in the summer of 2012 and they will vote on an “Overture” to “implement divestment procedures as well as encourage individual Presbyterians and congregations to divest of holdings in the [publicly traded health insurance] companies.” Other faith groups cannot be far behind.

We have nothing to lose. Health insurance companies have everything to lose as their stock prices drop and their influence wanes. Go to your church, your union, your pension plan, your 401k advisor, your university endowment, your city council, your friends and neighbors, and tell them it’s time to get the health insurers out!

Who can defend these corporations? There is no business case, no health care case, no moral case to support their ongoing existence. They make their profits by avoiding taking care of sick people — by refusing to issue policies, canceling policies, or denying payment. I went to medical school in order to care for the sick.

The health insurance industry must go.

Rob Stone is a gardener, grandfather, and teacher. He has practiced emergency medicine in Bloomington, Indiana, since the early 1980s, and for the past year has been transitioning his medical career to hospice and palliative medicine. He is founder and director of Hoosiers for a Commonsense Health Plan and serves on the board of directors of Physicians for a National Health Program.

Uninsured patients in Massachusetts still predominantly the working poor, despite state’s health reform

Many still find insurance unaffordable and employer-sponsored insurance unavailable, Harvard Medical School researchers say

FOR IMMEDIATE RELEASE
Sept. 19, 2011

Contacts:
Danny McCormick, M.D., M.P.H.
Rachel Nardin, M.D.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

Despite the implementation of the Massachusetts health care reform designed to bolster employer-based insurance and to provide no-cost or low-cost insurance to those unable to afford it, the uninsured in Massachusetts remain predominantly the working poor, according to a new study by researchers at Harvard Medical School just published online in the Journal of General Internal Medicine.

The 2006 comprehensive health care reform was designed to achieve “universal coverage” through new laws requiring that employers with more than 10 employees offer insurance and that all state residents obtain insurance or pay a fine. It also provided free or low-cost, subsidized insurance to state residents with low incomes.

Yet, most estimates put the number of uninsured in the state at well above a quarter million. For instance, last week the Census Bureau released its survey which found 370,000 people to be uninsured in Massachusetts — 5.6 percent of the state’s population.

To understand why people remained uninsured after the reform, the study authors surveyed 431 patients, ages 18-64, who were visiting the emergency room of Massachusetts’ second largest safety-net hospital.

The researchers found that of the 189 patients without health insurance, two-thirds (65.9 percent) were employed, but only a quarter had access to employer-sponsored insurance. In addition, about one-third (35.2 percent) of uninsured patients reported having lost previous insurance coverage, with the majority of these (51.9 percent) having lost their coverage due to loss of a job or transition from one job to another.

“These findings illustrate that tying insurance to employment can be an unstable mechanism for providing coverage,” said the study’s lead author, Dr. Rachel Nardin, a neurologist at Cambridge Health Alliance. “We found that employer-based coverage failed the self-employed; those who worked for firms that did not offer insurance, especially small firms exempt from a requirement to offer insurance; and the poor who could not afford employer-sponsored insurance even when it was offered to them. The system of coverage also failed those who lost their job, which is particularly problematic with the current economic downturn.”

More than 85 percent of the uninsured patients interviewed had incomes low enough to qualify them for free or low-cost, state-subsidized private insurance. Nonetheless, one-third reported being uninsured because they could not find affordable insurance.

In fact, although the majority of the uninsured were aware of the new legal requirement that they carry health insurance, nearly half reported that it motivated them to try to find insurance but that they had been unable to find insurance they could afford.

Senior author Dr. Danny McCormick, an internist at Cambridge Health Alliance, said: “It appears that for people with very low incomes, even state plans with subsidized insurance premiums may be too costly. Also, under the reform law workers who are offered employer sponsored insurance but decline it due to cost are not eligible for state subsidized insurance, no matter how poor they are.”

McCormick added, “If we are serious about the goal of universal coverage, we will need to further reduce or eliminate the financial barriers to getting insurance that still clearly exist in Massachusetts.”

The study also found that another common reason for losing previously held insurance was having had it cancelled without notice or because of lapsed paperwork. Only 5.6 percent of the interviewees were uninsured because they didn’t think they needed insurance, suggesting there were few seeking a so-called free ride.

“Our study shows the many ways that patients can get left out of a complex system for providing health insurance,” said McCormick. “While the reform substantially reduced the number of uninsured in our state, it failed to fully reach the demographic groups it targeted. Our findings emphasize the fragility of a reform requiring voluntary uptake, periodic renewal, dependence on employment and cost-sharing.”

The study authors also point out that the Massachusetts health care reform law served as the model for the national health reform law, the Affordable Care Act, and thus may suggest even larger difficulty ahead for national health reform.

Nardin commented: “In Massachusetts, we had about 10 percent uninsured before the reform. In many other states, the uninsured rate is in the 20-25 percent range. If our results are any indicator, the national reform may leave many working poor uncovered.

“Although arguments about political feasibility are a major challenge, our study suggests that a comprehensive reform guaranteeing coverage to all residents without eligibility restrictions — such as that provided by many single-payer systems — would be a more effective way to achieve universal coverage than the Massachusetts reform.”

“Reasons why patients remain uninsured after Massachusetts’ health care reform: A survey of patients at a safety-net hospital,” Rachel Nardin, M.D., Assaad Sayah, M.D., Hermione Lokko, B.Sc., Steffie Woolhandler, M.D., M.P.H., and Danny McCormick, M.D., M.P.H. Journal of General Internal Medicine, Sept. 16, 2011.

*******

Physicians for a National Health Program (www.pnhp.org) is an 18,000-member organization advocating a nonprofit, single-payer national health insurance program for the United States. PNHP had no role in funding the study mentioned above. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Government health spending is fiscally unsustainable?

Census Numbers: The Trend Toward Government Coverage Continues

By Nina Owcharenko
Health Affairs Blog, September 14, 2011

(Condensed)

In its yearly survey of health insurance coverage, the U.S. Census Bureau published figures that underscore the trend toward greater dependence on government for coverage.

Most analysts, regardless of political views, generally agree that to make the system work better, there needs to be greater portability and continuity in health care coverage.

This, however, is where the philosophical divide occurs. Those on the left generally see a larger role for government-based coverage, while those on the right see a greater role for individuals. One only needs to look at the Patient Protection and Affordable Care Act (PPACA) to see this take shape. The PPACA puts the trend toward government-based coverage on the fast track. The law will add an estimated 26 million people to Medicaid alone.

Even without PPACA, existing government-based coverage (Medicare and Medicaid) is fiscally unsustainable.

Those on the right (including myself) who oppose the government-based model see an alternative path toward portability and continuity based on individual ownership and market-based competition. The Heritage Foundation’s Saving the American Dream plan empowers individuals and families to own and control their health insurance. It establishes individual tax relief for people to buy coverage in a marketplace where insurers and providers are accountable to meeting consumers’ needs of higher quality at lower costs. It also reforms Medicare and Medicaid, putting them on a sustainable path forward.

While discussion of the Census numbers typically focuses on changes affecting  the uninsured, the real story is the slow but steady trend away from private coverage and toward government coverage. Recent estimates by the CMS actuaries project that by 2020, government will control 50 percent of all health care spending in the country. Americans should take note that the health care system is moving to the tipping point where it will be more government-run than private.

http://healthaffairs.org/blog/2011/09/14/census-numbers-the-trend-toward-government-coverage-continues/

Response originally posted on the Health Affairs Blog

Response: Don McCanne
September 18th, 2011

Why would health care be fiscally unsustainable when it is paid for through a government program, yet sustainable when it is paid for privately?

The fiscally unsustainable argument is based on the assumptions that the government would not introduce adequate cost containment measures, and that the government would not impose adequate taxes or tax equivalents to pay for the system. Based on the experience of other nations, both assumptions should be challenged.

Other nations use either government ownership or robust government regulation to slow the growth in health care costs. They also use government taxing authority or regulatory mandates to ensure that the health system is fiscally sustainable. Directly or indirectly, they function as a public monopsony. Although they may complain about their own rising costs, they certainly spend less money than we do, yet they are able to include essentially everyone in their comprehensive programs.

How would private control of health spending produce a fiscally sustainable system? The answer is that it would be fiscally sustainable only for the government. With a median household income of $49,000 and average health care expenditures of an insured family at $18,000 (Milliman Medical Index), health care costs for individuals and families are already unsustainable. (Median households and families with employer-sponsored plans are not the same, but these numbers still illustrate the enormity of the problem.)

Health consumer empowerment is being achieved by shifting more of the responsibility for payment directly to patients, especially through increased deductibles and other cost sharing. At today’s high heath care costs that means that many more patients would be foregoing beneficial health care services, simply because they can’t pay for them.

Now Medicare and Medicaid are being threatened with proposed reforms that allegedly would put them on the path of sustainability. Again, that might be sustainable for the government, but the proposed changes would shift more costs to patients, further impairing access because of increasing financial barriers to care.

Many of us were shocked recently during the Republican candidates’ debate when the moderator asked if a thirty year old, critically ill man should be allowed to die because he was uninsured, and members of the audience shouted, “Yes.” But that was only a very few voices from an anti-government Tea Party audience. Not only would citizens of other nations emphatically reject this view, it also decidedly violates American values.

Nina Owcharenko offers us the choice between consumer empowerment in which we can reject the health care we need but can’t pay for, or our own beneficent government monopsony that would ensure value in our health care purchasing so that all of us could have the health care that we need.

Although her blog entry and this response may appear to be merely a rhetorical game, the choice really is a matter of our nation’s health.

Seven reasons single-payer health care will be great for Vermont business

By Bram Kleppner
Burlington Free Press, Sept. 15, 2011

One: Quality. Our health care system doesn’t produce very good health. Of the world’s 33 developed countries, the United States ranks near the bottom in health indicators like infant death, death that could have been prevented by proper health care, and life expectancy. From North America to Europe to the Middle East to Asia, people in countries with single-payer systems are consistently healthier than Americans.

Healthy workers do better work at lower cost than unhealthy workers. A single-payer system will provide Vermont companies with healthier workers.

Two: Hard costs. Judging by other single-payer systems around the world, going to single-payer should cut our health care costs roughly in half.

The report to the Vermont legislature recommended paying for single-payer with an 11 percent payroll tax. The legislature does not seem enthusiastic about this, and I expect we will end up with a combination of smaller taxes on payroll, income, and/or sales. However, even if we fund the system entirely with an 11 percent payroll tax, our small Vermont company would still have lower costs than under the current system; over the last five years, Danforth Pewter’s health care costs have averaged over 15 percent of payroll.

Three: Soft costs. How much time do you personally waste dealing with your health insurance every year? Multiply that across every employee in Vermont. Add the time everyone spends at benefits meetings trying to figure out the latest changes to their insurance. Add the additional time that the HR people at every Vermont company waste on health insurance administration every year.

Now imagine all that going away.

Four: Sales. Consumers will benefit directly from the lower costs of a single-payer system through much lower out-of-pocket expenses, and every dollar a consumer doesn’t spend on health care is a dollar he or she can spend on something more pleasant. Since Vermonters spend a big portion of their discretionary dollars on local goods and services, Vermont companies will see higher sales.

Five: Privacy. We’ve been getting our health insurance through our jobs so long that we’ve become used to having our companies know all about our private health status, but companies and employees will both be happier when we’re not forced into this uncomfortable intimacy.

Six: Freedom. You probably know people who dream of starting their own businesses, or joining their spouse’s business, but who can’t quit their day jobs because they need the health insurance. Imagine the boon to the economy if all those people become free to unleash their entrepreneurial passion. Imagine the great new products and services that they will create. Imagine how much happier those people will be working for themselves in a business they care about.

This will be good for Vermont business because first, some of those new products and services will help us run our businesses better; and second, honestly, we don’t want people around who are just punching the clock to get health insurance. Make it easy to go, and some of the dead wood will clear itself out.

Seven: Employment. Employees, companies and the economy will all benefit from another aspect of single-payer health care. If we remove the cost of health care from the cost of hiring a new employee, it becomes a lot easier to hire. Companies will be quicker to hire when they’re growing, and quicker to rehire when the economy starts recovering from recession.

With single-payer, Vermonters get better health, lower costs, more privacy, more freedom, a better economy and more jobs. Vermont companies get healthier and more motivated workers, a more flexible labor market, a better economy, lower costs, and more sales.

That sounds like good business to me.

Bram Kleppner is chief executive officer of Danforth Pewter in Middlebury.

http://www.burlingtonfreepress.com/article/20110915/BUSINESS08/110914020/Seven-reasons-single-payer-health-care-will-great-Vermont-business

Obama administration's dishonest promotion of Medicare Advantage

Medicare Advantage Premiums To Fall 4% Next Year

By Phil Galewitz
Kaiser Health News, September 15, 2011

The Obama administration on Thursday said the nearly 12 million senior citizens enrolled in Medicare health plans will see their monthly premiums drop by an average of 4 percent while benefits remain stable next year.

Enrollment in the plans, which now have about a quarter of all Medicare beneficiaries, is expected to grow by 10 percent in 2012, said Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services.

He attributed the premium drop to the agency’s strong negotiations with plans as well as the companies’ continuing desire to serve the market.

Dan Mendelson, the chief executive of consulting firm Avalere Health, said plans are lowering premiums because their costs have fallen as their members have used fewer services in the midst of the economic downturn.

The plans were targeted by Democrats who complained that the government pays more per capita for beneficiaries in the private plans than it spends on those in traditional Medicare.

Federal payments were frozen to Medicare Advantage plans this year and are dropping by less than 1 percent in 2012.

The health care law softens the impact of Medicare Advantage cuts in 2012 by providing billions of dollars for quality bonuses for highly rated plans that received four or five stars in a government grading system.

In a policy shift last fall, HHS decided to lower the bar for bonuses. Average-quality plans garnering just three or three-and-a-half stars would also get bonuses, although at a lower percentage than top-tier plans.

The HHS decision means that nearly 90 percent of Medicare Advantage enrollees are in plans now eligible for a bonus. Under the tougher approach Congress took in the health law, only about 33 percent would have been in plans getting the extra payments.

http://www.kaiserhealthnews.org/Stories/2011/September/15/medicare-advantage-premiums-fall-next-year.aspx

Comment: 

By Don McCanne, MD

The Obama administration is countering Republican claims that the Affordable Care Act stole money from Medicare. They are trumpeting the facts that Medicare Advantage premiums are 4 percent lower, and enrollment is expected to be up by 10 percent. We really need to get past the deceptive rhetoric on both sides to understand what really is going on.

The Medicare Advantage program began as a fraud. These private plans were paid 113 percent of the costs of the traditional Medicare program so that they could offer extra benefits to entice individuals away from the public program. Once a sufficient number of individuals joined the private plans, funding for the public program would be slashed and patients would flee into the private plans. Only then would the public learn that the next planned step would be to shift to a Ryan-type voucher (premium support), which would dump much more of the costs onto patients.

The Affordable Care Act included a provision to gradually reduce these Medicare Advantage overpayments. The scheduled reduction for 2012 will be less than 1 percent. But members of the Obama administration have been listening to the insurers and the Republicans. They decided that this very modest reduction might make them more vulnerable to Republican attacks as we enter an election year. So what did they do?

They replenished the reductions with billions of dollars in quality bonuses designed for top tier 4 and 5 star plans, but they expanded the program to include 3 star plans. That way, plans covering 90 percent of Medicare Advantage enrollees would receive additional payments. A quality bonus for almost every plan is nothing more than a blanket payment increase. They have preserved this gift to the private insurers and then have the gall to claim that the programs are stronger and more popular as a result of their “strong negotiations” with the plans! Strength in politics seems to be proportional to the size of the gifts of cash, especially appalling when you realize that this is our tax money.

By the way, how much is that 4 percent reduction in premiums that the Medicare Advantage enrollees will be paying? It averages about $1.48 monthly per enrollee. That tough negotiating sure hit the insurers hard. $1.48! I can picture the insurers leaving the negotiations saying that they sure were hit hard this year, but they hope to do better in next year’s negotiations, as they collapse in hysterics right after the door closes.

One more important fact to keep in mind is that these extra insurance company bonuses are paid partly by our Part B premiums in the traditional Medicare program. Those of us who refuse to join the Medicare Advantage plans are paying higher premiums to buy more patient benefits, more insurer profits and more administrative services for those who have enrolled in the private plans. We now have an official government policy that requires us to pay more and get less if we don’t privatize ourselves!

Dishonesty is so prevalent in politics today that I think I almost understand the graffiti that we saw yesterday while hiking on our ridge trail: “The truth is a lie!”

Obama administration’s dishonest promotion of Medicare Advantage

Medicare Advantage Premiums To Fall 4% Next Year

By Phil Galewitz
Kaiser Health News, September 15, 2011

The Obama administration on Thursday said the nearly 12 million senior citizens enrolled in Medicare health plans will see their monthly premiums drop by an average of 4 percent while benefits remain stable next year.

Enrollment in the plans, which now have about a quarter of all Medicare beneficiaries, is expected to grow by 10 percent in 2012, said Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services.

He attributed the premium drop to the agency’s strong negotiations with plans as well as the companies’ continuing desire to serve the market.

Dan Mendelson, the chief executive of consulting firm Avalere Health, said plans are lowering premiums because their costs have fallen as their members have used fewer services in the midst of the economic downturn.

The plans were targeted by Democrats who complained that the government pays more per capita for beneficiaries in the private plans than it spends on those in traditional Medicare.

Federal payments were frozen to Medicare Advantage plans this year and are dropping by less than 1 percent in 2012.

The health care law softens the impact of Medicare Advantage cuts in 2012 by providing billions of dollars for quality bonuses for highly rated plans that received four or five stars in a government grading system.

In a policy shift last fall, HHS decided to lower the bar for bonuses. Average-quality plans garnering just three or three-and-a-half stars would also get bonuses, although at a lower percentage than top-tier plans.

The HHS decision means that nearly 90 percent of Medicare Advantage enrollees are in plans now eligible for a bonus. Under the tougher approach Congress took in the health law, only about 33 percent would have been in plans getting the extra payments.

http://www.kaiserhealthnews.org/Stories/2011/September/15/medicare-advantage-premiums-fall-next-year.aspx

The Obama administration is countering Republican claims that the Affordable Care Act stole money from Medicare. They are trumpeting the facts that Medicare Advantage premiums are 4 percent lower, and enrollment is expected to be up by 10 percent. We really need to get past the deceptive rhetoric on both sides to understand what really is going on.

The Medicare Advantage program began as a fraud. These private plans were paid 113 percent of the costs of the traditional Medicare program so that they could offer extra benefits to entice individuals away from the public program. Once a sufficient number of individuals joined the private plans, funding for the public program would be slashed and patients would flee into the private plans. Only then would the public learn that the next planned step would be to shift to a Ryan-type voucher (premium support), which would dump much more of the costs onto patients.

The Affordable Care Act included a provision to gradually reduce these Medicare Advantage overpayments. The scheduled reduction for 2012 will be less than 1 percent. But members of the Obama administration have been listening to the insurers and the Republicans. They decided that this very modest reduction might make them more vulnerable to Republican attacks as we enter an election year. So what did they do?

They replenished the reductions with billions of dollars in quality bonuses designed for top tier 4 and 5 star plans, but they expanded the program to include 3 star plans. That way, plans covering 90 percent of Medicare Advantage enrollees would receive additional payments. A quality bonus for almost every plan is nothing more than a blanket payment increase. They have preserved this gift to the private insurers and then have the gall to claim that the programs are stronger and more popular as a result of their “strong negotiations” with the plans! Strength in politics seems to be proportional to the size of the gifts of cash, especially appalling when you realize that this is our tax money.

By the way, how much is that 4 percent reduction in premiums that the Medicare Advantage enrollees will be paying? It averages about $1.48 monthly per enrollee. That tough negotiating sure hit the insurers hard. $1.48! I can picture the insurers leaving the negotiations saying that they sure were hit hard this year, but they hope to do better in next year’s negotiations, as they collapse in hysterics right after the door closes.

One more important fact to keep in mind is that these extra insurance company bonuses are paid partly by our Part B premiums in the traditional Medicare program. Those of us who refuse to join the Medicare Advantage plans are paying higher premiums to buy more patient benefits, more insurer profits and more administrative services for those who have enrolled in the private plans. We now have an official government policy that requires us to pay more and get less if we don’t privatize ourselves!

Dishonesty is so prevalent in politics today that I think I almost understand the graffiti that we saw yesterday while hiking on our ridge trail: “The truth is a lie!”