PNHP

An Insurance Maze for U.S. Doctors

An Insurance Maze for U.S. Doctors

By PAULINE W. CHEN, M.D.
The New York Times, Well blog, Aug. 25, 2011

A former colleague from Canada who practiced medicine with me here in the States never hesitated to make one thing clear to me: He couldn’t wait to get back.

It wasn’t the cultural life that he missed, nor was it the ex-girlfriend I always suspected he pined for. It was the medicine.

“It’s different,” he would say wistfully, without elaborating. “Practicing medicine is just different over there.”

A study published this month in the journal Health Affairs made me think of my colleague again and offered one likely possibility for his return to Canada: There, he had more time to focus on his patients.

Researchers asked hundreds of physicians and administrators in private practices across the United States and Canada how much time they spent each day with insurers and other third-party payers, tracking down information for claims that were denied or incorrectly paid, resolving questions about insurance coverage for prescription drugs or diagnostic tests, and filing the different forms required by each and every insurance company.

Physicians in Canada, where health care is administered mainly by the government, did spend a good deal of time and money communicating with their payers. But American doctors in the study spent far more dealing with multiple health plans: more than $80,000 per year per physician, or roughly four times as much as their northern counterparts. And their offices spent as many as 21 hours per week with payers, nearly 10 times as much as the Canadian offices.

“The amount of time we spend on this is just crazy,” said Dr. Sara L. Star, a partner in a three-physician pediatrics practice in suburban Chicago. “But each insurance company has its own language, its own set of rules and specific contracts with certain laboratories, hospitals, physicians and pharmaceutical companies.”

And when those companies offer multiple “insurance products,” the convoluted coverage grid acquires yet another level of complexity. Each “product” comes with its own unique permutation and combination of authorization requirements, rules for claims and list of approved prescription drugs.

Large practices often choose to outsource the job to firms that specialize in wading through the labyrinthine rules and regulations. Some hire several nurses or administrators to work exclusively with insurers, with each specializing in the arcane rules of a single insurer. But most primary care providers in this country — clinicians who are part of practices with five or fewer physicians — cannot afford to pay for additional help. Instead, they must make their way through the thicket of insurers and rules by themselves.

The complicated task inevitably gets in the way of patient care.

A young patient complaining of extreme fatigue, for example, might benefit from a $40 blood test that could confirm infectious mononucleosis in 10 minutes. But a doctor cannot order the simple test without first checking with the insurance company to see if it is covered and if there are any constraints on where the patient’s blood can be drawn and the test run.

Tracking down answers often means phone calls with long periods on hold, digging up old patient information and even recruiting office workers to act as specimen couriers to other labs and hospitals in order to expedite results or save frail patients or harried family members the hassle of traveling to an “approved site” for a test or procedure. “If someone comes in with a sick infant who needs a test, we often eat the costs and draw the blood ourselves,” Dr. Star said. “We aren’t going to tell them to put that kid in a car seat, drive a mile to an approved lab, park, register, then wait in line.”

Even more confusing are frequent changes in health care plans, particularly regarding prescription drugs. Every week, payers send physicians’ offices notifications of changes in their list of approved medications, lists that run to hundreds of different drugs. The sheer volume of new information makes it impossible for doctors to keep up. “Physicians get into medical school because we can follow rules,” said Dr. Marian Bouchard, a family doctor who practices with two other physicians and a nurse practitioner in Bristol, Vt. “But none of us can or want to follow the minutiae of a hundred rules at once, especially when we are trying to be present for our patients.”

The authors of the study offer several recommendations to reduce the confusion and inefficiency of interactions between physician practices and payers. Not surprisingly, they propose simplifying the forms and procedures that add to costs without improving quality. “There are rules that really save money or improve patient care that health plans won’t want to change,” said Sean Nicholson, one of the study authors and an economist in the department of policy analysis and management at Cornell University. “But there are also a lot of things that don’t matter that they could and should standardize.”

The insurance industry, for example, could embrace a single set of universal standards to measure quality rather than the dozens that are currently used. They could adopt a uniform process of obtaining authorization for tests, procedures or consultations. And while widespread adoption of electronic medical records and changes in how doctors are reimbursed may eventually decrease some administrative burdens, the results of the study leave little doubt as to the costs now and in the foreseeable future for doctors and patients.

“We aren’t saying that we should go to a single-payer system,” Dr. Nicholson added. “But it’s important to know exactly what all the benefits of the current costs are.”

[PNHP note: Although Dr. Sean Nicholson is quick to assert that he and his co-authors are not advocating for a single-payer system, many readers of this New York Times article definitely support single-payer health reform. Their comments can be viewed at the URL below; scroll down to the reader comments section.]

http://well.blogs.nytimes.com/2011/08/25/an-insurance-maze-for-u-s-doctors/

Johnathon Ross and Don McCanne on lessons from the Oregon experiment

The Effects of Medicaid Coverage — Learning from the Oregon Experiment

By Katherine Baicker, Ph.D., and Amy Finkelstein, Ph.D.
The New England Journal of Medicine, July 20, 2011

Working with a team of researchers, we have taken advantage of an unprecedented opportunity to gauge the effects of Medicaid coverage on low-income, previously uninsured adults, using the gold standard of medical and scientific research: a randomized, controlled trial. In 2008, Oregon used a lottery to allocate a limited number of Medicaid spots for low-income adults (19 to 64 years of age) to people on a waiting list for Medicaid. Those selected by random lottery draw won the opportunity to apply for Medicaid. In total, about 30,000 people were selected from the 90,000 on the waiting list. Approximately 10,000 of those selected ended up being enrolled in Medicaid; not everyone who was selected successfully filled out the required application and met the eligibility criteria.

The lottery provides an opportunity to estimate the causal effects of being allowed to apply for Medicaid (intention to treat). It also allows us to estimate the causal effects of being enrolled in Medicaid relative to being uninsured (the effects of “treatment on the treated,” which we focus on below), under the assumption that selection by the lottery to be able to apply for Medicaid affects the outcomes we studied only through its role in increasing insurance coverage.

We now have evidence of the effects of the first year of Medicaid coverage after the lottery. These results are based on administrative data from hospital discharges, credit reports, and death records, in addition to mail surveys we conducted. We found that Medicaid coverage increases the use of health care.

Responses by Johnathon Ross and Don McCanne, former presidents of Physicians for a National Health Program:

Johnathon Ross MD, MPH
Toledo Ohio, USA
August 25, 2011

This is interesting “experiment” and useful policy data but it reminds me of Tuskegee. What a sad commentary on our country that we question whether access to care is good for patients and that it might cost us something to provide it. We need a national health insurance program that is nondiscriminatory, fairly financed, effective, and efficient. An improved and expanded Medicare for all would be the easiest to implement since the administrative savings would be adequate to cover all the uninsured and improve coverage and financial security for everyone. Instead we will muddle along with the half baked reforms that have been passed and continue to waste hundreds of billions of dollars on the billing and insurance bureaucracy. Cost control will be the natural outcome of setting a national budget for health care. This will lead to better emphasis on those services which are most beneficial and reduce future costs and disability. ACO’s, bundled payments, managed care will never accomplish what a budget will. What are we doing? Caring citizens should protect and empower each other.

and…

Don McCanne MD
San Juan Capistrano California, USA
August 25, 2011

With our current level of knowledge about the favorable impact of insurance coverage, obviously it would have been unethical to design a study in which the control group – the uninsured – was exposed to both the financial hardship and impaired health outcomes of being uninsured. It is ironic that this would represent an intolerable violation in ethics within the health policy community, yet at the same time represents an acceptable standard for politicians.

The Affordable Care Act, as a political document, includes policies that seem to violate fundamental health policy ethics. It was enacted knowing that tens of millions will remain uninsured, under-insurance will become the new standard (60 to 70 percent actuarial values), and that it is the most expensive model of reform, providing little relief from the financial burden placed upon all of us.

Ethical policies and sterile politics could have been melded into a process that would have brought us truly universal coverage, with comprehensive benefits, financial security for everyone, and cost containment through the power of an efficient public monopsony. That, of course, would describe a single payer national health program – an improved and expanded Medicare for all.

Instead, the policy community compromised their ethics by cooperating with politicians who were catering to interests much more powerful than patients. But the greater ethical transgression was committed by the politicians themselves who ruled out in advance of the reform process the single payer model. They knew that if it were seriously considered, the superiority would have been obvious when compared to the fragmented, dysfunctional, inequitable, administratively overburdened, overpriced system that the politicians dumped on us.

We can still go back to the drawing boards and do it right.

http://healthpolicyandreform.nejm.org/?p=14971

Johnathon Ross and Don McCanne on lessons from the Oregon experiment

The Effects of Medicaid Coverage — Learning from the Oregon Experiment

By Katherine Baicker, Ph.D., and Amy Finkelstein, Ph.D.
The New England Journal of Medicine, July 20, 2011

Working with a team of researchers, we have taken advantage of an unprecedented opportunity to gauge the effects of Medicaid coverage on low-income, previously uninsured adults, using the gold standard of medical and scientific research: a randomized, controlled trial. In 2008, Oregon used a lottery to allocate a limited number of Medicaid spots for low-income adults (19 to 64 years of age) to people on a waiting list for Medicaid. Those selected by random lottery draw won the opportunity to apply for Medicaid. In total, about 30,000 people were selected from the 90,000 on the waiting list. Approximately 10,000 of those selected ended up being enrolled in Medicaid; not everyone who was selected successfully filled out the required application and met the eligibility criteria.

The lottery provides an opportunity to estimate the causal effects of being allowed to apply for Medicaid (intention to treat). It also allows us to estimate the causal effects of being enrolled in Medicaid relative to being uninsured (the effects of “treatment on the treated,” which we focus on below), under the assumption that selection by the lottery to be able to apply for Medicaid affects the outcomes we studied only through its role in increasing insurance coverage.

We now have evidence of the effects of the first year of Medicaid coverage after the lottery. These results are based on administrative data from hospital discharges, credit reports, and death records, in addition to mail surveys we conducted. We found that Medicaid coverage increases the use of health care.

Responses by Johnathon Ross and Don McCanne, former presidents of Physicians for a National Health Program:

Johnathon Ross MD, MPH
Toledo Ohio, USA
August 25, 2011

This is interesting “experiment” and useful policy data but it reminds me of Tuskegee. What a sad commentary on our country that we question whether access to care is good for patients and that it might cost us something to provide it. We need a national health insurance program that is nondiscriminatory, fairly financed, effective, and efficient. An improved and expanded Medicare for all would be the easiest to implement since the administrative savings would be adequate to cover all the uninsured and improve coverage and financial security for everyone. Instead we will muddle along with the half baked reforms that have been passed and continue to waste hundreds of billions of dollars on the billing and insurance bureaucracy. Cost control will be the natural outcome of setting a national budget for health care. This will lead to better emphasis on those services which are most beneficial and reduce future costs and disability. ACO’s, bundled payments, managed care will never accomplish what a budget will. What are we doing? Caring citizens should protect and empower each other.

and…

Don McCanne MD
San Juan Capistrano California, USA
August 25, 2011

With our current level of knowledge about the favorable impact of insurance coverage, obviously it would have been unethical to design a study in which the control group – the uninsured – was exposed to both the financial hardship and impaired health outcomes of being uninsured. It is ironic that this would represent an intolerable violation in ethics within the health policy community, yet at the same time represents an acceptable standard for politicians.

The Affordable Care Act, as a political document, includes policies that seem to violate fundamental health policy ethics. It was enacted knowing that tens of millions will remain uninsured, under-insurance will become the new standard (60 to 70 percent actuarial values), and that it is the most expensive model of reform, providing little relief from the financial burden placed upon all of us.

Ethical policies and sterile politics could have been melded into a process that would have brought us truly universal coverage, with comprehensive benefits, financial security for everyone, and cost containment through the power of an efficient public monopsony. That, of course, would describe a single payer national health program – an improved and expanded Medicare for all.

Instead, the policy community compromised their ethics by cooperating with politicians who were catering to interests much more powerful than patients. But the greater ethical transgression was committed by the politicians themselves who ruled out in advance of the reform process the single payer model. They knew that if it were seriously considered, the superiority would have been obvious when compared to the fragmented, dysfunctional, inequitable, administratively overburdened, overpriced system that the politicians dumped on us.

We can still go back to the drawing boards and do it right.

http://healthpolicyandreform.nejm.org/?p=14971

The Ryan Medicaid Plan: A Threat to Middle Class Security

The Medicaid changes in the Ryan budget plan would have extraordinary implications not only for the poor individuals who are normally thought of as the principal beneficiaries but for a very broad swath of middle-class families who are far more likely to become reliant on Medicaid benefits at some point in their life than most currently realize.

By Scott Lilly
Center for American Progress, July 8, 2011

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For more than a decade policymakers in Washington and ordinary citizens across the country have engaged in a public dialogue on the federal budget that has frequently served to confuse rather than clarify the choices facing our nation. This year Rep. Paul Ryan (R-WI), chairman of the House Budget Committee, put forward a proposal that attaches significantly greater programmatic detail to the spending reductions he is proposing than previous advocates of large spending cuts. The proposal has been both praised and assailed for its content—but there is little question that it has served to move the budget debate to a more substantive and informative level.

The Ryan plan is important not simply because it provides greater detail as to how cuts in federal spending might be achieved but also because it has legislative credibility. On April 15, 2011 the Ryan budget was adopted by the U.S. House of Representatives by a vote of 235 to 193, with all but four members of the majority party (the Republicans) voting “yes.”

This paper examines one key proposal in the Ryan budget plan that has thus far received surprisingly little attention—the proposal to replace the current Medicaid program with block grant payments to states. The Medicaid changes would have extraordinary implications not only for the poor individuals who are normally thought of as the principal beneficiaries but for a very broad swath of middle-class families who are far more likely to become reliant on Medicaid benefits at some point in their life than most currently realize.

A full public discourse on whether the Congress should go forward with these particular cuts as opposed to other policy options available to the Congress requires some in depth probing as to what impact the cuts would likely have on various segments of the population, and whether or not the public at large would be comfortable with the risk that those benefits might disappear. It is also necessary to view the value of these benefits in comparison with other options that might be available to Congress and in particular, the overall policy direction of the broader Ryan proposal—a proposal that not only includes the permanent extension of the Bush era tax cuts but the adoption of additional tax cuts, including the lowering the top individual income tax rate from 35 percent to 25 percent.

Overall the proposal includes $5.8 billion in spending cuts (relative to the Congressional Budget Office baseline) that are heavily offset by $4.2 billion in revenue reductions. Net the plan generates only $1.6 trillion in deficit reduction. Medicaid reductions and most other spending cuts can be fairly seen as largely paying for further tax reductions rather than deficit reduction.

As a result, the federal budget will remain in deficit throughout this period and the public debt will grow by $5.8 trillion. That is less than the $7.4 trillion worth of debt that would accumulate if no deficit reduction plan were adopted, but far less than one might assume given the magnitude of spending cuts Rep. Ryan is proposing.
What does this mean for Medicaid? Under the Ryan plan, Medicaid accounts for $771 billion in spending cuts over the 10-year period of the proposal. That is more than one-eighth of the total cuts in the plan—many times more than the cuts in Medicare. Nonetheless, the Medicaid portion of the package has received far less attention than the Ryan proposal for Medicare. Medicaid is in fact the epicenter of the current budget debate.

Perhaps that is because many of us are under the misperception that Medicaid is simply one more benefit for the nation’s poor and that we have reached a point when we can no longer afford to be as generous to the poor as we were in the past.

But in fact Medicaid is not really a poverty program. As this paper will demonstrate, two-thirds of Americans living below the federal poverty line are not Medicaid beneficiaries. But the overwhelming majority of families who make up what is generally considered the nation’s middle class will be at significantly greater risk of facing financial catastrophe at some point in their lives if these benefits are taken away.

We all know people—or at least know of people—who had their lives changed in a split second. Whether it is an auto accident, the birth of a severely disabled child, a stroke, or devastating news from the doctor’s office, a well-planned and orderly life can be turned upside down almost instantly with grave consequences for not only the immediate victim but friends and family as well.

The medical costs associated with such events can run into hundreds of thousands and even millions of dollars. Many of us are lucky enough to have insurance that will cover most if not all of those costs. But few of us can manage the extraordinary burden of the long-term care requirements that such tragedies often leave in their wake. Few of us could cover such costs if we were the victims and even fewer could make a substantial contribution to the cost of providing such care for a relative that can no longer be cared for at home or in a community setting.

Many elderly and disabled Medicaid beneficiaries once lived in middle class households, and while they make up only 25 percent of Medicaid’s enrollees they account for two-thirds of Medicaid spending. It is difficult to envision reductions in Medicaid spending of the magnitude that would be required under the Ryan formula without significant reductions in this portion of the program.

Cutting eligibility for those who are neither elderly nor disabled would also be more problematic than is generally recognized. The overwhelming portion of Medicaid funds going to adults who are neither aged nor disabled goes for prenatal and maternity care and that care is at least partially responsible for the dramatic decreases in miscarriages and infant mortality that have taken place in this country. Reducing the health care available to children would reduce the number who arrive at school ready to learn and would also place the broader population at risk from the stand point of public health.

Finally, this paper will discuss whether the Ryan Medicaid proposal actually resolves the deficit and spending problems we now face or simply relocates them to state capitals. Even if the Ryan proposal to repeal the recently enacted health care legislation is adopted, the cost of providing current levels of service to currently eligible populations will increase by about $337 billion over the next decade. Under the current formula the federal government would pay about $192 billion of that increase leaving the states to pick up the remaining $145 billion.

Ryan would cut the federal contribution to $78 billion, leaving the states with well over a quarter of a trillion in new revenue necessary to fund the current Medicaid program. Under the Ryan proposal the portion of state revenues needed to fund current service and eligibility levels would go from 16 percent at present to 26 percent by 2021. While it is likely that the portion of state revenues going to Medicaid will rise significantly—crowding out other state servi
ces such as support for colleges and universities, aid to highways, public health, law enforcement, and the support of local schools —it is not likely that those shifts will resolve the entire shortfall.

As a result, the proposal will also place significant upward pressure on state and local taxes, including sales taxes and property taxes. Combined with the Ryan proposal to lower tax rates on the highest-income federal taxpayers, this will amount to a massive downward redistribution of after-tax income.

Medicaid is a huge program that touches many lives but is nonetheless poorly understood by both the public and policymakers. Perhaps more than any other government program it is the social safety net for middle class families—families that as the result of old age, injury, disease, or some other catastrophic happenstance could face medical and long-term care bills that far exceed what their savings and insurance will cover. Because it insured millions of Americans who got the care that they needed, millions of families did not confront financial disaster.

Changes to this program should be made with extreme caution and not before the public has a clear understanding of the consequences those changes might have on their lives and the lives of their neighbors. In the pages that follow, this paper details the costs and consequences of the Ryan plan as passed by the House of Representatives earlier this year.

Scott Lilly is a Senior Fellow at the Center for American Progress.

http://www.americanprogress.org/issues/2011/07/ryan_medicaid.html

Arizona Medicaid co-pays rejected by Appeals Court panel

Copays Break Law

By Mary K. Reinhart
The Arizona Republic, August 25, 2011

The three-judge panel of the 9th U.S. Circuit Court of Appeals said federal health officials failed to show how the copays, imposed in November after a seven-year court battle, served any purpose besides cutting the state’s Medicaid budget.

Raising copayments for more than 200,000 of Arizona’s poorest residents and making them mandatory, the judges said, helped balance the state budget but didn’t meet that federal standard.

“The administrative record reveals that the purpose of Arizona’s waiver application was to save money,” wrote Judge Richard Paez. “There is little, if any, evidence that the secretary considered the factors (federal law) requires her to consider before granting Arizona’s waiver. Thus, the secretary’s decision was arbitrary and capricious.”

The copays, which range from $4 to $30, were first approved by lawmakers in 2003 and were in place for about four months before a class-action suit was filed and a federal judge put them on hold. That stay was lifted in November by a separate appeals-court panel, which upheld a March 2010 ruling by U.S. District Judge Earl Carroll.

Since November, childless adults covered under the Arizona Health Care Cost Containment System, the state’s Medicaid program, and those who spend down their savings to become AHCCCS eligible can be turned down for medical care and medications if they can’t afford the copayment.

http://www.azcentral.com/arizonarepublic/local/articles/2011/08/25/20110825ahcccs-copays-break-law-ruling.html

Comment: 

By Don McCanne, MD

These are patients with incomes below the federal poverty level. Requiring a co-payment before access to care is permitted causes many of these individuals to go without medical care. It is appropriate that the Court of Appeals panel ruled that the HHS Secretary was “arbitrary and capricious” in approving the waiver that authorized the imposition of co-payments.

What is the purpose of co-payments? Some say that it is to prevent people from obtaining medical care that they don’t really need. Really? If a person has decided that she should see a physician, and she can afford the co-payment, would that really stop her from obtaining care? Highly unlikely.

Then is the co-payment for the purpose of raising revenues to help fund health care? The administrative hassle of processing co-payments offsets much of the gain that the co-payment revenues would bring.

Yet co-payments for low-income individuals clearly impair access to beneficial health care services. Thus co-payments provide little good and cause real harm.

Deductibles and coinsurance are another matter. For the very wealthy, they have no impact on health care access. But for middle-income individuals they are enough of a financial burden that they do cause patients to forego beneficial health care – obviously an undesirable policy.

How effective are deductibles and coinsurance in raising revenues to pay for health care? About 80 percent of health care is consumed by individuals who are no longer sensitive to the costs because they have already met their cost-sharing requirements. Thus they play a negligible role in funding our total national health expenditures.

The primary role that cost sharing plays in reducing health care spending is to prevent individuals from receiving care that they should have. (The value of reductions in non-essential services that result from cost sharing has been overstated since consultations with reassurance are still very beneficial health care services.)

So how much does foregoing beneficial care really save? Estimates based on the RAND HIE have suggested that the amount saved is about 30 percent. But 30 percent of what? It is 30 percent of the care consumed by healthy workers and their young healthy families, most of whom do not have major health expenses. Once you factor in the entire population, including all major medical disorders, the percentage of care that would be avoided is negligible.

Many other countries that spend far less while covering everyone do not have deductibles, co-payments, nor coinsurance. They have found them to be unnecessary in controlling costs. They are an insignificant revenue source, and they can cause harm, especially in vulnerable groups such as Arizona’s adult Medicaid population, and now in middle-income Americans who must live with the new standard of under-insurance.

It didn’t have to be this way.

Healthcare, babies and the national debt: The real cost

By Jonathan D. Walker, M.D.
Frost Illustrated (Fort Wayne, Ind.), Aug. 24, 2011

The term “infant mortality rate” is a measure of the number of babies that die under one year of age per 1,000 live births. It is a useful indicator of how effective a healthcare system is—the lower the number, the fewer babies die.

Although there are a lot of people who feel the U.S. has the best healthcare system in the world, according to the Center for Disease Control, the United States actually ranks 29th in the world for infant mortality. And it gets worse. Infant mortality for African Americans is consistently more than twice that for white Americans—infant mortality among African Americans in 2007 was 13.3 deaths per 1,000 live births compared to a rate for non-Hispanic whites of 5.6.

There are a lot of reasons why this disparity exists—it happens to be a very complex issue. One big factor is simply the lack of access to appropriate healthcare. Healthy babies need healthy mothers, and the process starts well before a woman gets pregnant. But, that process can’t happen if you don’t have insurance and can’t afford to see a doctor.

Every other developed country in the world has decided that people should be able to get the care they need when they need it, and without having to worry about going bankrupt. In America, the healthcare system has ended up protecting the interests of for-profit companies over the needs of individuals and, as a result, people are left without access to care. And, the problem is spreading—even people with insurance are finding that their copays and deductibles are becoming so expensive that they put off needed care because they can’t afford it.

And, now we have the debt crisis, and a lot of politicians who want to simply cut back on spending without thinking about the consequences. Unfortunately, this means that there will be less money available to solve problems like our higher infant mortality rate. And, that means that not only will babies continue to die, but people who need all types of medical care will only show up sicker and in worse shape, which means it will cost us even more to take care of them.

Those politicians don’t seem to get the fact that when you cut back on healthcare, not only do you hurt people, but you also make it more expensive for everybody else.

Instead of blindly cutting back on spending, we should start by making sure that everyone gets the care they need. Then we could sit down as a society and begin to control the free-for-all that exists amongst the for-profit companies that are fighting to get healthcare dollars while people suffer.

Every other developed country has figured this out, and their babies live. But, we seem to be incapable of trying to learn from them—powerful vested interests want us to think that any way besides our way must be wrong.

An entire world of solutions is out there, but in America, lobbyists and politicians can literally stop the debate with irrelevant accusations of “socialized medicine” or “government takeover of healthcare.” So we all end up paying more for healthcare and more people are afraid to go to the doctor because they can’t afford it.

If we could say that we actually had the best results in the world, perhaps this would be tolerable. Unfortunately, the real result is that the youngest, sickest and poorest of us will be hurt, and we will all pay the rising cost of treating the ones that survive. It means that babies—and especially African American babies— will be dying because no one wants to look at the obvious solutions that are all around us.

Dr. Walker is a local physician and member of Hoosiers for a Commonsense Health Plan.

http://www.frostillustrated.com/full.php?sid=9153&current_edition=2011-08-24

Arizona Medicaid co-pays rejected by Appeals Court panel

Copays Break Law

By Mary K. Reinhart
The Arizona Republic, August 25, 2011

The three-judge panel of the 9th U.S. Circuit Court of Appeals said federal health officials failed to show how the copays, imposed in November after a seven-year court battle, served any purpose besides cutting the state’s Medicaid budget.

Raising copayments for more than 200,000 of Arizona’s poorest residents and making them mandatory, the judges said, helped balance the state budget but didn’t meet that federal standard.

“The administrative record reveals that the purpose of Arizona’s waiver application was to save money,” wrote Judge Richard Paez. “There is little, if any, evidence that the secretary considered the factors (federal law) requires her to consider before granting Arizona’s waiver. Thus, the secretary’s decision was arbitrary and capricious.”

The copays, which range from $4 to $30, were first approved by lawmakers in 2003 and were in place for about four months before a class-action suit was filed and a federal judge put them on hold. That stay was lifted in November by a separate appeals-court panel, which upheld a March 2010 ruling by U.S. District Judge Earl Carroll.

Since November, childless adults covered under the Arizona Health Care Cost Containment System, the state’s Medicaid program, and those who spend down their savings to become AHCCCS eligible can be turned down for medical care and medications if they can’t afford the copayment.

http://www.azcentral.com/arizonarepublic/local/articles/2011/08/25/20110825ahcccs-copays-break-law-ruling.html

These are patients with incomes below the federal poverty level. Requiring a co-payment before access to care is permitted causes many of these individuals to go without medical care. It is appropriate that the Court of Appeals panel ruled that the HHS Secretary was “arbitrary and capricious” in approving the waiver that authorized the imposition of co-payments.

What is the purpose of co-payments? Some say that it is to prevent people from obtaining medical care that they don’t really need. Really? If a person has decided that she should see a physician, and she can afford the co-payment, would that really stop her from obtaining care? Highly unlikely.

Then is the co-payment for the purpose of raising revenues to help fund health care? The administrative hassle of processing co-payments offsets much of the gain that the co-payment revenues would bring.

Yet co-payments for low-income individuals clearly impair access to beneficial health care services. Thus co-payments provide little good and cause real harm.

Deductibles and coinsurance are another matter. For the very wealthy, they have no impact on health care access. But for middle-income individuals they are enough of a financial burden that they do cause patients to forego beneficial health care – obviously an undesirable policy.

How effective are deductibles and coinsurance in raising revenues to pay for health care? About 80 percent of health care is consumed by individuals who are no longer sensitive to the costs because they have already met their cost-sharing requirements. Thus they play a negligible role in funding our total national health expenditures.

The primary role that cost sharing plays in reducing health care spending is to prevent individuals from receiving care that they should have. (The value of reductions in non-essential services that result from cost sharing has been overstated since consultations with reassurance are still very beneficial health care services.)

So how much does foregoing beneficial care really save? Estimates based on the RAND HIE have suggested that the amount saved is about 30 percent. But 30 percent of what? It is 30 percent of the care consumed by healthy workers and their young healthy families, most of whom do not have major health expenses. Once you factor in the entire population, including all major medical disorders, the percentage of care that would be avoided is negligible.

Many other countries that spend far less while covering everyone do not have deductibles, co-payments, nor coinsurance. They have found them to be unnecessary in controlling costs. They are an insignificant revenue source, and they can cause harm, especially in vulnerable groups such as Arizona’s adult Medicaid population, and now in middle-income Americans who must live with the new standard of under-insurance.

It didn’t have to be this way.

"Affordable" coverage for employees, but not their families

Measuring the Affordability of Employer Health Coverage

By Larry Levitt and Gary Claxton
Kaiser Family Foundation, August 24, 2011

A recent draft regulation issued by the Treasury Department describes who is eligible for premium tax credits to help them afford coverage offered through health insurance exchanges beginning in 2014. The approach that the regulation proposes for measuring the affordability of employer coverage could have significant financial consequences for a modest number of lower- and middle-income families.

Starting in 2014, the health reform law generally requires people to have health insurance and provides tax credits to help them afford it. Those who are offered health insurance through a job, however, are expected to take that coverage and generally are not eligible for premium tax credits. This includes both the worker and any family members who are eligible to enroll in the job-based coverage. There is an exception to this rule, though: if people are offered coverage by an employer that has patient cost-sharing above a certain level or is unaffordable, they are permitted to forgo the employer plan and apply for a tax credit that can be used for coverage in an exchange. Job-based coverage is considered unaffordable if the amount of the out-of-pocket premium for the employer coverage exceeds 9.5% of that person’s income.

While it’s clear how this applies to a single worker without any dependents, determining a family’s eligibility for premium tax credits is far less clear in the law. One way would be to look at what the family would have to pay for coverage based on its size and compare that to its income. A second way, which the Treasury Department has proposed, would judge affordability for the entire family based solely on whether the employee’s contribution for single coverage would exceed 9.5% of family income, regardless how much it would cost the entire family to enroll in job-based coverage. A third hybrid approach is also possible: affordability for the worker could be determined based on the required contribution for single coverage while affordability for the remaining family members would be based on the required contribution for family coverage.

What would this mean for families? We estimated the effect based on coverage in 2008 using demographic and insurance data from the Medical Expenditure Panel Survey and employee premium contribution information from the Kaiser/HRET Employer Health Benefits Survey. The analysis – which assumes no behavior changes by employers in response to the health reform law – suggests that there are about 3.9 million non-working dependents in families (technically, “health insurance units”) in which the worker has access to affordable employer-sponsored coverage but the family does not. Under the draft regulation, these family members would be excluded from getting federal tax credits to help them buy coverage in health insurance exchanges. On average they’d have to pay 14% of their income to opt into the employer coverage, substantially more than what they would pay in an exchange.

In the draft regulation, the Treasury Department indicated that it expects to exempt these family members from the requirement to buy insurance, so they won’t be penalized if they choose to forego coverage. Some of these families would probably still decide to enroll in their employer coverage even though they would have to pay a large percentage of income for it; that would likely be the case even if they were permitted to buy subsidized insurance in an exchange. People value insurance, and they particularly value employer-provided benefits. But, some of these family members would undoubtedly remain uninsured.

http://healthreform.kff.org/notes-on-health-insurance-and-reform/2011/august/measuring-the-affordability-of-employer-health-coverage.aspx

Comment: 

By Don McCanne, MD

Although this policy failure of the Affordable Care Act (ACA) was touched on briefly in a recent message, it is elaborated on here because of its great importance to families.

To avoid being assessed a penalty for being uninsured, most employees will be required to obtain their health insurance through their employment. They will not be allowed the option of obtaining coverage through the state insurance exchanges and will have to forego the tax credits available for exchange plans, unless their premium is unaffordable (over 9.5% of income).

But what about their families? The Treasury Department (IRS) has tentatively ruled that ACA prohibits them from using the insurance premium for the family to determine whether it meets the threshold of affordability. Only the individual employee’s premium can be used. Even though the premium for family members may be unaffordable, they are not allowed the option of using tax credits to purchase plans in the exchanges.

What are they to do? The IRS agrees that these family premiums are unaffordable so they are ruling that the family members have a right to remain uninsured without having to pay the penalty required by the individual mandate. Our government in action – protecting the right to remain uninsured!

This is not a Catch 22, but rather a Catch 4,000,000 since it is estimated that close to four million dependents will fall into this trap in which the worker has access to “affordable” employer-sponsored coverage but the family members do not. This will impact most heavily middle-income families since those with low incomes may be eligible for Medicaid, and those with very high incomes will likely be able to afford family coverage.

What happened to the American dream? The dream wherein hard working, middle income families could be assured of shelter, food, education, and health care? It seems that all they can be guaranteed today is the right to participate in a tea party, that is if they bring their own tea.

“Affordable” coverage for employees, but not their families

Measuring the Affordability of Employer Health Coverage

By Larry Levitt and Gary Claxton
Kaiser Family Foundation, August 24, 2011

A recent draft regulation issued by the Treasury Department describes who is eligible for premium tax credits to help them afford coverage offered through health insurance exchanges beginning in 2014. The approach that the regulation proposes for measuring the affordability of employer coverage could have significant financial consequences for a modest number of lower- and middle-income families.

Starting in 2014, the health reform law generally requires people to have health insurance and provides tax credits to help them afford it. Those who are offered health insurance through a job, however, are expected to take that coverage and generally are not eligible for premium tax credits. This includes both the worker and any family members who are eligible to enroll in the job-based coverage. There is an exception to this rule, though: if people are offered coverage by an employer that has patient cost-sharing above a certain level or is unaffordable, they are permitted to forgo the employer plan and apply for a tax credit that can be used for coverage in an exchange. Job-based coverage is considered unaffordable if the amount of the out-of-pocket premium for the employer coverage exceeds 9.5% of that person’s income.

While it’s clear how this applies to a single worker without any dependents, determining a family’s eligibility for premium tax credits is far less clear in the law. One way would be to look at what the family would have to pay for coverage based on its size and compare that to its income. A second way, which the Treasury Department has proposed, would judge affordability for the entire family based solely on whether the employee’s contribution for single coverage would exceed 9.5% of family income, regardless how much it would cost the entire family to enroll in job-based coverage. A third hybrid approach is also possible: affordability for the worker could be determined based on the required contribution for single coverage while affordability for the remaining family members would be based on the required contribution for family coverage.

What would this mean for families? We estimated the effect based on coverage in 2008 using demographic and insurance data from the Medical Expenditure Panel Survey and employee premium contribution information from the Kaiser/HRET Employer Health Benefits Survey. The analysis – which assumes no behavior changes by employers in response to the health reform law – suggests that there are about 3.9 million non-working dependents in families (technically, “health insurance units”) in which the worker has access to affordable employer-sponsored coverage but the family does not. Under the draft regulation, these family members would be excluded from getting federal tax credits to help them buy coverage in health insurance exchanges. On average they’d have to pay 14% of their income to opt into the employer coverage, substantially more than what they would pay in an exchange.

In the draft regulation, the Treasury Department indicated that it expects to exempt these family members from the requirement to buy insurance, so they won’t be penalized if they choose to forego coverage. Some of these families would probably still decide to enroll in their employer coverage even though they would have to pay a large percentage of income for it; that would likely be the case even if they were permitted to buy subsidized insurance in an exchange. People value insurance, and they particularly value employer-provided benefits. But, some of these family members would undoubtedly remain uninsured.

http://healthreform.kff.org/notes-on-health-insurance-and-reform/2011/august/measuring-the-affordability-of-employer-health-coverage.aspx

Although this policy failure of the Affordable Care Act (ACA) was touched on briefly in a recent message, it is elaborated on here because of its great importance to families.

To avoid being assessed a penalty for being uninsured, most employees will be required to obtain their health insurance through their employment. They will not be allowed the option of obtaining coverage through the state insurance exchanges and will have to forego the tax credits available for exchange plans, unless their premium is unaffordable (over 9.5% of income).

But what about their families? The Treasury Department (IRS) has tentatively ruled that ACA prohibits them from using the insurance premium for the family to determine whether it meets the threshold of affordability. Only the individual employee’s premium can be used. Even though the premium for family members may be unaffordable, they are not allowed the option of using tax credits to purchase plans in the exchanges.

What are they to do? The IRS agrees that these family premiums are unaffordable so they are ruling that the family members have a right to remain uninsured without having to pay the penalty required by the individual mandate. Our government in action – protecting the right to remain uninsured!

This is not a Catch 22, but rather a Catch 4,000,000 since it is estimated that close to four million dependents will fall into this trap in which the worker has access to “affordable” employer-sponsored coverage but the family members do not. This will impact most heavily middle-income families since those with low incomes may be eligible for Medicaid, and those with very high incomes will likely be able to afford family coverage.

What happened to the American dream? The dream wherein hard working, middle income families could be assured of shelter, food, education, and health care? It seems that all they can be guaranteed today is the right to participate in a tea party, that is if they bring their own tea.

Will job insecurity lead to health insecurity?

When Unemployed Means Uninsured: The Toll of Job Loss on Health Coverage, and How the Affordable Care Act Will Help

By Michelle M. Doty, Sara R. Collins, Ruth Robertson, and Tracy Garber
The Commonwealth Fund, August 2011

Chronically high unemployment has left millions of Americans without health insurance, which disappeared along with their wages and other job benefits. Although continuing health coverage through COBRA is an option for some workers, the often prohibitively high cost means that relatively few elect to purchase it. When fully implemented in 2014, the Affordable Care Act will dramatically increase health insurance options for people who lose their jobs. Even so, gaps in coverage will remain a risk for many workers who become unemployed or are transitioning to a new job. To help bridge coverage gaps until 2014, policymakers should consider reestablishing the COBRA premium subsidies that helped millions of people who lost their jobs in 2008–2010.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Aug/1540_Doty_when_unemployed_means_uninsured_COBRA_reform%20brief.pdf

And…

Maintaining Coverage, Affordability, and Shared Responsibility When Income and Employment Change

By Pamela Farley Short, Katherine Swartz, Namrata Uberoi, and Deborah Graefe
The Commonwealth Fund, May 2011

The Affordable Care Act builds on existing sources of public and private health insurance, while creating new health insurance exchanges and subsidies. A potential disadvantage of preserving many sources of health insurance is the likelihood of abrupt changes in coverage or financial responsibility when individual circumstances change. This brief describes four policy challenges related to such changes: adjusting premium and cost-sharing subsidies when incomes change; coordinating eligibility for premium credits, Medicaid, and the Children’s Health Insurance Program; encouraging and facilitating continuous coverage; and minimizing transitions between individual and small-business exchanges. Policy recommendations to reduce uncertainty, simplify coverage decisions, and minimize insurance transitions include extending coverage to the open enrollment period at the end of the year, generous treatment of income gains in correcting premium tax credits, and unifying the small-business and individual exchanges.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/May/1503_Short_maintaining_coverage_affordability_reform_brief.pdf

Comment: 

By Don McCanne, MD

How many individuals continue in the same employment for their entire careers, with the same employer-sponsored health plan, with the same network of health care providers, with the same…? Well, we can stop there. Nobody does.

Generally, individuals in well-paid occupations in high demand who change their employment may face some transitional issues with health plans and provider networks, but usually they fare quite well, even if annoyed at the prospect of perhaps having to change their primary health care professionals, or whatever.

But what about low and moderate income individuals? Job instability is the norm. Income levels can fluctuate considerably. Periods of prolonged unemployment are now more common, and, based on economic projections, will likely persist into the foreseeable future.

The Affordable Care Act has so many slippery variables that it is almost impossible to predict what one’s coverage will be beyond a couple of years, if that. Eligibility can change sometimes on a monthly basis (exchange plans) or yearly basis (Medicaid) for various programs including employer-sponsored plans, Medicaid, CHIP, state exchange plans, or state Basic Health Plans. Eligibility for tax credits for premiums in the exchange plans and for cost sharing reductions can be very unstable because of fluctuations in income. Even waiver of the penalty for failure to purchase private insurance can trigger in or out quite abruptly.

The newest Commonwealth Fund report addresses specifically the problem of coverage during intervals of unemployment. COBRA plans allow newly unemployed workers to continue with coverage under their former employer-sponsored plans but with the out-of-work former employees having to pay the full premiums. COBRA plans have had an unacceptably low participation simply because a person out of work cannot pay the premiums.

To address the problem of unaffordable COBRA premiums that became even more prevalent during the Great Recession, the American Recovery and Reinvestment Act (ARRA) authorized premium subsidies for the purchase of COBRA plans, but that program has expired.

To provide coverage during transitions of unemployment in the future, the authors of this report suggest that the subsidies be permanently resuscitated. The problem with this approach is, even with these temporary subsidies, the COBRA take-up rate was still well less than half of eligible former employees. Policies that don’t work shouldn’t take precedence over policies that do.

You can apply all of the patches that you can devise to the leaking ship of the Affordable Care Act, but it is still going to leak. As more patches are applied, it is further weighted down with greater expenses and with even more administrative burdens – enough to sink any ship.

You want something that floats? Try enrolling everyone at birth, permanently. The solid ship of Medicare for All would have no leaks to patch.

Invitation to a Dialogue: A National Health Plan

Letter
New York Times, August 23, 2011

To the Editor:

In “Will Health Care Reform Survive the Courts?” (State of Play, Sunday Review, Aug. 21), Philip M. Boffey states that “reforms would work far less well without an individual mandate” that requires citizens to buy health insurance or pay a penalty.

I disagree. Health care reform could provide better care at less cost by replacing individual mandates with a single-payer national health care plan financed by taxes. Congress’s power to mandate purchase of private products sold at a profit is disputable, but Congress’s power to tax is not.

Other industrialized countries have national health plans providing care to more citizens at less cost with better outcomes than our system. And they don’t use mandates that allow insurers to charge different prices for different people.

These health care systems have three common properties: public subsidies ensure that everyone has access to care regardless of health, wealth or employment; primary care is encouraged; and publicly accountable, transparent, not-for-profit agencies transfer funds from patient to provider.

There is no need to experiment with mandates. Convert our current health care system into a national health plan.

SAMUEL METZ
Portland, Ore., Aug. 21, 2011

The writer, an anesthesiologist, is a founding member of Mad as Hell Doctors, which advocates a single-payer system.

Editors’ Note: We invite readers to respond to this letter for our Sunday Dialogue. We plan to publish responses and Dr. Metz’s rejoinder in the Sunday Review. E-mail: letters@nytimes.com

http://www.nytimes.com/2011/08/24/opinion/invitation-to-a-dialogue-a-national-health-plan.html