By The VLOGBROTHERS
Is HHS pushing bronze plans?
Note: You may want to skip directly to the comment, and only afterwards read the excepts from the HHS release and report, if you wish to review the details.
News Release: Report finds lower insurance premiums, more choices in 2014 for families, businesses under Affordable Care Act
U.S. Department of Health & Human Services
January 28, 2011
Secretary of Health and Human Services Kathleen Sebelius today released a new report showing how much families and businesses can save on health insurance premiums and out-of-pocket costs under the Affordable Care Act in 2014 – each year, a low-income family of four could save up to $14,900 and businesses will benefit from the savings and tax credits in the new law.
The report finds that, compared to what they would have paid without the law:
* Middle-class families purchasing private insurance in the new State-based Health Insurance Exchanges could save as much as $2,300 per year in 2014.
* Tax credits provided by the Affordable Care Act will lead to even greater savings. For example, in 2014, a family of four with an income of $33,525 could save as much as $14,900 per year since they will also qualify for tax credits and reduced cost sharing.
http://www.hhs.gov/news/press/2011pres/01/20110128a.html
And…
Report: Health Insurance Premiums: Past High Costs Will Become the Present and Future Without Health Reform
U.S. Department of Health & Human Services
January 28, 2011
This report examines the past, present, and future regarding the likely effects of the law on premiums – along with what might happen without it.
Savings for individuals and families:
The Congressional Budget Office (CBO) produced estimates of the impact of the Affordable Care Act on premiums. For people purchasing nongroup coverage through the Exchanges, it estimated savings of 7 to 10 percent resulting from the increase in the size of the insurance pool as well as the nature of the new enrollees, who, in light of the premium tax credits and the individual responsibility provisions, are likely to be healthier than existing enrollees. An additional 7 to 10 percent savings would result from providing the same set of services to the same group of enrollees – primarily because of the new rules in the market such as eliminating insurance underwriting. CBO also credits some of the savings to increased choices and competition. Together, these savings range from 14 to 20 percent. CBO also assumed that individuals and families would have, on average, coverage that is more comprehensive than what they have now, meaning that the savings would offset by higher premiums due to better coverage. It is important to note that this benefit enhancement is a choice, not a requirement.
Assuming 20 percent premium savings, families purchasing insurance through Exchanges could save as much as $2,300 per year and individuals could save up to $800 in 2014 compared to individual market coverage with the same level of benefits without the law. With premium tax credits, the savings from health reform range from $9,900 for a family of four with income of $33,525 to $3,500 for a family with an income of $78,225 (see Figure and Methodology).
Premium savings are only part of picture for low-income individuals and families. They also may qualify for reduced cost sharing under the Affordable Care Act. For the same families with incomes of $33,525 and $78,225, this could add $5,000 and $1,500 respectively to the premium savings (see Table in Methodology).
METHODOLOGY
The table below uses CBO data to illustrate the savings that could be achieved under health reform in 2014. It uses the CBO single premium data for 2016, deflated to 2014 using its last public estimate of private premium growth (6 percent). Family premiums are calculated by multiplying the single premium by 2.7, the standard ratio of family to single premiums (CBO assumes that the composition of a family policy will change under the new law). It then applies the maximum savings for the individual market of 20 percent, assuming that individuals do not decide to purchase better coverage. The tax credits are calculated by applying the maximum premium payment in the law to the 2011 income (using the latest poverty thresholds) inflated by 1.7 percent (CBO’s August 2010 projection for 2012-2014). Premiums vary by age, region and other factors, so these estimates are illustrative.
The cost sharing estimates were calculated by taking the average out-of-pocket spending for a silver plan in 2016 – $1,900 for an individual and $5,000 for a family according to CBO – and deflating to 2014 assuming 6 percent health cost growth (see above). Assuming a linear relationship between the actuarial value of a silver plan (70 percent) and the average out-of-pocket cost sharing, the reduced cost sharing amounts were calculated using the schedule in the law for individuals and families at different income brackets. This was subtracted from the average out-of-pocket costs for a bronze plan to assess the savings.
The potential premium effects in the text and chart are rounded to the nearest $100. Note: the premium effects shown here differ from earlier estimates from HHS due to the January 20, 2011 update of the poverty guidelines.
(The table from which the numbers in the release and the report are derived can be accessed at the link below. Only the footnotes to the table are reproduced here.)
Source: DHHS
1. CBO 11/30/09 estimate of prior law national average individual market single premium ($5,500), deflated to 2014 assuming 6% annual premium growth and adjusted pro-rata for a plan with an actuarial value of 60%. Family premium is the single premium multiplied by a family factor of 2.7
2. CBO 11/30/09 estimate of average cost sharing under reform ($1,900 / $5,200), deflated to 2014 assuming 6% annual health cost growth, pro-rated for a plan with an actuarial value of 60%.
3. Assumes CBO 11/30/09 gross savings of 20%, not counting the premium cost of buying up benefits.
4. Income inflated to 2014 assuming general inflation of 1.7% per year (CBO, August 2010)
http://www.healthcare.gov/center/reports/premiums01282011a.pdf
Comment:
By Don McCanne, MD
Today’s selections from the Department of Health & Human Services (HHS) are not so much for the purpose of reading and studying, but rather are presented to provide documentation to support today’s comment. HHS is touting the savings in insurance premiums that will result from having enacted the Patient Protection and Affordable Care Act. The fine print is important in understanding what this touted savings really is.
HHS is comparing family plans that will be offered in the state insurance exchanges with family plans that are currently offered in the individual insurance market. The current plans are terrible, which is the main point that HHS should have made. To keep premiums down to a level that families can barely afford, the existing plans provide very limited benefits, potentially exposing families to very high out-of-pocket expenses.
So that the savings can be calculated on an apples to apples comparison, HHS has selected the most austere plan to be offered in the exchanges – the bronze plan, which has an actuarial value of 60 percent – a plan that’s about as lousy as those on the individual market today. This leaves the family exposed to 40 percent of their health care costs (though admittedly with inadequate income-indexed subsidies, which is important but not covered here further).
The family has the option to buy up to a silver plan,
but then the touted savings goes away. Furthermore, the silver plan is also an under-insurance product since its actuarial value is still only 70 percent, leaving the family responsible for 30 percent of the costs. Although still a lousy plan, as HHS says, “this benefit enhancement is a choice, not a requirement.” What a choice.
Gold and platinum plans with actuarial values of 80 percent and 90 percent will be offered in the exchanges, but very few families will move up to those plans since they must pay the full additional premium. Only the wealthiest families will be able to afford the difference.
The title of HHS’s release says “lower insurance premiums” and “more choices.” But what they bury in their report is that you get lower premiums only if you choose a crappy plan similar to those currently available in the individual market.
We can do far better than that. We can enact an improved Medicare for all. Then you wouldn’t have to worry about unaffordable premiums and out-of-pocket expenses since they would be replaced with equitable taxes which would be affordable for all.
Vermont "house call": Dr. Rebecca Jones, dermatologist
From VTDigger.com
See related story here: On video: Doctors speak out in favor of single payer
Vermont "house call": Dr. Bill Eichner, opthalmologist
From VTDigger.com
See related story here: On video: Doctors speak out in favor of single payer
On video: Doctors speak out in favor of single payer
By Anne Galloway
VTDigger.com, January 28, 2011
Physicians were in attendance at the Statehouse on Thursday. They came dressed in lab coats and scrubs, and stethoscopes dangling around their necks. The ailment they came to cure was the medical system itself: In a rare “house call” to the Capitol, they issued a prescription for Vermont’s byzantine system of insurance and government programs – they called for a single payer health care system.
About 40 Vermont medical practitioners lined one wall of Room 11 and about 20 gave short speeches about their patients, their professions and their frustration with insurers that obstruct adequate care for patients. In several cases, patients were denied life-saving treatments because of delays and bureaucratic mazes created by insurers.
They told stories about a farmer with diabetes who didn’t get his eyes checked and ended up temporarily losing the sight in one eye; a teenage girl who needed brain surgery for a tumor whose insurance company delayed approval for the procedure for three months and then reneged on payment at the time the surgery was performed; a woman without insurance who suffered with a variety of symptoms for a year before she went to a doctor and ended up having to endure intensive treatment for neck cancer. Several psychiatrists talked about suicidal patients who were denied treatment.
Dr. Deb Richter, the founder of Vermont Health Care for All, a single-payer advocacy group, said at one point doctors opposed the creation of a single-payer health care system.
Now, contrary to public perception, she said most physicians, who are getting increasingly frustrated with the byzantine nature of the payment system, have become proponents of uniform administration of medical reimbursements.
“You can blame us for not having universal health care, but we’re now here to say that has changed,” Richter said. “The majority of physicians, the majority of nurses and the majority of health professionals are in favor of health care as a right, not a privilege, health care for all. Health care that is affordable for all.”
Dr. Adam Sorscher described the prior authorization “rigmarole” he goes through every time insurance companies question his prescriptions for patients. He’s put on hold for many minutes at a time, given conflicting information and told coverage is denied – for no apparent reason.
A sampling of their speeches follows.
http://vtdigger.org/2011/01/28/on-video-doctors-speak-out-in-favor-of-single-payer/
Thinking about health care: PPACA’s impact on small business
By Claudia Fegan, M.D.
The Hyde Park Herald (Chicago), Nov. 24, 2010
Many of Hyde Park’s small businesses are doing their budget and tax planning for the year ahead. For some, the issue of health care insurance looms large, either as a current expense or as something they’d like to begin offering their employees.
I’m a physician and longtime advocate of a highly efficient, equitable and affordable system of financing care known as single-payer national health insurance, an improved Medicare for all. Under a single-payer plan, everyone would be covered, there would be no co-pays or deductibles and everyone would have free choice of physician and hospital. The single plan’s bargaining clout would help us rein in rising costs.
Today, under our present arrangements, private insurance firms can (and do) suddenly jack up premiums 20 percent or more, playing havoc with a small company’s balance sheet. Other health costs are also rising precipitously.
In contrast, a single-payer plan would be characterized by a modest and predictable expense based on a payroll tax (smaller than what they pay for premiums now) that would help finance truly universal coverage and allow small companies to plan ahead with confidence. Costs would be subject to greater control. Canada has something like this and it generally works well.
But that’s not what we got. Instead, Congress passed the Patient Protection and Affordable Care Act, which, while preserving (and actually strengthening) the wasteful, inefficient and profit-hungry private insurance industry, also offers some modest benefits around the edges.
Given this less-than-stellar picture, I nonetheless believe small business owners should take advantage of whatever benefits the new law has to offer. But a word of warning: Sudden premium hikes are still possible and, in my opinion, quite likely under the new law. Costs will continue to rise, and the federal government estimates that 23 million people will remain uninsured in 2019.
So what are some of these benefits?
First, if you have less than 50 workers (or the equivalent in employee hours) there’s nothing in the new law that forces you to do anything right away. You aren’t penalized if you don’t offer coverage to your employees, for example. So don’t get too agitated; keep your blood pressure low.
Second, if you have less than 25 employees, you might want to start offering coverage to your workers now. Why? Because you may be eligible for a tax credit ranging from 35 percent (25 percent for nonprofits) of your share of premium costs. That tax credit will increase to 50 percent (35 percent for nonprofits) in 2014, if you buy your company coverage through an exchange and otherwise quality.
Third, if you have been offering insurance to your workers since March 23, 2010, your existing plan can largely be retained, or grandfathered in, until major changes are required in 2014. Some new consumer protections kicked in near the end of September, but again, most big changes don’t take effect until 2014.
There are other benefits too. You can research these at the Kaiser Family Foundation (kff.org) and at the Department of Health and Human Services (healthcare.gov). Business journals like Crain’s also offer helpful tips.
However, if you want to learn more about a more fundamental, equitable and sustainable solution to our health care woes — a single-payer Medicare-for-all system — visit Physicians for a National Health Program (pnhp.org).
Dr. Claudia Fegan is associate chief medical officer for the Ambulatory and Community Health Network for the Cook County Health and Hospital System and a past president of Physicians for a National Health Program. She resides in Hyde Park.
Insurance company profits vs. care for all
Editorial
The Capital Times (Madison, Wis.), Jan. 26, 2011
Americans are divided over the question of how best to reform a dysfunctional health care system.
But the new Republican majority in the House entertains no doubt about what must be done: The for-profit insurance industry must be restored to its “proper” place as the decider of who gets care — and how much they will have to pay.
In the first major vote of the new Congress, the House voted 245-189 in favor of repealing the modest health care reforms approved last year.
A total of 242 Republicans — including Wisconsin’s Paul Ryan, James Sensenbrenner, Tom Petri, Sean Duffy and Reid Ribble — voted for repeal. So too did three conservative Democrats.
A total of 189 “no” votes were cast by Democrats — including Wisconsinites Tammy Baldwin, Ron Kind and Gwen Moore.
House Speaker John Boehner claimed that the vote represented the will of the American people.
But did it?
Survey research suggests that, while Americans overwhelmingly support health care reform, they are not sure the reform cobbled together by President Obama and the last Congress is the proper fix. According to a new Washington Post/ABC News poll, the country is split three ways: 33 percent for complete repeal of the measure adopted last year, 35 percent for partial repeal, and 30 percent for no repeal.
Those numbers don’t tell the whole story, however.
What about the tens of millions of Americans who are dissatisfied with the current law but who recognize that the whole debate about repealing it is a political show primarily designed to satisfy talk-radio hosts while exciting insurance industry campaign donors?
The Americans who oppose repeal but refuse to buy into the fantasy that the health care system has been sufficiently reformed are right. And there are a lot of them. According to the Associated Press poll, 43 percent of Americans want the government to do more to re-engineer the existing health care system.
That’s millions more than favor the repeal proposed by Republican leaders.
That level of support for more radical reform is the great untold story of the current debate.
The American people are not fools.
Substantial numbers of them understand that what is called “Obamacare” by Republicans is a compromise proposal that, at most, addresses the worst abuses of the nation’s for-profit insurers and health providers while outlining a framework for genuine reform.
Unfortunately, Congress did not take the next and necessary step toward a system that provides all Americans with high-quality health care while holding down costs, which now eat up 17 percent of GDP.
Rather, House Republicans used their new majority to push for a return to the bad old days when insurance executives were deemed to have an absolute right to their multimillion-dollar bonuses but children and others with pre-existing conditions were deemed to have a right only to beg for charity.
If the House debate on repeal of health care served a purpose, it was to illustrate the deep divide between those who believe the highest priority is to preserve insurance industry profits and those who worry about sick kids.
Congresswoman Sheila Jackson Lee, D-Texas, summed up the whole charade with her usual precision when she invited House Republicans to consider their responsibility to represent not just corporations but the common good. “So I would argue that my good friends — some of them are new and I appreciate their newness — I appreciate their desire to keep a commitment to constituents — but when you come to the Congress, you have to govern, you have to look at the whole of America,” she declared during the debate on repeal. “And therefore, looking at the whole of America, you need to look at the crux; the crux is saving lives.”
The congresswoman bluntly rejected the notion that repeal is the economic necessity Republicans suggest. Instead, she proposed, preserving reforms that protect the most vulnerable is a life-and-death necessity. “Frankly, I would just say to you, this is about saving lives. Jobs are very important; we created jobs,” explained Jackson Lee. “But even the title of their legislation, H.R. 2, ‘job-killing’ — this is killing Americans if we take this away, if we repeal this bill.”
That’s a credible argument, to be sure.
But what of real reform? What about the changes that might get to the heart of the matter of ending the profiteering that makes health care so expensive and inaccessible?
Congressman Dennis Kucinich, D-Ohio, brought the right perspective to the debate when he reminded the House that “everyone knows that health insurance companies make money by not providing health care. After all, they are in the insurance business. They are not charities. With as many as 129 million Americans suffering from pre-existing conditions, insurance companies want Congress to repeal health care reform. The provisions which require covering people with pre-existing conditions would eventually cut into insurance company profits.”
Kucinich warned: “Repeal means Americans will continue to pay more for insurance but get less — that is, if they can afford health care insurance in the first place.”
But the co-author (along with Wisconsinites Baldwin and Moore) of legislation that would extend the Medicare system to all Americans, regardless of age, did not stop there.
“The very idea of health care reform solely within the context of a for-profit system has been more than problematic. Today, 50 million Americans have no health insurance. What are we going to do for them?” asked Kucinich. “Rather than waste time on debating how much reform insurance companies will permit — if any — it is time to change the debate. It is time to end the for-profit health care model. It is time for not-for-profit health care — single-payer, universal, Medicare for all — with an emphasis on wellness and personal responsibility.”
http://host.madison.com/ct/news/opinion/editorial/article_9830667d-67f2-562c-bc2f-527dfea7a770.html
Is HHS pushing bronze plans?
Note: You may want to skip directly to the comment, and only afterwards read the excepts from the HHS release and report, if you wish to review the details.
News Release: Report finds lower insurance premiums, more choices in 2014 for families, businesses under Affordable Care Act
U.S. Department of Health & Human Services
January 28, 2011Secretary of Health and Human Services Kathleen Sebelius today released a new report showing how much families and businesses can save on health insurance premiums and out-of-pocket costs under the Affordable Care Act in 2014 – each year, a low-income family of four could save up to $14,900 and businesses will benefit from the savings and tax credits in the new law.
The report finds that, compared to what they would have paid without the law:
* Middle-class families purchasing private insurance in the new State-based Health Insurance Exchanges could save as much as $2,300 per year in 2014.
* Tax credits provided by the Affordable Care Act will lead to even greater savings. For example, in 2014, a family of four with an income of $33,525 could save as much as $14,900 per year since they will also qualify for tax credits and reduced cost sharing.
And…
Report: Health Insurance Premiums: Past High Costs Will Become the Present and Future Without Health Reform
U.S. Department of Health & Human Services
January 28, 2011This report examines the past, present, and future regarding the likely effects of the law on premiums – along with what might happen without it.
Savings for individuals and families:
The Congressional Budget Office (CBO) produced estimates of the impact of the Affordable Care Act on premiums. For people purchasing nongroup coverage through the Exchanges, it estimated savings of 7 to 10 percent resulting from the increase in the size of the insurance pool as well as the nature of the new enrollees, who, in light of the premium tax credits and the individual responsibility provisions, are likely to be healthier than existing enrollees. An additional 7 to 10 percent savings would result from providing the same set of services to the same group of enrollees – primarily because of the new rules in the market such as eliminating insurance underwriting. CBO also credits some of the savings to increased choices and competition. Together, these savings range from 14 to 20 percent. CBO also assumed that individuals and families would have, on average, coverage that is more comprehensive than what they have now, meaning that the savings would offset by higher premiums due to better coverage. It is important to note that this benefit enhancement is a choice, not a requirement.
Assuming 20 percent premium savings, families purchasing insurance through Exchanges could save as much as $2,300 per year and individuals could save up to $800 in 2014 compared to individual market coverage with the same level of benefits without the law. With premium tax credits, the savings from health reform range from $9,900 for a family of four with income of $33,525 to $3,500 for a family with an income of $78,225 (see Figure and Methodology).
Premium savings are only part of picture for low-income individuals and families. They also may qualify for reduced cost sharing under the Affordable Care Act. For the same families with incomes of $33,525 and $78,225, this could add $5,000 and $1,500 respectively to the premium savings (see Table in Methodology).
METHODOLOGY
The table below uses CBO data to illustrate the savings that could be achieved under health reform in 2014. It uses the CBO single premium data for 2016, deflated to 2014 using its last public estimate of private premium growth (6 percent). Family premiums are calculated by multiplying the single premium by 2.7, the standard ratio of family to single premiums (CBO assumes that the composition of a family policy will change under the new law). It then applies the maximum savings for the individual market of 20 percent, assuming that individuals do not decide to purchase better coverage. The tax credits are calculated by applying the maximum premium payment in the law to the 2011 income (using the latest poverty thresholds) inflated by 1.7 percent (CBO’s August 2010 projection for 2012-2014). Premiums vary by age, region and other factors, so these estimates are illustrative.
The cost sharing estimates were calculated by taking the average out-of-pocket spending for a silver plan in 2016 – $1,900 for an individual and $5,000 for a family according to CBO – and deflating to 2014 assuming 6 percent health cost growth (see above). Assuming a linear relationship between the actuarial value of a silver plan (70 percent) and the average out-of-pocket cost sharing, the reduced cost sharing amounts were calculated using the schedule in the law for individuals and families at different income brackets. This was subtracted from the average out-of-pocket costs for a bronze plan to assess the savings.
The potential premium effects in the text and chart are rounded to the nearest $100. Note: the premium effects shown here differ from earlier estimates from HHS due to the January 20, 2011 update of the poverty guidelines.
(The table from which the numbers in the release and the report are derived can be accessed at the link below. Only the footnotes to the table are reproduced here.)
Source: DHHS
1. CBO 11/30/09 estimate of prior law national average individual market single premium ($5,500), deflated to 2014 assuming 6% annual premium growth and adjusted pro-rata for a plan with an actuarial value of 60%. Family premium is the single premium multiplied by a family factor of 2.7
2. CBO 11/30/09 estimate of average cost sharing under reform ($1,900 / $5,200), deflated to 2014 assuming 6% annual health cost growth, pro-rated for a plan with an actuarial value of 60%.
3. Assumes CBO 11/30/09 gross savings of 20%, not counting the premium cost of buying up benefits.
4. Income inflated to 2014 assuming general inflation of 1.7% per year (CBO, August 2010)http://www.healthcare.gov/center/reports/premiums01282011a.pdf
Today’s selections from the Department of Health & Human Services (HHS) are not so much for the purpose of reading and studying, but rather are presented to provide documentation to support today’s comment. HHS is touting the savings in insurance premiums that will result from having enacted the Patient Protection and Affordable Care Act. The fine print is important in understanding what this touted savings really is.
HHS is comparing family plans that will be offered in the state insurance exchanges with family plans that are currently offered in the individual insurance market. The current plans are terrible, which is the main point that HHS should have made. To keep premiums down to a level that families can barely afford, the existing plans provide very limited benefits, potentially exposing families to very high out-of-pocket expenses.
So that the savings can be calculated on an apples to apples comparison, HHS has selected the most austere plan to be offered in the exchanges – the bronze plan, which has an actuarial value of 60 percent – a plan that’s about as lousy as those on the individual market today. This leaves the family exposed to 40 percent of their health care costs (though admittedly with inadequate income-indexed subsidies, which is important but not covered here further).
The family has the option to buy up to a silver plan, but then the touted savings goes away. Furthermore, the silver plan is also an under-insurance product since its actuarial value is still only 70 percent, leaving the family responsible for 30 percent of the costs. Although still a lousy plan, as HHS says, “this benefit enhancement is a choice, not a requirement.” What a choice.
Gold and platinum plans with actuarial values of 80 percent and 90 percent will be offered in the exchanges, but very few families will move up to those plans since they must pay the full additional premium. Only the wealthiest families will be able to afford the difference.
The title of HHS’s release says “lower insurance premiums” and “more choices.” But what they bury in their report is that you get lower premiums only if you choose a crappy plan similar to those currently available in the individual market.
We can do far better than that. We can enact an improved Medicare for all. Then you wouldn’t have to worry about unaffordable premiums and out-of-pocket expenses since they would be replaced with equitable taxes which would be affordable for all.
Vt. doctors at Statehouse support single-payer
AP/CNBC, Jan. 27, 2011
MONTPELIER, Vt. – Donning lab coats, Vermont doctors are taking to the halls of the Statehouse to lend their backing to Gov. Peter Shumlin’s push for a single-payer health care system.
More than two dozen doctors, nurses and nurse practitioners held forth in a committee room Thursday, taking turns at a microphone to explain why they feel a universal health care system would better serve patients than the existing system.
Many, including psychiatrist Dr. Alice Silverman of St. Johnsbury, said restrictions on access to care and the high cost of some tests were causing people to avoid getting the care they need.
http://www.cnbc.com/id/41298302
Why don't Americans live longer?
Why Don’t Americans Live Longer?
By David Leonhardt
The New York Times
January 25, 2011
The National Academy of Sciences has just released a fascinating report on life expectancy in rich countries around the world. The researchers who wrote the report — public-health experts, demographers, economists and others, from around the world — have tried to figure out why Americans don’t live as long as people in many other countries.
From a summary of the report:
“Over the last 25 years, life expectancy at age 50 in the U.S. has been rising, but at a slower pace than in many other high-income countries, such as Japan and Australia. This difference is particularly notable given that the U.S. spends more on health care than any other nation….
“Three to five decades ago, smoking was much more widespread in the U.S. than in Europe or Japan, and the health consequences are still playing out in today’s mortality rates, the report says. Smoking appears to be responsible for a good deal of the differences in life expectancy, especially for women….
“Obesity’s contribution to lagging life expectancies in the U.S. also appears to be significant, the report says. While there is still uncertainty in the literature about the magnitude of the relationship between obesity and mortality, it may account for a fifth to a third of the shortfall in longevity in the U.S. compared to other nations, the report says….
“Lack of universal access to health care in the U.S. also has increased mortality and reduced life expectancy, the report says, though this is a less significant factor for those over age 65 because of Medicare access….”
And from the report itself:
“With respect to income inequality, it is widely believed that such inequalities are higher in the United States than in other high-income countries, in part because the United States does less to redistribute wealth among its citizens…. Poverty rates also appear to be higher in the United States than in most of the other countries….
“This combination of factors could result in higher mortality rates among people in the lower socioeconomic brackets in the United States than in other countries, pulling down U.S. life expectancy levels in general…. In particular, there is a clear pattern among U.S. white males that fits the hypothesis….On the other hand, the pattern for U.S. women is somewhat different: mortality rates are higher than in most Northern and Western European countries among those who are highly educated as well as among the least educated….
“It is difficult to draw a precise conclusion as to the size of the role of inequality in relative levels and trends in U.S. mortality above age 50.”
This country has made a lot of progress against smoking. Obesity remains a major problem, though there are some signs it’s leveling off. And as the report notes, the link between obesity and mortality isn’t yet clear. Inequality’s role also seems unclear.
So beyond reducing smoking further, the single best strategy for extending American lives would appear to be extending universal health-insurance coverage below the age of 65.
http://economix.blogs.nytimes.com/2011/01/25/why-dont-americans-live-longer/
National Research Council of the National Academies:
“Explaining Divergent Levels of Longevity in High-Income Countries”
http://www.nap.edu/catalog.php?record_id=13089
Comment:
By Don McCanne, MD
We frequently look at the lower life expectancy in the United States, in comparison to other wealthy nations, as a sign of the relatively poor performance of the U.S. health care system. We conclude that we would benefit if we established a reasonably comprehensive national health program that included everyone. Opponents contend that our system is outstanding and that reform is not necessary; individuals need only to take better care of themselves.
This new report by the National Research Council does not provide all of the answers, but it does provide very useful information. Two detrimental factors in which individuals do play some role are smoking and obesity.
On smoking, there is good news. Our high incidence of deaths from lung cancer and chronic pulmonary disease are related to the very high rates of smoking from a few decades ago. In the recent couple of decades, smoking cessation programs have been very successful, so much so that we can predict a significant increase in life expectancy as the non-smoking generation ages. Score one for those who blame individuals for our higher death rates, but also score ten for those who support the multitude of public health programs that have been so effective in reducing smoking behavior.
Obesity is a more difficult problem. Certainly a sedentary life style and poor eating habits contribute, so individuals can bear some blame, but other complex factors play even more important roles. Genetic factors, which are very important, we have no control over. Computers, televisions, work-at-home arrangements all reduce physical exertion. Community design and transportation have reduced self-propelled locomotion (i.e., walking). The food industry has not been particularly helpful, marketing excesses of nutritionally unbalanced foods, though there are signs that an awareness has set in and that product selection should improve. It’s easy to say that everyone should exercise more and eat less, but it is going to require intensive public policy and public health measures – more intensive than with the smoking cessation programs – to alter the obesity-inducing milieu.
Socioeconomic inequality in the United States certainly plays a role in our shorter life expectancy statistics. Considerable heated debate takes place over whether that is a cause or a symptom of factors leading to premature deaths. That debate is misdirected since socioeconomic inequality is deplorable for far more reasons than just our health outcomes. We do need national policies to raise the lot of those who are falling hopelessly behind. Although there is much to do, we can begin by reversing the income transfer that has been taking place from the productive workforce (hard-earned income) to the very wealthy (largely unearned income). Simple progressive tax policies can ensure that everyone has a living income, without impacting in the least the life styles of the wealthy.
You really need to read the 200 page report to understand what is known and what is not known about why we have lower life expectancies than should be expected for a wealthy nation. Regardless of those who would distract us by blaming personal failure for increased mortality, one conclusion of the report really stands out:
“The lack of universal access to health care in the United States undoubtedly increases mortality and reduces life expectancy. It is a smaller factor above age 65 than at younger ages because of Medicare.”
We know how to fix that.
PNHP comments on Hsiao draft report "Achieving Affordable Universal Health Care in Vermont" 1/19/11
January 21, 2011
William Hsiao, Ph.D.
124 Mt. Auburn Street, Suite 410 South
Cambridge, MA 02138
Dear Dr. Hsiao,
Thank you for this opportunity to comment on your draft report, and for generously volunteering your time and international expertise to this project.
PNHP agrees that the most effective, evidence-based approach to addressing the health care crisis facing Vermont is the adoption of a single payer system, and applauds the work of your team in preparing two models of single payer – with different benefit packages and governance structures – for the Vermont legislature to consider.
We particularly appreciate your recommendation, based on interviews with all the stakeholders, for an Independent Board to determine budgets and payments to providers, to address concerns – real or imagined – about the transparency and accountability of the single payer. That is a valuable contribution to the design of a single payer system for Vermont.
We briefly outline some questions and concerns, below, with the goal of strengthening the single payer model in Option 1 and Option 3 and giving it greater ability to control costs.
We also have concerns about the fiscal analysis of the model, also below, mostly related to what we believe is an underestimate of the potential administrative savings and savings from effective cost-containment with single payer budgeting, and an overestimate of the potential savings from ACO’s. Overall we believe that the projected savings from single payer are in the right range (25 percent of projected health spending 2015-2024), however.
Strengthening the Single Payer, Strengthening Cost Control
1. Medicare and Medicaid should be fully incorporated into the single payer to maximize administrative savings, strengthen cost control, and provide seniors and low-income residents with the superior benefits package of the single payer as well as seamless, continuous coverage. Additional Medicaid benefits (e.g. transportation costs) may continue to be provided separately.
2. With Medicare and Medicaid fully incorporated into the single payer, it will be possible to globally budget hospitals, nursing homes, and other delivery facilities, a measure we strongly recommend both to slash administrative costs at the hospital level and to vastly strengthen cost control. In order to contain costs, it is important to do health planning, particularly with new technology, which is expanding in Vermont more rapidly than hospitals’ physical plant. Thus we recommend that hospitals and other institutions have separate capital and operating budgets.
3. In order to effectively control costs Vermont needs to prohibit participation in the program by investor-owned, for-profit delivery systems. There is solid evidence that investor ownership raises costs and lowers quality of care in nursing homes, hospitals, dialysis clinics, and other facilities.
4. Long-term care is an essential benefit for an aging population. The additional cost of coverage for nursing home care may be reduced by charging an income-based fee for the housing portion of nursing home care, but not for the clinical portion.
5. Other benefit improvements we suggest are:
– use of the “comprehensive” benefit package as the starting point
– coverage of all residents of Vermont (subject to a residency requirement, not citizenship status)
– elimination of all co-pays and cost-sharing (reduces administrative costs and is not necessary for cost control under single payer system with enforceable budgets)
6. While we appreciate the need for time to prepare for a new way of financing care, we suggest that the program be implemented sooner, in 2012, rather than wait until 2015. We believe that the evidence from Taiwan shows that faster implementation, if there is the political will, is possible.
Comments on the fiscal analysis: Single Payer “Bends the Cost Curve”
1. The evidence from savings from administrative waste is very strong and savings from this category are a minimum of 10 percent if the single payer is correctly structured (that is, Medicare and Medicaid are included and hospitals are globally budgeted) and as high as 15 percent or more of total health expenditures.
2. The evidence of savings from using a non-profit delivery system is also very strong; for-profit hospitals are an average of 19 percent more costly than non-profits. There is a large body of evidence showing that investor-owned, for-profit facilities such as dialysis clinics are more costly and have lower quality than non-profits that should be added to the report and fiscal modeling (see references at www.pnhp.org/resources/evidence-based-talking-points).
3. In addition to the one-time savings from slashing administrative waste, if the single payer is strengthened it is able to “bend the cost curve” and reduce the rate of health inflation in Vermont going forward (e.g. with enforceable global budgets for physician care and hospitals as well as total health spending; bulk purchasing of drugs and supplies; and negotiated fees). This is the real source of the majority of savings over time from a single payer plan, and projections of future health spending should reflect this. This finding is well supported by the international evidence from Taiwan and elsewhere.
4. In contrast, we believe that the evidence for ACOs saving money is weak (much of it has not been published in peer-reviewed journals; even CMS does not agree on what an ACO looks like and is only pursuing pilot projects) and there is just as much reason to believe that the consolidation of providers and increased management costs necessitated by the ACO requirement will raise costs as lower them. In fact, dramatically raising administrative costs is precisely what has happened in the British NHS as it has tried ACO-like schemes.
5. We thus strongly recommend a more critical evaluation of the literature on ACOs in the report and reducing the estimate of the potential savings from ACOs. We believe that the savings from effective cost-control as a result of the single payer will more than make up for the savings currently attributed to ACOs.
6. While outsourcing claims processing to the lowest bidder may be more appealing politically and to insurers, we are skeptical of the claim that it will save any more money.
7. Finally, while we understand the justification for the payroll tax on the employer side, we believe that the payroll tax on the employee side should be replaced with a small income tax or surtax on very wealthy families (top 5 percent) or a small tax on unearned income. Income inequality is a major contributor to ill health in its own right, and income inequality has increased dramatically in the U.S. over the past 30 years. A small tax on unearned income (or surtax on those with very high unearned incomes) would be a small step towards reducing this disparity.
We would be happy to review these points with your team or to arrange meetings with PNHP policy experts.
Thank you again for your outstanding contribution to fundamental health care reform in Vermont.
Sincerely yours,
Deborah Richter, MD
Chair, Vermont chapter, PNHP
Ida Hellander, MD
Executive Director, PNHP
Comments by Himmelstein and Woolhandler on Hsiao draft report "Achieving Affordable Universal Health Care in Vermont"
By Drs. Steffie Woolhandler and David Himmelstein
Submitted on Mon, Jan 24, 2011
Dear Dr. Hsiao,
1- We are convinced that hospital global budgeting would generate substantial additional administrative savings. This conviction is based both on strong anecdotal evidence and some systematic studies. Canadian hospitals do little of the internal cost tracking needed to attribute costs and charges to individual patients. Anecdotally, this allows a typical Canadian hospital to employ fewer than 5 billing personnel, vs. 50 or more for a U.S. hospital. Some years ago we learned that Toronto General had about a dozen people in its billing department whose main task was to send bills to Americans who wandered across the border. At that time, the MGH had 352 FTE billing personnel. We’re told that the current number at the MGH is closer to 1000. This is reflected in the 10 percentage point difference in administration’s proportion of hospital costs between the U.S. and Canada, far larger than the roughly 2% that you estimate could be saved under your options 1 or 3 (http://www.masscare.org/wp-content/uploads/2007/05/PNHPAdminCosts.pdf). Our studies of the number of administrative personnel employed in U.S., Canadian and German hospitals yield similar estimates of potential savings through global budgeting, and indicate that a unified per-patient billing system (as in Germany) is far less administratively streamlined (http://ajph.aphapublications.org/cgi/content/abstract/86/2/172 and Himmelstein, D. U., et al., “The Health Care Labor Force: U. S., Canada, and Western Germany,” unpublished contractor report prepared for the Office of Technology Assessment, U.S. Congress, Washington, DC, Mar. 19, 1993.). In the U.K., hospitals also beefed up their administrative staffs when the internal market was promulgated, and the director of the Karolinska Hospital in Stockholm told David that the advent of per-patient payments had caused at least a doubling in that hospital’s administrative costs.
2- We’re very concerned about your failure to recommend that hospital capital budgets be allocated separately from their operating revenues. Deriving hospital capital largely from the surpluses they accumulate out of their operating budgets means that profitability determines investment, negating any real possibility for health planning. Allowing hospitals to divert unspent operating funds to capital investment also provides incentives for hospitals to amplify profitable services such as elective orthopedic and cardiac procedures, and shrink needed but unprofitable ones such as psychiatry and primary care. We’re similarly concerned about the plan to allow ACOs to keep any surplus they don’t spend on their patients. Such incentives will guarantee cherry picking and the neglect of important but unmeasured care. Regulatory efforts and quality measurement are no match for the cleverness of those who will game the system.
3- Your endorsement of P-4-P is unsupported by any reasonable evidence. The extensive British experience indicates that you get more of what you pay for, but with substantial undesired side effects on aspects of care that are not incentivized. Recent studies from the MGH indicate that P-4-P targets are far harder to achieve when caring for low income, minority or mentally ill patients. Moreover, interesting data from behavioral economics suggests that such schemes may well worsen performance of complex tasks (see the video at: http://www.youtube.com/watch?v=u6XAPnuFjJc for an entertaining introduction to this literature from writer Daniel Pink).
4- Microsimulation models inaccurately predict changes in utilization that result from system-wide changes in the comprehensiveness of coverage because they assume no supply limit. Given the shortage of primary care physicians in much of Vermont it is implausible that the more comprehensive benefit package would cause much increase in primary care visits. Similarly, unless hospital capacity were greatly expanded, dropping financial barriers to hospitalization would not be likely to cause a large increase in inpatient care. The proof of this lies in data from Canada. In Quebec, there was virtually no change in aggregate utilization of physician care with the elimination of financial barriers in 1971. The poor and sick saw doctors more frequently, while the wealthy and healthy waited a bit longer for appointments and saw their doctors a bit less often (http://www.nejm.org/doi/pdf/10.1056/NEJM197311292892206). Similarly, Saskatchewan saw little decrease in aggregate physician visits when co-payments for outpatient care were added, and not much increase when they were subsequently dropped (http://www.jstor.org/pss/3764080). Bob Evans has noted that physicians almost always work the same number of hours, regardless of the MD/Population ratio, and the Dartmouth data make a convincing case that this is so. Hence, we’d suggest that your estimates of the cost of comprehensive benefits are too high.
5- While we find much to like in your Model 1 with comprehensive benefits, even that plan cannot be properly labeled “single payer” since it would retain (at least initially) Medicare and Medicaid (and apparently Medigap plans as well). We’d suggest calling this plan (and Model 3) “Oligopayer” options. If (as we understand that you advocate) Medicare and Medicaid were folded in at a later date and Medigap eliminated, only at this more advanced stage would the system properly be termed single payer.
6- Finally, we are unaware of evidence to support your claim that contracting out claims payment etc. to a private insurer will produce savings, and would urge you to review the evidence to the contrary. The initial Saskatchewan experience (reviewed in: Horne JM, Beck RG. Further Evidence on Public versus Private Administration of Health Insurance. Journal of Public Health Policy 1981) led the Hall Commission that recommended nationwide adoption of the single payer approach to conclude: “Hence the decision which Canadians have to make is whether they wish to pay $1,027 million in 1971 for a programme administered by the insurance industry, or $837 million for a programme administered by government agencies.” At present, Canadian public payers average about 1% overhead, far lower than any of the private contracted payers that you cite. Moreover, it seems likely that after the initial bidding process, barriers to entry for competitors will be steep since the initial winning bidder will have a decisive advantage in having built the payment infrastructure (computer programs, provider rosters etc.). Moreover, a private firm would have strong incentives to increase the complexity and cost of administration, and hence boost its revenues.
Thanks in advance for your consideration. We’d be happy to discuss these issues with you further if you wish.
