PNHP

Medicare beats employer-sponsored plans

Medicare beats employer-sponsored plans

Meeting Enrollees' Needs: How Do Medicare And Employer Coverage Stack Up?

By Karen Davis, Stuart Guterman, Michelle M. Doty, Kristof M. Stremikis
Health Affairs
May 12, 2009

One key issue in health reform concerns the relative roles of coverage offered through private insurance and public programs. This paper compares the experiences of aged Medicare beneficiaries with those of people under age sixty-five who have private employer coverage. Compared with the employer-coverage group, people in the Medicare group report fewer problems obtaining medical care, less financial hardship due to medical bills, and higher overall satisfaction with their coverage. Although access and bill payment problems increased across the board from 2001 to 2007, the gap between Medicare and private employer coverage widened.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w521v1

Comment:

By Don McCanne, MD

Very few individuals, especially those already covered by Medicare, will be surprised by this study. It demonstrates that, compared to people under 65 with private employer-sponsored coverage, Medicare beneficiaries over 65 have fewer problems with access to care, have less financial hardship due to medical bills, and have higher overall satisfaction with their coverage.

The private insurance industry has been taking quite a beating lately, and appropriately so. Much of the criticism has been targeted to the individual and small group insurance market, especially since these more innovative plans have been quite ineffective in preventing financial hardship for those who need care.

In contrast, policy makers and legislators in Washington are claiming that the employer-sponsored segment of the private insurance market is working quite well for us, and reform should include policies to expand this market. But this study isolated the employer-sponsored segment and compared it specifically with Medicare. No contest. Medicare is clearly superior to employer-sponsored plans.

This study will be cited by those who support a Medicare-like option within a market of private plans. But what is the implication for the taxpayers?

An employer-sponsored plan is no longer affordable for average-income workers, and already is subsidized through the tax system. It is absolutely inevitable that additional taxpayer subsidies would be required to pay for private plans, whether through tax credits, tax deductions or vouchers. It is morally wrong to require taxpayers to subsidize inferior private health plans when they could be replaced with a superior, more efficient public insurance program – an expanded and improved Medicare for all.

It’s our tax money. We have a right to demand higher value in health care purchases made by our public stewards – precisely the value that a single payer national health program would bring us.

Insurers place burden on physician practices

What Does It Cost Physician Practices To Interact With Health Insurance Plans?

By Lawrence P. Casalino, Sean Nicholson, David N. Gans, Terry Hammons, Dante Morra, Theodore Karrison, Wendy Levinson
Health Affairs
May 14, 2009
Physicians have long expressed dissatisfaction with the time they and their staffs spend interacting with health plans. However, little information exists about the extent of these interactions. We conducted a national survey on this subject of physicians and practice administrators. Physicians reported spending three hours weekly interacting with plans; nursing and clerical staff spent much larger amounts of time. When time is converted to dollars, we estimate that the national time cost to practices of interactions with plans is at least $23 billion to $31 billion each year.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w533

And…

Peering Into The Black Box: Billing And Insurance Activities In A Medical Group

By Julie Ann Sakowski, Jeffrey M. Newman, James G. Kahn, Richard G. Kronick, Harold S. Luft
Health Affairs
May 14, 2009
Billing and insurance-related functions have been reported to consume 14 percent of medical group revenue, but little is known about the costs associated with performing specific activities. We conducted semistructured interviews, observed work flows, analyzed department budgets, and surveyed clinicians to evaluate these activities at a large multispecialty medical group. We identified 0.67 nonclinical full-time-equivalent (FTE) staff working on billing and insurance functions per FTE physician. In addition, clinicians spent more than thirty-five minutes per day performing these tasks. The cost to medical groups, including clinicians’ time, was at least $85,276 per FTE physician (10 percent of revenue).
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w544

Much has been said about the large amount of premium dollars that are spent on the administrative excesses of the private insurance industry. These two important studies add additional evidence that the excesses of the private plans also increase the administrative burden placed on physicians and their co-workers.
The price paid for continuing to tolerate our dysfunctional, multi-payer system is tallied not only in manpower hours lost, but also in the monetary value of this wasteful burden placed on our health care professionals. Not quantified here is the price paid in loss of job satisfaction and the potential negative impact that could have on the enthusiasm for advocating for the best patient care possible within the resources made available.
Yesterday President Obama, boiling it down to basics, said, “But whatever plans emerge, both from the House and the Senate, I do believe that they’ve got to uphold three basic principles: first, that the rising cost of health care has to be brought down; second, that Americans have to be able to choose their own doctor and their own plan; and third, all Americans have to have quality, affordable health care.”
Americans have to be able to choose their own plan? Instead of having all essential care covered automatically by a single program, we have to choose a plan that limits coverage and limits choice of health care professionals? And for that we have to pay much more to cover the wasteful administrative costs of the insurers and the physicians? Why is that a basic principle?

Health Insurance Exchange and private plan behavior

Expanding Health Care Coverage: Proposals to Provide Affordable Coverage to All Americans

Description of Policy Options

Senate Finance Committee
May 14, 2009 (released May 11)

Health Insurance Exchange

Proposed Options

Plan Participation. All state-licensed private insurers in the non-group and small group markets, and the public health insurance option if applicable, operating nationally, regionally, statewide, or locally would be required to participate in the Health Insurance Exchange. Private insurers would also be permitted to sell these policies directly to purchasers.

http://finance.senate.gov/sitepages/leg/LEG%202009/051109%20Health%20Care%20Description%20of%20Policy%20Options.pdf

And…

What Health Insurance Exchanges or Choice Pools Can and Can’t Do About Risks and Costs

By Rick Curtis and Ed Neuschler
Institute for Health Policy Solutions
May 2009

Health Plan Participation and Perspectives

Where health insurance pools or exchanges are an optional coverage venue, and there are no incentives or requirements for their use, exchanges that are expected to offer licensed health insurance plans need those plans more than the health plans need the exchange.

Most health plans strongly prefer direct contracts with with whole employer groups over enrollment through such purchasing pools. Their reasons include:

* Maintaining their business role. Many plans do not want to cede — to pools or to anyone else — administrative functions such as premium collection and enrollment. …they are concerned about losing revenues and functions that are a key component of their resource base and their value-added role as a business.

* Resistance to being “commoditized.” Health plans generally do not like competing head-to-head on price for the same benefit package.

* Fear of adverse selection where the pool, rather than the plan, controls marketing, eligibility, rating, enrollment, etc. Plans fear that, overall, purchasing pools will attract less healthy groups that can’t get coverage elsewhere — at least not as easily.

For these reasons, health plans are reluctant to participate in a pool or exchange that largely competes against plans’ own direct contracting with small employers or individuals. If they agree to participate, they likely will not offer lower prices to the pool/exchange than they charge for their outside business. Further, the general point made earlier is worth repeating: Most established health plans are unlikely to cooperate in helping a pool that competes for their direct enrollment. They generally have no desire to create a larger purchaser with more bargaining clout out of smaller, weaker employer groups or individuals.

http://www.allhealth.org/briefingmaterials/WhatHealthInsuranceExchangesorChoicePoolsCanandCantDoAboutRisksandCosts-1459.pdf

Comment:

By Don McCanne, MD

What was the campaign rhetoric? Something like, “You can keep the insurance you have if that’s what you want, and, if you prefer, you can choose a plan like the members of Congress have.”

Although no final decisions have been made, our congressional leaders have made it clear that reform will be built on the existing model of private plans and public programs. Although the private insurance industry has promised full cooperation with reform, most moderates and progressives understand that legislated insurance market reforms will be essential if the industry is expected to live up to its promises.

Rather than a revolutionary transformation of the private insurance industry into a highly regulated social insurance program, Congress seems intent on establishing a Health Insurance Exchange, as described in the Senate Finance policy option paper. So that “you can keep the insurance you have,” the private insurance industry would be allowed to continue to offer their products directly to individuals and employers.

But think about that. Private insurers will continue to do what private insurers do well. They will do whatever is necessary to continue to insure the large numbers of individuals who are healthy, while shunning those with greater health care needs.

Employer-sponsored plans are often touted as the sector of health care coverage that is working well for us, though rising costs are a growing threat to the stability of these plans. These plans do work fairly well for some of us because they cover the low-cost healthy workforce and their young healthy families, they spread risk through larger, less expensive pools, and they have lower administrative costs than the individual and small group plans. The private insurance industry, either as insurers or as administrators for self-insured plans, will continue to thrive in this market.

So what is the purpose of the Health Insurance Exchange? It is a way of requiring plans to provide coverage to the much neglected individual and small group markets. The private insurance industry is already very wary of this market, and has responded with risk-avoidance behaviors that we find to be so repulsive. As Curtis and Neuschler explain in their report, the insurance industry will be “unlikely to cooperate in helping a pool that competes for their direct enrollment.” Again, private insurers being what they are, they will make every effort to be certain that their own subsidiaries in the Exchange will fail in their efforts to compete successfully with their private plans sold directly to purchasers.

Now step back and think about this. The comments here discuss only one paragraph in a 61 page report about policy options for reform, and this is only one of three reports that the Senate Finance Committee is releasing. The complexities of building reform on the U.S. business model of private plans make it absolutely impossible to create an equitable, efficient and affordable health care financing system for everyone. And the House leaders pledged today that they will pass a comprehensive reform bill by July 31! If you think the Clinton proposal was a
disaster, just wait!

Can Health Insurers Be Cost-Cutters?

Laura S. Boylan
Letter to the Editor
New York Times
May 11, 2009

To the Editor:

Paul Krugman outlines proposed cost-cutting by the “medical-industrial complex.” Why, thank you, medical- industrial complex! How nice to suggest lowering costs.

At the risk of seeming ungrateful, I wish to point out that the problem with voluntary cost reduction is that it’s voluntary. As long as the logic of our system is set by a huge for-profit multipayer bureaucracy, we will continue to get low value on the health care dollar.

Our nation’s ability to afford decent health care for all our citizens must not depend on voluntary self-regulation of for-profit entities. We need single-payer national health insurance. Let’s circle the wagons around health care, not around private insurance companies and Big Pharma.

The writer, a clinical associate professor of neurology at New York University School of Medicine, is on the board of directors of Physicians for a National Health Program, Metro New York.

Not Change We Can Believe In

By Claudia Chaufan, MD, PhD
KQED
May 12, 2009

In this second posting, I wish to elaborate on the question: “Is the public option model change we can believe in?”

I wish I could, but sadly I see no reason or evidence to do so. But before readers who may be excited about this approach conclude that I am a “spoiler,” let me lay out my case, making educated guesses about what assumptions underlie the “public option theory.”

During his election campaign, President Obama said he believed that health care is a right, so I assume that whatever he does, granting this universal right must be a high priority. So to secure this right he has promised to “overhaul” health care.

Very well. What may he and his supporters (like Kennedy, Baucus, etc.) have in mind? They have called their approach “uniquely American,” and modeled it after Berkeley professor Jacob Hacker’s proposal of a “public option” competing with private plans within a “highly regulated health care market.”

I call them all “hope it works” health care policy.

The fundamental problem is that, because supporters of this policy hold false assumptions about health insurance — that it is something you can comparative shop for with the same ease you comparative shop for designer shoes — they send you comparative shopping for it. But you do not comparative shop for rights; you are entitled to them.

“But,” says the public option crowd, “we have to send you comparative shopping because this will control costs and make health care affordable to everybody!” But what if I still cannot afford meaningful coverage that will protect me financially if I get sick? They might answer, “don’t worry; the health care marketplace will be highly regulated.”

What would they mean by that? Let me lay it out schematically:

First, they mean that private insurers will be legally bound to sell policies to everybody, regardless of past or present health status, and at prices people can afford. (Note: we are not told how this regulatory machinery will be enforced, or who will pay for it, but we can infer that taxpayers will foot the bill and, given the history of private insurance business practices, it won’t be cheap).

Second, employers will either provide insurance or contribute to a public fund. Discussions are also now moving from Obama’s initial demand for a mandate for children to a “universal individual mandate” that will legally compel all Americans to buy insurance.

Third, public programs for “vulnerable (i.e. expensive or poor) populations” will be expanded (Note: again, we are not told who will foot the bill of the machinery to divide people up according to “vulnerable” or not, or who will pay for the public programs, but we can safely infer it will be all taxpayers).

Fourth, there will be subsidies for those who cannot afford market prices, yet who are not “poor enough” to qualify for public programs (Note: again, criteria for “poor enough” remain a mystery, and once more we can infer that taxpayers will pay for subsidies, whether or not they qualify for them themselves).

Fifth, and here is where the theme of this second posting comes into play, there will be a “public option” good enough to set high standards — assuming, that is, that private insurers do not kill this option or water it down enough to make it worthless. The high standards of the public option — presumed by Hacker, based on Medicare’s indicators of performance, to provide excellent services and fair prices — will force insurers to compete or drop out of the market.

Finally, the plan will encourage providers to use electronic medical records, emphasize preventive medicine and fund research on comparative efficacy of treatment options.

Then we will all hold our breath, and hope that all this works, somehow.

Don’t get me wrong. I am not against electronic medical records, preventive medicine, eating your broccoli and not smoking, or researching what really works in medicine. All else equal, they are wonderful things. But is there any reason to believe that all or any of these things will, for instance, increase our purchasing power so that health care becomes affordable and can be universally guaranteed, as it is everywhere else in the industrialized world?

Well, there is not, because as I discussed in my previous posting, purchasing power comes from bulk purchasing, and all of the above are irrelevant to it.

Nor do electronic medical records or healthy lifestyles have any connection whatsoever with the other big “cancer” of our system: the administrative overhead that comes from dividing people up according to a mind boggling number of policies or eligibility criteria. (Britons spend half of what we do, while providing comprehensive and universal coverage, since they created the National Health Services. And there is no evidence whatsoever that their costs are lower because they eat more broccoli or use computerized records).

“But,” you might still insist, “what about the public option?” Well, in the absolutely best case scenario, it will end up with all the “bad customers” (i.e. the sicker, the poorer and the “not so poor for public programs yet not poor enough to qualify for a subsidy”, etc.).

And of course the public option, by being just an option, will be deprived of the greatest strengths of social insurance: 1. risk pooling, which assures sustainability and lowest costs, and 2) cooperative compulsory contributions, which secures an economically and politically sustainable source of money to pay for health care for all.

“But”, you may still argue, “can we not hope that this time a hybrid “private-public” insurance model will work?” You can, but you can’t rely on any past evidence of success — quite the contrary. Similar “hybrids” giving a central role to private insurance have been tried, touted repeatedly as “ground-braking” by a complacent, misinforming mainstream media, and have failed, repeatedly. There were tried in Massachusetts in 1988; Oregon in 1989; Minnesota, Tennessee and Vermont in 1992; Washington State in 1993; Maine in 2003; and again in Massachusetts in 2006. (For excellent analysis of these attempts, see “State Health Reform Flatlines” [PDF].)

Now, I recognize that the picture I have given you is grim. But let me tell you about the change I, at least, can believe in. It is the change that grassroots, truly popular social movements are able to bring about. One such movement is the single-payer movement.

If all those who believe that health care is a right — and evidence indicates that it is the majority of the population — drop the self-defeating belief that a true right to health care is not “politically feasible” and join in this movement, its collective strength will move mountains. After all, during the civil rights movements, Americans did not say, “let us just negotiate that black people be able to sit in the rear half of buses and hope this will lead to a universal right to sit in the whole bus.” They settled for no less than full equal rights.

Single payer legislation has already passed twice in our state, and was vetoed, twice, by Governor Schwarzenegger and his fellow Republicans. It has recently been reintroduced by Senator Mark Leno. At the federal level, many brave Americans are being dragged out of Washington-sponsored meetings and thrown in jail for demanding single payer (see video clips in my reply to a reader’s comment on my previous post). And as more people continue falling into debt or suffering unnecessarily, many more will join the ranks of these brave Americans. There are only so many jails to throw the increasing number who fight for health care equity. And they — we – cannot be silenced forever.

This growing grassroots movement gives me real hope that meaningful change is on the horizon and that politicians will eventually have to listen.

Because it is ordinary people who hold the vote.

More Tools for Single Payer Advocates

Action Alert from Health-Justice.Org

New Tools and Continuing Campaigns

Stuff You Can Do. Free. Easy. Free and Easy. NOW

New Tool for Phone Calling Campaign.

Until this morning, we had to transcribe the 200-300 voicemails we get each day from callers to our 800-578-4171 number. After transcription, we faxed the messages to the White House and each member of the Senate Finance Committee. Today, for instance, I sent a 36 page fax of closely printed voicemails from May 6.

But starting at 0900 EST today, we went live with a system that converts each overnight voice message to a phone call, dialing the White House and Sen. Baucus automatically, waiting for a human to answer, then playing the message and hanging up. And then dialing again to deliver the next message in the queue. And the next. And so on. So this morning we delivered 500 phone messages to the White House and Sen. Baucus at the rate of one or two a minute.

You can join the fun. Call 1-800-578-4171 and press 0 for the White House or 1 for Sen. Baucus. Or call during the day and be transferred directly to the live White House operator. Or call tonite and tomorrow and tomorrow nite and . . .

Continuing Campaign Update

You are still sending faxes and lots of them. This morning we had sent about 22 thousand faxes to the White House and members of Congress. You can take your pick of faxes, from chastising Republicans for intransigent obstructionism to asking Obama to do the right thing. Each one allows you to add your comments. Each one is sent immediately. Each one is free to you.

Click here and pick a fax to send. Or pick several. Or pick all. And remember, when we work together, we can overwhelm the fax machines in Washington. We did it before. We can do it again.

Yes, Some Things in Life Are Free — And Some Are Not

Much as I enjoy providing a way for you to send faxes and make phone calls, it’s kind of like Free Beer Tomorrow. Today I have to pay. So please donate to help keep the faxes free for those who can’t afford to donate, to keep the phone lines open for those who despaired of ever being heard, and to keep the videos on TV inspiring others to join us. Your donation is appreciated and the money will be carefully spent on this cause and this cause only. Not a penny is wasted because we can’t afford to let the rich guys beat us just because they are rich. We may not be wealthy, but we are smart and we are dedicated and we are many. Donate today to keep these campaigns alive.

Marcia Angell's testimony before Senate Finance

“Financing Comprehensive Health Care Reform”

Committee on Finance
United States Senate
May 12, 2009
Testimony of Marcia Angell, M.D.
(file does not exist)
http://finance.senate.gov/sitepages/hearing051209.html

It didn’t happen.
After nurses and physicians supporting single payer were removed from the audience, single payer was mentioned once only parenthetically.
During a discussion on the tax deductibility of employer-sponsored health plans, Sen. Max Baucus indicated that we should retain the tax preference, perhaps with modifications, since we should work with what we have and not make a radical change.
In response, considering that eliminating the tax preference would be a radical change especially impacting workers, Gerald Shea of AFL-CIO stated, “If we’re going to do a radical change, I think that single payer is really the way to go.”

Marcia Angell's testimony before Senate Finance

"Financing Comprehensive Health Care Reform"

Committee on Finance
United States Senate
May 12, 2009

Testimony of Marcia Angell, M.D.

(file does not exist)

http://finance.senate.gov/sitepages/hearing051209.html

Comment:

By Don McCanne, MD

It didn’t happen.

After nurses and physicians supporting single payer were removed from the audience, single payer was mentioned once only parenthetically.

During a discussion on the tax deductibility of employer-sponsored health plans, Sen. Max Baucus indicated that we should retain the tax preference, perhaps with modifications, since we should work with what we have and not make a radical change.

In response, considering that eliminating the tax preference would be a radical change especially impacting workers, Gerald Shea of AFL-CIO stated, “If we’re going to do a radical change, I think that single payer is really the way to go.”