USA Today/Kaiser Family Foundation/Harvard School of Public Health National Survey of Households Affected by Cancer

Kaiser Family Foundation
November 20, 2006

Survey of Families Affected by Cancer Shows People With and Without Health Insurance Often Suffer Serious Financial Hardships

A major national survey of people affected by cancer provides an in-depth examination of how families cope with cancer and highlights problems of health insurance and health care costs through the lens of those who have experienced this major illness. The results show how health care and health insurance systems can fail to protect people when they are most in need.

The survey found that one in four families affected by cancer say the experience led the person with the disease to use up all or most of their savings, and one in eight say they borrowed money from relatives. The illness also made it harder for some to find and keep health insurance – with about one in 10 saying they couldn’t buy health insurance because they had been diagnosed with cancer, and 6% saying they lost their coverage as a result of the disease.

Having health insurance at all times during treatment helped to limit the financial consequences of a cancer diagnosis, but even those with consistent coverage faced difficulties – one in five used up all or most of their savings, one in 10 borrowed money from relatives and 9% were contacted by a collection agency.

Among those who did not have health insurance consistently during their illness, the financial burden was even greater. More than one in four said that they delayed or decided not to get treatment because of its cost – five times the rate reported by those who had health insurance consistently. Nearly half used all or most of their savings; four in 10 were unable to pay for basic necessities; one in three sought the aid of a charity or public assistance program; and 6% filed for personal bankruptcy.

“This is one of the most disturbing of the hundreds of surveys we have done,” said Kaiser Family Foundation President and CEO Drew E. Altman, Ph.D. “When people with cancer are deferring care and experiencing such serious financial hardships because of inadequate insurance or because they have no health insurance, it casts a new light on the need to address our nation’s health insurance problems.”

http://www.kff.org/kaiserpolls/pomr112006pkg.cfm

Comment:

By Don McCanne, MD

How many times have you heard the opponents of health reform say that insurance should not pay for an oil change for your automobile, nor for a bag of potato chips at the supermarket? They contend that the only purpose of insurance is to indemnify an individual against catastrophic financial loss.

When a biopsy is not obtained in a timely manner because of financial limitations, doesn’t that result in a catastrophic loss? When potentially curable interventions are declined because of financial considerations, doesn’t that result in a catastrophic loss? When a victim of cancer decides to decline care in order to protect his or her limited assets in order to help pay for food and shelter for the surviving children, doesn’t that result in a catastrophic loss? Admittedly these questions redefine catastrophic loss as a loss of health or life, and not merely a loss of a large amount of personal funds. But, really, which is more important?

It is truly tragic that both the uninsured and the insured potentially face catastrophic losses. Our national policies are currently aimed at expanding coverage to the uninsured by exposing those insured to greater risks. Instead, we should be adopting policies that improve access to care by removing financial barriers for both the insured and uninsured.

This is certainly “one of the most disturbing of the hundreds of surveys” that KFF has done. What is particularly disturbing is that we understand the policy options that would allow us to remove the financial barriers without increasing health care spending. A single payer system does precisely that, by design.

For those who would prefer to accept the status quo simply because they’re healthy and their employers provide them with insurance, we should not wish that they would be the next to face the tragedy of cancer in their families. But we can grieve in the realization that our fellow Americans do not have the decency to support policies that would help protect other individuals and families (and possibly even their own!) against these tragedies.

It is not a matter of spending more money, because we don’t have to. It’s a matter of egalitarianism – apparently a foreign concept for Americans.

We Believe Every American Should Have Access to Affordable Health Care Coverage A Vision for Reform

America’s Health Insurance Plans (AHIP)

Our proposal to expand access to health insurance coverage is built upon five principles that are designed to clearly delineate the responsibilities of the private and public sectors, avoiding duplication, providing a framework for complementary strategies, and maximizing the effectiveness of a system-wide effort to improve quality and reduce costs.

Principle 1: The federal government should provide incentives to states to develop strategies that lead to – and sustain – coverage of children within three years and adults within 10 years.

Principle 2: The federal government should establish incentives for states to provide coverage through the Medicaid program for all adults with incomes

under 100 percent of the federal poverty level (FPL), including single adults, and through the State Children’s Health Insurance Program (SCHIP) for children under 200 percent of the federal poverty level. States should have the option to exceed these levels for SCHIP to the extent necessary to maintain enrollment of existing populations.

Principle 3: The federal government should provide subsidies for the purchase of private coverage to individuals and families with incomes under 400 percent of the FPL. Individuals with incomes under 300 percent of the FPL should receive proportionally greater assistance, with assistance levels phasing down for individuals with incomes approaching 400 percent of the FPL. Individuals who are eligible for premium subsidies should be encouraged to purchase coverage through existing market mechanisms. Employed individuals who are eligible for employer-sponsored coverage should be encouraged to use their premium subsidies to enroll in such coverage.

Principle 4: The 6 million uninsured Americans with incomes over 400 percent of the FPL should be encouraged to purchase coverage. This proposal sets out a range of options states should consider to achieve this goal. To help create a level playing field for individuals purchasing coverage on their own and for those who have employer coverage, full tax deductibility of premiums purchased in the individual market should be granted.

Principle 5: Employers should be encouraged to facilitate, provide, and maintain coverage for their employees. This proposal sets out a range of options states should consider to achieve this goal. In addition, the federal government should not disrupt employer coverage by changing the current tax treatment of employer-provided coverage.

http://www.ahipbelieves.com/Portals/0/docs/vision_of_reform.pdf

HealthCast video of AHIP’s release of the proposal:
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1974

Comment:

By Don McCanne, MD

AHIP, representing the nation’s private insurers, is currently being lauded for taking a leadership role in promoting policies encouraging universal access to affordable health care coverage. Are the accolades warranted?

The proposals do seem to meet what many consider to be the political common ground for reform. The expansion of coverage is incremental, beginning with children. The goal is universal coverage that is affordable for everyone.
The process builds on the current system rather than replacing it with a single, government-run program. Though politically expedient, is this the common ground where we really want to be?

AHIP’s primary mission is to protect the interests of the private insurers. They want to continue to market affordable plans to healthy populations that have a source to pay for the insurers’ products. Most employed individuals and their families are healthy and have, through their employment, the resources to purchase insurance. The insurance industry wants to retain that market. Many of the uninsured are also employed and healthy, but lack the resources to pay for coverage. The insurance industry also would like to have this market, and so they have proposed government subsidies to help pay for that coverage. They also propose subsidies for the higher-income uninsured in order to entice them as well to buy their products.

Individuals living in poverty have poor employment records and have a high incidence of chronic problems, especially socio-economic difficulties. The insurance industry does not want to cover this market since there is very little profit incentive in including these less fortunate individuals. Thus AHIP recommends turning these individuals over to a government welfare program, Medicaid, thereby sparing the industry of this burden.

What a great program for the insurers. They cover the healthy with well funded plans, and turn the problem sectors over to the government and the taxpayers.

Besides being extremely self-serving, there are serious deficiencies in their proposals. They are supporting affordable coverage, but not affordable health care. Reading the specifics of their proposals, it is clear that they have no mechanism for slowing health care inflation. Instead, they support proposals that shift more costs to individuals, making access less affordable. Rather than reducing the profound administrative waste in our system, they increase administrative inefficiencies, further adding to health care costs. They have no proposal to pay for the increased government spending, knowing that a massive tax increase, without an offset in reduced private spending, would blow a crater in a common ground on reform. Also, their program cannot possibly achieve 100 percent coverage since much of it requires voluntary participation.

The greatest flaw of all is that their plans are made affordable by increasing financially burdensome cost sharing, by reduction in benefits covered, and by excluding those with health care needs. If these patterns were reversed, then coverage would not be affordable. The private insurance model is an anachronism.

The political common ground for reform should be on policies that ensure that everyone has affordable access to comprehensive health care, rather than on policies that increase wasteful spending through a government program designed for the welfare of private plans. It’s time for taxpayer/patients, providers, and politicians to join together on a common ground to fix our system. But we do need to acknowledge that AHIP and the private insurers have disqualified themselves from being legitimate participants in that process.

Kaiser Family Foundation
Health Care Costs

Whenever consumers have a choice among different insurance arrangements, there is a tendency for people to choose a level of insurance based on their expected need for what is being covered (in this case health care). At any given price, people with a relatively high perceived need for the covered item are more likely to want coverage (and given coverage, more likely to want generous coverage) than people with a lower perceived need for the covered item. This is often referred to as “adverse selection.” Since high deductible plans generally are less generous than typical insurance policies — particularly for people with employer-sponsored coverage — some have raised concerns that CDHPs could disrupt the pooling of health risk in insurance markets.

To demonstrate that a relatively small share of enrollees can have a meaningful impact on average claims costs, we present an exercise using a database of medical claims complied by the Society of Actuaries.

What we can see from this exercise is that adverse selection can occur and have a meaningful impact on claims cost even where there are no extreme changes in enrollment. The enrollment shifts portrayed here would be far too small to substantially change the demographic make up of either pool in terms of age, gender, income, or other observable factors — even the 60%/40% scenario only increases the overall census of the adverse selection pool by 2%. Generalizations about enrollment would not reveal the real differences in underlying claim costs. If bias enrollment patterns such as these persist and insurers base premiums on claims experience, or if insurers can anticipate enrollment bias and base their premiums on expected claims, then these small enrollment differences would translate into fairly significant premium differences.

http://www.kff.org/insurance/snapshot/chcm111006oth2.cfm

Comment:

By Don McCanne, MD

This study demonstrates the simple fact that shifting a very few high-cost patients from one insurance pool to another (adverse selection) can have a very dramatic impact on the premiums that must be charged to cover health care costs for the pools.

This phenomenon is of much more concern now because of the greater use of cost sharing, especially though higher deductibles. People with needs will avoid those plans since they would be exposed to unaffordable out-of-pocket expenses. More comprehensive plans will attract the higher cost individuals, and the shift of only a few would make the premiums unaffordable. People with needs are being priced out of both coverage and health care.

Many policies have been suggested to eliminate adverse selection through risk adjustment. They don’t work. Separate high risk insurance pools have been established in several states to insure these people. They don’t work.
Medical underwriting is used in many states to be certain that pools can continue to exclude higher cost individuals, thereby ensuring that pooling will never work.

With a single, universal risk pool, adverse selection disappears. Why do we continue to avoid the inevitable?

by Robin J. Moody
Portland Business Journal
November 3, 2006

Fewer than 20 percent of medical practices nationwide — probably even fewer in Oregon due to the preponderance of small medical groups — conduct comprehensive reviews of payments.

By failing to audit bills, clinics are leaving money on the table.

Clinics that do conduct audits — including a handful that recently completed a pilot project to gather data on the underpayment problem — have identified clear patterns in billing errors.

Preferred Provider Organizations are the worst offenders, administrators said, especially those that lease their networks to out-of-state health plans.

Under PPOs, a network of medical providers charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

A notable finding was the volume of underpayments with sums under $10, which are hard to spot without billing-audit software.

When Portland-based Women’s Clinic PC Administrator Marilyn Happold-Latham used such software, she was surprised to find consistent, albeit small, discrepancies in sums less than $10.

“There were underpayments of a few dollars, over and over again, for the same types of procedures or office visits,” said Happold-Latham.

Happold-Latham’s experience with underpayments prompted her to organize other administrators to perform manual audits. Three companies that completed the audits found numerous small discrepancies.

“Our personnel find the large mistakes, but without payment audit software you won’t find the $2 underpayments that come up time and time again and really add up,” said MaryKaye Brady, administrator for Metropolitan Pediatrics, which learned that the practice was underpaid by $77,000 in one year.

Because 65 percent of Oregon’s doctors practice in groups with fewer than 10 doctors, the cost of a billing-audit system many seem out of reach for many groups. As income levels decline for primary care doctors and stagnate for specialists, however, physician advocates say that auditing bills is an increasingly important business practice.

http://www.bizjournals.com/portland/stories/2006/11/06/story7.html?page=2&b=1162789200^1371308

Comment:

By Don McCanne, M.D.

The physicians signed these PPO contracts in good faith, assuming that they would be paid at the contracted rates. Apparently the PPOs feel that they are not constrained by good faith contractual terms. This policy of chiseling down the rates is particularly egregious when considering that overhead expenses are relatively fixed and that these reductions come directly out of the physicians’ paychecks. A two dollar reduction is a twenty-five percent reduction when the net income would have been eight dollars for the service provided.

If a government-run single payer program reduced compensation by two dollars, it would have done so, by design, only after negotiating and reaching an agreement with the providers. Apparently private insurers use market arguments to operate on a different ethical plane. If you are caught violating the terms of a contract, then the marketplace will take care of that. Or will it?

As long as we leave the private insurers in charge, we can expect the amoral or immoral ethics of whatever the market will bear. A public system would be held to a much higher ethical standard. Let’s go public!