KFF, Newsroom, July 11, 2018

In all but four states, insurance companies can deny private Medigap insurance policies to seniors after their initial enrollment in Medicare because of a pre-existing medical condition, such as diabetes or heart disease, except under limited, qualifying circumstances, a Kaiser Family Foundation analysis finds.

Medigap policies provide supplemental health insurance to help cover the deductibles and coinsurance for Medicare covered services. One in four people in traditional Medicare had a Medigap policy in 2015.

This new analysis of federal law and state regulations shows that only Connecticut, Maine, Massachusetts, and New York require Medigap insurers to sell policies to all Medicare beneficiaries ages 65 and older either continuously during the year or for at least one month per year. In all other states and the District of Columbia, insurers may deny a Medigap policy to seniors, except during their initial open enrollment period when they start on Medicare, or when applicants have other specified qualifying events, such as the loss of retiree health coverage.

Depending on their state, Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life if their needs or priorities change, or if they choose to switch to traditional Medicare after several years of being in a Medicare Advantage plan.

The brief provides new national and state-by-state data on Medigap enrollment, and describes federal and state-level consumer protections that can affect seniors’ access to Medigap.

https://www.kff.org…

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Medigap Enrollment and Consumer Protections Vary Across States

By Cristina Boccuti, Gretchen Jacobson, Kendal Orgera, and Tricia Neuman
KFF, Issue Brief, July 11, 2018

Discussion

Medigap plays a major role in providing supplemental coverage for people in traditional Medicare, particularly among those who do not have an employer-sponsored retiree plan or do not qualify for cost-sharing assistance under Medicaid. Medigap helps beneficiaries budget for out-of-pocket expenses under traditional Medicare. Medigap also limits the financial exposure that beneficiaries would otherwise face due to the absence of an out-of-pocket limit under traditional Medicare.

Nonetheless, Medigap is not subject to the same federal guaranteed issue protections that apply to Medicare Advantage and Part D plans, with an annual open enrollment period. As a result, in most states, medical underwriting is permitted which means that beneficiaries with pre-existing conditions may be denied a Medigap policy due to their health status, except under limited circumstances.

Federal law requires Medigap guaranteed issue protections for people age 65 and older during the first six months of their Medicare Part B enrollment and during a “trial” Medicare Advantage enrollment period. Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life if their needs or priorities change. This constraint potentially affects the nearly 9 million beneficiaries in traditional Medicare with no supplemental coverage; it may also affect millions of Medicare Advantage plan enrollees who may incorrectly assume they will be able to purchase supplemental coverage if they choose to switch to traditional Medicare at some point during their many years on Medicare.

Only four states (CT, MA, NY, ME) require Medigap policies to be issued, either continuously or for one month per year for all Medicare beneficiaries age 65 and older. Policymakers could consider a number of other policy options to broaden access to Medigap. One approach could be to require annual Medigap open enrollment periods, as is the case with Medicare Advantage and Part D plans, making Medigap available to all applicants without regard to medical history during this period. Another option would be to make voluntary disenrollment from a Medicare Advantage plan a qualifying event with guaranteed issue rights for Medigap, recognizing the presence of beneficiaries’ previous “creditable” coverage. For Medicare beneficiaries younger than age 65, policymakers could consider adopting federal guaranteed issue protections, building on rules already established by the majority of states.

On the one hand, these expanded guaranteed issue protections would increase beneficiaries’ access to Medigap, especially for people with pre-existing medical conditions. They would also treat Medigap similarly to Medicare Advantage in this regard, and make it easier for older adults to switch between Medicare Advantage and traditional Medicare if their Medicare Advantage plan is not serving their needs in later life. On the other hand, broader guaranteed issue policies could result in some beneficiaries waiting until they have a serious health problem before purchasing Medigap coverage, which would likely increase premiums for all Medigap policyholders. A different approach altogether would be to minimize the need for supplemental coverage in Medicare by adding an out-of-pocket limit to traditional Medicare.

Ongoing policy discussions affecting Medicare and its benefit design could provide an opportunity to consider various ways to enhance federal consumer protections for supplemental coverage or manage beneficiary exposure to high out-of-pocket costs. As older adults age on to Medicare, they would be well-advised to understand the Medigap rules where they live, and the trade-offs involved when making coverage decisions.

https://www.kff.org…

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Comment:

By Don McCanne, M.D.

Although most individuals are relieved when they are finally eligible for Medicare, the traditional program leaves them exposed to excessive out-of-pocket costs and so they often seek additional coverage.

If they are fortunate enough to have an employer-sponsored retiree plan, they will usually select that. If they have very low incomes, they may be eligible for dual coverage with Medicaid. Medigap plans are offered to supplement traditional Medicare, but they are quite expensive and many feel that they cannot afford them. Some decide that they will risk going without any other coverage, but others will select private Medicare Advantage plans usually because the benefits are more generous whereas the premiums are generally quite low, and may be zero.

The Medicare Advantage plans have become quite popular because of their marketing appeal, but some individuals find that their use of provider networks limits their access to other physicians and hospitals that they would prefer, plus they sometimes feel that they are being deprived of care that they feel they should have such as an expensive cancer drug that has been excluded from the plan formulary or placed on a financially inaccessible tier.

When their care becomes complex they sometimes decide that they would prefer to shift to the traditional Medicare program that does not limit them to provider networks, and purchase a Medigap plan to protect themselves against catastrophic losses. At this point they are usually out of luck. If they elected not to enroll in a Medigap plan during the initial enrollment period when they first became eligible for Medicare, with rare exceptions they will find that guaranteed issue no longer applies and that they likely will be denied coverage. The initial marketing appeal of the Medicare Advantage plan comes back to bite them since they are then locked out of the Medigap plans.

There is something unjust here. Congress and the administrations of the past couple of decades have been granting the private Medicare Advantage plans all kinds of concessions while paying them more that what comparable patients would cost in the traditional Medicare program. Yet they have failed to enact the improvements that the traditional Medicare program needs to make benefits comparable to the private plans. That is why Medigap plans exist. They are necessary to cover the financial exposure that exists in traditional Medicare, especially the risk of catastrophic loss.

But why should someone in the traditional plan have to buy an expensive supplemental Medigap plan when we, as taxpayers, are also contributing generously to the private Medicare Advantage insurers (30 percent of what they receive goes to administrative costs, profits, and extra benefits such as Silver Sneakers). Shouldn’t taxpayer support for all Medicare beneficiaries be equitable, whether in the private or public plans?

If the traditional Medicare program were funded at the same risk-based level as the private Medicare Advantage plans, we could roll all of the Medigap benefits into traditional Medicare and then there would be no need to purchase a separate Medigap plan. Furthermore, there would be no reason to consider a private Medicare Advantage plan unless you were willing to give up your choice of physicians and hospitals in exchange for a Silver Sneakers membership, or if you preferred to receive your care through an integrated health care delivery system such as Kaiser Permanente.

Better, of course, would be to establish a single payer program – an improved Medicare for all. One of the more important improvements would be to roll Plan F Medigap benefits into Medicare. However, Congress decided that in 2020 Plan F benefits will no longer be offered to new enrollees – just one more measure to chisel away at the traditional Medicare program while furthering the cause of privatization by nurturing the private Medicare Advantage plans. In fact, a new administration proposal this month will further expand benefits in the private Medicare Advantage plans while denying them to patients in the traditional program.

How about health care justice for all? We can have that by enacting and implementing an expanded and improved Medicare for all.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Federal Register, Proposed rule, Centers for Medicare & Medicaid Services

II.I.2.c (page 345)

Minimizing Documentation Requirements by Simplifying Payment Amounts

As we have explained above, including in prior rulemaking, we believe that the coding, payment, and documentation requirements for E/M visits are overly burdensome and no longer aligned with the current practice of medicine. We believe the current set of 10 CPT codes for new and established office-based and outpatient E/M visits and their respective payment rates no longer appropriately reflect the complete range of services and resource costs associated with furnishing E/M services to all patients across the different physician specialties, and that documenting these services using the current guidelines has become burdensome and out of step with the current practice of medicine. We have included the proposals described above to mitigate the burden associated with the outdated documentation guidelines for these services. To alleviate the effects and mitigate the burden associated with continued use of the outdated CPT code set, we are proposing to simplify the office-based and outpatient E/M payment rates and documentation requirements, and create new add-on codes to better capture the differential resources involved in furnishing certain types of E/M visits.

In conjunction with our proposal to reduce the documentation requirements for E/M visit levels 2 through 5, we are proposing to simplify the payment for those services by paying a single rate for the level 2 through 5 E/M visits.

In alignment with our proposed documentation changes, we are proposing to develop a single set of RVUs under the PFS for E/M office-based and outpatient visit levels 2 through 5 for new patients (CPT codes 99202 through 99205) and a single set of RVUs for visit levels 2 through 5 for established patients (CPT codes 99212 through 99215). While we considered creating new HCPCS G-codes that would describe the services associated with these proposed payment rates, given the wide and longstanding use of these visit codes by both Medicare and private payers, we believe it would have created unnecessary administrative burden to propose new coding. Therefore, we are instead proposing to maintain the current code set. Of the five levels of office-based and outpatient E/M visits, the vast majority of visits are reported as levels 3 and 4. In CY 2016, CPT codes 99203 and 99204 (or E/M visit level 3 and level 4 for new patients) made up around 32 percent and 44 percent, respectively, of the total allowed charges for CPT codes 99201-99205. In the same year, CPT codes 99213 and 3 and 4 for established patients) made up around 39 percent and 50 percent, respectively, of the allowed charges for CPT codes 99211-99215. If our proposals to simplify the documentation requirements and to pay a single PFS rate for new patient E/M visit levels 2 through 5 and a single rate for established patient E/M visit levels 2 through 5 are finalized, practitioners would still bill the CPT code for whichever level of E/M service they furnished and they would be paid at the single PFS rate. However, we believe that eliminating the distinction in payment between visit levels 2 through 5 will eliminate the need to audit against the visit levels, and therefore, will provide immediate relief from the burden of documentation. A single payment rate will also eliminate the increasingly outdated distinction between the kinds of visits that are reflected in the current CPT code levels in both the coding and the associated documentation rules.

(The proposed payments are on page 349.)

Federal Register – Proposed Rule  (1472 pages):
https://www.federalregister.gov…

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Sniffles? Cancer? Under Medicare Plan, Payments for Office Visits Would Be Same for Both

By Robert Pear
The New York Times, July 22, 2018

The Trump administration is proposing huge changes in the way Medicare pays doctors for the most common of all medical services, the office visit, offering physicians basically the same amount, regardless of a patient’s condition or the complexity of the services provided.

Administration officials said the proposal would radically reduce paperwork burdens, freeing doctors to spend more time with patients. The government would pay one rate for new patients and another, lower rate for visits with established patients.

“Time spent on paperwork is time away from patients,” said Seema Verma, the administrator of the Centers for Medicare and Medicaid Services. She estimated that the change would save 51 hours of clinic time per doctor per year.

“We anticipate this to be a very, very significant and massive change, a welcome relief for providers across the nation,” Ms. Verma said, adding that it fulfills President Trump’s promise to “cut the red tape of regulation.”

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Bizarre. Purportedly paying the same fee for all office visits regardless of the complexity of the care would reduce the administrative time required to code the level of complexity of the visit and would reduce the record keeping requirements even though the complexity level would still be determined and records would still be kept to document the patients’ conditions and care.

What this really does is to sharply reduce fees for caring for patients with complex conditions. What does that accomplish? It appears to be yet another attack on the traditional Medicare program. Physicians caring for patients with the greatest health care needs are already being paid marginally low rates for their services, and this reduction will be enough to cause many physicians to bail out. When patients lose their private physicians and have to turn to community clinics for their complex care, many will not be happy. It is likely that this is intended to pressure more patients to sign up for the private Medicare Advantage plans.

Not only is this another step towards privatization of Medicare, it also might place a damper on the enthusiasm for Medicare for all, by discrediting the traditional Medicare program.

Maybe it’s time to consider placing all physicians on salary. We could do that by nationalizing our health care delivery system, converting it into a national health service. A single payer, improved Medicare for all seems to be a much less disruptive option, but we do need public stewards who believe in and support Medicare. Vote!

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Adam Cancryn
POLITICO, July 19, 2018

President Donald Trump handed an influential business advocacy group what should have been a historic lobbying victory when he recently rolled out new rules encouraging small businesses to band together to offer health insurance.

Trump, who’s touted the expansion of so-called association health plans as a key plank in his strategy to tear down Obamacare, even announced the rules at the 75th anniversary party of the National Federation of Independent Business last month, claiming the group’s members will save “massive amounts of money” and have better care if they join forces to offer coverage to workers.

But the NFIB, which vigorously promoted association health plans for two decades, now says it won’t set one up, describing the new Trump rules as unworkable. And the NFIB isn’t the only one: Several of the nationwide trade groups that cheered Trump’s new insurance rules told POLITICO they’re still trying to figure out how to take advantage of them and whether the effort is even worth it.

That could signal there’s minimal early interest in an initiative the administration says will help lower health care costs — and one that Trump himself has prematurely hailed as a wild success. Trump falsely claimed during rallies in recent weeks that “millions” are signing up, though the new health plans can’t be sold until Sept. 1.

Behind the scenes, the NFIB had already been souring on the idea before Trump’s announcement, concluding that establishing an association health plan would be too complex and not worth the effort. The NFIB, which offered only a vague endorsement of the Trump effort last month, now says it’s abandoned any idea of setting up a national plan for its hundreds of thousands of members.

https://www.politico.com…

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Comment:

By Don McCanne, M.D.

For a couple of decades the concept of association health plans (AHPs) has been vigorously promoted by organizations such as the National Federation of Independent Business (NFIB) since AHPs would satisfy the desire to nominally provide health insurance to small business employees at a lower cost than traditional health plans, made possible by the deficiencies in coverage that characterize most of these plans.

Now that the Trump administration is making AHPs available as a replacement for plans established by the Affordable Care Act, the reality seems to be sinking in. The NFIB “now says it’s abandoned any idea of setting up a national plan for its hundreds of thousands of members.”

Small business owners do want to have health insurance for themselves and for their employees. For those who were hoping that AHPs would be the answer, they do not have to give up hope. They should turn to a far better prospect – a single payer improved Medicare for all. Not only would the coverage be far more effective, the costs would also be affordable because the financing mechanism is equitable, based on ability to pay.

Instead of pie-in-the-sky AHPs, the NFIB should take a serious look at an improved Medicare for all – the best model for small businesses and for everyone else.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Corwin N. Rhyan
Altarum, July 19, 2018

A new Altarum research brief estimates private versus public health spending on a timely basis and finds that:

* Spending and price growth among the privately-insured population accelerated in 2017 and early 2018 relative to Medicare and Medicaid, despite very low growth in private insurance enrollment. This reverses the trend seen from 2009 through 2016, when private spending growth was near or below Medicare and Medicaid rates.

* Since the start of the economic recovery in 2009, total Medicaid spending has grown by 72.6%—more than Medicare (50.7%) and private payer spending (49.4%)—largely due to increases in enrollment, although Medicaid spending has slowed significantly, averaging only 2.3% since January 2017.

* On a per enrollee basis, private payer spending has grown 45.9% since 2009, three times the rate of Medicare and Medicaid per enrollee spending.

* Faster rising private prices are a major factor in the divergence between public and private spending growth, with private prices up 8.2% since June 2014, although recent data show an uptick in public prices as well.

* Breaking down spending growth attributable to enrollment, prices, and utilization & intensity, we find more than half the growth in both Medicare and Medicaid spending since 2014 is due to higher enrollment, while private spending growth over this period has been driven almost entirely by higher prices and increased utilization & intensity, in nearly equal measure.

https://altarum.org…

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Comment:

By Don McCanne, M.D.

This Altarum study shows that half of the growth in spending in Medicaid and Medicare has been due to the increased enrollment in each of these programs. In contrast, there has been little increase in enrollment in private plans so almost all of the spending increase has been due to higher prices and due to increased utilization & intensity of care.

Unlike the total spending increases in each sector, Figure 3 on page 4 of their report (link above) demonstrates the spending increase per enrollee in each sector. Clearly the private plans have been ineffective in controlling prices and in controlling utilization & intensity of care, whereas the government programs – Medicaid and Medicare – have been quite effective, resulting in a much slower spending increase per enrollee.

With everyone being concerned about our very high health care spending, the lesson here shouldn’t be too difficult. Don’t use private health plans to try to control spending. Instead improve Medicare and expand it to cover everyone; that will place us on a sustainable spending trajectory.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Marshall Allen
ProPublica, July 17, 2018

Excerpts:

To an outsider, the fancy booths at last month’s health insurance industry gathering in San Diego aren’t very compelling. A handful of companies pitching “lifestyle” data and salespeople touting jargony phrases like “social determinants of health.”

But dig deeper and the implications of what they’re selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.

With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They’re collecting what you post on social media, whether you’re behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.

Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you’re stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.

Are you a woman who’s purchased plus-size clothing? You’re considered at risk of depression. Mental health care can be expensive.

Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks. 

“We sit on oceans of data,” said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm’s booth. And he isn’t apologetic about using it. “The fact is, our data is in the public domain,” he said. “We didn’t put it out there.”

Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn’t be used to set prices. But as a research scientist from one company told me: “I can’t say it hasn’t happened.”

At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry’s data gathering runs counter to its touted, and federally required, allegiance to patients’ medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.

Patient advocates warn that using unverified, error-prone “lifestyle” data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person’s rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.

This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry’s bewildering web of strategies and inside deals often have little to do with patients’ needs. As the series’ first story showed, contrary to popular belief, lower bills aren’t health insurers’ top priority.

To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. The company says it uses the information to link patients’ medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.

Optum’s marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person’s clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company’s current marketing materials say it combines claims and clinical information with social media interactions.

But patient advocates are skeptical health insurers have altruistic designs on people’s personal information.

The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called “cherry-picking” and “lemon-dropping,” experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.

The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients’ personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.

Robert Greenwald, faculty director of Harvard Law School’s Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they’re subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.

At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.

Ruane said he has used IBM Watson Health’s socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don’t know the medical history of people seeking coverage. A region with too many sick people, or with patients who don’t take care of themselves, might not be worth the risk.

The LexisNexis booth was emblazoned with the slogan “Data. Insight. Action.” The company said it uses 442 non-medical personal attributes to predict a person’s medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people’s cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients’ health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.

McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.

Before the conference, I’d seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: “There could be an opportunity.”

Data scientist Cathy O’Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O’Neil, author of the book “Weapons of Math Destruction,” which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.

https://www.propublica.org…

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Comment:

By Don McCanne, M.D.

It’s obvious that massive amounts of data are being collected on each one of us, and this data is being purchased by the private health insurance companies. They say that this data is only being used to help patients get the care they need, but does that really fit with the business model of the insurers?

Are they really paying for this data in order to be able to pay for more care that patients would not be receiving except for the wisdom of the insurers in identifying the medical needs of their clients and then arranging for additional care?

When you listen to the quarterly reports of the major health insurers, they boast about increased revenues, increased profits, and low medical loss ratios – the latter being important because it shows that they are being successful in limiting the amount of health care that they pay for. That seems to be the opposite of their avowed use of these massive pools of data to obtain more care for their clients.

Furthermore, when the United States is already infamous for its profoundly wasteful administrative excesses in health care, doesn’t it seem illogical that we would expand these excesses through this superfluous, massive data management?

The full ProPublica article is quite long, but it is worth reading if you wish to understand more details about this nefarious mismanagement of our personal data.

If we had a single payer, improved Medicare for all, would our public stewards be accessing this massive amount of data in order to stratify the needs of various sectors of patients, avoiding those with greater needs? Of course not. The system would be designed to serve all patients well, including those with the greatest needs. The sooner we get rid of the private insurers, the better.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Austin Frakt
The New York Times, July 16, 2018

It takes only a glance at a hospital bill or at the myriad choices you may have for health care coverage to get a sense of the bewildering complexity of health care financing in the United States. That complexity doesn’t just exact a cognitive cost. It also comes with administrative costs that are largely hidden from view but that we all pay.

Because they’re not directly related to patient care, we rarely think about administrative costs. They’re high.

A widely cited study published in The New England Journal of Medicine used data from 1999 to estimate that about 30 percent of American health care expenditures were the result of administration, about twice what it is in Canada. If the figures hold today, they mean that out of the average of about $19,000 that U.S. workers and their employers pay for family coverage each year, $5,700 goes toward administrative costs.

That New England Journal of Medicine study is still the only one on administrative costs that encompasses the entire health system. Many other more recent studies examine important portions of it, however. The story remains the same: Like the overall cost of the U.S. health system, its administrative cost alone is No. 1 in the world.

One obvious source of complexity of the American health system is its multiplicity of payers. A typical hospital has to contend not just with several public health programs, like Medicare and Medicaid, but also with many private insurers, each with its own set of procedures and forms (whether electronic or paper) for billing and collecting payment. By one estimate, 80 percent of the billing-related costs in the United States are because of contending with this added complexity.

“The extraordinary costs we see are not because of administrative slack or because health care leaders don’t try to economize,” said Kevin Schulman, a professor of medicine at Duke. “The high administrative costs are functions of the system’s complexity.”

“One can have choice without costly complexity,” said Barak Richman, a professor of law at Duke. “Switzerland and Germany, for example, have lower administrative costs than the U.S. but exhibit a robust choice of health insurers.”

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Reader Comment:

By Don McCanne, M.D.

European private plans such as those in Switzerland and the Netherlands have very little similarity to private plans in the United States since they are very tightly regulated. Changing our fragmented system of public and private plans into a system of highly regulated private plans would be about as disruptive as improving Medicare and providing it to everyone. But the efficiencies of an improved Medicare for all would be much greater (lower administrative costs), and the financing would be more equitable, not to mention that there would be a multitude of other advantages through an improved Medicare for all.

It’s clear that we can’t continue with the same dysfunctional system. If we are going to change it, we might as well do it right.

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

It is refreshing to see The New York Times publish an article accurately describing the profound administrative waste that uniquely characterizes the health care financing system in the United States. The public needs to understand how huge this waste is in order to better understand how we would be able to pay for a health care system that was expanded to include everyone without requiring deductibles and copayments.

Austin Frakt’s well researched article includes links to several classic articles on administrative excesses, some of which were authored by the PNHP leadership, especially cofounders Steffie Woolhandler and David Himmelstein. The article is well worth retaining to keep as a reference on administrative waste.

A well designed single payer system – an improved Medicare for all – not only recovers most of the administrative waste (while continuing to finance essential administrative services), it also attacks the problem of out-of-control health care pricing. Other single payer policies such as improving allocation of our health care resources also would make our health care system more affordable and equitable so that all of us can be assured that we could receive the essential health care services that we need.

That starts with getting rid of silly ideas such as the concept that patient-consumers can make health care affordable by shopping wisely, or that health care professionals need to be more accountable for costs when they are already swamped just trying to take care of their patients. Rather we need to begin by recovering the half a trillion dollars that we are wasting on administration and exorbitant pricing and redirecting that to patient care instead.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.