PNHP national coordinator Dr. Claudia Fegan participated in a “Medicare for All” town hall on Jan. 23, 2018. The first of its kind town hall was hosted by Sen. Bernie Sanders (I-Vt.) in partnership with leading digital media outlets NowThis, ATTN: and The Young Turks. Dr. Feganās segment starts at the 11:25 mark below.
By Anna L. Goldman, MD, MPA; Steffie Woolhandler, MD, MPH; David U. Himmelstein, MD; David H. Bor, MD; Danny McCormick, MD, MPH
JAMA Internal Medicine, January 22, 2018
Key Points
Question: Was implementation of the Affordable Care Act associated with reduced spending on out-of-pocket medical expenses and household premium contributions among nonelderly adults?
Findings: In this nationally representative survey of validated spending data from 83āÆ431 US adults, mean out-of-pocket spending decreased by 11.9% in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges. Premium contributions increased by 12.1%, mainly owing to large increases in the higher-income group, whereas total health spending by households decreased in the Medicaid-eligible (lowest-income) group by 16.0%.
Meaning: Implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.
From the Discussion
In the first 2 years of implementation, the ACA was associated with a decrease in mean out-of-pocket spending for the overall population, driven by decreases among the lowest- and low-income groups and a reduction in high-burden out-of-pocket spending overall and among the lowest-income group. Mean premium payments increased moderately, whereas the prevalence of high-burden combined health spending and income-based inequalities in high-burden spending did not change.
The ACAās Medicaid expansion, which generally required enrollees to pay neither premiums nor co-payments, likely accounts for our finding that out-of-pocket spending decreased among the lowest-income group after the lawās implementation. This consequence might have been greater if all states had accepted the ACAās Medicaid expansion. In the analysis of high-burden spending in this group, controlling for use of health care services slightly attenuated the decrease but did not substantially alter our findings. The differences noted for the lowest-income group in our placebo test in the pre-ACA period suggests that our results for this group may also have been influenced by secular trends or early expansions of Medicaid in some states. Because only 17.8% of adults in the lowest-income group paid insurance premiums before the ACA, we are not surprised that the legislation had little effect on premiums in this group.
The reduction in out-of-pocket spending for low-income individuals (139%-250% of FPL) that we observed suggests that the ACAās exchange plans and cost-sharing subsidies were associated with a decreased burden of health care costs for this population. Our finding from models controlling for use of health care services suggests that decreased use of medical services and drugs did not drive this decrease.
The decrease in mean out-of-pocket expenditures by the middle-income group may reflect the modest 5.1% increase in coverage gained in this group under the ACA. Although individuals in this income group were not eligible for subsidized cost-sharing on the exchange, the ACAās provision that eliminated cost-sharing for preventive services may have decreased out-of-pocket spending. Although many individuals in this group were eligible for premium assistance through the ACA exchanges, the subsidies were apparently insufficient to prevent growth of premium contributions for this group or to reduce their total health spending.
Previous studies have highlighted the ACAās successes. About half of the previously uninsured population gained coverage. Several other indicators also improved, such as the likelihood of having access to affordable care and self-reported health status.
The ACA did not have a greater effect on out-of-pocket spending for several reasons. First, only a small proportion of Americansā6.5% according to our dataābecame newly insured after the ACA. Second, about 28 million Americans remain uninsured. Third, many of those with coverage continued to incur high costs; in 2016, individual deductibles were a mean of $3064 in exchange Silver plans (the metal tier chosen by most exchange enrollees) compared with $1478 in employer-sponsored plans.
Conclusions
Repeal of the ACA was under consideration in Congress several times in the past year, and the future of the ACA remains uncertain. Our findings carry several implications for the health reform debate. First, the ACA was associated with moderate reductions in the cost burden for lowest-, low-, and middle-income households, which represents incremental but important progress. Repealing or otherwise dismantling the legislation without a suitable replacement could cause financial harm to many lower-income families. As of this writing, the Senate tax bill includes a repeal of the individual mandate. If enacted, the numbers of uninsured persons will increase, along with their out-of-pocket costs. Premiums will likely increase because healthier people will exit the insurance pool.
Second, medical expenses currently consume a large share of many familiesā incomes and compound income inequalities. Reforms to the ACA that could improve household spending burdens include expanding Medicaid in all states, increasing the generosity of cost-sharing and premium subsidies, and increasing the actuarial values of standard exchange plans. International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.
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By Don McCanne, M.D.
This well documented analysis confirms that “implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums.”
But ACA still falls far short of the reform that we need. The bottom line, as stated in their conclusion: “International experience suggests that a universal, comprehensive national health insurance program would most effectively reduce household spending and ameliorate disparities.” ACA isn’t that.
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From: Senator Ron Wyden, Ranking Member, U.S. Senate Committee on Finance
United States Senate, January 19, 2018
I am writing concerning possible violations by Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma of her ethics agreements. Recent statements by governors representing multiple states indicate that Administrator Verma has personally and substantially participated in waivers submitted to CMS by states that were clients of her previous consulting business. Such participation appears to violate Administrator Verma’s ethics agreement, absent the issuance of written waivers for each of her interactions on a case-by-case basis. Administrator Verma’s actions also appear to violate self-imposed ethics pledge that the Trump Administration requires its appointees to sign pursuant to Executive Order 13770.
I request that you immediately investigate whether Administrator Verma’s actions comply with her agreements as well as applicable federal laws and regulations.
Prior to being confirmed to her current position, Administrator Verma headed a consulting firm, SVC, Inc., a role in which she provided services to the states of Arkansas, Indiana, Iowa, Kentucky, Ohio, South Carolina and Virginia. Federal ethics officials deemed her consulting work with these seven states as significant, and included a provision in her Ethics Agreement requiring special review of future matters involving those seven States. Specifically, pursuant to 5C.F.R.2635.502(d), Administrator Verma agreed to “seek a written authorization to participate personally and substantially in particular matters involving specific parties” in which those states would be “a party or represents a party.” Furthermore, the Trump Administration’s self-imposed ethics pledge provides that a nominee “will not for a period of 2 years from the date of [their] appointment participate in any particular manner involving specific parties that is directly and substantially related to [their] former employer or former clients, including regulations and contracts.”
Recent statements by the governors of three states specifically designated in Administrator Verma’s ethics agreement – Arkansas, Kentucky, and Iowa – strongly suggest she was personally and substantially involved in matters those states brought before CMS. Two of the governors represent states that have submitted Section 1115 waivers seeking to impose work requirements on Medicaid recipients – Arkansas and Kentucky. The third relates to a separate Section 1332 waiver submitted by the State of Iowa.
Administrator Verma’s commitment to recuse herself from work with former clients appears to have fallen short of the mark thus far, which is extremely concerning given that many of her former clients have sought – or plan to seek – waivers to impose unprecedented work requirements in state Medicaid programs.
https://www.finance.senate.gov…
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By Michael Hiltzik
Los Angeles Times, January 16, 2018
One can say this about the hoops Kentucky will require low-income residents to jump through to become eligible for Medicaid: If you were deliberately trying to come up with ways to throw people off the program, you couldnāt do better.
Itās been widely reported that the āwaiverā of Medicaid rules approved for the state by federal officials last week includes a first-in-the-nation work requirement. But thereās much more to it, none of it good if you are a Medicaid enrollee or someone who believes that the purpose of government healthcare programs is to provide people with healthcare.
āCoverage is at risk for large numbers of low-income adults and families,ā says Judith Solomon, a health policy expert at the Center on Budget and Policy Priorities.
Kentuckyās program bristles with paperwork requirements and Catch-22s that could easily lead even those who meet the work requirements to ātrip up and become uncovered,ā Solomon says. Thatās because the program includes a ālockoutā if enrollees fail to revalidate their eligibility every year or miss one or another deadline for paperwork: In those cases, they could be denied benefits for as long as six months.
As we reported earlier, Kentuckyās tea-party Gov. Matt Bevin, who took over from Democrat Steve Beshear in 2015, is inordinately proud of this outcome. He calls the changes ātransformational.ā
Another person who should be ashamed, not proud, of the program is Seema Verma, who oversees Medicaid as administrator of the Centers for Medicare and Medicaid Services. Vermaās department issued the guidelines last week under which Kentuckyās work and other requirements were approved the very next day. More to the point, as a private consultant prior to becoming head of the centers, she helped Kentucky draft the waiver application that her underlings approved. (Verma said she recused herself from ruling on the Kentucky application, which deserves a response of: Pu-leeze.)
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By Ricardo Alonso-Zaldivar
ABC News, January 12, 2018
Rewriting the rules on health care for the poor, the Trump administration said Thursday it will allow states to require “able-bodied” Medicaid recipients to work, a hotly debated first in the program’s half-century history.
Seema Verma, head of the Centers for Medicare and Medicaid Services, said requiring work or community involvement can make a positive difference in people’s lives and in their health. The goal is to help people move from public assistance into jobs that provide health insurance. “We see people moving off of Medicaid as a good outcome,” she said.
http://abcnews.go.com…
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By Don McCanne, M.D.
CMS Administrator Seema Verma is ideologically driven to make health care an individual responsibility rather than a collective good in which we can all be ensured of health care access and affordability. She made her reputation by recommending to states policies that impair access to health care for the poorest amongst us by erecting barriers to care for their Medicaid populations.
As CMS Administrator she has expanded and accelerated policies that further impair access for the poor, policies that are now being adopted by states for which she served as a consultant. Many of these waiver requests were rejected by the Obama administration, but when Verma first took office, she encouraged her (former) clients and all other states to submit Section 1115 Medicaid waiver applications and assured them that they would be favorably considered.
Whether or not Verma has technically violated her ethics pledge by this conflict of interest is a relatively moot point compared to her efforts to sabotage a program that was designed to help poor people get the health care that they need. That she has orchestrated the process is enough to confirm her ethical lapses. As she says, “We see people moving off of Medicaid as a good outcome.”
As Michael Hiltzik says about her recusing herself, “Pu-leeze.”
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By Carey Goldberg and Meghna Chakrabarti
WBUR, CommonHealth, Jan. 22, 2018
A new study out in JAMA Internal Medicine shows that in the years following the implementation of the Affordable Care Act, out-of-pocket spending decreased, while premiums increased. (Click here to read PNHP’s news release on this study.)
By F. Perry Wilson, M.D., M.S.C.E.
MedPage Today, Jan. 22, 2018
The Affordable Care Act. We often discuss its impact on reducing the uninsured rate in the US healthcare system, but there’s another salient question. Did the Affordable Care Act make care more affordable?
A new analysis, appearing in JAMA Internal Medicine, is the first to really quantify what has happened to individual health care spending since the ACA was put into effect.
Drawing on data from the Medical Expenditure Panel Survey, a nationally representative sample of more than 83,000 US adults, researchers led by Dr. Anna Goldman (in her first peer-reviewed publication, congratulations Dr. Goldman), determined how much individual expenses changed from the pre-ACA to the post-ACA era.
The study looked at out-of-pocket expenses and premiums and the two combined. But in a conversation with Dr. Goldman, she pointed out to me that out-of-pocket expenses might be more important when it comes to healthcare access:
“Out of pocket spending really can be ā in a different way then premiums ā a real barrier to care. Since it saves at the point of care.”
So what happened when the ACA was introduced?
Overall, premiums went up and out-of-pocket costs went down. The net effect was that the average American family spent $28.71 less on healthcare in the two years after the ACA compared to the two-years before.
But the benefits were not evenly distributed. Families making up to 138% of the federal poverty level spent, on average $160 less on healthcare after the ACA. Families making more than 400% of the poverty level spent around $281 dollars more per year. I should note that this doesn’t include the added cost of some ACA-associated taxes that affected higher income earners.
These numbers may not seem that impressive, but consider two factors. First, healthcare expenditures had been increasing in the run-up to the ACA, so even a modest decrease is somewhat encouraging. Second, even if there were no changes in healthcare spending, 6.5% more of the US population became insured in the two years after the ACA.
So did the Affordable Care Act make care more affordable? For some people, yes, but perhaps that’s not the main point.
Dr. Goldman again:
“Even though it was called the Affordable Care Act, its major intervention was to expand insurance coverage. Experts in the field who I’ve spoken to about this take issue with the idea that it should even be expected to make care more affordable.”
Is “affordability” even the right metric for healthcare? I’m not sure. The effect of the ACA should be measured not in terms of cost, but value ā the outcomes achieved for the cost. In other words, this paper gives us the denominator. We’ll need more time before Information on the numerator, particularly any long-term health outcomes, can be put into the equation.
F. Perry Wilson, M.D., M.S.C.E., is an assistant professor of medicine at the Yale School of Medicine. He is a MedPage Today reviewer, and in addition to his video analyses, he authors a blog, The Methods Man. You can follow @methodsmanmd on Twitter.
FOR IMMEDIATE RELEASE: Monday, January 22, 2018 at 11:00 a.m. EST
Contact: Clare Fauke,Ā clare@pnhp.org, 312-782-6006
Families’ out-of-pocket medical expenses decreased in the first two years after the Affordable Care Act was implemented, but their premium payments rose, according to aĀ new studyĀ by researchers at Harvard Medical School and the City University of New York at Hunter College published today inĀ JAMA Internal Medicine. The savings on annual out-of-pocket expenses averaged $74 (12 percent), with poorer individuals seeing the biggest drop (21.4 percent) while those with higher incomes saw no change. In contrast, higher-income households bore the brunt of premium increases (23 percent), while premiums for other income groups didn’t change significantly. Overall, householdsā premiums rose by an average of $232 (or 12 percent).Ā The findings indicate that the ACA shifted the spending burden from low- to higher-income households, and from out-of-pocket spending to spending on premiums.
The study analyzed national data on 83,431 non-elderly adults. The researchers compared householdsā medical spending during the two years before and after the full implementation of the ACA in 2014. They assessed out-of-pocket outlays (any medical spending not covered by insurance) and premium contributions made by household members. In addition to analyzing how much families spent, the study examined āhigh-burden spending,ā such as paying more than 10 percent of income (or 5 percent for low-income households) for out-of-pocket expenses. Premiums were considered āhigh-burdenā if they exceeded 9.5 percent of income (the affordability threshold specified in the ACA).
High-burden out-of-pocket spending fell by 20 percent overall, with the most substantial decrease seen among poorer individuals. In contrast, middle-income households (those with incomes between 250-400 percent of poverty) saw a 28 percent increase in high-burden premium spending, while other income groups experienced little change in this measure.
āOur findings suggest that the Affordable Care Act reduced out-of-pocket costs for many Americans,ā said the studyās lead author, Dr. Anna Goldman, a primary care doctor at Cambridge Health Alliance and fellow at Harvard Medical School. āBut the ACA didn’t stem the steady rise in families’ premiums. Overall, the law helped ease families’ medical cost burden, but there is plenty of room for progress.ā
āIt’s not surprising that the ACA’s effects were modest,ā continued Dr. Goldman. āOnly 6.5 percent of Americans gained coverage through the ACA, while about 28 million remained uninsured. Moreover, efforts to make the ACAās financing budget-neutral limited the generosity of subsidies and may have reduced the lawās potential to reduce medical spending.ā
Dr. Steffie Woolhandler, a distinguished professor of public health at CUNY’s Hunter College and lecturer in medicine at Harvard Medical School noted: āThe ACA helped smooth out spending, and made it more predictable. Fewer families were left with high out-of-pocket costs when they were sick, but paid more in upfront premiums. But the law fell far short of what many nations with single-payer systems have achieved: universal, comprehensive, and affordable coverage.ā
āWeāre worried that recent moves by the administration and Congress to undermine the ACA will erase the gains we observed, or worse,ā said senior study author Dr. Danny McCormick, an associate professor of medicine at Harvard Medical School and primary care physician at Cambridge Health Alliance. āThe repeal of the ACA mandate, weakening of insurance standards, and erosion of Medicaid will punish many lower-income Americans,ā concluded Dr. McCormick.
āOut-of-Pocket Spending and Premium Contributions after Implementation of the Affordable Care Actā by Anna L. Goldman, M.D., M.P.A., Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D., David H. Bor, M.D., and Danny McCormick, M.D., M.P.H., JAMA Internal Medicine, published online ahead of print January 22, 2018.
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Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 22,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.
By Martha Bebinger
WBUR, January 18, 2018
A decision about health coverage for state employees and retirees is shaking the Massachusetts health insurance industry. Harvard Pilgrim Health Care, Tufts Health Plan and Fallon Health, which are the second-, third- and fourth-largest insurers in the state, have been dropped by the state Group Insurance Commission (GIC), which manages coverage for 442,000 members.
The GIC says it’s been talking to insurers about the need to simplify, streamline and save money for more than a year, so Thursday’s 8-5 commission vote should not be a surprise. But dropping three prominent, nonprofit Massachusetts insurers is a major blow.
āTime and again, the Group Insurance Commission has voted to make workers bear the brunt of out of control health care costs, instead of tackling the crisis with providers,” said Peter MacKinnon, president of SEIU Local 509. “It is evident that the GIC has taken a bad situation and made it far worse with this anti-consumer vote.”
http://www.wbur.org…
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By Don McCanne, M.D.
We keep hearing that most people are pleased with their current health care coverage so we should reject the disruption that would be caused by changing to a single payer system. What better coverage could there be than that of public employees in Massachusetts whose options include three of the largest nonprofit carriers in the state? Until now that is.
This is the best there is and yet it results in instability, especially in the choice of their health care professionals and institutions. And the reason given for the disruption is that the costs are too high.
This would not occur under a well designed single payer system. Individuals would have permanent free choice of their health care and costs would be contained through patient-friendly policies.
Think of the health care coverage you had twenty years ago. Ten years ago. Even perhaps five years ago. And they say that single payer would be disruptive? It is single payer that finally would bring us stability of coverage – for life!
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By Vann R. Newkirk II
The Atlantic, Jan. 19, 2018
For most people, a single doctorās visit can be a financial obstacle course.
Many patients throughout the year pay hundreds or thousands of dollars in premiums, most often through workplace contributions. Then, at the doctorās office, they are faced with a deductible, and they may need to pay coinsurance or make a copayment. If they have prescriptions, theyāll likely fork over cash for those, too.
And thatās just for basic primary care for one person. Repeat that process for an entire family; add in any labs, referrals, specialists, emergency-room visits, and surgeries; and the result for even healthy families is dozens and dozens of payments, and often thousands of dollars. This series of expenditures before, during, and after care is euphemistically called having āskin in the game.ā But the reality is, the American insurance system is designed to make health care financially unpleasant, often to the point where patients forego necessary care.
A new study in the forthcoming March issue of the American Journal of Public Health sheds light on just how all that āskin in the gameā affects the material conditions of patients. The researchāby Andrea Christopher at the Boise Veterans Affairs Medical Center, David Himmelstein and Steffie Woolhandler at the City University of New York at Hunter College, and Danny McCormick at Harvard Medical Schoolāindicates that household spending on health care is a significant contributor to income inequality in the United States. It also indicates that medical expenses push millions of Americans below the federal poverty line, including 7 million people who make more than 150 percent of the poverty level. Four million of those Americans are pushed into the ranks of extreme poverty.
That health-care costs in the country are expensiveāoften, prohibitively soāis well known. As Voxās Sarah Kliff notes, the first reason why is the exorbitantly high cost of care, which doesnāt always correspond with measurable increases in quality or demand. Even for routine procedures or precautionary visits, hospital bills can run over $400, an expense that almost half of American households canāt meet without dipping into credit. Additionally, billing is famously opaque, incoherent, and fragmented, creating major barriers to informed care decisions and often resulting in bills going into collections.
Health insurance is supposed to mitigate those cost and information barriers. A 2016 Kaiser Family Foundation analysis found that while significant numbers of Americans have trouble paying medical bills, only 20 percent of insured people had difficulty versus half of all uninsured people. Most of that difficulty for both groups comes from sudden medical events or accidents, or sudden life events like the loss of a job. Medical debt is also a major contributor to bankruptcy in the United States. One of the major arguments for the Affordable Care Act was in its name: a promise to help shield people from the worst financial effects of medical catastrophe or chronic illness.
New avenues of subsidized or free health insurance that sprang from Obamacareāincluding private insurance offered on the exchanges and expanded Medicaid rolls in many statesāhave been able to do some shielding. The ACA helped reduce total bankruptcies by as many as 1.5 million between 2010 and 2017. The Centers for Disease Control and Prevention reports that, between 2011 and 2016, the percentage of Americans with trouble paying medical bills dropped precipitously. And a 2017 study by the Urban Instituteās Kyle Caswell and Timothy Waidmann found āimproved credit scores, reduced balances past due as a percent of total debt, reduced probability of a medical collection balance of $1,000 or more, ā¦ and a reduction in the probability of a new bankruptcy filingā for people in Medicaid-expansion states.
But the new AJPH study complicates some of that rosy analysis. The researchers didnāt split the survey population up based on insurance status; they instead measured income inequality across the population, both before medical expenses were taken into account and after. They found that income inequality in 2014 actually increased by 1.5 points after medical expenses were subtracted from income. Put another way, poor people spent much more of their income on health care than the richest people did, and as a result around 1.5 percent of all relative income shifted toward the higher earners.
The researchers also found that medical spending sent millions of people effectively into poverty or into deeper rungs of poverty. Seven million Americans making more than 150 percent of the federal poverty lineā$31,000 for a family of threeādropped below that line if medical expenses were subtracted from their income. That meant that these families spent something like a third or more of all their income on health care. Of the 7 million, 4 million found their post-health-care income reduced below 50 percent of the poverty line, meaning they spent about two-thirds of their total income on health care. The study also found that the ACA decreased the amount of inequality caused by health-care expenses, but only slightly.
There are some limitations to how far these results can be interpreted. Itās possible that, since 2014, continued gains in insurance coverageāat least until the uninsured rate rose in 2017ācombined with additional states expanding Medicaid, decreased coverage costs; a more recent study would be needed to say for sure. Also, without insurance-enrollment breakdowns, itās impossible to see where and why the biggest gaps in income inequality emerge, and the exact role the ACA may have played in fixing them.
Still, the study adds to the body of evidence on the dramatic impact of health-care costs. Even with Medicaid as a safety net, health care is a major burden for low-income peopleāso much so that it deeply exacerbates differences in income and wealth.
One major reason for this burden, perhaps even especially under the ACA, is deductibles. While almost the whole of the national health-care debate has centered on how to lower premiums, the ACA and other health policies have in many cases purposefully driven deductibles upward. More Americans say they have trouble affording their deductibles than they do affording their premiums. Between 2006 and 2017, the Kaiser Family Foundation found that deductibles for people with employer-sponsored insurance increased fourfold. The out-of-pocket maximums on many of these plans also increased sharply. Many of these hikes came from an across-the-board embrace of so-called high-deductible plans, which have been theorized to limit both utilization of health care and the burden of premiums. The tradeoff for those lower premiums is that those who use their insurance have to pay a lot more to do so.
As a 2017 Atlantic investigation showed, this theory can often create two kinds of adverse outcomes when put into practice. Many people simply spend what they need to to cover health-care costs, draining their savings and income as they go. And many who donāt turn to crowdfunding to pay their bills, or go without care in the first place. Technically, these outcomes reduce the number of medical bankruptciesāa victory for policymakersābecause even high-deductible plans place a hard cap on medical expenditures.
Yet even as Americans are better protected from the worst consequences of catastrophic illness, routine care continues to hurt low-income peopleās finances.
The ACA isnāt really designed to combat that particular paradox. In fact, the law at times embraces it. It juiced up the comprehensiveness of most plans, and it shields people from the true cost of premiums through a number of mechanisms. But in exchange, the structure of the high-deductible plan was accepted as a basic mechanism for both rationing and budgeting. While cost-sharing reductions were introduced to put a cap on the burden that deductibles, copayments, and coinsurance place on low-income Americans, 90 percent of all people on the exchanges still pay deductibles in excess of $1,300 individually or $2,600 per family, amounts that are often difficult to afford even for middle-class families.
Republican plans to create a new health-care regime would, for the most part, only increase that difficulty, because both the Senate and House bills to repeal Obamacare increased deductibles even further. President Trump, meanwhile, has stopped paying cost-sharing reduction payments and signed a tax law that repealed the individual mandate to purchase insurance. Both of these actions could increase premiums, thus giving some patients yet another financial burden to worry about.
The new study functions as a reminder that policymakers seeking to address income and wealth inequality cannot do so without continuing to address health care, still one of the most constant sources of financial woe in American life. That includes both the absolute cost of health care and the myriad ways the cost is passed onto people with insurance. Until those problems are mitigated, having āskin in the gameā for the poorest Americans translates to losing financial ground.
By Andrea S. Christopher, MD, MPH, David U. Himmelstein, MD, Steffie Woolhandler, MD, MPH, and Danny McCormick, MD, MPH
American Journal of Public Health, January 18, 2018 (online ahead of print)
Objectives. To assess the effect of householdsā outlays for medical expenditures on income inequality and changes since the implementation of the Affordable Care Act (ACA).
Methods. We analyzed data from the US Current Population Surveys for calendar years 2010 through 2014. We calculated the Gini index of income inequality before and after subtracting householdsā medical outlays (including insurance premiums and out-of- pocket costs) from income, the financial burden of medical outlays for each income decile, and the number of individuals pushed below poverty by medical outlays.
Results. In 2014, the Gini index was 47.84, which rose to 49.21 after medical outlays were subtracted, indicating that medical outlays effectively redistributed about 1.37% of total income from poorer to richer individuals, a slightly smaller redistribution compared with the years before the ACA. Medical outlays reduced the median income of the poorest decile by 47.6% versus 2.7% for the wealthiest decile and pushed 7.013 million individuals into poverty.
Conclusions. The way we finance medical care exacerbates income inequality and impoverishes millions of Americans. This regressive financing pattern improved minimally in the wake of the ACA.
From the Results
In 2013, medical outlays lowered the median income (calculated after subtracting medical expenditures) for the poorest decile by 49.2% and by 10.7% for the next poorest group versus 2.5% for the wealthiest decile, a markedly regressive pat- tern. This unequal pattern improved only slightly in 2014. In that year, medical outlays lowered median income in the lowest income decile by 47.6% versus 2.7% in the top decile. For those in the top 1.0% of income, medical outlays decreased income by only 1.3%.
In 2014, 9.28 million Americans whose incomes before their medical outlays were above poverty were pushed into near poverty (150% of FPL) when medical outlays were subtracted from their family incomes. Similarly, 7.013 million were lowered into poverty (below 100% of the FPL), and for 3.946 million, medical outlays reduced their incomes into the extreme poverty range (below 50% of the FPL). These numbers were little changed from 2013 (before the main provisions of the ACA took effect), when medical outlays pushed 7.263 million people below the poverty line, 3.809 million into extreme poverty, and 9.576 million below the near-poverty threshold.
From the Discussion
In the United States, most insured families pay premiums, deductibles, and copayments that are not scaled to income. As a result, medical care expenses exacerbate poverty and income inequality, which are key social determinants of health. Although access to high-quality care might narrow the health disparities caused by social inequality, the ways we pay for careānotably, the failure of most insurance programs to scale premiums and deductibles to incomeāmay widen them.
Out-of-pocket health care expenditures are likely to continue increasing under the ACA, as well as under Republicansā proposed alternatives. The proportion of privately insured employees whose individual coverage carries an annual deductible of $2000 or more has increased 6-fold since 2006. Most of the new private coverage offered on the ACA exchanges carries high deductibles. These could drive many families into poverty despite cost-sharing subsidies that reduce copayments and deductibles for those with incomes below 250% of the FPL.
Equally worrisome, Centers for Medicare & Medicaid Services has allowed several states to impose cost sharing on Medicaid recipients, reversing a long-standing rule against such policies.
In some nations the wealthy pay a larger share of their incomes toward health care than do the poor. In others, health expenditures account for a similar share of incomes for the poor and rich. In the United States, health expenses exact a higher toll from the poor, whereas the wealthy pay relatively little. This regressive financing patternāwhich redistributes as much as 1.7% of total income from poorer to richer Americansālies largely hidden in a complex web of private and public insurance arrangements. We suspect that the opacity of US funding streams helps shield the wealthy from demands for a fairer health-financing pattern.
http://ajph.aphapublications.org…
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By Don McCanne, M.D.
The way we pay for health care in the United States is egregiously regressive. In spite of ACA, “medical outlays reduced the median income of the poorest decile by 47.6% versus 2.7% for the wealthiest decile and pushed 7.013 million individuals into poverty.”
Income inequality has reached intolerable levels in the United States bringing ever more riches to the wealthy (how much wine and cheese do they need?) while leaving workers with relatively stagnant wages and leaving the poor without much hope for ever moving up to at least a minimally acceptable standard of living. This astonishing study shows that medical expenditures have worsened this inequity and have shoved another 7 million people into poverty (4 million into extreme poverty!). What a penalty to pay for having the misfortune of needing health care.
Considering the recent tax bill signed into law by President Trump, the nation is moving in the wrong direction in addressing the problem of income inequality. We need new policies, and one of the easiest and most beneficial would be to enact a well designed single payer national health program, funded equitably through the tax system. That way we would ensure that everyone would have health care while shifting from a regressive to a progressive pattern of financing. It would be good for our health and good for our personal finances.
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FOR IMMEDIATE RELEASE: January 18, 2018
Contact: Clare Fauke, 312-782-6006,Ā clare@pnhp.org
Householdsā payments for medical premiums, copayments and deductibles pushed more than 7 million Americans into poverty in 2014, according to a study appearing in theĀ American Journal of Public Health. Such payments also dramatically worsened overall income inequality.
The researchers analyzed data on household medical payments from the Census Bureau’s 2010-2015 Current Population Survey, the standard source for estimating income and poverty.Ā First, the researchers calculated the number of people who were below the poverty level before taking into account their medical expenses. Then they compared that to the number whose income fell below the poverty level after subtracting payments for health insurance and out-of-pocket medical expenses.
After taking account of householdsā medical payments, the incomes of the poorest 10% of the population fell by 47.6 percent. In addition, the burden of health care spending fell steadily as income rose. Such spending cut the incomes of households at the median income by about 8 percent, while it reduced the income of the wealthiest 1 percent by only 1.3 percent.
In their analysis, the researchers found that familiesā health care spending markedly increased overall income inequality. Using economistsā standard measure of income inequality, the Gini index, they found that the index worsened by 1.37 points after taking account of health care expenditures. If employer-paid premiums were considered part of an employeeās compensation (a standard assumption in economics), the effect of medical payments on income inequality was even greater, a worsening of 1.70 points. These health spending impacts on incomes were equivalent to transferring between $149.6 billion (1.37 percent) and $185.6 billion (1.70 percent) from households with incomes below $75,738 to wealthier households in 2014.
The study also found that the Affordable Care Act slightly improved this pattern (by 0.10 points) even before considering the effects of its $22 billion increase in Medicare taxes on the top 2 percent of earners.
Dr. Steffie Woolhandler, a study author who is a distinguished professor of public health at the City University of New York at Hunter College (CUNY/Hunter) and lecturer in medicine at Harvard Medical School commented: āIn many other countries, health care helps cushion the effects of poverty. But our health care financing system drives millions of Americans into poverty and worsens inequality. That’s not just a financial problem, it’s a medical one because poverty breeds ill-health.ā
According to Dr. David Himmelstein, a distinguished professor at CUNY/Hunter and staff physician at Montefiore Medical Center in the Bronx: āIn recent years, the gaps between rich and poor in both income and life expectancy have widened. Today, the richest Americans live 10 to 15 years longer than the poorest. A national health insurance program funded from progressive taxes instead of premiums and out-of-pocket payments would shift the financing burden to those who can afford it, and improve the health of our nation.ā
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āThe Effects of Household Medical Expenditures on Income Inequality in the United Statesāby Andrea Christopher, M.D., M.P.H., David U. Himmelstein, M.D., Steffie Woolhandler, M.D.,Ā M.P.H., and Danny McCormick, M.D. American Journal of Public Health, published online ahead of print January 18, 2018.
Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization whose more than 22,000 members support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the study described above.
By Eric T. Roberts, PhD; J. Michael McWilliams, MD, PhD; Laura A. Hatfield, PhD; Sule Gerovich, PhD; Michael E. Chernew, PhD; Lauren G. Gilstrap, MD; Ateev Mehrotra, MD, MPH
JAMA Internal Medicine, January 16, 2018
Importance
In 2014, the State of Maryland placed the majority of its hospitals under all-payer global budgets for inpatient, hospital outpatient, and emergency department care. Goals of the program included reducing unnecessary hospital utilization and encouraging greater use of primary care.
Objective
To compare changes in hospital and primary care use through the first 2 years of Marylandās hospital global budget program among fee-for-service Medicare beneficiaries in Maryland vs matched control areas.
Design, Setting, and Participants
We matched 8 Maryland counties (94āÆ967 beneficiaries) with hospitals in the program to 27 non-Maryland control counties (206āÆ389 beneficiaries). Using difference-in-differences analysis, we compared changes in hospital and primary care use in Maryland vs the control counties from before (2009-2013) to after (2014-2015) the payment change, using 2 different assumptions. First, we assumed that preintervention differences between Maryland and the control counties would have remained constant past 2014 had Maryland not implemented global budgets (parallel trend assumption). Second, we assumed that differences in preintervention trends would have continued without the payment change (differential trend assumption).
Main Outcomes and Measures
Hospital stays (defined as admissions and observation stays); return hospital stays within 30 days of a prior hospital stay; emergency department visits that did not result in admission; price-standardized hospital outpatient department (HOPD) utilization; and visits with primary care physicians (overall and within 7 days of a hospital stay).
Results
We matched 8 Maryland counties with hospitals in the program (94āÆ967 beneficiaries; 41.8% male; mean [SD] age, 72.3 [12.2] years) to 27 non-Maryland control counties (206āÆ389 beneficiaries; 42.8% male; mean [SD] age, 71.7 [12.5] years). Assuming parallel trends, we estimated a differential change in Maryland of ā0.47 annual hospital stays per 100 beneficiaries (95% CI, ā1.65 to 0.72; P = .43) from the preintervention period (2009-2013) to 2015, but assuming differential trends, we estimated a differential change in Maryland of ā1.24 stays per 100 beneficiaries (95% CI, ā2.46 to ā0.02; P = .047). Assuming parallel trends, we found a significant increase in primary care visits (+10.6 annual visits/100 beneficiaries; 95% CI, 4.6 to 16.6 annual visits/100 beneficiaries; P = .001), but assuming differential trends, we found no change (ā0.8 visits/100 beneficiaries; 95% CI, ā10.6 to 9.0 visits/100 beneficiaries; P = .87). Comparing estimates with both trend assumptions, we found no consistent changes in emergency department visits, return hospital stays, HOPD use, or posthospitalization primary care visits associated with Marylandās program.
Conclusions and Relevance
We did not find consistent evidence that Marylandās hospital global budget program was associated with reductions in hospital use or increases in primary care visits among fee-for-service Medicare beneficiaries after 2 years. Evaluations over longer periods should be pursued.
https://jamanetwork.com…
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By Don McCanne, M.D.
Making health care payment rates the same for all payers, public and private, and establishing global budgets for hospitals seem like reasonable steps toward establishing a single payer system. So how has Maryland done so far with this program?
The stated goals were to reduce unnecessary hospital utilization and to encourage greater use of primary care. But they “did not find consistent evidence that Marylandās hospital global budget program was associated with reductions in hospital use or increases in primary care visits among fee-for-service Medicare beneficiaries after 2 years.” As is typical of unsuccessful policy studies, an accompanying editorial suggests that we should give the study five or ten years before we expect to see any transformation of the delivery system. Sure.
This has in common with other health policy studies the major defect that an isolated policy is studied within the background of our highly dysfunctional, fragmented, multipayer system. You cannot study a universal single payer system unless you have a universal single payer system to study (and they do exist elsewhere).
Right now we are seeing proposals such as a public option, a Medicare or Medicaid buy-in, or a change in the age of Medicare eligibility, all of which some hope eventually would lead to single payer. But when added to our current dysfunctional system, little benefit will be evident because the fundamental defects will remain extant. Each such step will reinforce the views of those who profess that single payer can’t work because our system will still be overpriced, too many will still be uninsured or underinsured, and patients will still be deprived of choices of their health care professionals and institutions.
Currently in California there is a proposal for a Medi-Cal Public Option as an incremental step to single payer. That seems to be so far off track that it constitutes a derailment of the Single Payer Express.
We need to end this nonsense of spoon-fed policy and move forward with comprehensive policy that we know works – a single payer national health program. Now. Full steam ahead.
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By Ed Weisbart, M.D.
STAT, Jan. 17, 2018
The Republicans are right. We should cut Medicare. And I know how: Keep Medicareās funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.
Strong majorities of Americans across the political spectrum agree that Medicare needs to negotiate the price of prescription drugs. Prices here are roughly double what patients in other countries pay for the same drugs. Over the next ten years, Medicare is projected to spend $1.5 trillion on prescription drugs. Clearly, negotiating drug prices would save a lot of money.
Medicare Advantage, formally known as Medicare Part C, was created as a way for the private insurance industry to help control the cost of Medicare. But instead of saving taxpayers money, these for-profit insurers successfully lobbied the federal government to pay them significantly more than would have been paid for comparable patients in ātraditionalā Medicare.
Although Advantage plans arenāt allowed to overtly exclude costly (read: unprofitable) patients, they have found ways to push high-cost patients back into traditional Medicare by charging high copayments for drugs and services that are mostly used by high-cost patients. For instance, the Advantage plans have raised copayments particularly quickly for ambulance services, home health care, partial hospitalization, and inpatient services. A new analysis shows that the resulting shift of high-cost Advantage patients to the traditional Medicare program saved the for-profit Advantage plans $5.2 billion in 2007-2009.
Advantage plans save additional money by limiting care. Compared to traditional Medicare enrollees, seniors on Advantage plans received 24 percent fewer diagnostic tests, 38 percent fewer flu shots, and 15 percent fewer colon cancer screening tests. Thatās just not good medicine.
Because Medicare pays Advantage plans a higher premium for sicker seniors, Advantage plans have learned to cherry-pick healthier seniors and lemon-drop the sicker ones. For example, Medicare pays Advantage plans several thousand dollars extra for patients with heart failure. But insurers know that heart failure ranges from nearly undetectable (and inexpensive to care for) to overwhelming (and very expensive to care for). Insurers have become remarkably effective at attracting the undetectable and shunning the overwhelming. Witness the mobile echocardiogram units that provide free screening for heart failure, a strategy guaranteed to identify trivial ā but reimbursable ā disease.
And what is the āadvantageā of throwing tax dollars at private insurers whose overhead averages 30 percent, compared to a bit over 3 percent for traditional Medicare?
Medicare Advantage insurers have learned how to maximize their payments from the federal government. They have learned to āupcodeā ā overestimating their membersā disease burden and justifying higher federal reimbursements ā to the tune of $2 billion a year. Between upcoding and other schemes, Medicare Advantage plans are paid an average of 105 percent of what comparable patients would cost the traditional Medicare program.
Medicare Advantage is an increasingly popular choice among seniors, and now attracts more than 18 million members. The growth is easy to understand: These plans often come with richer benefit designs and reduced financial exposure for patients. But the trade-off is narrow networks of physicians and hospitals. More than one third of Advantage plans fail to include even a single National Cancer Institute center. None of the Advantage plan networks in the New York City area, for example, include Memorial Sloan Kettering Cancer Center.
Patients with short-term nursing home stays are nearly three times more likely to switch out of an Advantage plan and those with long-term nursing home stays are five times more likely. Twenty-seven percent of those leaving plans with relatively high disenrollment rates do so because of problems getting needed care; 41 percent leave because their preferred provider is not in the planās network. The sicker you are, and the more you actually need access to your choice of health care, the less advantage you see to an Advantage plan.
Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.
The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. Itās just a matter of political will.
Dr. Ed Weisbart is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.
