PNHP

Big Pharma execs are the new robber barons

Big Pharma execs are the new robber barons

By F. Douglas Stephenson
The Gainesville (Fla.) Sun, Sept. 18, 2016

Mylan Pharmaceuticals has been price gouging its life-saving injectable epinephrine — EpiPen — by charging $300 for a product that costs less than $10 to make.

Heather Bresch, chief executive at Mylan, the pharmaceutical giant that has been vilified for price increases on its EpiPen allergy treatment, maintains that her company has attained a sort of capitalist nirvana — it does good for others while doing well for itself. As Bresch says, the EpiPen is her “baby.”

The lack of ethics from Mylan and its CEO is an oft-repeated scenario by Big Pharma. They created nothing but paid billions — that must be recovered through sales — for a company that made their targeted product. They then generated skyrocketing returns through escalating price gouging, and even avoided taxes through inversion.

But the argument that Mylan has achieved a balance benefiting all of its stakeholders simply doesn’t hold up when viewed through the prism of the company’s recent proxy filings. Those materials detail the company’s executive pay and show, for example, that Mylan’s top brass received a windfall when it incorporated overseas in 2014 to cut its tax bill sharply.

This is not the first time that Mylan has attempted to monopolize a drug so that they could raise prices on a relatively cheap product to produce profits. In 2000, Mylan entered into agreements with the providers of the active pharmaceutical ingredient for widely prescribed anti-anxiety drugs lorazepam and clorazepate.

The effect was to deny competitors access to ingredients necessary to produce these drugs generically. Having done so, Mylan inflated the drugs prices by 2,000 percent and 3,000 percent respectively. Mylan was dragged into court by 32 state attorneys general and the U.S. Federal Trade Commission. The settlement basically required Mylan to disgorge all of the ill-gained profits in what was then the largest settlement with a drug manufacturer, amounting to well over $100 million.

But Mylan is not the only offender. Far from it. Valeant Pharmaceuticals between 2015 and this year raised the prices of Isuprel and Nitropress by 528 percent and 212 percent respectively; from 2013 to this year Cuprimine by 5,787 percent and Benzaclin and Retina-A Micro by 1,800 percent each; and from 2011 to this year Carac and Targretin 1,700 percent each. The drug Syprine went up by 3,200 percent since 2011.

Just like large health insurance corporations, BigPharma has the inherent tendency to invent new needs, disregard all boundaries and turn everything into an object for sale and big profit. To fix this problem, we might nationalize the pharmaceutical industry and mandate that drug companies be converted to non-profit public service corporations that serve the public interest rather than being used by one percenters for unlimited profit.

Another option is to establish a single-payer system of health insurance that allows a single purchaser — the government — to directly haggle with drug manufacturers over drug prices. This would bring U.S. drug prices in line with those of other high-income countries, which pay substantially less than we do for medications.

Additionally, we need comprehensive reform in the way we produce new drugs — inclusive of a public path for drug development and clinical trials that would produce new medications that remain forever in the public domain. Drugs, that is to say, that would function as real social goods, not rent-producing commodities.

Nobel Prize recipient Dr. Bernard Lown of the Harvard School of Public Health sums it up nicely: “One may only hope that Winston Churchill’s quip will soon be realized: ‘You can always count on Americans to do the right thing, after they have tried everything else.’ The United States has tried any number of bad solutions for providing its people with health care. Long overdue is the recognition that health care is a necessary social service that should be accessible to all citizens.”

F. Douglas Stephenson, LCSW, LMFT, BCD, is a retired psychotherapist/clinical social worker who practiced in Alachua and Citrus counties and was a faculty member in the University of Florida Department of Psychiatry. He lives in Gainesville.

http://www.gainesville.com/opinion/20160918/f-douglas-stephenson-big-pharma-execs-are-new-robber-barons

Australians concerned about ‘Americanization’ of their health insurance

Crisis looms as Australians look to ditch private health insurance

By Adam Gartrell
The Sydney Morning Herald, September 17, 2016

Almost 70 per cent of Australians with private health insurance have considered ditching or downgrading their cover in the last year in the face of relentless price rises and diminishing value for money, polling has found.

Close to 80 per cent of people believe health insurance companies put profits before patients and more than 90 per cent are concerned they’re trying to “Americanise” the health system to boost their bottom line.

Asked for their opinion on the statement “private health insurers put profits before patients”, 53.5 strongly agreed and 24.4 per cent agreed. Fewer than 10 per cent of people disagreed with the statement.

A whopping 73 per cent said they were “very concerned” about the creeping Americanisation of the Australian health care system and a further 18.6 per cent said they were “somewhat concerned”.

http://www.smh.com.au/federal-politics/political-news/crisis-looms-as-australians-look-to-ditch-private-health-insurance-20160916-grichb.html

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Comment:

By Don McCanne, M.D.

Under their conservative government, Australia seems to be creeping toward American-style privatization of their health insurance. Over 90 percent of Australians are concerned about this “Americanization” of their system. Can’t we learn something from them?

Oregon can pave the way for a single-payer system

Patient-centered, high-quality health care accessible to all is a realistic vision, says Dr. Paul Gorman

By Paul Gorman, M.D.
Portland (Ore.) Business Journal, Sept. 15, 2016

Every person in Oregon should have access to quality health care when they need it. We can achieve this vision without compromising on the quality of care, crippling the economy, or excluding hundreds of thousands of people from receiving care until it becomes an emergency.

The solution is a single payer health care system.

Working as an Oregon physician for over 30 years, in small town primary care and big city academic medical centers, I have become convinced that this is the only way to achieve the health care system we need and deserve.

Imagine a future in which our children and their children receive care in a system that ensures access, choice, patient-centeredness, accountability and affordability.

Access means universal access, cradle to grave. If you are in school, want to start a small business, or are laid off — no matter what happens — you and your family can get the health care you need. Choice means free choice — you choose any doctor or hospital, not just those in the company plan. All of them are included in the plan because there is one plan for everyone.

Patient-centered means that you and your doctors make decisions together, based on your situation and values, not based on bewildering rules in hundreds of different insurance plans. There’s just one set of rules for everyone, so your doctor can spend time caring for you instead of filling out paperwork.

Accountable means that decisions about health care coverage and costs are made by a publicly accountable group, guaranteeing citizen input, ensuring that the plan covers services that are evidence-based and cost-effective.

Affordable means affordable. None of us should go bankrupt because of medical costs: not patients, not businesses, not governments. None of us should have to do without needed care because of copayment and deductible schemes meant to reduce our access to services and ensure company profits. We should not all be one serious illness away from bankruptcy and ruin.

What we’re talking about here is simple: publicly funded, privately delivered, affordable and accountable health care for everyone in Oregon. We all chip in on the cost and we all have a say in the coverage.

Some will say that this vision is not realistic, that to call for health care for everyone in our country is to appear ridiculous.

Of course, we’ve heard this before. Elizabeth Cady Stanton heard it at Seneca Falls in 1848, when she insisted on demanding voting rights for women: “Why Lizzie, thee will make us ridiculous,” she was told.

We hear this argument whenever the status quo is threatened by the movements for equity and social justice. But we know better.

Every person in America should have access to quality health care when they need it. Oregon can lead the way.

Dr. Paul Gorman is a member of Physicians for a National Health Program and a professor of Medical Informatics and Clinical Epidemiology at Oregon Health & Science University. The views expressed here are his own.

http://www.bizjournals.com/portland/blog/health-care-inc/2016/09/guest-opinion-oregon-can-pave-the-way-for-a-single.html

Reprinted with permission.

Dr. Garrett Adams warns health insurance costs to soar

By Bill Zechman
Southern Standard (McMinnville, Tenn.), Sept. 4, 2016

A nationally prominent physician and advocate for single-payer healthcare assailed the power and influence of the insurance and drug industries in a speech Thursday at The Rotary Club of McMinnville.

Dr. Garrett Adams, past president of the 20,000-members Physicians for a National Health Program, took aim at health insurance giant Aetna for “manipulating the federal government” by threatening to abandon hundreds of thousands of customers who bought their plans with subsides under the Affordable Care Act, familiarly known as Obamacare.

Aetna and others, such as BlueCross BlueShield of Tennessee, have asked state insurance regulators for dramatic increases in premiums for policies issued under President Obama’s massive 2010 health care overhaul.  In practically all cases, those price increases were approved, and policy holders may expect scorching premium hikes starting in January.

Tennessee Insurance Commissioner Julie McPeak recently gave the green light to BCBS-TN to boost premiums for its ACA plans next year by an average of 62 percent.  She also approved hikes of more than 40 percent for two other carriers, Humana and Cigna.  The insurance companies argued the hikes are necessary to cover the claims of thousands of people, many of whom had gone without insurance and medical care for years.

Tennessee, along with Arizona and North Carolina, lead the nation in premium escalation, according to an Urban Institute analysis cited in last Friday’s USA Today.  While rates are soaring, competition and consumer choice are vastly shrinking all over the country.

While some rate hikes might be justified by the influx of newly insured customers, there might be a more sinister motive in the insurance industry action, Adams hinted in a WCPT 91.3 interview recording after the Rotary Club meeting.  But if private corporations are trying to squeeze more profit out of their customers and the government subsidies, public hostility and political backlash might hasten the arrival of single-payer universal insurance, he said in the half-hour talk show.  “I hope so,” he said.

The program airs on WCPI Tuesday at 5 p.m. and again Wednesday at 5:05 a.m., Thursday at 1 p.m., and Friday at 1:05 a.m.

http://www.southernstandard.com/

The public option is back

Senators Introduce Resolution Calling for Health Care Public Option

U.S. Senate, Committee on Health, Education, Labor & Pensions
September 15, 2016

Today, Oregon’s Senator Jeff Merkley and Senators Charles E. Schumer (D-NY), Patty Murray (D-WA), Dick Durbin (D-IL) and Bernie Sanders (I-VT), along with 22 of their colleagues, introduced a Senate resolution calling for a public option in the health insurance market.

Senate Resolution

Supporting efforts to increase competition and accountability in the health insurance marketplace, and extend accessible, quality, affordable health care coverage to every American through the choice of a public insurance plan.

After nine whereases:

Resolved, that the Senate supports efforts —

to build on the Affordable Care Act by ensuring that, in addition to the coverage options provided by private insurers, every American has access to a public health insurance option which, when established, will strengthen competition, improve affordability for families by reducing premiums and increasing choices, and save American taxpayers billions of dollars.

http://www.help.senate.gov/ranking/newsroom/press/senators-introduce-resolution-calling-for-health-care-public-option

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Comment:

By Don McCanne, M.D.

This week an intensive campaign is being initiated in support of a “public option” – offering the choice of a public, nonprofit insurance plan which competes with private health plans. Our enthusiasm should be tempered.

Following are a couple of points to keep in mind, especially when you hear promises that the public option is a giant step towards single payer:

* A public option will be only one more player in our costly, fragmented system of funding health care. It alone will bring us none of the important features of a single payer system such as efficiency, equity, systemic cost savings, and universality. The profoundly wasteful administrative complexity will remain.

* Previous efforts by Congress, heavily influenced by the insurance industry, to design a public option led to a highly flawed model that would prevent the “unfair” competitive advantage that a government program would otherwise have over the private insurance industry. This same insurance industry influence is precisely why the co-op models authorized by ACA are now failing. And there is absolutely no reason to believe that the insurance industry might change its tune now.

* The public option has been characterized as a Medicare buy-in. But Medicare is an equitably funded social insurance program covering everyone who is eligible, whereas the public option would be just another individual plan in a market of private plans, likely with higher premiums because of adverse selection.

* If a public option were to be enacted some believe that it would be only a matter of time before everyone would want in once it demonstrates its superiority, and then we would have a de facto single payer system. You need look only at the experience with the conspiracy between Congress and the private insurance industry in the establishment of the private Medicare Advantage plans that compete with traditional Medicare. Congress has given the private plans an unfair advantage so Medicare beneficiaries are moving from the public program to the private plans in ever greater numbers – the exact opposite of what the public option supporters visualize.

* The Affordable Care Act drew support of much of the progressive community as it seemed to them to be the only politically feasible approach at the time. Thus the clamor for comprehensive reform died down. We are hearing again that single payer is not feasible, but the public option is. When the public option is enacted, it will be mislabeled as single payer, and then it will be exposed for the miserable failure that it will be because it was designed by the private insurance industry to fail (like the co-ops). The single payer concept will have been tarnished, and it could be decades before our nation would recover and be ready for reform that really works. In the meantime, millions would have gone broke, suffered, and died merely because we didn’t think single payer was feasible.

Many look to Jacob Hacker for inspiration on enacting and implementing a public option. But he has identified the greatest barrier to moving forward. In a recent Vox article, he wrote, ”Private plans lobbied aggressively against the public option in 2009 on the grounds that it would amount to unfair competition. But insurers don’t want a level playing field; they want the field tilted in their favor.”

Now see if you can find a Congress that doesn’t tilt the field in favor of the private insurers. Not even on the horizon.

Congress has a way to solve high drug prices

By William M. Fogarty Jr., M.D.
St. Louis Post-Dispatch, Letters, Sept. 8, 2016

The editorial “Injected and gouged” (Sept. 1) clearly delineates the problem of unconscionable drug price increases. However, the solution to the problem is mentioned only in passing.

The best way to stop this gouging is for Medicare to negotiate drug prices for its beneficiaries and have private insurers use that fee schedule as a basis for their own schedules. At this time the government is precluded by law from such negotiations. This makes no sense and could be changed by members of Congress, if they weren’t beholden to the pharmaceutical industry.

We will likely see hearings with legislators acting shocked by the gouging on the EpiPen when the remedy is in their hands. Even more serious are the 300 percent to 500 percent increases in the prices of many common generic drugs that affect far more patients than the increase in the price of the EpiPen. These increases are caused by questionable mergers and the arrangements of generic drug makers that limit or eliminate competition. This situation should also fall under the purview of the Congress.

In the end, these and so many more problems in our medical system can only be solved by adopting a single-payer system that can negotiate for all Americans to receive quality care at reasonable cost.

Dr. William M. Fogarty Jr. resides in  Webster Groves.

http://www.stltoday.com/news/opinion/mailbag/congress-has-a-way-to-solve-high-drug-prices/article_2635684f-0b72-553c-a38b-80b1ba31b2d3.html

U of L Medical Students Host Single-Payer Event

By Kay Tillow
Kentuckians for Single-Payer Healthcare, Sept. 11, 2016

On  Sept. 7, at the University of Louisville School of Medicine, members of SNaHP (Students for a National Health Program) hosted first-year students at an Education and Advocacy lunchtime discussion on the concept of a single-payer system.
 
Drs. Edgar Lopez and Garrett Adams, both members of Physicians for a National Health Program, assisted with a slide presentation and Q&A. Dr. Adams cited poll results that indicate growing physician support for a publicly funded plan to cover everyone. The students raised questions on the social determinants of health, disparities in delivery of care, and on the recent surge in the price of medications — including the EpiPen.

Seventeen students attended, including current president Mallika Sabharwal and past president Brandi Jones.
 
SNaHP chapters nationwide are gearing up for a major event on Monday, Oct. 31, under the hashtag of #TreatNotTrick:
 
“Despite living in an era of great potential in the fight against disease and death, Americans continue to be haunted by health care profiteers. This Halloween, hundreds of medical and health professional students around the country will call on candidates and elected officials to abolish private health insurance, and to replace the health insurance industry with an expanded and improved Medicare-for-all.
 
Our message: “Private health insurance is a trick – we just want to treat our patients.”

Kay Tillow is a leader of Kentuckians for Single-Payer Health Care. She resides in Louisville.

http://kyhealthcare.org/posts/u-of-l-medical-students-host-single-payer-program

U.S. must abandon current health care system to cut costs

By Beth Woodruff
Iowa State Daily (Ames, Iowa), Aug. 31, 2016

The major producer of the EpiPen, Mylan, has been under attack in recent days because of the extreme price hike of the life-saving medication. In the last few years, the EpiPen’s price has increased by more than 400 percent, peaking at a price of $600 per unit in the last week, according to CNBC. While the CEO of Mylan has been more than apologetic, and borderline outraged, over the company’s recent price hike, I can’t help but notice a trend in American health care.

Comparing America’s universal health care costs with those of other developed nations, the differences are astounding. The Commonwealth Fund is a private organization that specializes in research regarding the health care system and America’s most vulnerable citizens such as children and those who are poverty-stricken. During its research, the Commonwealth Fund found that the average American spends $7,960 on health care each year, which is more than double the average in New Zealand, where the average citizen spends just below $3,000. It also discovered that for every dollar the United States spends on health care, the United Kingdom spends a meager 51 cents.

Not only are average yearly medical costs higher in the United States, but so are nearly all medical procedures. PBS found that a normal birth, not involving a caesarean section or complications, costs $1,521 in Finland, but $4,451 in the United States. Similarly, an appendectomy, a somewhat routine procedure in the United States, has a price tag nearly double most other developed nations.

So why is U.S. health care so astronomically priced compared to similar nations? Many people might believe the high price is because of high quality care, but unfortunately that is not the case. The United States ranked last among 11 other developed nations in the healthy lives category, according to a Commonwealth Fund finding. The New York Daily News said the “healthy lives” category took into account infant mortality, life expectancy and death rates from preventable diseases.

It’s time for the United States to take a look at other developed nations’ health care systems. A majority of the nations that ranked higher than the United States followed a single-payer system format. Harvard’s medical school describes a single-payer system as a lone public entity in charge of financing health care for all citizens. In simpler terms, everyone in the nation would be provided with the exact same health insurance plan and company, but individual patients can still choose where to receive their medical services.

Harvard also explained how the single-payer system could help slim down America’s bloated health care prices. General expenses and wasteful spending could be greatly reduced through cost-control methods and administrative costs by cutting out the many middle men the current U.S. system has. A single-payer system also could provide a greater sense of financial equality, as all citizens would have the same insurance plan despite any monetary struggles.

Not only is a federally funded single-payer system working in other countries, but after Bernie Sanders brought the idea to America’s attention, a majority of citizens see hope in swapping health care systems. A Gallup poll in 2016 found that 58 percent of Americans were in favor of ditching the current ACA system with a single-payer medical system. 

With prices of America’s health care treatments skyrocketing at unprecedented speeds, there needs to be a change. Whether that change is to a single-payer system or just finding ways to eliminate greed in America’s health care system, it needs to happen soon. More and more Americans are in favor of abandoning the current system in hopes of finding financial refuge in a new one.

Beth Woodruff is on the staff of Iowa State Daily.

http://www.iowastatedaily.com/opinion/article_7992865e-6d7d-11e6-968d-33a8e2bfa2ff.html

Out-of-pocket expenses drag 11 million people into poverty

The Supplemental Poverty Measure: 2015

By Trudi Renwick and Liana Fox
United Census Bureau, September 2016

This is the sixth report describing the Supplemental Poverty Measure (SPM) released by the U.S. Census Bureau, with support from the Bureau of Labor Statistics (BLS). The SPM extends the official poverty measure by taking account of many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure.

In 2015, 45.7 million people were poor using the SPM definition of poverty, more than the 43.5 million using the official definition of poverty with the adjusted universe.

The SPM and the Effect of Cash and Noncash Transfers, Taxes, and Other Nondiscretionary Expenses

(Excerpt): Without subtracting MOOP (Medical Out-of-Pocket) expenses from income, the SPM rate would have been 3.5 percentage points lower. In numbers, 11.2 million fewer people would have been classified as poor.

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-258.pdf

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Uninsured rate drops, but medical expenses still drag millions into poverty

By Bob Herman
Modern Healthcare, September 13, 2016

However, separate census data showed that medical out-of-pocket expenses dragged 11.2 million people into poverty in 2015, a potential symptom of the shift of moving employees and individuals into health plans that have higher deductibles, copays and coinsurance rates.

http://www.modernhealthcare.com/article/20160913/NEWS/160919973

***

Comment:

By Don McCanne, M.D.

We read repeatedly about how out-of-pocket health care spending is exposing patients to financial hardship. Yet our policymakers are continuing to expand that exposure under the screwball concept that spending out of pocket makes patients better health care shoppers, which we know is not true. It only makes them forgo beneficial care. Today’s number should be an awakening call: in 2015, out-of-pocket health care expenses shoved 11 million individuals into poverty!

At a time when we need to improve our anti-poverty programs, we are pushing more people into poverty through policies inherent in our dysfunctional health care financing system. With a well-designed single payer system, nobody would be forced into poverty because of medical bills.

Or should we continue with policies that prevent people from getting the care they should have, while forcing millions into poverty? How could anyone think that we really have a choice here?

Deductibles soar in employer health plans

Studies: Employer Costs Slow As Consumers Use Less Care, Deductibles Soar

By Jay Hancock and Shefali Luthra
Kaiser Health News, September 14, 2016

Employer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.

Average premiums for employer-sponsored family coverage rose 3.4 percent for 2016, down from annual increases of nearly twice that much before 2011.

But 3.4 percent is still faster than recent economic growth, which determines the country’s long-run ability to afford health care.

And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.

Since 2011, the average deductible for single coverage has soared 63 percent, according to the survey, while workers’ earnings have gone up by only 11 percent.

Change from 2011 to 2016 (from graph available at KHN link below):

6% – Overall inflation
11% – Workers earnings
19% – Single coverage premiums
63% – Single coverage deductibles, all workers

Members of high-deductible plans paid nearly a fourth of their total medical costs out of pocket versus only 14 percent for members of conventional plans.

Average annual 2016 premiums for single coverage were $6,435 for single coverage and $18,142 for family coverage, according to the Kaiser report.

http://khn.org/news/studies-employer-costs-slow-as-consumers-use-less-care-deductibles-soar/

KFF 2016 Employer Health Benefits Survey:
http://kff.org/health-costs/report/2016-employer-health-benefits-survey/

***

Comment:

By Don McCanne, M.D.

Although most media attention has been directed toward health plans offered by the ACA exchanges, most individuals actually obtain their insurance through their employment, so it is important to observe what is happening there, and the news is not so good.

In the past five years, inflation has remained low and wage increases have almost doubled the rate of inflation, and that’s the good news. Medical costs have continued to increase at a rate greater than inflation, and that has contributed to the tripling of insurance premiums. But what is really disturbing is that the rate of increase in plan deductibles is ten times the rate of inflation. Ten times!

Many enrollees in the ACA exchange plans receive government subsidies to help pay for their premiums and deductibles, but those those subsidies are not available for the majority who receive their coverage from their employer (though higher-income employees unfairly benefit from tax expenditures that help pay their premiums).

Fortunately, the majority of workers and their families are quite healthy and have little need for health care. It is those families that have greater medical needs that are now facing these high deductibles. Precisely those individuals who need help paying their medical bills are the ones being punished with financial penalties for being sick (the financial penalties being high deductibles and other cost sharing).

Our geniuses in the policy community came up with the concept of incentivizing enrollment in low actuarial value plans in the ACA exchanges – the ones that require high deductibles to reduce the pressure to increase premiums. Employers have quickly latched onto that concept and are now increasing the deductibles in their plans to levels that will cause financial hardship for too many families.

Did you catch that line above? The one that says that we are assessing financial penalties against those unfortunate enough to have significant medical needs. Isn’t just suffering from medical problems enough punishment for the unfortunate? Or maybe we don’t even want them to be punished. Maybe we would prefer to help them, as other civilized societies do.

Let’s fix this system. A single payer national health program with first dollar coverage would be a great start.

Insurers May Be Down on the ACA’s Exchanges …

… but they should be careful what they wish for

By Caroline Poplin, M.D., J.D.
MedPage Today, Sept. 6, 2016

Last month, Aetna announced that it would drastically reduce its participation on the Affordable Care Act (ACA) exchanges in 2017 because of larger-than-expected losses: it will go from 15 states to four. This follows similar decisions by UnitedHealth Group and Humana. As a result, more than one third of the exchanges next year will have only one participating insurer, so no competition at all. As early as May, even before the insurers’ announcements, analysts were predicting double-digit premium increases in 2017.

Why is this happening?

The Obama administration, as well as stalwart supporters in the policy community, have rushed to assure us that nothing much is happening: some bumps along the way were to be expected in such a grand experiment, and the Department of Health and Human Services (HHS), working with other stakeholders, will make it right.

Maybe.

Keep in mind that the whole point of the ACA was to placate private, for-profit health insurers, the group that destroyed Hillary-care in the 1990’s. (Remember Harry and Louise?) The companies did not want to lose their customers in the individual market — the healthy and the wealthy — and those customers, who had qualified for insurance, wanted to keep it.

But before the ACA, something like 40 million Americans had no access to health insurance, let alone healthcare; many more were underinsured. People demanded better. Centrist Democratic leaders — today we would call them the political elite — were determined to show that everyone could be adequately covered by commercial health insurers competing in a private market. So they filled the ACA with features designed specifically to make the new system attractive to commercial insurers.

First and most important, the federal government subsidized premiums for those with incomes under 400% of the federal poverty level ($97,000 for a family of four in 2016) — taxpayer funds that went directly to insurers. In addition, the ACA included three different programs to protect insurers from unusually costly patients (and simultaneously to prevent companies from cherry-picking healthy customers). These were known as the three ‘R’s: reinsurance, risk corridors, and risk adjustment. Only risk adjustment, under which insurers with a higher proportion of healthy customers compensate those with a sicker cohort, is permanent; the other two programs expire at the end of the year.

In exchange for these protections, insurers were required to offer every plan at the same price to all customers — that is, all plans were community-rated, with limited adjustments only for age and smoking status. No more pre-existing condition exclusions — patients with chronic illnesses could be charged no more than healthy customers. This is far and away the most popular feature of the ACA.

Nevertheless, 3 years in, insurers are complaining of losses, and voting with their feet. To reverse the downward momentum, HHS is tweaking risk adjustment, and adding a program to reimburse costs over $2 million for a single individual (to be shared among insurers).

ACA supporters have more ideas: greater outreach to eligible young, healthy people; higher penalties for failure to enroll; fewer required benefits; narrower networks. Insurers would like to adjust ratings upwards by, for example, charging the oldest customers five times more than younger ones, instead of three times more; or obtaining government reinsurance for especially costly patients; Hillary has suggested higher taxpayer-funded subsidies, and perhaps a “public option”.

Many of these measures would increase the cost of exchange policies and/or reduce their value. But the current policies are not great insurance: premiums are high. In 2015, 86% of enrollees received subsidies. Only 2% of eligible families who did not qualify for subsidies enrolled. Moreover, many families cannot access the benefits they have paid for because of high out-of-pocket expenses, especially deductibles.

The average deductible for a silver plan in 2015 was $2,994 — this in a country where 46% of families could not manage $400 for an emergency without borrowing the money or selling something. The federal limit next year for out-of-pocket expenses (including deductibles and co-pays, but not premiums) for a family is $14,300.

Under the ACA, the goal for insurers is to price their policies low enough to attract the healthy, but high enough to cover the costs of the sick. But even with giant computers, Big Data, and armies of actuaries, that may not be possible. It is certainly not the standard insurance business plan.

Commercial insurance works by charging individuals enough to cover their risk (with something left over for profit). High-risk people often cannot buy insurance at all. No one sells ordinary flood insurance to homeowners in a flood plain. We have Medicare for elderly and disabled people because they couldn’t get private health insurance. Insurers want to keep their healthy customers, and let someone else — high-risk pools, charity, the government — take care of anyone who gets sick.

But remember this: health insurance is not healthcare. Insurers are simply middlemen: if they disappeared — or were paid simply to track claims — and replaced by a Medicare-for-all system, everyone could still access healthcare. It is not clear that the value added by the industry is worth the cost, estimated at $350 billion. Spending that money directly on healthcare could improve our health, and eliminating public subsides to private insurers would reduce the deficit.

Insurers who are dissatisfied with the ACA: Be careful what you wish for.

Caroline Poplin, MD, JD, is an attorney and internist in Bethesda, Md. She is a former staff internist for the National Naval Medical Center, and currently practices medicine part-time at the Arlington Free Clinic in Virginia. She also consults for law firms on Medicare and Medicaid fraud.

http://www.medpagetoday.com/washington-watch/reform/60047

Health insurance gains fall short of what we could have had

Health Insurance Coverage in the United States: 2015

By Jessica C. Barnett and Marina Vornovitsky
United States Census Bureau, September 2016

Highlights (excerpts)

*  The uninsured rate decreased between 2014 and 2015 by 1.3 percentage points as measured by the CPS ASEC. In 2015, the percentage of people without health insurance coverage for the entire calendar year was 9.1 percent, or 29.0 million, lower than the rate and number of uninsured in 2014 (10.4 percent or 33.0 million).

*  The percentage of people with health insurance coverage for all or part of 2015 was 90.9 percent, higher than the rate in 2014 (89.6 percent).

*  In 2015, private health insurance coverage continued to be more prevalent than public coverage, at 67.2 percent and 37.1 percent, respectively. Of the subtypes of health insurance, employer-based insurance covered 55.7 percent of the population for some or all of the calendar year, followed by Medicaid (19.6 percent), Medicare (16.3 percent), direct-purchase (16.3 percent), and military cover- age (4.7 percent).

*  In 2015, the percentage of uninsured children under age 19 was 5.3 percent. This was a decrease from 6.2 percent in 2014.

*  In 2015, the uninsured rate for children under age 19 in poverty, 7.5 percent, was higher than the uninsured rate for children not in poverty, 4.8 percent.

*  In 2015, non-Hispanic Whites had the lowest uninsured rate among race and Hispanic origin groups, at 6.7 percent. The uninsured rates for Blacks and Asians were higher than for non-Hispanic Whites, at 11.1 percent and 7.5 percent, respectively. Hispanics had the highest uninsured rate in 2015, at 16.2 percent.

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-257.pdf

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Income and Poverty in the United States: 2015

By Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar
United States Census Bureau, September 2016

Highlights (excerpts)

*  Median household income was $56,516 in 2015, an increase in real terms of 5.2 percent from the 2014 median of $53,718.

*  The 2015 real median earnings of men ($51,212) and women ($40,742) who worked full time, year round increased 1.5 percent and 2.7 percent, respectively, between 2014 and 2015.

*  In 2015 there were 43.1 million people in poverty, 3.5 million less than in 2014.

*  The 2015 poverty rate was 1.0 percentage point higher than in 2007, the year before the most recent recession.

*  The income deficit for families in poverty (the difference in dollars between a family’s income and its poverty threshold) averaged $10,118 in 2015, which was not statistically different from the inflation-adjusted 2014 estimate.

Income Inequality

Since 1993, the earliest year available for comparable measures of income inequality, the Gini index was up 5.5 percent. Comparing changes in household income at selected percentiles shows that income inequality has increased from 1999 (the year that household income peaked before the 2001 recession) to 2015 (Table A-2). Incomes at the 50th and 10th percentiles declined 2.4 percent and 9.9 percent, respectively, while income at the 90th percentile increased 5.7 percent between 1999 and 2015. Since 1999, the 90th to 10th percentile income ratio (10.42 in 1999 and 12.23 in 2015) has increased 17.4 percent.

https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-256.pdf

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PNHP release on Census health insurance report:
https://www.pnhp.org/news/2016/september/stronger-rx-than-obamacare-needed-to-cover-everyone-and-control-costs-physician-

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Comment:

By Don McCanne, M.D.

The good news is that more people than ever now have health insurance. The bad news is that 29 million people remain uninsured with little hope that this number will decrease significantly because of our flawed model of health care financing. The other bad news, which does not appear in this report, is that costs are up, out-of-pocket spending is less affordable, and patients are losing choice of their health care professionals.

Great news is that median household income is up, and there are 3.5 million fewer people living in poverty. The terrible news is that we still have 43 million people in poverty. Further, the increase in median income was not enough to reverse the trend in income inequality which has prevented low- and middle-income workers from getting ahead.

It must be disappointing for many of those with income gains to have the additional funds consumed by higher insurance premiums, larger deductibles, and costs of unavoidable out-of-network care. It is particularly a shame when we know that we can improve health care equity by simply changing to a single payer national health program.

Providing the 29 million uninsured with health care should be the easy step. Then we can intensify our efforts in addressing the more difficult problem of improving the living standards for the 43 million still living in poverty. But charity alone won’t do it. We need efficacious public policies and a government that will enact and implement them.