PNHP

Congress has a way to solve high drug prices

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

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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/

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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.

Dartmouth devises ACO concept, but then abandons its own

Dropout by Dartmouth Raises Questions on Health Law Cost-Savings Effort

By Robert Pear
The New York Times, September 10, 2016

In its quest to remake the nation’s health care system, the Obama administration has urged doctors and hospitals to band together to improve care and cut costs, using a model devised by researchers at Dartmouth College.

But Dartmouth itself, facing mounting financial losses in the federal program, has dropped out, raising questions about the future of the new entities known as accountable care organizations, created under the Affordable Care Act.

The entities are in the vanguard of efforts under the health law to move Medicare away from a disjointed fee-for-service system to a new model that rewards doctors who collaborate and coordinate care.

“There’s little in the way of analysis or data about how A.C.O.s did in 2015,” said Dr. Ashish K. Jha, a professor at the Harvard School of Public Health. “The results have not been a home run.”

In addition, he said, “there is little reason to think that A.C.O.s will bend the cost curve in a meaningful way” unless they bear more financial risk, sharing losses as well as savings with the government.

An evaluation for the federal government found that Dartmouth’s accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.

“We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.”

Dr. Elliott S. Fisher, the director of the Dartmouth Institute for Health Policy and Clinical Practice, said: “It’s hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with. I helped design the model of accountable care organizations. So it’s sad that we could not make it work here.”

Dartmouth-Hitchcock is the main teaching hospital for Dartmouth’s medical school, of which the Dartmouth Institute is part.

http://www.nytimes.com/2016/09/11/us/politics/dropout-by-dartmouth-raises-questions-on-health-law-cost-savings-effort.html

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Creating Accountable Care Organizations: The Extended Hospital Medical Staff

By Elliott S. Fisher, Douglas O. Staiger, Julie P.W. Bynum and Daniel J. Gottlieb
Health Affairs, January 2007 (online December 2006)

Abstract

Many current policies and approaches to performance measurement and payment reform focus on individual providers; they risk reinforcing the fragmented care and lack of coordination experienced by patients with serious illness. In this paper we show that Medicare beneficiaries receive most of their care from relatively coherent local delivery systems comprising physicians and the hospitals where they work or admit their patients. Efforts to create accountable care organizations at this level — the extended hospital medical staff — deserve consideration as a potential means of improving the quality and lowering the cost of care.

http://content.healthaffairs.org/content/26/1/w44.abstract

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How does the Affordable Care Act define ACOs?

Comment by Don McCanne, M.D.
Quote of the Day, October 28, 2010

Excerpt

So how do ACOs achieve higher quality and lower cost?

The ACOs are not rewarded monetarily for meeting the quality standards. Their motivation to comply is to avoid being suspended from the program.

Costs are reduced by the shared savings program. A benchmark is established for each ACO “using the most recent available 3 years of per-beneficiary expenditures for parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO.” If the ACO can provide care for costs below the benchmark, the ACO then shares those savings with HHS. The benchmark is reset at the beginning of each 3 year agreement.

If the costs are above the benchmark, then the fees are still paid as usual, with no adjustments.

Think about this. The incentives continue to promote greater volume. There is no penalty for running the charges up. Is the reward for reducing the volume and intensity of services enough? Since fixed costs for the ACO are relatively unchanged, the reductions in marginal overhead expenses due to reduced volume must be greater than the amount of savings that HHS shares with the ACO in order to come out ahead. Since this is the opposite of “making it up in volume,” it is more likely that net income will be reduced. Further, since the benchmarks are reset every 3 years based on lower utilization, it is very unlikely that that the ACO could continue to ratchet down services to qualify for shared savings.

(A later iteration included penalties for failure to meet savings targets.)

https://www.pnhp.org/news/2010/october/how-does-the-affordable-care-act-define-acos

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Elliott Fisher questions whether ACOs will work

Comment by Don McCanne, M.D.
Quote of the Day, March 28, 2011

Excerpt

Accountable care organizations (ACOs) began as an abstract concept of integrating health care providers into a not-yet-defined entity that would be rewarded for improving quality and reducing costs. Without knowing what they were, Congress included them in the Affordable Care Act (ACA). Dartmouth’s Elliott Fisher, who was one of the first to promote the concept, now says that “there are some really important questions about whether this will work.”

https://www.pnhp.org/news/2011/march/elliott-fisher-questions-whether-acos-will-work

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Comment:

By Don McCanne, M.D.

Elliott Fisher and his colleagues at the Dartmouth Institute are generally credited with introducing in 2006 the concept of the accountable care organization (ACO) – coordinated organizations of hospitals and their extended medical staffs that would improve quality and lower costs (HMO 2.0?). The concept was incorporated into the Affordable Care Act. But by 2011, we should have been concerned when Elliott Fisher said, “there are some really important questions about whether this will work.”

Many doubts have been expressed about this model, and after a decade of fooling around with it, the record can be summed up by Ashish Jha’s understatement, “The results have not been a home run.”

Well it did not work for Dartmouth-Hitchcock in spite of Elliott Fisher’s presence. They dropped out of the program a year ago (though Robert Pear’s article provides much needed transparency on the ACO concept). Fisher said that he helped design the model so it is sad that they couldn’t make it work there. He said that it was hard for Dartmouth-Hitchcock to achieve savings since they were already “a low cost provider.”

But it should not have been a surprise. In a Quote of the Day in 2010 (excerpt above) we explained why, in a “think about this” comment, that the basic concept was fundamentally flawed – the reward for participation being that you would have to give a major portion of your savings to Medicare instead of keeping them as profits (Medicare shared savings).

It’s too bad that Congress didn’t listen to those of us expressing concerns when they included the concept in the Affordable Care Act. Yet acting CMS administrator Andrew Slavitt is moving forward, saying that the current iteration is “like the iPhone 2.” If you read the thousands of pages of rules that CMS is generating, it is clear that this will be a godsend – for those profiting from administrative services, that is.

Abstractions of higher quality and lower costs sound great, but you need proven policy to carry them out. The single payer experiments have already been done, and they work! Even Gail Wilensky says, “Enough demonstrations, already.”

Stronger Rx than Obamacare needed to cover everyone and control costs: physician leader

Citing Census Bureau report that 29 million people were uninsured last year, and noting that rising deductibles and other out-of-pocket expenses are deterring millions of insured Americans from seeking needed care, Dr. Robert Zarr says moving to a single-payer, improved-Medicare-for-all program has never been more urgent

FOR IMMEDIATE RELEASE, Sept. 13, 2016
Contact: Mark Almberg, PNHP communications director, 312-782-6006, mark@pnhp.org

“The Census Bureau’s official estimate that 29 million Americans, including 3.7 million children, still lacked health insurance in 2015, five years after the passage of the Affordable Care Act, starkly illustrates how our inefficient, private-insurance-based system of financing care is fundamentally incapable of providing universal coverage,” said Dr. Robert Zarr, a Washington-based pediatrician who is president of Physicians for a National Health Program.

“The fact that 29 million people remain uninsured – a figure that won’t change much over the next decade, according to the Congressional Budget Office – is totally unacceptable to me as a physician,” he said. “Studies show that lack of insurance is linked to a higher mortality rate. Being uninsured is lethal, and currently leads to tens of thousands of deaths annually.”

Zarr noted that since the ACA’s passage the number of uninsured has fallen by about 41 percent – from about 49 million people in 2010 to 29 million in 2015, with the largest gains among the poor, near-poor, and minorities. He said such gains “can only be welcomed, since research shows that having some kind of coverage is better than none.”

But he said the Census Bureau report shows that new sign-ups dramatically slowed last year, with a decrease in the uninsured rate of only 1.3 percentage points from 2014. Zarr said other research shows that even if all the states that opted out of the ACA’s Medicaid expansion program were to opt in, the overall picture would largely remain the same.

“That tens of millions of people will remain uninsured under our current arrangements is perhaps the most compelling argument for why our nation needs to swiftly adopt a single-payer system, where everyone, without exception, would be covered and get first-dollar coverage for all medically necessary care,” he said. “But it’s by no means the only argument.”

Zarr pointed out that, once again, the Census Bureau report leaves unmentioned the declining quality of health insurance in the United States, or the “hollowing out” of already inadequate insurance, which takes the form of very high deductibles and copays, rising coinsurance rates, and narrow provider networks that restrict patients’ access to care.

“Too many people have skimpy policies that deter them from seeking care when they should get treatment, and that leave them unprotected against financial hardship when illness or injury strikes,” he said. “And their number is growing.”

He said that a 2014 study by the Commonwealth Fund shows that about 31 million people who have health insurance – nearly a quarter of all non-elderly adults – are “underinsured,” or have inadequate coverage based on their income. That’s nearly double the rate in 2003. Of these, 44 percent went without a doctor’s visit, medical test, or prescription due to cost, while 51 percent had problems paying off medical bills.

“For example, today a 40-year-old man earning $25,000 who signed up for a silver plan on the exchange would be eligible for government subsidies, but would still be at risk for $5,000 in copayments and deductibles,” he said. “Or a family of four with an income of about $60,600 could face out-of-pocket costs for copayments and deductibles – after premium payments – as high as $13,700. And these numbers apply to ‘in network’ services only. Out-of-network costs can go much, much higher. Such financial barriers are untenable, economically and morally.”

“The problem has only gotten worse over the past several years,” Zarr said. “Last week the National Center for Health Statistics reported that the percentage of persons under age 65 with private insurance enrolled in a high-deductible health plan increased to 40 percent in the first quarter of 2016, up from 25.3 percent in 2010. This is an alarming proliferation of an insurance model that discourages care-seeking, a model that will lead to much suffering and in too many cases, early death.”

Zarr said the recent announcement by Aetna, UnitedHealth Group, and other insurers of their withdrawals ACA’s marketplaces in many U.S. counties because the enrollees there were unprofitably ill – even as the insurers’ overall profits and stock prices have soared to record highs – shows they cannot be relied upon to fulfill the basic function of protecting patients’ financial security in time of need.

“Whether it be the big private insurers’ increases in premiums, deductibles, and copays, or the skyrocketing costs of medications by Big Pharma – the recent EpiPen price hike is a glaring example, although dramatic increases in the costs of insulin and other life-saving medications have also occurred – it’s clear that our corporatized health industry is bent on maximizing their profits at the expense of our patients’ health,” he said.

“Only a nonprofit, single-payer health care program will cut out the huge bureaucratic waste in our system, freeing up the funds to provide everyone with quality coverage. And a single payer will give us the tools we need to rein in rising costs. That’s why I and thousands of other physicians earlier this year issued a statement calling for a single-payer system.

“Our patients and our economy can’t wait any longer for an effective remedy to our health care woes. The stakes are too high. We need to swiftly move beyond the ACA to a single-payer national health insurance program.”

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Historical state-by-state data on the uninsured from 2012-2015, compiled by PNHP staff from the Census Bureau’s newly published data, can be found here.

Physicians for a National Health Program (www.pnhp.org) is a nonprofit research and education organization of more than 20,000 doctors who support single-payer national health insurance.

Lower-income workers get less health care with HSA-eligible health plans

The Impact of an HSA-Eligible Health Plan on Health Care Services Use and Spending by Worker Income

By Paul Fronstin, Ph.D. and M. Christopher Roebuck, Ph.D.
Employee Benefit Research Institute, Issue Brief, August 2016

This study examines whether there is variation by worker income on how an HSA-eligible health plan affects health care services use and spending. Does the typically flat-dollar gap between a health plan’s deductible and the employer contribution to a health savings account (HSA) have a bigger impact on the use of health care services among lower- income workers than it does for higher-income workers?

The data for this study come from a large employer that offered an HSA-eligible health plan alongside a preferred provider organization (PPO), includes between 150,000 and 200,000 individuals, and covers health care services use and spending over the six-year period from 2009‒2014.

*  The HSA-eligible health plan was associated with a decline in (non-preventive) outpatient office visits for workers at all income levels, but the decline was over twice as large for workers and their dependents with incomes less than $50,000 as compared with those with incomes of at least $100,000. The decline in specialist visits accounted for most of the decline in outpatient office visits among the group of workers with less than $50,000 in income.

*  There was an across-the-board decline in prescription drug fills regardless of worker income.

*  The HSA-eligible health plan was associated with a reduction in various preventive services by worker income.

https://www.ebri.org/pdf/briefspdf/EBRI_IB_425.Aug16.HSAs.pdf

***

Comment:

By Don McCanne, M.D.

Yes, this is yet another report that confirms that enrolling in HSA-eligible high-deductible health plans is associated with a decline in physician visits and in high-value preventive services. This negative impact occurs across all income levels but is twice as great amongst lower-income individuals than it is for those with higher incomes.

Yet we continue to see a significant increase in enrollment in high-deductible plans whether or not they are associated with a health savings account. Slowing health care spending by reducing the use of beneficial health care services is not the type of health care policy we should be supporting.

Our current policies are creating more financial barriers to care; they are reducing our choices in our health care professionals; they are increasing administrative waste, and they have have inflamed an epidemic of physician burnout. Yet we continue to let the medical-industrial wonks lead us down this path to the everlasting bonfire.

Hey, aren’t we wonks too? We know a far better path – one that leads to health care nirvana. Why aren’t we doing the leading?

Is it true that 85% do not have to worry about premium increases?

Steve Davis & Robert Laszewski confirm what I’ve been saying all along: Appx. 40% of ACA indy market is OFF EXCHANGE

By Charles Gaba
ACASignups.net, September 6, 2016

For 2 1/2 years, dating back to around February 2014, I’ve been trying to hammer home the importance of the OFF-exchange individual market. Time and time again I’ve been stunned at the seeming blind spot that people who should know better (such as Avik Roy) have regarding the millions of people who are enrolled in fully ACA-compliant policies, but are doing so directly through the carriers themselves. There are a few reasons why people buying individual/family policies would do this, but the most obvious one is simple: If you earn more than 400% of the Federal Poverty Level (around 97,000/year for a family of 4), there’s no reason to jump through the extra hoops of enrolling through HealthCare.Gov or the other various ACA exchanges…because you don’t qualify for federal financial assistance anyway. For whatever reason, however, numerous reporters, pundits and even the HHS Dept. itself keep acting as though this market doesn’t exist.

How many people are we talking about here? Well, back in 2014 I estimated that roughly 8 million people had signed up as of mid-April…almost exactly the same as the 8.02 million who selected QHPs on the ACA exchanges, or about 50% of the total. That 8 million included several million transitional and grandfathered policy enrollees, however, though I wasn’t sure what the breakout was.

By this year, the exchange-based number had grown to around 11.1 million as of March 2016, of course…but the off-exchange number has been tougher to estimate. I’ve generally estimated the total off-exchange indy market at around 8-9 million, with roughly 7-8 million of that consisting of people enrolling in ACA-compliant plans at full price, and another 1-2 million or so enrolled in ACA-noncompliant “grandfathered” or “transitional” policies.

This estimate has been strongly supported by Mark Farrah Associates, which pegs the total individual market in 2016 at around 20.5 million.

Well, today, Robert Laszewski stumbled upon an excellent piece of data diving by a reporter named Steve Davis, in which Davis dug up the broken-out enrollment numbers for a whole mess of Blue Cross carriers nationwide.

The overall picture is quite clear: Roughly 48% (2.3 million) of all individual policies sold by these carriers (Blue Cross only) are subsidized, while another 48% are ACA-compliant but unsubsidized (8% on exchange, 40% off exchange). The remaining 4% or so are grandfathered/transitional enrollees.

It’s important to note that in the states where there’s no Grandfathered/Transitional (GR/TR) numbers listed, some chunk of the “Off Exchange Unsubsidized” tally likely belongs in the GR/TR column. Even so, the above hard data is remarkably close to my own assumptions:

9.4 million on-exchange subsidized (47%)
+ 1.7 million on-exchange unsubsidized (8%)
+ 7.1 million off-exchange unsubsidized (ACA-compliant) (35%)
+ 2.0 million off-exchange unsubsidized (NON-ACA compliant) (10%)
= 20.2 million total

http://acasignups.net/16/09/08/steve-davis-robert-laszewski-confirm-what-ive-been-saying-all-along-appx-40-aca-indy-market

***

Comment:

By Don McCanne, M.D.

More numbers. Moving directly to the point, HHS and others keep assuring us that the anticipated greater increase in ACA insurance premiums will not be a problem for the 85 percent of individuals who receive premium subsidies through the ACA exchanges. Well it is a problem not only for the 15 percent of individuals in the exchanges who do not receive subsidies but also for those who buy their individual plans outside of the exchanges.

Charles Gaba makes the point that the individual plans sold by the insurers both within and outside of the exchanges share a common risk pool.

So roughly 47 percent of plans sold by insurers servicing the exchanges are subsidized, but another 53 percent (10 percent of total are not ACA compliant) sold on and off the exchanges are not subsidized so the insured individual bears the full premium increase. So it is not 85 percent who do not have to worry, but rather it is closer to half of those with ACA compliant plans.

Middle-income individuals not only bear the brunt of the premium increases, but they also pay taxes that will be used to provide the subsidies for the higher premiums in the exchanges. This is one more example of why middle-income individuals have fared poorly under ACA.

Single payer would have been simpler, more equitable, and would have had better control of increases in health care spending that are contributing to higher premiums. We can still make the change.

Fewer are uninsured, but…

Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January–March 2016

By Robin A. Cohen, Ph.D.
Michael E. Martinez, M.P.H., M.H.S.A.
Emily P. Zammitti, M.P.H.
National Center for Health Statistics, September 2016

This report provides health insurance estimates from the first quarter of the 2016 National Health Interview Survey.

* In the first 3 months of 2016, 27.3 million (8.6%) persons of all ages were uninsured at the time of interview — 1.3 million fewer persons than in 2015 and 21.3 million fewer persons than in 2010.

* The percentage of persons under age 65 with private insurance enrolled in a high-deductible health plan (HDHP) increased, from 25.3% in 2010 and 36.7% in 2015 to 40.0% in the first 3 months of 2016.

* In the first 3 months of 2016, among adults aged 18–64, 11.9% were uninsured at the time of interview, 19.5% had public coverage, and 70.2% had private health insurance coverage.

* Among adults aged 18–64, the 12-month increase in the percentage with private coverage through the Health Insurance Marketplace or state-based exchanges — from 4.4% (8.6 million) in the first quarter of 2015 to 4.7% (9.2 million) in the first quarter of 2016 — was not statistically significant.

* In the first 3 months of 2016, among adults aged 18–64, 24.7% of those who were poor, 23.6% of near poor, and 6.5% of not poor lacked health insurance coverage at the time of interview.

* In the first 3 months of 2016, 24.5% of Hispanic, 13.0% of non-Hispanic black, 8.4% of non-Hispanic white, and 6.7% of non-Hispanic Asian adults aged 18–64 lacked health insurance coverage at the time of interview.

https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201609.pdf

***

Comment:

By Don McCanne, M.D.

Six years after the enactment of the Affordable Care Act, we have achieved less than half of the goal of covering all of the uninsured – a decline from 48.6 million in 2010 to 27.3 million earlier this year. Many are celebrating this as a great success, but others do not out of concern for the 27 million who remain uninsured. Besides, there are many other observations in this report that should concern advocates of health care justice for all.

Although 21.3 million uninsured gained coverage since 2010, the further reduction in the uninsured in the past year – 1.3 million – was not statistically significant. This suggests that we are close to the flat of the curve. The feasible patches to ACA are very unlikely to have much more than a negligible impact in further reducing the numbers of uninsured. We need a system that is designed to cover absolutely everyone, such as a single payer national health program.

For adults under 65, 70 percent are privately insured, predominantly through employer sponsored plans. Only 4.7% are insured through the exchanges. Those who dreamed that the nation would swarm to the exchanges because of their superior competitive markets of private plans (HHS even changed the name from exchange to marketplace) had better go back to their drawing boards, and think “improved Medicare for all”.

Perhaps the most alarming trend is the increase in enrollment in high deductible health plans (HDHP). For those under age 65, the percentage has increased from 25.3% in 2010 to 40.0% earlier this year. This has been responsible for much of the financial hardship caused by medical bills for those who are insured. The system is not working well for them, and it is getting worse.

Some say that the answer to high deductible plans is to include health savings accounts (HSA), making them consumer-directed health plans (CDHP). But three-fifths of those with HDHPs do not even have an HSA, and for many of the other two-fifths, the HSAs are inadequately funded. Pretending that deductibles can be paid with empty or nonexistent savings accounts is not sound health policy.

Another concern is that the uninsured rates are higher amongst the poor, Hispanics, and non-Hispanic blacks. Although much still needs to be done to reduce inequities in health care, the task remains much more difficult without adopting an equitable health care financing system (single payer).

So when you see headlines this week stating that the number of uninsured is at an all time low, don’t think, “a job well done.” It wasn’t.