PNHP

Medical Students Call for Single-Payer Health Insurance

Medical Students Call for Single-Payer Health Insurance

By Mark Chee, Rebecca Gieseker and Rachel Stones
Chicago Maroon, March 31, 2016

As medical students, we have chosen a profession dedicated to treating illness and helping people live healthy lives.

Yet, early on during our training, we learn about the unequal access to care, unaffordable treatments, and medical debt that patients face because of our current private, for-profit health insurance system. We hear about physicians who are increasingly burdened with paperwork and frustrated by a system that does not serve their patients. We discover that despite spending more per capita on health care than other developed countries, the U.S. population has a shorter life expectancy, higher infant mortality, and worse overall health.

While the implementation of the Affordable Care Act (ACA) has expanded coverage, it fails to sufficiently address the problems our health care system faces. Around 33 million Americans remain uninsured, some indefinitely. These individuals are immigrants, who still cannot afford health insurance or live in states that have blocked Medicaid expansion. In addition to this remaining lack of coverage, increasing deductibles and cost sharing are also being used to shift the financial burden from insurers to patients. Over 50 percent of bankruptcy filings in the U.S. are due to illness and medical debt, even though the majority of individuals in this group has some form of coverage when they file for bankruptcy. Expanding insurance coverage that leaves patients vulnerable to the financial burden of illness is not the answer. Furthermore, narrow network health plans prevent patients from having continuity of care with their physicians and expose them to exorbitant (and often unexpected) out-of-network costs.

Medical students often ask what can be done about this. The clear solution is a single-payer health care reform. In a single-payer system, Medicare would be expanded to cover all U.S. residents, but care would continue to be delivered by private institutions. This would guarantee access to health care for the 33 million Americans who remain uninsured under the ACA, cover necessary services without co-pays, coinsurance, or deductibles, and contain health care costs by reducing the high administrative costs of for-profit insurers. While a single-payer wouldn’t solve all the problems that our health care system faces, it would be an important first step to make our health system more equitable, affordable, and efficient.

Implementing single-payer, or Improved Medicare for All, is far from revolutionary, and it can work in the U.S. We already spend more money than other countries that have implemented universal coverage. Furthermore, public opinion favors this approach. Recent polls have found that 58 percent of the U.S. population supports the idea of Medicare-for-all. Here at the Pritzker School of Medicine, a fall 2015 survey distributed by the school’s chapter of Physicians for a National Health Program (PNHP) identified 108 medical students and 119 physicians/faculty (including at least seven deans and six third-year clerkship directors) who publically supported single-payer. While many argue that single-payer would be too expensive for patients and the government, an economic analysis of the single-payer bill HR 676 in the U.S. House of Representatives showed that 95 percent of Americans would actually save money.

As a key hospital on the South Side of Chicago, single-payer could benefit rather than harm the bottom line for the University of Chicago Medicine. During the discussions around the Level I trauma center, a main argument brought forth against the expansion of the University’s emergency department involved the need to have a financially viable patient mix. Since Medicare and Medicaid reimbursement often do not cover the full cost of treating a patient, privately insured patients are needed to subsidize this uncompensated care. A trauma center would likely be used by patients in the surrounding communities who are insured by Medicare or Medicaid or are otherwise uninsured. Under a single-payer health care system, varying rates of reimbursements would not be an issue, and there would no longer be a financial incentive to serve the wealthy over the underinsured and vulnerable.

As doctors-in-training, we are excited to devote our futures to serving others, but we have already seen the struggles and burnout faced by providers and patients under our fragmented, expensive, and inefficient system. We want to practice medicine in a system that serves all Americans and guarantees health care as a basic human right for all. Those who stand to lose from single-payer in the U.S. have significant voices in the political sphere and include the for-profit insurance companies and their stakeholders, Big Pharma, and political leaders who benefit from the current status quo. However, as the next generation of physicians, if we stand together and make our voices heard, single-payer will be achieved in our lifetime.

Mark Chee, Rebecca Gieseker, and Rachel Stones are medical students at the Pritzker School of Medicine at the University of Chicago.

http://chicagomaroon.com/2016/03/31/paying-less-with-single-payer/

Oklahoma physician leaders vote to abandon Medicaid patients

Oklahoma State Medical Association urges doctors to mull leaving Medicaid over 25 percent rate cut

By Barbara Hoberock
Tulsa World, April 1, 2016

Oklahoma State Medical Association leaders have voted unanimously to urge members to consider dropping out of Medicaid.

The association’s executive committee took the unanimous vote on Wednesday following an announcement earlier in the week by the Oklahoma Health Care Authority that Medicaid rates could be cut by as much as 25 percent effective June 1.

For the current fiscal year, the state has seen a deepening revenue failure requiring state-appropriated agencies to make cuts.

“We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” said OSMA President Woody Jenkins. “But a 25 percent rate cut, combined with previous cuts that had already been made in recent years, will leave many of our members with little choice.”

He said the association in coming days will be offering guidance on its website for doctors on how to opt out of the Medicaid program.

http://www.tulsaworld.com/homepagelatest/oklahoma-state-medical-association-urges-doctors-to-mull-leaving-medicaid/article_8f6feba5-dd9f-56eb-9c74-ff3eac146838.html

***

KGOU Update:

The third part of the plan would restore the Medicaid reimbursement rate to 86.5 percent of Medicare. Earlier this week, the Oklahoma Health Care Authority proposed reducing the reimbursement rate to providers by 25 percent as a result of the estimated $1.3 billion general revenue shortfall in the upcoming fiscal year.

http://kgou.org/post/oklahoma-health-care-authority-proposes-plan-insure-more-oklahomans#stream/0

***

Comment:

By Don McCanne, M.D.

One of the flaws in our fragmented, multi-payer system of financing health care is that low-income patients tend to be lumped into the Medicaid program. Since it is a welfare program serving individuals who do not command much political capital, politicians are more willing to use cuts in Medicaid to balance their budgets than cuts for programs designed to serve the general population such as Medicare and Social Security. What lessons can Oklahoma’s proposed 25 percent cut in Medicaid rates provide for us?

As a welfare program, Medicaid does remain chronically underfunded. As such, access problems occur because of a lack of willing providers since there is reluctance on the part of others to accept the lower Medicaid rates. But should the less fortunate members of society be relegated to a lower standard of health care, or should everyone have the equivalent access to essential health care services? That question has been answered by our politicians even if it was never asked.

That said, what response should organized medicine have to these cuts in Medicaid? Perhaps we should ask whom they perceive as being victimized here. The Oklahoma State Medical Association (OSMA) has recommended that all physicians drop out of the Medicaid program in order to protect themselves from underpayment for their services.

What about the patients otherwise qualified for Medicaid who need health care? OSMA has provided no recommendation. Do the physicians simply refuse to see those patients if they cannot pay cash for their services? Would some physicians agree to see them on a charitable basis at the risk of having their schedules swamped because too many others would continue to boycott the patients until their fee demands were met?

Although we can sympathize with physicians who are being requested to practice in a toxic environment because of unreasonable policy decisions made by the politicians, we can also be troubled by their abandonment of the needy patients who seem to be the real victims here. This is not unlike some members of Congress who have repeatedly voted to repeal the Affordable Care Act yet have offered no replacement to ensure that people can get the health care that they need.

We could replace the politicians who have refused to enact policies that would ensure health care for everyone. Physicians could also replace their medical association delegates with those who follow modern Hippocratic traditions: “I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.”

What was it the OSMA president said? “We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” but they are left with little other choice than to abandon them. Really?

Update:

It appears that they may receive a reprieve with a new proposal from the state Medicaid agency, but that does not excuse them from the fact that they were willing to abandon their Medicaid patients.

Oklahoma physician leaders vote to abandon Medicaid patients

Oklahoma State Medical Association urges doctors to mull leaving Medicaid over 25 percent rate cut

By Barbara Hoberock
Tulsa World, April 1, 2016

Oklahoma State Medical Association leaders have voted unanimously to urge members to consider dropping out of Medicaid.

The association’s executive committee took the unanimous vote on Wednesday following an announcement earlier in the week by the Oklahoma Health Care Authority that Medicaid rates could be cut by as much as 25 percent effective June 1.

For the current fiscal year, the state has seen a deepening revenue failure requiring state-appropriated agencies to make cuts.

“We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” said OSMA President Woody Jenkins. “But a 25 percent rate cut, combined with previous cuts that had already been made in recent years, will leave many of our members with little choice.”

He said the association in coming days will be offering guidance on its website for doctors on how to opt out of the Medicaid program.

http://www.tulsaworld.com/homepagelatest/oklahoma-state-medical-association-urges-doctors-to-mull-leaving-medicaid/article_8f6feba5-dd9f-56eb-9c74-ff3eac146838.html

***

KGOU Update:

The third part of the plan would restore the Medicaid reimbursement rate to 86.5 percent of Medicare. Earlier this week, the Oklahoma Health Care Authority proposed reducing the reimbursement rate to providers by 25 percent as a result of the estimated $1.3 billion general revenue shortfall in the upcoming fiscal year.

http://kgou.org/post/oklahoma-health-care-authority-proposes-plan-insure-more-oklahomans#stream/0

One of the flaws in our fragmented, multi-payer system of financing health care is that low-income patients tend to be lumped into the Medicaid program. Since it is a welfare program serving individuals who do not command much political capital, politicians are more willing to use cuts in Medicaid to balance their budgets than cuts for programs designed to serve the general population such as Medicare and Social Security. What lessons can Oklahoma’s proposed 25 percent cut in Medicaid rates provide for us?

As a welfare program, Medicaid does remain chronically underfunded. As such, access problems occur because of a lack of willing providers since there is reluctance on the part of others to accept the lower Medicaid rates. But should the less fortunate members of society be relegated to a lower standard of health care, or should everyone have the equivalent access to essential health care services? That question has been answered by our politicians even if it was never asked.

That said, what response should organized medicine have to these cuts in Medicaid? Perhaps we should ask whom they perceive as being victimized here. The Oklahoma State Medical Association (OSMA) has recommended that all physicians drop out of the Medicaid program in order to protect themselves from underpayment for their services.

What about the patients otherwise qualified for Medicaid who need health care? OSMA has provided no recommendation. Do the physicians simply refuse to see those patients if they cannot pay cash for their services? Would some physicians agree to see them on a charitable basis at the risk of having their schedules swamped because too many others would continue to boycott the patients until their fee demands were met?

Although we can sympathize with physicians who are being requested to practice in a toxic environment because of unreasonable policy decisions made by the politicians, we can also be troubled by their abandonment of the needy patients who seem to be the real victims here. This is not unlike some members of Congress who have repeatedly voted to repeal the Affordable Care Act yet have offered no replacement to ensure that people can get the health care that they need.

We could replace the politicians who have refused to enact policies that would ensure health care for everyone. Physicians could also replace their medical association delegates with those who follow modern Hippocratic traditions: “I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.”

What was it the OSMA president said? “We are fully aware this will create an access-to-care crisis for rural residents, vulnerable seniors, the disabled and the nearly 60 percent of Oklahoma babies born under Medicaid,” but they are left with little other choice than to abandon them. Really?

Update:

It appears that they may receive a reprieve with a new proposal from the state Medicaid agency, but that does not excuse them from the fact that they were willing to abandon their Medicaid patients.

Who isn’t insured, and how can we change that?

Who Are the Remaining Uninsured, and What Do Their Characteristics Tell Us About How to Reach Them?

By Linda J. Blumberg, Michael Karpman, Matthew Buettgens, and Patricia Solleveld
Robert Wood Johnson Foundation
Urban Institute, March 2016

From the Introduction

Although the ACA was not designed to eliminate uninsurance, a detailed assessment of those remaining uninsured after reform can provide insight into the potential to increase coverage further.

Main Findings

*  According to the CPS-ASEC, 32.9 million nonelderly residents of the United States remained uninsured as of March 2015, constituting 12.2 percent of the total non-elderly, civilian, non-institutionalized population of the country.

*  The rate of uninsurance is significantly higher in (Medicaid) nonexpansion states, where 15.4 percent of the nonelderly are uninsured compared with only 10.1 percent in expansion states, a relative difference of over 50 percent.

*  About 28 percent of the uninsured are eligible for Medicaid or the Children’s Health Insurance Program (Medicaid/CHIP), and 21 percent are eligible for marketplace tax credits.

*  Fully 66.5 percent of uninsured children are eligible for Medicaid/CHIP compared with only 20.6 percent of uninsured adults.

*  We posit that the uninsured who are eligible for the greatest amount of financial assistance under the ACA — 12.4 million uninsured in total — are those for whom additional outreach and enrollment efforts are likely to be most successful.

*  Absent further policy changes (e.g., more states expanding Medicaid, increased financial assistance, and expanded eligibility for assistance), we do not expect that a substantial share of the other uninsured — who constitute 20.6 million of the total — will gain coverage.

*  Targeting of resources to those 12.4 million uninsured with the greatest potential to enroll in either Medicaid/CHIP or marketplace coverage can be improved by understanding their characteristics.

From the Conclusion

Our analysis of the CPS-ASEC combined with past work on program participation rates and case studies on insurance enrollment behavior under the ACA suggests that two subpopulations of the uninsured have the most promise in further expanding coverage: the Medicaid eligible and the low-income marketplace tax credit eligible. These are the uninsured eligible for the most comprehensive coverage at the lowest direct cost under current law, and those eligible for this level of assistance have relatively high rates of participation in health insurance programs. Together, these subgroups account for 37.5 percent of the remaining uninsured, or approximately 12.4 million people.

Under current law, however, expectations of increasing coverage substantially among the other 62.5 percent of the remaining uninsured should be tempered. Although some additional coverage within these groups is likely as the individual mandate penalties increase and information on available coverage alternatives spread further, gains are likely to be quite modest unless further financial assistance is provided.

http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2016/rwjf427898

***

Comment:

By Don McCanne, M.D.

Perhaps the most important statement in this report on the remaining uninsured is the following: “The ACA was not designed to eliminate uninsurance.” It should be no surprise that we are left with trying to figure out why so many are uninsured and who they are when the architects of the Affordable Care Act abandoned, in advance, any effort to make health care insurance truly universal.

If there is good news in this report it is that there are two groups in which, with concerted effort, we can increase rates of enrollment: the uninsured eligible for Medicaid/CHIP, and the lower-income uninsured eligible for government subsidies for ACA exchange plans. These eligible individuals are more likely to accept coverage because government subsidies make it free or very low cost to them. But those eligible are still a minority of the uninsured – 12.4 million individuals.

The majority of the uninsured – 62.5 percent, 20.6 million individuals – have no publicly-supported programs available for them and are likely to remain uninsured. It has been suggested that we can expand coverage through incremental changes in ACA, but, because of political, logistical and financial barriers, it would be very difficult to design add-on programs that would be effective in bringing these individuals under the coverage umbrella.

Another problem is that a static picture at one point in time does not lead to policies that would address the instability in coverage due to changes in income, employment, age, residency, and other requirements that determine the type of coverage for which an individual may or may not be eligible. As we work on the front end to expand coverage to the currently uninsured, people are falling off of the back end as they lose their coverage and may face new barriers to transitioning to other programs. This instability makes it virtually impossible to ever cover everyone simultaneously under our fragmented system that has been perpetuated by ACA.

So do we want everyone insured? I would say absolutely yes, but it is not going to happen under a system that was clearly not designed to do that. In contrast, an Improved Medicare for All would be designed to actually cover everyone, permanently, not to mention the multitude of other social and health benefits that it would bring to all of us.

Who isn’t insured, and how can we change that?

Who Are the Remaining Uninsured, and What Do Their Characteristics Tell Us About How to Reach Them?

By Linda J. Blumberg, Michael Karpman, Matthew Buettgens, and Patricia Solleveld
Robert Wood Johnson Foundation
Urban Institute, March 2016

From the Introduction

Although the ACA was not designed to eliminate uninsurance, a detailed assessment of those remaining uninsured after reform can provide insight into the potential to increase coverage further.

Main Findings

*  According to the CPS-ASEC, 32.9 million nonelderly residents of the United States remained uninsured as of March 2015, constituting 12.2 percent of the total non-elderly, civilian, non-institutionalized population of the country.

*  The rate of uninsurance is significantly higher in (Medicaid) nonexpansion states, where 15.4 percent of the nonelderly are uninsured compared with only 10.1 percent in expansion states, a relative difference of over 50 percent.

*  About 28 percent of the uninsured are eligible for Medicaid or the Children’s Health Insurance Program (Medicaid/CHIP), and 21 percent are eligible for marketplace tax credits.

*  Fully 66.5 percent of uninsured children are eligible for Medicaid/CHIP compared with only 20.6 percent of uninsured adults.

*  We posit that the uninsured who are eligible for the greatest amount of financial assistance under the ACA — 12.4 million uninsured in total — are those for whom additional outreach and enrollment efforts are likely to be most successful.

*  Absent further policy changes (e.g., more states expanding Medicaid, increased financial assistance, and expanded eligibility for assistance), we do not expect that a substantial share of the other uninsured — who constitute 20.6 million of the total — will gain coverage.

*  Targeting of resources to those 12.4 million uninsured with the greatest potential to enroll in either Medicaid/CHIP or marketplace coverage can be improved by understanding their characteristics.

From the Conclusion

Our analysis of the CPS-ASEC combined with past work on program participation rates and case studies on insurance enrollment behavior under the ACA suggests that two subpopulations of the uninsured have the most promise in further expanding coverage: the Medicaid eligible and the low-income marketplace tax credit eligible. These are the uninsured eligible for the most comprehensive coverage at the lowest direct cost under current law, and those eligible for this level of assistance have relatively high rates of participation in health insurance programs. Together, these subgroups account for 37.5 percent of the remaining uninsured, or approximately 12.4 million people.

Under current law, however, expectations of increasing coverage substantially among the other 62.5 percent of the remaining uninsured should be tempered. Although some additional coverage within these groups is likely as the individual mandate penalties increase and information on available coverage alternatives spread further, gains are likely to be quite modest unless further financial assistance is provided.

http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2016/rwjf427898

Perhaps the most important statement in this report on the remaining uninsured is the following: “The ACA was not designed to eliminate uninsurance.” It should be no surprise that we are left with trying to figure out why so many are uninsured and who they are when the architects of the Affordable Care Act abandoned, in advance, any effort to make health care insurance truly universal.

If there is good news in this report it is that there are two groups in which, with concerted effort, we can increase rates of enrollment: the uninsured eligible for Medicaid/CHIP, and the lower-income uninsured eligible for government subsidies for ACA exchange plans. These eligible individuals are more likely to accept coverage because government subsidies make it free or very low cost to them. But those eligible are still a minority of the uninsured – 12.4 million individuals.

The majority of the uninsured – 62.5 percent, 20.6 million individuals – have no publicly-supported programs available for them and are likely to remain uninsured. It has been suggested that we can expand coverage through incremental changes in ACA, but, because of political, logistical and financial barriers, it would be very difficult to design add-on programs that would be effective in bringing these individuals under the coverage umbrella.

Another problem is that a static picture at one point in time does not lead to policies that would address the instability in coverage due to changes in income, employment, age, residency, and other requirements that determine the type of coverage for which an individual may or may not be eligible. As we work on the front end to expand coverage to the currently uninsured, people are falling off of the back end as they lose their coverage and may face new barriers to transitioning to other programs. This instability makes it virtually impossible to ever cover everyone simultaneously under our fragmented system that has been perpetuated by ACA.

So do we want everyone insured? I would say absolutely yes, but it is not going to happen under a system that was clearly not designed to do that. In contrast, an Improved Medicare for All would be designed to actually cover everyone, permanently, not to mention the multitude of other social and health benefits that it would bring to all of us.

Better Care for the Poor, More Return on Cost

By Jack Bernard
The Wall Street Journal, Letters, March 29, 2016

Re: Dr. Scott Atlas’s “How to Fix the Scandal of Medicaid and the Poor” (op-ed, March 16):

Dr. Atlas is correct about many of the problems faced by Medicaid, but his cure is worse than the disease. The fact is the poor can’t afford to go the high-deductible or health-savings-account route. Yes, they will ask for less care, as Dr. Atlas states, but he seems to forget that people don’t go to doctors for the joy of the experience. They go because they are ill.

A more effective direction would be to expand the Medicare program by moving these individuals into it. In fact, if you examine per capita health expenditures of the U.S. versus other developed nations, our costs are much higher because we do not have national universal health insurance — Medicare for all.

Jack Bernard is a former head of health planning for Georgia. He resides in Peachtree City, Ga.

http://www.wsj.com/articles/better-care-for-the-poor-more-return-on-cost-1459176633

IMPORTANT: ACA-compliant plans have been subjected to adverse selection

Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

BlueCross BlueShield, March 2016

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

***

Comment:

By Don McCanne, M.D.

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care – 22 percent higher in 2015. Adverse selection – concentrating more costly patients in the ACA-compliant plans – was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients’ choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad news for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection – the individuals pooled in these plans have greater medical needs and thus are more expensive – driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.

IMPORTANT: ACA-compliant plans have been subjected to adverse selection

Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

BlueCross BlueShield, March 2016

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care – 22 percent higher in 2015. Adverse selection – concentrating more costly patients in the ACA-compliant plans – was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients’ choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad news for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection – the individuals pooled in these plans have greater medical needs and thus are more expensive – driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.

Financing health care with consumer loans

Mortgages For Expensive Health Care? Some Experts Think It Can Work.

By Michelle Andrews
Kaiser Health News, March 29, 2016

A Massachusetts Institute of Technology economist and Harvard oncologist have a proposal to get highly effective but prohibitively expensive drugs into consumers’ hands: health care installment loans.

Writing last month in the journal Science Translational Medicine, the authors liken drug loans to mortgages, noting that both can enable consumers to buy big-ticket items requiring a hefty up-front payment that they could not otherwise afford.

Some consumer advocates and health insurance experts see it differently.

“Isn’t this why we have health insurance?” asked Mark Rukavina, a Boston-based health care consultant whose work has focused on affordability and medical debt. “Insurance used to protect people from financial ruin for these unpredictable, costly occurrences. Now, with large deductibles, we’ve got coverage for preventive care but not for treatment.”

Andrew Lo, a financial economist at MIT’s Sloan School of Management, and Dr. David Weinstock, an oncologist at the Harvard-affiliated Dana-Farber Cancer Institute, agree that insurance would be a better option. But for many consumers that isn’t enough protection these days.

“This is a private sector stopgap way to deal with something right now,” said Lo.

Their proposal calls for the loans to be financed by a pool of investors who would buy bonds and equities issued by an organization that makes the loans to consumers.

While it’s “distasteful” to talk about patients mortgaging their lives for treatment, Lo said, they hope the proposal will spur change.

http://khn.org/news/mortgages-for-expensive-health-care-some-experts-think-it-can-work/

***

Buying cures versus renting health: Financing health care with consumer loans

By Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo
Science Translational Medicine, February 24, 2016

Abstract

A crisis is building over the prices of new transformative therapies for cancer, hepatitis C virus infection, and rare diseases. The clinical imperative is to offer these therapies as broadly and rapidly as possible. We propose a practical way to increase drug affordability through health care loans (HCLs) — the equivalent of mortgages for large health care expenses. HCLs allow patients in both multipayer and single-payer markets to access a broader set of therapeutics, including expensive short-duration treatments that are curative. HCLs also link payment to clinical benefit and should help lower per-patient cost while incentivizing the development of transformative therapies rather than those that offer small incremental advances. Moreover, we propose the use of securitization — a well-known financial engineering method — to finance a large diversified pool of HCLs through both debt and equity. Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry.

The Role of Health Insurance

Large copays are antithetical to the very purpose of health insurance. Hence, our proposal for patients to cover these costs with HCLs is only a short-run bridging solution. A more sustainable and economically more efficient approach to address the high cost of transformative therapies is for insurance companies to cover these costs, spread the amortized costs across their policyholders, finance the upfront payments using securitization, and set premiums at the appropriate levels to cover these costs. In return for larger drug purchases, insurance companies would wield substantial leverage to negotiate lower prices. Also, insurers would presumably borrow at lower interest rates than would individual patients, further reducing the overall financing cost of these therapies.

Conclusion

The burden of upfront payment for curative therapies makes it challenging for public and private payers to afford universal access to potentially life-saving therapies. To address this issue, we considered a new financing paradigm in which portfolio theory and securitization techniques are used to finance HCLs whose repayment is linked to ongoing value. By estimating the post-treatment mortality rates of the patients and using statistical models to gauge the default characteristics of these loans, we demonstrate viability under current practical conditions. Securitization brings new participants (for example, pension funds, mutual funds, and life insurance companies) into the financing pool and helps transform a set of disjointed and sometimes competing interests into a more cooperative system focused on improving care. HCLs, not unlike student loans, auto loans, and home mortgages, can improve access to the best health care for the less affluent.

Considering the extremely large burden of certain diseases, such as HCV, for which cures already exist, and the many transformative therapies on the horizon, developing more efficient financing methods is now a matter of life and death. Taking action is no longer a choice but has become a necessity.

http://stm.sciencemag.org/content/8/327/327ps6.full

***

Comment:

By Don McCanne, M.D.

So the answer to outrageously priced drugs is to pay for them through health care loans (HCLs) – the equivalent of mortgages – and then use securitization “to finance a large diversified pool of HCLs through both debt and equity.” Did we not learn anything from the subprime mortgage crisis? Just as securitization of subprime loans became a “necessity,” securitization of HCLs is now not only supposedly necessary to prevent personal insolvency, it is, according to Andrew Lo, et al, “a matter of life and death.”

In Lo’s words, “While it’s ‘distasteful’ to talk about patients mortgaging their lives for treatment, they hope the proposal will spur change.”

Oh my.

An improved Medicare for all with first dollar coverage would eliminate any need to consider such an inhumane concept.

Medicare-For-All is Winning the Debate

By Joseph Sparks   
Sparks Remarks Blog, March 23, 2016

Medicare-for-all advocates should rejoice. You are winning the debate. No one has refuted the benefits of this proposed single-payer health care system. The arguments that have been presented against Medicare-for-all have been wrong, misleading, and disingenuous. Even the haggling over cost is not much of a dispute. This issue is not whether Medicare-for-all will save money—it will—it is just a question of how MUCH will be saved.

The benefits of Medicare-for-all include: one, it covers everybody. No more time needs to be spent figuring what insurance to buy or what your policy covers.

Two, it eliminates co-payments and deductibles, making health care affordable and accessible to all. No more worrying about whether you can afford medical care or whether the co-payments and deductibles will cause bankruptcy.

Three, it covers more benefits than most current insurance. For example, Medicare-for-all covers vision and dental, benefits that many insurance policies lack.

Four, it provides the freedom to choose any hospital or medical professional. Under Medicare-for-all you can choose any physician you want, and you can stay with that doctor no matter how many times you change jobs. No longer will your choice be limited by the insurance companies’ ability to get the best rate without regard to quality.

Five, it allows the physician to determine the best course of treatment based on need, not based on whether your insurance policy covers the treatment or whether you can afford it.

While no one disputes the benefits, many are engaged in misstatements about Medicare-for-all that make egregious errors, including a major media outlet. The Washington Post said this:

“Health-care costs have been moderating in recent years, a fact the Sanders plan relies on to balance its books. However, a major reason for that cost containment has been the rise of high-deductible plans of precisely the kind Mr. Sanders wants to eliminate; cost-sharing encourages people to avoid unnecessary tests and other wasteful expenses.”

There are at least three errors in the above statement. First, there is very little, if any, evidence to support this statement. Second, in recent years, medical costs have been moderating in most developed countries, even the ones that have no co-payments or deductibles. Third, if high-deductible plans are necessary to contain costs, then how do they explain that countries with single-payer systems that lack co-payments or deductibles, such Canada and England, have substantially lower costs than the U.S.? On a per-capita basis, we spend twice as much as Canada and more than 2.5 times what England spends on health care. If high-deductibles were necessary to keep health care costs down, then both England and Canada should have much higher health care costs than the U.S.

The best response to the claim that people would overuse health care if it were free was this comment, “Gee honey, I have nothing to do today. I think I’ll go get a colonoscopy.”

High-deductible plans do achieve one result. They cause people to forgo needed medical care because they cannot afford it, aggravating the continuing problem with underinsurance.

An often-stated misleading and possibly disingenuous statement about Medicare-for-all is that it is unclear whether you can keep your health care plan if you want. Since insurance is unnecessary under a Medicare-for-all system, no plan is needed. Generally, people want to keep their plans because they can use the doctor they want and/or the out-of-pocket costs are affordable. A Medicare-for-all plan, as already mentioned, allows you to choose any doctor and eliminates out-of-pocket expenses, something that almost no health insurance plans match.

A statement that is definitely misleading and disingenuous is that Medicare-for-all will raise taxes because it neglects to mention that it will save money for a substantial majority of the population. Gerald Friedman, an economist who has studied single-payer economics for many years, estimates that Medicare-for-all will save or reduce health care costs for at least 95 percent of the population. For example, a family that makes $50,000 per year will pay an extra $466 in taxes, but the savings from no premiums, no deductibles and no co-pays produces a net saving of $5,807.

Now there has been some debate about how many people will save from a Medicare-for-all plan. Kevin Thorpe, a Health Policy and Management professor, argues that Friedman’s savings estimates are too high, but even Thorpe concedes that more than 70 percent of working families will save money.

And this brings up to the final issue: cost. Thorpe argues that Friedman’s estimates of the savings are too high. However, Thorpe’s analysis is flawed for a variety of reasons, and his current analysis contradicts some of his previous work that was more in line with Friedman’s numbers.

Another misleading and disingenuous argument is put forth related to cost; it will increase government spending. Certainly, if we went to a Medicare-for-all system, the government would spend more on health care, but it is money that will be spent anyway. In 2014, we spent more than $3 trillion. Does it matter if that burden is paid almost all by the government, or by the government and insurance companies? Yes, because if we move to Medicare-for-all, we save at least $600 billion per year along with all the other previously mentioned benefits of a single-payer system, especially ending the individuals’ financial burden of health care. As one economist, lawyer, and expert on the federal budget said, “[W]e cannot afford not to do so.”

For all these reasons, Medicare-for-all advocates are winning the debate.

Joseph Sparks is a freelance journalist who resides in Washington, D.C. He covers health care, politics, and technology.

http://www.sparksremarks.com/2016/03/23/medicare-for-all-is-winning-the-debate/

Financing health care with consumer loans

Mortgages For Expensive Health Care? Some Experts Think It Can Work.

By Michelle Andrews
Kaiser Health News, March 29, 2016

A Massachusetts Institute of Technology economist and Harvard oncologist have a proposal to get highly effective but prohibitively expensive drugs into consumers’ hands: health care installment loans.

Writing last month in the journal Science Translational Medicine, the authors liken drug loans to mortgages, noting that both can enable consumers to buy big-ticket items requiring a hefty up-front payment that they could not otherwise afford.

Some consumer advocates and health insurance experts see it differently.

“Isn’t this why we have health insurance?” asked Mark Rukavina, a Boston-based health care consultant whose work has focused on affordability and medical debt. “Insurance used to protect people from financial ruin for these unpredictable, costly occurrences. Now, with large deductibles, we’ve got coverage for preventive care but not for treatment.”

Andrew Lo, a financial economist at MIT’s Sloan School of Management, and Dr. David Weinstock, an oncologist at the Harvard-affiliated Dana-Farber Cancer Institute, agree that insurance would be a better option. But for many consumers that isn’t enough protection these days.

“This is a private sector stopgap way to deal with something right now,” said Lo.

Their proposal calls for the loans to be financed by a pool of investors who would buy bonds and equities issued by an organization that makes the loans to consumers.

While it’s “distasteful” to talk about patients mortgaging their lives for treatment, Lo said, they hope the proposal will spur change.

http://khn.org/news/mortgages-for-expensive-health-care-some-experts-think-it-can-work/

***

Buying cures versus renting health: Financing health care with consumer loans

By Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo
Science Translational Medicine, February 24, 2016

Abstract

A crisis is building over the prices of new transformative therapies for cancer, hepatitis C virus infection, and rare diseases. The clinical imperative is to offer these therapies as broadly and rapidly as possible. We propose a practical way to increase drug affordability through health care loans (HCLs) — the equivalent of mortgages for large health care expenses. HCLs allow patients in both multipayer and single-payer markets to access a broader set of therapeutics, including expensive short-duration treatments that are curative. HCLs also link payment to clinical benefit and should help lower per-patient cost while incentivizing the development of transformative therapies rather than those that offer small incremental advances. Moreover, we propose the use of securitization — a well-known financial engineering method — to finance a large diversified pool of HCLs through both debt and equity. Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry.

The Role of Health Insurance

Large copays are antithetical to the very purpose of health insurance. Hence, our proposal for patients to cover these costs with HCLs is only a short-run bridging solution. A more sustainable and economically more efficient approach to address the high cost of transformative therapies is for insurance companies to cover these costs, spread the amortized costs across their policyholders, finance the upfront payments using securitization, and set premiums at the appropriate levels to cover these costs. In return for larger drug purchases, insurance companies would wield substantial leverage to negotiate lower prices. Also, insurers would presumably borrow at lower interest rates than would individual patients, further reducing the overall financing cost of these therapies.

Conclusion

The burden of upfront payment for curative therapies makes it challenging for public and private payers to afford universal access to potentially life-saving therapies. To address this issue, we considered a new financing paradigm in which portfolio theory and securitization techniques are used to finance HCLs whose repayment is linked to ongoing value. By estimating the post-treatment mortality rates of the patients and using statistical models to gauge the default characteristics of these loans, we demonstrate viability under current practical conditions. Securitization brings new participants (for example, pension funds, mutual funds, and life insurance companies) into the financing pool and helps transform a set of disjointed and sometimes competing interests into a more cooperative system focused on improving care. HCLs, not unlike student loans, auto loans, and home mortgages, can improve access to the best health care for the less affluent.

Considering the extremely large burden of certain diseases, such as HCV, for which cures already exist, and the many transformative therapies on the horizon, developing more efficient financing methods is now a matter of life and death. Taking action is no longer a choice but has become a necessity.

http://stm.sciencemag.org/content/8/327/327ps6.full

So the answer to outrageously priced drugs is to pay for them through health care loans (HCLs) – the equivalent of mortgages – and then use securitization “to finance a large diversified pool of HCLs through both debt and equity.” Did we not learn anything from the subprime mortgage crisis? Just as securitization of subprime loans became a “necessity,” securitization of HCLs is now not only supposedly necessary to prevent personal insolvency, it is, according to Andrew Lo, et al, “a matter of life and death.”

In Lo’s words, “While it’s ‘distasteful’ to talk about patients mortgaging their lives for treatment, they hope the proposal will spur change.”

Oh my.

An improved Medicare for all with first dollar coverage would eliminate any need to consider such an inhumane concept.

Part D plans moving from copayments to coinsurance

Majority of Drugs Now Subject to Coinsurance in Medicare Part D Plans

By Caroline F. Pearson
Avalere, March 10, 2016

A new analysis from Avalere finds that a majority of prescription drugs covered by standalone Medicare Part D plans (PDPs) are subject to coinsurance, rather than copayments, in 2016. Coinsurance is when a beneficiary pays a percentage of the cost of the drug, rather than a fixed dollar amount, or copayment. Coinsurance often leads to patients paying more out of pocket compared to fixed dollar amount copayments. The average percentage of covered drugs facing coinsurance has risen sharply from 35 percent in 2014 to 58 percent in 2016 among PDPs. While most PDPs have historically applied coinsurance to high-cost drugs on the specialty tier, plans have extended coinsurance to drugs on lower tiers in recent years, including those covered on preferred and non-preferred brand tiers.

“These very high rates of coinsurance have shifted our understanding of Part D formulary coverage,” said Caroline Pearson, senior vice president at Avalere. “It will be important to monitor what drugs are being placed on various coinsurance tiers and how plans are using these tiers to manage cost and utilization in the program.”

http://avalere.com/expertise/managed-care/insights/majority-of-drugs-now-subject-to-coinsurance-in-medicare-part-d-plans

***

Comment:

By Don McCanne, M.D.

Medicare Part D drug plans are shifting more drugs from a copayment requirement – a fixed dollar amount to be paid for each prescription – to coinsurance – a percentage of the charge for each prescription. This is important because coinsurance payments tend to be higher than copayments – sometimes much higher – especially with the recent increases in drug prices.

Obviously this is simply one more method of shifting the costs of health care to the patient. Many are already finding out-of-pocket costs to be unaffordable, yet it keeps getting worse. This is a one way street. The insurers are not looking for ways to reduce out-of-pocket expenses since they would have to pick up the additional costs which would then make their premiums less affordable, and the last thing that they would want to do is risk losing market share through higher premiums.

Coinsurance is a method of reducing health spending by erecting financial barriers to the care that patients should have. Instead, we should be removing financial barriers to care. That is what an improved Medicare for all with first dollar coverage would do.