Anthem, Express Scripts Face Legal Challenge Over Prescription Drug Prices

By Julie Appleby
Kaiser Health News, July 1, 2016

Anthem and its pharmacy manager Express Scripts overcharged patients with job-based insurance for prescription drugs, alleges a lawsuit that seeks class action status for what could be tens of thousands of Americans.

It’s the latest wrinkle in a battle that has already pitted the major national insurer and its pharmacy benefit manager (PBM) against each other in dueling legal actions — and further illustrates the complicated set of factors that determine what consumers pay for prescription medications.

The case alleges that insured workers paid too much because Express Scripts charged “above competitive pricing levels” and Anthem, in effect, allowed those higher prices as part of a 10-year contract deal with the pharmacy management firm.

Recently, some independent pharmacists have complained that some PBMs are charging insured consumers more than the cash price for some generic drugs.

And for years, questions have been raised about whether the industry fully discloses how much it is actually saving insurer and employer clients — and what portion of those savings are actually passed along to consumers.

“It’s such a complicated web of intermediaries that stand between consumers and the prices they pay,” said Erin Fuse Brown, an assistant professor of law at Georgia State University College of Law. “As a result, no one knows if they’re getting ripped off.”

Anthem’s lawsuit aims to end its contract with the PBM and seeks $15 billion in damages for what it alleges was the PBM’s failure to renegotiate lower prices for prescriptions. Anthem used to run its own PBM, but sold it to Express Scripts in 2009 as part of the contract deal, court documents show.

In its counterclaims, Express Scripts said the insurer rejected several proposals to renegotiate prices. In addition, Express Scripts’ legal document says Anthem was offered a choice of “less money up front but lower pricing” or a bigger upfront payment “with higher pricing for Express Scripts’ services.” It chose the higher prices over the course of the contract in exchange $4.6 billion more in upfront fees, according to the PBM’s counterclaim. That money, Express Scripts’ documents allege, was then used by Anthem to buy back its own stock, rather than passing it along to health plan members. The stock buyback “applied upward pressure to Anthem’s stock price, thereby enriching shareholders and management,” the filing alleges.

http://khn.org/news/anthem-express-scripts-face-legal-challenge-over-prescription-drug-prices/

===

Decoding Big Pharma’s Secret Drug Pricing Practices

By Robert Langreth, Michael Keller and Christopher Cannon
Bloomberg, June 29, 2016

The pharmaceutical industry has long said that list prices aren’t a reliable indicator of what Americans pay for prescription drugs because big customers, including health insurers and pharmacy benefit managers, negotiate discounts. But a Bloomberg analysis of 39 medicines with global sales of more than $1 billion a year showed that 30 of them logged price increases of more than double the rate of inflation from 2009 to 2015, even after estimated discounts were factored in. Only six drugs had price increases in line with or below inflation.

(A large number of specific examples are provided in the article.)

http://www.bloomberg.com/graphics/2016-drug-prices/

===

Comment:

By Don McCanne, M.D.

Pharmaceutical companies, insurers and pharmacy benefit managers each conspire, with each other and independently, to get the maximum financial gain that prescription drug market dynamics will allow. Health care funds pour into these industries, and patients end up the losers.

What would it be like if pharmaceutical firms all converted to non-profit status and then negotiated earnestly with the public stewards of a single payer national health program? Health care funds would no longer be drained off to passive investors and to exorbitant executive salaries and benefits, and patients would end up the winners.

Anthem, Express Scripts Face Legal Challenge Over Prescription Drug Prices

By Julie Appleby
Kaiser Health News, July 1, 2016

Anthem and its pharmacy manager Express Scripts overcharged patients with job-based insurance for prescription drugs, alleges a lawsuit that seeks class action status for what could be tens of thousands of Americans.

It’s the latest wrinkle in a battle that has already pitted the major national insurer and its pharmacy benefit manager (PBM) against each other in dueling legal actions — and further illustrates the complicated set of factors that determine what consumers pay for prescription medications.

The case alleges that insured workers paid too much because Express Scripts charged “above competitive pricing levels” and Anthem, in effect, allowed those higher prices as part of a 10-year contract deal with the pharmacy management firm.

Recently, some independent pharmacists have complained that some PBMs are charging insured consumers more than the cash price for some generic drugs.

And for years, questions have been raised about whether the industry fully discloses how much it is actually saving insurer and employer clients — and what portion of those savings are actually passed along to consumers.

“It’s such a complicated web of intermediaries that stand between consumers and the prices they pay,” said Erin Fuse Brown, an assistant professor of law at Georgia State University College of Law. “As a result, no one knows if they’re getting ripped off.”

Anthem’s lawsuit aims to end its contract with the PBM and seeks $15 billion in damages for what it alleges was the PBM’s failure to renegotiate lower prices for prescriptions. Anthem used to run its own PBM, but sold it to Express Scripts in 2009 as part of the contract deal, court documents show.

In its counterclaims, Express Scripts said the insurer rejected several proposals to renegotiate prices. In addition, Express Scripts’ legal document says Anthem was offered a choice of “less money up front but lower pricing” or a bigger upfront payment “with higher pricing for Express Scripts’ services.” It chose the higher prices over the course of the contract in exchange $4.6 billion more in upfront fees, according to the PBM’s counterclaim. That money, Express Scripts’ documents allege, was then used by Anthem to buy back its own stock, rather than passing it along to health plan members. The stock buyback “applied upward pressure to Anthem’s stock price, thereby enriching shareholders and management,” the filing alleges.

http://khn.org/news/anthem-express-scripts-face-legal-challenge-over-prescription-drug-prices/

===

Decoding Big Pharma’s Secret Drug Pricing Practices

By Robert Langreth, Michael Keller and Christopher Cannon
Bloomberg, June 29, 2016

The pharmaceutical industry has long said that list prices aren’t a reliable indicator of what Americans pay for prescription drugs because big customers, including health insurers and pharmacy benefit managers, negotiate discounts. But a Bloomberg analysis of 39 medicines with global sales of more than $1 billion a year showed that 30 of them logged price increases of more than double the rate of inflation from 2009 to 2015, even after estimated discounts were factored in. Only six drugs had price increases in line with or below inflation.

(A large number of specific examples are provided in the article.)

http://www.bloomberg.com/graphics/2016-drug-prices/

Pharmaceutical companies, insurers and pharmacy benefit managers each conspire, with each other and independently, to get the maximum financial gain that prescription drug market dynamics will allow. Health care funds pour into these industries, and patients end up the losers.

What would it be like if pharmaceutical firms all converted to non-profit status and then negotiated earnestly with the public stewards of a single payer national health program? Health care funds would no longer be drained off to passive investors and to exorbitant executive salaries and benefits, and patients would end up the winners.

The Biggest Obstacle to the Health-Care Revolution

By David Blumenthal
The Wall Street Journal, June 28, 2016

The digitization of our health-care system is well under way, but several obstacles frustrate efforts to take full advantage of the health information revolution.  Perhaps the most important is our difficulty moving patients’ data, so that records can follow patients as they go from one site of care to another.

Moving health data goes by the technical term “health information exchange” or HIE. There are some technical barriers to HIE, but they are not the big problems. The big problems are economic and cultural.

The American health system consists of competing economic entities: health systems, hospitals, nursing homes and doctors, to name a few. State and federal authorities zealously enforce antitrust laws to assure that local health-care competition remains strong. But health providers’ data about their patients is a valuable economic asset that some doctors and hospitals are understandably reluctant to share with their competitors down the street. Many patients stick with clinicians and hospitals in part because that’s where their records are. If the records can travel, so may patients, taking their business with them. Also, many providers believe that they – not patients — own that information, and have no obligation to share it.

A recent federal report cites this “information blocking” by providers as an important obstacle to HIE. Legislative and regulatory remedies to information blocking are under review, but there may be another, equally powerful route to HIE: giving patients their records so they can decide who can have them and when.

The idea is simple. Under provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), providers must share patients’ records within 30 days on request. Instead of doctors or hospitals totally controlling their health information, patients could take charge. Managing this information may be challenging for some patients, but they could retain third parties that, for a fee, would steward and distribute health-care data as directed. Patients could designate particular clinicians or institutions, or family members and caretakers, as entitled to access. If so inclined, patients could also share their health information with researchers or public health authorities. Some call this “consumer-mediated health information exchange.” A robust new business sector could provide these data services to interested patients.

To move forward with consumer-mediated HIE, several steps will be required. First, the federal government needs to more aggressively enforce HIPAA’s information-sharing provisions. Second, we need a new cohort of health-data stewards who can help patients manage their own data. Some process of private certification or public regulation will likely be necessary to assure that these new entities can be trusted to discharge this sensitive and complex responsibility. Third, we will need to perfect the technical ability of these new data stewards to access the electronic-data repositories of health-care providers.

Dr. David Blumenthal is the president of the Commonwealth Fund, a national health-care philanthropy based in New York. From 2009 to 2011, he served as the National Coordinator for Health Information Technology, with the charge to build an interoperable, private, and secure nationwide health information system and to support the widespread, meaningful use of health IT.

http://blogs.wsj.com/experts/2016/06/28/how-to-make-health-care-records-as-mobile-as-patients/

***

Comment:

By Don McCanne, M.D.

We have some serious problems in health care that need our immediate attention such as administrative  excesses, wasteful spending, impaired access, maldistribution of health care resources, and financial barriers to care. But the health policy community is entrenched in efforts to expand the administrative oversight of our system as somehow being the solution to problems they seem not to have defined. They are adding to the problem of administrative excesses while ignoring what really needs to be done.

David Blumenthal, having been our National Coordinator for Health Information Technology, seems to define the problem as a lack of health data management through a health information exchange. He would create a “robust new business sector” – a “consumer-mediated health information exchange” – providing data services to patients. Just what we need – more administrative excesses!

Right now our government and the health care industry are deeply involved in drafting rules for the Merit-based Incentive Performance System (MIPS) and the alternative payment model (APM) option as more studies are showing that such efforts are impairing professional satisfaction and increasing physician burnout –  more administrative excesses with detrimental outcomes!

We need to start thinking about the patients and a health care system that would best serve their needs. A single payer national health program is specifically designed to address the real problems noted in the first paragraph above. Patients are not looking to interact with personal data managers; they want health care, and they want it now.

The Biggest Obstacle to the Health-Care Revolution

By David Blumenthal
The Wall Street Journal, June 28, 2016

The digitization of our health-care system is well under way, but several obstacles frustrate efforts to take full advantage of the health information revolution.  Perhaps the most important is our difficulty moving patients’ data, so that records can follow patients as they go from one site of care to another.

Moving health data goes by the technical term “health information exchange” or HIE. There are some technical barriers to HIE, but they are not the big problems. The big problems are economic and cultural.

The American health system consists of competing economic entities: health systems, hospitals, nursing homes and doctors, to name a few. State and federal authorities zealously enforce antitrust laws to assure that local health-care competition remains strong. But health providers’ data about their patients is a valuable economic asset that some doctors and hospitals are understandably reluctant to share with their competitors down the street. Many patients stick with clinicians and hospitals in part because that’s where their records are. If the records can travel, so may patients, taking their business with them. Also, many providers believe that they – not patients — own that information, and have no obligation to share it.

A recent federal report cites this “information blocking” by providers as an important obstacle to HIE. Legislative and regulatory remedies to information blocking are under review, but there may be another, equally powerful route to HIE: giving patients their records so they can decide who can have them and when.

The idea is simple. Under provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), providers must share patients’ records within 30 days on request. Instead of doctors or hospitals totally controlling their health information, patients could take charge. Managing this information may be challenging for some patients, but they could retain third parties that, for a fee, would steward and distribute health-care data as directed. Patients could designate particular clinicians or institutions, or family members and caretakers, as entitled to access. If so inclined, patients could also share their health information with researchers or public health authorities. Some call this “consumer-mediated health information exchange.” A robust new business sector could provide these data services to interested patients.

To move forward with consumer-mediated HIE, several steps will be required. First, the federal government needs to more aggressively enforce HIPAA’s information-sharing provisions. Second, we need a new cohort of health-data stewards who can help patients manage their own data. Some process of private certification or public regulation will likely be necessary to assure that these new entities can be trusted to discharge this sensitive and complex responsibility. Third, we will need to perfect the technical ability of these new data stewards to access the electronic-data repositories of health-care providers.

Dr. David Blumenthal is the president of the Commonwealth Fund, a national health-care philanthropy based in New York. From 2009 to 2011, he served as the National Coordinator for Health Information Technology, with the charge to build an interoperable, private, and secure nationwide health information system and to support the widespread, meaningful use of health IT.

http://blogs.wsj.com/experts/2016/06/28/how-to-make-health-care-records-as-mobile-as-patients/

We have some serious problems in health care that need our immediate attention such as administrative  excesses, wasteful spending, impaired access, maldistribution of health care resources, and financial barriers to care. But the health policy community is entrenched in efforts to expand the administrative oversight of our system as somehow being the solution to problems they seem not to have defined. They are adding to the problem of administrative excesses while ignoring what really needs to be done.

David Blumenthal, having been our National Coordinator for Health Information Technology, seems to define the problem as a lack of health data management through a health information exchange. He would create a “robust new business sector” – a “consumer-mediated health information exchange” – providing data services to patients. Just what we need – more administrative excesses!

Right now our government and the health care industry are deeply involved in drafting rules for the Merit-based Incentive Performance System (MIPS) and the alternative payment model (APM) option as more studies are showing that such efforts are impairing professional satisfaction and increasing physician burnout –  more administrative excesses with detrimental outcomes!

We need to start thinking about the patients and a health care system that would best serve their needs. A single payer national health program is specifically designed to address the real problems noted in the first paragraph above. Patients are not looking to interact with personal data managers; they want health care, and they want it now.

Low Prices for Vaccines Can Come at a Great Cost

By Austin Frakt
The New York Times, June 27, 2016

A $30,000 price tag for cancer drug therapy that extends life only a few weeks is understandably alarming. But a $2,000 price tag for all childhood vaccines — credited with eradicating smallpox, preventing a million or more cases of other diseases and averting thousands of deaths each year — is a bargain. In fact, the price of childhood vaccines may be too low for our own good because it contributes to shortages.

Vaccine shortages have popped up in the United States many times over the past 50 years. In 2001, eight of 11 recommended childhood vaccines were unavailable or in short supply.

Vaccine prices have gone up over the years, in large part because of newer vaccines that command higher prices. The number of recommended vaccine doses has also increased, which pushes up the overall cost of full vaccination. Still, vaccines are inexpensive relative to their value. A typical dose costs $50 and, apart from an annual flu shot, only a few doses are required over a lifetime. According to the Duke study, vaccines with lower prices were more likely to be in short supply than those with higher prices. There were no shortages of vaccines with a price per dose above $75.

Commercial market vaccine prices are higher than government ones, but not by enough to prevent shortages.

We probably don’t need to raise vaccine prices by a factor of 10 to promote new vaccine investment and stabilize supply. According to one study, a doubling in price would incentivize new vaccine research, development and production.

For drugs as valuable as vaccines, that might be a price worth paying.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

***

NYT Reader Comment:

By Don McCanne
San Juan Capistrano, CA

Are vaccines developed primarily to move wealth from the masses to corporate executives and passive investors? Or are they developed to reduce grief and suffering for all of us?

As a child, I remember putting dimes in the March of Dimes cardboard donor cards, because it was the right thing to do. As a medical student, I remember the iron lungs at San Francisco General Hospital. I remember Jonas Salk saying to Edward R. Morrow about polio vaccine, “There is no patent. Could you patent the sun?” It has been decades since I’ve seen an iron lung.

Piketty and Saez have shown us what happened: We have moved from the post-war egalitarian society in which our nation thrived by directing production to the common good, and now onto a society that transfers income and wealth to the richest amongst us, even if that means that many will have to do without vaccines because they are not affordable.

Would Jonas Salk rather have been known as a person who became wealthy from a patent on a vaccine, or as a person who helped virtually eliminate polio from the earth? Altruism is still out there. We need to unlock it from from the shackles of the rent seekers.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

***

Dealing with vaccine shortages: current situation and ongoing activities

By Dr. Oleg Benes
World Health Organization, April 12-14, 2016

The way forward…

Paradigm change
  * Global solutions to address global challenges
  * Strategic supply management vs transactions

Risk management ESSENTIALS
  * Identification & assessment & management

Systemic approach
  * Articulated policy & strategies
  * Monitoring & early-warning systems

Commitment & collaboration
  * WHO, Member States, regional institutions, partners & industry

http://www.who.int/immunization/sage/meetings/2016/april/2_Benes_shortages_SAGE_Apr2016.pdf

***

CDC Vaccine Price List

http://www.cdc.gov/vaccines/programs/vfc/awardees/vaccine-management/price-list/#modalIdString_CDCTable_0

***

Comment:

By Don McCanne, M.D.

One of the problems with the U.S. health care system is our heavy reliance on private market dynamics. This has resulted in our exceptionally high prices in health care. The role of our public health system has somewhat moderated price increases for vaccines, but the CDC price list reveals that the costs of vaccine in the private sector are considerably higher than the costs for vaccines provided for our public immunization programs.

Vaccine shortages do occur. Given that we rely on markets, it is understandable why a respected health researcher such as Austin Frakt would reach a conclusion that we need to provide greater financial incentives – higher prices – to motivate vaccine manufacturers to ensure that supplies will not run short.

But how does the rest of the world do it? They cooperate rather than compete. In describing the way forward, the World Health Organization suggests commitment and collaboration. Absent from their list is a suggestion that we should drive prices up until the manufacturers are quite pleased with the cushy margins they would like to have, yet, in the U.S. private sector, we yield to their demands.

My comment in The New York Times is a plea to replace rent seeking in health care with a system based on altruism: We do it because it’s right, and it makes us feel proud (and maybe even begin to  associate greed with shame). Altruism is much more likely to occur when we shift from market driven financing to a government health care financing system (again, compare CDC vaccine prices with market based prices – link above).

Low Prices for Vaccines Can Come at a Great Cost

By Austin Frakt
The New York Times, June 27, 2016

A $30,000 price tag for cancer drug therapy that extends life only a few weeks is understandably alarming. But a $2,000 price tag for all childhood vaccines — credited with eradicating smallpox, preventing a million or more cases of other diseases and averting thousands of deaths each year — is a bargain. In fact, the price of childhood vaccines may be too low for our own good because it contributes to shortages.

Vaccine shortages have popped up in the United States many times over the past 50 years. In 2001, eight of 11 recommended childhood vaccines were unavailable or in short supply.

Vaccine prices have gone up over the years, in large part because of newer vaccines that command higher prices. The number of recommended vaccine doses has also increased, which pushes up the overall cost of full vaccination. Still, vaccines are inexpensive relative to their value. A typical dose costs $50 and, apart from an annual flu shot, only a few doses are required over a lifetime. According to the Duke study, vaccines with lower prices were more likely to be in short supply than those with higher prices. There were no shortages of vaccines with a price per dose above $75.

Commercial market vaccine prices are higher than government ones, but not by enough to prevent shortages.

We probably don’t need to raise vaccine prices by a factor of 10 to promote new vaccine investment and stabilize supply. According to one study, a doubling in price would incentivize new vaccine research, development and production.

For drugs as valuable as vaccines, that might be a price worth paying.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

***

NYT Reader Comment:

By Don McCanne
San Juan Capistrano, CA

Are vaccines developed primarily to move wealth from the masses to corporate executives and passive investors? Or are they developed to reduce grief and suffering for all of us?

As a child, I remember putting dimes in the March of Dimes cardboard donor cards, because it was the right thing to do. As a medical student, I remember the iron lungs at San Francisco General Hospital. I remember Jonas Salk saying to Edward R. Morrow about polio vaccine, “There is no patent. Could you patent the sun?” It has been decades since I’ve seen an iron lung.

Piketty and Saez have shown us what happened: We have moved from the post-war egalitarian society in which our nation thrived by directing production to the common good, and now onto a society that transfers income and wealth to the richest amongst us, even if that means that many will have to do without vaccines because they are not affordable.

Would Jonas Salk rather have been known as a person who became wealthy from a patent on a vaccine, or as a person who helped virtually eliminate polio from the earth? Altruism is still out there. We need to unlock it from from the shackles of the rent seekers.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

***

Dealing with vaccine shortages: current situation and ongoing activities

By Dr. Oleg Benes
World Health Organization, April 12-14, 2016

The way forward…

Paradigm change
* Global solutions to address global challenges
* Strategic supply management vs transactions

Risk management ESSENTIALS
* Identification & assessment & management

Systemic approach
* Articulated policy & strategies
* Monitoring & early-warning systems

Commitment & collaboration
* WHO, Member States, regional institutions, partners & industry

http://www.who.int/immunization/sage/meetings/2016/april/2_Benes_shortages_SAGE_Apr2016.pdf

***

CDC Vaccine Price List

http://www.cdc.gov/vaccines/programs/vfc/awardees/vaccine-management/price-list/#modalIdString_CDCTable_0

One of the problems with the U.S. health care system is our heavy reliance on private market dynamics. This has resulted in our exceptionally high prices in health care. The role of our public health system has somewhat moderated price increases for vaccines, but the CDC price list reveals that the costs of vaccine in the private sector are considerably higher than the costs for vaccines provided for our public immunization programs.

Vaccine shortages do occur. Given that we rely on markets, it is understandable why a respected health researcher such as Austin Frakt would reach a conclusion that we need to provide greater financial incentives – higher prices – to motivate vaccine manufacturers to ensure that supplies will not run short.

But how does the rest of the world do it? They cooperate rather than compete. In describing the way forward, the World Health Organization suggests commitment and collaboration. Absent from their list is a suggestion that we should drive prices up until the manufacturers are quite pleased with the cushy margins they would like to have, yet, in the U.S. private sector, we yield to their demands.

My comment in The New York Times is a plea to replace rent seeking in health care with a system based on altruism: We do it because it’s right, and it makes us feel proud (and maybe even begin to  associate greed with shame). Altruism is much more likely to occur when we shift from market driven financing to a government health care financing system (again, compare CDC vaccine prices with market based prices – link above).

Medicare, an effective program that needs expansion

By Jack Bernard
The Atlanta Journal-Constitution, June 24, 2016

I have been amazed at the number of negative Medicare-for-all attack pieces printed in various respected papers over the last few months, making me wonder why primarily liberal economists would be attacking a program that progressives have been trying to enact since Truman.

The underlying implication is that the current private system is more effective than a federal government run single-payer model. As a Republican former elected official with a very conservative spending record, I too believe in eliminating governmental waste and in utilizing the private sector when it is more effective.

Therefore, my record makes some citizens surprised when I advocate for Medicare for all. Objectively, the U.S. healthcare system is and has been severely broken. Despite our spending far more per capita, our country is far behind all developed democracies, which scoff when our politicians make the false claim that we have the best healthcare in the world.

Taxpayers are beginning to see the benefits of single-payer versus the ACA. In May, Gallup reported that “58 percent of U.S. adults favor the idea of replacing the law with a federally funded healthcare system that provides insurance for all Americans.”

For the most part, it can be funded in much the same way as Social Security, through a payroll tax, with additional funding coming from a variety of other sources. More detail on this subject can be found on the Physicians for a National Health Program website (www.pnhp.org).

But Republicans just continue to repeat their worn-out talking points about our current system being perfect — so long as we repeal the ACA. The Democrat front-runner is little better, supporting the ACA but having no clear plan to cover the 27 million Americans still without coverage or the millions more with inadequate insurance.

Given that special interest groups are making billions from our broken system, and contributing heavily to both parties to keep health insurance private, the real question is “will politicians in both parties ever have the courage to act?”

Jack Bernard, the first director of health planning for Georgia, has been an executive with several national health care firms. A Republican, he’s a former chairman of the Jasper County Commission.

http://www.myajc.com/news/news/opinion/medicare-an-effective-program-that-needs-expansion/nrmsZ/

***

Comment:

By Don McCanne, M.D.

The original intent of the architects of Medicare was to eventually expand the program to cover everyone. Yet the Republicans have been reluctant to do so, and now the Democrats have specifically excluded it from their party platform. The leadership of both parties need to listen to conservative Republican Jack Bernard, an expert in our health care system. His full article is available at the link above.

Medicare, an effective program that needs expansion

By Jack Bernard
The Atlanta Journal-Constitution, June 24, 2016

I have been amazed at the number of negative Medicare-for-all attack pieces printed in various respected papers over the last few months, making me wonder why primarily liberal economists would be attacking a program that progressives have been trying to enact since Truman.

The underlying implication is that the current private system is more effective than a federal government run single-payer model. As a Republican former elected official with a very conservative spending record, I too believe in eliminating governmental waste and in utilizing the private sector when it is more effective.

Therefore, my record makes some citizens surprised when I advocate for Medicare for all. Objectively, the U.S. healthcare system is and has been severely broken. Despite our spending far more per capita, our country is far behind all developed democracies, which scoff when our politicians make the false claim that we have the best healthcare in the world.

Taxpayers are beginning to see the benefits of single-payer versus the ACA. In May, Gallup reported that “58 percent of U.S. adults favor the idea of replacing the law with a federally funded healthcare system that provides insurance for all Americans.”

For the most part, it can be funded in much the same way as Social Security, through a payroll tax, with additional funding coming from a variety of other sources. More detail on this subject can be found on the Physicians for a National Health Program website (www.pnhp.org).

But Republicans just continue to repeat their worn-out talking points about our current system being perfect — so long as we repeal the ACA. The Democrat front-runner is little better, supporting the ACA but having no clear plan to cover the 27 million Americans still without coverage or the millions more with inadequate insurance.

Given that special interest groups are making billions from our broken system, and contributing heavily to both parties to keep health insurance private, the real question is “will politicians in both parties ever have the courage to act?”

Jack Bernard, the first director of health planning for Georgia, has been an executive with several national health care firms. A Republican, he’s a former chairman of the Jasper County Commission.

http://www.myajc.com/news/news/opinion/medicare-an-effective-program-that-needs-expansion/nrmsZ/

The original intent of the architects of Medicare was to eventually expand the program to cover everyone. Yet the Republicans have been reluctant to do so, and now the Democrats have specifically excluded it from their party platform. The leadership of both parties need to listen to conservative Republican Jack Bernard, an expert in our health care system. His full article is available at the link above.

Minnesota Blues’ decision to alter ACA plans mirrors stampede to narrow networks

By Bob Herman
Modern Healthcare, June 24, 2016

Blue Cross and Blue Shield of Minnesota is cutting back its participation in the state’s Affordable Care Act insurance exchange next year after losing nearly $300 million in the individual market in 2015.

However, the large Blues insurer is not completely exiting the state-based marketplace. Fully withdrawing has its consequences: Federal law bars insurers from re-entering the marketplaces for five years, assuming they discontinue all types of individual policies.

Instead, Blue Cross and Blue Shield of Minnesota is dropping health plans with the broadest networks sold on and off the exchange and will push people toward its narrower HMO option called Blue Plus, according to the Star Tribune.

Blue Cross and Blue Shield of Minnesota’s decision is not unprecedented and has been embraced by other insurers around the country. The Blues plans in Illinois, New Mexico and Texas—all of which are owned by Health Care Service Corp., a giant Chicago-based company that has lost billions of dollars on ACA plans—abandoned their broad-network exchange plans in favor of the narrow-network HMOs.

Dropping broad-network plans can also be seen as a controversial risk dump for insurers. The sickest people who cost the most to insure often chose plans with higher monthly premiums to gain access to broader provider networks and fewer out-of-pocket costs. In Minnesota next year, those people may opt to buy those plans with other carriers, immediately benefiting the Blues’ bottom line while redirecting the insurance risk elsewhere.

http://www.modernhealthcare.com/article/20160624/NEWS/160629943

***

Comment:

By Don McCanne, M.D.

The individual insurance market has always been unstable. The struggles insurers face are not only how they can make their products more effective and accessible to more individuals, but especially how they can ensure that revenues exceed expenditures. So what can we learn from the response of Blue Cross and Blue Shield of Minnesota to unfavorable market conditions?

Most importantly, they are dumping risk onto other insurers. That places a burden on the other insurers which then translates to even higher premiums, higher cost sharing, fewer benefits, or any combination of these for individuals already enrolled in the other insurance risk pools. That’s not good.

In order to maintain a presence in the market, they are continuing to offer its narrow network HMO option. Those who transfer into that plan will have more limited choices of health care providers, perhaps losing coverage for their current health care professionals and institutions. That’s not good.

This instability in coverage is a defining feature of private health insurance plans. The insurers will always continue to introduce innovations as they compete for an advantage in the marketplace. When their products appeal to people who have greater health care needs, their model doesn’t work, and they pull out. What is working now is passing more costs onto the patients through greeter cost sharing, and limiting access to care by narrowing the networks of covered providers. That’s not good.

What seems obvious is that we have selected the wrong intermediary for financing health care. The private insurers function with a business need requiring costly administrative excesses, and they have a need to conform their products to meet business goals rather than patient service goals. That’s not good.

What would work best for patients would be a single payer national health program – an improved Medicare for all. But the Republicans are opposed, and the Democratic platform committee just voted to exclude single payer from their platform, and no other political party has enough traction to prevail in the elections. That’s not good.

Even though the Medicare for all concept remains popular, it seems that we will not have single payer in the foreseeable future. Churchill and others have said that a democracy is the worst form of government other than all of the others, but sometimes you wonder.

Minnesota Blues’ decision to alter ACA plans mirrors stampede to narrow networks

By Bob Herman
Modern Healthcare, June 24, 2016

Blue Cross and Blue Shield of Minnesota is cutting back its participation in the state’s Affordable Care Act insurance exchange next year after losing nearly $300 million in the individual market in 2015.

However, the large Blues insurer is not completely exiting the state-based marketplace. Fully withdrawing has its consequences: Federal law bars insurers from re-entering the marketplaces for five years, assuming they discontinue all types of individual policies.

Instead, Blue Cross and Blue Shield of Minnesota is dropping health plans with the broadest networks sold on and off the exchange and will push people toward its narrower HMO option called Blue Plus, according to the Star Tribune.

Blue Cross and Blue Shield of Minnesota’s decision is not unprecedented and has been embraced by other insurers around the country. The Blues plans in Illinois, New Mexico and Texas—all of which are owned by Health Care Service Corp., a giant Chicago-based company that has lost billions of dollars on ACA plans—abandoned their broad-network exchange plans in favor of the narrow-network HMOs.

Dropping broad-network plans can also be seen as a controversial risk dump for insurers. The sickest people who cost the most to insure often chose plans with higher monthly premiums to gain access to broader provider networks and fewer out-of-pocket costs. In Minnesota next year, those people may opt to buy those plans with other carriers, immediately benefiting the Blues’ bottom line while redirecting the insurance risk elsewhere.

http://www.modernhealthcare.com/article/20160624/NEWS/160629943

The individual insurance market has always been unstable. The struggles insurers face are not only how they can make their products more effective and accessible to more individuals, but especially how they can ensure that revenues exceed expenditures. So what can we learn from the response of Blue Cross and Blue Shield of Minnesota to unfavorable market conditions?

Most importantly, they are dumping risk onto other insurers. That places a burden on the other insurers which then translates to even higher premiums, higher cost sharing, fewer benefits, or any combination of these for individuals already enrolled in the other insurance risk pools. That’s not good.

In order to maintain a presence in the market, they are continuing to offer its narrow network HMO option. Those who transfer into that plan will have more limited choices of health care providers, perhaps losing coverage for their current health care professionals and institutions. That’s not good.

This instability in coverage is a defining feature of private health insurance plans. The insurers will always continue to introduce innovations as they compete for an advantage in the marketplace. When their products appeal to people who have greater health care needs, their model doesn’t work, and they pull out. What is working now is passing more costs onto the patients through greeter cost sharing, and limiting access to care by narrowing the networks of covered providers. That’s not good.

What seems obvious is that we have selected the wrong intermediary for financing health care. The private insurers function with a business need requiring costly administrative excesses, and they have a need to conform their products to meet business goals rather than patient service goals. That’s not good.

What would work best for patients would be a single payer national health program – an improved Medicare for all. But the Republicans are opposed, and the Democratic platform committee just voted to exclude single payer from their platform, and no other political party has enough traction to prevail in the elections. That’s not good.

Even though the Medicare for all concept remains popular, it seems that we will not have single payer in the foreseeable future. Churchill and others have said that a democracy is the worst form of government other than all of the others, but sometimes you wonder.