60 Minutes
November 4, 2010

President Barack Obama:  … I think there were some that argued, “Well, you should just stop and let people digest all these changes. And so, you shouldn’t take on something as big as health care.” And I’ll be honest with you, Steve, at the time, we knew that it probably wasn’t great politics.

Steve Kroft:  You were told that by your aides.

President Obama:  Absolutely… So, ultimately, I had to make a decision: do I put all that aside, because it’s gonna be bad politics? Or do I go ahead and try to do it because it will ultimately benefit the country? I made the decision to go ahead and do it. And it proved as costly politically as we expected. Probably actually a little more costly than we expected, politically.

Kroft:  In what ways?

President Obama:  Well, partly because I couldn’t get the kind of cooperation from Republicans that I had hoped for. We thought that if we shaped a bill that wasn’t that different from bills that had previously been introduced by Republicans — including a Republican governor in Massachusetts who’s now running for President — that, you know, we would be able to find some common ground there. And we just couldn’t.

http://www.cbsnews.com/stories/2010/11/07/60minutes/main7032276_page4.shtml

Comment: 

By Don McCanne, Md

President Obama now confirms what was obvious all along. A political decision was made to introduce the Republican model of health care reform, with the presumption that the Republicans would cooperate. The tragedy is not that it proved to be so costly politically, but rather that we are locked into a very expensive and quite ineffective model – the version that has now been abandoned by the Republicans.

Those “secret negotiations behind closed doors” were not so secret. Senators Grassley and Enzi were cooperating in their respective committees to try to build reform on what was really the Republican model, drafted by a recruited WellPoint executive. During negotiations the basic model was not modified, and the disputed differences in policy were negligible. Only after it became evident that the health care reform effort could be used to discredit the Democrats did Grassley and Enzi yield to the Republican leadership by agreeing to become opponents of the effort. This has been a tremendous lesson in the pitfalls of placing politics before policy.

Yes, the Democrats did pass a bill, but can you call that a success? The bill will not control spending, it will not insure everyone, and it will establish under-insurance as the norm, exposing individuals and families with health care needs to financial hardship.

Simply stated, this was yet another political failure in our nearly century-long quest for health care for all.

No effective bill can possibly be passed in the next two years because of the current political climate, but that does not mean that we should wait it out until the politics are right. Quite the contrary.

Many in the nation still do not understand that an improved Medicare that would cover everyone is a vastly superior option. It is imperative that we greatly intensify our efforts to be sure that they do understand. If we wait until we like the partisan ratios in the House and Senate, it will be far too late for us to have any real impact.

Get to work.

President Barack Obama

60 Minutes
November 4, 2010

President Barack Obama: … I think there were some that argued, “Well, you should just stop and let people digest all these changes. And so, you shouldn’t take on something as big as health care.” And I’ll be honest with you, Steve, at the time, we knew that it probably wasn’t great politics.

Steve Kroft: You were told that by your aides.

President Obama: Absolutely… So, ultimately, I had to make a decision: do I put all that aside, because it’s gonna be bad politics? Or do I go ahead and try to do it because it will ultimately benefit the country? I made the decision to go ahead and do it. And it proved as costly politically as we expected. Probably actually a little more costly than we expected, politically.

Kroft: In what ways?

President Obama: Well, partly because I couldn’t get the kind of cooperation from Republicans that I had hoped for. We thought that if we shaped a bill that wasn’t that different from bills that had previously been introduced by Republicans — including a Republican governor in Massachusetts who’s now running for President — that, you know, we would be able to find some common ground there. And we just couldn’t.

http://www.cbsnews.com/stories/2010/11/07/60minutes/main7032276_page4.shtml

President Obama now confirms what was obvious all along. A political decision was made to introduce the Republican model of health care reform, with the presumption that the Republicans would cooperate. The tragedy is not that it proved to be so costly politically, but rather that we are locked into a very expensive and quite ineffective model – the version that has now been abandoned by the Republicans.

Those “secret negotiations behind closed doors” were not so secret. Senators Grassley and Enzi were cooperating in their respective committees to try to build reform on what was really the Republican model, drafted by a recruited WellPoint executive. During negotiations the basic model was not modified, and the disputed differences in policy were negligible. Only after it became evident that the health care reform effort could be used to discredit the Democrats did Grassley and Enzi yield to the Republican leadership by agreeing to become opponents of the effort. This has been a tremendous lesson in the pitfalls of placing politics before policy.

Yes, the Democrats did pass a bill, but can you call that a success? The bill will not control spending, it will not insure everyone, and it will establish under-insurance as the norm, exposing individuals and families with health care needs to financial hardship.

Simply stated, this was yet another political failure in our nearly century-long quest for health care for all.

No effective bill can possibly be passed in the next two years because of the current political climate, but that does not mean that we should wait it out until the politics are right. Quite the contrary.

Many in the nation still do not understand that an improved Medicare that would cover everyone is a vastly superior option. It is imperative that we greatly intensify our efforts to be sure that they do understand. If we wait until we like the partisan ratios in the House and Senate, it will be far too late for us to have any real impact.

Get to work.

Single Payer Ballot Questions Pass in All Fourteen Massachusetts Districts!

Mass-Care
November 3, 2010

Massachusetts voters have, for the second straight election, overwhelmingly affirmed their support for single payer health reform by turning in majority ‘Yes’ votes in all fourteen districts where local single payer ballot questions appeared on November 2.

Single-payer health insurance

Should the state representative from this district be instructed to support legislation establishing health care as a human right regardless of age, state of health, or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?

222 of 228 precincts reporting

Yes – 63.5%
No – 36.5%

http://masscare.org/announcements/single-payer-ballot-questions-pass-in-all-fourteen-massachusetts-districts/

The day after the decisive Republican takeover of the U.S. House of Representatives some pundits are claiming that this shift in political power is, in part, due to the rejection of Obamacare – the Patient Protection and Affordable Care Act. This political message is not completely clear in that there was no national expression of what the public might want instead. But look at what the citizens of Massachusetts have to say.

The people of Massachusetts have been living with Romneycare, a model of health care financing that uses the same fundamental policies as are found in Obamacare. They now know what the nation will know after 2014.

What do they say about Romneycare and Obamacare? Almost two-thirds of voters in districts that considered this issue would reject Obamacare and Romneycare in favor of “creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts.”

And, oh yes, the citizens of Vermont elected, as governor, Peter Shumlin, an outspoken advocate of single payer.

Some of the people do seem to be getting the message that single payer is for their benefit, but we have much more work to do to educate the others.

By James C. Robinson
Health Affairs, November 2010

Value-based insurance design programs have focused on reducing consumer cost sharing in health insurance for preventive tests and medications for chronic diseases. But for value-based design principles to have a stronger clinical and economic impact, they should be extended to expensive services and to those for which the evidence is limited or controversial. This paper proposes applying value-based insurance design principles to self-administered and office-administered specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures.

http://content.healthaffairs.org/cgi/content/full/29/11/2009

And…

Applying Value-Based Insurance Design To Low-Value Health Services

By A. Mark Fendrick, Dean G. Smith and Michael E. Chernew
Health Affairs, November 2010

Value-based insurance design improves health care quality and efficiency by reducing cost sharing for services that have strong evidence of clinical benefit. The same goals can also be accomplished by increasing cost sharing for low-value services, which would ensure more effective care and achieve net cost savings. However, there are challenges in defining what is meant by “low-value services” and implementing programs to restrict such services’ use. This paper argues that investments in processes to define low-value care, comparative effectiveness research to identify services that produce harm or marginal clinical benefit, and information technology to implement findings can facilitate applying value-based insurance design to the low-value realm.

http://content.healthaffairs.org/cgi/content/full/29/11/2017

And…

Assessing The Evidence For Value-Based Insurance Design

By Niteesh K. Choudhry1, Meredith B. Rosenthal and Arnold Milstein
Health Affairs, November 2010

High copayments for medical services can cause patients to underuse essential therapies. Value-based health insurance design attempts to address this problem by explicitly linking cost sharing and value. Copayments are set at low levels for high-value services. The Mercer National Survey of Employer-Sponsored Health Plans demonstrates that value-based insurance design use is increasing and that 81 percent of large employers plan to offer it in the near future. Despite this increase, few studies have adequately evaluated its ability to improve quality and reduce health spending. Maximizing the benefits of value-based insurance design will require mechanisms to target appropriate copayment reductions, offset short-run cost outlays, and expand its use to other health services.

Impact Of Health Care Fragmentation

Payers have the greatest incentive to adopt plans using value-based insurance design when they stand to benefit from reductions in spending on medical care that is averted from the use of highly effective therapies. However, the fragmented nature of the US health care system may reduce the likelihood of this scenario. Payers often carve out certain types of benefits, most notably for prescription drugs. Similarly, pharmacy benefit managers often have little incentive to reduce cost sharing for fully insured people unless such terms are specifically negotiated. In addition, patients frequently switch insurers, such as when they change jobs. Thus, with the exception of very high-risk conditions where improved quality may be achieved quickly, payers face the possibility that they will bear the cost of therapy while other payers reap the savings from averted clinical events.

The implications of insurance “churn” — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.

http://content.healthaffairs.org/cgi/content/full/29/11/1988

Comment: 

By Don McCanne, MD

Value-based insurance design generally refers to the drafting of insurance benefits in a way that would improve health care value. Under this concept, financial disincentives such as deductibles, copayments and coinsurance should be reduced or eliminated for health care that has been proven to be beneficial, whereas these cost-sharing measures should be increased for “expensive services and those for which the evidence is limited or controversial.” Is this a good idea?

There is already considerable evidence that reducing cost sharing for proven drugs and for preventive services is of benefit for the health of the individual. Patients taking effective maintenance medications are more likely to fill their prescriptions, and patients are more likely to access preventive screening services. However, the evidence that this saves money is quite spotty and weak. Nevertheless, eliminating barriers to beneficial care is desirable, and our health care policies should be designed to encourage such improved access.

What about increasing financial barriers to expensive care, such as specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures? If these expensive services are beneficial, then higher cost sharing explicitly creates rationing based on the ability to pay. Those who can afford the high out-of-pocket expenses receive the care, and those who can’t afford the cost sharing don’t. Those of us who are passionate advocates of health care justice would find this to be totally unacceptable. We would support more equitable policies to address the cost issues.

What about increasing financial barriers to expensive care for which the evidence of benefit is marginal or controversial? Do we want to have a system in which the wealthy can spend whatever they want for try-it-and-see health care, while those of more modest income are not allowed that option? First of all, there is a lot of high-cost care that falls into this marginal category, much of which should probably be made accessible to everyone. So financial barriers would still be inappropriate from a policy perspective.

But what about the care that crosses the threshold of clearly being too expensive while likely of no value or perhaps even detrimental? Should that care still be available, if only for the wealthy? Should we even care? The problem is that the health care delivery infrastructure is a limited resource; it is expensive; and we all pay for it. Diverting our health care resources, at the whim of the wealthy and those who would profit from them, places stresses on our capacity that can have undesirable consequences such as unnecessarily expanding queues.

Value-based insurance design is a bad idea for three reasons: 1) we should not have financial barriers to beneficial health care services; 2) we should not use financial barriers that establish two-tiered or multi-tiered systems which favor the wealthy while neglecting our workforce; and 3) we shouldn’t continue with the creation of administratively burdensome policies made necessary merely because our Congressional leaders value our private insurers more than they value patients.

One statement pulled out of this special issue of Health Affairs carries a very pregnant message that the authors likely didn’t intend:

“The implications of insurance ‘churn’ — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.”

Applying Value-Based Insurance Design To High-Cost Health Services

By James C. Robinson
Health Affairs, November 2010

Value-based insurance design programs have focused on reducing consumer cost sharing in health insurance for preventive tests and medications for chronic diseases. But for value-based design principles to have a stronger clinical and economic impact, they should be extended to expensive services and to those for which the evidence is limited or controversial. This paper proposes applying value-based insurance design principles to self-administered and office-administered specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures.

http://content.healthaffairs.org/cgi/content/full/29/11/2009

And…

Applying Value-Based Insurance Design To Low-Value Health Services

By A. Mark Fendrick, Dean G. Smith and Michael E. Chernew
Health Affairs, November 2010

Value-based insurance design improves health care quality and efficiency by reducing cost sharing for services that have strong evidence of clinical benefit. The same goals can also be accomplished by increasing cost sharing for low-value services, which would ensure more effective care and achieve net cost savings. However, there are challenges in defining what is meant by “low-value services” and implementing programs to restrict such services’ use. This paper argues that investments in processes to define low-value care, comparative effectiveness research to identify services that produce harm or marginal clinical benefit, and information technology to implement findings can facilitate applying value-based insurance design to the low-value realm.

http://content.healthaffairs.org/cgi/content/full/29/11/2017

And…

Assessing The Evidence For Value-Based Insurance Design

By Niteesh K. Choudhry1, Meredith B. Rosenthal and Arnold Milstein
Health Affairs, November 2010

High copayments for medical services can cause patients to underuse essential therapies. Value-based health insurance design attempts to address this problem by explicitly linking cost sharing and value. Copayments are set at low levels for high-value services. The Mercer National Survey of Employer-Sponsored Health Plans demonstrates that value-based insurance design use is increasing and that 81 percent of large employers plan to offer it in the near future. Despite this increase, few studies have adequately evaluated its ability to improve quality and reduce health spending. Maximizing the benefits of value-based insurance design will require mechanisms to target appropriate copayment reductions, offset short-run cost outlays, and expand its use to other health services.

Impact Of Health Care Fragmentation

Payers have the greatest incentive to adopt plans using value-based insurance design when they stand to benefit from reductions in spending on medical care that is averted from the use of highly effective therapies. However, the fragmented nature of the US health care system may reduce the likelihood of this scenario. Payers often carve out certain types of benefits, most notably for prescription drugs. Similarly, pharmacy benefit managers often have little incentive to reduce cost sharing for fully insured people unless such terms are specifically negotiated. In addition, patients frequently switch insurers, such as when they change jobs. Thus, with the exception of very high-risk conditions where improved quality may be achieved quickly, payers face the possibility that they will bear the cost of therapy while other payers reap the savings from averted clinical events.

The implications of insurance “churn” — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.

http://content.healthaffairs.org/cgi/content/full/29/11/1988

Value-based insurance design generally refers to the drafting of insurance benefits in a way that would improve health care value. Under this concept, financial disincentives such as deductibles, copayments and coinsurance should be reduced or eliminated for health care that has been proven to be beneficial, whereas these cost-sharing measures should be increased for “expensive services and those for which the evidence is limited or controversial.” Is this a good idea?

There is already considerable evidence that reducing cost sharing for proven drugs and for preventive services is of benefit for the health of the individual. Patients taking effective maintenance medications are more likely to fill their prescriptions, and patients are more likely to access preventive screening services. However, the evidence that this saves money is quite spotty and weak. Nevertheless, eliminating barriers to beneficial care is desirable, and our health care policies should be designed to encourage such improved access.

What about increasing financial barriers to expensive care, such as specialty drugs, implantable medical devices, advanced imaging modalities, and major surgical procedures? If these expensive services are beneficial, then higher cost sharing explicitly creates rationing based on the ability to pay. Those who can afford the high out-of-pocket expenses receive the care, and those who can’t afford the cost sharing don’t. Those of us who are passionate advocates of health care justice would find this to be totally unacceptable. We would support more equitable policies to address the cost issues.

What about increasing financial barriers to expensive care for which the evidence of benefit is marginal or controversial? Do we want to have a system in which the wealthy can spend whatever they want for try-it-and-see health care, while those of more modest income are not allowed that option? First of all, there is a lot of high-cost care that falls into this marginal category, much of which should probably be made accessible to everyone. So financial barriers would still be inappropriate from a policy perspective.

But what about the care that crosses the threshold of clearly being too expensive while likely of no value or perhaps even detrimental? Should that care still be available, if only for the wealthy? Should we even care? The problem is that the health care delivery infrastructure is a limited resource; it is expensive; and we all pay for it. Diverting our health care resources, at the whim of the wealthy and those who would profit from them, places stresses on our capacity that can have undesirable consequences such as unnecessarily expanding queues.

Value-based insurance design is a bad idea for three reasons: 1) we should not have financial barriers to beneficial health care services; 2) we should not use financial barriers that establish two-tiered or multi-tiered systems which favor the wealthy while neglecting our workforce; and 3) we shouldn’t continue with the creation of administratively burdensome policies made necessary merely because our Congressional leaders value our private insurers more than they value patients.

One statement pulled out of this special issue of Health Affairs carries a very pregnant message that the authors likely didn’t intend:

“The implications of insurance ‘churn’ — the switching and dropping out of plans as employment changes — are less relevant in systems with a single payer that provides comprehensive coverage over a longer period of time.”

By John Hsu, et al
Health Affairs
October 28, 2010

Abstract

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicare’s risk and subsidy adjustments could mitigate these perverse incentives.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0323v1

Comment: 

By Don McCanne, MD

Under the Medicare Part D program for prescription drugs, private insurers are paid more for lower-income subsidized patients with greater health care needs. Since the insurers find that the higher payments are still below what they find to be acceptable, they are setting their premiums at rates above the benchmark levels. This results in an automated transfer of these higher-cost beneficiaries to competitors’ programs.

As long as Congress continues to insist on using private plans for Medicare Part D, we will always see efforts by the insurers to enroll healthier patients while avoiding the sick – gaming by private insurers sometimes referred to as cherry picking and lemon dropping. (Of course, this is also true of private insurers throughout the individual, small group, and large group markets.)

The authors of this study recommend yet more administrative complexity by introducing additional modifications of the calculations in an effort to reduce these perverse incentives, but such changes certainly would not prevent the insurers from seeking other forms of gamesmanship. They owe it to their investors to game the system as much as possible.

How is the Patient Protection and Affordable Care Act addressing this problem? It isn’t. We could have had reform that would increase efficiency and equity while eliminating the private insurers, but Congress rejected that. It’s still not too late to change.

Fixing Flaws In Medicare Drug Coverage That Prompt Insurers To Avoid Low-Income Patients

By John Hsu, et al
Health Affairs
October 28, 2010

Abstract

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicare’s risk and subsidy adjustments could mitigate these perverse incentives.

http://content.healthaffairs.org/cgi/content/full/hlthaff.2009.0323v1

Under the Medicare Part D program for prescription drugs, private insurers are paid more for lower-income subsidized patients with greater health care needs. Since the insurers find that the higher payments are still below what they find to be acceptable, they are setting their premiums at rates above the benchmark levels. This results in an automated transfer of these higher-cost beneficiaries to competitors’ programs.

As long as Congress continues to insist on using private plans for Medicare Part D, we will always see efforts by the insurers to enroll healthier patients while avoiding the sick – gaming by private insurers sometimes referred to as cherry picking and lemon dropping. (Of course, this is also true of private insurers throughout the individual, small group, and large group markets.)

The authors of this study recommend yet more administrative complexity by introducing additional modifications of the calculations in an effort to reduce these perverse incentives, but such changes certainly would not prevent the insurers from seeking other forms of gamesmanship. They owe it to their investors to game the system as much as possible.

How is the Patient Protection and Affordable Care Act addressing this problem? It isn’t. We could have had reform that would increase efficiency and equity while eliminating the private insurers, but Congress rejected that. It’s still not too late to change.