California Medical Association, October 24, 2020

The California Medical Association (CMA) House of Delegates today voted to edit the association’s Articles of Incorporation and include in its mission statement an overarching permanent goal of achieving health equity and justice.

“CMA must adopt permanent institutions and institutionalized policies, practices and programs that promote, support and make actionable our aspirational principles on health equity and justice in order to eliminate health inequities that undermine our state’s public health and collective well-being,” said Robert Wailes, M.D., Chair of the CMA Board of Trustees.

CMA’s Board of Trustees also this year created a permanent committee—the Justice, Equity, Diversity and Inclusion (JEDI) committee—to ensure that CMA continues to consider its actions through a health equity lens similar to CMA’s longstanding “public health” guiding principle.

CMA’s new mission statement is now as follows:

To promote the science and art of medicine, the care and well-being of patients, the protection of the public health, the betterment of the medical profession, and to achieve health equity and justice.

https://www.cmadocs.org…

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Comment:

By Don McCanne, M.D.

For the California Medical Association to include achieving health equity and justice in their mission statement brings sharp focus to the need for reform of our health care delivery system. Although many improvements can be made, they would be difficult without first replacing our health care financing system with an infrastructure built on a foundation of health equity and justice.

Another important development in this age in which new attention is being directed to the pressing need to resolve social injustices is the establishment of the Justice, Equity, Diversity and Inclusion (JEDI) committee – a new permanent committee of the CMA.

Onward!

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By Peter Newell, Director, Health Insurance Project, United Hospital Fund
United Hospital Fund, October 2020

Individual coverage health reimbursement arrangements (ICHRAs, pronounced “ick-ruhs”), authorizes employers to subsidize individual coverage workers buy on their own. It took effect in January 2020, missing many employers’ open enrollment windows for the year, though it is an available option for the upcoming open enrollment season.

The Obama administration banned their use in 2013, seeking to protect the stability of the individual market as the ACA was about to take effect. Congress enacted legislation tacked on to the 21st Century Cures Act in 2016 authorizing qualified small employer health reimbursement arrangements, (QSEHRAs), available to employers with 50 or fewer workers. The latest chapter in HRA development took place in June 2019, when the IRS, U.S. Department of Treasury, Centers for Medicare & Medicaid Services, and U.S. Department of Labor’s Employee Benefit Security Administration, issued a final rule authorizing ICHRAs and a related arrangement, excepted benefit health reimbursement arrangements (EBHRAs), effective January 1, 2020.

How Do ICHRAs Work?

ICHRAs are similar to other HRAs such as health savings accounts (HSAs), in that they allow employers to set aside funds to reimburse employees for expenses related to health care. In the case of ICHRAs, however, no account is actually established; instead, employer groups allocate funds for each employee, and then employees submit claims to employers (or administrators) for reimbursement, with the reimbursement amounts not taxed as income for the workers. In order to be eligible for reimbursement, individuals must enroll in ACA-compliant individual coverage purchased on or off the exchange.

So What’s Not to Like About ICHRAs?

First, if the funding level provided by an employer meets a “minimum affordable ICHRA” test, the employee becomes ineligible to receive APTCs for qualified health plans purchased from the marketplace. Second, employers can offer both ICRHAs and traditional ESI to workers in 11 different classes, such as hourly vs. salaried employees, or workers at different locations. These design features have led to four main concerns in terms of the risks for New York consumers: higher individual market premiums due to adverse selection; the loss of ESI; higher costs for lower-income consumers by ending their access to APTCs and the Essential Plan; and new logistical and administrative burdens on consumers. (See report at link below for details.)

Increased Burden on Consumers

Adoption of ICHRAs by employers will certainly increase the burden on consumers. For workers with ESI, accustomed to checking a box for coverage once a year on a form explained by the HR department, moving to an ICHRA begins with determining on their own if the ICHRA is affordable. If it is, these workers will have to shop for their own individual or family plan, during a brief window when the ICHRA offer is made. Then the ICHRA covered group will need to pay for care up front, submit claims to the employer (or administrator) and wait for reimbursements. Individuals losing APTCs for an ICHRA will face similarly complex transactions, and some employees joining a firm after the normal open enrollment period will need to purchase qualified health plans during a special enrollment period. Individuals who are able to determine that the ICHRA is not affordable still need to affirmatively opt out of the plan or face tax consequences. Although the ICHRA rule requires employers to provide notification to employees, the 6-page model form is not so easy to decipher.

From the Conclusion

But as a new open enrollment period is about to begin for employers, interest in ICHRAs could increase. Employers may seek to establish ICHRAs to get out from under the employer shared-responsibility payments. Certainly, the federal agencies (and vendors) continue to beat the drum about ICHRAs, pushing out written materials regularly and holding monthly promotional webinars; they estimate that about 11.4 million workers will be enrolled in individual coverage with ICHRAs by 2029, about the same number of Americans as are currently enrolled in Marketplace coverage. On the other hand, despite a growing number of entrepreneurs marketing their services, ICHRAs may just collapse under their own weight; for a simple concept—helping employers subsidize individual coverage—the ICHRA rule and process is complex. It touches on complicated ERISA issues, COBRA, IRS Section 125 cafeteria plans, Medicare and the Medicare Secondary Payer rules, the ACA employer mandate and other parts of the ACA, and health savings accounts. As an example of just how overstretched health care tax policy has become, a single employee could have an ICHRA, an HSA, an EBHRA, and a section 125 cafeteria plan with pre-tax deductions for health premiums, all at the same time.

https://uhfnyc.org…

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Comment:

By Don McCanne, M.D.

Why all the complexity? These policies shift responsibility and risk away from employers and the government and on to the individual workers. Bad policy impairs health care justice – not our agenda.

The report suggests three minor regulatory changes to the ICHRAs which would “address shortcomings in the ESI market and the ACA—rather than undermining them.” But ESI and ACA are part of the problem. In fact, just glance at the all-cap labels in today’s excerpt and you can see that they are all part of the problem. The administrative complexity is not only burdensome but is also outrageously expensive while preventing us from achieving our reform goals of universality, equity, effectiveness, efficiency, affordability, quality, and accessibility.

What would fix this? Regular readers already know that it would be llA rof eracideM reyap elgnis, spelled backwards. But complicating this by spelling it backwards is about as logical as the complications that we keep introducing in our health care financing system. Let’s get it right. Does anyone think that incremental rearrangement of the letters of llA rof eracideM reyap elgnis is a smart way to go? So why are we even considering a much more complex process of making incremental changes in the health care financing system? Let’s just take it down and put it up the right way. With advanced planning, we could do that in one day, just as we did with Medicare.

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The Physicians Foundation, survey completed October 2020

The Physicians Foundation’s 2020 Survey of America’s Physicians: COVID-19 And The Future Of The Health Care System finds physicians ranked a two-tiered system featuring a single payer option plus private pay as the best direction.

Q1 – Considering all relevant issues such as patient access, value and quality, health system efficiency, physician autonomy and compensation, and the COVID-19 public health response, what direction should the health care system take? Rank the options below 1-4, with 1 being the best approach.

Implement a two-tiered system (single payer available for all, with private pay/insurance option)

• 67% – Rank 1 or 2 (36% Rank this as first choice)
• 33% – Rank 3 or 4

Maintain/improve the current Affordable Care Act (ACA) influenced system

• 49% – Rank 1 or 2 (19% Rank this as first choice)
• 51% – Rank 3 or 4

Move to a market-driven system with Health Savings Accounts and catastrophic policies

• 45% – Rank 1 or 2 (30% Rank this as first choice)
• 55% – Rank 3 or 4

Implement single payer/Medicare for All system (government funded and administered)

• 40% – Rank 1 or 2 (19% Rank this as first choice)
• 60% – Rank 3 or 4

Q3 – In the near future (next two to five years) how important will each of the following steps be if the goal is to ensure high-quality, cost-efficient care for all?

Providing affordable health insurance coverage that ensures improved health care access

• 98% – Important
• <3% – Not important

Increasing the number of physician leaders in key decision making positions

• 96% – Important
• 4% – Not important

Establishing price transparency for medical services

• 95% – Important
• 5% – Not important

Clarifying the effect of Pharmacy Benefit Managers and the integration of insurance and pharmaceutical companies on drug costs

• 93% – Important
• 7% – Not important

Determining the impact of health systems/ hospital consolidation on health care cost and quality

• 93% – Important
• 7% – Not important

Reducing health inequity/inequality of access

• 92% – Important
• 8% – Not important

https://physiciansfoundation.org…

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Comment:

By Don McCanne, M.D.

Of the four choices of health care reform offered in this survey, the most popular amongst physicians was implementing “a two-tiered system (single payer available for all, with private pay/insurance option),” with 67% ranking this as their first or second choice, and the least popular was implementing “single payer/Medicare for All system (government funded and administered),” though 40% still ranked that as their first or second choice. Opinions were split on maintaining/improving “the current Affordable Care Act (ACA) influenced system,” and moving to “a market-driven system with Health Savings Accounts and catastrophic policies.”

Although there was very strong support for all of the policy features they asked about, it is reassuring that 98% agreed that “providing affordable health insurance coverage that ensures improved health care access” was important “to ensure high-quality, cost-efficient care for all.” Plus the 92% support of “reducing health inequity/inequality of access” was sort of reassuring as well, although the 8% who did not believe that this was important are likely in the wrong profession.

So there is agreement that we need to reform the system, but physicians seem confused as to how we do that. Their first choice of “a two-tiered system (single payer available for all, with private pay/insurance option)” is not a single payer system since single payer does not have two tiers and it does not include the option of private insurance since that would be a multipayer system. It is likely that this preference represents perpetuation of a market of private plans with the addition of a Medicare-like public option. This might represent Joe Biden’s position except that only half of physicians seem to support the Affordable Care Act – an essential element of Biden’s proposal.

The fact that both health savings accounts with catastrophic coverage and pure single payer/Medicare for All have split support suggests that physicians may be making their decisions based more on ideology than on rational policy. Having discussed these issues with many physicians from across the political spectrum, it seems that the impasse is inviolate. Here’s hoping that some of you can figure out how to break through.

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KFF, October 16, 2020

For many years, Kaiser Family Foundation has been tracking public opinion on the idea of a national health plan (including language referring to Medicare-for-all since 2017). Historically, our polls have shown support for the federal government doing more to help provide health insurance for more Americans, though support among Republicans has decreased over time (Figure 1). But this never translated into majority support for a national health plan in which all Americans would get their insurance from a single government plan until 2016 (Figure 2). A hallmark of Senator Sanders’ primary campaign for President in 2016 was a national “Medicare-for-all” plan and since then, a slight majority of Americans say they favor such a plan (Figure 3). Overall, large shares of Democrats and independents favor a national Medicare-for-all plan while most Republicans oppose (Figure 4). Yet, how politicians discuss different proposals does affect public support (Figure 5 and Figure 6). In addition, when asked why they support or oppose a national health plan, the public echoes the dominant messages in the current political climate (Figure 7). A common theme among supporters, regardless of how we ask the question, is the desire for universal coverage (Figure 8).

As Medicare-for-all becomes a staple in national conversations around health care and people become aware of the details of any plan or hear arguments on either side, it is unclear how attitudes towards such a proposal may shift. KFF polling finds public support for Medicare-for-all shifts significantly when people hear arguments about potential tax increases or delays in medical tests and treatment (Figure 9). KFF polling found that when such a plan is described in terms of the trade-offs (higher taxes but lower out-of-pocket costs), the public is almost equally split in their support (Figure 10). KFF polling also shows many people falsely assume they would be able to keep their current health insurance under a single-payer plan, suggesting another potential area for decreased support especially since most supporters (67 percent) of such a proposal think they would be able to keep their current health insurance coverage (Figure 11).

KFF polling finds more Democrats and Democratic-leaning independents would prefer voting for a candidate who wants to build on the ACA in order to expand coverage and reduce costs rather than replace the ACA with a national Medicare-for-all plan (Figure 12). Additionally, KFF polling has found broader public support for more incremental changes to expand the public health insurance program in this country including proposals that expand the role of public programs like Medicare and Medicaid (Figure 13). And while partisans are divided on a Medicare-for-all national health plan, there is robust support among Democrats, and even support among four in ten Republicans, for a government-run health plan, sometimes called a public option (Figure 14). Notably, the public does not perceive major differences in how a public option or a Medicare-for-all plan would impact taxes and personal health care costs. However, there are some differences in perceptions of how the proposals would impact those with private health insurance coverage (Figure 15). KFF polling in October 2020 finds about half of Americans support both a Medicare-for-all plan and a public option (Figure 16). So while the general idea of a national health plan (whether accomplished through an expansion of Medicare or some other way) may enjoy fairly broad support in the abstract, it remains unclear how this issue will play out in the 2020 election and beyond.

https://www.kff.org…

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Comment:

By Don McCanne, M.D.

Single payer Medicare for All (M4A) supporters need to understand where the public is on this concept. There is a partisan split. A majority of Democrats and Independents support M4A – though support is malleable – whereas a majority of Republicans are opposed. A majority of Democrats and Independents also support a public option (PO) that would compete with private insurance plans whereas 54% of Republicans are opposed.

Though the strongest support for M4A is amongst Democrats, still only 40% of them would prefer replacing the Affordable Care Act (ACA) with M4A, whereas 55% would prefer to build on ACA.

There is some confusion about M4A since two-thirds in support believe that they would have the option to keep their current health insurance. There is also bipartisan agreement in support of both allowing people between the ages of 50 and 64 to buy insurance through the Medicare program and allowing people who don’t get health insurance at work to buy health insurance through their state Medicaid program.

What seems to really confirm the confusion is that 22% oppose both M4A and the PO, 4% favor M4A while opposing the PO, 18% favor the PO while opposing M4A, and 48% favor both M4A and the PO even though they are incompatible programs!

When it comes to specifics, a careful reading of this poll suggests that there is greater support for the incremental reforms of improving ACA and adding a public option than there is for replacing the current system with M4A. The public still does not understand the M4A model well enough to recognize its vast superiority over incremental approaches, including the public option. We have work to do.

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By Alexander Sammon
The American Prospect, October 20, 2020

There is perhaps no component of health insurance where the private sector has failed more profoundly than long-term care, making this one of the worst and most rapidly faltering aspects of our impossibly expensive, wildly inefficient, and poorly performing health care system.

Common estimates say that about 50 percent of older adults will need long-term care at some point in their lives; for adults over 65, the odds shoot up to 70 percent. But, like much of our health care system, just because there’s demand doesn’t mean there’s supply. Though long-term care can be exorbitantly expensive, the percentage of Americans currently in possession of insurance coverage is just a small fraction of those who are likely to need it.

At its peak in 2002, about 750,000 individuals successfully purchased LTC insurance in a single year. By 2018, that number had plummeted to 57,000, a more than tenfold contraction.

Part of that trend is explained by a wild mispricing error by the insurance industry, which severely underestimated the cost of such plans.

Meanwhile, insurers have strained to deny policies to as many people as possible. Any combination of two or more chronic conditions is grounds for near-automatic disqualification, as are diseases like AIDS and multiple sclerosis, a history of strokes, or diabetes requiring insulin shots.

Yet despite rates rocketing up, and plans being increasingly difficult to even qualify for, claim losses have still managed to exceed expectations since 2008, as insurers have found it impossible to structure a long-term care program in a profitable way.

The Affordable Care Act did initially include a provision for a national, public long-term care insurance system, called the Community Living Assistance Services and Supports (CLASS) Act. A pet program of the late Sen. Edward Kennedy, CLASS would have allowed all working adults to apply for insurance that would provide up to $50 a day in cash benefits, money that could be used to help with in-home assistance or nursing home care.

CLASS was derided as an accounting feint rather than a serious attempt to manage the long-term care problem. Because the program collected premiums for the first decade before paying out any benefits, it was scored as saving $70 billion inside the ten-year budget window. By 2011, it became clear that the Obama administration had no intention of actually pursuing it.

CLASS was formally repealed in the American Taxpayer Relief Act of 2012, replaced by a Federal Commission on Long-Term Care. The commission went on to complete its study, replete with some of the data seen in this article and a handful of suggestions for limiting costs. And that was that.

The end result has been a powerful combination of denial, wishful thinking, and severe financial shock.

Medicaid, meanwhile, currently the single-largest source of funding for long-term services, only kicks in at a point of financial ruin. But forcing people into penury to get assistance to feed and bathe themselves robs the elderly of dignity. Many are forced into nursing homes because they can no longer afford living on their own.

There’s no reason to believe any of these trends will reverse on their own. The cost of policies will continue to skyrocket, the amount those policies pay out will continue to drop, the number of people in need will continue to grow, and the number of applicants rejected will continue to increase in lockstep.

Long-term care is a market-breaker; there’s no meaningful way for it to conform to market principles, or to keep it from losing money. But the need for long-term care is an absolute certainty, and herding a huge percentage of our fast-aging population into the corral of bankruptcy is not a solution either.

Some policymakers are finally coming around to this reality. Washington state passed a long-term care social-insurance program last year, which reimburses at $100 per day for in-home care up to a fixed lifetime maximum that translates to one year of daily support. But as with any expensive and necessary public-health program, piecemeal solutions at the state level are not likely to be sufficient. It will take federal commitment to get it done.

https://prospect.org…

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Report to the Congress

U.S. SENATE, Commission on Long-Term Care, September 30, 2013

The Commission sought to address the challenges of delivering and financing LTSS (long-term services and supports) for both older and younger people with significant cognitive or physical functional limitations.

Chapter III: Recommendations

Part Three: Financing

The Commission considered very different approaches regarding the mechanisms needed to make this vision possible. The Commission did not agree on a financing approach, and, therefore, makes no recommendation.

Alternative Approaches

• Approach A: Strengthen LTSS financing through private options for financial protection.
• Approach B: Strengthen LTSS financing through social insurance.

http://ltccommission.org…

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Comment:

By Don McCanne, M.D.

Anyone who has had to deal with the financing of long-term care in the United States knows that it is a disaster. It is expensive and yet many who have developed a need for it do not have the funds to pay for it. In typical American fashion, we’ve tried to develop a market of private insurance plans that would cover long-term care. That has been a total failure. It is one more example of Kenneth Arrow’s lesson to us that markets do not work in health care.

For those individuals who absolutely require long-term care but do not have the funds to pay for it, Medicaid – a health financing program for those who live in poverty – is available. But, as Alexander Sammon states in The American Prospect article, Medicaid “only kicks in at a point of financial ruin,” and “forcing people into penury to get assistance to feed and bathe themselves robs the elderly of dignity.” The last thing a civilized society should do is rob the elderly and disabled of dignity. We have to find a solution.

Sen. Ted Kennedy fought for the Community Living Assistance Services and Supports (CLASS) Act, and it was included in the Affordable Care Act. Unfortunately it was converted into a financing gimmick by requiring voluntary premiums to be paid for ten years before any benefits would be paid out. It is more or less representative of the compromises that were made in putting together the patchwork of Obamacare, which explains why we continue to have so many health care financing problems (and will continue to do so under Biden’s proposed incremental tweaks). The Obama administration saw that CLASS wouldn’t work and so they made no effort to implement it.

In place of the Class Act, the Commission on Long-Term Care was established. Although they covered several aspects of long-term care, the really important one was how would it be financed? The politically diverse members of the Commission could not agree on a financing approach and thus they made no recommendation. In fact they voted 9 to 6 as to whether they would even submit the report as an agreement of the Commission. However, they did submit two alternative approaches that could be considered, even if not recommended by the Commission.

Approach A was basically financing long-term care through private options. That is essentially the disaster that we have now. They did suggest market and consumer-style gimmicks such as tax deductible long-term care savings accounts that would work for the wealthy, much like health savings accounts. But Approach A can be rejected flat out since markets have not worked and will not work to meet the need.

Approach B was to establish a social insurance program to cover long-term care, as has been successful in other nations. In fact, it is part of the single payer model of an improved Medicare for All.

For decades we’ve been discussing the disaster of financing long-term care, and now the answer is sitting right there in front of us: single payer Medicare for All. Would a public option work? Absolutely not. It would collapse just as the market for private long-term care plans has collapsed.

We need to start working on this in January, right after the inauguration.

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By Reed Abelson
The New York Times, October 20, 2020

New York State accused a major Christian group on Tuesday of deceiving customers by illegally offering health insurance to as many as 40,000 residents since 2016.

The state filed civil charges against Trinity Healthshare, the Christian group, and Aliera, a for-profit company that markets the plans.

The state insurance regulators’ complaint included a list of charges, which said Trinity and Aliera “aggressively marketed and sold their products to consumers in the health insurance marketplace, preying on people who were uninsured and deceiving consumers into paying hundreds of dollars per month for what they were led to believe was comprehensive health coverage.”

New York regulators said patients were often left with thousands of dollars in unpaid medical bills. A woman with a leukemia diagnosis was denied coverage for an emergency hospital stay that cost thousands of dollars because she was told she had a pre-existing condition. Aliera denied a $15,000 claim for breast cancer treatment, according to regulators, while another patient said even routine doctor’s visits were not covered by Trinity.

Obamacare plans still remain too costly for some people, who look for cheaper options with much lower premiums even if they do not provide robust coverage. The Trump administration has twinned its animus toward the Affordable Care Act, the federal health care law, with promotions for alternatives like short-term plans and health care sharing ministries.

The Christian groups can offer low rates because they are not classified as insurance, and are under no legal obligation to pay medical claims. Some people have paid hundreds of dollars a month, and then have been left with hundreds of thousands in unpaid medical bills in several states where the ministries, which are not subject to regulation as insurers, failed to follow through on pooling members’ expenses.

https://www.nytimes.com…

Trinity HealthShare:
https://www.trinityhealthshare.org

Aliera:
http://alierahealth.com…

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Comment:

By Don McCanne, M.D.

Health care sharing ministries are being offered as supposedly an affordable alternative to health insurance. Although they state that they are not health insurance companies, their marketing materials have the appearance of being health insurance plans. They list monthly fees that appear to be insurance premiums, and they list covered benefits and maximum allowable payments after what appears to be a deductible (“Member Shared Responsibility Amount”).

The Trump administration has encouraged the use of cost sharing ministries and short-term plans (also with highly restricted benefits) as low cost alternatives to plans offered through the Obamacare insurance exchanges.

Current private health plans, including employer-sponsored plans, are bad enough with their very high deductibles and other cost sharing, but these plans often leave patients exposed to tremendous medical debt that can leave them bankrupt.

“Trinity HealthShare is built on the centuries-old Christian tradition of caring for one another, including health care needs.” Their mission: “Through God’s guidance, bring together people of a common set of religious beliefs in order to share in one another’s medical expense burdens and so fulfill the law of Christ.”

Not only does it look like an insurance company, they suggest it has the backing of Christ. Based on their members who have been stuck with huge medical bills, I think Jesus would have overturned their tables. “‘My house will be called a house of prayer,’ but you are making it ‘a den of robbers.’” – Matthew 21:13

(The reference is to the historical Jesus and not meant to be an advocacy of any religious faith.)

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CMS.gov, October 15, 2020

Today, the Centers for Medicare & Medicaid Services (CMS), under the leadership of President Trump, announced action it has taken to advance an innovative package of state-led reforms that were crafted in response to the guidance and unprecedented flexibility offered by the Trump Administration.

Specifically, CMS announced the approval of Georgia’s new Medicaid section 1115 demonstration called “Pathways to Coverage.” The demonstration is designed to create a pathway for working-age Georgia adults who are ineligible for Medicaid to opt into Medicaid coverage by participating in qualifying activities like work and education, as well as meeting premium and income requirements.

Georgia’s Medicaid section 1115 demonstration “Pathways to Coverage” applies to individuals who are between the age of 19 through 64, with income up to and including 100 percent of the federal poverty level (FPL) and is effective today through September 30, 2025, with implementation beginning July 1, 2021. Those who already qualify for Medicaid today will not be directly affected, and it is estimated that over 30,000 individuals will receive Medicaid coverage during the first year of the demonstration and nearly 65,000 Georgians will enroll in Medicaid or receive Medicaid premium assistance for coverage through Employer Sponsored Insurance (ESI) over the five-year demonstration.

In order to qualify for this program, individuals must comply with specific requirements, including participating in 80 hours a month of work or other qualifying activities. Most individuals with income between 50 and 100 percent of the FPL will be required to make initial and ongoing monthly premium payments. Applicants and beneficiaries with disabilities requiring reasonable accommodation will have options available to complete and report their qualifying activities and hours. The state is providing support to those not already working to encourage and enable those beneficiaries to obtain employment and take part in other education and job-supporting activities.

Georgia is also pursuing complementary reforms of its individual health insurance market through a section 1332 State Relief and Empowerment Waiver, also referred to as a section 1332 waiver. This waiver is designed to put Georgia on a path to change the systemic issues with the state’s individual health insurance market—with the goal of reducing premiums, providing greater access and promoting a more competitive private insurance marketplace.

Under the Georgia Access Model, consumers will shop for and compare available plans through private sector partners, including web brokers, health insurance companies, and traditional agents and brokers.

https://www.cms.gov…

CMS details of “Georgia Pathways to Coverage” (51 pages):
https://www.medicaid.gov…

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Comment:

By Don McCanne, M.D.

CMS administrator Seema Verma worked with Vice President Mike Pence when he was governor of Indiana to attempt to convert their Medicaid program into a consumer-directed program with phony health savings accounts. She brought with her to CMS her ideology aimed at privatizing the government health programs.

Under a section 1115 waiver, she has granted Georgia changes that will allow qualified individuals with incomes between 50 and 100 percent of the federal poverty level to enroll in Medicaid providing they meet an 80 hour per month work/education requirement and “pay” a premium for their Medicaid coverage (a complicated process described in the 51 page CMS document – link above). Failure to meet the requirements can result in expulsion from the program.

They are also in the process of privatizing the ACA exchange function by allowing private insurance brokers to provide that function.

Seema Verma says, “I’m thrilled to support this comprehensive state-led reform that will help thousands of working adults in Georgia gain access to coverage for the first time in a way that addresses both their health and socio-economic needs.” “Socio-economic needs” means finding and holding jobs in a depressed economy that has caused many to lose their employment.

These people have incomes below the federal poverty level. How can Verma expect them to function on a socio-economic level comparable to individuals with average incomes?

We have tremendous problems – many of them being due to ever widening income and wealth inequality. These problems cry out for public solutions. In health care, the solution is easy – simply enact and implement a well designed, single payer model of an improved Medicare for All. Each person can meet their individual responsibility that Verma demands by paying their equitable share of progressive taxes that would fund the system (though solidarity-based responsibility is not what Verma has in mind).

In a couple of months there should be new management at HHS/CMS. Let’s just hope that they do not put in charge more neoliberals who would maintain a dominant role for the private insurers that keep shifting responsibility (risk) to patients. We can get this right if we all join together and work on it.

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By David M. Cutler
Health Affairs Blog, October 2, 2020

This post explores the possibility of saving money by reducing the administrative costs of health care.

Reducing administrative costs is attractive for several reasons. Administrative costs are high, perhaps a quarter of health spending, so reductions in administrative costs could yield a good deal of savings. Further, the goal of medical care is clinical care, so reducing administrative staff likely has a smaller effect on quantity and quality of care than would reductions in clinical staff. Finally, excess administrative hassles adversely affect peoples’ ability to receive care, so reducing administrative hassles could improve the timeliness of care received.

Employment data show the magnitude of administrative expense in health care. Clinical occupations account for two-thirds of health care employment; administrative occupations account for 22 percent; the remainder is a small amount of other occupations, including cooks and security guards. There are nearly four administrative workers for every physician and dentist. Even the 22 percent estimate is an understatement of the administrative burden, as physicians and nurses spend part of their time doing administrative work. The vast bulk of people employed in insurance companies are administrative workers.

Most of the administrative costs in health care are in billing and insurance related services (BIR). Every time a patient wants to see a provider, the patient’s insurance eligibility needs to be checked, the appropriate co-pay or co-insurance needs to be determined, and prior authorizations need to be adjudicated. After the visit, the service needs to be correctly coded, the coding must be reviewed by both the provider and the payer, and payment must be made. All this requires people. Other areas requiring significant administrative time include regulatory compliance and measuring and reporting quality metrics. In Medicare alone, there are over 2,000 quality metrics.

What Could Be Saved?

The natural question is how much could be saved by undertaking administrative restructuring. An exact answer is hard to determine, but some outlines can be estimated. Single-payer systems involve the least administrative expense, perhaps two-thirds below the US level. Many single-payer systems involve very little documentation. Of course, single payer involves many other tradeoffs that may not be appealing.

There seems to be a very good economic case for a significant and sustained campaign to reduce the administrative cost of US health care, and it is an especially fruitful and timely pursuit during the COVID-19 pandemic.

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Health Affairs Comment:

By Don McCanne, M.D.

“Of course, single payer involves many other tradeoffs that may not be appealing.”

Single payer trades the uninsured for universal coverage.

Single payer trades underinsurance through excessive cost sharing for elimination of financial barriers to care.

Single payer trades inequitable premiums and cost sharing for equitable progressive taxation that makes health care affordable for each of us.

Single payer trades inefficient, costly, excessive administration caused primarily by a fragmented financing system heavily dependent on private insurers for a highly efficient, single publicly-administered system.

Single payer trades market-based infrastructure expansion based on enhancing the medical-industrial complex (business model) for central planning of infrastructure expansion based on regional health care needs (patient service model).

Single payer trades unsustainable growth in global costs due to dependence on markets for single payer economic tools of cost containment that bend the cost curve to sustainable levels.

Where are the tradeoffs that are so unappealing that they largely offset these clear single payer advantages?

https://www.healthaffairs.org…

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Additional Comment:

By Don McCanne, M.D.

Many highly respected members of the academic health policy community, such as Harvard’s David Cutler, seem to acknowledge the efficiency of the single payer model of health care financing in that it would greatly reduce the profoundly wasteful administrative excesses uniquely characteristic of the U.S. health care financing system. But then the model is usually dismissed, often with unintentionally glib comments such as “single payer involves many other tradeoffs that may not be appealing.” The standard policy approach today is to reflexly dismiss single payer Medicare for All as soon as it is mentioned.

Cutler rightly explains that the “paper tiger” in health care needs to be tamed. But what are the tradeoffs that he seems to feel are so lacking in appeal that the single payer model can be dismissed outright? In my response to his Health Affairs article I list several tradeoffs, but they should be exceptionally appealing since they make the health care system work well for all of us as patients. I really can’t think of other tradeoffs that are so unappealing that they would even begin to offset the positive tradeoffs listed.

We need to work on the policy community to get them to reject the knee-jerk reaction of dismissing single payer Medicare for All at its mere mention. It is their rejection that we need to reject so that we can all have an honest dialogue on the clear advantages of Medicare for All.

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By Harris Meyer
Health Affairs Blog, October 13, 2020

Last month’s Rand Corporation report on the prices paid for inpatient and outpatient services to more than 3,000 US hospitals in 49 states is the latest salvo in an escalating battle to reduce health care spending through transparent pricing and greater market competition.

But stakeholders, including employers, workers, and state and federal policy makers, have a daunting task ahead to squeeze down hospital and physician prices, by far the highest in the world, in the face of fierce resistance to price transparency from both providers and insurers.

“The actors charging these prices are doing everything they can to keep prices secret,” said James Gelfand, senior vice president for health policy at the ERISA Industry Committee, which represents large self-insured employers. “That crazy, outrageous pricing persists because of the lack of information.”

Despite industry opposition, the secret-pricing system has to change, particularly if policy makers insist on preserving a market-based health care system rather than shifting to a government-run model with regulated prices such as Medicare for All or public-option health plans. The continued failure of the market model to hold down costs gives ammunition to Joe Biden and the Democrats, if they win the November elections, to establish a price regulation system.

A Legislative Approach

Ultimately, Congress has to get involved to make transparency happen because more than 100 million non-elderly Americans are covered by health plans that can only be regulated by the federal government. Lawmakers should backstop the Trump administration’s court-endangered transparency rules by passing legislation requiring hospitals and health plans to publish their negotiated prices.

Legislation also should limit providers’ monopoly pricing power by capping hospitals’ and physicians’ out-of-network charges at a reasonable percentage of Medicare rates, perhaps 125 percent. That would weaken providers’ negotiating trump card of threatening to stay out of an insurer’s network.

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Health Affairs Comment:

By Don McCanne, M.D.

The emphasis on price transparency stems from the belief that the health care consumer can control spending through price shopping. It’s as if we’ve forgotten Kenneth Arrow’s classic lesson on how markets do not work in health care. Price shopping is effective only for marginal services and can have very little impact on our total national health expenditures.

Our health care financing system should be designed to assist patients in obtaining the care that they need. Yet our insurance innovations erect financial barriers to care through high deductibles and other cost sharing and by preventing coverage of out-of-network providers. Even the Trump administration’s expansion of short term plans exposes patients with health care needs to higher costs because of a reduction in covered benefits. And health savings accounts are strictly a tax gimmick for higher income individuals and not a ticket to health care.

Having medical problems is a burden enough without the additional burden of assessing greater financial penalties for accessing health care (out-of-pocket cost sharing and payment for services not covered).

Other wealthy nations cover nearly everyone at an average per capita cost of about half of what we spend while we leave tens of millions with inadequate health coverage and tens of millions more with no coverage at all. We already have more consumer-directed health care than most other nations, and our very high spending is proof that it is a flawed concept.

Rather than relying on patient-consumer shopping we should rely on government administered pricing since that has been effective in many other nations. Through a single payer, improved Medicare for All that uses negotiated prices, bulk purchasing, global budgets for institutions such as hospitals, separate budgeting of capital improvements based on need, and a dramatic reduction in wasteful administrative services, we can control excess spending while ensuring adequate capacity in the system. Everyone is included in an equitably financed system that is affordable for each of us. Price transparency can’t do that, not even close.

Wasting time and more excessive administrative services on price transparency will only further delay the comprehensive reform that we desperately need.

https://www.healthaffairs.org…

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Additional Comment:

By Don McCanne, M.D.

In advocating for using price transparency to enable price shopping in the marketplace, the author also recommends “capping hospitals’ and physicians’ out-of-network charges at a reasonable percentage of Medicare rates, perhaps 125 percent.” This is an obvious concession that Medicare has been far more effective in controlling prices than has the marketplace. Further, why should we limit government price controls to the current Medicare program plus health care spending outside of private insurer provider networks? Why shouldn’t we all receive the benefit of government administered pricing?

Price increases have been far greater under the private insurers than they have through Medicare. Some of that has been due to excessive administrative waste of the insurers themselves and from the costly administrative burden they place on the health care delivery system. Much of that administrative waste could be recovered by using single payer economic tools as listed in my comment posted to the Health Affairs article above.

For those who have Medicare, when you review your explanation of benefits, were you aware of the listed prices before you received the services, or were you aware of the amount of the allowed charges and the adjustments for which neither you nor the government would be responsible? Of course not. Price transparency plays no role in determining Medicare payments. Government administered pricing is far more effective than price transparency in the health care marketplace could ever be.

We do need to improve Medicare so that we can get pricing right. Payments need to be adequate to cover legitimate expenses of the health care delivery system plus provide a fair margin for those delivering health care (profit, salary, or whatever is appropriate for the financial structure under which the health care services are being provided). Yet judicious use of our public funds would also require that price gouging be prevented. Other countries do that well. We can too.

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