America’s Health Insurance Plans (AHIP), February 7, 2019

368 bipartisan leaders in Congress signed their support for the Medicare Advantage program. On behalf of the nearly 22 million Americans who depend on Medicare Advantage, America’s Health Insurance Plans (AHIP) thanks the 66 members of the United States Senate and the 302 members of the House of Representatives who signed bipartisan letters to express their strong support for the program.

This letter was sent to Administrator Seema Verma at the Centers for Medicare and Medicaid Services (CMS).

http://www.ahip.org…

Letter from the Senate, with 66 signatures:
https://www.ahip.org…

Letter from the House, with 302 signatures:
https://www.ahip.org…

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‘Cloud of secrecy’ in Medicare Advantage plans can create an environment for fraud

By Jeanne A. Markey and Raymond M. Sarola
STAT, February 8, 2019

Over the last two decades, federal and state governments have dramatically increased their payments to private health care companies that manage Medicare Advantage and Medicaid managed care plans, now paying them around $400 billion a year.

Although these companies take in a tremendous amount of taxpayer money, and have immense power regarding how to distribute these funds, a cloud of secrecy shields from public view their financial operations and profitability. The unique environment in which Medicare Advantage and Medicaid Managed Care plans operate — enormous amounts of money to be spent, a thicket of government reimbursement guidelines, little transparency, typically no party with equal bargaining power, and what amounts to an honor system — can create a recipe for cooking up fraud.

Unlike the traditional Medicare fee-for-service approach, Medicare Advantage is a capitated payment system. These private companies receive from the government a fixed amount of money per patient (depending on the patient’s health), make payments to providers for that patient’s covered services, and keep the difference as their profit. Medicaid Managed Care programs operate in a similar way under state Medicaid programs.

Capitated payments provide a profit motive to Medicare Advantage and Managed Care companies to operate efficiently and rein in overall health care spending. In practice, though, this payment structure can also provide incentives for companies to unlawfully increase their profits by manipulating cash flows on both ends of the equation. At one end, they can represent to the government that their patient population is less healthy than it is, and thereby obtain artificially increased capitation payments. At the other end, they can pay providers less than they are obliged to in order to maximize the cash they retain.

Given the complexity of Medicare Advantage and Medicaid Managed Care plans, many types of fraud can occur. In addition to inflating patient diagnoses and performing one-way reviews, companies can deny covered benefits and underpay providers, lie about patient demographics, and manipulate reported administrative costs.

In September 2018, the federal government issued a report that revealed another type of fraud in this area: “widespread and persistent performance problems related to denials of care and payment.” This report found that Medicare Advantage organizations improperly denied coverage for health care services in many cases, and forced patients to endure lengthy appeals processes to obtain their proper coverage. The types of fraud that can arise are likely to increase over time.

When companies that manage Medicare Advantage and Medicaid managed care plans receive hundreds of billions of dollars from the government on what is basically an honor system without sufficient transparency into how that money is spent or retained, fraud almost always ensues.

https://www.statnews.com…

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Comment:

By Don McCanne, M.D.

The next time you hear a politician claim to support Medicare for All, it might be wise to ask if that includes supporting the private Medicare Advantage plans. The insurance lobby organization, America’s Health Insurance Plans (AHIP), has collected the signatures of 368 members of Congress for letters to encourage the Centers for Medicare and Medicaid Services to further nurture the private Medicare Advantage plans that are already displacing the traditional Medicare program – now about 40 percent.

The plans are popular primarily because there is no need to purchase an additional Medigap plan. Much has been written about the perversities of these private plans, but most of the deficiencies remain out pf the view of the enrollees. Just as a reminder, excerpts from the STAT article, “Cloud of Secrecy,” explain how “fraud almost always ensues.”

The only model with Medicare for All label that achieves the goals of reform (universality, equity, efficiency, affordability) is the single payer model that eliminates private plans. Yet many politicians who professed to support single payer Medicare for All are now backtracking by stating that private health plans should remain as an option. This is a clear rejection of single payer since most of the efficiencies and the egalitarianism of single payer are lost under a multi-payer system that includes private insurers.

Of particular concern is this overwhelming endorsement by members of Congress of the private Medicare Advantage plans which automatically eliminates any consideration of a bona fide Single Payer Medicare for All program.

You might want to check the signatures on the two letters to see if the names of your members of Congress are listed. If so, you might also want to share your thoughts with them.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Matthew Sheffield
The Hill, February 7, 2019

A new poll finds that about only one in 10 registered voters want the equivalent of Medicare for all if it means abolishing private health insurance plans.

In a Hill-HarrisX survey released Thursday, 13 percent of respondents said they would prefer a health care system that covers all citizens and doesn’t allow for private plans, an approach that is sometimes referred to as “single-payer.”

The most popular option, at 32 percent, consisted of a universal, government-operated system that also would allow people to buy private, supplemental insurance.

Twenty-six percent of respondents said they wanted a government insurance plan offered to all citizens, but one that doesn’t compel people with private plans to use it, a system sometimes called a “public option.”

A small minority of 15 percent of voters said they wanted the government to completely remove itself from paying for health care, while another 14 percent said they want to keep the existing health care system intact.

The Hill-HarrisX survey was conducted among a statistically representative sample of 1,001 registered voters from Feb. 1-2. It has a sampling margin of error of 3.1 percentage points.

The Hill-HarrisX Daily Poll

Which of the following comes closest to your view?

15% – The government should remove itself from paying for all health care

14% – The current healthcare system should be kept as is

26% – Any citizen should be able to sign up for Medicare/Medicaid regardless of age or income while those with private plans could keep their existing insurance

13% – Medicare/Medicaid should be expanded to cover all citizens regardless of age or income and private health plans should be abolished

32% – Medicare/Medicaid should be expanded to cover all citizens regardless of age or income but people should be able to purchase private supplemental plans

https://thehill.com…

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Comment:

By Don McCanne, M.D.

This survey is important because it is being cited by others as proof that voters want to be able to keep their private insurance plans, and thus they believe that politicians are stretching too far when they support a single payer version of Medicare for all that would eliminate all private insurance.

Actually these results are not that straightforward. Those surveyed were given five choices, and that means that each choice would average 20 percent support. For any option to approach 100 percent support, almost everyone would have had to reject the other four choices. That would be highly unlikely in any poll in which the advantages and disadvantages of each option are not that clear.

Three of the choices included a base of Medicare/Medicaid. That alone can be confusing since many people are aware that Medicaid is a welfare program for low-income individuals and there would be some reluctance to choose a welfare program to apply to everyone as either an option for enrollment or as a mandated plan.

The Medicare/Medicaid option that allows people to sign up voluntarily or keep their existing private plan corresponds to the public option proposal being bantered about, although many might not make that association, nor even know what the ramifications of the public option would be. One-fourth selected this choice.

One of the other two Medicare/Medicaid options is a mandated program that includes everyone and would allow individuals to purchase additional private supplemental plans. That is not unlike our current program of allowing Medicare beneficiaries to purchase a supplemental Medigap plan. By implication, this seems to assume that the proposed Medicare/Medicaid program leaves people exposed to financial risk unless additional coverage is obtained. Thus it is perplexing that this was the most popular choice – with one-third selecting it. Why would people select a plan that would require the purchase of additional coverage to ensure adequate financial security?

The other Medicare/Medicaid mandated plan seems scary to some because it would abolish private health plans with which most of us are very familiar. This fear made this the least popular choice – at 13 percent – and thus led to the title of the article in The Hill. Only 13 percent want Medicare for All if it means the end of private insurance. The irony is that this is the choice that is closest to Single Payer Medicare for All in which everyone is guaranteed health care for life which is affordable – the least expensive model of comprehensive reform – and allows free choice of health care professionals and institutions. The need for private health insurance, with all of its inefficiencies, extra costs, and administrative excesses, is eliminated.

The other two unpopular choices were keeping the system as it is and removing the government from paying for health care. Apparently the public does understand that the system needs to be changed and that the government should be involved in the financing. Seventy-one percent chose one of three Medicare/Medicaid options – presumably a proxy for government involvement.

Although the politicians campaigned on Medicare for all, they are very busy backpedaling now by denying that they would abolish private insurance. Surely they understand that keeping private insurance as an option destroys most of the benefits of the single payer model – universality, equity, administrative efficiency, comprehensiveness, accessibility, and affordability. By keeping private insurers in place, collectively we pay more and get less. That’s not what we want, or at least it shouldn’t be.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Sara R. Collins, Herman K. Bhupal, and Michelle M. Doty
The Commonwealth Fund, February 7, 2019

The greatest deterioration in the quality and comprehensiveness of coverage has occurred among people in employer plans. More than half of Americans under age 65 — about 158 million people — get their health insurance through an employer, while about one-quarter either have a plan purchased through the individual insurance market or are enrolled in Medicaid. Although the ACA has expanded and improved coverage options for people without access to a job-based health plan, the law largely left the employer market alone.

Since the ACA, Fewer Adults Are Uninsured, but More Are Underinsured

Compared to 2010, when the ACA became law, fewer people today are uninsured, but more people are underinsured. Of the 194 million U.S. adults ages 19 to 64 in 2018, an estimated 87 million, or 45 percent, were inadequately insured.

There also has been some improvement in long-term uninsured rates. Among adults who were uninsured at the time of the survey, 54 percent reported they had been without coverage for more than two years, down from 72 percent before the ACA coverage expansions went into effect.

More Adults Are Underinsured, with the Greatest Growth Occurring Among Those with Employer Coverage

Of people who were insured continuously throughout 2018, an estimated 44 million were underinsured because of high out-of-pocket costs and deductibles. This is up from an estimated 29 million in 2010. The most likely to be underinsured are people who buy plans on their own through the individual market including the marketplaces. However, the greatest growth in the number of underinsured adults is occurring among those in employer health plans.

Fewer Adults Report Not Getting Needed Care Because of Costs, but Gains Have Stalled in Recent Years

In 2014, the year the ACA’s major coverage expansions went into effect, the share of adults in our survey who said that cost prevented them from getting health care that they needed, such as prescription medication, dropped significantly. But there has been no significant improvement since then.

Inadequate Coverage Is Associated with More Cost-Related Problems Getting Needed Care

The lack of continued improvement in overall access to care nationally reflects the fact that coverage gains have plateaued, and underinsured rates have climbed. People who experience any time uninsured are more likely than any other group to delay getting care because of cost. And among people with coverage all year, those who were underinsured reported cost-related delays in getting care at nearly double the rate of those who were not underinsured.

Fewer Adults Have Difficulty Paying Their Medical Bills, but the Improvement Has Stalled

There was modest but significant improvement following the ACA’s coverage expansions in the proportion of all U.S. adults who reported having difficulty paying their medical bills or said they were paying off medical debt over time. However, those gains have stalled.

Inadequate Coverage Is Associated with More Problems Paying Medical Bills

Inadequate insurance coverage leaves people exposed to high health care costs, and these expenses can quickly turn into medical debt. More than half of uninsured adults and insured adults who have had a coverage gap reported that they had had problems paying medical bills or were paying off medical debt over time. Among people who had continuous insurance coverage, the rate of medical bill and debt problems is nearly twice as high for the underinsured as it is for people who are not underinsured.

From the Conclusion

U.S. working-age adults are significantly more likely to have health insurance since the ACA became law in 2010. But the improvement in uninsured rates has stalled. In addition, more people have health plans that fail to adequately protect them from health care costs, with the fastest deterioration in cost protection occurring in the employer market. The ACA made only minor changes to employer plans, and the erosion in cost protection has taken a bite out of the progress made in Americans’ health coverage since the law’s enactment.

Health care costs are primarily what’s driving growth in premiums across all health insurance markets. Employers and insurers have kept premiums down by increasing consumers’ deductibles and other cost-sharing, which in turn is making more people underinsured.

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WHY ARE INSURED AMERICANS SPENDING SO MUCH OF THEIR INCOME ON HEALTH CARE COSTS?

Several factors may be contributing to high underinsured rates among adults in individual market plans and rising rates in employer plans:

1. Although the Affordable Care Act’s reforms to the individual market have provided consumers with greater protection against health care costs, many moderate-income Americans have not seen gains. The ACA’s essential health benefits package, cost-sharing reductions for lower- income families, and out-of-pocket cost limits have helped make health care more affordable for millions of Americans. But while the cost-sharing reductions have been particularly important in lowering deductibles and copayments for people with incomes under 250 percent of the poverty level (about $62,000 for a family of four), about half of people who purchase marketplace plans, and all of those buying plans directly from insurance companies, do not have them.

2. The bans against insurers excluding people from coverage because of a preexisting condition and rating based on health status have meant that individuals with greater health needs, and thus higher costs, are now able to get health insurance in the individual market. Not surprisingly, the survey data show that people with individual market coverage are somewhat more likely to have health problems than they were in 2010, which means they also have higher costs.

3. While plans in the employer market historically have provided greater cost protection than plans in the individual market, businesses have tried to hold down premium growth by asking workers to shoulder an increasing share of health costs, particularly in the form of higher deductibles. While the ACA’s employer mandate imposed a minimum coverage requirement on large companies, the requirement amounts to just 60 percent of typical person’s overall costs. This leaves the potential for high plan deductibles and copayments.

4. Growth in Americans’ incomes has not kept pace with growth in health care costs. Even when health costs rise more slowly, they can take an increasingly larger bite out of incomes.

https://www.commonwealthfund.org…

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Trump Versus the Socialist Menace

By Paul Krugman
The New York Times, February 7, 2019

After all, voters overwhelmingly support most of the policies proposed by American “socialists,” including higher taxes on the wealthy and making Medicare available to everyone (although they don’t support plans that would force people to give up private insurance — a warning to Democrats not to make single-payer purity a litmus test).

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

Many politicians today are walking away from Single Payer Medicare for All – a system that would make health care affordable for everyone. Many suggest instead that we merely need to add one more option to our fragmented system of financing health care. So how is the system that they want to protect working?

Of just the U.S. adults alone – the 194 million aged 19 to 64 in 2018 – an estimated 87 million, or 45 percent, were inadequately insured. The greatest growth in underinsured has been in the insurance market that supposedly we were protecting – the employer-sponsored health plans that are required to cover only 60 percent of the typical person’s overall costs.

This is shocking! The financial protection supposedly afforded by private employer-sponsored plans is deteriorating. Yesterday’s Quote of the Day revealed that the incidence of medical bankruptcy has not declined since the implementation of the Affordable Care Act.

And yet there is a surge in the call to protect private insurance from being displaced by a single payer Medicare for All system. As only one of hundreds of examples, Paul Krugman writes that people don’t support plans that would force them to give up private insurance – “a warning to Democrats not to make single-payer purity a litmus test.”

When you look at all of the other proposals designed to avoid the enactment of a single payer Medicare for All system, none of them address adequately this deterioration in the financial protection that should be an essential feature of private insurance. Yet if you redesign private plans so they do provide that protection, the premiums would be so high that much greater public subsidies would be required – subsidies that the politicians will tell us we can’t afford.

They don’t get it. Our current fragmented, dysfunctional, administratively wasteful system is by far the most expensive model of financing health care, while taking away choice of doctors and hospitals and forcing on individuals excessive out-of-pocket costs that have resulted in inadequate coverage for 87 million adults. Eighty-seven million!

All of that would go away with the least costly system of providing comprehensive coverage for everyone: Single Payer Medicare for All.

Remember when they tell us that people want their private plans protected from Medicare for All, 87 million adults are potentially exposed to financial hardship, and most of them don’t even realize it since they have not yet faced major medical expenses. But what is insurance for? Prepaid medical care through the social insurance program of Single Payer Medicare for All will show you what it’s for. Eighty-seven million fewer adults that would have to worry about the potential of debt from medical bills.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By David U. Himmelstein, M.D.; Robert M. Lawless, J.D.; Deborah Thorne, Ph.D.; Pamela Foohey, J.D.; and Steffie Woolhandler, M.D., M.P.H.
AJPH, March 2019

In surveys conducted by researchers with the Consumer Bankruptcy Project in 2001 and 2007, a majority of recently bankrupt debtors implicated medical bills or illness-related work loss as causes of their bankruptcy, findings that President Obama used to argue for passage of the Affordable Care Act (ACA). The ACA both expanded and upgraded health insurance coverage, banning preexisting illness exclusions, imposing a cap on out-of-pocket spending, and mandating coverage for essential benefits. Although these reforms might attenuate the risk of medical bankruptcy, increasing medical costs and stagnant incomes could have the opposite effect.

We sought to assess the incidence of medical bankruptcy in the current era using methods similar to those employed by the Consumer Bankruptcy Project in its 2001 and 2007 surveys.

The share of debtors reporting a medical contributor before the ACA’s January 1, 2014 implementation (65.5%) and after implementation (67.5%) was similar (P = .37). Both of these figures are close to the 62.1% estimate from the 2007 survey, and in a difference-in-differences analysis we found no evidence that trends differed between states that did versus did not accept the ACA’s Medicaid expansion (P = .76). The responses regarding individual items in the current survey are also similar to those in 2007, when 57.1% of debtors cited medical bills as contributors to their bankruptcy and 40.3% cited income loss due to illness.

Medical bankruptcy has garnered public attention because it resonates with the abuse that Americans—including many middle-class Americans—suffer at the hands of our health care finance system. Despite gains in coverage and access to care from the ACA, our findings suggest that it did not change the proportion of bankruptcies with medical causes.

Moreover, medical costs continue to outpace incomes, 29 million remain uninsured, and many of those with health insurance face unpredictable and unaffordable out-of-pocket costs as copayments and deductibles ratchet up. And few Americans have adequate disability coverage, leaving them vulnerable to illness-related income loss that amplifies the financial distress caused by medical bills.

Although death is inevitable, good public policy can ensure that financial suffering from illness is not.

https://ajph.aphapublications.org…

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Comment:

By Don McCanne, M.D.

The Affordable Care Act did not change the proportion of bankruptcies with medical causes. “The share of debtors reporting a medical contributor before the ACA’s January 1, 2014 implementation (65.5%) and after implementation (67.5%) was similar.”

A well designed single payer Medicare for All program would essentially eliminate medical bills as a contributing cause to bankruptcy though we would still need more effective programs that would replace lost income due to illness – income that would be required to meet basic needs.

The Affordable Care Act has not provided enough financial protection for those with health care needs, and merely adding to the insurance market another public option, as many politicians are suggesting, will do essentially nothing to reduce the scourge of medical bankruptcy. We need to enact and implement Single Payer Medicare for All if we want to seriously address this problem.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

By Zack Cooper, Stuart Craig, Martin Gaynor, Nir J. Harish, Harlan M. Krumholz, and John Van Reenen
Health Affairs, February 2019

Abstract

Evidence suggests that growth in providers’ prices drives growth in health care spending on the privately insured. However, existing work has not systematically differentiated between the growth rate of hospital prices and that of physician prices. We analyzed growth in both types of prices for inpatient and hospital-based outpatient services using actual negotiated prices paid by insurers. We found that in the period 2007–14 hospital prices grew substantially faster than physician prices. For inpatient care, hospital prices grew 42 percent, while physician prices grew 18 percent. Similarly, for hospital-based outpatient care, hospital prices grew 25 percent, while physician prices grew 6 percent. A majority of the growth in payments for inpatient and hospital-based outpatient care was driven by growth in hospital prices, not physician prices. Our work suggests that efforts to reduce health care spending should be primarily focused on addressing growth in hospital rather than physician prices. Policy makers should consider a range of options to address hospital price growth, including antitrust enforcement, administered pricing, the use of reference pricing, and incentivizing referring physicians to make more cost-efficient referrals.

From the Discussion

Our findings suggest that there may be significant differences in the bargaining leverage of hospitals and physicians. More work needs to be done to quantify the differences between the two groups’ bargaining leverages and the extent to which there are differences in the price elasticities facing the two types of providers.

Our results also have direct implications for strategies to address growth in health spending for the privately insured. For example, a bill recently introduced in the California legislature would allow state officials to regulate hospital and physician prices. Broad-brush efforts that do not discriminate by setting could miss the mark. Our work suggests that instead of focusing on growth of physician prices (which have grown roughly at the pace of inflation), in the short run policy makers should devote more of their efforts to addressing growth of hospital prices.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

Under our current fragmented system of financing health care, it is no surprise that hospital prices have been growing faster than physician prices for both inpatient and outpatient services. Merger and acquisition activities, including hospital acquisition of medical groups have long been suspected as contributors to health care inflation. So what do we do about it?

It is well established that markets do not work well in setting prices for health care, whereas publicly financed and publicly administered programs are more effective in determining appropriate value. A well designed single payer Medicare for All program would go a long way toward improving pricing in health care.

Central planning and budgeting of capital improvements does a better job in controlling capacity of the system, thus ensuring the right number of beds. Operations of the facility should be funded through global budgets, just as the fire department is. That would both slow excessive growth in prices while ensuring adequate funding to fulfill the community’s needs.

Physicians would be reimbursed at negotiated rates whether through fee-for-service or capitation, depending on the practice model. Our government Medicare program has been more effective than private insurers at keeping price increases at sustainable rates.

At any rate, according to this study, “efforts to reduce health care spending should be primarily focused on addressing growth in hospital rather than physician prices.”

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