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ACA exchange plans are under attack

ACA exchange plans are under attack

The Potential Impact of Short-Term Limited- Duration Policies on Insurance Coverage, Premiums, and Federal Spending

By Linda J. Blumberg, Matthew Buettgens, and Robin Wang
Urban Institute, February 2018

In Brief

On February 20, 2018, the Departments of Treasury, Labor, and Health and Human Services released a proposed regulation that would increase the maximum length of short-term, limited-duration insurance policies to one year. These plans, sold to individuals and families, are not federally required to comply with the Affordable Care Act regulations that prohibit annual and lifetime benefit limits, require coverage of all essential health benefits, and otherwise prohibit insurers from setting premiums or choosing whether to sell coverage to particular people based on applicants’ health status and health history. As such, these plans do not meet minimum essential coverage standards under the law; thus, the Congressional Budget Office does not consider them private insurance. If implemented, the rule would permit these plans to compete against the ACA-compliant plans.

Importantly, this change would be implemented on top of an array of other significant policy changes made since the beginning of 2017. We analyze the implications of the 2017 policy changes relative to the ACA as originally designed and implemented (prior law), in addition to the potential consequences of the proposed expansion of short-term limited-duration policies. In estimating the effects of these changes on insurance coverage, premiums, and federal spending, we take into account the variations in state circumstances and state-specific laws on short-term plans.

Key findings include the following:

* The elimination of the individual-mandate penalties and the other policy changes, such as the withdrawal of cost-sharing reduction payments and the diminution of federal investments in advertising and enrollment assistance during 2017 that affected the 2018 open enrollment period, will lead to an additional 6.4 million people uninsured in 2019 compared with prior law (12.5 percent of the nonelderly population uninsured compared with 10.2 percent).

* The introduction of expanded short-term, limited-duration policies, consistent with proposed regulations, would increase the number of people without minimum essential coverage by 2.5 million in 2019. Of the 36.9 million people without minimum essential coverage, 32.6 million would have no coverage at all (completely uninsured), and 4.2 million would enroll in expanded short-term limited-duration plans.

* The combined effect of eliminating the individual-mandate penalties and expanding short-term limited-duration policies would increase 2019 ACA-compliant nongroup insurance premiums 18.2 percent on average in the 43 states that do not prohibit or limit short-term plans.

* Federal government spending in 2019 will be an estimated 9.3 percent higher than under prior law, owing to the combined effect of expanding short-term limited-duration policies, eliminating the individual-mandate penalties, and other recent policy changes. This increase in federal spending is lower than the overall increase in premiums because of cost reductions caused by decreases in enrollment.

From the Discussion:

The expansion of short-term limited-duration policies implied in the current administration’s proposed rule has significant implications, particularly for insurance coverage and premiums in the remaining ACA-compliant insurance market. We estimate that ACA-compliant private nongroup coverage would fall by 2.1 million people in 2019 from the expansion of STLD policies alone, exacerbating the nongroup market decline of 5.5 million people already anticipated in 2019 because of the elimination of the individual-mandate penalties and other policy changes made since early 2017. The effects will vary across the states given differences in state laws and regulations as well as differences in health care costs and population characteristics. In the 43 states most affected, premiums in the ACA-compliant nongroup insurance market would increase 18 percent on average owing both to the expansion of the short-term plans and elimination of the individual-mandate penalties. This premium effect would be 20 percent or higher in nine states. Those affected by these large premium increases would be disproportionately middle-income people with health problems because they prefer health insurance that covers essential health benefits, are unlikely to have access to medically underwritten short-term limited-duration policies, and are not financially protected by the ACA’s premium tax credits. For people who have ACA-compliant coverage and are eligible for premium tax credits, these higher premiums translate into higher premium tax credits per enrollee paid by the federal government. In total, 9.0 million fewer people would have insurance (minimum essential coverage) compared with prior law.

https://www.urban.org…

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Twenty states sue federal government, seeking end to Obamacare

By Eric Beech
Reuters, February 26, 2018

A coalition of 20 U.S. states sued the federal government on Monday over Obamacare, claiming the law was no longer constitutional after the repeal last year of its requirement that people have health insurance or pay a fine.

Led by Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel, the lawsuit said that without the individual mandate, which was eliminated as part of the Republican tax law signed by President Donald Trump in December, Obamacare was unlawful.

“The U.S. Supreme Court already admitted that an individual mandate without a tax penalty is unconstitutional,” Paxton said in a statement. “With no remaining legitimate basis for the law, it is time that Americans are finally free from the stranglehold of Obamacare, once and for all,” he said.

https://www.reuters.com…

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Comment:

By Don McCanne, M.D.

This Urban Institute analysis demonstrates once again that the Trump administration has been effective in reducing both the adequacy and prevalence of health insurance coverage. Elimination of the individual mandate penalties, elimination of cost sharing reduction payments, and slashing advertising and enrollment assistance funding for ACA exchange plans have already had a negative impact, and now they will be enticing healthy individuals to move from ACA-compliant plans into short-term, limited-duration junk insurance.

Linda Blumberg and her colleagues estimate that next year about 33 million people will have no insurance at all, another 4 million will be enrolled in these almost worthless junk insurance plans (total of 37 million without minimum essential coverage), and, of course, tens of millions will still be underinsured because of the inadequacies of the ACA-compliant plans. Further, adverse selection in the ACA-compliant nongroup plans is likely to cause an 18 percent increase in their premiums. Some private insurers may find these markets no longer favorable and withdraw from them. Junk plans are no substitute since they do not protect patients in need.

The ACA exchanges barely squeaked through in a Supreme Court decision that ruled that the individual mandate penalties were taxes and therefore constitutionally permissible under federal law. Since this penalty for being uninsured has now been removed, twenty states are suing to have the Affordable Care Act overturned, arguing that since the constitutional tax no longer exists,  the ACA exchanges supposedly no longer have a legal basis for their existence. There will no doubt be many varying legal opinions on this argument, but the fact remains that the attacks on ACA will continue.

It has already been established that Medicare is constitutional. In fact, the Supreme Court has ruled that individuals cannot decline to be enrolled in Part A of Medicare if they accept Social Security benefits. They are mandated to accept Medicare enrollment. Also Medicare is not as subject to absurd administrative decisions designed to trash the program, partly because of the legacy law and decisions supporting the program, and partly because it would be political insanity for Congress and the Administration to attempt to reduce or eliminate Medicare, considering its great popularity with the public.

It would be foolish to hope that the damage being done to the Affordable Care Act will somehow not have a negative impact and that tweaking it will counter the multitude of policy studies that show that it is the most expensive way of expanding health care and yet falls tragically short of our universal reform goals. With the growing popularity of the Medicare for All concept, the obvious path that we should be following is to affirm the constitutionality of Medicare by improving it and then expanding it to cover everyone.

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Single-payer health care provides opportunities

By George Jolly, M.D.
Albany (N.Y.) Times Union, Letters, February 27, 2018

Regarding the letter from Heather Briccetti, president and CEO, Business Council of New York State, (“Single-payer system would be utter disaster,” Feb. 7), I thank Briccetti for bringing the discussion of single-payer health care finance into the public eye with her response to Howie Hawkins’ commentary (Opinion on the Web: “Single-payer would save N.Y. billions,” Jan. 30). However, Briccetti’s response includes serious errors.

Briccetti writes that the “plan would remove choice in health care.” This is false. With a single-payer system, the patient has free choice of doctor, hospital or other provider. Insurance companies, for which there will no longer be choice, do not provide health care.

Briccetti writes the proposal would “raise taxes by more than $200 billion.” This also is false. Assessments on earned and unearned income will amount to $92 billion. The largest financing will come from Medicare and Medicaid. Payroll assessments replace today’s health insurance premiums. There will be no additional out-of-pocket expenses (co-pays or deductibles). In fact, 98 percent of New Yorkers will pay less for health care than they do now.

Briccetti also writes the proposal would eliminate thousands of jobs. Yes, insurance company jobs will be eliminated, but much of that talent and technology would find a place in the new system.

Briccetti does not address the business opportunities that would be created by lower health care costs for most employers and employees. There are valid issues to debate, but Briccetti’s use of scare tactics and questionable information is not helping the conversation. New Yorkers should view the New York Health Act as an opportunity to plan for optimum use of our state’s resources.

https://www.timesunion.com…

Important lessons from Canada

Canada's universal health-care system: achieving its potential

By Danielle Martin, M.D., Ashley P. Miller, M.D., Amélie Quesnel-Vallée, Ph.D., Nadine R. Caron, M.D., Bilkis Vissandjée, Ph.D., Gregory P. Marchildon, Ph.D.
The Lancet, February 22, 2018

Key messages

* Canada’s universal, publicly funded health-care system—known as Medicare—is a source of national pride, and a model of universal health coverage. It provides relatively equitable access to physician and hospital services through 13 provincial and territorial tax-funded public insurance plans.

* Like most countries that are members of the Organisation for Economic Co-operation and Development (OECD), Canada faces an ageing population and fiscal constraints in its publicly funded programmes. Services must be provided across vast geography and in the context of high rates of migration and ethnocultural diversity in Canadian cities.

* In 2017, the 150th anniversary of Canadian Confederation, the three key health policy challenges are long waits for some elective health-care services, inequitable access to services outside the core public basket, and sustained poor health outcomes for Indigenous populations.

* To address these challenges, a renewal of the tripartite social contract underpinning Medicare is needed. Governments, health-care providers (especially physicians), and the public must recommit to equity, solidarity, and co-stewardship of the system.

* To fully achieve the potential of Medicare, action on the social determinants of health and reconciliation with Indigenous peoples must occur in parallel with health system reform.

* Without bold political vision and courage to strengthen and expand the country’s health system, the Canadian version of universal health coverage is at risk of becoming outdated.

Canadian lessons for a global world

Canada’s most important accomplishment by far has been the establishment of universal health coverage, which is free at the point of care, for medical and hospital services. The preservation and enhancement of Medicare are due largely to Canadians’ pride in caring for one another—an expression of equity and solidarity that runs core to Canadian values. Hinging on a social consensus of equitable access to health care, the simplicity of the system—no variable coverage, no means testing, and no co-payments—is easy for Canadians to understand and support.

But universal health coverage is an aspiration, not a destination. All countries must continuously consider the depth and scope of coverage that is politically achievable and fiscally feasible. In Canada, that necessary work has not been done for more than 40 years. The Canadian experience thus offers a cautionary tale on incrementalism. In the absence of bold political vision and courage, coverage expansion can be very difficult to achieve, with the result that the Canadian version of universal health coverage is at risk of becoming outdated.

A powerful mechanism such as a single-payer insurance system is only as good as the willingness of system leaders to use it for reform. In turn, reform requires a willingness on the part of governments to pursue change, rather than simply managing the status quo. Clear mechanisms are lacking to consistently realign resources to meet population needs, promote evidence-based care, reduce variation, and contain costs. Health care is ultimately a local affair, and no patient or provider wants the payer in the examination room. However, much of the potential benefit of a single-payer structure is lost when institutions are independent, with little accountability. The potential of the system is further limited by the fact that physicians function alongside but outside the system, rather than as accountable participants through employment or other contractual means. Co-stewardship and accountability should be recognised as integral parts of payment systems rather than avoided or grafted on afterwards.

Conclusion

When Tommy Douglas first established public health insurance in Saskatchewan in the late 1940s, his goal was to begin by creating insurance models that would eliminate the financial barriers to care. He intended to follow that with a second reform of health service delivery that would focus on population health needs, with an emphasis on the reform of delivery models and on the social determinants of health. His government, and subsequent governments, provincially and federally, managed to overcome fragmented institutional structures and decentralisation of power to make the first stage of his vision a reality, but not yet the second. To achieve that second stage in the 21st century, determined action on the social determinants of health and a joint effort by governments, health-care providers, and the public in achieving health system reform will be needed. With bold political vision and courage, this ambitious goal is within reach.

http://www.thelancet.com…

PDF version:
http://www.thelancet.com…

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Canada’s global health role: supporting equity and global citizenship as a middle power

By Stephanie A. Nixon, Ph.D., Prof Kelley Lee, D.Phil., Prof Zulfiqar A. Bhutta, Ph.D., Prof James Blanchard, Ph.D., Prof Slim Haddad, Ph.D., Prof. Steven J. Hoffman, Ph.D., Prof. Peter Tugwell, M.D.
The Lancet, February 22, 2018

Key messages

* Canada boasts long-standing and active engagement in global health, shaped by the country’s history of nation building and middle-power status. Ongoing nation building emphasises consensus building and equity in foreign policy, and relies on strong commitment to multilateralism.

* Canada’s unique strengths in global health leadership draw from the country’s legacy and contemporary challenges of building a multicultural society, maintaining a bilingual heritage, and reconciling the injustices inflicted on Indigenous peoples. Health equity has been a key focus.

*  The quality of Canadian contributions to global health has been high, but impact has been diluted by a tendency to spread limited resources thinly, and by fragmentation among global health institutions, priorities, and policies in Canada.

* The previous Conservative federal government, led by Stephen Harper, adopted an approach to foreign policy that favoured technocratic solutions and tied global health initiatives to trade and investment opportunities benefiting Canada. It championed maternal and child health in the Millennium Development Goal era, but critics say this period was a sharp departure from traditional Canadian values of equity, human rights, and global citizenship.

* High expectations exist for the current Liberal government led by Justin Trudeau, which has signalled a return to these traditional Canadian values. Canada now has an important opportunity to assert much-needed global leadership, including in global health. Real policy change and concrete action on issues such as foreign aid assistance and Indigenous health inequities are urgently needed to demonstrate the credibility of the government’s commitment to these values.

Conclusion

Canada was formed 150 years ago, bringing together a vast land at risk of being subsumed by its larger neighbour to the south. The political forging of the country came at a considerable price, notably to Indigenous peoples, and the country has learned hard lessons about the importance of inclusion and equity. Moreover, Canada’s unique history continues to unfold. Authentically reconciling its relationship with Indigenous peoples, maintaining social cohesion amid diversity, and successfully meeting domestic needs while remaining open to globalisation will be integral to the country’s next 150 years. Against this backdrop, Canada is uniquely positioned to become a more prominent global health leader by harnessing its distinct experiences, diverse assets, and core values. Like the country itself, Canada’s role in global health remains a work in progress.

http://www.thelancet.com…

PDF version:
http://www.thelancet.com…

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Comment:

By Don McCanne, M.D.

This two part series on Canada’s health system, published in The Lancet, provides an excellent overview and update on their system. It is closest to the model that single payer advocates in the United States support. But we have much to learn from Canada – both on what does work and what doesn’t. These articles should be downloaded and retained as invaluable reference sources for our work here in the United States.

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Why are Democratic party think tanks still not backing universal health care?

The Center for American Progress is inching closer to ‘Medicare for All’ – but its version leaves some gaping holes

By Adam Gaffney, M.D.
The Guardian, Feb. 25, 2018

On Thursday, the Center for American Progress (CAP), a Democratic party-affiliated think tank, launched a proposal confusingly called “Medicare Extra for All.” For proponents of a Bernie Sanders-style single-payer “Medicare for All,” this might seem like a positive development. Well, yes and no.

On the one hand, “Medicare Extra” is a step to the left for CAP, suggesting that the Democratic establishment is following the lead of its galvanized base. On the other hand, this new proposal would exact sacrifices from patients to placate the insurance industry, and could serve to divert the single-payer movement, which has been rapidly gaining steam.

A debate over the next step on health reform has roiled the Democratic party. Some, like Hillary Clinton, have advocated incremental changes to Obamacare, such as a “public option.” Others, led by Bernie Sanders, seek to replace the hodgepodge of private and public health plans with “Medicare for All” – a single-payer program covering everyone without copays or deductibles.

Though Trump’s victory might have dampened support for the more radical road, it did just the opposite. The president swore to repeal the Affordable Care Act, and try he did – but apart from felling the individual mandate, the effort flopped in Congress. He did, however, rouse millions of Americans behind the cause of healthcare justice. Single-payer bills in both houses of Congress accrued record support in 2017, including a majority of House Democrats and more than a third of Democratic senators.

The political winds had shifted: progressives were out of power, but they were coalescing around a post-Trump plan – improved “Medicare for All” – overwhelmingly popular with the party’s base: about 69% of Democrats supported it, according to a September survey.

Enter Medicare Extra. CAP’s proposal is a response to these shifting winds. The new Medicare Extra program would automatically enroll anyone without other insurance. Premiums and out-of-pocket payments (eg copays and deductibles) would continue, with limits based on income.

Employers could choose to offer private coverage, or switch their employees into Medicare Extra. Notably, private insurers would get a big slice of the Medicare Extra market, enrolling millions in “Medicare Choice” coverage modeled on today’s wasteful, privatized Medicare Advantage plans, which in effect cost taxpayers “104% of per capita traditional Medicare spending” per enrollee, as noted in the Journal of the American Medical Association.

What’s not to like?

First, there’s the proposal’s voodoo economics. The US healthcare system hemorrhages cash through useless billing and bureaucracy, the inevitable consequence of battles between our jumble of profit-seeking insurers and the country’s providers. Transitioning to single-payer could end this waste, saving about $500bn annually; multi-payer systems such as Medicare Extra that add yet another plan to the existing slew of private insurers cannot. And without these efficiencies, expanding to fully universal coverage could prove unaffordable.

Second, because the economics don’t work, the coverage is insufficient. Although Medicare Extra would be more generous than most Obamacare plans, it would still leave millions encumbered with copayments and deductibles, which force people to choose between healthcare and other necessities. Keep in mind that one survey found that almost half of Americans couldn’t afford an unanticipated $400 expense, per the Washington Post.

Indeed, under the CAP program, some might see their coverage worsen if their employer elected to transition them to Medicare Extra. Consider that large employers’ plans cover, on average, 85.4% of healthcare costs. But Medicare Extra would cover only 80% of costs, for at least some families (depending on income). Republicans would have a field day scaremongering about the government taking away your healthcare plan. While CAP touts the political advantages of their plan, it may well be a juicier target for such scaremongering than “Medicare for All”, which would cover 100% of healthcare costs.

Medicare Extra offers an inferior policy option, when a better one is on the table. Improved “Medicare for all” can affordably provide healthcare to everyone. It’s widely supported by the progressive base – and indeed by the majority of the nation in most polls. And it can serve as a powerful political promise as we wade into the profoundly consequential 2018 and 2020 election season. Democrats would be wise to unite behind it, rather than be sidetracked by CAP’s second-rate scheme.

https://www.theguardian.com…

QOTD Extra: Frank Ticheli’s “An American Elegy”

An American Elegy

By Frank Ticheli
Gusman Concert Hall, University of Miami, Coral Gables, March 12, 2013

Performed by the Greater Miami Symphonic Band
Conducted by Gary Green
Off-stage trumpet solo by Alan Wolfe

From the Program Notes by Frank Ticheli:

An American Elegy is, above all, an expression of hope. It was composed in memory of those who lost their lives at Columbine High School on April 20, 1999, and to honor the survivors. It is offered as a tribute to their great strength and courage in the face of terrible tragedy. I hope the work can also serve as one reminder of how fragile and precious life is and how intimately connected we all are as human beings.

The work begins at the bottom of the ensemble’s register, and ascends gradually to a heartfelt cry of hope. The main theme that follows, stated by the horns, reveals a more lyrical, serene side of the piece. A second theme, based on a simple repeated harmonic pattern, suggests yet another, more poignant mood. These three moods – hope, serenity, and sadness – become intertwined throughout the work, defining its complex expressive character. A four-part canon builds to a climactic quotation of the Columbine Alma Mater. The music recedes, and an offstage trumpeter is heard, suggesting a celestial voice – a heavenly message. The full ensemble returns with a final, exalted statement of the main theme.

Performance of An American Elegy:
https://www.youtube.com…

Program Notes:
http://issuu.com…

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By Frank Ticheli, Pasadena
Los Angeles Times, Letters, February 20, 2018

When I composed “An American Elegy” nearly 20 years ago in response to the Columbine shooting in 1999, I thought it would be a singular episode, or at least a rare one, in our nation’s history. Sadly, I am constantly reminded how wrong I was.

Nothing will improve until more lawmakers admit that the Constitution was written by mere mortals doing the best they could without benefit of a crystal ball. Those same mortals saw this themselves, thereby permitting amendments to the Constitution. In other words, they possessed a humility and wisdom that many current lawmakers seem to lack.

Commonsense gun legislation may very well save the 2nd Amendment. This may not happen in my lifetime, but I have hope that our children’s generation will show more wisdom than the small-minded legislators from our generation.

“An American Elegy” has been performed frequently in response to mass shootings occurring since Columbine. I had no idea that could ever happen. I am sad about a cultural situation that makes it so.

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Comment:

By Don McCanne, M.D.

Today’s Quote of the Day Extra requires no explanation to single payer supporters who understand and support social justice for all. Frank Ticheli’s “An American Elegy” provides us with eleven minutes of contemplation that helps to fine tune our values.

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Exposing the value-based payment meme

How Value-Based Medicare Payments Exacerbate Health Care Disparities

By Rita Rubin, M.A.
JAMA, February 21, 2018

Paying physicians on the basis of the quality of their care, not the quantity, sounded like a good idea when Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which changed the way the government pays physicians.

For more than a decade, Medicare had paid physicians based on the number of services they provided to fee-for-service beneficiaries, whether or not those services were needed. Under MACRA, however, Medicare would assess the quality, value, and results of care physicians provided to these beneficiaries and reward the top performers while penalizing the worst.

The problem, health policy researchers say, is that evidence about how best to evaluate health care quality is lacking and currently used measures fail to account for differences in patients’ socioeconomic and health status that could skew quality scores in favor of practices that care for higher-income, better-educated, and less-complex patients.

Medicare’s pay-for-performance scheme is a zero-sum game, so bonuses for practices that score higher on quality measures are offset by the penalties levied on practices that score lower or don’t even submit data to play the game. “For every winner, there has to be a loser,” said Donald Berwick, MD, MPP, an administrator of the Centers for Medicare & Medicaid Services (CMS) during the Obama administration.

In this game, the losers are more likely to be physicians who care for poorer or sicker patients, and, in turn, their patients. “We are literally taking money from providers that serve the poor and giving it to providers that serve the rich,” said Karen Joynt Maddox, MD, MPH, a cardiologist and health services researcher at the Washington University School of Medicine in St Louis.

Continuing the Cycle

With the incentives stacked as they are, medical practices could game the current payment system by cherry-picking the patients who are more likely to try to stay healthy and, as a result, have better outcomes, thus making it appear that their physicians provide higher-quality care, said J. Michael McWilliams, MD, PhD, a general internist and professor of health care policy at Harvard Medical School.

He said he is more concerned that pay-for-performance incentives could discourage large organizations from opening or acquiring practices in poorer areas.

In a recent study in Annals of Internal Medicine, McWilliams and his coauthors found that the PVBM (Physician Value-Based Payment Modifier Program) had no effect on the quality or efficiency of care provided and likely exacerbated health care disparities by disproportionately penalizing practices that care for lower-income or sicker patients.

As of January 2018, the PBVM was succeeded by the Merit-based Incentive Payment System (MIPS), which differs mainly by allowing medical practices to choose the quality measures on which they’d like to be assessed. “Essentially, we are going from providers knowing the test questions in advance to providers being able to pick the test questions,” McWilliams said. “It further weakens the incentives of the program and allows for a lot more gaming behavior.”

And so, the cycle will persist, said Austin Frakt, PhD, coauthor of the editorial accompanying McWilliams’ article. Without accounting for patients’ socioeconomic status, practices that are otherwise doing a good job but happen to be serving lower-income patients will continue to be disproportionately hit with penalties, which “makes it harder for them to do a good job,” said Frakt, who holds appointments with the VA Boston Healthcare System, the Boston University School of Public Health, and the Harvard T.H. Chan School of Public Health. “The resources matter,” he added.

“I could see members of Congress saying, ‘Oh, sure, we should be able to measure quality in medical practices,’” said (Karen Joynt Maddox, MD, MPH, a cardiologist and health services researcher at the Washington University School of Medicine in St Louis). “The reality of that is much further away than any of us would prefer. We don’t even have the ability to collect and report high-quality clinical data…and that’s worse in underresourced settings.” However, even in places where the data are available, “we don’t have the science behind the quality measures,” she added.

Adjusting for Case Mix

“The critics say case-mix adjustment is incomplete. It will always be incomplete. You can’t get all the right variables on the page,” said Berwick, president emeritus and senior fellow at the Institute for Healthcare Improvement. On top of that, he said, providers could manipulate data for case-mix adjustment by coding patient visits as more complex than they actually were.

Race might be an appropriate variable to use for case-mix adjustment, Berwick said. After all, “blacks have a different disease burden. They’re of lower wealth. Overall, in the United States, the consequences of racism are still with us.”

However, that approach, while more difficult to game, has its own problems, he said. “What you’re then doing is saying, ‘If I am treating a population of more African-Americans, then I can have worse care, and you’ll adjust for that. It’s kind of like excusing the performance issues. How do you feel about that if you’re black?”

Seeking the Patient Perspective

According to Berwick and others, the current approaches to assessing the quality of care physicians provide leave out a key player: the patient. “We need to shift the question from ‘How are we [physicians] doing?’ to ‘How are you [patients] doing?’” said Berwick.

“It’s a paternalistic argument to say that we—CMS, scholars—are going to decide what high-quality means, and we’re just going to try to impose that or incentivize that,” Frakt added.

Berwick recently served on a panel convened by the Organisation for Economic Co-operation and Development (OECD), whose 35 member countries include the United States, that recommended using patient-reported indicators to strengthen the international comparison of health system performance.

“There remain substantive gaps in what is known about the experience of patients and the outcomes of care from the patient’s point of view,” panel members wrote in a report released in January 2017.

However, patient satisfaction should not be confused with outcomes, Frakt said. “Maybe I had a great visit with a physician, and I give him 5 stars out of 5. But what I really care about is getting my tendonitis resolved so I can run again.” No matter how likeable the physician, if a patient’s tendonitis has not improved by the time of a follow-up visit, the patient is not going to consider that a good outcome, Frakt said.

In the end, though, no matter what approach Medicare uses to pay physicians, it cannot be counted on to eliminate health care disparities, Berwick said.

“Pay-for-performance on the whole may well have aggravated disparities,” he acknowledged. But, he noted, “We have problems in social justice and income inequality and unfairness that need to be addressed directly, not indirectly, through public policy.”

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

It seems that these days almost every forum or treatise or journal article on health care financing reform begins with the admonition that we must start to pay for the value of health care delivered rather than for the volume, or the quality instead of the quantity. But then just try to find in the discussion that follows precise methods of demonstrating true global quality or precise methods of demonstrating how quantity can be reduced by eliminating selectively only that care that is not beneficial. Yet this aspiration has been repeated so often that it has become an empty meme.

Today’s article by Rita Rubin demonstrates that trying to comply with this meme fails in achieving the goals of reducing volume while increasing quality, but, worse, it may have adverse consequences that negatively impact patients and the professionals who care for them.

Years ago, in discussing the medical-industrial complex, Arnold Relman was one of many who pointed out that paying fee-for-service incentivizes greater volume regardless of the value of the services, whereas paying capitation (a fixed amount per patient regardless of the amount of care rendered) incentivizes a lower volume of care that increases margins by reducing overhead. Some have said that physicians should be paid a salary instead, but Relman pointed out that salaries incentivize sloth – in some ways a greater evil than greed.

The policy community is spending too much time looking at policies that might change the behavior of the health care professionals, even though plenty of studies have shown that there is not much impact from their schemes. They underrate the professionalism of the practitioners of the art of medicine. Give them the infrastructure and practice environment in which they are free to apply their skills, and they will do the right thing with and for the patient. Quantity is controlled by the resources available and quality is incentivized by the favorable practice environment. Sloth is tempered by by reducing the causes of burnout, such as having to comply with intrusive protocols and measurements that have little positive impact on patient care.

Donald Berwick reminds us that it really is all about the patient, and not just in the health arena. As he says, “Pay-for-performance on the whole may well have aggravated disparities,” but “we have problems in social justice and income inequality and unfairness that need to be addressed directly, not indirectly, through public policy.”

The next time a presenter opens with “value instead of volume” or “quality instead of quantity,” please feel free to scream – as loud as you can.

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CAP’s ‘Medicare Extra for All’ – What it really is

Beyond ‘Obamacare’: New liberal plan on health care overhaul

By Ricardo Alonso-Zaldivar
Associated Press, February 22, 2018

A major liberal policy group is raising the ante on the health care debate with a new plan that builds on Medicare to guarantee coverage for all.

Called “Medicare Extra for All,” the proposal to be released Thursday by the Center for American Progress gives politically energized Democrats more options to achieve a long-sought goal.

In a nod to political pragmatism, the plan would preserve a role for employer coverage and for the health insurance industry. Employers and individuals would have a choice of joining Medicare Extra, but it would not be required.

That differs from the more traditional “single-payer” approach advocated by Vermont independent Sen. Bernie Sanders, in which the government would hold the reins of the health care system.

Even though the plan has no chance of passing in a Republican-controlled Congress, center president Neera Tanden said, “We think it’s time to go bolder.”

“There is consensus on the progressive side that universal coverage should be the goal and health care is a right,” she added.

The Center for American Progress is a think tank that was closely aligned with President Barack Obama and 2016 Democratic presidential nominee Hillary Clinton. A 2005 proposal from the center foreshadowed Obama’s Affordable Care Act.

https://www.apnews.com…

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Medicare Extra for All

By the CAP Health Policy Team
Center for American Progress, February 22, 2018

Health care is a right: No American should be left to suffer without the health care they need. The United States is alone among developed countries in not guaranteeing universal health coverage.

To address these challenges, the Center for American Progress proposes a new system—“Medicare Extra for All.” Medicare Extra would include important enhancements to the current Medicare program: an out-of-pocket limit, coverage of dental care and hearing aids, and integrated drug benefits. Medicare Extra would be available to all Americans, regardless of income, health status, age, or insurance status.

Employers would have the option to sponsor Medicare Extra and employees would have the option to choose Medicare Extra over their employer coverage. Medicare Extra would strengthen, streamline, and integrate Medicaid coverage with guaranteed quality into a national program.

The cost of coverage would be offset significantly by reducing health care costs. The payment rates for medical providers would reference current Medicare rates—and importantly, employer plans would be able to take advantage of these savings. Medicare Extra would negotiate prescription drug prices by giving preference to drugs whose prices reflect value and innovation. Medicare Extra would also implement long overdue reforms to the payment and delivery system and take advantage of Medicare’s administrative efficiencies. In this report, CAP also outlines a package of tax revenue options to finance the remaining cost.

Medicare Extra for All would guarantee universal coverage and eliminate underinsurance. It would guarantee that all Americans can enroll in the same high-quality plan, modeled after the highly popular Medicare program. At the same time, it would preserve employer-based coverage as an option for millions of Americans who are satisfied with their coverage.

Medicare Choice

Within the current Medicare program, Medicare Advantage provides a choice of plans that deliver Medicare benefits to seniors.

Medicare Extra would reform Medicare Advantage and reconstitute the program as Medicare Choice. Medicare Choice would be available as an option to all Medicare Extra enrollees. Medicare Choice would offer the same benefits as Medicare Extra and could also integrate complementary benefits for an extra premium.

Medicare Extra would make payments to plans that are equal to the average bid, but subject to a ceiling: Payments could be no more than 95 percent of the Medicare Extra premium.

Administration

Medicare Extra would be administered by a new, independent Center for Medicare Extra within the current Centers for Medicare and Medicaid Services, which would be renamed the Center for Medicare. To ensure that the Center for Medicare Extra is immune from partisan political influence within the administration, the legislative statute would leave little to no discretion to the administration on policy matters. In this respect, the administration of Medicare Extra would resemble the administration of the current Medicare program and not of the Medicaid program.

Administrative efficiencies

Excessive administrative costs are a key reason why health care costs are so much higher in the United States compared to other developed countries. Medicare Extra would take advantage of the current Medicare program’s low administrative costs, which are far lower than the administrative costs of private insurance. In particular, the cost and burden to physicians of administering multiple payment rates for multiple programs and payers would be greatly reduced.

In addition to having economies of scale and no need to make a profit, Medicare Extra would implement several administrative efficiencies. Providers would only need to report one set of quality measures and physicians would only need to submit one set of clinical credentials. Medicare Extra and providers would transmit claims information and payment electronically. Electronic health records would automatically convert clinical entries into claims information. Importantly, so-called churning between Medicaid and the individual market—in which individuals must frequently enroll and unenroll due to changes in eligibility—would be eliminated.

From the Conclusion

America, the most powerful and wealthiest nation in the history of civilization, has endured a long journey spanning decades to fulfill these principles. The country has slowly added step upon step toward universal health coverage. The ACA was a giant step, and the sustained political fight over the law showed that the American people want to expand coverage, not repeal it.

https://www.americanprogress.org…

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A Better Single-Payer Plan

By David Leonhardt
The New York Times, February 22, 2018

A new single-payer health care proposal has just come out, and I think it has a better chance of eventually becoming law — in whole or in part — than Bernie Sanders’s plan.

It comes from the Center for American Progress, the influential liberal research group (often known as CAP). The proposal would create a program called Medicare Extra through which any American, regardless of age, could buy health insurance.

The crucial difference between the Sanders plan and the CAP plan is that the CAP version would not force people to give up their current employer insurance coverage. Those who are covered through their jobs could either keep that plan or enroll in Medicare Extra. The Sanders plan, by contrast, would eliminate employer-provided insurance in favor of a single federal system.

Substantively, the Sanders approach has a huge advantage: simplicity. But the experience of the last 25 years — across both Bill Clinton’s and Barack Obama’s presidencies — shows the dreadful politics of pushing people out of their current insurance plan.

There is a lot that I like in the CAP plan.

Ultimately, though, I still favor more modest health care proposals to sweeping, ambitious plans, for reasons of realpolitik.

https://www.nytimes.com…

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Several years ago, David Himmelstein and Steffie Woolhandler explained during the debate over Obamacare what was wrong with the public option. It bears repeating today:

The “public plan option” won’t work to fix the health care system for two reasons.

1. It forgoes at least 84 percent of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95 percent of Americans who are currently privately insured were to join the public plan (and it had overhead costs at current Medicare levels), the savings on insurance overhead would amount to only 16 percent of the roughly $400 billion annually achievable through single payer — not enough to make reform affordable.

2. A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan — which started as the single payer for seniors and has now become a funding mechanism for HMOs — and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients, with profitable ones in private plans and unprofitable ones in the public plan.

https://pnhp.org…

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Comment:

By Don McCanne, M.D.

What is this “Medicare Extra for All” proposal by the Center for American Progress (CAP), and where does it or should it stand in the movement for health care for all?

First of all, it is not a single payer proposal. It leaves in place much of our multi-payer system, including Medicare, Medicare Advantage, employer-sponsored health plans, the individual and small group market plans, TRICARE, Veterans Affairs medical care, and FEHBP – the Federal Employees Health Benefits Program. Private insurers continue to thrive – selling us risk-bearing plans favorable to them and/or excessive administrative services. Their iniquitous tools such as excessive cost sharing and narrow provider networks will not go away. The fundamental health care infrastructure remains in place in spite of the fact that some admittedly beneficial tweaks are recommended in this proposal.

What this proposal really is is a glorified version of the public option – a Medicare-like government plan that would be used to attempt to cover those who are uninsured and could be a replacement for those who are underinsured. If you carefully review the CAP proposal you will see that it adds both costs and administrative complexity to our existing health care financing system. It forgoes much of the cost containment and administrative simplicity of a bona fide single payer system.

As one example, look at their description of the administrative efficiencies they tout in their plan. They claim that they “would take advantage of the current Medicare program’s low administrative costs,” but their Medicare Extra plan adds other administrative costs and yet it would represent only a small fraction of health care financing considering that most of the existing multi-payer system would remain in place. They claim that electronic submission of claims through electronic health records would provide efficiencies, yet yesterday’s Quote of the Day demonstrated that those savings have not been realized and costs were actually increased when considering investments in the technology. They have not seriously addressed the profound administrative waste in our system.

A particular irony in this proposal is that they suggest replacing the private Medicare Advantage plans with private Medicare Choice plans. This reverts to the prior Medicare + Choice plans which were paid at rates of 95 percent of the costs in the traditional Medicare program, allowing them to prove that they could provide higher quality at lower costs. They couldn’t, and the program began to tank until it was rescued by the Medicare Advantage program which gave the private plans a tremendously unfair advantage at taxpayer expense. The authors of Medicare Extra don’t even give us a hint as to how they will entice the private insurers to jump back into their Medicare Choice plans.

A little bit of history of the Center for American Progress is enlightening. It was founded by John Podesta – Bill Clinton’s Chief of Staff. It has professed to represent and advance progressive/liberal values, but it really represents the neo-liberal element that has assumed control of the Democratic Party. Their current CEO is Neera Tanden who lead the forces that successfully blocked the Sanders camp from inserting a single payer plank in the Democratic Party platform, protecting Hillary Clinton who considered single payer to be a threat. The neo-liberals have been very protective of the private insurance insurance industry and have been successful to the degree that they lured many single payer progressives into their camp in support of the Affordable Care Act – legislation designed to protect and enhance the the interests of the private insurance industry. How could we have expected more out of the Center for American Progress than this highly deficient proposal with a pro-industry bias?

Already the media is jumping on this as a new, liberal, Medicare for All proposal. Even the progressive New York Times columnist David Leonhardt is calling this “A Better Single-Payer Plan.” Worse, he is falling into line with the comment, “I still favor more modest health care proposals to sweeping, ambitious plans, for reasons of realpolitik.” Shades of HCAN and the erection of political barriers to single payer reform. We’ve said repeatedly, single payer policy is right but it’s the politics that are wrong. Don’t change good policy; change bad politics!

We can’t leave this topic without acknowledging the one bit of good news here. Single payer Medicare for All is a vastly superior model of financing health care – a model we desperately need in this nation – and a majority of the public now realizes that. The neo-liberal Democrats realize that they cannot go into an election touting a model that many feel has fallen far short of our needs, especially when the concept of an improved Medicare for all has gained so much traction. CAP recognizes the threat and takes this challenge so seriously that they have elected to “go bolder” by dummying up a fake Medicare for all plan, calling it “Medicare Extra for All.” We just have to be sure that the public is not lured by this siren song. They want the real thing.

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

Billing and insurance-related waste in an academic medical center

Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care System

By Phillip Tseng, MEd; Robert S. Kaplan, PhD; Barak D. Richman, JD, PhD; Mahek A. Shah, MD; Kevin A. Schulman, MD
JAMA, February 20, 2018

Abstract

Importance: Administrative costs in the US health care system are an important component of total health care spending, and a substantial proportion of these costs are attributable to billing and insurance-related activities.

Objective: To examine and estimate the administrative costs associated with physician billing activities in a large academic health care system with a certified electronic health record system.

Design, Setting, and Participants: This study used time-driven activity-based costing. Interviews were conducted with 27 health system administrators and 34 physicians in 2016 and 2017 to construct a process map charting the path of an insurance claim through the revenue cycle management process. These data were used to calculate the cost for each major billing and insurance-related activity and were aggregated to estimate the health system’s total cost of processing an insurance claim.

Exposures: Estimated time required to perform billing and insurance-related activities, based on interviews with management personnel and physicians.

Main Outcomes and Measures: Estimated billing and insurance-related costs for 5 types of patient encounters: primary care visits, discharged emergency department visits, general medicine inpatient stays, ambulatory surgical procedures, and inpatient surgical procedures.

Results: Estimated processing time and total costs for billing and insurance-related activities were 13 minutes and $20.49 for a primary care visit, 32 minutes and $61.54 for a discharged emergency department visit, 73 minutes and $124.26 for a general inpatient stay, 75 minutes and $170.40 for an ambulatory surgical procedure, and 100 minutes and $215.10 for an inpatient surgical procedure. Of these totals, time and costs for activities carried out by physicians were estimated at a median of 3 minutes or $6.36 for a primary care visit, 3 minutes or $10.97 for an emergency department visit, 5 minutes or $13.29 for a general inpatient stay, 15 minutes or $51.20 for an ambulatory surgical procedure, and 15 minutes or $51.20 for an inpatient surgical procedure. Of professional revenue, professional billing costs were estimated to represent 14.5% for primary care visits, 25.2% for emergency department visits, 8.0% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures, and 3.1% for inpatient surgical procedures.

Conclusions and Relevance: In a time-driven activity-based costing study in a large academic health care system with a certified electronic health record system, the estimated costs of billing and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure. Knowledge of how specific billing and insurance-related activities contribute to administrative costs may help inform policy solutions to reduce these expenses.

From the Introduction

Administrative costs have been estimated to represent 25% to 31% of total health care expenditures in the United States, a proportion twice that found in Canada and significantly greater than in all other Organization for Economic Co-operation and Development member nations for which such costs have been studied. The rate of growth in administrative costs in the United States has outpaced that of overall health care expenditures1 and is projected to continue to increase without reforms to reduce administrative complexity.

Most of the administrative costs in the US health care system (at least 62% based on prior studies) has been attributed to billing and insurance-related activities (described as billing hereafter). Billing costs are disproportionately high in the United States: for instance, in primary care practice, performing these activities in the United States costs nearly 4 times more than performing the corresponding activities in Canada.

From the Discussion

This study used a state-of-the-art cost accounting method to derive the costs associated with billing for physician activities at an encounter level. Across the 5 services examined in this study, billing costs for professional services ranged from 3.1% to 25.3% of professional revenue, which represented $20 to $215 in absolute costs per visit.

Previous studies of billing costs were developed before adoption of certified EHR systems. These studies used a variety of methods to estimate costs, including existing aggregate data, cost reports and departmental budgets, case studies, and interviews and surveys. They reported that physician billing costs represented 10% to 14% of revenue. This study, using a more accurate cost-tracing approach, estimated these costs to be 14.5% of primary care physician annual revenue, which is at the upper end reported in previous studies.

Billing activities were associated with these high costs despite specific efforts to streamline billing operations. Examination of the billing process did not reveal any significantly wasteful or inefficient efforts, such as overt duplication of tasks or the performance of low-skill tasks by high-wage personnel.

Certified EHR systems were implemented, in part, to address concerns about the significant administrative cost burden in the US health care system. The Office of the National Coordinator for Health Information Technology has suggested that adoption of certified EHR systems could have economic benefits for physicians and health systems by directly addressing these costs. However, the results of the current study suggest that administrative costs remain high even in the setting of a certified EHR. Although the EHR system can automatically generate bills for clinical visits, these systems require the time of high-cost physicians to perform coding and documentation activities that are unrelated to clinical services. In addition, the process maps revealed that despite the electronic system, the billing process still required multiple steps by many types of personnel. Full allocation of certified EHRs to billing activities significantly increased billing costs from the base-case estimate.

These findings suggest that significant investments in certified health information technology have not reduced high billing costs in the United States. To a large degree, the significant administrative costs measured in this study are the consequences of heterogeneous payment requirements across the multiple payers and health plans contracting with the academic health center. The lack of standardized contracts and price schedules within and across markets might explain why administrative costs in the United States are significantly higher than those in other nations that also make fee-for-service payments to private hospitals and physicians. Adoption of certified EHR systems by hospitals appears to have been unable to cope with the complexity of multiple payer contracts or to catalyze significant transformation of the administrative business processes in US health care.

https://jamanetwork.com…

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Disentangling Health Care Billing For Patients’ Physical and Financial Health

By Vivian S. Lee, MD, PhD, MBA; Bonnie B. Blanchfield, CPA, ScD
JAMA, Editorial, February 20, 2018

In this issue of JAMA, Tseng and colleagues1 estimated the administrative costs associated with physician billing and insurance-related activities in one large academic medical center with a fully implemented electronic health record (EHR) system. Based on a time-driven activity-based costing method and interviews with health system administrators and physicians, the authors estimated that the costs associated with billing activities performed by physicians represented, as a proportion of professional revenue, 14.5% for primary care visits, 25.2% for emergency department visits, 8.0% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures, and 3.1% for inpatient surgical procedures. For primary care visits, this translated to an estimated more than $99,000 of billing and insurance-related expenses annually for each primary care physician working in the system just to get paid.

As high as these figures are, they likely underestimate the true financial burden of billing for physicians in most health systems. For one, the hospital and physicians of this academic system share a single billing organization, an unusual efficiency for an industry in which hospitals and physicians are typically separate business entities. In addition, billing costs in this study did not include costs within clinical departments for credentialing and other billing-related functions or charge integrity costs (ie, the costs associated with ensuring that all health care delivery charges are accounted for and properly accrued to each patient visit or discharge). While annual operating costs of the EHR were included in this estimate of billing costs, the capital costs of the EHR were not. When the full costs of EHR installation and implementation were fully amortized and attributed to billing, the calculated costs of billing increased by another 44% to 68%.

Despite the preimplementation assumption that EHRs would streamline coding and reduce clinical documentation requirements, this study suggests that, if anything, administrative time needed for billing has increased for physicians and other staff as EHRs have become more widespread. In the health care system the authors studied, each primary care visit necessitated 3 minutes of physician time for billing, which amounts to about 5 hours per week for a typical primary care physician. These figures exceed previous estimates of 3 to 4 hours per week.

The results from the analyses by Tseng et al1 are consistent with previous reports and again highlight how much health care is an outlier compared with other industries. The unnecessarily complex, fragmented, and inefficient system of billing, coding, and claims negotiations in the US health care system employs enough people to populate small nations just to ensure that health care organizations and clinicians are reimbursed for their services. While non–health care industries typically might employ 100 full-time-equivalents to collect payment for $1 billion in services, health care employs an astounding 770 full-time-equivalents per $1 billion of physician services. The process of moving money from payer to hospitals and physicians in the United States consumes an estimated $500 billion per year, and 80% of that amount may be waste. Evidence of that waste includes the high rate of errors in remittances (3-fold higher than other industries) and the high rate of billed charges that are initially denied by insurance companies (12.6% in one study) but that are later paid (81%).

Increasing Payer and Hospital or Health System Mergers

Increasing market consolidation bringing insurers and health systems (including hospitals and physicians) under the same corporate umbrella could help simplify what could then be considered “internal” transactions. Along the same lines, discussions of a national single payer system suggest that such a model could reduce administrative costs substantially, although the political viability of this strategy is uncertain.

Rising Consumer Payments

These changes may be accelerated by the mounting pressure from consumers as payment obligations shift increasingly to them. Whether it is direct payment for noncovered services, a higher share of premium expenses, or increasing copays and deductibles, consumers now pay a larger share of health care costs than employers.

As the report by Tseng et al demonstrates, now is an opportune time to start unraveling the Gordian knot of health care billing and administration, ultimately, for the sake of the health—both physical and financial—of patients. Alternative payment models and EHRs may just be the 2 ends of the cord that the health care system has needed to find to help begin the disentangling.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

This report further validates previous studies demonstrating administrative excesses in our health care system, especially in billing and insurance related activities. If anything, this new study shows that the administrative costs in time and funds may be even greater than previous studies suggest. It further shows that the promise of greater efficiency through certified electronic health record systems was not fulfilled, and EHRs have even compounded the administrative waste.

To understand the magnitude of the problem, you should read the excerpts above. Also prior studies, several of which were done by some members of the academic leadership at PNHP can be found on the PNHP website (www.pnhp.org).

An accompanying editorial states, “discussions of a national single payer system suggest that such a model could reduce administrative costs substantially, although the political viability of this strategy is uncertain.” Yet they conclude, “Alternative payment models and EHRs may just be the two ends of the cord that the health care system has needed to find to help begin the disentangling.”

It is ironic that the editorialists suggest that that the ineffective alternative payment models and disappointing EHR technology somehow hold the solutions to this egregiously expensive and wasteful problem of administrative excesses. Yet the mechanism that has been proven in other nations to be highly effective – a single payer national health program – seems to be dismissed because of uncertain political viability.

From a policy perspective, single payer is the right way to go whereas APMs and EHRs will never get us there. When the policy is right and the politics are wrong, you don’t change the policy, you change the politics. This study shows once again that we have only one clear policy choice – an improved Medicare for all. Let’s fix the politics so we can get there.

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

New federal rule expanding short-term, limited-duration pauper plans

Trump Administration works to give relief to Americans facing high premiums, fewer choices

U.S. Department of Health & Human Services, February 20, 2018

In direct response to President Trump’s October 2017 Executive Order, the Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) issued a proposed rule today that is intended to increase competition, choice, and access to lower-cost healthcare options for Americans. The rule proposes to expand the availability of short-term, limited-duration health insurance by allowing consumers to buy plans providing coverage for any period of less than 12 months, rather than the current maximum period of less than three months. The proposed rule, if finalized, will provide additional options to Americans who cannot afford to pay the costs of soaring healthcare premiums or do not have access to healthcare choices that meet their needs under current law

“Americans need more choices in health insurance so they can find coverage that meets their needs,” said Health and Human Services Secretary Alex Azar. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump Administration is taking action so individuals and families have access to quality, affordable healthcare that works for them.”

“Americans who find themselves between jobs or simply can’t afford coverage because prices are too high will be helped by President Trump’s Healthcare for All Executive Order,” said Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma. “In a market that is experiencing double-digit rate increases, allowing short-term, limited-duration insurance to cover longer periods gives Americans options and could be the difference between someone getting coverage or going without coverage at all.”

https://www.hhs.gov…

CMS Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule
https://www.cms.gov…

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Proposed Rule: Short-Term, Limited-Duration Insurance (Department of the Treasury; Department of Labor; Department of Health and Human Services)

Federal Register, to be published February 21, 2018

Summary

This rule contains proposals amending the definition of short-term, limited- duration insurance for purposes of its exclusion from the definition of individual health insurance coverage. This action is being taken to lengthen the maximum period of short-term, limited- duration insurance, which will provide more affordable consumer choice for health coverage.

Short-Term, Limited-Duration Insurance

Short-term, limited-duration insurance is a type of health insurance coverage that was
designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage. Although short-term, limited-duration insurance is not an excepted benefit, it is exempt from the PHS Act’s individual-market requirements because it is not individual health insurance coverage. Section 2791(b)(5) of the PHS Act provides “[t]he term ‘individual health insurance coverage’ means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance.”

Benefits

Consumers who would be likely to purchase short-term, limited-duration insurance for longer periods would benefit from increased insurance options at lower premiums, as the average monthly premium in the fourth quarter of 2016 for a short-term, limited-duration policy was approximately $124 compared to $393 for an unsubsidized PPACA-compliant plan. This proposed rule would also benefit individuals who need coverage for longer periods for reasons previously discussed in the preamble, such as needing more than 3 months to find new employment, or finding PPACA-compliant plans to be unaffordable. Individuals who purchase short-term, limited-duration insurance as opposed to being uninsured would potentially experience improved health outcomes and have greater protection from catastrophic health care expenses. Individuals purchasing short-term, limited-duration policies could obtain broader access to health care providers compared to those PPACA-compliant plans that have narrow provider networks.

Issuers of short-term, limited-duration insurance would benefit from higher enrollment. They are likely to experience an increase in premium revenues and profits because such policies can be priced in an actuarially fair manner (by which the Departments mean that it is priced so that the premium paid by an individual reflects the risks associated with insuring the particular individual or individuals covered by that policy) and are not required to comply with PPACA medical loss ratio requirements for group and individual health insurance coverage.

Costs and Transfers

Short-term, limited-duration insurance policies would be unlikely to include all the elements of PPACA-compliant plans, such as the preexisting condition exclusion prohibition, coverage of essential health benefits without annual or lifetime dollar limits, preventive care, maternity and prescription drug coverage, rating restrictions, and guaranteed renewability. Therefore, consumers who switch to such policies from PPACA-compliant plans would experience loss of access to some services and providers and an increase in out-of-pocket expenditures related to such excluded services, benefits that in many cases consumers do not believe are worth their cost (which could be one reason why many consumers, even those receiving subsidies for PPACA-compliant plans, may switch to short-term, limited-duration policies rather than remain in PPACA-compliant plans). Depending on plan design, consumers who purchase short-term, limited-duration insurance policies and then develop chronic conditions could face financial hardship as a result, until they are able to enroll in PPACA-compliant plans that would provide coverage for such conditions.

Because short-term, limited-duration insurance policies can be priced in an actuarially fair manner, subject to State law, individuals who are likely to purchase such coverage are likely to be relatively young or healthy. Allowing such individuals to purchase policies that do not comply with PPACA, but with term lengths that may be similar to those of PPACA-compliant plans with 12-month terms, could potentially weaken States’ individual market single risk pools. As a result, individual market issuers could experience higher than expected costs of care and suffer financial losses, which might prompt them to leave the individual market. Although choices of plans available in the individual market have already been reduced to plans from a single insurer in roughly half of all counties, this proposed rule may further reduce choices for individuals remaining in those individual market single risk pools.

The Departments anticipate that most of the individuals who switch from individual market plans to short-term, limited-duration insurance would be relatively young or healthy and would also not be eligible to receive APTC (Advance Premium Tax Credit). If individual market single risk pools change as a result, it would result in an increase in premiums for the individuals remaining in those risk pools. An increase in premiums for individual market single risk pool coverage would result in an increase in Federal outlays for APTC.

The Congressional Budget Office estimates that 3 million people will drop coverage in 2019 from the individual market and premiums will increase 10 percent on average, as a result of the change to the individual shared responsibility payment.

https://federalregister.gov…

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Comment:

By Don McCanne, M.D.

The Trump administration has released a rule that will allow individuals to purchase a short-term, limited-duration insurance plan for a period less than twelve months, extending the current limit which is less than three months. What are these plans, and why does the administration believe that they should be made more readily available?

In 2016 the average monthly premium for a short-term, limited-duration plan was $124 compared to $393 for an unsubsidized PPACA-compliant plan. The very low premium should give you a hint that you are not buying very much protection. In fact, “short-term, limited-duration insurance policies would be unlikely to include all the elements of PPACA-compliant plans, such as the preexisting condition exclusion prohibition, coverage of essential health benefits without annual or lifetime dollar limits, preventive care, maternity and prescription drug coverage, rating restrictions, and guaranteed renewability.” People who need health care would likely face financial hardship under these plans. Also, younger, healthier individuals would likely be attracted by the low premiums and leave the PPACA-compliant plans, concentrating risk in the compliant plans resulting in higher premiums for those who remain. The coverage is so poor that the rule states, “it is exempt from the PHS Act’s individual-market requirements because it is not individual health insurance coverage.” These are pauper plans. They provide neither guaranteed health care access nor financial security in the face of medical need.

HHS Secretary Alex Azar says, “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices,” so they are making available an additional choice of very cheap pauper plans.

CMS Administrator Seema Verma says, “In a market that is experiencing double-digit rate increases, allowing short-term, limited-duration insurance to cover longer periods gives Americans options and could be the difference between someone getting coverage or going without coverage at all,” a choice for some between a pauper plan or nothing at all.

The goal was affordable health care for all, not affordable private health plans no matter how worthless they are. We need to replace Congress and the administration with people who understand and care about the difference.

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

It’s time for Medicare for all

By Jonathan Michels
Winston-Salem (N.C.) Journal, Feb. 20, 2018

For more than 100 years, Americans have searched for a cure for health care inequality. Instead, we’ve been prescribed placebos: watered-down poverty programs and party politics.

Despite attempts to ease the pain with reforms like Medicaid and the Affordable Care Act (ACA), we continue to rely on a market-driven health care system. After stitching together the remnants of various poverty programs we are left with a system so dysfunctional and freakish it would make Dr. Frankenstein recoil.

After signing the Health Reinsurance Act — the result of a contentious battle for a national health program that was ultimately foiled by the American Medical Association — Republican President Dwight Eisenhower handed the pen to Esther Lape, a social scientist and longtime universal health care advocate. Disappointed that the bill fell far short of her expectations, Lape reportedly waved the souvenir in the air and declared, “This represents a puny little bone in the vertebrae of what I had in mind!”

What Lape envisioned would be transformative: quality health care for everyone.

The ACA reforms initiated by Democrats provided some patient protections and increased health access for 20 million Americans since it was implemented in 2010. Its primary mission, however, was to ensure that Americans would have to rely on the for-profit insurance market.

Merely protecting the ACA would leave the most marginalized populations behind. Despite the ACA’s improvements, 28 million Americans remain uninsured, without access to primary care that could prevent costly and life-threatening diseases. Those fortunate enough to have insurance are assaulted by prohibitively expensive co-pays, premiums and deductibles that limit access to care.

This past year we saw an upsurge in popular resistance against Republican attacks on important—if imperfect—social welfare initiatives, especially health care for the most vulnerable. Activists pushed back attempts to repeal and replace the ACA with bills that would lead to the loss of health coverage for at least 22 million Americans.

As a premedical student and a health care worker, I bear witness to a broad spectrum of suffering; the kind that we are all likely to face at some point during our lives. But what haunts me at the end of each shift is the pain that could have have been prevented if patients who are uninsured or under-insured had been able to access care sooner.

Take for instance the young woman who checked into the emergency room because she was uninsured and couldn’t afford the anti-inflammatory drugs that her doctor prescribed for her Crohn’s disease. Her symptoms worsened and when I x-rayed her, she was likely headed for invasive surgery.

Based on my personal experiences working in health care, I believe that the prescription for our collective heartache is improved Medicare for all: An insurance system that is government-financed but privately delivered and could save the U.S. nearly $600 billion annually while providing all Americans with access to quality health care.

Our health care system is once again at a crossroads.

Here in North Carolina, the General Assembly refused to expand Medicaid under the ACA, denying thousands access to basic care.

State Rep. Donny Lambeth, a Republican, recently proposed House Bill 662, also known as Carolina Cares, that would finally expand Medicaid. However, as the Winston-Salem Journal reported earlier this month, some members of the General Assembly say that even if work requirements like those in Kentucky and Indiana are put into place, they won’t support providing health care to the state’s neediest citizens. Meanwhile, the majority of Americans are increasingly realizing what 100 years of struggle has taught Medicare-for-all supporters already know: any measure other than national health insurance will fail.

Support for single payer is growing. According to the Pew Research Center, 60 percent of Americans believe that the federal government has a responsibility to provide health coverage to everyone. H.R. 676, the single-payer bill in the House, now has a record 120 co-sponsors; Sen. Bernie Sanders’ Medicare for All Act has 16 co-sponsors, including potential candidates for the presidential nomination.

It’s true that in our time, just as in Lape’s era, embracing single payer demands not only a radical revision of how health care is financed but the courage to move beyond half-measures.

As the popular saying goes, “You can’t cross a chasm in two small jumps.” Imagine a health care program that provides affordable, quality care to every person—ourselves, our families and our neighbors—regardless of age, income or employment; a model proven to work in every other developed nation. Isn’t that reason enough to take a leap?

http://www.journalnow.com…

Robert Reich on ‘the common good’ – appropriate for Presidents day

The Meaning of America

By Robert Reich
robertreich.org, February 17, 2018

When Trump and his followers refer to “America,” what do they mean?

Some see a country of white English-speaking Christians.

Others want a land inhabited by self-seeking individuals free to accumulate as much money and power as possible, who pay taxes only to protect their assets from criminals and foreign aggressors.

Others think mainly about flags, national anthems, pledges of allegiance, military parades, and secure borders.

Trump encourages a combination of all three – tribalism, libertarianism, and loyalty.

But the core of our national identity has not been any of this. It has been found in the ideals we share – political equality, equal opportunity, freedom of speech and of the press, a dedication to open inquiry and truth, and to democracy and the rule of law.

We are not a race. We are not a creed. We are a conviction – that all people are created equal, that people should be judged by the content of their character rather than the color of their skin, and that government should be of the people, by the people, and for the people.

That idealism led Lincoln to proclaim that America might yet be the “last best hope” for humankind. It prompted Emma Lazarus, some two decades later, to welcome to American the world’s “tired, your poor/ Your huddled masses yearning to breathe free.”

That idealism sought to preserve and protect our democracy – not inundate it with big money, or allow one party or candidate to suppress votes from rivals, or permit a foreign power to intrude on our elections.

It spawned a patriotism that once required all of us take on a fair share of the burdens of keeping America going – paying taxes in full rather than seeking loopholes or squirreling money away in foreign tax shelters, serving in the armed forces or volunteering in our communities rather than relying on others to do the work.

These ideals compelled us to join together for the common good – not pander to bigotry or divisiveness, or fuel racist or religious or ethnic divisions.

The idea of a common good was once widely understood and accepted in America. After all, the U.S. Constitution was designed for “We the people” seeking to “promote the general welfare” – not for “me the narcissist seeking as much wealth and power as possible.”

Yet the common good seems to have disappeared. The phrase is rarely uttered today, not even by commencement speakers and politicians.

There’s growing evidence of its loss – in CEOs who gouge their customers and loot their corporations; Wall Street bankers who defraud their investors; athletes involved in doping scandals; doctors who do unnecessary procedures to collect fatter fees; and film producers and publicists who choose not to see that a powerful movie mogul they depend on is sexually harassing and abusing women.

We see its loss in politicians who take donations from wealthy donors and corporations and then enact laws their patrons want, or shutter the government when they don’t get the partisan results they seek.

And in a president of the United States who has repeatedly lied about important issues, refuses to put his financial holdings into a blind trust and personally profits from his office, and foments racial and ethnic conflict.

This unbridled selfishness, this contempt for the public, this win-at-any-cost mentality, is eroding America.

Without binding notions about right and wrong, only the most unscrupulous get ahead. When it’s all about winning, only the most unprincipled succeed. This is not a society. It’s not even a civilization, because there’s no civility at its core.

If we’re losing our national identity it’s not because we now come in more colors, practice more religions, and speak more languages than we once did.

It is because we are forgetting the real meaning of America – the ideals on which our nation was built. We are losing our sense of the common good.

http://robertreich.org…

The Common Good, by Robert B. Reich (Publication date February 20, 2018)
https://www.amazon.com…

Crisis in U.S. Health Care: Corporate Power vs. The Common Good, by John Geyman, M.D.
https://www.amazon.com…

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Comment:

By Don McCanne, M.D.

Contrasting our presidents, past and present, it is easy to see why Robert Reich says that we are losing our sense of the common good. He writes, “Yet the common good seems to have disappeared. The phrase is rarely uttered today, not even by commencement speakers and politicians.”

Well, that doesn’t apply to all of us. If you type “common good” into the search window at the PNHP website (www.pnhp.org) you will find many references to the common good. Even one of our own, John Geyman, has written a book, “Crisis in U.S. Health Care: Corporate Power vs. The Common Good.”

Tomorrow is the publication date of Robert Reich’s new book, “The Common Good.” It is liberally excerpted at the Amazon website (link above).

Presidents Washington and Lincoln helped us to understand the common good. Now President Trump, in his own style, unintentionally reminds us of the importance of this concept. We should use this Presidents Day as a starting point on our renewed quest for the common good.

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David Cutler: What is the health spending problem?

What Is The U.S. Health Spending Problem?

By David M. Cutler
Health Affairs, Published Ahead of Print February 14, 2018

Abstract

Is increased spending on medical care harmful to the US economy? The overall share of the gross domestic product spent on medical care is not a problem, provided that the services bought are worth more than their cost. However, high and rising costs expose two often-overlooked problems. First, spending is too high because many dollars are wasted. Estimates suggest that unnecessary medical spending costs the typical American family thousands of dollars each year. Second, high medical costs combined with stagnant incomes for a large share of the population and the inability of governments at all levels to raise tax dollars leads to increased health and economic disparities: fewer people covered by private insurance, the rationing of care in public health programs, and the lack of funds for other social programs. These distribution issues, coupled with the large waste, imply that efforts to address medical spending need to be among our highest priorities.

A Large Part of Spending Is Wasteful

A large number of studies have estimated the waste in health care. Estimates suggest that between one-quarter and one-half of medical spending is not associated with improved health, although this view is not without controversy.

High prices are a second form of wasteful spending.

Excessive administrative costs are a third form of wasteful spending.

The fact that there is so much waste in medical care does not mean that spending more is necessarily bad.

But neither should we assume that all spending increases reflect value, as indicated by the rising prices of established drugs or of services from newly merged hospitals. Most fundamentally, the presence of significant waste argues that we ought to pay at least as much attention to ways of improving efficiency as we do to whether and how people should get covered.

Rising Spending Worsens Inequality

The second problem with medical spending is that it feeds into the already severe harms caused by growing income inequality. The most important fact about the income distribution in the United States is that it is becoming increasingly unequal: Real incomes have soared at the very high end, risen modestly in the next few deciles, and been stagnant or falling at the bottom.

Rising medical costs combined with stagnant incomes for a large share of the population mean that more people will need help paying for medical care. A family at the median income level, whose income is relatively constant, has had no easy way to pay the roughly $10,000 rise in the cost of a family health insurance policy between 1999 and 2017.

At the same time that needs are increasing, however, government resources are being cut. Governments at all levels are loath to raise taxes, and some are even cutting them. Total government revenue as a share of GDP has been relatively constant for several decades and is projected to fall with enactment of the federal tax bill in December 2017.

This combination of increased need for help and fewer resources to spend inevitably creates problems. Three problems are particularly apparent.

Fewer People Are Covered by Private Insurance

Public Programs Turn to Rationing

Other Social Programs Are Crowded Out

Even with both explicit and implicit rationing, rising costs for medical care translate into higher overall government spending. Given the constraint on raising money, this necessarily means that less money is available for other government services—for example, spending on early childhood education or income subsidies for low-income workers.

Conclusion

Additional medical spending brings both benefits and costs to society. For this reason, the question about how much money a country such as the United States can afford to spend on medical care is not well formulated. But that ambiguity does not mean that additional medical spending is innocuous. The United States is being pulled apart as a country, separating into rich and poor. Every dollar that is spent on medical care is one less dollar available for addressing the problems of an unequal society, and one more dollar that is difficult for much of the population to pay. One of the goals for health policy must be to reduce social and economic disparities, not increase them.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

In this article David Cutler reminds us of two problems with health care spending that demand our attention: Wasted dollars on health care could be better spent on the typical American family, and high medical costs along with stagnant incomes and limits on government funding lead to increased health and economic disparities.

Reducing waste is relatively straightforward under a single payer national health program. Cutler calls for improving efficiency and two of the ways that single payer would do that include a tremendous reduction in administrative waste by converting to a well designed single financing system, and a reduction in services of negligible value by improving allocation of our resources such that services of greater value displace those of little value.

But look at the potential single payer would have at helping to address our social and economic disparities. Although David Cutler remains silent on single payer, it is obvious to us that the problems he discusses cry out for single payer reform.

The publishers have granted free access to this article. You should take advantage of that to read the full article.

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