Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

BlueCross BlueShield, March 2016

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

***

Comment:

By Don McCanne, M.D.

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care – 22 percent higher in 2015. Adverse selection – concentrating more costly patients in the ACA-compliant plans – was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients’ choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad news for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection – the individuals pooled in these plans have greater medical needs and thus are more expensive – driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.

Newly Enrolled Members in the Individual Health Insurance Market After Health Care Reform: The Experience from 2014 and 2015

BlueCross BlueShield, March 2016

This report is a comprehensive, in-depth study of medical claims among those enrolled in BCBS individual coverage before and after the ACA took effect.

Comparing the health status and use of medical services among those who enrolled in individual coverage before and after the ACA took effect, as well as those with employer-based health insurance, the study finds that:

•  Members who newly enrolled in BCBS individual health plans in 2014 and 2015 have higher rates of certain diseases such as hypertension, diabetes, depression, coronary artery disease, human immunodeficiency virus (HIV) and Hepatitis C than individuals who already had BCBS individual coverage.

•  Consumers who newly enrolled in BCBS individual health plans in 2014 and 2015 received significantly more medical services in their first year of coverage, on average, than those with BCBS individual plans prior to 2014 who maintained BCBS individual health coverage into 2015, as well as those with BCBS employer-based group health coverage.

•  The new enrollees used more medical services across all sites of care—including inpatient hospital admissions, outpatient visits, medical professional services, prescriptions filled and emergency room visits.

•  Medical costs associated with caring for the new individual market enrollees were, on average, 19 percent higher than employer-based group members in 2014 and 22 percent higher in 2015. For example, the average monthly medical spending was $559 for individual enrollees versus $457 for employer-based group members in 2015.

http://www.bcbs.com/healthofamerica/newly_enrolled_individuals_after_aca.pdf

Compared with members previously enrolled in BlueCross BlueShield plans, those enrolling after the Affordable Care Act (ACA) took effect have higher rates of certain diseases, use more medical services across all sites of care, and have higher medical costs associated with care – 22 percent higher in 2015. Adverse selection – concentrating more costly patients in the ACA-compliant plans – was a consequence of the design selected for expanding health care coverage in the United States.

Although required benefits were increased by ACA, to keep premiums affordable patients were leveraged into lower actuarial value plans, especially plans like the silver plans that pay 70 percent of allowable charges. Outside of the exchanges, the other 30 percent is paid by patients, especially through much higher deductibles. Also some income is forgone by providers who contract for lower fees to serve in narrow networks that take away patients’ choices in health care.

It was obvious that many people with modest incomes would not be able to afford their share of the costs of these plans so the politicians included income-based federal subsidies for both the premiums and the cost sharing of the silver plans purchased through the ACA insurance exchanges (marketplaces).

Fine, but what about the hard working middle-income individuals and families who have just enough income that they are disqualified from receiving the subsidies? They are hurting. The higher premiums, the higher deductibles, and the decrease in choices through narrower networks are a greater burden that has been placed on these individuals and families.

This new BCBS report is further bad news for middle-income Americans. It shows that the ACA-compliant plans, both within and outside of the exchanges, have been subjected to adverse selection – the individuals pooled in these plans have greater medical needs and thus are more expensive – driving up premiums and increasing deductibles, with the full brunt borne by middle-income families that do not qualify for subsidies.

It does not have to be this way. We could improve Medicare, expand it to include everyone, and pay for it with equitable taxes based on ability to pay, wherein nobody suffers a financial hardship because of health care. Adverse selection would no longer exist because everyone would be included in the same universal risk pool.

Mortgages For Expensive Health Care? Some Experts Think It Can Work.

By Michelle Andrews
Kaiser Health News, March 29, 2016

A Massachusetts Institute of Technology economist and Harvard oncologist have a proposal to get highly effective but prohibitively expensive drugs into consumers’ hands: health care installment loans.

Writing last month in the journal Science Translational Medicine, the authors liken drug loans to mortgages, noting that both can enable consumers to buy big-ticket items requiring a hefty up-front payment that they could not otherwise afford.

Some consumer advocates and health insurance experts see it differently.

“Isn’t this why we have health insurance?” asked Mark Rukavina, a Boston-based health care consultant whose work has focused on affordability and medical debt. “Insurance used to protect people from financial ruin for these unpredictable, costly occurrences. Now, with large deductibles, we’ve got coverage for preventive care but not for treatment.”

Andrew Lo, a financial economist at MIT’s Sloan School of Management, and Dr. David Weinstock, an oncologist at the Harvard-affiliated Dana-Farber Cancer Institute, agree that insurance would be a better option. But for many consumers that isn’t enough protection these days.

“This is a private sector stopgap way to deal with something right now,” said Lo.

Their proposal calls for the loans to be financed by a pool of investors who would buy bonds and equities issued by an organization that makes the loans to consumers.

While it’s “distasteful” to talk about patients mortgaging their lives for treatment, Lo said, they hope the proposal will spur change.

http://khn.org/news/mortgages-for-expensive-health-care-some-experts-think-it-can-work/

***

Buying cures versus renting health: Financing health care with consumer loans

By Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo
Science Translational Medicine, February 24, 2016

Abstract

A crisis is building over the prices of new transformative therapies for cancer, hepatitis C virus infection, and rare diseases. The clinical imperative is to offer these therapies as broadly and rapidly as possible. We propose a practical way to increase drug affordability through health care loans (HCLs) — the equivalent of mortgages for large health care expenses. HCLs allow patients in both multipayer and single-payer markets to access a broader set of therapeutics, including expensive short-duration treatments that are curative. HCLs also link payment to clinical benefit and should help lower per-patient cost while incentivizing the development of transformative therapies rather than those that offer small incremental advances. Moreover, we propose the use of securitization — a well-known financial engineering method — to finance a large diversified pool of HCLs through both debt and equity. Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry.

The Role of Health Insurance

Large copays are antithetical to the very purpose of health insurance. Hence, our proposal for patients to cover these costs with HCLs is only a short-run bridging solution. A more sustainable and economically more efficient approach to address the high cost of transformative therapies is for insurance companies to cover these costs, spread the amortized costs across their policyholders, finance the upfront payments using securitization, and set premiums at the appropriate levels to cover these costs. In return for larger drug purchases, insurance companies would wield substantial leverage to negotiate lower prices. Also, insurers would presumably borrow at lower interest rates than would individual patients, further reducing the overall financing cost of these therapies.

Conclusion

The burden of upfront payment for curative therapies makes it challenging for public and private payers to afford universal access to potentially life-saving therapies. To address this issue, we considered a new financing paradigm in which portfolio theory and securitization techniques are used to finance HCLs whose repayment is linked to ongoing value. By estimating the post-treatment mortality rates of the patients and using statistical models to gauge the default characteristics of these loans, we demonstrate viability under current practical conditions. Securitization brings new participants (for example, pension funds, mutual funds, and life insurance companies) into the financing pool and helps transform a set of disjointed and sometimes competing interests into a more cooperative system focused on improving care. HCLs, not unlike student loans, auto loans, and home mortgages, can improve access to the best health care for the less affluent.

Considering the extremely large burden of certain diseases, such as HCV, for which cures already exist, and the many transformative therapies on the horizon, developing more efficient financing methods is now a matter of life and death. Taking action is no longer a choice but has become a necessity.

http://stm.sciencemag.org/content/8/327/327ps6.full

***

Comment:

By Don McCanne, M.D.

So the answer to outrageously priced drugs is to pay for them through health care loans (HCLs) – the equivalent of mortgages – and then use securitization “to finance a large diversified pool of HCLs through both debt and equity.” Did we not learn anything from the subprime mortgage crisis? Just as securitization of subprime loans became a “necessity,” securitization of HCLs is now not only supposedly necessary to prevent personal insolvency, it is, according to Andrew Lo, et al, “a matter of life and death.”

In Lo’s words, “While it’s ‘distasteful’ to talk about patients mortgaging their lives for treatment, they hope the proposal will spur change.”

Oh my.

An improved Medicare for all with first dollar coverage would eliminate any need to consider such an inhumane concept.

Mortgages For Expensive Health Care? Some Experts Think It Can Work.

By Michelle Andrews
Kaiser Health News, March 29, 2016

A Massachusetts Institute of Technology economist and Harvard oncologist have a proposal to get highly effective but prohibitively expensive drugs into consumers’ hands: health care installment loans.

Writing last month in the journal Science Translational Medicine, the authors liken drug loans to mortgages, noting that both can enable consumers to buy big-ticket items requiring a hefty up-front payment that they could not otherwise afford.

Some consumer advocates and health insurance experts see it differently.

“Isn’t this why we have health insurance?” asked Mark Rukavina, a Boston-based health care consultant whose work has focused on affordability and medical debt. “Insurance used to protect people from financial ruin for these unpredictable, costly occurrences. Now, with large deductibles, we’ve got coverage for preventive care but not for treatment.”

Andrew Lo, a financial economist at MIT’s Sloan School of Management, and Dr. David Weinstock, an oncologist at the Harvard-affiliated Dana-Farber Cancer Institute, agree that insurance would be a better option. But for many consumers that isn’t enough protection these days.

“This is a private sector stopgap way to deal with something right now,” said Lo.

Their proposal calls for the loans to be financed by a pool of investors who would buy bonds and equities issued by an organization that makes the loans to consumers.

While it’s “distasteful” to talk about patients mortgaging their lives for treatment, Lo said, they hope the proposal will spur change.

http://khn.org/news/mortgages-for-expensive-health-care-some-experts-think-it-can-work/

***

Buying cures versus renting health: Financing health care with consumer loans

By Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo
Science Translational Medicine, February 24, 2016

Abstract

A crisis is building over the prices of new transformative therapies for cancer, hepatitis C virus infection, and rare diseases. The clinical imperative is to offer these therapies as broadly and rapidly as possible. We propose a practical way to increase drug affordability through health care loans (HCLs) — the equivalent of mortgages for large health care expenses. HCLs allow patients in both multipayer and single-payer markets to access a broader set of therapeutics, including expensive short-duration treatments that are curative. HCLs also link payment to clinical benefit and should help lower per-patient cost while incentivizing the development of transformative therapies rather than those that offer small incremental advances. Moreover, we propose the use of securitization — a well-known financial engineering method — to finance a large diversified pool of HCLs through both debt and equity. Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry.

The Role of Health Insurance

Large copays are antithetical to the very purpose of health insurance. Hence, our proposal for patients to cover these costs with HCLs is only a short-run bridging solution. A more sustainable and economically more efficient approach to address the high cost of transformative therapies is for insurance companies to cover these costs, spread the amortized costs across their policyholders, finance the upfront payments using securitization, and set premiums at the appropriate levels to cover these costs. In return for larger drug purchases, insurance companies would wield substantial leverage to negotiate lower prices. Also, insurers would presumably borrow at lower interest rates than would individual patients, further reducing the overall financing cost of these therapies.

Conclusion

The burden of upfront payment for curative therapies makes it challenging for public and private payers to afford universal access to potentially life-saving therapies. To address this issue, we considered a new financing paradigm in which portfolio theory and securitization techniques are used to finance HCLs whose repayment is linked to ongoing value. By estimating the post-treatment mortality rates of the patients and using statistical models to gauge the default characteristics of these loans, we demonstrate viability under current practical conditions. Securitization brings new participants (for example, pension funds, mutual funds, and life insurance companies) into the financing pool and helps transform a set of disjointed and sometimes competing interests into a more cooperative system focused on improving care. HCLs, not unlike student loans, auto loans, and home mortgages, can improve access to the best health care for the less affluent.

Considering the extremely large burden of certain diseases, such as HCV, for which cures already exist, and the many transformative therapies on the horizon, developing more efficient financing methods is now a matter of life and death. Taking action is no longer a choice but has become a necessity.

http://stm.sciencemag.org/content/8/327/327ps6.full

So the answer to outrageously priced drugs is to pay for them through health care loans (HCLs) – the equivalent of mortgages – and then use securitization “to finance a large diversified pool of HCLs through both debt and equity.” Did we not learn anything from the subprime mortgage crisis? Just as securitization of subprime loans became a “necessity,” securitization of HCLs is now not only supposedly necessary to prevent personal insolvency, it is, according to Andrew Lo, et al, “a matter of life and death.”

In Lo’s words, “While it’s ‘distasteful’ to talk about patients mortgaging their lives for treatment, they hope the proposal will spur change.”

Oh my.

An improved Medicare for all with first dollar coverage would eliminate any need to consider such an inhumane concept.

Majority of Drugs Now Subject to Coinsurance in Medicare Part D Plans

By Caroline F. Pearson
Avalere, March 10, 2016

A new analysis from Avalere finds that a majority of prescription drugs covered by standalone Medicare Part D plans (PDPs) are subject to coinsurance, rather than copayments, in 2016. Coinsurance is when a beneficiary pays a percentage of the cost of the drug, rather than a fixed dollar amount, or copayment. Coinsurance often leads to patients paying more out of pocket compared to fixed dollar amount copayments. The average percentage of covered drugs facing coinsurance has risen sharply from 35 percent in 2014 to 58 percent in 2016 among PDPs. While most PDPs have historically applied coinsurance to high-cost drugs on the specialty tier, plans have extended coinsurance to drugs on lower tiers in recent years, including those covered on preferred and non-preferred brand tiers.

“These very high rates of coinsurance have shifted our understanding of Part D formulary coverage,” said Caroline Pearson, senior vice president at Avalere. “It will be important to monitor what drugs are being placed on various coinsurance tiers and how plans are using these tiers to manage cost and utilization in the program.”

http://avalere.com/expertise/managed-care/insights/majority-of-drugs-now-subject-to-coinsurance-in-medicare-part-d-plans

***

Comment:

By Don McCanne, M.D.

Medicare Part D drug plans are shifting more drugs from a copayment requirement – a fixed dollar amount to be paid for each prescription – to coinsurance – a percentage of the charge for each prescription. This is important because coinsurance payments tend to be higher than copayments – sometimes much higher – especially with the recent increases in drug prices.

Obviously this is simply one more method of shifting the costs of health care to the patient. Many are already finding out-of-pocket costs to be unaffordable, yet it keeps getting worse. This is a one way street. The insurers are not looking for ways to reduce out-of-pocket expenses since they would have to pick up the additional costs which would then make their premiums less affordable, and the last thing that they would want to do is risk losing market share through higher premiums.

Coinsurance is a method of reducing health spending by erecting financial barriers to the care that patients should have. Instead, we should be removing financial barriers to care. That is what an improved Medicare for all with first dollar coverage would do.

Majority of Drugs Now Subject to Coinsurance in Medicare Part D Plans

By Caroline F. Pearson
Avalere, March 10, 2016

A new analysis from Avalere finds that a majority of prescription drugs covered by standalone Medicare Part D plans (PDPs) are subject to coinsurance, rather than copayments, in 2016. Coinsurance is when a beneficiary pays a percentage of the cost of the drug, rather than a fixed dollar amount, or copayment. Coinsurance often leads to patients paying more out of pocket compared to fixed dollar amount copayments. The average percentage of covered drugs facing coinsurance has risen sharply from 35 percent in 2014 to 58 percent in 2016 among PDPs. While most PDPs have historically applied coinsurance to high-cost drugs on the specialty tier, plans have extended coinsurance to drugs on lower tiers in recent years, including those covered on preferred and non-preferred brand tiers.

“These very high rates of coinsurance have shifted our understanding of Part D formulary coverage,” said Caroline Pearson, senior vice president at Avalere. “It will be important to monitor what drugs are being placed on various coinsurance tiers and how plans are using these tiers to manage cost and utilization in the program.”

http://avalere.com/expertise/managed-care/insights/majority-of-drugs-now-subject-to-coinsurance-in-medicare-part-d-plans

Medicare Part D drug plans are shifting more drugs from a copayment requirement – a fixed dollar amount to be paid for each prescription – to coinsurance – a percentage of the charge for each prescription. This is important because coinsurance payments tend to be higher than copayments – sometimes much higher – especially with the recent increases in drug prices.

Obviously this is simply one more method of shifting the costs of health care to the patient. Many are already finding out-of-pocket costs to be unaffordable, yet it keeps getting worse. This is a one way street. The insurers are not looking for ways to reduce out-of-pocket expenses since they would have to pick up the additional costs which would then make their premiums less affordable, and the last thing that they would want to do is risk losing market share through higher premiums.

Coinsurance is a method of reducing health spending by erecting financial barriers to the care that patients should have. Instead, we should be removing financial barriers to care. That is what an improved Medicare for all with first dollar coverage would do.

Mayo rebuffs Iowa Medicaid managed-care contracts

By Tony Leys
The Des Moines Register, March 24, 2016

Iowans with Medicaid health coverage will not be able to routinely use the Mayo Clinic after the state shifts the $4 billion program to private management next week.

The three managed-care companies that will run Iowa’s Medicaid program told legislators this week they’ve been unable to negotiate contracts with Mayo’s famed hospital system, which is just across the border in Rochester, Minn.

Cheryl Harding, Amerihealth’s top executive in Iowa, told legislators that her managed-care firm has signed contracts with three Mayo-affiliated primary care clinics in Iowa, but not with Mayo’s main medical center in Rochester. The other managed-care companies, UnitedHealth and Amerigroup, also said they have not obtained such contracts.

For the time being, they said, Mayo has agreed to consider single-case contracts for Iowa Medicaid recipients needing specific care that can’t be provided elsewhere.

http://www.desmoinesregister.com/story/news/health/2016/03/24/mayo-rebuffs-iowa-medicaid-managed-care-contracts/82230958/

***

Comment:

By Don McCanne, M.D.

There are so many issues here, but it really boils down to one, which we’ll get to in a moment.

One of primary the goals of health care reform is to provide integrated health care services. The participants in an ideal health care delivery system work together as a team to ensure that the patient receives the right care, at the right time, at the right place. The care pyramid is built on a solid primary care infrastructure that serves, not as a gatekeeper, but as a facilitator.

Examples range from structurally integrated systems such as Kaiser Permanente, to loosely integrated services provided by the various health care resources in a community – hospitals, outpatient centers, community health centers, and independent primary care and specialty practices. In today’s message, Mayo Clinic represents an integrated system with its mothership in Rochester and its affiliated primary care clinics serving patients in its neighboring state of Iowa.

Thus Mayo provides integrated services that would be paid for by private insurers or employer-sponsored plans, either through fee-for-service or capitated payment schedules. Low income patients would be covered by Iowa’s Medicaid program.

But wait a minute. The insurers now profess to provide higher quality and lower costs through their own integrated managed care services. Iowa is following the lead of other states and turning its Medicaid program over to private Medicaid managed care companies. Although they avow quality, early experience with other state Medicaid managed care programs indicate that it is all about saving money, as quality and access deteriorate.

So what is happening to Iowa’s Medicaid patients who are currently obtaining their care from Mayo? It seems that Mayo is no longer in charge of integrating the health care of these patients; the private insurers are instead. For most of the patients, that means they lose access to their current care. One of the insurers will still allow patients to use the Mayo affiliated primary care clinics but not the Mayo mothership in Rochester, except by special arrangement on an individual basis. Instead of integrated care, these managed care companies are providing disintegrated care (double entendre intended).

The obvious conclusion is that integration of health care services should be a function of the health care delivery system based on patient service and not a function of an intermediary payer based on business goals.

A publicly administered and financed single payer monopsony would be designed to incentivize appropriate integration of our health care delivery system so that we really could have a higher quality health care system that brings greater value to all of us.

Mayo rebuffs Iowa Medicaid managed-care contracts

By Tony Leys
The Des Moines Register, March 24, 2016

Iowans with Medicaid health coverage will not be able to routinely use the Mayo Clinic after the state shifts the $4 billion program to private management next week.

The three managed-care companies that will run Iowa’s Medicaid program told legislators this week they’ve been unable to negotiate contracts with Mayo’s famed hospital system, which is just across the border in Rochester, Minn.

Cheryl Harding, Amerihealth’s top executive in Iowa, told legislators that her managed-care firm has signed contracts with three Mayo-affiliated primary care clinics in Iowa, but not with Mayo’s main medical center in Rochester. The other managed-care companies, UnitedHealth and Amerigroup, also said they have not obtained such contracts.

For the time being, they said, Mayo has agreed to consider single-case contracts for Iowa Medicaid recipients needing specific care that can’t be provided elsewhere.

http://www.desmoinesregister.com/story/news/health/2016/03/24/mayo-rebuffs-iowa-medicaid-managed-care-contracts/82230958/

There are so many issues here, but it really boils down to one, which we’ll get to in a moment.

One of primary the goals of health care reform is to provide integrated health care services. The participants in an ideal health care delivery system work together as a team to ensure that the patient receives the right care, at the right time, at the right place. The care pyramid is built on a solid primary care infrastructure that serves, not as a gatekeeper, but as a facilitator.

Examples range from structurally integrated systems such as Kaiser Permanente, to loosely integrated services provided by the various health care resources in a community – hospitals, outpatient centers, community health centers, and independent primary care and specialty practices. In today’s message, Mayo Clinic represents an integrated system with its mothership in Rochester and its affiliated primary care clinics serving patients in its neighboring state of Iowa.

Thus Mayo provides integrated services that would be paid for by private insurers or employer-sponsored plans, either through fee-for-service or capitated payment schedules. Low income patients would be covered by Iowa’s Medicaid program.

But wait a minute. The insurers now profess to provide higher quality and lower costs through their own integrated managed care services. Iowa is following the lead of other states and turning its Medicaid program over to private Medicaid managed care companies. Although they avow quality, early experience with other state Medicaid managed care programs indicate that it is all about saving money, as quality and access deteriorate.

So what is happening to Iowa’s Medicaid patients who are currently obtaining their care from Mayo? It seems that Mayo is no longer in charge of integrating the health care of these patients; the private insurers are instead. For most of the patients, that means they lose access to their current care. One of the insurers will still allow patients to use the Mayo affiliated primary care clinics but not the Mayo mothership in Rochester, except by special arrangement on an individual basis. Instead of integrated care, these managed care companies are providing disintegrated care (double entendre intended).

The obvious conclusion is that integration of health care services should be a function of the health care delivery system based on patient service and not a function of an intermediary payer based on business goals.

A publicly administered and financed single payer monopsony would be designed to incentivize appropriate integration of our health care delivery system so that we really could have a higher quality health care system that brings greater value to all of us.

Pharmaceutical Companies Hiked Price on Aid in Dying Drug

By April Dembosky
KQED, March 22, 2016

When California’s aid-in-dying law takes effect this June, terminally ill patients who decide to end their lives could be faced with a hefty bill for the lethal medication. It retails for more than $3,000.

Valeant Pharmaceuticals, the company that makes the drug most commonly used in physician-assisted suicide, doubled the drug’s price last year, one month after California lawmakers proposed legalizing the practice.

“It’s just pharmaceutical company greed,” said David Grube, a family doctor in Oregon, where physician-assisted death has been legal for 20 years.

The drug is Seconal, or secobarbital, its generic name. Originally developed in the 1930s as a sleeping pill, it fell out of favor when people died from taking too much, or from taking it in combination with alcohol. But when intended as a lethal medication to hasten the death of someone suffering from a terminal disease, Seconal is the drug of choice.

In 2009, Grube remembers the price of a lethal dose of Seconal — 100 capsules — was less than $200. Over the next six years, it shot up to $1,500, according to drug price databases Medi-Span and First Databank. Then Valeant bought Seconal last February and immediately doubled the price to $3,000.

Most drug companies justify such hikes by pointing to high research costs. But Grube says that’s not the case with Seconal. It’s been around for 80 years.

“It’s not a complicated thing to make, there’s no research being done on it, there’s no development,”  he says. “That to me is unconscionable.”

http://ww2.kqed.org/stateofhealth/2016/03/22/pharmaceutical-companies-hiked-price-on-aid-in-dying-drug/

***

Comment:

By Don McCanne, M.D.

One of my father’s favorite phrases was, “There oughta be a law…” Whenever I heard that, I knew a bit of wisdom with a moral message would follow.

Dad’s last three weeks of life was spent in a hospital and could not have been more miserable (this was in the 1970s, before hospice). He had multiple myeloma and had extensive pathological fractures. When the nurses had to turn him, the pain was intolerable. He did not tolerate the narcotics administered as they aggravated his vomiting and obstipation. As a physician, he understood well his status.

At the last relatively rational conversation I had with him, he said, “Don, there oughta be a law. When the tiny bit of good that happens in a day cannot possibly even begin to compensate for the profound, unrelenting pain and suffering, your physician should be able to authorize the placement of a bottle of sleeping pills on the nightstand next to your bed.”

No such bottle appeared. The agony persisted for several more days, without even any fleeting moments of contentment, before he slipped into his final coma. In spite of my reverence for life, I knew this wasn’t right.

Today’s message on Valeant’s price gouging for Seconal – price gouging timed to capitalize on California’s new aid-in-dying law – would normally lead to my usual diatribe on the evils of dysfunctional health market dynamics in the U.S. But this time, it led to tears – mine.

How can we leave our health care system under the control of the rentiers in the medical industrial complex? Dad would have said, “There oughta be a law.” And we know what that law would be – an improved Medicare for all that spends money exclusively for the benefit of patients.

Why am I not out there helping to organize the marches on Washington and our state capitols on behalf of health care justice for all? For that matter, why aren’t you?

Pharmaceutical Companies Hiked Price on Aid in Dying Drug

By April Dembosky
KQED, March 22, 2016

When California’s aid-in-dying law takes effect this June, terminally ill patients who decide to end their lives could be faced with a hefty bill for the lethal medication. It retails for more than $3,000.

Valeant Pharmaceuticals, the company that makes the drug most commonly used in physician-assisted suicide, doubled the drug’s price last year, one month after California lawmakers proposed legalizing the practice.

“It’s just pharmaceutical company greed,” said David Grube, a family doctor in Oregon, where physician-assisted death has been legal for 20 years.

The drug is Seconal, or secobarbital, its generic name. Originally developed in the 1930s as a sleeping pill, it fell out of favor when people died from taking too much, or from taking it in combination with alcohol. But when intended as a lethal medication to hasten the death of someone suffering from a terminal disease, Seconal is the drug of choice.

In 2009, Grube remembers the price of a lethal dose of Seconal — 100 capsules — was less than $200. Over the next six years, it shot up to $1,500, according to drug price databases Medi-Span and First Databank. Then Valeant bought Seconal last February and immediately doubled the price to $3,000.

Most drug companies justify such hikes by pointing to high research costs. But Grube says that’s not the case with Seconal. It’s been around for 80 years.

“It’s not a complicated thing to make, there’s no research being done on it, there’s no development,”  he says. “That to me is unconscionable.”

http://ww2.kqed.org/stateofhealth/2016/03/22/pharmaceutical-companies-hiked-price-on-aid-in-dying-drug/

One of my father’s favorite phrases was, “There oughta be a law…” Whenever I heard that, I knew a bit of wisdom with a moral message would follow.

Dad’s last three weeks of life was spent in a hospital and could not have been more miserable (this was in the 1970s, before hospice). He had multiple myeloma and had extensive pathological fractures. When the nurses had to turn him, the pain was intolerable. He did not tolerate the narcotics administered as they aggravated his vomiting and obstipation. As a physician, he understood well his status.

At the last relatively rational conversation I had with him, he said, “Don, there oughta be a law. When the tiny bit of good that happens in a day cannot possibly even begin to compensate for the profound, unrelenting pain and suffering, your physician should be able to authorize the placement of a bottle of sleeping pills on the nightstand next to your bed.”

No such bottle appeared. The agony persisted for several more days, without even any fleeting moments of contentment, before he slipped into his final coma. In spite of my reverence for life, I knew this wasn’t right.

Today’s message on Valeant’s price gouging for Seconal – price gouging timed to capitalize on California’s new aid-in-dying law – would normally lead to my usual diatribe on the evils of dysfunctional health market dynamics in the U.S. But this time, it led to tears – mine.

How can we leave our health care system under the control of the rentiers in the medical industrial complex? Dad would have said, “There oughta be a law.” And we know what that law would be – an improved Medicare for all that spends money exclusively for the benefit of patients.

Why am I not out there helping to organize the marches on Washington and our state capitols on behalf of health care justice for all? For that matter, why aren’t you?

How to Stop the Bouncing Between Insurance Plans Under Obamacare

By Dhruv Khullar
The New York Times, March 23, 2016

Millions of Americans are finding Obamacare to be unstable ground.

Consider a young construction worker, a patient of mine, whose hours are cut during the winter. His income drops slightly, and now his family no longer qualifies for financial assistance through marketplace subsidies and must sign up for Medicaid. He had finally managed to control his diabetes with his primary care doctor, but when scheduling his next appointment, he is told his doctor doesn’t accept Medicaid.

When the summer rolls around, he picks up more hours, and starts making too much for Medicaid. He has to go back on a marketplace plan, a different one from before. Meanwhile, providers and insurance plans rack up administrative costs as they accommodate these changes.

Because of fluctuations in income, millions of Americans move back and forth between Medicaid and the Affordable Care Act’s insurance marketplace, leading to significant health and financial costs for individuals, states and insurance companies.

This cycling across different forms of insurance is called “churning.” Churning is not a new phenomenon. In the past, people who rolled off Medicaid simply became uninsured. But now many who become ineligible for Medicaid become eligible for marketplace subsidies, and vice versa.

The Affordable Care Act sets the eligibility divide between Medicaid and the insurance marketplace at 138 percent of the federal poverty level, or about $33,000 for a family of four — a threshold at which many people experience substantial income fluctuation. Up to 28 million people may move between plans annually, according to a 2011 study by Benjamin Sommers at Harvard and Sara Rosenbaum at George Washington University. Over the course of four years, only 19 percent of adults will remain continuously eligible for Medicaid and 31 percent continuously eligible for marketplace subsidies. Almost 40 percent will have churned more than four times during this period.

Churning is also costly for taxpayers. Research suggests that average monthly spending on individuals continuously enrolled in Medicaid is two-thirds what it is for those enrolled for just half the year. And the administrative costs can be considerable; one study found that it costs $280 to enroll a child in Medicaid.

What can be done? One option is to require states to guarantee 12 months of continuous eligibility when people sign up for Medicaid. Currently fewer than half of states do this for children and pregnant women, and only New York does it for all adults. An analysis by the Commonwealth Fund found that offering 12 months of continuous Medicaid eligibility would reduce churning by 30 percent. Guaranteeing coverage through the end of the calendar year would reduce churning by nearly 80 percent.

Another approach is to smooth the transition between Medicaid and the marketplace plans by aligning plans, benefits and networks of providers. States are increasingly relying on managed-care companies to provide Medicaid benefits; in 2015, the number of Medicaid beneficiaries using private insurance plans reached 46 million. Making sure people can use similar providers and services — regardless of which insurance they technically qualify for at that time — could help.

Washington is helping insurers in the marketplaces develop Medicaid managed-care plans. A more direct path is simply to allow Medicaid-eligible populations to buy private plans on the marketplaces.

While the patchwork of health care in the United States may make some amount of churning unavoidable, it is possible to create a less wasteful, more unified system that works better for patients and providers.

Dhruv Khullar is a resident physician at Massachusetts General Hospital and Harvard Medical School.

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Published Comment:

By Don McCanne, M.D.
San Juan Capistrano, CA

Tweaking the alignment of Medicaid and the private ACA exchange plans still leaves in place a fragmented system of incongruous provider networks, and unstable cost sharing depending on plan actuarial values and sliding-scale subsidy qualifications. These efforts result in wasteful administrative excesses, inefficiencies and inequities in care.

A well designed single payer system – an improved Medicare for all – would provide stable health care coverage for life – totally eliminating churning. The savings from the administrative efficiencies would be enough to eliminate current financial barriers faced by the uninsured and the underinsured, while reducing inequities and ensuring access for all.

Tweaking a highly dysfunctional system just won’t get us there.

http://www.nytimes.com/2016/03/24/upshot/how-to-stop-the-bouncing-between-insurance-plans-under-obamacare.html

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Comment:

By Don McCanne, M.D.

Dhruv Khullar has provided us with an important policy lesson. He seems to be amongst those who believe that we should accept Obamacare (ACA) as a given and build on it through incremental reform. Amongst the multitude of problems with ACA, he has selected as an example the issue of churning in and out of Medicaid and the private ACA exchange plans. What does he propose?

He suggests reducing churning by offering twelve-month eligibility for Medicaid, and he suggests aligning benefits and provider networks between Medicaid managed care and private ACA exchange plans – a proposal with obvious profound administrative complexity. Further, when these anti-churning measures are implemented, he concedes that “the patchwork of health care in the United States may make some amount of churning unavoidable.”

This is the policy lesson. Our fragmented, dysfunctional financing infrastructure is so highly flawed that patches to it will have very little impact in moving us closer to the ideal of a quality health care system that serves all of us well. In contrast, the patches themselves lead to further administrative waste with associated higher costs.

The obvious answer to churning is to have a single, well-designed Medicare for all program in which individuals are enrolled for life. That would also take care of most of the multitude of other health care financing problems that Dhruv Khullar nor I could address here.