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Is the California ACA exchange a model for the nation?

Is the California ACA exchange a model for the nation?

Obamacare works in California. Here’s why.

By Peter V. Lee, James C. Robinson
Los Angeles Times, July 27, 2015

Early reports that 2016 health insurance premiums would increase in double digits brought out the usual cadre of critics to claim — once again — that Obamacare is not financially sustainable.

We now have the full picture in California, where we are proving that health insurance exchanges can keep prices in check. Residents who enroll through Covered California, our statewide exchange, will see only modest 4% increases in 2016. Those selecting the lowest-priced plans actually will save 4.5%.

These low premiums were made possible because California law gave Covered California the power to actively negotiate on behalf of its 1.3 million consumers. The board and staff of Covered California have used this authority. That’s helping the Affordable Care Act work as intended — using market forces to hold down costs.

So how exactly is California getting such good results? First, Covered California selects which plans can be sold through the exchange. This gives it leverage with the insurers, which want to reach this source of new customers. Those insurers then are able to negotiate better deals from hospitals and doctors. In contrast, the federal health insurance marketplace and other state exchanges take all comers and do not force insurers to improve plans to get their products onto the exchanges.

In 2014 and 2015, Covered California turned away several plans because of serious concerns about high prices, inadequate physician networks or weak administrative capabilities.

Covered California also negotiates directly with health insurers on prices. We pressure carriers to keep premiums as low as possible and offer robust networks of doctors and hospitals. Passive insurance exchanges, including the 37 states that are part of the federal marketplace, allow insurers to charge whichever rates pass regulatory muster and cover however many doctors they want.

Equally important, Covered California standardizes the deductibles and other characteristics of plans offered. That empowers consumers, who can make apples-to-apples comparisons. Standardization also allays fears that low-premium plans might be complicated or rife with coverage exclusions. Californians can rest assured that their coverage means they can get the treatment they need without first paying a deductible that can be thousands of dollars.

Moreover, the benefit of standard plans and negotiated prices accrue to anyone who buys individual health insurance. Again, because of how California law implemented the ACA, the rates Covered California negotiates must also apply to policies those plans sell outside the exchange.

Covered California is using its heft to improve patient care and outcomes too. Contracts with insurers require that they participate in quality improvement programs, reduce ethnic and geographic disparities in access to care, and provide patients with access to doctors and hospitals that meet their needs.

Taken together, this process generates a better set of insurance options than do the federal and state insurance exchanges that adopt a passive market approach.

Free market forces can be a powerful tool to contain health costs. But for that tool to work, consumers need the support of an active purchaser that can go toe-to-toe with the insurers. Other states and the federal exchange would be wise to look at what’s working in California.

Peter V. Lee is the executive director of Covered California. James C. Robinson is a professor of health economics at UC Berkeley.

http://www.latimes.com/opinion/op-ed/la-oe-0728-lee-aca-insurance-prices-20150727-story.html

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Covered California’s good news on premium hikes comes with trade-offs

By The Editorial Board
Los Angeles Times, July 28, 2015

The 2010 federal healthcare reform law made it easier for millions of Americans to obtain insurance coverage, but it didn’t stop the cost of that coverage from rising considerably faster than inflation. So it was a welcome surprise Monday when officials at Covered California, the state’s health insurance exchange, announced that the average premiums for individual policies in 2016 would be only about 4% higher than they are this year, and only about 2% higher in Los Angeles County. Mixed in with the good news for consumers, though, were some trade-offs that won’t make everyone happy. The announcement offers lessons for consumers and policymakers, not all of which are easy to stomach.

Monday’s announcement illustrates how competition among doctors and hospitals in Southern California is helping to hold down premiums. Consumers in remote or rural areas, and even in some parts of Northern California, who do not have such competitive marketplaces but are dominated by one or two hospital systems may face double-digit increases in their premiums in 2016. They can cut their costs significantly by switching insurers, but doing so may require them to find a new set of doctors — Covered California has encouraged insurers to compete by assembling different lineups of doctors and hospitals. That’s a potentially huge barrier to people with chronic conditions and those who don’t have the time or inclination to get into the details of their insurance plans.

Here’s another trade-off. Close to 90% of those insured through Covered California receive subsidies for their premiums, which makes premiums less of a problem for many than their policy’s out-of-pocket costs. To hold down those costs in 2016, the exchange is introducing a new standard “benefit design,” or common set of policy features. This design eliminates deductibles for more basic services and caps the costs of expensive prescription drugs. At the same time, though, it makes emergency services and hospitalizations more expensive, especially for those choosing the tier of coverage with the least expensive premiums. That should help many consumers, but not those in cheaper plans who are hit with a major illness or injury.

Unlike the exchanges in most states, Covered California actively negotiates with insurers over rates and plan designs. There’s a trade-off here too: Some insurers aren’t offering plans through the exchange to consumers in all or part of the state because they didn’t meet the exchange’s demands.

That’s not to give short shrift to what Covered California has been doing. It’s simply to acknowledge that the changes wrought by the 2010 law have yielded a market for individual policies that demands not just an active exchange but attentive consumers aware of the trade-offs implicit in their choices.

http://www.latimes.com/opinion/editorials/la-ed-health-insurance-premiums-20150727-story.html

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Comment:

By Don McCanne, MD

Peter Lee and James Robinson tell us that the Affordable Care Act (ACA) is working as intended – “using market forces to hold down costs,” and that California proves it by holding average premium increases down to 4% for the second consecutive year. But Covered California functions as an “active purchaser.” Does that mean it is functioning as an agent facilitating a free market between buyers and sellers of insurance, or is it functioning as a bureaucratic regulator dictating which insurers and which products are allowed in the exchange markets? 

The last half century has confirmed that free markets in health insurance are highly dysfunctional. The reason that Covered California is working is that it is very highly regulated, dictating which insurers can participate, what benefits their plans must offer beyond those mandated by ACA, while aggressively negotiating with insurers on prices, rejecting those that are too high.

By requiring more rigid standardization of negotiated prices, benefits, and lower deductibles, plan selection for buyers is less difficult. Although this standardization defeats the free market principles wherein choice would be between plans with much greater variability in these parameters, it reduces the risk for the individual that a given selected plan would be grossly inadequate in the face of significant medical need.

Thus given the limitations of ACA, the strong arm tactics of these bureaucrats benefit patients compared to simply turning them loose in a free market of unregulated health plans.

But there are important trade-offs. Because the exchange plans are supposed to compete, they are requiring plans to have different compositions of provider networks so that patients would have a choice of which restricted list of providers they could use. That could be difficult for patients with chronic problems whose professionals were scattered amongst different networks. Also yearly premium adjustments can leave patients with a choice of paying a higher, less affordable premium or changing to another plan with a different provider network, disrupting continuity of care.

The administrators of Covered California have recognized the financial barriers created by the very high deductibles that have become commonplace today. They rightfully established a new standard benefit design that eliminates the deductibles for basic services. But to avoid the necessity of premium increases they have had to allow greater cost sharing for emergencies and hospitalizations – creating financial hardships for those with the greatest needs for adequate coverage.

Trying to do the best with what ACA allows, they have crafted plans that limit choices of providers, expose the most vulnerable patients to high out-of-pocket costs, while keeping insurance premiums only modestly above the level they were before ACA was enacted.

What is missing here? They have failed to recover the profound administrative waste inherent in our dysfunctional financing system – waste that goes away simply by changing to single payer financing. Also they could be more effective negotiators if they were a single public monopsony – a single-payer purchaser – instead of trying to negotiate with only a portion of the multiple players in our fragmented financing system. The efficiencies would free up enough funds to provide all essential services for everyone in a system with free choice of health care professionals that is affordable for all through equitable public funding.

The honorable administrators of Covered California have shown us what can be done under ACA. Their efforts are admirable, but their results fall tragically short of what we need simply because they were limited by the fundamental defects in our financing infrastructure. Just think of what they could do for us if we gave them an improved Medicare for all with which to work.

Racial injustice still rife in health care

By Vijay Das and Adam Gaffney
CNN, July 28, 2015

Racism mars the history of health care in America. For years, black patients were relegated to separate — and appallingly unequal — hospitals and wards. Many were simply denied medical attention, either “dumped” into the care of other facilities or turned away at the hospital door.

Fifty years ago this week, that started to change as Lyndon B. Johnson signed into law two programs — Medicaid and Medicare — that constituted real progress in the cause of health care justice. For one, these programs greatly expanded health care access for the elderly and the poor, of all races. Also, building on years of civil rights work and legal challenges, Medicare was wielded to finally end explicit hospital segregation; hospitals hoping to become certified for the program were required to comply with Title VI of the Civil Rights Act.

Yet despite this important achievement, racial justice in health remains an aspiration, not an achievement.

After the death of Freddie Gray in April, and as the nation debated race and the criminal justice system, Americans were reminded of some disturbing racial inequalities in health. Not least among these were the differences in life expectancy between some of Baltimore’s segregated neighborhoods, which were as high as one to two decades. Meanwhile, across the nation, black males in 2010 had a life expectancy almost five years lower than white males; black women could expect to live three years fewer than white females.

In addition to inequalities in health outcomes (which have many roots), disparities persist in health care access. According to a 2013 report, blacks and Hispanics have substantially higher uninsured rates than whites. And while many are pinning their hopes on the Affordable Care Act to address such inequalities, the act won’t remedy the many deeply rooted racial injustices in America’s health care system.

The ACA’s primary instrument for increasing health coverage for people of color is the expansion of Medicaid to all those earning less than 138% of the federal poverty level. However, although Medicaid eligibility was meant to expand nationwide, the U.S. Supreme Court ruled that states could opt out. Some 19 states are doing exactly that.

Hopefully, with some combination of public shaming and political mobilization, common sense will prevail and Medicaid will be expanded nationwide. But even if the ACA’s Medicaid expansion reaches all 50 states, the program’s intrinsic weaknesses render it insufficient for reaching the goal of health care equality.

Most concerning is the problem of health care access. An audit of California’s Medicaid managed care system last month, for example, raised disturbing questions about the adequacy of doctor networks for program participants in that state. Nationally, limited access to particular treatments is another problem. Last month, a study revealed that state Medicaid programs are limiting coverage of sofosbuvir, a potentially life-saving medication for those with Hepatitis C, a chronic condition disproportionately affecting minorities. The investigators called these cost-saving restrictions — which do not appear to have been based on any official, professional clinical guidelines — a potential “human rights violation” because they prevented patients from obtaining needed care.

Unfortunately, the problem of health care inequality is not limited to Medicaid. As a recent study suggested, some Obamacare plans effectively discriminate on the basis of drug affordability for certain diseases, like HIV/AIDS. By categorizing medications for particular conditions in the highest co-payment “tier,” these plans price out patients with those ailments. These additional co-payments can result in thousands of dollars a year in extra expenses.

The reality is that people of color bear the brunt of a system that treats health care as a commodity at the same time as high out-of-pocket costs in the form of soaring deductibles become the norm. This point was underscored by the findings of the Commonwealth Fund, which found in 2014 that 31 million insured Americans were underinsured on the basis of high out-of-pocket expenses, which deter many from seeking treatment. Of course, these challenges affect everyone, but minority families may face particular distress.

We do not need to accept this status quo.

Just as Medicare helped spur hospital integration, it can usher in true universal health care — a single-payer system of “Medicare-For-All” — that will help lessen racial and class inequalities in health care. Such an expansion is consistent with the original goals of many advocates who created the 50-year-old program. But even as we expand Medicare to all, we must also improve it, including ending burdensome cost sharing requirements.

True universal health care cannot wait. Consider the tragic case of the late African-American Monroe Bird. This 21-year-old was shot by a private security guard in February. Though he was left paralyzed and critically ill, his private insurance plan reportedly denied him coverage for care in a rehabilitation facility. Bird returned home to be cared for by his family, who faced considerable financial stress in his complex care, owing up to $1 million in medical bills, according to the New York Times. Monroe died on June 30.

As we continue to confront the reality of structural racism in this country — where the criminal justice system disproportionately targets men and women of color, where the school-to-prison pipeline is the fate for far too many — we should also be aware that our for-profit-health care system continues to fail too many people.

Racial and economic inequalities are intimately interwoven. There is now a record number of billionaires, yet as Vox notes, infant mortality is higher in West Baltimore than in the West Bank. The United States remains the only advanced nation that routinely forces families to start GofundMe campaigns to pay for the medical treatment of their loved ones — and people of color are often bearing the brunt of this struggle. If we want to simultaneously improve American health care while opposing racial injustice, then let’s expand and improve Medicare, and guarantee just and equal health care for all.

http://www.cnn.com/2015/07/28/opinions/das-gaffney-racial-injustice-health-care/index.html

Journalist turned activist promotes changes in health insurance coverage

By Peter Wong
Portland (Ore.) Tribune, July 26, 2015

SALEM, Ore. — A journalist turned activist says that it’s more likely that Colorado, not Oregon, will be the first to lead the United States in providing health coverage for everyone.

“We beat you to marijuana and we will beat you to universal health care,” says T.R. Reid, the one-time Washington Post reporter who is now leading a campaign to qualify a financing measure for the 2016 ballot in Colorado.

Reid spoke Saturday at Salem Hospital during a presentation sponsored by the Salem City Club. He also spoke at Linn-Benton Community College in Albany. He also made several appearances in Portland.

Reid is chairman of the Colorado Foundation for Universal Health Care, which proposes a payroll tax on employers and employees to supplement existing funds for health coverage.

Oregon lawmakers have just budgeted $300,000 for a study, which they authorized two years ago, of better ways to pay for health care.

While the national health care overhaul signed by President Barack Obama in 2010 and known as “Obamacare” has taken some steps toward putting the United States on a par with other democracies with advanced economies, Reid says it’s still far short of the ideal of universal coverage for everyone.

“We are not going to get to that destination on a national basis,” he says. “The U.S. Congress is gridlocked and cannot do anything big. The way we are going to get there is state by state.”

He mentioned Canada’s program, which started with government-paid hospital care in 1961 and evolved into universal coverage in 1984. It originated in the province of Saskatchewan after World War II.

Under the 2010 law, any state that offers universal coverage may opt out of the federal requirements. Sen. Ron Wyden, D-Ore., authored the provision as a way to encourage state experimentation.

Personal interest

Reid is the author of “The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care.” It was published in 2009, the year after the documentary “Sick Around the World,” made for PBS Frontline. He also took part in a 2012 documentary, “U.S. Health Care: The Good News.”

Reid acknowledges he is not an expert in the field.

“I’m just an ink-stained reporter who got interested in this topic,” he says.

He did so when he was the Washington Post’s bureau chief in Tokyo, where he was initially worried when he had to take his children for medical care. He need not have worried.

“It was an American standard of care; the facilities were fine,” he said. “We did not wait very long. But the really striking thing was the bills — one-20th or one-tenth what you would pay in the United States for the same treatment.”

Japan relies on private doctors and hospitals. Great Britain, where Reid was London bureau chief for the Post, has a National Health Service established in 1948 that provides most care.

As Reid investigated health care in other nations, he spotlighted his quest for relief for an ailing right shoulder he injured in the early 1970s while a seaman in the Navy.

His conclusion: “We are paying vastly more and getting much less than all the other countries like us when it comes to health care. The main answer I get in those other countries is that they see it as a moral obligation. The United States has never seen this obligation like all the other rich countries.”

According to a July 20 compilation by the World Health Organization, based on 2013 data, the United States led with 17.1 percent of its gross domestic product on health spending. Of five other advanced democracies, the range was from 9.1 percent in Great Britain to 11.7 percent in France.

On Obamacare

Reid spent most of his talk about the Patient Protection and Affordable Care Act, the official name of the 2010 congressional overhaul, in terms of expanding coverage, restraining costs and other factors.

“It is working better than before,” he said. “But it doesn’t get us to where I think we ought to be. It has expanded coverage much more broadly than what opponents say, but much less than what the White House promised.”

Although some provisions took effect earlier, the law kicked in on Jan. 1, 2014.

While the law has expanded coverage to more than 16 million people, Reid said that’s still about half the intended target of 32 million people. By 2020, an estimated 31 million will still be without coverage, counting 11 million in the nation without immigration documents, who also had been excluded from the initial target.

Some are covered through plans under health insurance exchanges, for which there are federal tax subsidies.

Others are covered through an expansion of Medicaid, the joint federal-state program of health insurance for low-income people. Oregon is among the 30 states that have some form of expansion, according to the Kaiser Family Foundation; 19 states do not, mostly in the South, Great Plains and Mountain West. Exceptions are Maine and Wisconsin. Utah is considering its options.

States will have to share costs of that expansion beginning in 2017, but Reid said it is a fallacy for critics to say that states will have to assume 100 percent. “Congress does not take away entitlements,” he said.

Health care costs, which had been rising annually by two to three times the rate of the Consumer Price Index, have moderated. While costs have still grown, Reid said they rose by just 2 percent in 2014, matching the CPI, and actually fell by just under 1 percent in the first quarter of his year.

However, drug prices are increasing much faster.

“If cost increases level off, I think we have to give some credit to Obamacare,” even if there are other factors involved, Reid said.

Reid said the 2010 law also did some good things, such as put an end to insurance company exclusions for pre-existing medical conditions and arbitrary policy cancellations known as “rescissions.”

It also put an outside limit of 20 percent for administrative costs from premium dollars, down from 30 to 35 percent. But Reid said that’s still far more than the international average of 5 percent, or the 3.8 percent paid by Medicare, the federal program of insurance for those 65 and older and for some people with disabilities.

“Those of us who have looked at other countries believe the (2010) limit is not enough,” he said.

T.R. Reid has a public appearance scheduled at 6 p.m. Monday, July 27, at the Multnomah County Building, 501 SE Hawthorne Blvd., Portland. The event is free, but registration is encouraged at the City Club of Portland website. Other sponsors are Physicians for a National Health Program/Oregon, Physicians for Social Responsibility, Oregon Public Health Association and Oregon Public Health Institute.

http://portlandtribune.com/pt/9-news/267707-142133-journalist-turned-activist-promotes-changes-in-health-insurance-coverage

After 50 years, Medicare can still improve

By Nick Anton, M.D.
The Press Democrat (Santa Rosa, Calif.), July 28, 2015

You were conceived by Senator and then-President John F. Kennedy and born on July 30, 1965, when President Lyndon Johnson signed the law after a contentious debate in Congress.

Has it worked, or does it need to be improved? In every poll taken, people “love” their Medicare and don’t want it taken away.

But let’s look at the data. Only 50 percent of individuals over 65 years old had health insurance in 1965. Now 98 percent do.

Medicare insures 60,000 individuals in Sonoma County, 4.5 million in California and 53.5 million in the United States. In one attempt to improve it, in 1972 Medicare added adults who had been disabled for two years and patients with end-stage renal disease on dialysis. Eighty-five percent of Medicare recipients in Sonoma County are over 65 years old, 14 percent are disabled adults, and 1 percent have ESRD.

But Medicare is actually still very expensive for individuals. In 2013 Medicare spent $11,320/enrollee in California ($600 above the national average). Of this total individuals paid an average of $1,336 out-of-pocket, some as high as $2,500. In Sonoma County 67 percent of those on Medicare live on less than $35,000 and 54 percent less than $25,000. Medicare has drastically reduced but not eliminated the number of individual bankruptcies due to medical debt.

Nationally, Medicare covers only 50 percent of medical costs.

In another attempt to improve Medicare, in 2003 optional drug coverage (Part D) was added as a benefit, and more than 70 percent of Medicare enrollees participate in Part D. But, also in 2003, as part of that legislation, Congress prohibited Medicare from negotiating lower drug prices (and individuals from buying drugs in other countries with lower prices), resulting in drug prices 40 to 50 percent higher in the U.S.

Yet, despite providing a wide range of benefits, the overhead of Medicare — always low — in the past three years has been less than 2 percent. Compare this to the 10 to 20 percent of most private insurance companies.

It was envisioned, in 1965 when Medicare was passed, that Medicare would eventually be expanded to include all age groups and all people living in the United States.

However, ideological differences and political divisions have impeded that reality. The Affordable Care Act (passed in 2010) is an attempt to expand health care coverage, but it will still leave 30 million uninsured when fully-implemented and is unlikely to control rising health care costs. 

How can we really improve Medicare? How can we live up to the original vision?

A bill currently in Congress (HR 676) proposes “improved and expanded Medicare for all.” This would expand Medicare to all those living in the U.S. and would provide — in addition to all inpatient, outpatient, emergency room, drug coverage, mental health, and physical therapy services — drug and alcohol rehabilitation, vision care, dental care, and long-term care.

All of this would be without co-pays, co-insurance, or deductibles. How would this be possible? Because such a program would negotiate for lower drug and medical device charges, require hospitals to be non-profit, and eliminate $400 billion/year in unnecessary overhead and profits in the current multi-payer system.

As Martin Luther King, Jr., said, “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

Dr. Nick Anton practiced internal medicine in Santa Rosa for 34 years before retiring in 2009. He is a member of Physicians for a National Health Program. 

http://www.pressdemocrat.com/opinion/4263122-181/after-50-years-medicare-can

Happy 50th birthday to Medicare program

By Jessica Schorr Saxe, M.D.
The Charlotte (N.C.) Observer, July 27, 2015

What do these recent news stories in the Observer have in common?

An insurance agent connives to sell Affordable Care Act policies to homeless people by encouraging them to report inflated incomes. His clients/victims discover they can’t afford their deductibles nor can they any longer receive medications or other services earmarked for the uninsured.

Health care advocates across the state call on Governor McCrory to develop a plan for Medicaid expansion, noting that hundreds of thousands of North Carolinians would benefit significantly, at little cost to the state.

A benefit concert is held to pay mounting medical bills for an artist severely injured when struck by a car.

The answer: None of these stories would exist if the United States provided health care to all – as every other developed nation does.

July 30, 2015, is the 50th anniversary of the day President Lyndon Johnson signed the Medicare bill and handed former President Harry Truman, a longtime advocate of a national health care program, the first Medicare card. It marks a good time to reflect on the progress made and possibilities remaining, as the original Medicare proponents envisioned that the program would, in time, expand to cover everyone.

Many of us have become so accustomed to Medicare that we forget what a success it is. As the Commonwealth Fund notes, it has accomplished its two basic goals: improving access to care for the elderly and protecting them from financial hardship.

Before its implementation, 48 percent of seniors lacked health insurance; today the figure is 2 percent.

Medicare recipients are less likely to miss needed care, are less plagued by medical bills, have fewer negative insurance experiences, and are more satisfied with care than private insurance customers. Its administrative costs of about 2 percent are considerably less than those of private insurance, which average 12-14 percent.

By ensuring access to care, Medicare has contributed to a five-year increase in life expectancy at age 65. Another benefit of the program has been integration, as hospitals rapidly desegregated in order to participate and receive federal funding.

And Medicare is popular, with 77 percent of Americans supporting it, including majorities of Republicans, Democrats, and Independents.

Its shortcomings include a lack of comprehensiveness and seamless integration. At present, it is a mix of different programs – Medicare A, B, C, and D – each of which is administered and funded differently. Uniting the different parts and expanding it to cover all U.S. residents would actually simplify the program.

If we expanded Medicare to include everyone, we would all benefit from improved health care, relief from anxiety about medical bills, greater choice of providers and hospitals, and freedom from the oppressive bureaucracy that plagues both patients and providers.

As a physician, I would love to see us return to the primary mission that has inspired our profession for millennia – caring for patients, listening to their stories, concentrating on their well-being – instead of filling out forms and dancing to the beat of insurance companies.

Happy Anniversary, Medicare! Let’s celebrate its success by improving it and expanding it to all.

Dr. Jessica Schorr Saxe is chair of Health Care Justice – NC, a chapter of Physicians for a National Health Program. Reach her at HCJusticeNC@gmail.com.

http://www.charlotteobserver.com/opinion/op-ed/article28873498.html#storylink=cpy

Don’t shame patients for seeking the care they need

By Inge De Becker, M.D.
Star Tribune (Minneapolis), Letters, July 25, 2015

A headline like “$2B wasted on hospital visits” (July 23) is not what prudent and sensible Minnesotans want from their medical system. Unfortunately, the jump headline says, “Patients wasted billions on avoidable hospital trips,” implying that the sick are the ones responsible for high medical costs. We know they are not, and the article itself nicely explains why people end up going to the ER — they can’t afford to receive, or don’t have adequate access to, preventive, primary or urgent care, or post-hospitalization checkups.

Minnesota can do better. We need a unified insurance system that exists for no other reason than to pay to meet the medical needs of all. Imagine that!

Dr. Inge De Becker is co-chair of Physicians for a National Health Program-Minnesota. She resides in St. Paul.

http://www.startribune.com/readers-write-july-25-lake-mille-lacs-emergency-room-costs-paynesville-solar-project-delay-mankato-happy-chef/318496001/

Happy 50th to Medicare, which has saved an untold number of lives

By Inge De Becker, M.D.
MinnPost (Minneapolis), Letters, July 27, 2015

Medicare’s 50th anniversary, July 30, is just around the corner. Happy birthday, dear Medicare! You’ve given seniors and younger people with permanent disabilities the medical care and financial security they otherwise would never have known. You’ve saved an untold number of lives. And you cut elder poverty in half within 10 years of being implemented.

I know, 50 is not that old, but your tender loving care has gone a long way. We need to protect you against ongoing privatization. We need to smooth out some of your wrinkles (by eliminating your premiums, co-pays, and deductibles), keep all providers in your network, and give you permission to negotiate down exorbitant drug prices. And last but not least, we need to send a Medicare card to everyone under age 65, so that all Americans may enjoy health security without fear of medical bankruptcy.

You’ve shown us what works. Now let’s build on that!

Dr. Inge De Becker resides in St. Paul.

Happy 50th to Medicare, which has saved an untold number of lives

Wendell Potter’s call for Medicare supporters to wake up

Priceless safety net reaches Golden Anniversary

Medicare’s impressive milestone is reason to celebrate the safety net and time for supporters to wake up to threat of increased privatization

By Wendell Potter
medicareresources.org, July 23, 2015r

Happy birthday, Medicare! Happy Golden Anniversary!

The fact that we have such a special milestone to celebrate means that the opposition of wealthy, entrenched special interests can be overcome. But, as we will see, an entirely different group of special interests is now profiting as a result of a very favorable financial arrangement with what has become an immense federal program. They are making such rapid inroads that the original Medicare program may all but cease to exist over the next decade if the program’s supporters don’t wake up to what is a real existential threat.

Public program increasingly becoming private

Republican lawmakers whose goal was to privatize the program succeeded in passing legislation to enable insurance companies to provide coverage to Medicare beneficiaries – on the government’s dime. To entice them to get in the game, the government agreed to pay them considerably more than what it would cost to provide benefits to Medicare-eligible folks if they stayed in the original program. This not only enabled the insurers to make a tidy profit, it also allowed what are now called Medicare Advantage plans to offer a drug benefit before the traditional program was authorized to do so and to cover all medical costs, not just 80 percent. In exchange, beneficiaries could only get care provided by doctors, hospitals and other facilities that were in their insurance company’s provider network.

Insurance companies have spent billions of dollars over the past few years on sales and marketing campaigns to persuade beneficiaries to enroll in or switch to their Medicare Advantage plans. They’ve been so successful that a third of Medicare beneficiaries – 16.6 million at last count – are now enrolled in Medicare Advantage plans, most of which are operated as HMOs and PPOs.

Medicare’s growing value to insurers

If Medicare Advantage enrollment trends continue – and there is no reason to believe they won’t – within a few years, possibly before the end of this decade, we will reach a tipping point in which more people will be enrolled in private plans than in the original program.

That very real possibility should be of great concern to health care reform advocates who think Americans would be much better off if all of us – not just senior citizens and the disabled – were enrolled in an improved, “Medicare for All” program.

The word “improved” in that last sentence is essential. As medical costs continue to go through the roof, the 20 percent coinsurance obligation in the traditional program will make the Medicare Advantage plans increasingly attractive. If I were leading the strategy for the “Medicare for All crowd,” I would focus a lot of attention on strengthening the traditional program to make it every bit as comprehensive and attractive as a Medicare Advantage plan.

If that doesn’t happen, Medicare’s next significant birthday will be celebrated most enthusiastically by the shareholders and executives of private insurance companies.

http://www.medicareresources.org/blog/2015/07/23/priceless-safety-net-reaches-golden-anniversary/

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Comment:

By Don McCanne, MD

Mark Wendell Potter’s words. If we want an improved Medicare for all, we need to focus on strengthening the traditional program “to make it every bit as comprehensive and attractive as a Medicare Advantage plan.” Yes, but even more than that.

If benefits of the traditional Medicare program, especially the deductibles and coinsurance, were even better than the Medicare Advantage plans, then there would be no reason that Medicare beneficiaries would want the restrictions of the private plans, such as limiting their choices of physicians and hospitals to the networks selected by the private plans.

For those who say that we cannot afford to improve Medicare’s benefits, they will have to explain to us why it is then acceptable to give the private Medicare Advantage plans more taxpayer funds than are spent on comparable patients in the traditional program. Aren’t those in the traditional program worthy of the same level of spending? Then we need to explain to them how we could increase benefits without increasing total spending, by putting in place the substantial efficiencies of a single payer version of an improved Medicare for all.

With the release of the Medicare Trustees report, the conversation has returned to the need to control spending. The privatizers are out with their schemes to control government spending (but not total spending). Jeb Bush says that we need to “phase out” Medicare and “move to a new system” – presumably premium support vouchers which shift costs from the government to the beneficiaries.

We need to control total health care costs, not control only government spending while allowing total costs to escalate. So let’s change the conversation from that of cutting Medicare to that of improving Medicare while making it affordable – a feat which we can accomplish only if we convert it to a single payer system.

The modern-day health miracle known as Medicare

By Mary L. Ford
Daily Hampshire Gazette (Northampton, Mass.), Letters, July 24, 2015

I’m fed up with citizens complaining that government is a problem, not a solution. I want my children and nieces and nephews to know that because of Medicare, my generation as we grow old does not have to turn to them to cover hospital bills and doctors’ costs.

Only 2 percent of Americans over 65 lack coverage today. That’s public sector success. Fifty years ago President Johnson signed Medicare into law. It was a scaled-back first step toward universal health coverage in the U.S. which had failed to get enough support under Harry Truman, like FDR before him.

Since elders often needed the most care, lived on reduced incomes and had earned the right to be free from worry about affording medical attention, elected officials decided to start by covering them.

By lessening financial stress for retirees and their children, this 1965 program helped millions of families increase their standards of living over the next quarter century.

Of course, Medicare’s inherent aim was to improve the health of seniors by enabling them to afford needed services. And it worked. For just one example, cataract surgery in those over 65 doubled between 1965 and 1975, using modern technology to maintain vision and independence.

Fast forward to 2013 when a study showed federally insured seniors accessing services and avoiding medical debt at a rate much better than any other group. Medicare beneficiaries even fared twice as well as those insured through workplaces.

With a small Medicare payroll tax, a monthly premium after age 65 and minimal paperwork, the basic guarantee of covering most of seniors’ doctor and hospital bills has been both effective and efficient (only 1.6 percent of the dollars go to administration and overhead, according to the 2013 trustees’ report).

Medicare was expanded first to include another category of people with high health expenses and lower incomes – those unable to work for two years due to disability. Over time it has added more preventive services as well as a prescription option. Medicare’s straightforward administration has enabled it to add benefits smoothly and include new categories of beneficiaries, like those on kidney dialysis.

Today, Medicare is the largest insurance program in the U.S., public or private, serving more than 52 million people. It needs tweaks to be sure, but is deemed highly successful by health economists and beneficiaries. This month’s Medicare Trustees’ report shows full funding through 2030, beating projections.

Still, harkening back to earlier political struggles, the most “moderate” Republican front-runner said this past Wednesday in New Hampshire that we need to “phase out” the program in the future.

Wrong! We should expand this program, making improvements where necessary, eventually covering all Americans and releasing employers from having to run what is actually a societal benefit.

Most Americans now rely on Medicare as part of their family security. We expect it to provide adequate health coverage in later life and earlier in case of significant disability.

It enrolls and treats the healthy 65-year-old the same as the person with multiple chronic illnesses. Unlike private insurers, this taxpayer plan has little need for sales reps, expensive advertising and hordes of claims denial clerks. Doctors and their staff waste less time determining eligibility. This is a case of a public program functioning better than companies competing in a market.

President Obama’s Affordable Care Act spurred years of outrage about “government taking over health care” although, ironically, it mostly applied patches to private insurance systems.

The true national health insurance plan is Medicare, which has already been serving us for 50 years.

We take it for granted. Isn’t that a case of government fulfilling a real need of citizens, and getting it pretty much right?

In fact, isn’t this an example of what a practical, comprehensive, fair, cost-effective, no-drama program to provide health care at all stages of life ought to look like?

Let’s fight against any attempts to cut one of this country’s best programs.

Let’s work to get it improved and expanded to serve all of us.

I hope to see you at the celebration in front of City Hall at 1:30 p.m. Thursday.

We’ll be wishing Medicare at 50 a hearty Happy Birthday … and hoping for many, many more years of its coverage ahead.

Mary L. Ford served as mayor of Northampton from 1992 to 1999. She has worked for Kaiser Permanente and for federally qualified community health centers.

http://www.gazettenet.com/home/17902674-95/mary-l-ford-the-modern-day-health-miracle-known-as-medicare

Trudy Lieberman’s “Wrong Prescription?”

Wrong Prescription? The failed promise of the Affordable Care Act

By Trudy Lieberman
Harper’s Magazine, July 2015

It’s bad enough that the A.C.A. is fattening up the health-care industry and hollowing out coverage for the middle class. Even worse, the law is accelerating what I call the Great Cost Shift, which transfers the growing price of medical care to patients themselves through high deductibles, coinsurance (the patient’s share of the cost for a specific service, calculated as a percentage), copayments (a set fee paid for a specific service), and limited provider networks (which sometimes offer so little choice that patients end up seeking out-of-network care and paying on their own). What was once good, comprehensive insurance for a sizable number of Americans is being reduced to coverage for only the most serious, and most expensive, of illnesses.

The A.C.A.’s greatest legacy may finally be the fulfillment of a conservative vision laid out three decades ago, which sought to transform American health care into a market-driven system. The idea was to turn patients into shoppers, who would naturally look for the best deal on care — while shifting much of the cost onto those very consumers.

“Wrong Prescription?”: http://harpers.org/archive/2015/07/wrong-prescription/

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Comment:

By Don McCanne, MD

Harper’s Magazine has now moved Trudy Lieberman’s “Wrong Prescription?” out from behind the paywall, making it available for free.

It is an extraordinary article that explains the what, why and how we ended up with the wrong prescription for our sick health care financing system. Though a fairly long article, reading it and sharing it with others is an imperative.

The article does not dwell on what is the right prescription, but there are basically three options:

  1. Live with ACA, and try to patch the the defects. The problem with this is that the fundamental infrastructure cannot be repaired. Patches are inadequate in that the same basic structural flaws would be perpetuated.
  2. Although the Republicans keep telling us that they have a replacement plan, after five years they have been unable to agree within themselves on the specifics. That said, they have telegraphed their ideas, and, combined, they are basically a weaker version of the market-driven principles already incorporated in the Affordable Care Act. They would merely weaken oversight of the plans and shift even more responsibility to the patient-consumer. Being uninsured, underinsurance, and lack of affordability of adequate coverage would all worsen under their proposals.
  3. A single payer national health program – an improved Medicare for all – would finally achieve our goals of universality, affordability and accessibility while removing financial barriers through an equitable system of financing. It is the prescription we desperately need.

Take a moment this weekend to read this article and then share it with others. At the 50th anniversary of Medicare, this article is very timely. We have to fix this system once and for all, but that means that everyone must understand why ACA was the wrong prescription.

Healthcare ‘Oligopoly Wave’ Continues As Anthem Gobbles Cigna

Human rights campaigners say mega consolidation will erode healthcare access and hike prices, illustrating deep problems with for-profit model

By Sarah Lazare
Common Dreams, July 24, 2015

The health insurance giant Anthem announced Friday that it is buying its behemoth rival Cigna for $54.2 billion, launching the largest such merger the country has ever seen and reducing the number of major U.S. insurers to a paltry three.

Analysts and human rights campaigners warn that the move is poised to further slash access to healthcare and hike prices across the country, illustrating the problems with the for-profit model in terms of delivering vital services.

The mega deal comes less than a month after insurance giant Aetna acquired Humana for $37 billion, part of a nationwide push to consolidate in what the Wall Street Journal referred to earlier this year as an “oligopoly wave.”

The Anthem and Cigna merger is expected to be finalized in 2016, after which the joint company will provide coverage for at least 53 million people.

Numerous studies show that insurance mergers lead to higher premiums, including a 2012 analysis of a 1999 merger between Aetna and Prudential, as well as a report released in February which showed having more, not less, insurers in the insurance marketplace established by the Affordable Care Act leads to lower premiums.

Moreover, the mergers are taking place in a country that already has a dismal record with providing real care. A report released last year by the Commonwealth Fund finds that the U.S. healthcare system is already the most expensive in the world yet delivers the worse care among 11 industrialized nations.

Cait Vaughan, a Healthcare Is a Human Right organizer with the Southern Maine Workers Center, told Common Dreams that Friday’s merger underscores the fact that the Affordable Care Act model “is still a for-profit system that is not determined by our needs, but determined by the desires and profit margins of huge conglomerates.”

Dr. David Himmelstein, co-founder of Physicians for a National Health Program, told Common Dreams that the merger wave “will leave us with a small handful of insurance giants that are essentially monopolies. Much of their revenue comes from the government that pays hundreds of billions annually in premiums for private ‘Medicare Advantage’ plans, Medicaid managed care plans, and much of the premiums for the private plans bought on [ACA] insurance exchanges. Much of this money is wasted; Anthem and Cigna have overhead that’s nearly tenfold higher than traditional Medicare.”

What’s more, Himmelstein continued, “These monopolies are lightly regulated, and have used their enormous financial and political clout to avoid real oversight. Just this month, the insurers’ lobbying group hired as their new CEO Marilyn Tavenner, who as head of Medicare and Medicaid was responsible for regulating them until this spring.”

Vaughan emphasized that, in the “medical industrial complex,” people “made incredibly wealthy off of us being sick and limiting very basic access to healthcare while increasingly shrinking our ability to make choices.” In a presidential campaign cycle where we are “hearing a lot about how rich people control policy and elections,” Vaughan emphasized that it is vital to talk about the control of the wealthy over one of the most basic human rights: healthcare.

The growing nationwide movement for publicly-funded, universal healthcare is calling for a single-payer system in which the profit motive is cut out of the equation, and everyone is included.

But Brian Quinn, a law professor at Boston College, told the Washington Post that the frenzy of mergers could signal that the country is moving in the opposite direction: “It’s a little ironic I suppose that—over time—we may find ourselves moving towards a single payer healthcare system, but rather than it being government run, it may well be a small number of private, highly-regulated insurance companies.”

Sarah Lazare is a staff writer at Common Dreams.

http://commondreams.org/news/2015/07/24/healthcare-oligopoly-wave-continues-anthem-gobbles-cigna

Medicare Part D pays needlessly high brand-name drug prices

Mirror, Mirror on the Wall: Medicare Part D pays needlessly high brand-name drug prices compared with other OECD countries and with U.S. government programs

By Marc-André Gagnon, PhD. and Sidney Wolfe, MD.
Carleton University, School of Public Policy and Administration and Public Citizen, July 23, 2015

With $69.3 billion in prescription drug spending in 2013, Medicare Part D alone represents approximately 7% of the $993 billion global prescription drug market. Around 58% of Medicare Part D spending on prescription drugs is paid to brand-name manufacturers.

Despite its size, Medicare Part D is not allowed to “interfere with the negotiations between drug manufacturers and pharmacies and [Part D plan] sponsors” (P.L. 108-73, Section 1860D-11). Plan sponsors can obtain substantial rebates from both drug manufacturers and pharmacies, but the federal program is prohibited from leveraging its purchasing power to realize economies of scale due to this non- interference clause.

As this policy brief will show, by using previously unavailable data comparing U.S. brand-name drug prices with those of all other countries members of the Organization for Economic Co-operation and Development (OECD), Medicare Part D needlessly pays significantly higher prices than any other comparator countries. Moreover, even in comparison to other U.S. government programs such as Medicaid and the Veterans’ Benefits Administration (VBA), significantly higher prices are paid by Medicare Part D.

Highlights

1. After including rebates, brand-name drugs cost Medicare Part D 198% of the median costs for the same brand-name drugs in the 31 OECD countries.

2. Medicare Part D pays on average 73% more than Medicaid and 80% more than the Veterans Benefits Administration (VBA) for brand-name drugs.

3. Medicare Part D would save from $15.2 billion to $16 billion a year if it could secure the same prices that Medicaid or VBA, respectively, receives on the same brand-name drugs.

4. While Medicaid and VBA often are used as benchmarks because of the rebates or discounts they secure, even these organizations pay higher prices than many OECD countries.

5. Under current Medicare Part D pricing, non-innovative “me-too” drugs are priced as much or more than older, equally effective versions. By currently paying inflated prices for drugs that do not provide value for money, Medicare Part D artificially increases the returns and incentives for non-innovative “me-too” drugs to the detriment of new innovative medicines for unmet needs.

6. Reducing brand-name drug prices would reduce the high level of cost-related non-adherence (people not filling their prescription for financial reasons) found in Part D, by reducing beneficiaries’ premiums and co-pays. In addition, since the government pays for the majority of Medicare Part D, taxpayers’ contribution would decrease by at least $11 billion every year.

From the Conclusions and Policy Considerations

The after-rebate prices Medicare Part D plan sponsors pay for brand-name drugs remain significantly higher than the current market prices found in other countries or in other programs such as Medicaid or VBA. Medicare Part D would save between $15.2 billion and $16 billion a year if it could obtain the same manufacturer prices that Medicaid or VBA, respectively, obtains for the same brand-name drugs. Lower brand-name drug prices for Medicare Part D not only would generate savings, but, by increasing patient access to prescribed drugs, it also could improve adherence to treatments by reducing the high level of cost-related non-adherence found in Medicare Part D.

While Medicaid and VBA obtain almost equivalent brand-name price levels, they create completely different incentives for pharmaceutical R&D. The unconditional “basic rebates” of Medicaid foster the current business of developing me-too drugs while creating an incentive to artificially inflate official prices. The proactive drug formulary management of VBA maximizes therapeutic value for every dollar spent and thus provides greater incentives for producing more innovative products.

The main argument against managed formularies is that such formularies restrict patients’ choices. Indeed, managed formularies do not reimburse all new drugs, only those that provide value for money. However, freedom of choice is never at stake, since patients can decide to pay out of pocket for the drugs or treatments they desire, even if clinical evidence shows that these treatments do not provide therapeutic value for money. A managed formulary for prescription drugs does not reduce freedom of choice; it only reduces the freedom to needlessly waste taxpayers’ money.

https://carleton.ca/sppa/2015/sppas-marc-andre-gagnon-releases-report-with-public-citizen-on-medicare-part-d-medication-prices/

Policy Brief (19 pages): http://carleton.ca/sppa/wp-content/uploads/Mirror-Mirror-Medicare-Part-D-Released.pdf

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Comment:

By Don McCanne, MD

This report compares drug spending in the United States with other OECD nations and contrasts the higher prices in Medicare Part D with the lower prices in the Veterans’ Benefits Administration (VBA) and the Medicaid programs. Although supporters of the Medicare Part D drug program continue to tout the savings from the plans, this report shows us how we would be far better off if we used a public purchasing program such as that of the VBA instead of depending on competition of private pharmacy benefit managers wherein the government is prohibited from interfering in negotiations.

This report provides data that can be used to refute PhRMA’s contention that “fundamentally alter(ing) the structure of the successful Medicare Part D program would hurt both taxpayers and beneficiaries” (WSJ Pharmalot, July 23). To the contrary, it would help both taxpayers and beneficiaries.