PNHP

Drew Altman on public versus private control of spending

Drew Altman on public versus private control of spending

Public vs. Private Health Insurance on Controlling Spending

By Drew Altman
The Wall Street Journal, April 16, 2015

The Federal Office of the Actuary in the Centers for Medicare and Medicaid Services has charted the annual rate of increase in spending for Medicare, Medicaid, and private health insurance. As the chart (at the link below) shows, by cumulative growth in per capita spending, Medicare and Medicaid have generally grown more slowly than private insurance and are projected to continue doing so through 2023. Per capita spending is an especially useful measure for comparing public and private health insurance spending because it shows how much Medicare, Medicaid, and private insurers spend on each person irrespective of the number of people covered.

Overall… it appears that public programs control per capita spending somewhat more effectively than private coverage does. That may be just the opposite of what many would presume in a country where the private market is generally expected to outperform the public sector.

Here’s another way to think about it: While Medicare and Medicaid are far from perfect, the purchasing power and policy levers available to large public programs appear to give them an edge over our fragmented private insurance system when it comes to controlling spending.

Drew Altman is president and chief executive officer of the Kaiser Family Foundation.

http://blogs.wsj.com/washwire/2015/04/16/public-vs-private-health-insurance-on-controlling-spending/

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Comment:

By Don McCanne, MD

One of the primary purposes of the Affordable Care Act was to control health care spending. After five years, the impact on spending appears to be negligible except for a slight decline in use of beneficial services as a result of higher deductibles and less accessible provider networks – exactly the wrong way to control health care spending.

The data is right out front for all the world to see: large public programs are clearly more effective than our fragmented private insurance system when it comes to controlling spending.

The Affordable Care Act experiment has already failed. It’s time for single payer.

Maine’s delayed kidney donation shows disgrace of U.S. health care

By Dr. Philip Caper
Bangor (Maine) Daily News, April 16, 2015

Getting health care in the U.S. often seems first and foremost to be about money. Our first encounter when seeking health care always seems to be with the billing department, not a caregiver. The problem often is about too little money.

But the latest health care media kerfuffle in Maine is about too much money. It centers around the efforts of a local woman needing a kidney transplant to find a donor. She posted a note on her car’s window asking for somebody to volunteer. A man did volunteer and turned out to be a good match for the patient.

That was the easy part.

Because the U.S. has not created a system to routinely pay the costs of health care, including organ donation, a friend of the donor set up a crowdsourcing fund to cover some of the medical costs, lost income and other expenses he would incur, estimated to be around $6,000.

To everybody’s astonishment, donations came flooding in and soon amounted to about $50,000. Great news and a great success story.

Not so fast. The size of the fund triggered concern on the part of Maine Medical Center, where the transplant was scheduled to be performed, that the donor would be perceived to be selling his kidney. That turns out to be a violation of federal law. Accordingly, the hospital put the transplant on hold, pending resolution of the legal question.

This is just one more example of the ways in which the dysfunctional way we finance health care actually interferes with the provision of care instead of facilitating it. That is true not only for individual cases, but there is evidence the daunting prospect of unpaid bills in the U.S. is deterring potential organ donors to boot.

In many other wealthy democracies that, unlike the U.S., have well-designed health care systems, the donor’s and the recipient’s medical costs and ancillary expenses would be covered, no questions asked. No crowdsourcing, bean suppers or cookie jars in the general store are needed.

“How can they afford to do that?” we might well ask.

The answer is pretty straightforward. Instead of wasting billions of dollars on unnecessary administrative costs related solely to dealing with multiple insurance companies, they have eliminated those costs by simplifying their health care financing into a single system. Savings in the U.S. from eliminating such administrative waste are credibly estimated to reach $190 billion.

By doing that, they free up resources to devote to actual health care and other pressing public needs such as infrastructure, education and public safety. As a result, they are able to cover everybody; get better results than ours; have systems that are simpler and more popular with their public, politicians and doctors; and spend, on average, about half of what we do. If we had such a system, where money is not the dominant issue in determining whether appropriate care is provided, we could join them.

Unfortunately, the top management in many of our nation’s largest medical centers, where much of the care is provided and much of the money is spent, are well known to be hostile to a simplified, single, nonprofit payment system. Instead, they seem to be preoccupied with increasing their “market share” and boosting their bottom line rather than embracing the most efficient system for providing quality care for everybody.

I would love to be proven wrong and see more influential health care leaders advocating for such a transformation. But there is no evidence this will happen anytime soon. It seems that the barriers to reform of our health care system — apathy, fear and anger, ignorance and greed — are alive and well in our medical-industrial complex.

The fundamental problem is that we still treat health care as a privilege instead a right and spend inordinate amounts of money to make sure nobody who doesn’t “deserve” it has to grovel to get it. In the meantime, this patient’s kidneys continue to fail, her transplant continues to be on hold and the patient and donor continue to be subjected to unnecessary anxiety and delay.

This a disgrace. It’s an entirely unnecessary evil. Americans deserve better than this. We all need to push harder for more fundamental reform.

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com or through his website at philcaper.net.

http://bangordailynews.com/2015/04/16/health/blogs-and-columns/maines-delayed-kidney-donation-shows-disgrace-of-u-s-health-care/print/

Payment reforms in federal bill will add burdens to doctors

By Stephen B. Kemble, M.D.
Honolulu Star-Advertiser, April 16, 2015

Medicare’s “Sustainable Growth Rate” (SGR) formula, passed in 1997, required drastic cuts to physician fees annually. Each year Congress postponed the cuts in response to warnings that implementation would lead to severe problems with access to care for Medicare beneficiaries, but without changing the formula, effectively “kicking the can down the road.” 

The U.S. House and Senate have finally passed a bipartisan “Doc-Fix” bill, H.R. 2., which will eliminate the SGR formula for good. Everyone welcomes the end of the SGR, but instead of a clean bill, H.R. 2 contains add-ons from both parties that will have serious consequences for the Medicare program. 

The Republicans got increased patient cost-sharing for Medicare recipients. “Medi-gap” policies, that cover what regular Medicare doesn’t, will no longer be allowed to cover the Medicare deductible, so the required deductible will become a deterrent to needed care for those with limited means. Those with higher incomes will be subjected to means testing and higher Medicare premiums. 

The Republican goal is privatization of Medicare, so the “required deductible” will be waived for seniors that leave regular Medicare and join private Medicare Advantage plans. These are the plans that have been gaming risk adjustment formulas to increase their reimbursement and using marketing and restricted networks and formularies to “cherry-pick” healthier seniors and push sicker ones back onto regular Medicare, while costing the government 14 percent more than regular Medicare.

The Democrats got a 2-year extension of funding for the Children’s Health Insurance Program and the Community Health Centers, and those are good things. However, they also included provisions to accelerate the push toward “value-based” payment for doctors by implementing a “merit-based incentive payment system,” relying on detailed data from diagnosis and treatment coding, to be used for “pay-for-quality” or “pay-for outcomes.” There are escalating penalties for failure to adequately computerize so as to provide the required data. 

Physicians seeing patients under “alternative payment models” and Medicare Advantage plans are exempted from these penalties, but this means older doctors who are not up to all the changes are more likely to retire early. The rest will be pushed into large “clinically integrated networks” controlled by hospitals and insurance plans, or else into direct employment by hospitals and health plans. Independent physician practices will soon become extinct. 

Unfortunately, these reforms are not based on evidence-based policy.  Experience so far with “value-based” payment and “alternative payment models” shows no significant progress toward the stated goals of improving care coordination and quality of care, improving population health, or reducing cost. National evidence shows that small independent primary care practices, even without advanced computerization, actually do much better than large group practices in preventing avoidable admissions, most likely because independent doctors tend to know their patients better. 

In Hawaii, efforts to implement “pay-for-performance” have been associated with a dramatic increase in health insurance costs and administrative burdens imposed on doctors and hospitals. These efforts also coincide with a severe and worsening physician shortage across most specialties, and with rapid decline in physician acceptance of Medicaid due to managed care burdens. 

The payment reforms in the bill will accelerate the trends of increasing administrative burdens on doctors, worsening physician shortages, and worsening access to care problems. 

A clean repeal of the SGR would have been far preferable, but we must now live with H.R. 2. Instead of administratively expensive attempts to micromanage doctors, our best hope in Hawaii would be to design our own “alternative payment model” that focuses on reducing administrative burdens and improving access to necessary health care for all, controlling cost with administrative savings instead of restrictions on care.

Stephen B. Kemble, M.D., is a member of the Hawaii Health Authority. 

Copyright (c) Honolulu Star-Advertiser 

http://www.staradvertiser.com/editorialspremium/20150416__Payment_reforms_in_federal_bill_will_add_burdens_to_doctors.html?id=300050861

The lesson of a decade of health information technology mismanagement

Report on Health Information Blocking

The Office of the National Coordinator for Health Information Technology (ONC)
Department of Health and Human Services, April 2015

Current economic and market conditions create business incentives for some persons and entities to exercise control over electronic health information in ways that unreasonably limit its availability and use. Indeed, complaints and other evidence described in this report suggest that some persons and entities are interfering with the exchange or use of electronic health information in ways that frustrate the goals of the HITECH Act and undermine broader health care reforms. These concerns likely will become more pronounced as both expectations and the technological capabilities for electronic health information exchange continue to evolve and mature.

Conclusion

The intent of the HITECH Act was to drive the rapid adoption of interoperable technologies and services to support the exchange of electronic health information to improve care and efficiency in the U.S. health care system. While this intent was and is clear to most stakeholders, based on ONC’s experience and available evidence, the developing market for health IT products and services has, in some instances, fallen short of this charge.

The precise nature and extent of information blocking remain obscured in large part by contractual restrictions that prevent the disclosure of relevant evidence. However, based on the evidence and knowledge available, it is apparent that some health care providers and health IT developers are knowingly interfering with the exchange or use of electronic health information in ways that limit its availability and use to improve health and health care. This conduct may be economically rational for some actors in light of current market realities, but it presents a serious obstacle to achieving the goals of the HITECH Act and of health care reform.

There are several immediate actions ONC, HHS, and other federal agencies can take to partially address some kinds of information blocking. In this report, ONC has outlined a number of targeted actions to deter and mitigate such conduct, within limited areas.

While important, these actions alone will not provide a complete solution to the information blocking problem. Indeed, a key finding of this report is that many types of information blocking are beyond the reach of current federal law and programs to address. Thus a comprehensive approach will require overcoming significant gaps in current knowledge, programs, and authorities that limit the ability of ONC and other federal agencies to effectively target, deter, and remedy this conduct, even though it violates public policy and frustrates congressional intent. For these reasons, in addition to the actions outlined in this report, successful strategies to prevent information blocking will likely require congressional intervention.

Information blocking is certainly not the only impediment to an interoperable learning health system. But the findings in this report suggest that it is a serious problem—and one that is not being effectively addressed. ONC believes that in addition to the actions described in this report, there are several additional avenues open to Congress to address information blocking and drive continued progress towards the nation’s health IT and health care goals. ONC looks forward to working with Congress to identify the best solutions.

http://www.healthit.gov/sites/default/files/reports/info_blocking_040915.pdf

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On July 21, 2004, David Brailer, the then National Coordinator for Health Information Technology, released a 178 page report, “The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care.” Following is my comment on that date in response to his report:

A private health care information technology system

By Don McCanne, MD
Quote of the Day, July 21, 2004

The private, competitive market has produced for us computers that are powerful yet inexpensive. Software that is used widely is quite inexpensive, and that in the public domain is essentially free after the initial development costs. With inexpensive computers and software developed in the public domain, the cost of an integrated health care IT (information technology) system should be quite modest. And the return in error reduction and administrative efficiency would far more than offset any real costs.

The Veterans Administration is far ahead of the rest of the nation in developing and utilizing an integrated IT system. And this has been developed in the public (government!) sector. Many other nations with universal health care systems have also introduced integrated IT systems primarily through the public sector.

What has the magic of the competitive marketplace produced in the way of an integrated IT system to this date? High costs, very poor penetration, and system failures! Competitive market theory dictates that we should be leading the world with a high quality health care IT system at a low cost. What went wrong?

First of all, a fragmented system of multiple private plans, public programs and being uninsured does not provide an infrastructure that is very conducive to an integrated IT system. A single payer system, or, at minimum, a highly regulated system of universal coverage through multiple plans, would provide a framework that would ensure adaptability of an integrated IT system. Of course, a single, publicly administered system would be much preferred for an integrated IT system.

But the greatest difficulty with private IT solutions lies in the very nature of these marketplace models. Their goals are, above all, to maximize profits and to maximize the market price of their shares. To achieve those goals, corporate behavior varies from that of a public entity that has a simpler goal of establishing an effective and efficient high quality system that serves the heath care system and its patients well. The public system does not have to be concerned about being a successful business enterprise, but the private model does.

What might the private sector do that doesn’t serve our interests well? They will produce products that command the highest prices that the market will bear. They will design the products to provide a continuing revenue stream. Once gaining a significant share of the market, they will design incompatibility with other systems in an attempt to garner the entire market. They will design obsolescence into their systems to ensure future markets for their new innovative products. They will partner with and perhaps acquire other related entities that can expand profit potentials through greater control of components of the health care system which their products can influence. Although these are good business practices, they are terrible policies for our health care system.

The health information technology report released today should alarm us all. Although we all agree on the importance of an integrated IT system, the Bush administration is limiting the role of the government to being an enabler that encourages the private sector to develop a successful business model. Rather than higher quality at a lower cost, we’ll end up with mediocrity at a much higher cost, wasting even more of our health care dollars.

We desperately need strong leadership from our government in developing a health care IT system that will serve us all well. But based on the current leadership that has failed to address even the fundamental issue of adequate health care coverage for all, it is unlikely that we’ll see any enlightened leadership on this in the near future.

https://www.pnhp.org/news/2004/july/a_private_health_car.php

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Comment:

By Don McCanne, MD

Some say that my comments of over a decade ago were prescient. They were not. The current disarray of our health information technology system (HIT) was fully predictable.

There are times and circumstances in which the private sector sector serves us well, with appropriate government oversight, and there are times and circumstances in which the government serves us well, with appropriate private partnership.

We blew this one. We turned HIT over to the private sector while failing to provide adequate government oversight. We ended up with just what I predicted a decade ago, when David Brailer was predicting a decade leading to HIT nirvana.

Right now we have a much larger problem in our health care system with an imbalance between the private sector and government. We have turned much of our health care financing system over to the private sector, especially the private insurance plans, without providing adequate government oversight. Thus we have tens of millions of individuals without insurance, many more who are underinsured, many who have impaired access to their physicians because of insurer network restrictions, many who face financial hardship when medical needs arise, and an outrageously expensive system due to the profound administrative waste of the insurers and the burden they place on the health care delivery system.

Virtually none of these problems would exist if we had the government instead of the private insurers serving us as the health care financing authority. It should be the government rather than the private insurers that distributes the funds to the private and public health care delivery systems.

It is amazing that it has taken a decade for us to discover officially that placing control of HIT in the hands of the private sector is not serving us well. What is even more astounding is that, in over half of a century, we have not seemed to learn that lesson as it applies to our health care financing.

It is not as if we have not tried. PNHP has been preaching this lesson for over a quarter of a century, especially after it became obvious that the private insurers and their managed care revolution proved to us that they should no longer be stewards of our health care dollars.

The founders of PNHP were not prescient. The need was obvious. It still is.

Florida and Texas should be ashamed, but what about New York and California?

Health Care Coverage and Access in the Nation’s Four Largest States

By Petra W. Rasmussen, Sara R. Collins, Michelle M. Doty, Sophie Beutel
The Commonwealth Fund, April 10, 2015

In this brief we use data from the Biennial Survey to examine differences in health insurance coverage, cost-related problems getting needed care, and medical bill problems and debt among adults ages 19 to 64 in the nation’s four largest states.

The four largest states in the U.S.—California, Florida, New York, and Texas—fall into two distinct categories. The first group is represented by California and New York, both of which are operating their own health insurance marketplaces and have expanded eligibility for Medicaid to adults who earn at or below 138 percent of the federal poverty level—about $16,000 for an individual or $32,000 for a family of four.3 Florida and Texas, the second group, are using the federal marketplace to enroll residents in health plans and have declined to expand Medicaid eligibility. In this new analysis of data from the Commonwealth Fund Biennial Health Insurance Survey, we find that, in 2014, there were larger shares of uninsured adults in Florida and Texas compared with California and New York. In addition, adults in Florida and Texas were more likely to report not getting needed care because of cost and to report having problems paying medical bills.

Percent of adults ages 19-64 who are uninsured

12% – New York
17% – California
21% – Florida
30% – Texas

Percent of adults ages 19-64 who experienced cost-related access problems

30% – New York
31% – California
43% – Florida
43% – Texas

Percent of adults 19-64 reporting medical bill problems or medical debt

29% – New York
24% – California
42% – Florida
41% – Texas

Conclusion

The analysis suggests that the health policy decisions made by state leaders matter. Of the four states studied, New York has had the longest history of legislation aimed at enhancing the availability of affordable coverage. California also implemented an early expansion of Medicaid eligibility and, based on federal survey data, both states began achieving declines in their adult uninsured rate earlier than other states. Both have taken advantage of opportunities granted by the Affordable Care Act to further expand the reach of coverage and access. Alternatively, Florida and Texas, while experiencing robust enrollment in private plans through the federal health insurance marketplace, have not expanded Medicaid eligibility and have made less headway in reducing their uninsured populations.

While there have been significant declines in the number and share of uninsured adults since the major provisions of the Affordable Care Act went into effect in 2014, coverage gaps are leaving millions uninsured and without access to affordable coverage. An estimated 3.7 million people have fallen into the Medicaid coverage gap in states that have not yet expanded eligibility for Medicaid.

In addition, the law does not provide access to any new coverage options for unauthorized immigrants. They are ineligible for Medicaid coverage and cannot purchase private plans through the marketplace, either subsidized or unsubsidized. The Congressional Budget Office estimates that by 2020, 30 percent of the remaining uninsured will be unauthorized immigrants, or about 9 million people. Another part of the law that is leaving people uninsured is the so-called “family coverage glitch,” which defines affordability—and eligibility for subsidies—based on the cost of individual, rather than family, coverage. Currently, an estimated 2 million to 4 million people are uninsured because of this issue.

The analysis also indicates that expanded coverage is necessary to improve access to care and reduce medical financial burdens among U.S. families. But the quality and comprehensiveness of coverage across all sources of insurance (marketplace plans, individual plans, employer-provided coverage, and Medicaid), will ultimately determine the degree to which these problems are lessened for U.S. families.

http://www.commonwealthfund.org/publications/issue-briefs/2015/apr/coverage-and-access

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Comment:

By Don McCanne, MD

New York and California have fully implemented the provisions of the Affordable Care Act whereas Florida and Texas have not. As a result, Florida and Texas have more people who are uninsured, more people who experience cost-related access problems, and more people with medical bill problems or medical debt.

Although the leaderships of Florida and Texas should be ashamed for failing to implement the programs that would ensure that more residents receive the health care that they need, the leaderships of New York and California should be ashamed as well for not demanding changes in our health care financing system that would ensure health care for everyone. The numbers in the tables above for these two “exemplary” states are disgraceful and would not be tolerated by any other wealthy nation.

Incremental patches are grossly inadequate. We need a single payer national health program.

There’s a Trojan horse in the Medicare bill

By Laurence S. Jacobs, M.D.
Santa Fe New Mexican, April 10, 2015

Bipartisanship can work. The old flawed formula for physician reimbursement in Medicare (SGR) will finally be permanently canceled and replaced, so that physicians will no longer be looking at roughly 20 percent cuts in reimbursement every year, absent one-year congressional fixes.

That’s the good news about the bill recently passed by the House of Representatives (HR 2); the Senate will vote on it right after the current recess. Now here’s the bad, alarming news: The bill contains provisions intended to undermine and eventually destroy traditional Medicare, and replace it with progressive privatization.

This bill requires the payment of deductibles not coverable by Medigap policies, expands means-testing of Medicare premiums and imposes burdensome new documentation requirements on physicians in traditional Medicare. The results of these provisions will make Medicare more costly for everyone, restrict access and choice of physician in Medicare, and preferentially benefit private insurance plans, including Medicare Advantage plans.

The only way to avoid paying the deductible out of pocket will be to leave Medicare and join a private plan, like a Medicare Advantage plan. Such plans are more costly overall than traditional Medicare, and it has been estimated that their excess cost since 1985 amounts to over $282 billion. The expansion of means-testing, requiring higher- income seniors to pay higher premiums, seems likely to undermine support for Medicare by this relatively influential voting bloc.

The documentation requirements are sufficiently onerous that many physicians may opt out of traditional Medicare, or retire altogether, thus limiting choice of physician and access to care in traditional Medicare. The bill exempts from this documentation requirement “alternative payment methods,” which are more likely to be associated with contracts with private plans.

GOP members see this bill as part of their long-held goals of turning Medicare into a voucher-based program for private insurance plans (remember Paul Ryan’s plan?), and shifting more and more costs onto patients. Speaker John Boehner stated that this bill represents a step in the direction of “entitlement reform.”

This bill should not be passed unless the documentation, deductible and means-testing provisions are removed from it. If we had a single-payer health insurance system, like so many other industrialized nations, we wouldn’t be playing political ideology games with people’s health and their lives.

Laurence S. Jacobs, M.D., is emeritus professor of medicine at the University of Rochester in New York. He lives in Santa Fe.

http://www.santafenewmexican.com/opinion/my_view/reader-view-there-s-a-trojan-horse-in-the-medicare/article_4300b2bd-b4ce-57c5-9601-727613653699.html

Single payer would work better in SC than private health-insurance system

By Emilio Perez-Jorge, M.D.
The State (Columbia, S.C.), Letters, April 13, 2015

You may have heard of the recent tense negotiations of a business agreement between the Lexington Medical Center system and BlueCross BlueShield of South Carolina.

Until a final agreement was reached, a lot of patients, employees and doctors were left wondering what to do, as doctors would have risked being dropped from the “in-network” status and many patients would have had to pay extra to continue to see their regular doctors or else change doctors.

These troubled negotiations are just one example of the problems with our country’s private health-care system, but there is a solution that is not often heard in the regular media outlets. It is called single-payer health care.

There is a single-payer bill up for discussion in the S.C. House: the Palmetto Comprehensive Health Care Act (H.3726).

Single payer involves publicly funded, privately delivered health care. That means it’s paid for with everyone’s fair share in taxes and delivered by doctors who are not directly paid or employed by the government. Instead of hundreds of different insurance companies, intermediaries and payers, there would be a single, non-governmental health-care agency — patterned after the Medicare system for all patients 65 and older — that would negotiate the services and payments with doctors and hospitals.

Every patient would have the right to health care and to choose his or her doctor. Everybody is in; nobody is out. Patients would not have to worry about their insurance or jobs changing or how much their medical bills are going to be this year, since they would have the right to health care as long as they are tax-paying citizens. Single payer would be a win-win for patients and doctors.

As with any change, there would be pros and cons. As a patient and a provider with experience practicing in both a private and a single-payer system, I believe the benefits of a single-payer system clearly outweigh its drawbacks. Among the biggest benefits: The cost of health care will decrease significantly by decreasing the overhead (Medicare overhead is around 3 percent, whereas the average overhead for U.S. insurance companies is 15 percent), and the health status of our nation will improve (currently, our health-care outcomes lag behind many industrialized countries that have single-payer, universal health-care systems).

You can learn more about single-payer and universal health care at pnhpSC.org.

Dr. Emilio Perez-Jorge resides in Lexington.

http://www.thestate.com/opinion/letters-to-the-editor/article18426215.html#storylink=cpy

John Geyman: Why the private health insurance industry has to go

Why the Private Health Insurance Industry Has to Go

By John Geyman, MD
PNHP Blog, April 8, 2015

The private health insurance industry in the U.S. has had a long run since shifting to medical underwriting and a for-profit status in the early 1960s. It finds itself increasingly dependent on the government as the costs and prices of health care have continued upward since the 1980s. Its many perks from government include tax exemptions for employer-sponsored insurance (ESI), privatized Medicare and Medicaid programs, and longstanding over-payments to Medicare Advantage programs. The Affordable Care Act (ACA) has added to these perks since 2010 with subsidized premiums through the exchanges, a “risk corridor system” to protect insurers from losses, and allowing automatic self-renewal for 2015 plans.

Incremental attempts to contain health care costs and reform the system since the 1990s have built upon our current multi-payer financing system. After five years’ experience with the ACA, we now know that insurers themselves are a major barrier to achieving the kind of access to affordable care that our population so desperately needs.

Here are some of the major reasons why private health insurers warrant no further bailout by government and taxpayers.

1. Continued discrimination against the sick.

Despite the supposed consumer protections in the ACA, a 2014 letter from more than 300 patient advocacy groups to the Secretary of Health and Human Services described continuing ways that insurers still discriminate against the sick, including benefit designs that limit access, high cost-sharing, restrictive drug formularies, inadequate provider networks, and deceptive marketing practices. A recent study by Kaiser Family Foundation found that only one-third of households with incomes between 100 percent and 250 percent of poverty have enough liquid assets to pay their deductibles, while only about one-half can meet out-of-pocket limits. As other examples, Wellpoint developed an algorithm to search its database for patients with breast cancer with an intent to cancel their policies, while many insurers place all drugs used to treat such complex diseases as cancer, multiple sclerosis and HIV in the highest drug formulary cost-sharing tiers, thereby reducing insurers’ costs but making the drugs unaffordable for many patients

2. Fragmentation, inefficiency, and exorbitant administrative overhead.

There are some 1,300 private insurers still trying to maximize their income by avoiding the costs of sicker patients. Their administrative overhead is more than five times higher than that of the single-payer program in two Canadian provinces; the overhead of private Medicare Advantage plans averages 19 percent vs. the 1.5 percent for traditional Medicare. Although the ACA set limits of 20 percent for overhead in the individual market and 15 percent in large-group markets, a recent study has found that those requirements had no effect on insurers’ overhead spending over the first three years of the ACA.

3. Increasing costs for less coverage

The ACA provided insurers with four levels of coverage—the so-called “metals”—with actuarial values (what insurers pay vs. what patients pay) ranging from 60 percent (bronze) 70 percent (silver) to 80 percent (gold) and 90 percent (platinum). Not content with those levels of coverage, the industry through its trade group, America’s Health Insurance Programs (AHIP), has been lobbying hard for copper plans with only 50 percent actuarial value. Silver plans have been the most popular on the exchanges, so that patients are left with almost one-third of their costs, plus the cost-sharing that was required to get and maintain their policies. All this has led to an epidemic of underinsurance, whether the plans are purchased through the ACA exchanges or through the private insurance markets. The ACA has made the mistake of focusing on raising the numbers of Americans with “insurance”, but has not been effective in containing prices or costs of health care, with the result that an increasing proportion of these costs are shifted to patients and families. One-half of bronze plans in seven large U.S. cities require enrollees to pay the deductible (often $5,000) before covering a doctor’s visit. 

4. Gaming the ACA for profits more than service to patients

There are many examples of this, starting with Medicare Advantage. Many insurers have been cited by the Centers for Medicare & Medicaid Services (CMS) for serious violations of Medicare’s patient protection requirements, including inappropriate denial of coverage and failure to consider physicians’ clinical information. Humana, one of the largest Medicare Advantage insurers in the country, is facing scrutiny from the U.S. Department of Justice for its risk-adjustment practices, which “upcode” the severity of patients’ illnesses in order to gain increased reimbursement, even as they lobby Congress for continued high over-payments. Meanwhile, some insurers are marketing short-term plans that last less than 12 months, evading any of the ACA’s requirements.

5. Private insurance has priced itself out of the market.

Premiums keep going up at rates much higher than the cost of living, with little or no containment by regulators. As examples, MetroPlus, a popular new entrant on the New York exchange in 2014, has requested rate hikes of up to 28 percent in 2015 for some of its enrollees, while Florida Blue, the state’s largest insurer, has announced an average rate increase of 17.8 percent for 2015. One can argue that the private insurance industry should be regarded as obsolete and not worth saving. However, the ACA has extended its life, including almost $2 trillion in federal subsidies over  the next ten years (if these subsidies survive a U.S. Supreme Court ruling on their legality in coming months). Insurers have focused on attracting enrollees with low premiums, high cost-sharing, and low levels of actual coverage. Large insurers such as Wellpoint (Anthem) and Humana expect to receive $5.5 billion in 2015 through  the ACA’s “risk corridor” provision that protects them from “losses.”

6. As their business plan dictates, insurers are leaving unprofitable markets without regard for patients’ needs.

Private health insurers are all about making money, so they leave unprofitable markets regardless of the public’s needs. A recent example is Blue Shield of California (which just lost its state tax-exempt status with a surplus of more than $4 billion), which withdrew from 250 zip codes in California throughout the state in 2014.

Based on the above, the time has come for us to replace private health insurers with a more efficient, not-for-profit single-payer financing system—national health insurance (NHI)—which could be enacted by passage of H. R. 676, Expanded and Improved Medicare for All.

Reference:  

Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans. Friday Harbor, WA, Copernicus Healthcare, 2015, http://www.johngeymanmd.org

Other references are available at either link below.

PNHP Blog: https://pnhp.org/blog/2015/04/08/why-the-private-health-insurance-industry-has-to-go/

Huffington Post (Same article): http://www.huffingtonpost.com/john-geyman/why-the-private-health-in_b_7029594.html

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Comment:

By Don McCanne, MD

Those supporting further implementation of the Affordable Care Act (ACA) while rejecting more comprehensive reform are trying to make the overpriced and inadequate private health plans work for us. John Geyman reminds us of some of the reasons why the private plans are actually the cause of several of the problems we face today. We need to replace them with a single payer national health program.

A Tale of Two Patients

By Joseph Eichenseher, M.D.
Sonoma County (Calif.) Gazette, April 10, 2015

In previous columns in this newspaper you’ve heard a myriad of reasons why single payer, or Improved Medicare for All, benefits Americans and provides for a better and less expensive solution to the debacle of our current healthcare situation. While Canada and all developed countries have ongoing problems with healthcare, and none pretend to be perfect, the seriousness of our current crisis, in the form of out-of-control costs and unnecessary suffering, has reached epic proportions, casting us in a shameful light. Tens of thousands of Americans die each year due to lack of insurance, and there are millions of other examples of avoidable suffering. I see many of them daily as a primary care physician here in Sonoma County. The following are two examples of how our dysfunctional health system impacts local lives.

Patient #1 – “Bob.”  Robert M. is a 50-year-old carpenter experiencing daily chest pain at work.  He copes by doing less of the activities that cause the pain, but the symptoms are worsening over time. He works three part-time jobs, none of which provide health insurance.  He comes to my community clinic office because we have a sliding scale, and the visit costs him $40, as opposed to a private office that would charge over $200. He states that he can’t afford to spend more, as he is supporting three children and his invalid mother. Upon my exam it is determined that he needs a referral to a cardiologist and a possible heart procedure. The initial visit to the cardiologist will cost $300 (and they won’t see him if he doesn’t pay first), and any procedure will likely cost a minimum of $40,000. He understands he needs care, but refuses to follow my recommendations due to his inability to pay. We try to convince him that if he doesn’t go to the hospital or a specialist soon he will continue to suffer and possibly have a heart attack. He leaves our office downtrodden.

Patient #2 – “Cindy.”  Cynthia R. is a 61-year-old daycare worker with similar symptoms as Bob. When with the children, doing strenuous activities, she has sharp chest pains. She is one of the fortunate Americans to have insurance, but with a $5,000 deductible. This situation of “underinsurance” increasingly affects tens of millions of people. When we recommend that she seek treatment for her heart condition she likewise refuses, stating that she can’t afford to pay the deductible. We plead with her to seek appropriate care, yet she declines, and leaves my office more stressed, adding to her risk of a heart attack.

Both Bob and Cindy’s situations are common in today’s America. They are hardworking people who continue to suffer unnecessarily. Due to untreated medical conditions they are likely to miss many days at work and leave family responsibilities unfulfilled. The knowledge that treatment is available, yet financially challenging to obtain, also causes stress in their lives and worsens health outcomes. They will likely die younger or experience an emergency situation, causing more suffering and costing hundreds of thousands of dollars, potentially creating insurmountable debt. Medical bills are now the number one reason for individual and family bankruptcy in America.

The rest of the world has figured out that healthcare is a right for all people. They don’t tolerate for-profit health insurance companies and they find ways for everybody to be covered less expensively with better health outcomes. Society benefits if all people are treated with dignity. If either Cindy or Bob lived in Canada, Singapore, Australia, Costa Rica, or France they would receive timely specialist treatment and avoid unnecessary suffering. They would be happier, more productive citizens. The United States of America is a great country that offers so much opportunity and possibility. It is time for us to be part of the 21st-century civilized world.  Please consider joining us in Sonoma County to fight for healthcare justice: “Expanded, improved Medicare for All.” 

Check out our national website: www.pnhp.org.

Dr. Joseph Eichenseher is a member of the Sonoma County chapter of Physicians for a National Health Program. He resides in Healdsburg.

http://www.sonomacountygazette.com/cms/pages/sonoma-county-news-article-3738.html

Our healthcare system: Can we afford it for much longer?

By Dwight Michael, M.D.
Gettysburg Times, April 9, 2015

We are five years into the Affordable Care Act (ACA), and yet we truly do not know how this very complicated bill will ultimately affect the affordability of healthcare in our country.

Prior to passage of the ACA, the cost of medical care for the average American was spiraling upwards at an ever-increasing rate. Presently, $3 trillion a year, 17% of the U.S. gross domestic product, is spent on healthcare in our country. This is nearly twice the amount that any other country spends on healthcare.

Despite the fact that we outspend other developed countries nearly 2:1, our clinical outcomes such as infant mortality rates, maternal mortality rates, and life expectancy are mediocre at best.

Although there are many facets to the excessive cost of healthcare in our nation, patients’ out-of-pocket cost for their prescription drugs is one of the most upsetting to me. Why do we have to pay so much?

At the core of excessive American healthcare costs, our political system allows money to “buy” legislators and legislation.

In his recent book “America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System,” Steven Brill reveals that our legislators needed to cut deals with several powerful players in healthcare if there was any hope of passage of the ACA.

As early as 2003, under the leadership of congressman Billy Tauzin, Congress passed a bill that forbid Medicare to negotiate drug prices with the pharmaceutical industry, costing Medicare patients and taxpayers literally billions of dollars.

Six years later, from March to July of 2009, the same Billy Tauzin-now lead lobbyist for PhRMA (Pharmaceutical Research and Manufacturers of America) at $2 million a year-led the way in a backroom deal with negotiators from Max Baucus’s Senate Finance Committee and eventually the White House.

The ACA deal: The pharmaceutical industry would give up $80 billion over 10 years by paying an additional tax based on market-share, give Medicaid patients deeper discounts on the costs of their drugs, and reduce the “doughnut-hole” costs of drugs for Medicare patients. White House analyst Tony Clapsis had calculated that the pharmaceutical industry would reap an additional $200 billion due to the increased number of Americans with health insurance. By his estimate, Big Pharma was giving up less than half of its increased revenues.

In return, Max Baucus and the White House gave the pharmaceutical industry four major gifts: 1. Medicare was still forbidden to negotiate drug prices with the pharmaceutical industry. 2. Importation of drugs from other countries such as Canada remained illegal. 3. There were to be no draconian cuts in Medicaid payments for drugs. 4. Biologic drugs would have 12 years of patent protection, markedly improving their profits during that timespan. These promises were made to gain the pharmaceutical industry’s support of this legislation.

Who really pays for this? Everybody in the United States who buys a prescription drug pays for this. Last year, we spent $309 billion for prescription medications.

Other countries in the industrialized world have a central health authority that negotiates drug prices with the pharmaceutical industry. Because we have no such agency, it is estimated that our country spends anywhere from 35 to 50% more for prescriptions drugs.

Even at a conservative 30% extra, this is an additional $93 billion a year handed over to the pharmaceutical industry. These companies claim they require such revenues for research and development of new drugs. Their profit margins (10-43%), however, are better than those of any other industry. In 2008 the top 10 pharmaceutical companies in the world made profits of $51.6 billion. In 2014 this figure had increased by $38.2 billion to $89.8 billion. This is profit after all other expenses are paid!

Think about it. Because of money’s influence on our political process, the pharmaceutical industry has used its vast riches to influence our legislators, who then produce legislation that essentially causes the United States — you, me and all other Americans — to pay for the massive profits of these international corporations. We are paying 35-50% more for our prescriptions than any other country. In effect, our government’s legislation has allowed Big Pharma to pad its profit margin with our money, while these companies give the rest of the world discounted prices. It does not seem fair to me. Does it to you?

One of my conservative partners at Gettysburg Family Practice has suggested that he could support a law that would limit the charge for any prescription to no more than the average of what other nations pay for that drug. If we did this, we could cut American prescription drug costs by $93 billion a year.

In our present healthcare climate of ever-increasing deductibles, co-pays, and other out-of-pocket costs, I often spend time with my patients looking for an affordable option for a drug they need. This happens on a daily basis.

Last week I saw a patient who was intolerant of the first two or three statins (cholesterol-lowering medications) that we tried. She told me that despite her insurance, she was paying an additional $100 per month for her Crestor, even though she was taking it only every other day. I checked online during her appointment and found that without insurance, she could get the generic form of Crestor from a reputable Canadian online pharmacy at a cost of $10 per month. Note, this is an exponential reduction in price, from $100 per month with insurance to $10 per month, no insurance needed!

I am fed up with the moneyed interests of our country dictating our public policy in general. There is a tremendous amount of wealth in healthcare. Until we fix the policies that allow this wealth to dictate what we pay for our healthcare, we will continue to struggle with the risk of healthcare costs bankrupting our nation.

Practically every other developed nation on earth provides universal healthcare for its people. I believe that healthcare is a human right. We already spend nearly twice as much for our healthcare as any other nation. If we spent this money more wisely, we could afford healthcare for every American.

Dwight Michael, M.D., is a local family physician who practices with his partners at Gettysburg Family Practice. He is a member of Gettysburg Area Democracy for America’s healthcare task force, and he is a board member of Healthcare4AllPa.

http://www.gettysburgtimes.com/opinion/staff_columns/article_0f73ff8b-e831-593f-8bb4-26404b42e9fe.html

Medicare for all

By Julie Keller Pease, M.D.
Bangor (Maine) Daily News, Letters, April 10, 2015

I was one of the many Atul Gawande fans in the audience at the Quality Counts conference in Augusta on April 1. My reason for being at the conference was to advocate for improving the health of all Mainers via a system of improved Medicare for all. If we expanded Medicare to include everyone in Maine, we not only would save money, but we would improve the quality of health care in our state.

Dr. Gawande delivered the same message about Medicare, stating “Maine is in the top quarter of Medicare outcomes and in the lowest quarter of Medicare costs.” Indeed, over four years ago, noted health care economist Dr. William Hsiao delivered a similar message to the Maine Legislature, estimating that if Maine moved to a single-payer system of health care, such as Medicare for all, the state would save $1 billion during the first year alone.

Not only is universal health care financially feasible. But if the system is designed and implemented well, it actually will reduce Maine’s spiraling health care costs.LD 384, a Resolve, To Study the Design and Implementation of Options for a Universal Health Care Plan in the State, has been proposed by Sen. Geoff Gratwick, D-Bangor, and several co-sponsors. This bill recently passed the Insurance and Financial Services Committee by a 10-1 vote.

Contact your legislators and urge them to support this bill when it comes to the full House and Senate for a vote.

Dr. Julie Keller Pease resides in Brunswick.

Saturday, April 11, 2015: Mind your own business, Bangor; right to hunt versus right to vote

Medicare fix needs fixing

By Theodore R. Marmor
Philadelphia Inquirer (Philly.com), April 13, 2015

In recent weeks, reform legislation that proposes to change how Medicare pays physicians drew much attention. The prod to action was the imminent expiring of the present fee schedule.

For many years, Congress had failed to reach agreement about the rate of increase in physician payments under Medicare. This, in turn, prompted annual, ad hoc “fixes” while postponing decisions on how Medicare should operate as a “purchaser” of medical care.

The surprise of 2015 is that the House of Representatives did agree, in bipartisan fashion, on a remedy. After five years of persistent and contentious debate over the Obama health reform we now know as Obamacare, the sight of Speaker John Boehner (R., Ohio) embracing Minority Leader Nancy Pelosi (D., Calif.) over a health-care bill is indeed newsworthy.

But here, as in other instances, the problem is faulty reasoning from misleading assumptions.

Take the definition of what’s wrong with our current payment arrangements. Many lawmakers say that Medicare should reject the fee-for-service method, the mode Medicare has used since its inception – and the way many industrial nations pay their doctors.

Instead, these lawmakers argue, Medicare should reward doctors for the “quality” rather than the “quantity” of their work, and reward “value” over “volume.” Sylvia Burwell, secretary of Health and Human Services, has fervently embraced “value-based payment.”

This seeming agreement on the need to do away with fee-for-service has prompted much discussion of alternative payment models, such as “capitation,” “bundled payments,” and monetary incentives for exemplary physician behavior.

Sounds plausible, doesn’t it? But the problem is – as all other industrial democracies have learned in the last three decades – there is no single payment panacea. Each method of compensating doctors has the vice of its virtue.

If you pay physicians per capita – known as capitation, an annual or monthly amount for each patient signed up with a practice – the hope is that the doctors will care more about the health of their patients and less about the number of procedures they perform.

But there is little or no evidence to back up this hope. Many other countries use fee-for-service payments, but spend far less on health care than we do, and yet get decent results, without alarming problems of excess procedures.

Under Britain’s National Health Service, physicians were once paid almost exclusively by capitation, and it generally served them well. Now general practitioners get paid partly per capita, partly by meeting targeted actions, and partly by the equivalent of a “salary” for being available on weekends and evenings. They are experimenting with a mix of payment methods.

So the international evidence shows there is no one obvious way to pay doctors. How to manage sensibly the mix of methods is the important challenge.

The celebration of paying for “value over quantity” assumes we know how to identify value and pay for it. Yet, there is considerable disagreement in modern medicine about how much one way of working is better than another.

For example, an attempt to establish a standardized cost-benefit analysis of treatments for Medicaid patients in Oregon in the late 1990s fell apart upon implementation. There was no agreed-upon list of what treatments were more valuable on grounds of both cost and quality, and physicians were rightfully indignant when their professional knowledge about what was best for their individual patients was upended by a rulebook.

In reading the bill that the Senate will soon vote on, I can’t help but notice how the new prescriptions for physician behavior represent marketing jargon more than considered thought. For decades, one has seen prepaid group practice redefined as “managed care,” while actually what was going on were mostly efforts to reduce the costs of care.

We have now seen a whole series of reforms celebrated for giving the patient financial “skin in the game,” based on a vision of a medical-care marketplace where large deductibles force patients to make choices among goods and services that earlier forms of health insurance did not do.

As if these issues weren’t enough to abandon this bill and start over, there are a couple of specific provisions that represent a Trojan horse for the further undermining of traditional Medicare. One is the imposition of deductibles on Medigap plans that the majority of Medicare beneficiaries buy to help with cost-sharing, a reform that will discourage seniors from seeking needed care. The other is a measure that would require wealthier people to pay higher Medicare premiums – a measure that could further erode universal political support for the program.

The Senate should take this legislation back to the drawing board.

Ted Marmor is a professor emeritus of political science and public policy at Yale University and a coauthor, with Rudolf Klein, of “Politics, Health and Health Care.” He can be reached at theodore.marmor@yale.edu.

www.philly.com/philly/opinion/20150413_Medicare_fix_needs_fixing.html