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The Oregon Medicaid ED “experiment” and the overuse myth

The Oregon Medicaid ED “experiment” and the overuse myth

Emergency visits seen increasing with health law

By Sabrina Tavernise
The New York Times, January 2, 2014

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance. …

In remarks in New Mexico in 2009, Mr. Obama said: “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.” …

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard … and one of the authors of the study….

Comment:

By Kip Sullivan, JD

Last Friday the New York Times, the Wall Street Journal and other media outlets trumpeted the news that a recent study shows that low-income people newly insured through Medicaid use 40 percent more emergency room services than a control group of low-income people who remained uninsured. In a sane world, this finding would not have deserved any coverage, much less headlines on front pages. The conditions that would cause Medicaid enrollees to visit the ER more than the uninsured have been known for a long time, and it’s well known that some of these conditions have been getting worse. The conditions include:

•  the uninsured use roughly half as many health care services as the insured,

•  the uninsured are in worse health than the insured and have more unmet medical needs, and 

•  Medicaid enrollees have much more trouble finding primary care doctors and specialists who will take Medicaid than the privately insured.

Anyone familiar with these facts could have predicted that if the State of Oregon were to offer Medicaid coverage to 10,000 of its poor people those people would make more visits to emergency rooms than an uninsured control group. But the media’s fascination with this paper suggests the study’s results were indeed surprising to “many in the [health] policy debate,” as Ms. Baicker asserted.

How do we explain the surprise? I nominate the overuse myth – the conventional wisdom that the main reason America’s per capita health care costs are double those of the rest of the industrialized world is that doctors order, and patients demand, great volumes of unnecessary medical services. The overuse myth has led far too many policymakers on the left and the right to think that emergency rooms are vastly overused. Liberals like Obama use the myth to claim better coverage will reduce all that unnecessary ER use and free up money to insure the uninsured. Conservatives use the myth to decry more coverage. According to conservatives, better coverage will just encourage poor people to consume even more unnecessary care. As conservative blogger Avik Roy wrote on the Forbes blog about the new study, “Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking – and receiving – lots of inappropriate care.”

http://www.forbes.com/sites/theapothecary/2014/01/02/new-oregon-data-expanding-medicaid-increases-usage-of-emergency-rooms-undermining-central-rationale-for-obamacare/

In fact, researchers have determined (with the luxury of hindsight, it should be noted) that only 10 percent of Medicaid enrollees go to emergency rooms for non-urgent matters, which is close to the 7 percent rate seen in the privately insured http://www.hschange.com/CONTENT/1302/.

Like all sturdy myths, the overuse myth has a kernel of truth to it – some overuse of medical services does occur. But underuse is far more common than overuse, even among the insured, possibly four times worse according to a 2003 study by Elizabeth McGlynn et al. in the New England Journal of Medicine. Even for some expensive procedures like heart surgery underuse is far worse than overuse.

The media’s surprise at the new study’s finding and reporters’ and right-wing bloggers’ eagerness to report the political winners and losers of this story concealed the real problems, notably:

•  Because America sequesters its poor people in a separate program called Medicaid, it has never found the political will to pay the providers who care for poor people anywhere near as much as we pay providers for taking care of everyone else;

•  this policy has made it difficult for Medicaid recipients to find doctors;

•  this difficulty is further aggravated by the widespread use of managed care in Medicaid programs which forces recipients to pick doctors from “preferred” lists; and

•  Despite these facts, Oregon sought to increase coverage under Medicaid while doing little to increase the supply of primary care providers or the resources available to those who treat Medicaid enrollees.

In a sane world, we wouldn’t be debating whether a rich nation should be attempting to insure a minor portion of its uninsured through a separate and underfunded program for the poor. But if we must debate whether to do that, the least we can do is focus on the real issues, not promises of cost containment based on a false assumption, in this case, that overuse is our main problem and underuse, high prices and excessive administrative costs are nonexistent or trivial.

The truth is we are going to need to put more money into primary care in this country, and it will have to come from somewhere. Single-payer supporters propose that it come from reduced prices and reduced administrative waste. By clinging to their pet version of overuse, managed-care and high-deductible advocates dodge the issue. Managed care advocates claim that even within the underfunded world of Medicaid greater access to primary care can be paid for without harm to patients by reducing overuse via capitation, report cards, pay-for-performance, ACOs and other vaguely defined “changes to the delivery system.” High-deductible advocates claim consumption of medical services by poor people can be reduced without harm (because the foregone services weren’t necessary), and the savings can be directed to lower taxes or a lower deficit. Neither claim is credible.

The Oregon Medicaid ED “experiment” and the overuse myth

Emergency visits seen increasing with health law

By Sabrina Tavernise
The New York Times, January 2, 2014

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance. …

In remarks in New Mexico in 2009, Mr. Obama said: “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.” …

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard … and one of the authors of the study….

http://www.nytimes.com/2014/01/03/health/access-to-health-care-may-incre…

Comment:

By Kip Sullivan, JD

Last Friday the New York Times, the Wall Street Journal and other media outlets trumpeted the news that a recent study shows that low-income people newly insured through Medicaid use 40 percent more emergency room services than a control group of low-income people who remained uninsured. In a sane world, this finding would not have deserved any coverage, much less headlines on front pages. The conditions that would cause Medicaid enrollees to visit the ER more than the uninsured have been known for a long time, and it’s well known that some of these conditions have been getting worse. The conditions include:

•  the uninsured use roughly half as many health care services as the insured,

•  the uninsured are in worse health than the insured and have more unmet medical needs, and

•  Medicaid enrollees have much more trouble finding primary care doctors and specialists who will take Medicaid than the privately insured.

Anyone familiar with these facts could have predicted that if the State of Oregon were to offer Medicaid coverage to 10,000 of its poor people those people would make more visits to emergency rooms than an uninsured control group. But the media’s fascination with this paper suggests the study’s results were indeed surprising to “many in the [health] policy debate,” as Ms. Baicker asserted.

How do we explain the surprise? I nominate the overuse myth – the conventional wisdom that the main reason America’s per capita health care costs are double those of the rest of the industrialized world is that doctors order, and patients demand, great volumes of unnecessary medical services. The overuse myth has led far too many policymakers on the left and the right to think that emergency rooms are vastly overused. Liberals like Obama use the myth to claim better coverage will reduce all that unnecessary ER use and free up money to insure the uninsured. Conservatives use the myth to decry more coverage. According to conservatives, better coverage will just encourage poor people to consume even more unnecessary care. As conservative blogger Avik Roy wrote on the Forbes blog about the new study, “Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking – and receiving – lots of inappropriate care.”

http://www.forbes.com/sites/theapothecary/2014/01/02/new-oregon-data-exp…

In fact, researchers have determined (with the luxury of hindsight, it should be noted) that only 10 percent of Medicaid enrollees go to emergency rooms for non-urgent matters, which is close to the 7 percent rate seen in the privately insuredhttp://www.hschange.com/CONTENT/1302/.

Like all sturdy myths, the overuse myth has a kernel of truth to it – some overuse of medical services does occur. But underuse is far more common than overuse, even among the insured, possibly four times worse according to a 2003 study by Elizabeth McGlynn et al. in the New England Journal of Medicine. Even for some expensive procedures like heart surgery underuse is far worse than overuse.

The media’s surprise at the new study’s finding and reporters’ and right-wing bloggers’ eagerness to report the political winners and losers of this story concealed the real problems, notably:

•  Because America sequesters its poor people in a separate program called Medicaid, it has never found the political will to pay the providers who care for poor people anywhere near as much as we pay providers for taking care of everyone else;

•  this policy has made it difficult for Medicaid recipients to find doctors;

•  this difficulty is further aggravated by the widespread use of managed care in Medicaid programs which forces recipients to pick doctors from “preferred” lists; and

•  Despite these facts, Oregon sought to increase coverage under Medicaid while doing little to increase the supply of primary care providers or the resources available to those who treat Medicaid enrollees.

In a sane world, we wouldn’t be debating whether a rich nation should be attempting to insure a minor portion of its uninsured through a separate and underfunded program for the poor. But if we must debate whether to do that, the least we can do is focus on the real issues, not promises of cost containment based on a false assumption, in this case, that overuse is our main problem and underuse, high prices and excessive administrative costs are nonexistent or trivial.

The truth is we are going to need to put more money into primary care in this country, and it will have to come from somewhere. Single-payer supporters propose that it come from reduced prices and reduced administrative waste. By clinging to their pet version of overuse, managed-care and high-deductible advocates dodge the issue. Managed care advocates claim that even within the underfunded world of Medicaid greater access to primary care can be paid for without harm to patients by reducing overuse via capitation, report cards, pay-for-performance, ACOs and other vaguely defined “changes to the delivery system.” High-deductible advocates claim consumption of medical services by poor people can be reduced without harm (because the foregone services weren’t necessary), and the savings can be directed to lower taxes or a lower deficit. Neither claim is credible.

Devastating effects of cost-sharing and medical debt

Medical Debt among People with Health Insurance

By Karen Pollitz Cynthia Cox, Kevin Lucia and Katie Keith
Kaiser Family Foundation, January 2014

An estimated 1 in 3 Americans report having difficulty paying their medical bills – that is, they have had problems affording medical bills within the past year, or they are gradually paying past bills over time, or they have bills they can’t afford to pay at all. Medical debt – and a host of related problems – can result when people can’t afford to pay their medical bills. While the chances of falling into medical debt are greater for people who are uninsured, most people who experience difficulty paying medical bills have health insurance. Medical debt can arise when people must pay out-of-pocket for care not covered by health insurance or to which cost-sharing (such as deductibles) applies. Medical debt might also result from health insurance premiums that individuals find difficult to afford.  The consequences of medical debt can be severe. People with unaffordable medical bills report higher rates of other problems – including difficulty affording housing and other basic necessities, credit card debt, bankruptcy, and barriers accessing health care.

How does medical debt become a problem for people with health insurance?

 * In-network cost-sharing

    * Medical bills high relative to income and savings

    * Cost-sharing “multipliers”

       * Treatments spanning two plan years (doubles cost-sharing)

       * Family-level cost-sharing (2 family members doubles cost-sharing)

       * Cost-sharing for chronic conditions (cost-sharing restarts each year)

    * Extremely high cost-sharing (deductibles may not apply to OOP limits)

 * Out-of-network care

    * Fewer cost-sharing protections

    * “Inadvertent” out-of-network care

    * Balance billing (paying balances exceeding allowed charges)

 * Health plan coverage limits or exclusions

 * Unaffordable premiums

 * Other factors unrelated to insurance

    * Income loss due to illness

    * Challenges to effective self-advocacy (overwhelmed with bills, statements)

    * Medical debt collections

    * Credit card financing of medical debt

Consequences of medical debt

  * Damaged credit

  * Emotional distress

  * Economic deprivation

  * Depleted long term assets

  * Housing instability

  * Bankruptcy

  * Difficulty accessing care

ACA will not address all of the underlying causes of medical debt. For example:

  * High cost-sharing will persist under many plans

  * Limited protections for out-of-network care

  * Limits on essential health benefits standards

  * Lack of resources for consumer assistance

The ACA will provide health insurance to millions of Americans who are currently uninsured, which may also improve access to health care and lower their out-of-pocket expenses and exposure to medical debt. People who are insured will also see improvements in the protection that health coverage offers. However, in light of the limited assets many people have, the problem of medical debt is likely to persist and lead to continued debate over the tradeoffs inherent in providing more comprehensive coverage and limiting federal costs for premium and cost-sharing subsidies.

http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8537-medical-debt-among-people-with-health-insurance.pdf

Comment:

By Don McCanne, M.D.

Medical debt is a horrendous problem, and it will still be with us after the Affordable Care Act is fully implemented. This important report from the Kaiser Family Foundation and Georgetown University explains the devastating effects of medical debt with special attention given to the role of cost-sharing that can create intolerable debt.

Why did the ACA legislation include such onerous cost-sharing measures? The answers have to do with ideology and federal budgeting.

Conservatives have long supported the principle that individuals must be responsible for their own lot. They define insurance as a product to protect only against catastrophic losses. They are opposed to comprehensive prepaid health care since they believe that individuals should use their own personal funds to negotiate the health care marketplace, making them empowered consumers. This concept has permeated the health policy literature in the United States to the extent that many progressives now also believe that patients have a responsibility to make a cash payment at the time they access health care in order to improve their health care shopping judgements. 

Many other nations provide first dollar coverage for health care services and yet are able to keep their total health care spending well below ours. This real life practical experience in these nations obviates the need for us to get into discussions of moral hazard, the RAND HIE, Pareto parity, selective definition of insurance, asymmetrical information, health savings accounts, and so forth when these concepts are used to obfuscate the real debate that is over pure ideology – having the freedom as an individual to interact in the health care marketplace versus collectively covering all of our essential health care costs in a system dependent on rigid government regulation (social insurance) or government ownership (socialized medicine). Both markets and government can control spending, but the former does so at a cost of depriving far too many people of health care that they should have, whereas the latter enables everyone to have the health care that they need.

When ACA was crafted, the highest priority was given to make sure that the impact of the legislation on the federal budget was balanced. On the spending side, the new plans to be offered in the insurance exchanges were designed so that the most popular plans would have a low actuarial value – 30 or 40 percent of the costs of health care would be paid by the patient. It was realized that many would not be able to pay either the full premiums or the full out-of-pocket costs of these low actuarial value plans, so income-indexed subsidies were included in the legislation, but clearly not enough. Low cost plans with inadequate subsidies worked for the federal budget, but it will not work for many patients, as today’s report shows us.

So a system designed to satisfy ideology and to comply with federal budget restraints is proving to be a system that will saddle far too many patients with intolerable medical debt, with its horrendous consequences, including impaired access to health care. It’s such a shame. An improved Medicare for everyone with first dollar coverage would have prevented all of this. (We can still do it, you know.)

Devastating effects of cost-sharing and medical debt

Medical Debt among People with Health Insurance

By Karen Pollitz Cynthia Cox, Kevin Lucia and Katie Keith
Kaiser Family Foundation, January 2014

An estimated 1 in 3 Americans report having difficulty paying their medical bills – that is, they have had problems affording medical bills within the past year, or they are gradually paying past bills over time, or they have bills they can’t afford to pay at all. Medical debt – and a host of related problems – can result when people can’t afford to pay their medical bills. While the chances of falling into medical debt are greater for people who are uninsured, most people who experience difficulty paying medical bills have health insurance. Medical debt can arise when people must pay out-of-pocket for care not covered by health insurance or to which cost-sharing (such as deductibles) applies. Medical debt might also result from health insurance premiums that individuals find difficult to afford.  The consequences of medical debt can be severe. People with unaffordable medical bills report higher rates of other problems – including difficulty affording housing and other basic necessities, credit card debt, bankruptcy, and barriers accessing health care.

How does medical debt become a problem for people with health insurance?

* In-network cost-sharing

* Medical bills high relative to income and savings

* Cost-sharing “multipliers”

* Treatments spanning two plan years (doubles cost-sharing)

* Family-level cost-sharing (2 family members doubles cost-sharing)

* Cost-sharing for chronic conditions (cost-sharing restarts each year)

* Extremely high cost-sharing (deductibles may not apply to OOP limits)

* Out-of-network care

* Fewer cost-sharing protections

* “Inadvertent” out-of-network care

* Balance billing (paying balances exceeding allowed charges)

* Health plan coverage limits or exclusions

* Unaffordable premiums

* Other factors unrelated to insurance

* Income loss due to illness

* Challenges to effective self-advocacy (overwhelmed with bills, statements)

* Medical debt collections

* Credit card financing of medical debt

Consequences of medical debt

* Damaged credit

* Emotional distress

* Economic deprivation

* Depleted long term assets

* Housing instability

* Bankruptcy

* Difficulty accessing care

ACA will not address all of the underlying causes of medical debt. For example:

* High cost-sharing will persist under many plans

* Limited protections for out-of-network care

* Limits on essential health benefits standards

* Lack of resources for consumer assistance

The ACA will provide health insurance to millions of Americans who are currently uninsured, which may also improve access to health care and lower their out-of-pocket expenses and exposure to medical debt. People who are insured will also see improvements in the protection that health coverage offers. However, in light of the limited assets many people have, the problem of medical debt is likely to persist and lead to continued debate over the tradeoffs inherent in providing more comprehensive coverage and limiting federal costs for premium and cost-sharing subsidies.

http://kaiserfamilyfoundation.files.wordpress.com/2014/01/8537-medical-d…

Medical debt is a horrendous problem, and it will still be with us after the Affordable Care Act is fully implemented. This important report from the Kaiser Family Foundation and Georgetown University explains the devastating effects of medical debt with special attention given to the role of cost-sharing that can create intolerable debt.

Why did the ACA legislation include such onerous cost-sharing measures? The answers have to do with ideology and federal budgeting.

Conservatives have long supported the principle that individuals must be responsible for their own lot. They define insurance as a product to protect only against catastrophic losses. They are opposed to comprehensive prepaid health care since they believe that individuals should use their own personal funds to negotiate the health care marketplace, making them empowered consumers. This concept has permeated the health policy literature in the United States to the extent that many progressives now also believe that patients have a responsibility to make a cash payment at the time they access health care in order to improve their health care shopping judgements.

Many other nations provide first dollar coverage for health care services and yet are able to keep their total health care spending well below ours. This real life practical experience in these nations obviates the need for us to get into discussions of moral hazard, the RAND HIE, Pareto parity, selective definition of insurance, asymmetrical information, health savings accounts, and so forth when these concepts are used to obfuscate the real debate that is over pure ideology – having the freedom as an individual to interact in the health care marketplace versus collectively covering all of our essential health care costs in a system dependent on rigid government regulation (social insurance) or government ownership (socialized medicine). Both markets and government can control spending, but the former does so at a cost of depriving far too many people of health care that they should have, whereas the latter enables everyone to have the health care that they need.

When ACA was crafted, the highest priority was given to make sure that the impact of the legislation on the federal budget was balanced. On the spending side, the new plans to be offered in the insurance exchanges were designed so that the most popular plans would have a low actuarial value – 30 or 40 percent of the costs of health care would be paid by the patient. It was realized that many would not be able to pay either the full premiums or the full out-of-pocket costs of these low actuarial value plans, so income-indexed subsidies were included in the legislation, but clearly not enough. Low cost plans with inadequate subsidies worked for the federal budget, but it will not work for many patients, as today’s report shows us.

So a system designed to satisfy ideology and to comply with federal budget restraints is proving to be a system that will saddle far too many patients with intolerable medical debt, with its horrendous consequences, including impaired access to health care. It’s such a shame. An improved Medicare for everyone with first dollar coverage would have prevented all of this. (We can still do it, you know.)

National health spending in 2012 – a perspective

National Health Spending In 2012: Rate Of Health Spending Growth Remained Low For The Fourth Consecutive Year

By Anne B. Martin, Micah Hartman, Lekha Whittle, Aaron Catlin, the National Health Expenditure Accounts Team
Health Affairs, January 2014

Abstract

For the fourth consecutive year, growth in health care spending remained low, increasing by 3.7 percent in 2012 to $2.8 trillion. At the same time, the share of the economy devoted to health fell slightly (from 17.3 percent to 17.2 percent) as the nominal gross domestic product (GDP) grew by 4.6 percent. Faster growth in hospital services and in physician and clinical services was mitigated by slower growth in prices for prescription drugs and nursing home services. Despite an uptick in enrollment growth, Medicare spending growth slowed slightly in 2012, mainly due to lower payment updates. For Medicaid, slowing enrollment growth kept spending growth near historic lows. Growth in private health insurance spending also remained near historically low rates in 2012, largely influenced by the nation’s modest economic recovery and its impact on enrollment.

Medicare

Medicare accounted for 20 percent of national health spending in 2012, with expenditures reaching $572.5 billion (Exhibit 1). Overall, Medicare spending growth slowed slightly, increasing by 4.8 percent in 2012 compared to 5.0 percent in 2011. Growth in fee-for-service expenditures, which accounted for nearly three-quarters of total Medicare spending, slowed from 4.3 percent in 2011 to 2.7 percent in 2012. Medicare Advantage spending accounted for the remainder, increasing 10.9 percent in 2012—a faster rate than in 2011, when growth was 7.0 percent.

Enrollment in Medicare for all beneficiaries (fee-for-service and Medicare Advantage) jumped 4.1 percent in 2012—the largest one-year increase in enrollment in thirty-nine years—and more than half of these enrollees joined Medicare Advantage. The noticeable increase in total Medicare enrollment reflected the oldest members of the baby-boom generation, who became eligible to enroll in Medicare in 2011.

Total Medicare spending per enrollee grew by 0.7 percent in 2012—slower than the 2.5 percent rate of growth in 2011. This slowdown was largely due to a prominent decline in spending for nursing home care, which declined by 2.2 percent in 2012 following an increase of 9.9 percent the year before. This in turn was driven primarily by a one-time payment reduction to skilled nursing facilities, which followed a large increase in payments in 2011 corresponding to the introduction of the new payment system. In 2012 this reduction was applied to skilled nursing facility rates to recalibrate payments for the newly implemented payment system.15

For Medicare fee-for-service, per enrollee spending growth decelerated from 2.7 percent in 2011 to 0.6 percent in 2012. In addition to the decline in skilled nursing facility spending, slower growth in fee-for-service spending was influenced by spending trends for prescription drugs, physician and clinical services, and hospital care. For beneficiaries with traditional fee-for-service Medicare, prescription drug spending growth slowed because of the increased use of popular lower-cost generic drugs. Slower growth in the volume and intensity of physician services and inpatient hospital admissions contributed to slower fee-for-service Medicare physician and hospital spending in 2012. Finally, for all Part A and most Part B providers, the ACA reduced payment updates in 2012, most notably for hospitals.

The acceleration in Medicare Advantage spending growth in 2012 was driven by a 10.0 percent increase in enrollment. On a per enrollee basis, however, Medicare Advantage spending growth slowed to 0.8 percent in 2012 (from 1.6 percent growth in 2011), partially as a result of the implementation of the ACA’s new payment mechanism. That mechanism links benchmark payment rates to fee-for-service costs, and its implementation effectively lowered the increase in total Medicare Advantage payments. In addition, the ACA required quality ratings of plans to factor into payments beginning in 2012.

Conclusion

In 2012 the economy continued to modestly improve, and GDP grew faster than health care spending, causing the health spending share of the economy to fall slightly—from 17.3 percent to 17.2 percent. Spending growth for personal health care goods and services accelerated in 2012 as trends for hospital services and physician and clinical services more than offset one-time impacts that helped decelerate growth, such as numerous patent expirations for brand-name retail prescription drugs and a Medicare payment reduction for skilled nursing facilities. From a payer perspective, Medicaid spending growth accelerated somewhat in 2012 after experiencing low growth in 2011, while Medicare and private health insurance spending growth slowed slightly. These mixed trends produced the fourth consecutive year of low overall health spending growth and led to a relatively stable health spending share of GDP. However, this pattern is consistent with historical experience when health spending as a share of GDP often stabilizes approximately two to three years after the end of a recession and then increases when the economy significantly improves. Recently, however, the question has arisen about whether a more fundamental change is occurring within the health sector and whether this stability will endure. From our perspective, more historical evidence is needed before concluding that we have observed a structural break in the historical relationship between the health sector and the overall economy.

http://content.healthaffairs.org/content/33/1/67.abstract

Comment:

By Don McCanne, M.D.

With the release of this annual report on health care spending in the United States, many are celebrating the fourth consecutive year of a slow down in spending increases, with some even suggesting that this is a new permanent trend due in a large part to the implementation of the Affordable Care Act (ACA). However, according to this report, ACA “had a minimal impact on overall national health spending growth through 2012.”

The reasons for increases in spending are complex and change from year to year. The excerpt on Medicare, selected above, demonstrates some of these variabilities. Spending in Medicare is important to understand since it is often held up as a program that could serve us all well as a single payer national health program. However, under our fragmented system of financing health care, it is difficult to use the current Medicare data to predict what spending might be under an Improved Medicare for All program, particularly with the split in Medicare between the traditional fee-for-service program and the private Medicare Advantage plans, but also because Medicare has little control over most of our health care spending. It is even more difficult to predict total future health spending for the entire nation with our current administratively complex, fragmented financing system.

If we had a unified single payer system, we could look at the variables that really count when we try to predict future spending. These include elements such as demographics, inflation, prices, legitimate costs, access, new technology, elimination of ineffectual technology, and the health of the economy. When you look at this list, it cries out for adopting public policies that would ensure future value in our health care spending. Many of these policies would be extremely difficult if not impossible to implement under our current financing system. That is perhaps the most important reason for replacing our dysfunctional system with a single payer national health program – an improved Medicare that covers everyone.

‘Accountable care’ model revives HMO strategy, boding ill for patients, physicians: JGIM article

Latest physician payment reforms point to ‘global amnesia’ in the bandwagon-like embrace of ‘fee-for-NON-service’ model of failed HMOs

FOR IMMEDIATE RELEASE, January 7, 2014
Contact: Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

In a cautionary reply to a new medical society report embracing accountable care organizations (ACOs) and bundled payment – two key reforms embedded in the Affordable Care Act – a team of prominent health researchers charge that history is about to repeat itself, to the detriment of both patients and physicians.

“Let’s hope that Orwell’s memory hole remains in good repair,” write Drs. David Himmelstein and Steffie Woolhandler, alluding to the machine in George Orwell’s novel “1984” that incinerated memories of things more conveniently forgotten.

Writing in this week’s Journal of General Internal Medicine, Himmelstein and Woolhandler say both physicians and patients have bad memories of health maintenance organizations, or HMOs, which proliferated in the late 1970s and early 1980s. HMOs were associated with frequent denials of care, restrictive networks of providers, and increased financial “risk-sharing.”

Such HMO practices, which are resurfacing in the context of today’s ACOs, had the effect of limiting patient choice and pressuring physicians to withhold care and avoid unprofitably ill patients, such as those with mental illnesses.

The payment reforms of that period, including bundled payment and capitation, amounted to a scheme of “fee-for-NON-service,” they say. The cumulative effect of all these changes was to swell the profits of the privately owned HMOs.

The HMO model, touted as a cost-saving strategy (as are today’s ACOs), was sometimes associated with flagrant abuses, including “horrifying tales of office celebrations triggered when reviewers discovered loopholes allowing the denial of transplants.”

Although supporters of today’s ACO model assert that the new structures will have safeguards against the cherry-picking healthy patients and care denials that characterized HMOs, the authors write that the early HMO proponents made virtually identical promises.

Moreover, just like HMOs, ACOs will be highly susceptible to “gaming,” e.g. overdiagnosing and “upcoding” of medical conditions to make patients look sicker on paper so as to garner higher payments for care. Experience has shown that providers who initially refrain from such practices are ultimately forced to do so in order to compete and survive, they write.

Nor is there evidence that the gamut of cost-saving mechanisms championed by today’s ACO advocates, including pay-for-performance schemes, will save money.

Himmelstein and Woolhandler note that giant corporations will have a competitive edge in the reshaped, post-ACA health care landscape, based on their clout and the size of their market share, and that “a system dominated by profit-maximizing oligopolies is a perilous route to savings.”

In contrast, countries that have adopted a universal system of care with regulations that restrain costs and minimize opportunities for profit have achieved better outcomes, lower costs and fairer compensation of physicians.

“Payment reform should focus not on manipulating greed but on dampening it,” they write.

Himmelstein and Woolhandler are professors of public health at the City University of New York, lecturers in medicine at Harvard Medical School, and co-founders of Physicians for a National Health Program.

*****

“Global Amnesia: Embracing Fee-For-Non-Service – Again,” David H. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H. Journal of General Internal Medicine, January 2014.

*****

Physicians for a National Health Program is a nonprofit research and educational organization of more than 18,000 doctors who support single-payer national health insurance. PNHP had no role in funding or otherwise supporting the article described above.

Gov. Shumlin urges lawmakers to keep eyes on single payer prize

By Peter Hirschfeld
Vermont Public Radio, Jan. 7, 2014

In an extraordinarily rare appearance by a sitting governor before a legislative committee, Gov. Peter Shumlin Tuesday took responsibility for problems on the new health insurance exchange, but said the shortcomings only reinforce his case for a publicly financed, universal health care system.

“No one is more disappointed than I am that we fell short of our rollout in the exchange, and I take responsibility for those failures,” Shumlin said. “The confusion … has caused some to suggest that perhaps I should be deterred from my promise to move Vermont beyond the exchange and … to the first universal, publicly financed system in this country.” 

Shumlin’s testimony before the House and Senate health care committees comes as lawmakers prepare to scrutinize an insurance exchange that has fallen well short of consumer expectations. 

Shumlin asked legislative leaders last week for permission to address the committees, in an attempt to preemptively address many of the hard questions his top cabinet officials are likely to face this year.

“Like the rest of the country and the federal government, we’ve had our struggles,” Shumlin said. “I said at the beginning of this process that for those who wanted to focus on the negative, there would be no shortage of material. The website limped out of the gate and it’s only now beginning to hit its stride… The contractors we hired to build it have under-performed at every turn.” 

But Shumlin said lawmakers shouldn’t let disappointment in the exchange discourage them from pursuing the longer-term quest for the most dramatic state-level reform of the health care system in the nation’s history. The plan aims not only to eliminate the private insurance market in favor of a publicly financed system, but also the change the manner in which health care is paid for.

Moving away from a fee-for-service model that rewards providers for the quantity of services provided, as opposed to the quality of care provided, is key, Shumlin said, to curbing costs in a $5 billion annually industry that now accounts for about one-fifth of the state’s gross domestic product.

“Vermonters did not elect me to nip around the edges of health care and our health care system,” Shumlin said.

Even as he vowed to move full steam ahead on public financing, Shumlin said he wouldn’t pull the trigger on a single payer plan until he was assured the new system would succeed in lowering costs.

The governor on Tuesday also announced plans he said will more quickly resolve the glitches plaguing the insurance exchange, called Vermont Health Connect. He said he’s temporarily reassigning Secretary of Commerce Lawrence Miller to the Department of Vermont Health Access, where he’ll use his “practical business management” experience to identify and remedy problems.

Shumlin said he’ll also commission an independent review of the exchange rollout, to find out what went wrong, and how to make sure it doesn’t happen with the state’s next big IT venture.

Legislators had time to ask only a few questions of Shulmin before the governor had to depart for another engagement. But one Democratic lawmaker got to ask what kind of tax Shumlin plans to use to fund the publicly financed health care system.

Shumlin has indicated that the answer to that question may be at least partly in the offing before the end of the session. But he didn’t tip his hand Tuesday.

“I don’t have all the answers, and everything is on the table,” Shumlin said. “Everything’s fair game, and I will be a collaborative partner in this conversation – promise.”

http://digital.vpr.net/post/gov-shumlin-urges-lawmakers-keep-eyes-single-payer-prize

Treatment of medically uninsured Americans shameful

By C.V. Allen, M.D.
The Modesto Bee, Jan. 6, 2014

They are one American in six. They range in age from newborn to 65. They might be anyone – even your neighbor. They are America’s problem and America’s shame. They are America’s 47 million medically uninsured.

Contrary to public perception, the uninsured are, for the most part, not the lowest on the economic ladder. They are more likely to be one step up – too well off to qualify for Medicaid, too young for Medicare and too financially stretched to cover even moderate costs of illness.

According to the California HealthCare Foundation, here’s what the uninsured look like:

• 62 percent of the uninsured are employed.

• 32 percent of the uninsured have incomes below the poverty rate ($22,000 for a family of four)

• 28 percent have incomes greater than $50,000

• 10 percent are eligible for Medicaid (for minors the rate is 75 percent)

• 7 percent have incomes greater than $75,000

• 1 percent of elderly over 65 are uninsured (thanks to Medicare).

Large companies of over 500 employees have a 14 percent uninsured rate. That rate rises to 36 percent for companies with fewer than 10 employees and is at 30 percent for the self-employed.

This is changing. The number of employers providing medical insurance is declining while employee co-pays and deductibles are rising. About half of America’s annual 1.5 million personal bankruptcies are due to an inability to pay medical costs.

It is well documented that care of the uninsured is most often late, less than adequate and lacks follow-up. The results are predictable, including a higher death rate than for the insured. The great perversity here is that the uninsured are confronted with charges well in excess of real costs, charges paid by no one else since Medicare, Medicaid and private insurers all contract for services at far lower rates.

The results are nonpayments, which shift the costs to the rest of us, or financial destruction of the individual whose only crime was getting sick.

There are other nations like ours – industrialized, democratic, first-world nations functioning well in a free enterprise universe – who believe providing medical care to all, or seeing that it is provided, is not only a legitimate function of government but also a moral obligation. Despite system flaws and imperfections, they do so at slightly over half our cost, with medical outcomes equal to or superior to ours and with greater public support.

Critics say we are culturally “different” – that our violent society, highway fatalities, obesity and sloth explain the difference. But the facts suggest otherwise. When the richest country in the world combines a high level of poverty with the highest cost and highest uninsured population, the results are inevitable.

The problem is not cultural; it is political. So is the solution.

Dr. C.V. Allen is a semiretired Modesto physician and regular community columnist. Send questions or comments to columns@modbee.com.

http://www.modbee.com/2014/01/06/3121645/cv-allen-treatment-of-medically.html#storylink=cpy

National health spending in 2012 – a perspective

National Health Spending In 2012: Rate Of Health Spending Growth Remained Low For The Fourth Consecutive Year

By Anne B. Martin, Micah Hartman, Lekha Whittle, Aaron Catlin, the National Health Expenditure Accounts Team
Health Affairs, January 2014

Abstract

For the fourth consecutive year, growth in health care spending remained low, increasing by 3.7 percent in 2012 to $2.8 trillion. At the same time, the share of the economy devoted to health fell slightly (from 17.3 percent to 17.2 percent) as the nominal gross domestic product (GDP) grew by 4.6 percent. Faster growth in hospital services and in physician and clinical services was mitigated by slower growth in prices for prescription drugs and nursing home services. Despite an uptick in enrollment growth, Medicare spending growth slowed slightly in 2012, mainly due to lower payment updates. For Medicaid, slowing enrollment growth kept spending growth near historic lows. Growth in private health insurance spending also remained near historically low rates in 2012, largely influenced by the nation’s modest economic recovery and its impact on enrollment.

Medicare

Medicare accounted for 20 percent of national health spending in 2012, with expenditures reaching $572.5 billion (Exhibit 1). Overall, Medicare spending growth slowed slightly, increasing by 4.8 percent in 2012 compared to 5.0 percent in 2011. Growth in fee-for-service expenditures, which accounted for nearly three-quarters of total Medicare spending, slowed from 4.3 percent in 2011 to 2.7 percent in 2012. Medicare Advantage spending accounted for the remainder, increasing 10.9 percent in 2012—a faster rate than in 2011, when growth was 7.0 percent.

Enrollment in Medicare for all beneficiaries (fee-for-service and Medicare Advantage) jumped 4.1 percent in 2012—the largest one-year increase in enrollment in thirty-nine years—and more than half of these enrollees joined Medicare Advantage. The noticeable increase in total Medicare enrollment reflected the oldest members of the baby-boom generation, who became eligible to enroll in Medicare in 2011.

Total Medicare spending per enrollee grew by 0.7 percent in 2012—slower than the 2.5 percent rate of growth in 2011. This slowdown was largely due to a prominent decline in spending for nursing home care, which declined by 2.2 percent in 2012 following an increase of 9.9 percent the year before. This in turn was driven primarily by a one-time payment reduction to skilled nursing facilities, which followed a large increase in payments in 2011 corresponding to the introduction of the new payment system. In 2012 this reduction was applied to skilled nursing facility rates to recalibrate payments for the newly implemented payment system.15

For Medicare fee-for-service, per enrollee spending growth decelerated from 2.7 percent in 2011 to 0.6 percent in 2012. In addition to the decline in skilled nursing facility spending, slower growth in fee-for-service spending was influenced by spending trends for prescription drugs, physician and clinical services, and hospital care. For beneficiaries with traditional fee-for-service Medicare, prescription drug spending growth slowed because of the increased use of popular lower-cost generic drugs. Slower growth in the volume and intensity of physician services and inpatient hospital admissions contributed to slower fee-for-service Medicare physician and hospital spending in 2012. Finally, for all Part A and most Part B providers, the ACA reduced payment updates in 2012, most notably for hospitals.

The acceleration in Medicare Advantage spending growth in 2012 was driven by a 10.0 percent increase in enrollment. On a per enrollee basis, however, Medicare Advantage spending growth slowed to 0.8 percent in 2012 (from 1.6 percent growth in 2011), partially as a result of the implementation of the ACA’s new payment mechanism. That mechanism links benchmark payment rates to fee-for-service costs, and its implementation effectively lowered the increase in total Medicare Advantage payments. In addition, the ACA required quality ratings of plans to factor into payments beginning in 2012.

Conclusion

In 2012 the economy continued to modestly improve, and GDP grew faster than health care spending, causing the health spending share of the economy to fall slightly—from 17.3 percent to 17.2 percent. Spending growth for personal health care goods and services accelerated in 2012 as trends for hospital services and physician and clinical services more than offset one-time impacts that helped decelerate growth, such as numerous patent expirations for brand-name retail prescription drugs and a Medicare payment reduction for skilled nursing facilities. From a payer perspective, Medicaid spending growth accelerated somewhat in 2012 after experiencing low growth in 2011, while Medicare and private health insurance spending growth slowed slightly. These mixed trends produced the fourth consecutive year of low overall health spending growth and led to a relatively stable health spending share of GDP. However, this pattern is consistent with historical experience when health spending as a share of GDP often stabilizes approximately two to three years after the end of a recession and then increases when the economy significantly improves. Recently, however, the question has arisen about whether a more fundamental change is occurring within the health sector and whether this stability will endure. From our perspective, more historical evidence is needed before concluding that we have observed a structural break in the historical relationship between the health sector and the overall economy.

http://content.healthaffairs.org/content/33/1/67.abstract

With the release of this annual report on health care spending in the United States, many are celebrating the fourth consecutive year of a slow down in spending increases, with some even suggesting that this is a new permanent trend due in a large part to the implementation of the Affordable Care Act (ACA). However, according to this report, ACA “had a minimal impact on overall national health spending growth through 2012.”

The reasons for increases in spending are complex and change from year to year. The excerpt on Medicare, selected above, demonstrates some of these variabilities. Spending in Medicare is important to understand since it is often held up as a program that could serve us all well as a single payer national health program. However, under our fragmented system of financing health care, it is difficult to use the current Medicare data to predict what spending might be under an Improved Medicare for All program, particularly with the split in Medicare between the traditional fee-for-service program and the private Medicare Advantage plans, but also because Medicare has little control over most of our health care spending. It is even more difficult to predict total future health spending for the entire nation with our current administratively complex, fragmented financing system.

If we had a unified single payer system, we could look at the variables that really count when we try to predict future spending. These include elements such as demographics, inflation, prices, legitimate costs, access, new technology, elimination of ineffectual technology, and the health of the economy. When you look at this list, it cries out for adopting public policies that would ensure future value in our health care spending. Many of these policies would be extremely difficult if not impossible to implement under our current financing system. That is perhaps the most important reason for replacing our dysfunctional system with a single payer national health program – an improved Medicare that covers everyone.

Straight talk about health care reform

By Ewell G. Scott, M.D.
The Morehead (Ky.) News, Dec. 31, 2013

Let’s do some straight talking about the current situation in health care reform and cut through the misleading rhetoric on all sides. 

Two elementary problems exist. The first difficulty is that a sizable portion of us have no health insurance. Most estimates of that number are in the range of 50 million. 

The number two problem is the overall cost of health care itself. America spends nearly 18 percent of its GDP on health care, twice as much as other civilized countries. 

Why should that be? Everything else is more expensive in those other countries, except their Universal Health Care. How come? The answer is simple, straight forward and easy to understand. The phenomenon is call OVERHEAD. 

Every business man understands the cost of doing business. Humana, Aetna, Anthem and you name them, use up 20-30 percent of the premium dollar in administrative cost. Other countries similar overhead is in the range of 3 percent, similar to our Medicare’s cost.

Since we spend close to $2 trillion each year on health care, simple fifth-grade math give us a savings of $400 billion each year. Kentucky’s share of that savings would be $8 billion. That is a huge figure, when you know that our entire state budget is $9 billion. 

So what? Well, it means we do not have those funds for education, national security, roads or other job growing investments. In the very recent past Congress passed a budget resulting in a savings of $23 billion for the next year. 

That figure pales in comparison to the savings which could occur under a single-payer plan, such as an improved and expanded Medicare.

The Affordable Care Act is attempting to correct the first problem but because it is so complicated it has failed miserably. To date total enrollment of the previously uninsured is at about one million folks, but there are 50 million Americans uninsured. 

Gov. Steve Beshear certainly did the right thing by embracing the Medicaid expansion portion of the law so the folks making less than 138 percent of the Federal Poverty Level will qualify for that program. But alas the purchase of private health insurance has lagged way short of goals.

Medicare for All would solve both problems: Cost and access. It would be automatic, get it a birth and lose it at death. No web pages to negotiate, no phone calls to try, no “navigators” to help find the “right plan for you.” We would all have the best. 

Dr. Ewell G. Scott resides in Morehead.

http://www.themoreheadnews.com/letters/x2011608911/Straight-talk-about-health-care-reform

NBC’s chief medical editor, Nancy Snyderman, endorses single payer

Top Health Stories of 2013

By Nancy Snyderman, M.D., NBC’s chief medical editor
Morning Joe, MSNBC, December 30, 2013

Dr. Nancy Snyderman:  I think there should be a single payer system. And increasingly you’re seeing physicians in their late 50s, 60s and 70s who are saying, you know what, we got it wrong; we should have taken Medicare, expanded it and done it smarter.

http://www.msnbc.com/morning-joe

YouTube clip of segment: http://www.youtube.com/watch?v=x0giveiH1Zc

Comment:

By Don McCanne, M.D.

The endorsement of single payer by NBC’s chief medical editor, Dr. Nancy Snyderman, is a welcome addition to the many voices of those who have long understood the superiority of the single payer/improved Medicare for all model of reform but who now believe that it is finally time to speak out in support of it.

It is interesting that this video clip of Dr. Snyderman has been circulated widely on conservative blogs. We are hearing “single payer” from the conservatives so frequently now that it’s almost as if they are trying make the term a pejorative much as Reagan, Thatcher and others did with the term “socialism.” Another example just this weekend was on Fox News – six minutes of meaningless jabber, with the exception of one token, fair and balanced panelist who supports single payer:

http://video.foxnews.com/v/3009813083001/new-push-for-single-payer-health-care-in-america/?playlist_id=928378949001

NBC’s chief medical editor, Nancy Snyderman, endorses single payer

Top Health Stories of 2013

By Nancy Snyderman, M.D., NBC’s chief medical editor
Morning Joe, MSNBC, December 30, 2013

Dr. Nancy Snyderman:  I think there should be a single payer system. And increasingly you’re seeing physicians in their late 50s, 60s and 70s who are saying, you know what, we got it wrong; we should have taken Medicare, expanded it and done it smarter.

http://www.msnbc.com/morning-joe

YouTube clip of segment: http://www.youtube.com/watch?v=x0giveiH1Zc

The endorsement of single payer by NBC’s chief medical editor, Dr. Nancy Snyderman, is a welcome addition to the many voices of those who have long understood the superiority of the single payer/improved Medicare for all model of reform but who now believe that it is finally time to speak out in support of it.

It is interesting that this video clip of Dr. Snyderman has been circulated widely on conservative blogs. We are hearing “single payer” from the conservatives so frequently now that it’s almost as if they are trying make the term a pejorative much as Reagan, Thatcher and others did with the term “socialism.” Another example just this weekend was on Fox News – six minutes of meaningless jabber, with the exception of one token, fair and balanced panelist who supports single payer:

http://video.foxnews.com/v/3009813083001/new-push-for-single-payer-healt…