PNHP

Bare-bones plans still with us

Bare-bones plans still with us

Bare-Bones Health Plans Survive Through Quirk in Law

By Theo Francis
The Wall Street Journal, January 16, 2014

The health-care overhaul was supposed to eliminate insurance plans that offer skimpy coverage at cut rates. But a quirk in the law stands to help some companies keep them going for years to come.

AlliedBarton Security Services, a closely held firm that employs more than 63,000 people nationwide, has offered a modestly updated version of its so-called mini-med plan to employees this year and it intends to do so in 2015 as well, even though the cheap coverage fails to meet requirements of the Affordable Care Act.

What makes the no-frills plan attractive is that it will save money for AlliedBarton and for its security-guard employees who don’t incur substantial medical bills, many of whom want a low-cost option, according to the company.

What makes it possible under the health law: As long as companies offer at least one plan that complies with the law’s requirements, they are free to keep offering ones that don’t.

That has enabled companies to find ways to comply with the law while minimizing increases in their health-care costs. The result has been an increase in lean insurance offerings such as “fixed-indemnity” plans.

Such plans, which might cost an employee just $80 a month in premiums, generally pay a set amount for specific medical services—$70 for a doctor’s visit, for example, or $20 for a prescription—without regard to the underlying cost. They limit the amount of payments or care available in a year, and can exclude entire areas of coverage, such as mental-health care. When catastrophic injury or illness strikes, they often pay little.

AlliedBarton intends to offer its employees two low-cost insurance options—one that meets the law’s requirements for both scope of coverage and affordability, and a cheaper plan that falls short. Offering the compliant plan heads off the law’s penalties. And offering the cheaper plan—which the company thinks most of its security guards will pick—keeps costs down.

Employees who pick the cheaper plan could have to pay the individual penalty—though that could still cost them less than signing up for the more expensive plan.

Fixed-indemnity coverage “violates the spirit of the law,” said Jay Angoff, a Washington lawyer who previously headed the federal insurance-oversight office and served as Missouri’s insurance commissioner. “There’s a strong argument that it is inherently misleading, and it provides so little coverage that it shouldn’t be sold at all.” Such plans, he adds, “were never intended to survive past 2014.”

AlliedBarton’s Mr. Buckman countered that workers are good at weighing medical and financial trade-offs. “To a lot of people for a lot of good reasons, fixed-indemnity plans may be a better choice, and we think it’s appropriate for people to be able to make choices,” he said.

http://online.wsj.com/news/articles/SB1000142405270230375440457931276013…

What kind of rule is this? As long as employers offer to their employees a plan that complies with the requirements of the Affordable Care Act (ACA), but a plan that the employees cannot afford to purchase, then the employers are relieved of their penalties for providing them with almost worthless “fixed indemnity” plans, even though that means that the employees may have to pay a penalty for failing to be insured with a qualified plan.

ACA was designed to interfere as little as possible with employer-sponsored plans since supposedly that large sector of the health insurance market was working so well. But it wasn’t for far too many. Employers offering mini-med style fixed indemnity plans is only one of the potential deficiencies of employer-sponsored coverage, others being high deductibles, narrow provider networks, and forgone wage increases to pay for the coverage.

Right now, several respected journalists are criticizing single payer advocates for being critical of the health care gains under the Affordable Care Act. They have it all wrong. We are not critical of the gains; we are critical of the failure to correct the major deficiencies in our system that cause so much suffering and financial hardship. Instead of tweaking a mediocre system, we should fix it. We could do that with a single payer national health program – an improved Medicare that covers all of us.

The SGR fix is… well, we don’t know

Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

Comment:

By Don McCanne, M.D.

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.

The SGR fix is… well, we don’t know

Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.

Single-payer health plan is not dead

By Froma Harrop
The Leaf Chronicle (Clarksville, Tenn.) and Gannett, Jan. 13, 2014

The prospects for single-payer health care – adored by many liberals, despised by private health insurers and looking better all the time to others – did not die in the Affordable Care Act. It was thrown a lifeline through a little-known provision tucked in the famously long legislation. Single-payer groups in several states are now lining up to make use of Section 1332.

Vermont is way ahead of the pack, but Hawaii, Oregon, New York, Washington, California, Colorado and Maryland have strong single-payer movements.

First, some definitions. Single-payer is a system where the government pays all medical bills. Canada has a single-payer system. By the way, Canada’s system is not socialized medicine but socialized insurance (like Medicare). In Canada, the doctors work for themselves.

Under Section 1332, states may apply for “innovation waivers” starting in 2017. They would let states try paths to health care reform different from those mapped out by the Affordable Care Act – as long as they meet certain of its goals. States must cover as many people and offer coverage as comprehensive and affordable. And they can’t increase the federal deficit. Qualifying states would receive the same federal funding that would have been available under Obamacare.

My conservative friends complain that the innovation waiver requirements would rule out everything but single-payer. No doubt they are diligently working on a more privatized alternative that would cover less, cost more and raise the federal deficit.

‘’Vermont is the only state where they’re thinking very concretely about using (the waiver) as part of their plan,” Judy Solomon, health care expert at the Center on Budget and Policy Priorities, told me.

Hawaii got close. Its Legislature passed a single-payer bill in 2009, which was vetoed by then-Gov. Linda Lingle, a Republican. Lawmakers overrode the veto, but Lingle refused to implement the law.

The quest remains rocky, Dr. Stephen Kemble, a single-payer advocate and past president of the Hawaii Medical Association, told me. “If Vermont can get things going, that would make things easier for others.”

In Washington state, “our focus is to work on grass-roots support,” says Dr. David McLanahan, Washington coordinator for Physicians for a National Health Program. “We’re laying the groundwork” for legislation and a request for an innovation waiver.

Problems in the Obamacare rollout have energized fans of single-payer. Computer glitches aside, the troubles stem chiefly from the law’s complexity. Single-payer is all about simplicity.

Under the Vermont plan, employers and individuals would no longer have to buy private health coverage. They would instead pay a tax. The state-run system would also cover more things, like dental. And oh, yes, Vermonters could choose their hospitals and doctors.

William Hsiao, an economist at the Harvard School of Public Health, has projected that Vermont’s annual health care spending could fall 25 percent. The savings would more than pay for the new benefits.

How? Fewer dollars would go to advertising, executive windfalls and payouts to investors. Doctors dealing with one insurer would save on office staff. Fraud and abuse would shrink as a comprehensive database makes crooks easier to spot.

It’s too bad that some liberals have turned single-payer into a religion and are whacking the Vermont plan for not being pure enough. Vermont is permitting continued private coverage for very practical reasons.

Bear in mind that the most acclaimed health care systems – in Germany, in France and our Medicare – combine single-payer for basics with private coverage for the extras.

Vermont intends to use its state health insurance exchange as the structure on which to build its single-payer system. By 2017, the road to an innovation waiver should be clear.

Go forth, Green Mountain State. Show us what you can do.

http://www.theleafchronicle.com/article/20140114/OPINION/301140003/HARROP-Single-payer-health-plan-not-dead?nclick_check=1

Single-payer activism gets boost from Obamacare

By Claire Hughes
Times Union (Albany, N.Y.), Jan. 12, 2014

Dr. Richard Propp and Alice Brody thought Obamacare might sink their movement.

Instead, based on the interest they say they are getting, the federal Affordable Care Act has buoyed their cause of universal health coverage, or “improved Medicare for all,” they said.

At the heart of the new federal law are government-run online markets that provide one-stop shopping to public and private insurance plans for previously uninsured people. The intent was to improve access to health care.

But confusion over the insurance websites and disappointment with the coverage offered has fueled interest in something the activists say is simpler and better — a national health system supported with tax dollars. On Tuesday, they’re screening a documentary about the issue at the First Unitarian Society in Albany.

Recently joining the ranks of single-payer promoters are young adults and labor unions, they said. Both have been dismayed by the trend toward higher-deductible health plans, whether through the new government-run health exchanges or from private employers.

“We’re really surprised at how much new interest there is in this issue,” said Brody, 69, who is active in Single Payer New York, which has supported a proposed state law that would create universal health coverage for New Yorkers.

Propp, 79, launched the Capital District Alliance for Universal Healthcare in 2005. The group is an affiliate of Healthcare-Now!, a national grass-roots advocate that supports similar federal legislation.

The trouble with the Affordable Care Act, single-payer proponents said, is that lawmakers gave too much weight to the concerns of the industries that profit from an overpriced medical system. The result, they say, was a convoluted law that perhaps no one understands completely.

“The reason Obamacare is so complex is it’s so gerrymandered,” said Dr. David Ray of Albany Medical Center, who is active in CDAUH and heads the local chapter of Physicians for a National Health Program, a Chicago-based advocacy group. “The power of the moneyed interests — specifically the insurance industry and the pharmaceutical industry — was not taken out of the equation.”

By contrast, Medicare is easy to apply for and use, they said.

“You can understand Medicare,” Brody said. “The main problem with Medicare is it only serves the elderly, who are very sick. That’s why costs are high on Medicare.”

Another group whose support of universal health coverage may be surprising is doctors. Close to 60 percent of doctors support a single-payer health system, according to PNHP. Doctors support universal health coverage because it would make their business operations simpler, Ray said. Instead of meeting the requirements of dozens of insurance contracts, they would have to handle just one — with the government.

“Most physicians are dealing with so many masters, in terms of the insurance companies,” Ray said. “Single-payer is the only road to continuation of physician autonomy. And if there’s anything that physicians care about, it’s their autonomy.”

Ray, who has practiced medicine for 35 years at the former Community Health Plan and at the Whitney M. Young Jr. Health Center in Albany, said he has long held a philosophy that doctors should be paid for keeping people healthy, not for treating them only when they’re sick. His work at Whitney Young, an Albany-based clinic serving low-income patients, showed him the need for better health coverage for all people, he said.

Propp founded CDAUH when he retired, shortly after reading a Harvard study that showed uninsured people with diabetes had a 50 percent higher death rate than insured patients.

Brody’s impetus to join the movement came with the understanding in recent years that her childhood had been shaped by her family’s struggle to secure adequate health care. Her mother had multiple sclerosis, and her father worked three jobs to pay the household and medical bills. She and her sisters, Brody said, raised themselves.

“Health care should be a human right,” Brody said. “You have a right to be able to, if you’re sick, go see a doctor. It should be with you from birth to death.”

Healthcare plans

The Healthcare Movie” will be shown from 7 to 9 p.m. Tuesday at Emerson Community Hall, First Unitarian Universalist Society of Albany, 405 Washington Ave. Narrated by Kiefer Sutherland, the hour-long documentary explores the health care systems in Canada and America. Dr. Richard Propp will lead a discussion after the movie.

The showing is free. The film showing is sponsored by First Unitarian, CDAUH and other community groups. For more information, call Dr. Fred Eames, 727-7868.

http://www.timesunion.com/local/article/Single-payer-activism-gets-boost-from-Obamacare-5136793.php

Timothy Jost reviews what four years have brought us

Implementing Health Reform: Four Years Later

By Timothy S. Jost
Health Affairs, January 2014

Despite enormous potential, the Affordable Care Act has been plagued by controversy and confusion from day one.

Looking Ahead

It is likely that more complaints will be heard once people actually use their ACA coverage. Many exchange carriers are offering limited provider networks. Narrow networks allow insurers to reduce premiums as they exclude the most expensive providers and negotiate steep discounts with those who remain. Consumers will like the low premiums but will be unhappy to learn that their doctors are not available and shocked to discover charges from out-of-network specialists when they go to in-network hospitals.

Consumers may also be surprised by the magnitude of cost sharing under ACA plans. Bronze plans may have $6,000 deductibles, and silver plans can have deductibles of $2,000 or more. Even at these levels, of course, cost-sharing obligations will be lower than many policies found now in today’s nongroup market. But this is not free care, or anything close to it.

Millions of low-income Americans in states that refuse to expand Medicaid will find themselves too poor to receive any help. This is, of course, not the fault of the ACA but rather of its opponents. But the public may not grasp this distinction.

Other problems will also attend the implementation of the 2014 reforms, and all will be widely reported. Employers may continue to reduce employees to thirty hours or otherwise try to avoid offering health insurance to their employees. Insured and self-insured plans will bear part of the cost of expanding coverage and reinsuring high-cost enrollees in the individual market, increasing their costs. Finally, public outrage is sure to hit the headlines again when tax filing time arrives in 2015 as some individuals will be assessed the penalty for remaining uninsured, while others will face a repayment demand for overpaid premium tax credits.

Going forward, one of the most important challenges facing the ACA will be whether its benefits become apparent quickly and dramatically enough to offset the problems that are currently dominating the news coverage of the health reform law. Even more important may be the question of how much it will matter that the greatest beneficiaries of the ACA are likely to be low-income Americans, who are less likely to be politically active than many of the higher-income Americans who will be adversely affected by higher insurance premiums and taxes.

In the end, the most important fact is that the ACA addresses a real and dramatic problem: nearly fifty million uninsured Americans. Its opponents in Congress have failed to put forth any credible proposal to address this problem since the law was enacted. As disruptive as it may in fact be, the ACA does address this problem. If it succeeds, America will be a better place. If it fails, it is unlikely that another solution will be forthcoming any time soon, perhaps not for another generation.

http://content.healthaffairs.org/content/33/1/7.full

Comment:

By Don McCanne, M.D.

Timothy Jost is one of the most astute, objective analysts and observers of the unfolding of the Affordable Care Act. We should listen to him when he describes the negative impact that ACA will have on moderate- and higher-income Americans. They will be especially unhappy with their loss of choice of physicians and hospitals because of the narrow or ultra-narrow networks, and they will be greatly displeased with out-of-pocket costs that are much greater than they previously experienced.

Although Jost suggests that the determination of the success or failure will be based on how successful the enrollment of the 50 million mostly lower-income uninsured Americans will be, it is more likely that those with incomes above 400 percent of the federal poverty level who will be bearing the full costs of their insurance, directly or through wage concessions, will consider the shift in employer-sponsored plans toward narrow networks and high cost sharing to be a failure of policy.

Although Jost also discusses the positive features of ACA, they do not offset the negative since we did not have to accept such a compromised system.

Although he suggests that another solution is unlikely for a generation, once the politically active people with good jobs and decent incomes realize what happened and what they could have had, the demand for single payer Medicare for all will move the process much earlier. At least for their benefit, and for the benefit of all U.S. residents, we hope so.

Timothy Jost reviews what four years have brought us

Implementing Health Reform: Four Years Later

By Timothy S. Jost
Health Affairs, January 2014

Despite enormous potential, the Affordable Care Act has been plagued by controversy and confusion from day one.

Looking Ahead

It is likely that more complaints will be heard once people actually use their ACA coverage. Many exchange carriers are offering limited provider networks. Narrow networks allow insurers to reduce premiums as they exclude the most expensive providers and negotiate steep discounts with those who remain. Consumers will like the low premiums but will be unhappy to learn that their doctors are not available and shocked to discover charges from out-of-network specialists when they go to in-network hospitals.

Consumers may also be surprised by the magnitude of cost sharing under ACA plans. Bronze plans may have $6,000 deductibles, and silver plans can have deductibles of $2,000 or more. Even at these levels, of course, cost-sharing obligations will be lower than many policies found now in today’s nongroup market. But this is not free care, or anything close to it.

Millions of low-income Americans in states that refuse to expand Medicaid will find themselves too poor to receive any help. This is, of course, not the fault of the ACA but rather of its opponents. But the public may not grasp this distinction.

Other problems will also attend the implementation of the 2014 reforms, and all will be widely reported. Employers may continue to reduce employees to thirty hours or otherwise try to avoid offering health insurance to their employees. Insured and self-insured plans will bear part of the cost of expanding coverage and reinsuring high-cost enrollees in the individual market, increasing their costs. Finally, public outrage is sure to hit the headlines again when tax filing time arrives in 2015 as some individuals will be assessed the penalty for remaining uninsured, while others will face a repayment demand for overpaid premium tax credits.

Going forward, one of the most important challenges facing the ACA will be whether its benefits become apparent quickly and dramatically enough to offset the problems that are currently dominating the news coverage of the health reform law. Even more important may be the question of how much it will matter that the greatest beneficiaries of the ACA are likely to be low-income Americans, who are less likely to be politically active than many of the higher-income Americans who will be adversely affected by higher insurance premiums and taxes.

In the end, the most important fact is that the ACA addresses a real and dramatic problem: nearly fifty million uninsured Americans. Its opponents in Congress have failed to put forth any credible proposal to address this problem since the law was enacted. As disruptive as it may in fact be, the ACA does address this problem. If it succeeds, America will be a better place. If it fails, it is unlikely that another solution will be forthcoming any time soon, perhaps not for another generation.

http://content.healthaffairs.org/content/33/1/7.full

Timothy Jost is one of the most astute, objective analysts and observers of the unfolding of the Affordable Care Act. We should listen to him when he describes the negative impact that ACA will have on moderate- and higher-income Americans. They will be especially unhappy with their loss of choice of physicians and hospitals because of the narrow or ultra-narrow networks, and they will be greatly displeased with out-of-pocket costs that are much greater than they previously experienced.

Although Jost suggests that the determination of the success or failure will be based on how successful the enrollment of the 50 million mostly lower-income uninsured Americans will be, it is more likely that those with incomes above 400 percent of the federal poverty level who will be bearing the full costs of their insurance, directly or through wage concessions, will consider the shift in employer-sponsored plans toward narrow networks and high cost sharing to be a failure of policy.

Although Jost also discusses the positive features of ACA, they do not offset the negative since we did not have to accept such a compromised system.

Although he suggests that another solution is unlikely for a generation, once the politically active people with good jobs and decent incomes realize what happened and what they could have had, the demand for single payer Medicare for all will move the process much earlier. At least for their benefit, and for the benefit of all U.S. residents, we hope so.

Financial burden on Medicare households

Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households

By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, January 9, 2014

The Medicare program offers health and financial protection to more than 50 million seniors and younger people with disabilities.  However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package can result in beneficiaries spending a substantial share of their household budgets on health care.  

Medicare households devoted nearly 14% of total household spending to health-related expenses in 2012, on average — a substantially larger share than non-Medicare households.

Spending on health insurance premiums, including for Part B, Part C (Medicare Advantage), Part D and supplemental coverage (such as Medigap and retiree health plans), was about two-thirds (65.4%) of Medicare households’ average health care spending in 2012, and 9.1% of Medicare household spending overall.  Medical services (such as hospital stays, physician services, lab tests, and X-rays) were the next largest component of Medicare households’ health spending (18.5%), followed by prescription drugs (13.0%) and medical supplies (3.1%). 

The financial burden of out-of-pocket health spending is felt disproportionately by some subgroups of Medicare households, including older beneficiaries and those with incomes between 100% and 399% of poverty.

As policymakers consider options to address federal budget concerns, including policies to rein in Medicare spending, these findings highlight the importance of assessing the effects of such proposals on out-of-pocket health care spending among Medicare beneficiaries — a majority of whom already live on tight budgets.

http://kff.org/medicare/issue-brief/health-care-on-a-budget-the-financial-burden-of-health-spending-by-medicare-households/

****

Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News

By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.
Employee Benefit Research Institute, October 2013

Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 60 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 12 percent. Furthermore, the percentage of private-sector establishments offering retiree health benefits has been falling, and where benefits are offered, they are becoming less generous. This is true even in the public sector.

Couples at the 90th percentile in drug expenses would need $220,000 to have a 50 percent chance of having enough money to cover health care expenses in retirement. They would need $295,000 to have a 75 percent chance of covering their expenses and $360,000 to have a 90 percent chance of covering their expenses.

However, it should be noted that many individuals will need more than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare.

Finally, issues surrounding retirement income security are certain to become an even greater challenge in the future, as employers continue to scale back retiree health benefits and as policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.

http://www.ebri.org/pdf/notespdf/EBRI_Notes_10_Oct-13_RetSvgs-IRAs.pdf

Comment:

By Don McCanne, M.D.

The bad news is that out-of-pocket expenses for those on Medicare are significant and fall disproportionately on older individuals and those with incomes between 100% and 400% of the federal poverty level. Although some relief is anticipated with the closing of the Part D donut hole, the overall burden is expected to increase, especially with proposed policies that would increase spending on Medicare insurance premiums.

A far more equitable system would be to completely separate payments for the financing of health care from the benefits received. That is, eliminate premiums, deductibles, co-payments and coinsurance and instead use a single public fund for health care to which individuals contribute based on ability to pay (i.e, progressive taxes). Then care is accessed based only on medical need, not on ability to pay.

As long as Medicare remains a separate program exclusively for the elderly and for individuals with long term disabilities, we are going to see efforts made to try to limit federal spending on Medicare, passing more costs onto the beneficiaries. Increases in premium revenues is quite likely, not only for Part B and Part D of Medicare, but also for private Medigap, Medicare Advantage, and retiree health plans. Also, proposed taxes on Medigap premiums are on the agenda.

Both of today’s articles demonstrate that the burden is already too great, especially for the majority who are on tight budgets. Rather than shifting yet more responsibility for health care costs onto the backs of Medicare beneficiaries, we should be reducing it. If we were all in this together, as we would be with an improved Medicare for all, we would be demanding relief from excessive out-of-pocket costs while begrudgingly paying our taxes.

Financial burden on Medicare households

Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households

By Juliette Cubanski, Christina Swoope, Anthony Damico and Tricia Neuman
Kaiser Family Foundation, January 9, 2014

The Medicare program offers health and financial protection to more than 50 million seniors and younger people with disabilities.  However, the high cost of premiums, cost-sharing requirements, and gaps in the Medicare benefit package can result in beneficiaries spending a substantial share of their household budgets on health care.

Medicare households devoted nearly 14% of total household spending to health-related expenses in 2012, on average — a substantially larger share than non-Medicare households.

Spending on health insurance premiums, including for Part B, Part C (Medicare Advantage), Part D and supplemental coverage (such as Medigap and retiree health plans), was about two-thirds (65.4%) of Medicare households’ average health care spending in 2012, and 9.1% of Medicare household spending overall.  Medical services (such as hospital stays, physician services, lab tests, and X-rays) were the next largest component of Medicare households’ health spending (18.5%), followed by prescription drugs (13.0%) and medical supplies (3.1%).

The financial burden of out-of-pocket health spending is felt disproportionately by some subgroups of Medicare households, including older beneficiaries and those with incomes between 100% and 399% of poverty.

As policymakers consider options to address federal budget concerns, including policies to rein in Medicare spending, these findings highlight the importance of assessing the effects of such proposals on out-of-pocket health care spending among Medicare beneficiaries — a majority of whom already live on tight budgets.

http://kff.org/medicare/issue-brief/health-care-on-a-budget-the-financia…

****

Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News

By Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D.
Employee Benefit Research Institute, October 2013

Individuals should be concerned about saving for health insurance premiums and out-of-pocket expenses in retirement for a number of reasons. Medicare generally covers only about 60 percent of the cost of health care services for Medicare beneficiaries ages 65 and older, while out-of-pocket spending accounts for 12 percent. Furthermore, the percentage of private-sector establishments offering retiree health benefits has been falling, and where benefits are offered, they are becoming less generous. This is true even in the public sector.

Couples at the 90th percentile in drug expenses would need $220,000 to have a 50 percent chance of having enough money to cover health care expenses in retirement. They would need $295,000 to have a 75 percent chance of covering their expenses and $360,000 to have a 90 percent chance of covering their expenses.

However, it should be noted that many individuals will need more than the amounts cited in this report because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare.

Finally, issues surrounding retirement income security are certain to become an even greater challenge in the future, as employers continue to scale back retiree health benefits and as policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.

http://www.ebri.org/pdf/notespdf/EBRI_Notes_10_Oct-13_RetSvgs-IRAs.pdf

The bad news is that out-of-pocket expenses for those on Medicare are significant and fall disproportionately on older individuals and those with incomes between 100% and 400% of the federal poverty level. Although some relief is anticipated with the closing of the Part D donut hole, the overall burden is expected to increase, especially with proposed policies that would increase spending on Medicare insurance premiums.

A far more equitable system would be to completely separate payments for the financing of health care from the benefits received. That is, eliminate premiums, deductibles, co-payments and coinsurance and instead use a single public fund for health care to which individuals contribute based on ability to pay (i.e, progressive taxes). Then care is accessed based only on medical need, not on ability to pay.

As long as Medicare remains a separate program exclusively for the elderly and for individuals with long term disabilities, we are going to see efforts made to try to limit federal spending on Medicare, passing more costs onto the beneficiaries. Increases in premium revenues is quite likely, not only for Part B and Part D of Medicare, but also for private Medigap, Medicare Advantage, and retiree health plans. Also, proposed taxes on Medigap premiums are on the agenda.

Both of today’s articles demonstrate that the burden is already too great, especially for the majority who are on tight budgets. Rather than shifting yet more responsibility for health care costs onto the backs of Medicare beneficiaries, we should be reducing it. If we were all in this together, as we would be with an improved Medicare for all, we would be demanding relief from excessive out-of-pocket costs while begrudgingly paying our taxes.

Changing the structure of health care delivery systems: to benefit the patient, the providers, or the insurers?

By Joshua Freeman, M.D.
Medicine and Social Justice blog, Jan. 12, 2014

In an important series of three articles beginning on the Sunday before the New Year, “Doctors Inc.”, Alan Bavley of the Kansas City Star looked at the increasing acquisition of physician practices by hospitals, and the impact this has on access to, quality of, and cost of health care for patients. The first article, “Medicine goes corporate as more physicians join hospital payrolls,” describes the “what,” that:

“Since 2000, the number of doctors on hospital payrolls nationwide has risen by one-third, according to the American Hospital Association. In the Kansas City area, fully 55 percent of physicians are now employed by hospitals, Blue Cross and Blue Shield of Kansas City estimates. That includes virtually all cardiologists and most cancer specialists.” 

These changes are not limited to the KC area; he cites both national data and that from disparate regions such as Spartanburg, SC, and Phoenix, AZ. Part of the reason, the “financial model”, which is described in this first article, is that such “integrated” practices generate internal referrals, keeping patients within the system, as well as generating lucrative procedures. Physicians get a piece of the action; they get guaranteed salaries paid in part by the hospital or health system which is getting downstream revenue for their referrals.

And it makes these hospitals and health systems a lot of money, because they can now charge a lot more money. Bavley quotes “Robert Zirkelbach, vice president of America’s Health Insurance Plans, the industry’s trade association. ‘When a hospital buys a practice, its rates will increase in the following year’s contract. Increases of 20, 30 or 40 percent are not uncommon. It’s not 3 or 4 percent, that is for sure.’” 

It is also not always good for patients, as Bavley illustrates with examples of people who were referred internally and had delayed diagnosis. (One story discusses a woman discouraged from going to the academic medical center at which I work – full disclosure – for a second opinion regarding her lung cancer; the “reasons” given were both that she “didn’t have time”, and because she would see “young doctors still in training”.) Sometimes it is fine to see doctors within the system, and certainly this can be, and is, encouraged, but discouraging people from seeking outside referrals can also be hazardous to their health.

The Affordable Care Act (ACA) encourages the creation of “Accountable Care Organizations” (ACOs), which would be responsible (at least hopefully, in the best of scenarios) for the health of a population. At a minimum, they would seek to decrease the degree to which the delivery of health care is a series of episodic events paid for individually, instead taking on a global responsibility including inpatient, outpatient, and long-term care. This would, in theory, change the usual patient experience from seeing one (or many) doctors or having one (or many) ER visits, each charged and paid separately, culminating in a hospitalization, and then discharge to one (or many) doctors, or a long-term care facility (paid separately), and failure of care resulting in readmission to the hospital (paid again). The idea is that all levels would be coordinated to provide the best care at the most appropriate (inpatient, outpatient, long-term, home based) level.  In some settings, particularly for fully-integrated plans (where the providers of care are also the insurers) such as Kaiser, this works relatively well.

However, as Bavley makes clear in his series, written as part of a yearlong Reporting Fellowship on Health Care Performance sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund, particularly in the second article, “’Facility fees’ add billions to medical bills”, there is often a great cost to those who are paying, the patient and their insurer (including Medicare and Medicaid). This is because Medicare (and, following their lead, private insurers) pays an additional fee (the “facility fee”) for services, and especially procedures, done in a hospital outpatient facility beyond what they would pay for it to be done in a doctor’s office. (This is also addressed in the series by Elisabeth Rosenthal, “The $2.7 Trillion Medical Bill” in the New York Times.) 

Why? The original intent (as is often the case) was good, intended to both save money and improve care, by having many procedures done in outpatient rather than inpatient settings, where the cost would be even higher. And (as also so often is the case) the providers realized that this system could be gamed as well. The physician fee for a visit or procedure done in an office is greater than that done in a hospital clinic, but is expected to include all the overhead. In a hospital-based clinic (which just has to be owned by the hospital or health system; it doesn’t have to be on the campus and can be in the same doctor’s office that used to be separate) there is a somewhat lower doctor’s fee, but there is also a facility fee that, together with the doctor’s fee, is much higher in total than the office-based reimbursement; indeed, the facility fee can be far higher than the physician fee. Thus, the hospital makes money, and can share some of that with the physician, allowing the physician to make a lot more money without the overhead and risk. Voilà! Physicians are incented to become employed by hospitals!

I am a doctor and work in a medical center, so I understand the impetus for this from the point of view of providers, both doctors and hospitals. Medicare is ratcheting down its reimbursement, and a particular form of support for hospitals caring for a disproportionate share of uninsured is being cut back, and operating margins for many hospitals are getting thin or negative. Doctors are making less money (arguably some of them were making far too much, but they still don’t like making less) and will thus endorse efforts to have hospitals support them and maintain their incomes. The problem is that the cost to consumers goes up, especially when co-pays and co-insurances that come out of patients’ pockets, even when they are insured, go ever upward. 

Medicare is, sadly, responsible for much of this situation, as illustrated by the following: seeking to reduce costs for unnecessary admissions, Medicare has empowered bounty hunters (called “RACs”) to go after Medicare “fraud” by reviewing admissions to hospitals for patients who could have been care for in the hospital on “observation” status, which will save Medicare money. Hospitals are thus very careful to only officially “admit” people who meet very strict criteria. However, because “observation” status is officially “outpatient”, while Medicare saves money the patient pays more out of pocket, because this is under Medicare Part B, not the Part A that covers hospitalization. Complicated, but what it comes down to is what is financially good for Medicare is financially bad for the patient. Is this what we want?

I hope not. Yes, some of the fault is Medicare, and the fault is also providers (hospitals and doctors) seeking to maximize profit (even if “not-for-profit”) by manipulating the rules of the system. The fault is that we have Rube Goldberg-type complex constructs put in place to encourage behavior by providers, and providers are figuring out ways to work the system to their benefit. The real problem is that we do not have a straightforward system to deliver the highest-quality, necessary, health care to all people but a mess of conflicting incentives where gain to one component (i.e., insurers) is a loss to another (i.e., providers) and that they then take actions that benefit them and the overall loser is the patient. Bavley quotes an email from a board member of a hospital system to the Chief Financial Officer that said “Let’s be realistic. Employing physicians is not achieving better cost, it’s achieving better profit.”

That is not what our national health policy should be doing. A health system that did not permit gaming but straightforwardly paid for health care,  and eliminated the profit motive, would solve these problems. The answer is to put everyone in Medicare, in a single-payer system, so some patients are not “more desirable” than others. And to have Medicare, which is now covering everyone, pay for the appropriate level of care for every patient, where doctors and hospitals have no incentive to label a person’s hospitalization as “admission” or “observation”, or an outpatient visit as “hospital based” or “office based” because there is a difference in the reimbursement.

It can be done. It is done in Canada. It is done in some fashion in every other developed country. If we decide that the health of our people is more important than the profit of the health care industry, we can do it also. 

Dr. Joshua Freeman is chairman of the department of family medicine at the University of Kansas School of Medicine and a member of Physicians for a National Health Program (www.pnhp.org).

http://medicinesocialjustice.blogspot.com/2014/01/in-important-series-of-3-articles.html

Medicare for all a poverty solution

By James Besante
Albuquerque Journal, Jan. 12, 2014

Fifty years ago on Jan. 11, President Lyndon B. Johnson declared a “War on Poverty” on behalf of the “many Americans [who lived] on the outskirts of hope.”

His vision embraced an unprecedented expansion of health insurance coverage, which Congress achieved by enacting Medicare and Medicaid the following year.

In the case of Medicare, millions of Americans age 65 and older were given access to health care overnight. The new law went far beyond insuring the uninsured elderly; it reduced poverty by lifting crushing medical debt from the shoulders of America’s seniors and their families.

In the years that followed, Medicare continued to dramatically reduce poverty among the elderly. The scope of benefits expanded, and the health of America’s seniors improved, regardless of race or income.

Congress eventually extended Medicare coverage to the severely disabled, and today the program covers approximately 51 million Americans.

As a third-year medical student, every day I take part in the care of New Mexicans who live on the “outskirts of hope”: An uninsured mother with cervical cancer. An asthmatic who cannot afford his medication.

Their stories and suffering are real. My patients are the victims of physical and financial hardships. They are among the Americans for whom Johnson waged his unfinished war.

On this anniversary, I look back at Johnson’s 50-year-war and propose a simple remedy to address the persistent problem of unequal health care access, a solution supported by the majority of American physicians: a single-payer national health care system, or better known as “Improved Medicare For All.”

But wait. Some critics claim Medicare is “broken,” that it’s “bleeding the American economy.”

It is true the American health care system is hemorrhaging money.

But Medicare, with overhead costs of 2 percent, operates far more efficiently than any private health insurance plan, with overhead costs of anywhere from 15 percent to 25 percent.

The private insurance middlemen are the ones raising the costs of the system, without adding value.

Despite this fact, “free-market” advocates push for further privatization by corporate insurers whose primary goal is to maximize profits for their stockholders by raising premiums, restricting services and denying claims.

But others say, “We can’t afford Improved Medicare For All.” Wrong. The U.S. spends twice as much per person when compared to other developed nations on a dysfunctional health care system built around restricting access to care, rather than providing it. The money is already in the system – it just takes a detour through the private sector, which manufactures complexity, administrative waste and profits.

What does our sky-high health spending – 18 percent of the gross domestic product – get us? The U.S. has the worst health indicators of any First World country. The leading cause of bankruptcy in America is medically incurred debt.

The sad reality is that our current system weighs heaviest on the poor and working class. In the U.S., the poor live sicker and die younger, and the sick die poorer. Illness is both a condition of the poor and a structural barrier, which recreates poverty in America.

Medicare is not the problem, but the solution. The cure for the American health care system and the secret weapon to win the War of Poverty is to expand Medicare to every American: Improved Medicare For All.

Obamacare is not the answer because it relies on an inefficient patchwork system of private health insurers who are the cause of our current troubles.

At the end of each day, I ask myself: “How would this day have been different if my patients had Improved Medicare For All?” Perhaps appropriate cancer screening would have saved the life of the mother with cervical cancer. Maybe asthma medication would have prevented the hospitalization of the asthmatic.

America can win the War on Poverty. We can fix our health care system. A streamlined, publicly financed program, like “Improved Medicare for All,” is the answer.

James Besante is a resident of Albuquerque.

http://www.abqjournal.com/335125/opinion/medicare-for-all-a-poverty-solution.html

Advocating for a Single Payer System

Passionate students spread their message to their peers

By Anna Zelivianskaia
Chicago Medicine, January 2014 

Imagine these all-too-likely scenarios: Lisa Palmson recently lost her mother to breast cancer. Due to her family history, the physician recommends tamoxifen as a chemoprevention therapy. However, Lisa is unable to afford the co-pay. Paul Johnson has felt a burning sensation around his stomach for several weeks and it has recently gotten worse. Visits to his primary care physician are mostly covered by his insurance but his PCP refers him to a gastroenterologist whose services are not covered until Paul reaches a large annual insurance deductible. As a result, Paul cannot afford a visit. A year later he is diagnosed with gastric carcinoma due to Helicobacter pylori infection, a preventable cancer when caught early.

These types of scenarios happen every day in physician offices in America. Our health care system allows for high numbers of uninsured and underinsured, which prevents us from achieving the degree of care we are capable of. Medical decisions are no longer between the patient and doctor. Instead, every therapy and test must be approved by insurance companies, which operate with the goal of making a profit. Fortunately, many passionate medical students in Chicago are stepping up to advocate for changes.

Driven by the desire to improve patient care, medical students are educating other students and the public about the merits of a publicly funded, privately delivered, single-payer health care system. Scott Goldberg, an MS2 at the University of Chicago, has advocated for a single-payer system for several years and is now training other students to do so. He has set up workshops on how to write a political op-ed, trained students in community organizing, and even began educating undergraduates on the merits of a single payer. “For me,” he says, “it just made complete sense. Why can’t the richest country in the history of the world provide equitable, comprehensive insurance to all of its citizens? Until we eliminate private health insurance companies, we will never be able to fully achieve the ideal doctor-patient relationship in the American health care system.”

Similarly, Margaret Russell, an MS2 at Northwestern University, educates students on how our health care system works as well as teaches them the skills to change it. She recently presented an informational session on the federal bill for a single-payer system, H.R. 676. For Margaret, the fight is close to home: “I have seen firsthand how our fragmented and unjust insurance system stands in the way of patients receiving adequate care when they need it. … It is morally and ethically wrong for a patient’s insurance status to dictate the quality of their care.”

This passion comes from a fundamental belief that patients are more than their presenting symptoms and vital signs. These students realize that each patient has a unique set of circumstances but is part of a homogenizing system obsessed with profit. However, it is noteworthy that the most fervent student advocates, such as Scott and Margaret, tend to enter medical school believing in the urgent need for health care reform. As a medical community, we must try harder to make advocates out of other students who did not enter with such beliefs or background knowledge. Student-to-student advocacy is inspiring but not enough.

Medical education has changed drastically over the last several years in very commendable ways. Curriculum changes at some schools include education on systematic flaws. However, classroom information often stops at the problems and not at potential solutions or opportunities for student advocacy. Medical schools should constantly improve training in this area since student empowerment is a key step toward patient empowerment. Every medical school should provide systematic education on the inner workings of the medical system and reform options. We need to fix the system together for the sake of our patients.

Anna Zelivianskaia will graduate in 2016 from the University of Illinois at Chicago College of Medicine. The opinions expressed in this column are strictly those of the author and do not necessarily reflect those of the Chicago Medical Society. All members are encouraged to submit opinion pieces.

http://www.cmsdocs.org/news-publications/chicago-medicine-magazine/2014-issues/January2014.pdf