PNHP

Bare Bones Health Plans Expected To Survive Health Law

Bare Bones Health Plans Expected To Survive Health Law

By Jay Hancock and Julie Appleby
Kaiser Health News, Aug. 25, 2013

Consumer Reports calls it “junk health insurance.” A California regulator described them as “skeleton policies.” To an expert from the American Cancer Society, they “are a perfect example of why health care reform is so crucial.”

They are bare-bones health plans, and critics say they could leave consumers who become seriously ill on the hook for tens of thousands of dollars in medical costs. The Affordable Care Act was supposed to do away with them.

“The good news is that these plans will be a thing of the past in 2014,” Steve Larsen, then a high-ranking Department of Health and Human Services official, told reporters two years ago.

The law did outlaw so-called “mini-med” plans, which cap annual benefits at, say, $2,000 even though the average hospital stay costs $14,000. But now a new type of bare-bones policy may take their place.

Consumer advocates, employers and insurers say that unless regulators move to block them at the last minute, plans with limited benefits may continue to be offered by some large businesses, especially those with low-paid workers such as restaurant chains and retailers.

Proposed and final rules issued this spring surprised many by failing to bar large employers from offering insurance policies that could exclude benefits such as hospitalization.

Offering bare-bones policies may result in some fines, but that expense could be less than the cost of offering traditional medical coverage.

For large employers, “the feds imposed no minimum standard on how skimpy that coverage can be other than to say, in essence, it’s got to be more robust than a dental plan or a vision plan,” said Ed Fensholt, a senior vice president at insurance broker Lockton Companies. “We had customers looking at offering some relatively inexpensive and skimpy plan designs to satisfy the individual mandate at modest cost.”

Employers Showing Interest

“There is a lot of interest” from retailers and others that have offered limited-benefit plans in the past, said Joan Smyth, a partner with benefits consultant Mercer. She’s gotten so many inquiries since the Wall Street Journal reported on the issue in late May that limited benefit plans are “my favorite topic,” she joked.

Such plans were typically offered because some insurance was seen as better than none — and the premium costs for both employers and workers were far lower than for traditional coverage.

This summer, the Obama administration gave businesses with 50 or more employees another year, until 2015, to comply with the requirement that they offer insurance or pay a fine.

“Some of the pressure was taken off because of the announcement” to delay the employer mandate, said Neil Trautwein, employee benefits policy counsel at the National Retail Federation, a trade group. “But I think you will continue to see employers in many industries … carefully calculate their strategy for compliance,” in part by considering skinny plans. “As always, the interest is to limit cost increases.”

Officials for McDonald’s, Ruby Tuesday, Darden Restaurants and other large employers that have offered mini-med coverage in the past declined to comment or did not respond to questions about their plans.

Small Businesses Barred

The bare-bones plans cannot be offered to small businesses with fewer than 50 workers, or to individuals buying coverage through new online marketplaces that open for enrollment Oct. 1. But benefit experts expect some larger firms that buy outside the marketplaces or that self-insure to consider them. 

The Obama administration says that workers offered such coverage may qualify to shop in the marketplaces and to buy subsidized plans.

“Individuals who are not already offered quality, affordable health care can enter into the marketplaces and choose a health insurance option that works for them,” said Sabrina Siddiqui, spokeswoman for the Treasury Department.  

About 2 million Americans are covered by limited benefit mini-med insurance policies, many of which were issued by Aetna and Cigna.

Asked whether Cigna will offer new versions next year, a company spokesman said, “We are currently evaluating the types of plan designs that will meet the needs of employers and employees.” Aetna spokesman Matt Wiggin said the insurer is “still assessing” customer needs.

Skimpy insurance under the Affordable Care Act won’t be quite the same as it is now. Under the new rules, capping the dollar value of annual benefits isn’t allowed, but excluding entire categories from coverage – such as hospital stays – is permitted, say benefit consultants. That’s another way of keeping costs down.

‘Mini-Meds Have Morphed’

The law says only that large-employer policies must cover preventive care such as blood pressure tests or vaccines with no co-pays for consumers. So the plan could cover dental, vision and preventive cancer screenings, but possibly not the treatment or hospital care a patient could need if diagnosed with an illness.

True, the health act requires policies to include coverage for 10 broad categories of “essential health benefits,” such as hospitalization and mental health services, but that provision applies only to plans sold to small businesses and individuals.  Larger firms and self-insured employers are exempt.

Benefit advisers say some retailers and restaurant chains are considering limited-benefit plans for 2014 even though the deadline was pushed back for offering coverage or facing fines.

“It seems like mini-meds have morphed,” said Lydia Mitts, a health policy analyst for Families USA, a consumer advocacy group. The new limited benefit policies “are not the same animal but are still substandard coverage.” Employers offering these sorts of plans do face some risks, experts said. If a large employer doesn’t offer “minimum essential coverage,” it’s potentially liable for fines of $2,000 per full-time worker after the first 30 workers. Under the abstruse wording of the health law, however, skinny plans appear to qualify as minimum essential coverage.

But if employers don’t offer “comprehensive” policies — defined as covering at least 60 percent of health expenses — they must pay $3,000 for each worker who receives subsidies to buy coverage. Opinions differ on whether skinny plans will be able to pass the comprehensive test; some regulations are still pending. But employers see that potential expense as far lower than the cost of offering all their workers more robust coverage, experts said.

Some businesses are also betting that few workers will go to the government-run marketplaces to seek subsidized coverage, opting instead for the skinny plan “which costs less than the penalty,” said Dania Palanker, senior counsel for the National Women’s Law Center in Washington, D.C.

Signing up for a company skinny plan would fulfill a consumer’s obligation to be covered under the health act and protect her from the law’s fines. 

Advocates are still pressing employers to offer more comprehensive policies.

“People need to be covered for hospitalizations,” said Mitts of Families USA. “It’s important for employers to do the right thing and they should not just look at the minimum requirements of the law.”

http://www.kaiserhealthnews.org/Stories/2013/August/26/bare-bones-health-insurance-health-law.aspx

Why Health Law’s ‘Essential’ Coverage Might Mean ‘Bare Bones’

It came as a surprise to some that the Affordable Care Act seems to allow large employers to offer health insurance that pays for preventive care and not much else. Check out our story on “skinny” plans quoting a consultant saying that for employers with 50 or more workers, “the feds imposed no minimum standard on how skimpy that coverage can be other than to
say, in essence, it’s got to be more robust than a dental plan or a vision plan.” The Wall Street Journal broke the story in May.

Retailers, restaurant chains and temporary staffing companies are said to be interested.

But how can a law praised for expanding coverage — one that includes an “employer mandate” to offer “minimum essential coverage” — allow companies to offer insurance that might not even cover hospitalization?

Take a walk through the ACA weeds to see why.

First of all, there is no outright ban on skinny plans — even after the employer mandate kicks in in 2015. Instead, large employers — those with 50 or more full-time employees — run the risk of fines only if the coverage doesn’t conform to ACA rules. The regulations published so far, however, seem to allow skinny plans with a penalty that many employers may choose to pay because it is less costly than offering fuller coverage.

There are two fines in the health law for large employers failing to offer adequate coverage. First, any company that does not offer “minimum essential coverage” is liable for a $2,000-per-worker penalty (minus the first 30 workers), triggered when at least one employee enrolls in subsidized coverage in the online marketplaces known as exchanges.

But what is minimum essential coverage? Not as robust as you might think. To start, don’t confuse it with “essential health benefits,” including maternity benefits and prescription drugs, that must be included in plans sold to individuals or small employers.

If health insurance is merely sponsored by an employer, it passes one test for minimum essential coverage.

Now how good does that employer insurance have to be? The regulations are obscure, defining minimum essential coverage largely in terms of what it is not. For example, “limited-scope dental or vision benefits” are not minimum essential coverage. Nor is “coverage only for a specified disease or illness.”

Neither the law, nor the regulations say much about what minimum essential coverage offered by a large employer is. As a result, many experts believe large employers can shield themselves from the $2,000 penalty by offering a plan that covers the health law’s required preventive care, but still leaves workers vulnerable to thousands in bills if they’re hospitalized. If employees sign up for such plans, which may cost as little as $50 a month, they would also be protected from health-law penalties levied on individuals without coverage.

The health law also fines employers that don’t offer “minimum value” in their health plans, says Alden Bianchi, a Boston-based benefits and compensation lawyer. Skinny coverage flunks that test, based on regulations that measure minimum value against “benchmark plans” in each state, Bianchi said. But the employer penalty is only $3,000 for each worker enrolling in subsidized exchange coverage. That’s likely to be much less than the fine for not offering minimum essential coverage, which is $2,000 for nearly every employee in the company, even if most don’t buy policies in the exchanges.

But what about other rules governing health benefits? What about the part of the health law that bans insurers from cutting off benefits at a certain dollar level? Not a problem for skinny plans. Unlike the “mini-med” plans in common use before the law was passed, they don’t impose a dollar cap; they merely exclude large categories of care, which also keeps down costs.

What about new rules limiting out-of-pocket expenses for consumers? For 2014, your plan can’t make you pay more in co-pays and deductibles than $6,350 for individuals and $12,700 for families. (That may temporarily be higher if your employer has separate administrators for drug benefits and doctors and hospitals.) Skinny plans pass the test again. Out-of-pocket caps are for covered care only, and skinny plans don’t cover much care.

What about restrictions on self-insured employers (the large majority of large companies are self-insured) offering a rich-benefit plan to managers and a limited-benefit plan to hourly workers? Skinny plans survive this one, too, says Ed Fensholt, a senior vice president at Lockton Cos., a large insurance broker. These non-discrimination rules contain exceptions for high-turnover workers, he said. And they require employers only to offer the management plan to hourly workers, not for the workers to enroll.

“That plan would be priced at a place where relatively few rank and file employees would want it,” Fensholt says. “And then they’d offer the skinny plan to the rank and file.”

When asked about the situation, the Obama administration said consumers lacking good coverage “can enter into the marketplaces and choose a health insurance option that works for them.”

Bianchi, who represents large employers, says the people who wrote the law intended to give companies a bare-bones option.

“The ability to offer such plans is a result of conscious policy decisions by Congress, as implemented by the regulators,” he wrote in an industry brief.

The Cato Institute’s Michael Cannon, on the other hand, suspects the administration “had no idea what they were doing,” as he wrote on the libertarian think tank’s blog.

http://www.kaiserhealthnews.org/Stories/2013/August/26/essential-benefits-bare-bones-health-insurance.aspx

A version of these articles also appeared at The Washington Post.

Obamacare architects reap windfall as lobbyists

ObamaCare's architects reap windfall as Washington lobbyists

By Megan R. Wilson
The Hill, August 25, 2013

ObamaCare has become big business for an elite network of Washington lobbyists and consultants who helped shape the law from the inside.

More than 30 former administration officials, lawmakers and congressional staffers who worked on the healthcare law have set up shop on K Street since 2010.

Veterans of the healthcare push are now lobbying for corporate giants such as Delta Air Lines, UPS, BP America and Coca-Cola, and for healthcare companies including GlaxoSmithKline, UnitedHealth Group and the Blue Cross Blue Shield Association.

Ultimately, the clients are after one thing: expert help in dealing with the most sweeping overhaul of the country’s healthcare system in decades. 

Experts say that those able to fetch the highest salaries have come from the Department of Health and Human Services (HHS) or committees with oversight power over healthcare.

“After passage of major legislation, those who have networks on Capitol Hill take exceedingly lucrative jobs with the same industries subject to the legislation,” said Craig Holman, a lobbyist for Public Citizen. “It raises questions about the [bill’s] integrity.”

http://thehill.com/business-a-lobbying/318577-architects-of-obamacare-reap-windfall-as-washington-lobbyists

Comment:

By Don McCanne, M.D.

We need lobbyists, that is lobbyists such as Craig Holman of Public Citizen. But what about administration officials, lawmakers and congressional staffers who helped to create a profoundly wasteful health care financing system that falls tragically short of reform goals, and then left government employment to accept windfalls as private lobbyists representing clients who must deal with Obamacare? As Holman says, it raises questions about the bill’s integrity

Lobbying integrity that makes the difference? “Public Citizen serves as the people’s voice in the nation’s capital.” Public Citizen is already on record as supporting a single payer system:

http://www.citizen.org/singlepayer

A profession full of human beings

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, Aug. 23, 2013

A long time ago when I was about to apply to medical school and struggling with college courses in organic chemistry and calculus and the like, a friend pointedly mocked my desire to become a physician. He dismissed the idea that the profession of medicine could be “a calling” to serve humanity.

My friend specifically suggested that the notion that a doctor could play a modern role analogous to the village physicians of the agrarian past – wise and indispensable servants of the community – amounted to a stupid fantasy. In his view, as a profession, medicine, already overwhelmed by vanity and greed, had long since ceased to be a noble calling – if it ever had been one, he added. To hear this kind of thing from a respected friend can fill a person with self-doubt.

A couple of years after that stinging assessment, and right at the start of my clinical training, all of my doubts were cleared. I was the student accompanying a family physician on a house call in the Schoharie Valley. My teacher had worked his way up, from manual laborer, to hospital orderly, to a wise and indispensable, and indeed beloved, physician for his rural community.

We sat at a kitchen table of a massive man in his senescence. Tethered to oxygen, short of breath with exertion, the man could not get his feet into his shoes because of edema, swelling. He braced himself on backs of chairs to cross the small kitchen to the sink and breathed through his mouth as he went. He suffered advanced lung disease as well as congestive heart failure.

My teacher spoke gently to his patient about salt intake, about watching his weight daily to guard against the danger of accumulating too much fluid. He was sympathetic about how difficult it was to use the scale and stern about how oxygen needed to be used always. The patient volunteered that he had given up pretzels.

The doctor pointed to a gallon-sized pickle jar that sat empty against the wall on the counter. “Did you eat many of those?” he asked.

“No,” the patient replied, “I don’t eat too many. But I do like to drink the pickle juice.”

I could see from the twinkle in his eyes and a twitch at the corner of his mouth that my teacher wanted to laugh out loud. But out of respect for his patient the doctor remained cordial and easy, gently explaining that heavy salt intake would lead to retaining fluid and breathing problems too. The patient listened intently and pointed out that he needed his energy to make it out of the house to visit his wife at the nursing home.

Afterward, for my benefit, my teacher lingered over the lesson of how smoking-related illness had ruined the couple’s “golden years.”

“For decades the inside of that house has been a blue haze of cigarette smoke,” he observed. “Cigarettes have just about killed them both,” he explained in a way that illuminated the human tragedy of tobacco without putting the blame upon any one person.

My teacher later took me with him to the nursing home to visit the man’s wife. I admired his dedication, his insight, his commitment to care for the whole family, the whole community. I could see that the patients and nurses did too.

Later on that year I was invited on a house call in Manhattan, in Inwood, about 30 blocks north of our medical school. An elderly matriarch, incapacitated by her illnesses and attended by a private-duty home health aide, greeted us from a wheelchair in her living room. My teacher, her doctor, carefully reviewed the patient’s medications and how the aide helped give them, making minor adjustments. But most of all she encouraged the patient to live and make plans, cataloging upcoming and recent family events, the Jewish holidays.

Like the upstate doctor, she knew every detail of the cultural and family life of her patient. She emphasized for me the hardship of the patient’s decline from the viewpoint of her family. This family counted upon this doctor in a profound way, to shepherd them through this painful chapter, with an emphasis upon living life to the fullest experience. I was especially privileged not only to witness this human interaction, but to be charged with studying and absorbing as much as I could.

As my education and training, and now my so-called career, have proceeded, I can testify that these role model physicians – outstanding human beings and great teachers – are not exceptional in the context of the profession of medicine. Yes, house calls may be rare, but they illustrate an impulse I find in so many of my colleagues. (And more of us do them than you might think.)

Vanity and greed do threaten to undermine the practice of medicine as the so-called medical industry can’t help but introduce assembly-line management techniques. But the profession of medicine remains full of human beings striving to fulfill a noble calling, full of good doctors who know our patients, their culture, our communities.

Medicine as a profession remains full of potential to promote for the health of each and all. We have what it takes. We must rebuild our system to allow our caring, care-giving profession to live up to its calling.

Dr. Andrew Coates practices internal medicine in upstate New York. He is president of Physicians for a National Health Program.

You can listen to Dr. Coates’ radio broadcast here: http://www.wamc.org/post/andrew-coates-profession-full-human-beings

The Last Bad Idea

By Gerald Friedman
Center for Popular Economics blog, Aug. 23, 2013

The Patient Protection and Affordable Care Act (ACA) was adopted in 2010, but many provisions are only being phased in over several years.

Important provisions that have already taken effect include the requirement that family policies allow parents to keep their children enrolled until they are 26. The high unemployment rate for young adults and the lack of health coverage even for many with jobs has made this provision a great boon to many.

But there is much more to come with major elements to be implemented in January 2014, including a huge expansion in Medicaid coverage to the working poor, and the requirement that individuals without other coverage buy health insurance through new state exchanges, often with substantial federal subsidies.

Rather than making a fundamental shift to a system where health care is publicly guaranteed as a basic human right, the ACA reforms and expands the existing health insurance system, leaving private for-profit insurance companies as gatekeepers to medical care.

Without changing the foundation of the health care infrastructure, the law offers private insurers an expansion in business as a carrot to get them to accept reforms that limit their use of adverse selection, the practice of screening to identify and discourage the expensive sick (“lemon dropping”) and to attract the low-cost well (“cherry picking”).

The law also provides a dramatic expansion of public insurance by mandating that everyone is eligible for Medicaid whose income is below 138 percent of the Federal Poverty Line (FPL); but the Supreme Court has limited this program by allowing states to opt out of the expansion. Several Republican-dominated state governments are choosing this option despite the Federal commitment to pay over 90 percent of the costs of expansion.

The Court preserved the requirement that everyone have insurance and the law’s subsidies for buying private insurance, subsidies that will go to households with incomes as much as 400 percent of the FPL beginning in January 2014 when the individual mandate goes into effect.

Despite the Court decision and some state-level refusals to expand Medicaid, it is projected that the ACA will reduce the population without insurance by almost half, from 55 million in 2013 to 29 million by 2017. Over 80 percent of the newly insured are expected to receive subsidies; with an average subsidy of over $5,000 paid largely through new taxes on the highest earners, the subsidized insurance will be one of the largest redistributive measures ever enacted.

Subsidized coverage expansion and restrictions on insurance company abuses are significant gains. But these gains come at a steep price because with the ACA the Obama Administration has entrenched the insurance and drug companies as arbiters of America’s health care system.

This is not only repugnant because of these companies’ abusive policies, but it endangers everything that the ACA seeks because it precludes effective action to contain rapidly rising health care costs. Private plans divert health care spending into channels that do nothing to actually deliver health care, such as advertising and profit.

The proliferation of plans has also raised billing costs for providers, hospitals, clinics, and private medical practices, costs that now come to nearly a third of the cost of health care.

Without effective controls on profits and administrative costs, health care costs will continue to soar, rising faster than household, company and government budgets.  The pressure to control health care costs will continue and, having removed profits and administrative waste from consideration, the ACA risks becoming a vehicle to control health care costs by squeezing providers and restricting access.

The ACA commits the United States to providing universal access to health care. This is a great achievement, one to be treasured and nurtured. Now the real fight begins: the fight to turn this commitment into a reality that the ACA itself cannot produce. In a few years, it will be clear that the ACA will have failed to provide universal coverage and failed to control costs.

As president, Barack Obama accepted the political wisdom that it would be impossible to enact a single-payer program that would abolish the private health insurance market, but prior to his presidency he had been a long-time supporter of single payer. And he was right: only a single payer program can provide universal coverage, and only a single payer program can control costs.

The ACA may be the last bad idea that Americans try; after it fails, we will finally do the right thing: single-payer health insurance.

Gerald Friedman is professor of economics at the University of Massachusetts, Amherst.

http://www.populareconomics.org/2013/08/the-last-bad-idea-the-patient-protection-and-affordable-care-act/

Let’s Talk about a Real Healthcare System (And, No, I Don't Mean 'Obamacare')

By Deborah Burger, R.N.
CommonDreams, Aug. 13, 2013

Let’s talk about healthcare. I don’t mean debating the Affordable Care Act. I mean healthcare, as in: If everyone needs healthcare, guarantee that everybody gets it.

I know, when it comes to healthcare, it’s easy to get into a debate for or against Obamacare. But we nurses see the world through a different lens: our patients.

Good healthcare is a fundamental resource that keeps America’s big engine running. Every day, as we do our best to care for our patients, nurses see people with chronic disease like asthma or diabetes who can’t afford insurance costs or medication. Maybe they’re absent from work, tired, and distracted from trying to manage their health on a shoestring. They run the risk of hospitalization. They struggle for a distant unreachable shore hoping something will help. They can’t get ahead because their health keeps dragging them down.

And yet the answer isn’t on the horizon, the answer is in our pockets, in our hands. It’s our taxes. We pay them and we ought to benefit from them.

There’s one thing that every American does. Every working American (OK, except the Wall Street crowd) pays taxes. But what do we pay taxes for? Increasingly, we wonder where our money is going, how our money is serving our communities, and how our tax money is helping us and our families.

There are dozens of arguments about what our tax dollars should be doing. But what if we spent a portion of our tax dollars on the one thing that would position every American, young and old, on the road to success? That one thing is good health. You need it to go to school, get to your job, excel at what you do, and dream big dreams that will make our country great again.

We must do better and nurses have a solution. The United States ranks first in costs but 37th in health outcomes in the world. We do even worse for infant morality and life expectancy.

So nurses are proposing another way. We’re saying that our taxes should pay for our healthcare. It works for seniors, it works for Congressmembers, and it will work for all of us.

This week, we launched an online campaign, asking voters to demand this from Congress.

We’re talking about something that already exists for some, right here in the United States of America, and what can easily exist for everyone. A tax-funded national healthcare system would negotiate prices for prescription drugs, medical devices and services, specialists and more, effectively lowering the cost of delivering care. Taxpayers don’t have to worry about paying for someone else’s care. You’ll be paying for your own care, your family’s care, without raising taxes at all.

Since the tax subsidies to buy insurance under the ACA mostly move money around to pay for private insurance for some that don’t have it, and which allows the insurers to take 20 cents off the dollar, it would be more efficient to uses taxes to pay for everybody’s healthcare directly, eliminating the middleman and the shell game.

We are reaching inside the box to think outside the box; we are charting a third way. It’s time to rediscover healthcare as care rather than insurance for the first time in a long time, and let the taxes we already pay deliver what every American needs.

Deborah Burger is a registered nurse and a co-president of National Nurses United.

http://www.commondreams.org/view/2013/08/13-3

Is Medigap for wealthy people who want more health care?

The Future of Medicare Supplemental Insurance

By Gail R. Wilensky, PhD
JAMA Internal Medicine, August 19, 2013

Even these highly regulated versions of Medigap have problems. They are expensive and, frequently, are not a very good buy. And Medigap insurance imposes significant costs on the Medicare program. Because Medigap plans pay for the deductibles, coinsurance, and copayments associated with Medicare, they frequently are paying for low-cost, routine care. Such payments are prepayments, rather than “real insurance,” but Medigap plans have to set premiums to cover the costs of this expected use, as well as the administrative costs associated with the insurance.

More than half of the people who buy Medigap insurance buy one of the 2 most expensive plans—“C” or “F.” These plans pay almost all of the beneficiaries’ costs, thus providing first-dollar coverage, which has been the cause for congressional concern.

Currently, the Obama administration and Congress are focused on the costs that Medigap insurance imposes on the Medicare program. Because the plans typically cover all or most cost sharing, seniors with supplemental insurance use more medical services than seniors without supplemental insurance.

The Patient Protection and Affordable Care Act (Pub L No. 111-148) requires the National Association of Insurance Commissioners to review the benefit designs of plans C and F and introduce cost sharing for physician services for plans purchased as of 2015.

President Obama’s fiscal year 2014 budget proposal introduces a $100 home health copayment and a 30% surcharge on Part B premiums for new Medicare beneficiaries who purchase Medigap policies with low cost-sharing requirements.

The National Commission on Fiscal Responsibility and Reform (known as the Fiscal Commission) recommended that Medigap plans not be allowed to cover the first $550 per year in cost sharing and cover no more than half of the cost sharing up to $5500 per year.

The health care cost containment initiative of the Bipartisan Policy Center recommended a prohibition on first dollar supplemental insurance and a more coherent and rational cost-sharing benefit structure for traditional Medicare, as part of broader changes to the US health care system.

Medicaid would protect low-income beneficiaries, but other high users of Medicare services would be more likely to incur higher costs.

Not surprisingly, many of these proposals raise concerns about inappropriate reductions in the use of health care and increased costs for some Medicare beneficiaries. According to a Kaiser Family Foundation study, the majority of elderly persons would have reduced costs, but 20% would have higher costs.

Neither the outdated structure of Medicare nor the costs imposed on the program by Medigap insurance are new issues. Medicare needs to be a viable program, while providing insurance coverage appropriate for the 21st century. Congress and the Obama administration know that reforms to supplemental insurance are needed, and the specific types of changes that make most sense.

http://archinte.jamanetwork.com/article.aspx?articleID=1729536

Health Care Spending and the Medicare Program

MedPAC, June 2013

Chart 5-6.  Out-of-pocket spending for premiums and health services per beneficiary, by insurance and health status, 2009

Beneficiaries who report they are in good, very good, or excellent health:

Medicare only

$1,079  Premium
$1,643  Out-of-pocket

Medicare plus Medigap

$3,264  Premium
$1,900  Out-of-pocket

Beneficiaries who report they are in fair or poor health:

Medicare only

$1,128  Premium
$3,446  Out-of-pocket

Medicare plus Medigap

$3,191  Premium
$3,382  Out-of-pocket

http://www.medpac.gov/documents/Jun13DataBookEntireReport.pdf

Comment:

By Don McCanne, M.D.

Former HCFA Administrator Gail Wilensky has long been a supporter of patient cost sharing as a means of discouraging use of health care services, hopefully reducing spending in government health programs such as Medicare. She has particularly targeted Medigap plans because they remove cost sensitivity by providing first-dollar coverage. So do we need to prohibit Medigap plans from providing full coverage of deductibles and other cost sharing, as she recommends?

MedPAC has provided us with the numbers that indicate how patients respond to Medigap incentives. When Medicare beneficiaries elect to purchase Medigap plans, their premiums triple, no matter the status of their health. But look at their out-of-pocket expenses, excluding the premiums. If they are healthy, the out-of-pocket expenses are not much different, whether or not they are enrolled in a Medigap plan. If they are not healthy, the out-of-pocket expenses are quite a bit higher, but still with not much difference between those with and those without a Medigap plan.

According to the MedPAC report, “Insurance that supplements Medicare does not shield beneficiaries from all out-of-pocket costs. Beneficiaries who report being in fair or poor health spend more out of pocket for health services than those reporting good, very good, or excellent health regardless of the type of coverage they have to supplement Medicare.”

The report also speculates that “this result likely reflects the fact that beneficiaries who have Medigap have higher incomes and are likely to have stronger preferences for health care.” Rich people want more health care? It is much more likely that these numbers represent two other factors: 1) the actual dollar benefit of Medigap plans is truly paltry (except for a cap on the costs of catastrophic events), and 2) Medicare benefits are quite spartan, covering on average only about half of seniors’ health care costs.

Considering their high premiums, administrative excesses, and relatively paltry benefits, Medigap plans don’t need revision; they need to be eliminated, with the benefits being rolled into the traditional Medicare program.

Perhaps the most telling comment in Wilensky’s article is her statement that Medicare plus Medigap payments are “prepayments, rather than ‘real insurance.'” The consumer-driven advocates have created the meme that “real insurance” is catastrophic insurance only; it should not pay for routine medical care. That arbitrary definition is nonsense. Insurance is pooling risk, and you can include all health care costs in that pool, including routine and preventive care. Perhaps a better term is “prepaid health care.”

Regardless, when routine care exposes too many individuals to financial hardship, the system needs to be changed, and certainly not by increasing that exposure, as Wilensky recommends. Her diversionary strategy is to prevent us from considering a program that really would work for all of us – a government-run (OMG!) single payer, improved Medicare for all.

Why is she and her ilk so opposed? Is adhering to their ideology really more important to them than preventing physical suffering and financial hardship for the rest of us? I’ve tried to understand them, but I’ll never get it.

More definitive report confirming that most physicians accept Medicare

Access to Physicians’ Services for Medicare Beneficiaries

By: Adele Shartzer, Rachael Zuckerman, Audrey McDowell, and Richard Kronick
U.S. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation, August 2013

Key Findings:

–  According to federal survey data, the percentage of all office-based physicians who report accepting new Medicare patients has not changed significantly between 2005 and 2012, with 87.9% of physicians accepting new Medicare patients in 2005 and 90.7% in 2012.

–  The percentage of physicians who report accepting new Medicare patients is similar to, and in recent years slightly higher than, the percentage accepting new privately insured patients.

–  Medicare beneficiary access to care is high and has remained stable over the past five years.

According to Centers for Medicare and Medicaid Services (CMS) data, there were about 650,000 physicians who participated in the Medicare program in 2011 and nearly 1 million participating providers in total (including non-physician providers such as nurse practitioners). It is clear from the data the percentage of all physicians who accept new Medicare patients has been stable from 2005 to 2012. To the extent that there may have been a very small increase in the number of providers ‘opting out’, that increase has been mitigated by an increase in the share of other physicians who accept new Medicare patients. Further, the total number of providers participating in and billing Medicare has steadily increased since 2007.

These findings allay concern that the number of physicians ‘opting out’ of Medicare has increased in recent years.[4] (Footnote 4: Beck, M. “More Doctors Steer Clear of Medicare”, Wall Street Journal 7/29/13 p.A1, vCCLXII #24. This article reported that the number of physicians opting out of Medicare increased from 3,700 in 2009 to 9,539 in 2012.)

A 2005 study examining characteristics of providers opting out of Medicare found that overall less than one percent of providers eligible to opt out of Medicare did so, and the two specialties with the highest opt out percentages were psychiatrists (with 1.11% opting out) and plastic and reconstructive surgeons (with 1.56% opting out). In contrast, about a third of one percent of primary care physicians (0.35%) opted out of Medicare.

In its March 2013 Report to Congress, based on this and other federal surveys, MedPAC noted that Medicare beneficiaries report good access to care, and access to physicians’ services has remained stable over the past five years. Similarly, the large majority of beneficiaries had no problems getting an appointment with a new physician, and again the results are comparable to those for people with private insurance. Additionally, Medicare beneficiaries were less likely than the privately insured to report forgoing needed medical care (8% vs. 11%) in 2012.

Conclusion
 
Approximately 90% of all office-based physicians report accepting new Medicare patients. The percentage of physicians who report accepting new Medicare patients is similar to the percentage of physicians who report accepting new privately insured patients. In addition, the share accepting new Medicare patients has been relatively stable over the 2005-2012 period and shows a slight increase in 2011-2012 based on initial NAMCS data.  Beneficiary reports of access to care, including the ability to find a physician and see a doctor in a timely manner, are also favorable. Again, these results are comparable to reports by patients with private insurance and have been stable over time. Overall, Medicare beneficiary access to care has been consistently high over the last decade and continues to be high today.

http://aspe.hhs.gov/health/reports/2013/PhysicianMedicare/ib_PhysicianMedicare.cfm

Comment:

By Don McCanne, M.D.

This highly credible report lays to rest the nonsense perpetrated by media reports such as the recent Wall Street Journal article, “More Doctors Steer Clear of Medicare.” Although some physicians have stopped accepting new Medicare patients because of overload, over 90 percent still do, more than those who accept new privately insured patients. A few isolated anecdotes do not alter the truth.

Opponents of an improved Medicare for all have suggested that physicians would bale out in droves if that were the only insurance program in the U.S. But where would they go?

Everyone automatically would be enrolled in the Medicare program. Why would patients want to buy a private plan duplicating Medicare benefits when they are already paying obligatory taxes for the Medicare program? There would be no market for such plans, not to mention that consumers would be protected by making them illegal.

It would not be long before the physicians who opted out for a cash-only practice would discover that there would not be enough cash to support them. In fact, today 20 percent of concierge practices fail and that number has been increasing.

Under a Medicare for all program there simply would not be enough patients who would want to pay more than they would already be paying in taxes to support more than a minute contingency of cash-only concierge practices. Virtually all physicians would accept Medicare, without giving it a second thought, though the Wall Street Journal might then have to turn to the contrived scandal of the physician glut in Medicare.

Price-posting: Oh look! Another healthcare cost 'solution' gimmick

By Victoria Powell, MS3
Short White Coat, Inc., blog, Aug. 2, 2013

The Surgery Center of Oklahoma has been in the spotlight recently because of its decision to post all of its prices for its procedures online. This has been heralded as increasing transparency in healthcare costs and implicitly demonizes other hospitals in the area that haven’t followed suit, like traditional academic centers.

Why haven’t hospitals done this a long time ago, so the uninsured can bargain shop for their knee replacement instead of being stuck with a huge bill they’ll have to go into bankruptcy to afford? It’s an attractive idea, especially when presented as oversimplified as it has been to the public.

In isolation, price-posting is just another market-based artifice, more zeitgeist of our accelerating entrenchment in our broken, healthcare-as-commodity model than any real solution. Nothing illustrates it better than this quote in the NYT opinion piece from the co-founder of the Surgery Center himself, “Patients are holding plane tickets to Oklahoma City and printing out our prices, and leveraging better deals in their local markets.”

HOLD UP DOC. There are a few BIG assumptions here:

1) The medical procedure you need is known to you in advance – that is, it isn’t an emergency.

2) You have the ability to pay SOMETHING, but either don’t have insurance or lack specific coverage for the procedure, etc.

3) You are physically and mentally able to bargain shop for the healthcare you need. There are many people who need healthcare services who aren’t able to do this – people with dementia requiring long-term care, a person in a coma from a car accident, a person with a debilitating psychiatric problem – it’s not hard to bring examples to mind.

We find that what this really represents is a very specific marketing tactic to a targeted audience – mostly healthy people who need an elective surgery to improve their quality of life. Clearly a very important demographic, but it by no means representative of everyone seeking healthcare.

This approach might works for certain places, like outpatient surgery centers, because they don’t have to deal with people who can’t pay. They can throw their hands up and say, “Don’t blame us! This is a fair deal. Our prices are listed with no small print – pay or don’t receive services.” These are not hospitals – they are centers that offer specific, non-comprehensive services.

Meanwhile, other hospitals in the area, like Oklahoma University Medical Center, take care of people who can’t pay.

The NYT opinion piece basically sums the problem of healthcare costs as a lack of knowledge on the part of the consumer. That IS a problem, but the real problem is summed up simply in one word: profit.

When there is a market-based healthcare system like there is now, we get comical (but tragic!) comparisons like the NYT piece where finding cheap airline tickets through Kayak is used as analogy to “shopping” for health care.

Anyone without a stake in the current system, any American that needs life-saving services, anyone with the presence of mind to take a step back and examine things in context will see this is just. another. tired. gimmick.

The beginning of a real solution to the healthcare cost problem requires the following steps, in order:

1. Recognize every single person’s fundamental vulnerability to disease and death.

THEN

2. Affirm healthcare as a human right, NOT a commodity that is only available to those that can afford it.

THEN

3. Change the system into an “Ultimate Public Utility” model – because it’s something that we ALL benefit from, and are (mostly) unable to predict when we will require.

THEN

4. Realize that a publicly funded, Single Payer model – improved Medicare for everyone – is the NECESSARY BUT NOT SUFFICIENT next step.

I’ve noticed some Single Payer advocates start to falter when they present Single Payer as the ipso facto solution for every healthcare-related problem. It will not be like that. Very little will change for the average person if we just decide tomorrow to extend Medicare to cover everyone. A Single Payer system’s REAL power is providing the ONLY framework that will allow us to collate our bloated, fragmented system into one that can be examined and systematically changed in response to population needs. More fundamentally, it is the only one in which population needs can be accurately assessed in the absence of profiteering. It will be a quicker, more centralized, more responsive system because it is structured to be resistant to conflicts of interest. The goal of a Single Payer system is to provide necessary healthcare to everyone, NOT quibble about piecemeal, temporary gimmicks like price-posting.

Victoria Powell, a 3rd-year med student at Virginia Commonwealth University in Richmond, Va. Her blog, Short White Coat, Inc., is a collection of  thoughts, experiences and opinions on the complex relationship between medical industry and medical practice. You can follow her commentaries here.

http://shortwhitecoatinc.wordpress.com/2013/08/02/price-posting-oh-look-another-healthcare-cost-solution-gimmick/

Physicians group pushes for single-payer health care

By Ryan Gustafson
KEYC Channel 12 News (Mankato, Minn.), Aug. 21, 2013

Health care reform will take a big step forward on October 1st, when the insurance exchanges first open up.

Supporters of the law are busy making sure everyone is aware, and advocating for further reform in the future.

Up on the Loyola Hill, Our Lady of Good Counsel hosts a speaker from The Campaign for The Minnesota Health Plan, Dr. Nelson Adamson.

Dr. Adamson with Physicians for a National Health Program says, “The Affordable Care Act is a step forward, but it’s to the complete answer.”

Along with taking questions tonight on the implementation of the Affordable Care Act, health care reform law, or Obamacare, depending on your preference, Dr. Adamson’s main goal was to advocate for a single-payer system, where all medical bills are picked up by the government.

And he feels that personal stories will be the best way to get the point across.

Dr. Adamson says, “Cancer is a difficult enough diagnosis to deal with, but when you have the issue of how is this going to get paid for, whether I’ll be bankrupt seeking care, that is really more than you should have to handle when they’re dealing with a difficult diagnosis.

“From my point of view, I won’t dwell on the economics and policy, but the personal side. What I see as a practicing physician — how this affects my patients.”

Enrollment in the health care exchanges opens up on October 1. Actual health coverage will begin on January 1.

http://www.keyc.com/story/23224603/group-pushes-for-single-payer-health-care

Medicare for all is GOP's best bet

By Jack Bernard
The Springfield (Mo.) News-Leader, Aug. 21, 2013

While hospitals in Missouri are having their reimbursement cut under the Affordable Care Act (Obamacare), “red’’ leaning states are still trying to figure out whether or not to fully implement the law.

As pointed out in “What’s next? Information about the Affordable Care Act is in short supply in Missouri” in the News-Leader Aug. 11, Missouri has been among the most vehement in its opposition to implementation, going so far as legally prohibiting state employees from assisting.

Hospitals that treat the poor in disproportionate numbers are having their Medicare reimbursements cut under the ACA. Before the Supreme Court made Medicaid expansion voluntary, the law assumed that under the ACA these hospitals would see a decrease in medically indigent patients who would instead be covered by Medicaid.

In the short term, we Republicans need to wake up and support implementation of Obamacare in so far as it expands coverage of insurance to our low-income citizens at little cost to the state. The first three years of the expansion would be paid for 100 percent by the feds. After that, there would be a gradual tapering down to 90 percent federal support.

Expanding Medicaid also makes economic sense. Adding coverage for a more people means more economic activity in the health sector. This equates to thousands of jobs being created, both directly and indirectly. With unemployment still high, there is a need for more jobs in Missouri.

Besides, if Missouri does not take the federal money, it will be used in the “blue” states in the Northeast and the West Coast. So, take the money and push for more effective reform.

Which leads us to “where should the GOP go from here long term regarding national health financing reform?” The answer, to paraphrase “Star Trek,” is in a bold new direction where no Republican has gone before.

And, what would be bolder than having my party propose Medicare for all?

Medicare for all would find wide acceptance with the all important independent swing voters who make up an increasing portion of the electorate and decide national elections. It would also be a hard position for elderly tea party activists to attack. In 2009, they carried nonsensical signs saying “keep the government out of my Medicare.” Tea party or not, seniors like me love the program.

A group of progressive doctors known as Physicians for a National Health Program have a website, www.pnhp.org, devoted to explaining how universal Medicare would operate and how it could be funded.

On this site, you can also find references to numerous studies showing conclusively that our current system is clearly not cost-effective. The United States is currently spending more tax money per capita on health care than any other developed nation. We are just not getting as much for our excessive public expenditures.

It is time for us to face the facts. We do not have the best health care system in the world. Our expenses are out of control and our outcomes are much worse than nations with a single payer system, like Canada.

If we really want to change America for the better while turning around electoral losses in Congress and the presidency, we Republicans should propose something that can actually get the votes needed for passage. That something is Medicare for all.

Jack Bernard is a retired senior level health care executive who worked with Missouri hospitals and health systems on planning and cost-containment issues. He is a former chairman of the Republican Party and the County Commission in Jasper County, Georgia, an Atlanta suburb.

http://www.news-leader.com/article/20130822/OPINIONS02/308220044/Medicare?nclick_check=1

Modest premium increases hide important part of story

2013 Employer Health Benefits Survey

By Kaiser Family Foundation
August 20, 2013

Employer-sponsored insurance covers about 149 million nonelderly people. To provide current information about employer-sponsored health benefits, the Kaiser Family Foundation (Kaiser) and the Health Research & Educational Trust (HRET) conduct an annual survey of nonfederal private and public employers with three or more workers.

HEALTH INSURANCE PREMIUMS AND WORKER CONTRIBUTIONS

In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage. The single premium is 5% higher and the family premium is 4% higher than the 2012 average premiums. During the same period workers’ wages increased 1.8% and inflation increased 1.1%.

There is significant variation around the average single and family premiums, resulting from differences in benefits, cost sharing, covered populations, and geographical location. Twenty-one percent of covered workers are in plans with an annual total premium for family coverage of at least $19,622 (120% of the average family premium), while 21% of covered workers are in plans where the family premium is less than $13,081 (80% of the average family premium).

As with total premiums, the share of the premium contributed by workers varies considerably among firms. For family coverage, 42% of covered workers are in plans that require them to make a contribution of less than or equal to a quarter of the total premium and 14% are in plans that require more than half of the premium, while only 5% are in plans that require no contribution at all for family coverage.

EMPLOYEE COST SHARING

Seventy-eight percent of covered workers have a general annual deductible for single coverage that must be met before most services are reimbursed by the plan.

Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,135.

Almost three-in-four covered workers pay a copayment (a fixed dollar amount) for office visits with a primary care physician (74%) or a specialist physician (72%), in addition to any general annual deductible their plan may have.

Most workers also face additional cost sharing for a hospital admission or an outpatient surgery episode. The average coinsurance rate for hospital admissions is 18%, the average copayment is $278 per hospital admission, the average per diem charge is $264, and the average separate annual hospital deductible is $436.

Conclusion (excerpt)

The emergence of new exchanges, or marketplaces, also may portend important changes for employer-sponsored health insurance. Through an exchange, an employer can provide employees with a larger number and type of health plan options. Exchanges also facilitate the use of defined contributions or other strategies that encourage employees to choose lower cost plans or pay the difference in costs themselves. New SHOP exchanges will offer coverage options to small employers beginning in 2014, although employee choice will be limited in the federal SHOP exchanges until 2015. Large employers have the option of offering coverage through one of several exchanges being sponsored by benefit consulting organizations. While these approaches are new and differ across different exchanges, the common theme is to devolve some benefit choices, and some of the financial responsibility for those choices, to employees. Whether this new way of purchasing coverage works for employers and their employees, and how it affects benefits and plan costs, will be among the more important stories for the employer health insurance market over the next few years.

http://kff.org/private-insurance/report/2013-employer-health-benefits/

Comment:

By Don McCanne, M.D.

Many of the media reports about this annual Kaiser survey of employer-sponsored plans are expressing relief that the increases in premiums are relatively modest – only about 4 or 5 percent. But these numbers are not so reassuring when you consider that they are over twice the rate of wage increases and four time the rate of inflation. Workers continue to fall behind.

Also of concern is the fact that plans requiring high deductibles have increased and the amounts of those deductibles also have continued to increase. Thus the percentage increase in the premiums can be quite deceptive if you ignore the increase in out-of-pocket expenses that workers and their families are experiencing.

Also many employers are now considering private insurance exchanges which will allow them to convert their premium contributions into defined contributions, requiring employees to pick up the additional costs for plans that have more than minimal benefits.

Also there is considerable variation in the premiums, benefits, cost sharing, and covered populations of employer-sponsored health coverage. As if the average expenses that the employees must cover weren’t bad enough, many of them will find that the cost variations will be intolerably burdensome, even if some are better off.

These trends have been going on so long that they’ve become quite boring, but the cumulative impact on wage earners can be quite distressing. Giving a new definition to “catastrophic insurance,” the costs shifted to the workers can be catastrophic. Instead of catastrophic plans leaving people precariously exposed, what we really need is prepaid coverage that removes financial barriers to health care (i.e., single payer).

Health care costs can be controlled

By Richard A. Damon, M.D.
Bozeman Daily Chronicle, Letters, Aug. 5, 2013

Health economist and Professor Gerald Friedman, University of Massachusetts, celebrated Medicare’s 48th birthday by releasing a new study on health care. Analysis shows that a non-profit single-payer system based on an Expanded and Improved Medicare for All Act, H.R. 676, introduced by Rep. Conyers, D-Mich, and co-sponsored by 45 other lawmakers, would “save an estimated $592 billion in 2014, which would be more than enough to cover all 44 million people left uninsured by the ACA (Obamacare), and upgrade benefits for everyone else.” Friedman says the savings would come from slashing the administrative waste associated with today’s private health insurance industry ($476 billion), and using government bargaining muscle to negotiate pharmaceutical drug prices down to European levels ($116 billion).

“These savings would be more than enough to fund $343 billion in improvements to our health system, achieving truly universal coverage, improved benefits, and the elimination of premiums, co-payments and deductibles, which are major barriers to people seeking care.”

Friedman says the savings would also fund $51 billion in transition costs while retraining displaced workers from the insurance industry and phasing out investor-owned, for-profit delivery systems.

Over 10 years, the savings from reduced health inflation from cost-control methods such as negotiated fees, hospital global budgeting, and capital planning, would amount to $1.8 trillion. By expanding Medicare to everyone, we’d save billions of dollars annually. Friedman said the plan would be funded by current federal revenues for health care, a small increase in payroll taxes instead of insurance premiums, and new modest tax increases on high income earners and a small tax on stock and bond transactions. 95 percent of households would save money.

These findings are consistent with other economists, the CBO, and the General Accountability Office.

Where is the political will to get real health care for Americans?

Dr. Richard A. Damon lives in Bozeman.

http://www.bozemandailychronicle.com/opinions/letters_to_editor/article_f4a80086-fdef-11e2-867f-0019bb2963f4.html?mode=story