PNHP

To celebrate Medicare’s 48th birthday, support Medicare for All

To celebrate Medicare’s 48th birthday, support Medicare for All

By Pat Berger, M.D.
Wicked Local News (Brookline, Mass.), Aug. 1, 2013

July 30, 2013, was the 48th anniversary of the signing of the Medicare act of 1965 into law. This very special birthday calls for acknowledging the vital role Medicare has played in the lives of our seniors over the last 48 years.

Before Medicare was enacted, the elderly faced poverty, the fear of being stricken by costly illness, and dependency on family or charity despite holding jobs for many years. We all know from our own families that Medicare coverage is a resource we count on for our grandparents, parents, and ourselves as we near the magic age of 65. What a lifesaver Medicare has been!

But why can’t we have a system that provides everyone with guaranteed medical care from birth to death?  All the other developed countries cover everybody, pay half as much for their health care as we do, and provide better outcomes. America is the only developed country allowing the health care system to be run by private corporations that have transformed medical care into a commodity to be bought and sold.

We are faced with premiums, co-pays, deductibles, co-insurance, means testing, and insurance caps that make health insurance unaffordable for almost 50 million Americans. It is shocking that in America, loss of a job because of illness can lead to loss of medical coverage, bankruptcy and even homelessness.

We are now beginning the implementation of the federal Affordable Care Act (ACA, or Obamacare). There are provisions in the law that will give patients some important protections, and will cover about 20 million more people. But Obamacare does not address the problem of the power of corporate interests and their focus on making money from health care. The ACA actually promotes business for the health insurance industry by mandating that everyone buy insurance or pay a stiff fine. Obamacare does not cover everyone, and most importantly, it does not have the ability to control the soaring cost of health care.

Efforts to slow the cost curve may be mildly successful in the short term using expensive and untried system tweaks, such as accountable care organizations, electronic medical records, and pay-for-performance. But these experiments create more bureaucratic and administrative regulations. The best part of the ACA is that it allows the states to set up their own health care systems in 2017, as long as they cover more people more effectively. Plans are being made now to establish a single-payer system for Massachusetts in 2017.

By achieving a true Medicare for All, or single-payer system in 2017, it would put patients first, cover everyone, be affordable and sustainable, be simple to understand, and allow choice of doctor with no insurance middleman interfering in the decisions between doctors and patients.  Medicare for All would have a single governmental agency that pays all the medical bills and is publicly funded through an equitable tax system. It would save money by eliminating the enormous administrative bureaucracy generated by the multiple health insurance companies. It would control costs by consulting with patient advocates, doctors’ groups, hospitals and public health programs in order to provide the best patient care in the most cost effective manner.

America now spends trillions on health care each year, and wastes at least a third of it on administration, profits from corporate entities, a fragmented system, and ineffective or unnecessary clinical care. Having one system that is accountable to the people, that is focused on quality patient care, and is based on medical need and not ability to pay, changes the whole vision of health care.

Our health is not a commodity, it is a human right. Let’s remember Medicare’s birthday by working for Medicare for All in 2017!

Dr. Pat Berger is a retired primary care physician and co-chair of Mass-Care, the organization leading the campaign for single payer health care reform in Massachusetts. She lives on Heath Street.

http://www.wickedlocal.com/brookline/news/x273443610/Column-To-celebrate-Medicare-s-48th-birthday-support-Medicare-for-All

The Long and Unfinished Struggle: Single Payer Health Care in Vermont

By Ethan Parke
Solutions, May-June 2013

In 1998, Dr. Deb Richter began, almost single handedly, to revive the dream of universal health care in the United States — open to all and paid for by the government. A primary care physician from Buffalo, New York, Richter had become outraged by the barriers to accessing quality health care in the city’s low-income communities.

“I had people dying from preventable conditions like diabetes, high blood pressure, undiagnosed cancer with obvious signs,” said Richter. “And they were young, in their 20s, 30s, people in their 50s, dying.”

The existing system of privatized health care was expensive, opaque, and unfair, and yet reforming health care — as President Obama has discovered — means taking on a multibillion-dollar insurance industry that vociferously lobbies to maintain its profits.

Despairing of ever advancing universal care in the state of New York, Dr. Richter moved to Vermont where she thought that politics were on a scale where she could have an impact. Practicing medicine three days a week, Dr. Richter used the rest of her time to travel the state speaking about a so-called single payer system that would dispose of the multitude of private insurance companies and offer patients a simple point-of-access health care. Recognizing that businesses and doctors were key constituencies, she spoke to every Rotary Club and every business association that would have her, as well as to any doctor who would listen. She also started a new organization devoted solely to educating the public about the single payer system. She helped organize a rally that drew 1,000 people to the state capital. Eventually, Dr. Richter found her way inside the statehouse, where she formed alliances with legislators from all three parties — Democrat, Republican, and Progressive.

In 2011, with Dr. Richter standing by the governor’s side as he signed the bill, Vermont became the first state to enact a framework and a timetable for a state-level single payer health system. Implementation of the law now waits for the clearance of a number of crucial hurdles, among them a federal waiver of requirements in the Patient Protection and Affordable Care Act — Obamacare — and the passage of a financing plan that would raise enough new tax revenue to replace what is currently spent on private health insurance premiums.

Obamacare has been criticized by both the left and right for its failure to simplify the system or curb costs. There is a certain irony in the fact that President Obama’s reforms — which left the private insurance industry untouched and failed to introduce a “public option” that would force private insurers to lower their prices — might derail the Vermont initiative, which is designed to do both. Vermont’s single payer plan would eliminate the private health care exchanges in which the uninsured will be mandated to buy insurance or pay a fine under Obamacare. Instead, Vermont would provide publicly funded health care for all residents. Federal law dictates that in order to do this, Vermont must obtain a waiver from the U.S. Secretary of Health and Human Services sanctioning the state initiative, thus enabling Vermont to continue receiving the federal dollars that would have subsidized the exchange. That remains a hurdle, but the state legislators shaping the bill are confident they will get the waiver.

Financing the single payer system is the other challenge. Vermont’s lawmakers have until 2017 — when the reforms come in effect — to raise $1.6 billion in new taxes to replace private insurance premiums and to cover the health care costs of those who are now uninsured. That presents a formidable challenge for a cash-strapped rural economy. Vermont already has some of the highest taxes in the country, although it has weathered the financial crisis more successfully than its southern neighbors by avoiding a housing bubble. New taxes might mean a 1 percent assessment on individuals’ gross incomes and a 6 percent to 8.5 percent payroll tax. Local polling suggests that Vermonters are happy to pay more, provided additional revenue is ringfenced for health care.

The challenges are steep, but Vermont stands on the verge of a historic change — one that would make it the first U.S. state to have a universal health care system that is comparable with other developed countries. Could this be a tipping point in the battle against America epic health care problems? Could it also be the story of how an impassioned few succeeded in transforming their community?

Critical Condition

The push for single payer health care in Vermont began as far back as the late 1980s, when a small and eclectic group of Vermonters — a dairy farmer, a physician, an advocate for better wages, a political organizer, a college professor, and a mental health counselor — set out to change their state’s health care system. Their premise was that piecemeal reforms — such as subsidies for the uninsured, non-binding hospital budgets, and private insurance tweaks — would never solve the problems of escalating health care costs and inequality of access. Single payer or Medicare for all, in which the government funds health care but does not run the delivery of it, seemed the best way to reorganize the system, providing universal access, quality, and cost controls.

Chris Wood, one of the original activists, said he was drawn to the concept of single payer because it was based on the premise that health care is a public good, comparable to public schools and fire departments. “It didn’t make much sense to me,” said Wood, “that something as important as health care should be left to the marketplace, where your wealth or your income might determine the kind of care you [are] able to get.”

Wood and the other activists realized that neither the “crisis” nor its perceived solution were new. Norway has had a single payer health care system since 1912; Japan has had one since 1938. The United Kingdom began its single payer in 1948; Canada implemented one in 1966; and Taiwan did so in 1995. While all these countries pay for health care from a single government fund, the delivery system varies from country to country. In the U.K., the government not only finances health care, it also provides it through a national health service. On the other hand, Canada’s single payer financing is funneled to private sector hospitals and physicians.

The total number of single payer countries around the world is hard to estimate because the term is not uniformly defined. Using the purest definition, only about 20 countries are truly single payer, the vast majority in the developed world. However, there are scores of countries, such as France and the Netherlands, which use a single payer to finance a basic benefit package for all citizens while allowing private or employment-based financing to cover additional services. Other countries, such as Switzerland and Germany, are generally thought to have multi-payer systems because they rely heavily on employment-based “sickness funds.” However, the sickness funds are almost instrumentalities of the government because they are so tightly regulated and therefore bear little resemblance to for-profit U.S. insurance companies. Thus, among developed countries, only the U.S. fails to use the power of government to ensure health care access for all of its people. At the same time, the U.S. is the biggest spender on health care.

Although the U.S. made an important step toward universal care in 1965 with the enactment of Medicare and Medicaid, Obamacare is the only significant reform to have happened since, and many expect that Obamacare will fall short of providing universal access and controlling costs. Medicare, on the other hand, has been relatively successful in holding down costs. It pays providers according to a fixed fee schedule, and incurs administrati
ve expenses of only 3.1 percent, compared to an average of 14.1 percent for private insurance, according to a 2005 study by the American Medical Association. But Medicare leaves out everyone under age 65 and Medicaid only covers the very poor. By the 1970s, many people who were not eligible for either federal program were finding that health care expenses, even with insurance, put them at serious financial risk.

In 1972, Senator Edward Kennedy authored the book In Critical Condition: The Crisis in America’s Health Care. The book was based on the testimony of people Kennedy had invited to speak at Senate subcommittee hearings. Witnesses told of becoming pauperized from medical debt. They spoke of the unaffordability of health insurance, and decried the indignity of charity care. They chronicled the difficulty of finding doctors in low-income neighborhoods, and of navigating the confusing maze of services and insurance coverage. Others testified that they had trouble receiving good care, that the health care industry was profit-oriented and monopolistic, and that they had no say in the quality or availability of health care services.

Kennedy contrasted U.S. health care with what he had seen in trips to Sweden, Denmark, Norway, and Israel, and with what he had learned about the United Kingdom. “Most of us have been led to believe that health care is a disaster in Europe,” he wrote. “From what I saw, these things are simply false. The fact is, while most Americans are angry and frustrated about health care, most Englishmen, Danes, Swedes, and Israelis are not.” Kennedy concluded his book by calling for a program in which “the federal government would become the health insurance carrier for the entire nation.” Kennedy was proposing a single payer system, although he did not use that term.

The same stories recounted to Senator Kennedy’s committee could just as easily have been told by Vermonters in the 1980s, when hearings were held in the state capitol to build the case for state-subsidized private insurance for the uninsured. But in Vermont, as in the rest of the country, such ideas ran up against roadblocks. First, programs designed solely for the uninsured depended on complicated and onerous tests of applicants’ means; second, they lacked a coherent political constituency; and most importantly, because they subsidized an inefficient for-profit system of health insurance, they were devoid of cost controls.

In 1988, 10 percent of Vermonters had no health insurance; thousands more were underinsured. Farmers, loggers, artists, or convenience store owners who got seriously ill often faced financial ruin. The access crisis — a plight shared by other U.S. states — was compounded by health care costs that were rising at greater than the inflation rate. Employers and individuals often saw double digit annual increases in insurance premiums, and those without insurance who attempted to pay hospital bills out of pocket paid the highest rates of all. The health care system was also rife with excessive administrative costs related to its fragmented financing streams. Providers had to deal with scores of payers — insurance companies, multiple insurance policies, federal and state health plans, and private individuals. The insurance industry in particular added immense cost to the system without adding anything of value in terms of health care. Furthermore, the fragmentation of financing meant that payers had little bargaining power in purchasing pharmaceuticals or medical equipment, nor any say in hospital spending. As costs kept escalating, any attempt to curtail spending in one area simply caused an increase in charges somewhere else.

However, because the U.S. Congress showed no inclination to consider reforms resembling the universal health care systems in other developed countries, the health care activists in Vermont concluded that state-level initiatives were the only hope. The activists told themselves that the momentum for reform builds over time, but when the time is ripe, change happens with surprising speed. The important thing was to have thought through the solution and to have educated the public about its merits, so that when the opportune moment arrived, a reorganized health care system would reveal itself as the most practical response.

In 1989, they established a small nonprofit called the Vermont Consumers’ Campaign for Health. They raised funds, hired staff, and built a citizens’ movement. They sponsored educational forums around the state, published a newsletter, and arranged meetings with labor unions, consumer groups, businesses, teachers, town officials, and politicians. The organization coordinated referenda on single payer health care at more than 50 town meetings, and drummed up support for a single payer bill to be introduced in the Vermont legislature.

The response to the group’s efforts was overwhelmingly positive. Vermonters readily accepted the notion that the state should be everyone’s health insurer. Businesses would be relieved of the burden of buying health insurance for employees. Labor unions would no longer have to fight for health benefits at every contract negotiation. All Vermonters would share in financing the program, and therefore all Vermonters would have a stake in ensuring its quality and efficiency.

However, the populace was ahead of its elected officials on the issue. Although single payer advocates had a big ally in Vermont’s Independent former-Congressman Bernie Sanders, who had been busy in Washington trying to advance a national single payer proposal, Sanders’ enthusiasm was not shared by state legislators. The health care committee chairpersons felt that other matters were more pressing and less politically charged. Thus, the first single payer bill to be introduced in the legislature (in 1991) never even got a committee hearing. The following year, former-Governor Howard Dean, himself a physician, failed to back the proposals, perhaps with an eye to his later presidential bid that was well-funded by the insurance industry.

The mid-90s saw increased focus on health care at the national level. The Clinton administration was promoting health reform based on “managed competition” among private insurers. Ultimately the effort was easily defeated by Congress. Meanwhile, in Vermont, a tiny minority of Progressive Party lawmakers finally succeeded in forcing a vote on the single payer system, but fell short. Instead, the idea of “managed care” was adopted in Vermont and elsewhere, a system that saved money for a year or two before simply becoming a vehicle for denying care and increasing insurance company profits. Consumers reacted by demanding a return to more traditional insurance policies.

The single payer movement might have died then and there, if not for the campaigning of Dr. Richter at the turn of the millennium. The need to corral costs had never been so urgent. Vermont’s overall health care expenditures had doubled in less than 10 years. Health care had become a $5 billion per year industry in Vermont — 19 percent of the gross domestic product. Yet, Vermont’s governor at the time — Republican Jim Douglas — continued to oppose reform, even though a new state-commissioned study in 2001 showed that single payer would save $118 million annually, roughly a 5 percent reduction in Vermont’s total health care spending.

It wasn’t until 2010 that State Senator Peter Shumlin, also a gubernatorial candidate, dared to make the single payer system a centerpiece of his primary campaign. Shumlin had voted for the earlier single payer proposal, and had helped the legislature appropriate money for a Harvard professor, William Hsiao, to design an exhaustive study of how a universal health care system in Vermont might work.

Shumlin faced an uphill battle as polls showed him trailing his competitors early in the primary season. That’s when Dr. Richter and a Middlebury College professor, Ellen Oxfeld, kicked into action — day
after day on the phone, sending emails, attending meetings, pleading with friends and colleagues to support the single payer candidate. If Shumlin won, they said, Vermont would have a chance to lead the nation toward universal health care, just as Saskatchewan had led Canada to single payer decades before. People listened — and voted. Shumlin narrowly won the nomination, then went on to defeat his Republican opponent in the general election.

“The grassroots support I got from single payer advocates made it possible for me to be governor,” Shumlin told an interviewer from Vermont Life magazine. “They knocked on doors. They poured their hearts out. They saw an opportunity and I would not be here without them.”

As Shumlin took office, Professor Hsiao issued his report containing designs of three models that built on the state’s previous reform efforts: a government-run single payer, a public option, and a public-private single payer that preserved some role for insurance companies in administering claims. It was this third option that was chosen, based on its eye-catch savings of 25 percent over the next decade. Hsiao attributed these savings to administrative simplification, reductions in fraud and abuse, reformed payment systems for doctors and hospitals, and no-fault medical malpractice reform.

Passage of a single payer bill was far from a sure thing, despite a Democrat-controlled legislature. The major private health insurer in the state, Blue Cross Blue Shield, annually spends more on lobbying the state legislature than almost any other private firm. The pharmaceutical industry and the hospital association are not far behind. But with a population of only 600,000, Vermont’s legislative process is so intimate that the voices of private citizens can sometimes have impact equal to the professional lobbyists. A cascade of concerned citizens flooded the statehouse in favor of single payer. Most visible were members of a “Health Care is a Human Right” campaign organized by the pro-labor Vermont Workers’ Center. Wearing red t-shirts, they filled the committee rooms and visitors’ galleries, watching every debate, and reading every mark-up of the bill. Dr. Richter’s group was also present and single payer supporters throughout the state were kept up-to-date by email.

The bill that passed and was signed into law in the spring of 2011 laid the foundation for Green Mountain Care, the purpose of which was “to provide, as a public good, comprehensive, affordable, high quality, publicly financed health care coverage for all Vermont residents in a seamless and equitable manner regardless of income, assets, health status, or availability of other coverage.” The law established a five-member board to oversee the program and administer payments to providers from a dedicated fund. The program would contain costs by reducing unnecessary administrative expenses and establishing innovative payment mechanisms to providers, such as global budgets to hospitals.

However, the law left several items of business unfinished. First was the uncertain interface with Obamacare, the federal health care law passed by Congress the previous fall. National health care reform was clearly headed in a different direction from Vermont’s single payer system. Obamacare will require all individuals to have insurance by 2014. Those not covered by Medicare or Medicaid must purchase private insurance in health care “exchanges.” Federal subsidies will be available to individuals who qualify on the basis of income. No state may proceed in a different manner unless granted a federal waiver, and Obamacare explicitly prohibits waivers until 2017 at the earliest. That means that implementation of Green Mountain Care will have to wait.

Second, the Vermont law did not include a benefits package or a financing plan. The omission of a financing plan has drawn controversy, with critics charging that the Shumlin administration wants to avoid talking about what may be the largest tax increase in Vermont history. What the naysayers fail to mention, however, is that taxes would replace private insurance premiums and, by most estimates, Green Mountain Care would cover everyone for less total dollars than are currently spent in a system that leaves many uninsured.

The financing question has not been totally ignored. To fulfill a requirement of the new law, the Shumlin administration asked analysts at the University of Massachusetts to formulate baseline data for financing Green Mountain Care and to examine the financial implications of a federal health care exchange. The UMass report once again confirmed that a state single payer could cover everyone and still save money over the spending projections absent reform, but it stopped short of naming specific revenue sources, which was what single payer opponents had been clamoring for so that they could raise a hue and cry about taxes. Shumlin countered by pointing out that Green Mountain Care could not begin offering health coverage until 2017 at the earliest because of the Obamacare preemption, and therefore, he argued, a financing proposal would be premature.

Critics have also cried that doctors will leave the state when Green Mountain Care is implemented. Yet, while one or two specialists have indicated they might seek greener pastures elsewhere, there have been at least as many doctors outside the state who have said they would consider moving to Vermont so they could practice under a single payer system, and not have to worry about multiple insurance companies and whether their patients could afford needed care.

A Universal Prescription?

Vermont’s efforts contain lessons for other states looking at enacting universal health care. The first lesson is that the design of a state-level system can be more complex than the design might be for a federal Medicare-for-all plan. For one thing, a state-level single payer must wrap around existing federal programs such as Medicare and Medicaid, or obtain waivers to capture the federal funds and apply them to the state plan. In addition, there are many cross-border issues that uniquely burden state-level initiatives. For instance, residents of one state may obtain health care services in another state. Others may live in one state but work in another. The question then becomes how to negotiate and pay for out-of-state services and how to adjust tax exposure for residents who may have out-of-state insurance.

Finally, there is the question of the Employee Retirement Income Security Act (ERISA), the federal law that allows large employers to self-insure. ERISA prohibits states from interfering in self-insure health plans, but would probably not preclude a state payroll tax on all employers to support a universal health care plan. This would leave ERISA employers with the decision of whether to drop their self-insurance or try to challenge the payroll tax in federal court. No one, not even Hsiao, has been able to predict the outcome of a legal challenge to single payer financing based on the ERISA law. It remains one of the unknowns for Vermont going forward.

Vermont’s single payer supporters have caught their breath, but have not exactly relaxed their efforts in advocating for the ultimate goal. The implementation of Obamacare in 2014 will be closely watched, as will the state’s roll-out of the single payer benefits package and financing plan. Well-funded attacks on the Vermont single payer initiative have already been launched by political action committees and by Governor Shumlin’s political opponents. These attacks play on the public’s fear of change. But Vermonters are independent thinkers, and the single payer advocates have been quickly responding to the naysayers with letters to the editor and press releases reiterating the well-researched projections showing that single payer will save money.

The grand vision of Green Mountain Care continues to hold great promise: To treat all human beings as equals whe
n it comes to necessary health care; to end the absurd spiral of health care costs that is crippling businesses, bankrupting school and municipal budgets, and threatening the entire economy; and to give doctors the ability to practice the kind of medicine for which they were trained — focusing on patients’ needs, not on billing, insurance, and a patients’ financial status. A majority of Vermonters are cautiously optimistic that, in four years, their state will become the first place in America to realize this dream.

References

1. Goozner, M. The $800m Pill: The Truth Behind the Cost of New Drugs (University of California Press, Berkeley, 2004).
2.  Woolhandler, S, Campbell, T & Himmelstein, D. Costs of health care administration in the United States and Canada. New England Journal of Medicine 349, 768–75 (2003).
3. Cebul, RD, Rebitzer, JB, Taylor, LJ & Votruba, M. Organizational fragmentation and care quality in the U.S. health care system. National Bureau of Economic Research Working Paper Series, No. 14212 (2008).

Ethan Parke is a freelance writer who lives in Montpelier, Vermont, and who has been involved in the state’s health care reform efforts.

This article also appeared at CommonDreams on Aug. 11, 2013: http://www.commondreams.org/view/2013/08/11-1

Many do not understand their insurance

Consumers’ misunderstanding of health insurance

By George Loewenstein et al
Journal of Health Economics, September 2013

Abstract

We report results from two surveys of representative samples of Americans with private health insurance. The first examines how well Americans understand, and believe they understand, traditional health insurance coverage. The second examines whether those insured under a simplified all-copay insurance plan will be more likely to engage in cost-reducing behaviors relative to those insured under a traditional plan with deductibles and coinsurance, and measures consumer preferences between the two plans. The surveys provide strong evidence that consumers do not understand traditional plans and would better understand a simplified plan, but weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.

http://www.sciencedirect.com/science/article/pii/S0167629613000532

Do you understand health insurance? Most people don’t.

By Sarah Kliff
The Washington Post, August 8, 2013

Most people who George Loewenstein, the health-care economist, studied could get one or so questions right – and thought they had pretty decent comprehension of how health coverage works. But only 14 percent could identify what each of the four terms mean.

Actual and self-perceived comprehension of insurance concept
(Percent who think they understand concept, followed by percent who correctly answered question testing understanding of concept)

97% / 78% – Deductible
100% / 72% – Copay
57% / 34% – Coinsurance
93% / 55% – Maximum out-of-pocket

“It’s difficult for people to understand it because it’s inherently complicated,” Loewenstein says. “Even if you understand each concept individually, it’s still difficult to figure out the cost.”

Still, Loewenstein is skeptical. His worry isn’t so much about people having access to information, but rather that insurance is too complex to understand in the first place.

In his ideal world, health insurers would only charge co-payments and eliminate deductibles, co-insurance and every other form of cost sharing. While this could cause some sticker shock – co-pays would presumably increase if they’re the only way of paying for care – it would significantly simplify the system. Health costs would suddenly become predictable.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/08/do-you-understand-health-insurance-most-people-dont/

Comment:

By Don McCanne, M.D.

This survey of Americans who already have private insurance shows that they believe that they understand their insurance coverage, yet only 14 percent of them actually did understand all four of the basic insurance payment concepts. When individuals or their employers select insurance, what they really look at is the premium.

Of great concern is that those who remain relatively healthy and simply pay their premium are largely unaware that they have been part of the trend to greatly expand the prevalence of underinsurance products that place excessive financial burdens on those who actually need health care. They are underinsured and don’t know it.

For middle-income workers, perhaps the most important of the four concepts is maximum out-of-pocket costs. Yet only about half of them understand that the correct choice of the definitions offered was, “After meeting the out-of-pocket maximum, all medical expenses are covered 100%.” Though the other choices that the authors offered were clearly wrong, this one can be questioned as well. Medical expenses for services not provided as a plan benefit or for services obtained out-of-network are not covered 100%, and usually are not covered at all.

It is unfortunate that the insured often do not understand the extent of their potential financial exposure. Lead author George Loewenstein suggests that the problem is not so much the extent of their exposure but rather that the system needs to be simplified so people would understand what their exposure is. He suggests eliminating deductibles and coinsurance and replacing them exclusively with transparent copays, even if at exorbitantly high dollar amounts – at least they would know how much they may have to pay. Yet there is only “weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.”

We continue to see the policy community struggle with this concept that patients need to be made better shoppers by making their out-of-pocket spending more transparent. Other nations spend far less on health care and often with first dollar coverage. There is no need to create financial barriers to care. We can have far more efficient and equitable health care financing by adopting single payer policies.

Flow of physicians is into Medicare, not out

More Doctors Are Quitting Medicare. Is Obamacare Really To Blame?

By Dan Diamond
California Healthline, August 7, 2013

The Wall Street Journal last month portrayed physician unhappiness with Medicare as a burning issue, with a cover story that detailed why many more doctors are opting out of the program.

And yes, the number of doctors saying no to Medicare has proportionately risen quite a bit — from 3,700 doctors in 2009 to 9,539 in 2012. (And in some cases, Obamacare has been a convenient scapegoat.)

But that’s only part of the story.

What the Journal didn’t report is that, per CMS, the number of physicians who agreed to accept Medicare patients continues to grow year-over-year, from 705,568 in 2012 to 735,041 in 2013.

There’s more than finances at stake, too. In an informal survey of a half-dozen doctors, most told California Healthline that they felt ethically obligated to stick with the program.

http://www.californiahealthline.org/road-to-reform/2013/more-doctors-are-quitting-medicare-is-obamacare-really-to-blame

Comment:

By Don McCanne, M.D.

Since the beginning of Medicare, we have heard stories that doctors weren’t going to take it anymore; they were going to drop out of Medicare. Some have, but it’s a negligible number. Those who say that Obamacare is forcing more doctors to drop out of Medicare will have to explain to us how that computes with the fact that the numbers of physicians agreeing to accept Medicare has increased by almost 30,000 this year alone, for an all-time high of over 735,000.

What is more reassuring is the result of California Healthline’s very small informal survey of physicians. They found out what most of us who have been in the profession for a few decades already knew – physicians feel ethically obligated to stick with Medicare. What do you think their ethical sense would be under an improved Medicare program that covered everyone?

Health Affairs promotes "regulatory neutrality" for AHIP

Regulatory Neutrality Is Essential To Establishing A Level Playing Field For Accountable Care Organizations

By Gary E. Bacher, Michael E. Chernew, Daniel P. Kessler and Stephen M. Wiener
Health Affairs, August 2013

A recent drive for payment reform in both the public and private sectors is creating powerful incentives for integration in health care finance and delivery. One of the best-publicized models for encouraging a movement away from the fee-for-service payment arrangements that dominate the nation’s current health care delivery system is the accountable care organization (ACO).

Regulating accountable care organizations poses unique challenges. In particular, regulation should strive to create a level playing field both among the various providers and organizations seeking to form an ACO and between ACOs and health plans. This level playing field is known as regulatory neutrality. Regulatory neutrality refers to the concept that similar products or models for financing or delivering care should be regulated in similar ways to try to prevent regulation from favoring any particular approach or product.

Our analysis recognizes that policy interventions that might be viewed as “nonneutral” in the short term may be necessary to promote policy goals, such as maintaining a competitive marketplace, that facilitate regulatory neutrality over the longer term.

Policy Issues

Accountable care organizations are affected by a number of different regulatory regimes—including antitrust, solvency regulation, Medicare’s Shared Savings Program governance regulations, and Medicare payment rules. An uncoordinated approach to policy among these regimes creates a heightened risk that ACOs will be inadvertently favored or disfavored relative to other entities that accept financial responsibility and arrange for the delivery of care, such as Medicare Advantage plans (private managed care plans operated under the auspices of Medicare).

For example, seemingly small, technical differences—such as reserve requirements—for ACOs versus Medicare Advantage plans can place ACOs at an advantage (or disadvantage) relative to organizations participating in the Medicare Advantage program. Even if each regulatory regime were functioning perfectly in terms of its own objectives, the interaction among regimes can have unintended consequences that affect the neutrality of the system as a whole.

Although it has received little attention from health policy researchers, the concept of regulatory neutrality has been studied extensively in other contexts. This literature offers three key lessons also applicable in the health care setting.

First, in general, neutrality favors less over more prescriptive regulation. Simply put, more-prescriptive regimes affect a greater number of decisions, and thus they entail a greater risk of inadvertently favoring one organizational form over another.

Second, neutrality favors “functional” over traditional “institutional” regulation. That is, when different types of institutions are serving the same function, they should be supervised by the same regulator according to the same set of rules, regardless of the labels that may have been applied to them in the past.

Third, the first two rules are not absolute. As we show in our discussion of antitrust policy, the pursuit of neutrality can support a more activist approach and special rules directed at the health care sector, even if that might be viewed as nonneutral in the short term.

Medicare Payment Rules:

Accountable care organizations operating under the Medicare Shared Savings Program compete with Medicare Advantage plans for both beneficiaries and providers. A beneficiary enrolled in Medicare Advantage cannot be enrolled in an accountable care organization, and vice versa. Providers participating in an accountable care organization are also potential members of provider networks for Medicare Advantage plans.

As a result, neutrality between Medicare Advantage and accountable care organizations is important. Although the Medicare Shared Savings Program regulations attempt to address this point, they also show how even small, technical differences can have an effect on the attractiveness of the different models to beneficiaries and providers.

The effect of these differences could be to favor one model over another in different parts of the country and, in so doing, encourage unwanted behavior among providers and Medicare Advantage sponsors that is aimed at handicapping one of the models in comparison to the other.

Conclusion

Regulating accountable care organizations poses unique challenges. Because of their nature, they are affected by at least four different regulatory regimes. The complexity inherent in this situation requires that policy makers pay special attention to coordination to avoid unintended consequences. To address this concern, the government should seek to maintain a level playing field (what we call regulatory neutrality), so that different models of care and those seeking to offer them are permitted to stand or fall on the cost and quality of care each provides. We conclude that neutrality generally favors less, rather than more, prescriptive regulation. Nonetheless there are exceptions to this rule, with antitrust policy as the most prominent example.

More broadly, the pursuit of neutrality may need to be tempered by a recognition of competing goals. Like so many areas in health care policy, accountable care organizations present both potential opportunities and new challenges. Considerations of regulatory neutrality can add depth and clarity to considerations of how to strike the balance in determining how to regulate these new entities.

(Gary E. Bacher is the director of the Institute for Health Systems Solutions at the AHIP Foundation, in Washington, D.C. Michael E. Chernew is a professor of health care policy in the Department of Health Care Policy at Harvard Medical School. Stephen M. Weiner is the national chair of the health care practice at the law firm Mintz Levin Cohn Ferris Glovksy and Popeo. Daniel P. Kessler is a professor in the business and law schools and a senior fellow at the Hoover Institution at Stanford University. Daniel Kessler acknowledges and thanks the Institute for Health Systems Solutions at the AHIP Foundation for support in conjunction with this article.)

http://content.healthaffairs.org/content/32/8/1426.abstract

AHIP Foundation Launches Health Systems Change

AHIP Foundation
Institute for Health Systems Solutions, June 11, 2013

The AHIP Foundation (“Foundation”), a 501(c)(3) organization,  today announced the launch of the Institute for Health Systems Solutions (IHSS), which has been established to create a hub for new research, new analysis, and a new opportunity for the exchange of views around changes in the organization and structure of the health care system.

IHSS builds on the Foundation’s focus on exploring ways to better contribute to the health care research and policy enterprise and to advance forward-looking ideas for improving the quality and availability of care.

“Collaboration among stakeholders involved in the health care sector is critical to the country’s ability to address the complex challenges in front of us,” said AHIP Foundation President Karen Ignagni. “That’s why IHSS is launching new partnerships, engaging researchers, and hosting forums to bring together individuals with different points of view to expand the dialogue and educate the public.”

“By working together, we will be better able to recognize the connection points between access, innovation, and smart regulation, and begin to find structural solutions to improve quality and access and reduce costs while addressin
g the substantial challenges facing our health care system,” said IHSS Director Gary Bacher.

http://www.healthsystemssolutions.org/content/ahip-foundation-launches-health-systems-change-initiative

Comment:

By Don McCanne, M.D.

This one is pretty ugly.

The new issue of Health Affairs released this week includes an article on “regulatory neutrality” as a means of “establishing a level playing field for accountable care organizations” (ACOs). What? What level playing field, and what is this about making regulations neutral?

Reading quickly through the article, something didn’t smell right. Studying the article in more detail caused me to come to the conclusion that there was only one reason for the article. It was to introduce the concept of regulatory neutrality as a way of ensuring that private Medicare Advantage plans did not lose footing to the new ACOs established by Obamacare.

The authors conclude that regulatory neutrality “favors less, rather than more, prescriptive regulation,” except “the pursuit of neutrality can support a more activist approach and special rules directed at the health care sector, even if that might be viewed as nonneutral.” That’s it! Medicare Advantage plans should be able to compete with ACOs in relatively unregulated markets, except when they need the government to provide them with “special nonneutral rules.”

Who is behind this? The lead author, Gary Bacher, is director of the Institute for Health Systems Solutions (IHSS) at the AHIP Foundation, and co-author, Stanford Professor Daniel Kessler, “acknowledges and thanks the Institute for Health Systems Solutions at the AHIP Foundation for support in conjunction with this article.”

So what is IHSS? It is a new “research and analysis” entity established by AHIP Foundation, a 501(c)(3) organization, headed by Karen Ignagni… yes, the same Karen Ignagni who heads the insurance lobby organization AHIP – perhaps the most influential lobby organization in the nation. Obamacare was created under the guidance of AHIP.

Health Affairs is one of the most prestigious health policy journals in the world. What is their role in this? It was only June 11 that AHIP Foundation announced the launch of IHSS, and yet less than two months later – much shorter than the usual lead time for a journal article –  Health Affairs has published this article that informs politicians and the policy community that we have a new double standard for regulating private Medicare Advantage plans and their ACO competitors – “regulatory neutrality.”

It is shameful that leaders in our public and private institutions should be conspiring in this blatant abuse of the processes through which legitimate policy science is advanced. I mean, IHSS/AHIP actually purchased Daniel Kessler’s opinion! But Health Affairs? As I said, this one is pretty ugly.

Get bosses out of insurance business

Let business tend to business, not health insurance

By Dr. Judith Dasovich
Springfield (MO) News-Leader, Aug. 3, 2013

Employee-sponsored health insurance, or ESI, should be replaced with an affordable, efficient financing system.

During World War II, wage controls forced employers to compete for labor through benefits. Today, it is a burden on business and workers.

ESI puts American companies at a disadvantage. They have expenses that foreign competitors do not. Negotiations surrounding it sour relations between management and labor. Hiring is constrained by the cost of ESI. Entrepreneurship is stifled.

Starting a small business often means buying health insurance through the individual market. This is more expensive and may not be available due to pre-existing conditions. The Affordable Care Act is supposed to outlaw denial of coverage, but it doesn’t outlaw price gouging.

ESI is expensive and inefficient. Overhead averages 14 percent compared to less than 3 percent for traditional Medicare because of complexity, marketing costs and administrative pay.

One of Springfield’s largest employers uses Coventry insurance. Coventry’s CEO makes $13 million a year, or $49,765 a day. Doctors, hospitals and businesses are all forced to incur higher overhead because of ESI’s business model.

ESI restricts freedom. Patients cannot choose their doctors or hospitals. They have to switch providers if the plan changes. This is dangerous and expensive. Workers pay for insurance while they are healthy. When they get sick, they lose their jobs and insurance. COBRA is time limited and too expensive for most people without incomes. This is an inhumane situation for the worker, but a sweet deal for the insurance companies.

It is a myth that higher out-of-pocket expenses control medical costs. Americans pay more than anyone in the industrialized world, but medical spending is much higher.

We have higher infant, maternal and overall mortality. People do not choose ovarian cancer or rheumatoid arthritis, like they choose a used Honda over a new BMW. They cannot “shop around.”

Choice of providers is restricted. It is almost impossible to know the cost before obtaining a medical service. Medical emergencies do not allow patients time to shop. Having “skin in the game” does not control costs. If it did, we would have the cheapest health care in the world.

There is a solution. U.S. House Resolution 676 supports a single payer system of national health insurance, or improved Medicare for all.

General tax revenues would pay for the continued private delivery of an essential service. This is the same way interstate highways are financed and built.

Doctors and hospitals would not be owned by the government.

Patients would be free to choose and stay with any provider or care center. They would not lose their insurance if they became sick or lost their job. Employers could tend to their businesses instead of health care expenses and administration.

As taxpayers, we would support a system that uses the money paid in for patient care, not administrative waste and profiteering. Ask your U.S. representative to endorse HR 676. Your personal and financial health may depend on it.

Dr. Judith Dasovich lives in Springfield. She is the former volunteer medical director at The Kitchen Clinic.

http://www.news-leader.com/article/20130804/OPINIONS02/308040051/Judy-Dasovich-employee-sponsored-health-insurance?nclick_check=1

Medicine As A Beleaguered Profession

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, August 3, 2013

A young friend and keen analyst of social change made the observation that it seems that physicians, when it comes to the contemporary state of our profession, seem a bit in shock, as if suffering a grief reaction. She referenced the stages of grief elucidated by Elisabeth Kubler-Ross — denial, anger, bargaining, depression and acceptance.

Last week I mentioned an anecdote from a recent essay in the Journal of the American Medical Association in which a medical school Dean asked the incoming class for a show of hands by those who had been advised by at least one physician not to go into medicine — and 4 out of 5 hands went up across the room. I can attest to the veracity of this anecdote from my own experiences with medical students and colleagues.

Physicians find the profession of medicine in a beleaguered state as the environment and framework in which we practice has shifted around us. The solo practice physician worthy of a Normal Rockwell painting has become a fossil of the past. Physician-run group practices are now also on the endangered species list, as hospitals, corporations, insurance companies and Wall Street investors purchase or develop physician groups.

For example, at the end of April this year Forbes magazine reported “in the [United States] where healthcare faces sweeping changes accelerated by the Affordable Care Act,” private equity investors have been “making serial acquisitions of smaller medical practices that they roll up into larger, more efficient groups. In particular, [private equity] funds are assembling groups of practitioners, both in traditional hospital-centered specialties in such areas as radiology and neonatology as well as in emerging fields of hospital-focused specialization like neurology and general surgery.”

Once upon a time physicians commanded almost total control over who we worked with, what kind of equipment we needed, how we wanted to spend our day. Now doctors are among the employees, not just of hospitals and non-profit organizations, and not only for-profit entities, but finance capital itself. As physicians experience these changes — and weigh what it means to care for our patients within these new environs designed to serve the interests of private equity — we find the potential for conflict between the loyalty owed to our patients and their interests, and the loyalty demanded by our employer.

The American Medical Association last November emphasized the impact of these changes upon physicians by adopting a set of guiding principles for physicians entering into contractual and employment agreements in order to protect the paramount responsibility to patients and the best interests of patients. That the American Medical Association took the time to “address some of the unique challenges to professionalism and the practice of medicine arising in the face of physician employment,” seems to me a fair gauge of the pressures upon physicians brought by the “sweeping changes” like the ones Forbes magazine describes.

These pressures will likely intensify unless profit-seeking itself is removed from healthcare, removed from caregiving. What’s more, to throw the sweeping changes toward the “profitization” of caregiving into full reverse is entirely practical. A bill before Congress, the Expanded and Improved Medicare For All Act, would ban for-profit medicine.

This week Professor Gerald Friedman, economist of the University of Massachusetts, presented the findings of his analysis of the legislation at a Congressional briefing.  Not only would profiteering be removed from our healthcare system, upgrading the nation’s Medicare program and expanding it to cover people of all ages would yield more than a half-trillion dollars in efficiency savings in its first year of operation, enough to pay for high-quality, comprehensive health benefits for all residents of the United States at a lower cost to most individuals, families and businesses.

With a solution at hand perhaps it is not too much to invoke Kubler- Ross’s paradigm of denial, anger, bargaining, depression and acceptance as an analogy, for the societal moment seems to me precipitous. Yet for medicine as a profession although the diagnosis is grave and life-altering, I believe the prognosis is excellent. How we will carry on in the interests of our patients will ultimately win out.

Four out of five of our students may have been warned to stay away from medicine, yet the chose our profession anyway. Physicians and physicians-to-be remain profoundly motivated by the service we perform to our fellow human beings. That spirit will help us lead our system to the kind of real reform we need.

Your doctor copays are too high!

We’ve chosen a cost-sharing system of high-deductible health care. Here’s why it’s grossly unfair to Americans

By Adam Gaffney
Salon, August 5, 2013

Until recently, the high-deductible health insurance plan – pay less up front, and more when you get sick – was something of a novelty product, marketed to the young and healthy. Now, however, high-deductibles are rapidly going mainstream – whether for young or old, professionals or poor alike.

Let’s say that you are in the market for a health insurance plan for your family. Perusing the choices on United Health’s website, you play it safe, avoid the plan labeled “high-deductible,” and settle on the company’s “comprehensive plan,” so-called “Copay Select.”

You expect a hefty annual premium, but are surprised to learn that after the premium is paid, you will still have a sizable deductible – money to be paid out-of-pocket for services ranging from lab tests to surgery – starting at $1,000 and ranging up to $12,500 per year. You may then be susceptible to “co-insurance” – additional out-of-pocket expenses of up to 30% of your medical bills –with maximums reaching as high as $10,000 per year. Then there are copays for visits to the doctor, as well as four “tiers” of cost sharing for prescription drugs.

Realizing that such expenses might turn a medical illness into a financial catastrophe, you consider waiting to 2014, when you can buy health insurance through the new exchanges created under the Affordable Care Act (ACA). You would, however, be disappointed to learn that the mid-level “silver” plans offered on the exchange are only required to cover 70% of your annual health care expenses. Out-of-pocket “cost-sharing” – in the form of copays, deductibles, or co-insurance – could go as high as $12,700 a year for your family, depending on your income.

Now those fortunate enough to have insurance through their employer might hope to be free from this phenomenon. The protection, however, is only partial, as plans in the employer market have been trending in a similar direction for years. Between 2006 and 2012, for instance, the percentage of covered workers with a deductible of $1,000 or more tripled, as did those with a deductible of more than $2,000.

Even those sufficiently impoverished to be eligible for public assistance are not immune: in January, the administration moved to allow states to charge Medicaid patients higher copayments for drugs, emergency room use and doctor’s visits.

Welcome to Copay Country.

To understand the origins of this new era of “cost-sharing,” we have to look back to the 1970s, when the rising costs of American health care became for the first time the predominant concern of policymakers.

During that decade, accelerating health care inflation was superimposed on economy wide-stagflation, a situation that only got worse after the expiration of Nixon’s health care sector price controls in 1974. From 1970 to 1980 health care spending jumped from $75 billion to $256 billion, an increase from 7.2 to 9.2% of GDP. The health care cost crisis was born.

The idea of “cost sharing” is neither a new idea, nor a universal one. Nixon’s 1971 health care plan, for instance, featured deductibles and copayments as well as a cap on annual expenses. The British National Health Service, conversely, has since its inception made health care free at the point of service.

Those who support cost sharing argue that it reduces overall health care spending by deterring patients from seeking unnecessary health care, or – more recently – by pursuing less expensive care from competing providers.  Those who oppose cost sharing, on the other hand, argue that the incentive to save could also serve as a disincentive to seek care, as well as a financial liability for many working class families.

To address these concerns, in the late 1970s the federal government funded the “Rand Health Insurance Experiment,” a difficult-to-perform study that has not been repeated, and which continues to inform discussions on the topic today. The experiment assigned – at random – 3958 people aged 14 to 61 to one of four categories of health insurance: a “free plan” with no cost sharing, and three other plans with variable degrees of cost-sharing in the form of copays, deductibles and co-insurance.

Some of the results were predictable. Those who had to pay each time they used health care, for instance, used less of it, making about a third-fewer visits to the doctor and being hospitalized about a third less. But notably, for the group as a whole, such cost sharing didn’t seem to worsen overall health outcomes. The experiment has subsequently been used to argue that there was a potential free lunch to be had: cost sharing could decrease overall spending, and no one would get hurt in the process.

Of course, there was some fine print. First, even at the time of publication, when the researchers looked specifically at the group of patients with low income and elevated health risks, the results were concerning: within this group, those who were in the cost sharing plans, as compared to the free plans, had worse vision as well as higher blood pressure. In fact, the researchers calculated that they had an increased risk of dying as a result of cost sharing.

Furthermore, later evaluations demonstrated that while cost sharing clearly reduced health care usage, it reduced both “appropriate care” (for instance, effective care for acute conditions) and “inappropriate care,” not a surprising fact given that patients generally trust the advice of their physicians, and are usually not equipped to decide which care is necessary and which is dispensable.

More modern research on cost sharing has raised even more concerns. When it comes to prescription drugs, for instance, a 2007 study in the Journal of the American Medical Association demonstrated that cost sharing results in lower rates of medication usage, with worse adherence to prescribed regimens. Additionally, those with higher cost sharing seemed to use more non-drug medical services – in particular patients with heart failure and schizophrenia – suggesting that not taking medications might be increasing medical costs in other ways.

Cost sharing frequently also puts individuals and families in extremely unenviable situations: should I go for the follow-up CT scan and make sure that some small growth isn’t developing into a cancer, or should I pay my rent? A 2011 study published in the journal Health Affairslooked at the effect of “high-deductible plans” (defined as plans with a $1,000 or more deductible) on families in which one member was chronically ill. Almost half of the families with a high-deductible plan – more than double that of families in traditional plans – had substantial financial burdens, such as having difficulty paying basic bills or having to set up payment plans. Cost sharing may also cause some families to avoid care altogether: a 2012 study published by some of the same researchers demonstrated that high-deductible plans were associated with an increase in delayed or forgone care, both for adults and chi
ldren.

Cost sharing, it is becoming increasingly clear, may not be a free lunch after all, particularly for those who have to pay for it.

But putting aside the empiric data for a moment, there is also something deeply counterintuitive about the underlying logic of cost sharing: that someone who is sick – frequently operating under significant physical, psychological, or financial constraints – will be able to impartially dissect the rationale for his or her doctor’s recommendations, parse the nuances of the frequently controversial and incomplete medical evidence, and safely decline only the unneeded medical interventions. That the same individual – so the theory goes – will simultaneously engage in a lifelong hunt for high-quality but bargain-priced deals among competing groups of laboratories, doctors, pharmacies, drug-manufacturers, hospitals, dialysis providers, imaging centers, and medical supply companies.

Such an expectation is – to put it modestly – entirely unrealistic. But even worse, it is grossly unfair to the sick patient.

Regardless, unless things change, the future promises only more and more cost sharing.  In addition to the trends already in place, in 2018 another provision of the ACA will go into effect – a 40% excise tax on high-cost insurance plans, defined as family plans costing more than $27,500, or individual plans costing more than $10,200. These are no doubt very expensive plans by today’s dollars, and if this provision went into effect today, few would be affected. But over the years, as a result of continued health sector inflation, more and more plans will begin to hit that ceiling. And when they do, it will not be in the employer’s or insurer’s interest for them to go any higher: further increases in the cost of care will simply take the form of more and more cost sharing. As the New York Times reported in May, many companies are already increasing copays and deductibles now, so that they can remain below the threshold when 2018 hits.

Understanding the logic of this tax is crucial: its purpose is not to raise revenue, but to contain costs by limiting the scope of benefits under these so-called “cadillac plans.” But the problem is that costs are contained only by dumping more of the price of care onto us when we get sick, forcing us to either decline care, or theoretically to find cheaper alternatives.

The logic of cost sharing is therefore essentially the logic of health care consumerism, increasingly a dominant mantra in political and health policy circles. Make the patient a consumer, and the system will be saved.

Yet, the United States already has more health care “consumerism” and cost sharing than other developed countries – and yet we have much higher costs. The truth is that there are safer and better-proven methods of cost control that we could employ, and which wouldn’t involve making a patient pay every time he or she gets sick.

We could, for instance, allow Medicare to directly bargain with drug companies over prescription drug prices, as other wealthy countries already do: by one estimate, the savings from this reform alone could range from $230 to $541 billion over ten years.

More ambitiously, we could work towards a “single payer system,” which could save billions through reduced administrative and clerical expenditures, while allowing costs to be directly controlled through global budgets and fee schedules. Gerald Friedman, an economist at the University of Massachusetts at Amherst, recently estimated the savings of such a system at $592 billion annually.

At the same time, we are of course obliged to continue to move away from procedures and tests with high cost and little health benefit, both through physician and patient education.

But rather than borrow these and other ideas from better performing health care systems, we are only making our system more and more like itself.

“Copay Country,” in other words, is not an inevitability – it is a choice. But is it really the country we want to become?

Adam Gaffney is a physician and writer in Massachusetts.

Low-socioeconomic patients with high-deductibles receive less high-severity emergency care

Low-Socioeconomic-Status Enrollees In High-Deductible Plans Reduced High-Severity Emergency Care

By J. Frank Wharam, Fang Zhang, Bruce E. Landon, Stephen B. Soumerai and Dennis Ross-Degnan
Health Affairs, August 2013

Abstract

One-third of US workers now have high-deductible health plans, and those numbers are expected to grow in 2014 as implementation of the Affordable Care Act continues. There is concern that high-deductible health plans might cause enrollees of low socioeconomic status to forgo emergency care as a result of burdensome out-of-pocket costs. We analyzed emergency department (ED) visits and hospitalizations over two years among enrollees insured in high-deductible plans through small employers in Massachusetts. We found that plan members of low socioeconomic status experienced 25–30 percent reductions in high-severity ED visits over both years, while hospitalizations declined by 23 percent in year 1 but rose again in year 2. Similar trends were not found among high-deductible plan members of high socioeconomic status. Our findings suggest that plan members of low socioeconomic status at small firms responded inappropriately to high-deductible plans and that initial reductions in high-severity ED visits might have increased the need for subsequent hospitalizations. Policy makers and employers should consider proactive strategies to educate high-deductible plan members about their benefit structures or identify members at higher risk of avoiding needed care. They should also consider implementing means-based deductibles.

http://content.healthaffairs.org/content/32/8/1398.abstract

Comment:

By Don McCanne, M.D.

People of low-socioeconomic status who have high-deductible health plans have 25 to 30 percent fewer emergency department visits for high-severity medical conditions – conditions with a high probability of needing ED-level care within twelve hours. That can’t be good.

Since similar trends were not found in people of high-socioeconomic status, the authors suggest that deductibles should be means-based – lower deductibles for those of low-socioeconomic status. But that would add more administrative complexity to our system already overburdened with administrative excesses.

The purpose of the deductibles is to reduce health care spending, but we don’t want to do that by not taking care of individuals with high-severity medical conditions. It would be far more efficient to simply eliminate deductibles for everyone and use better, patient-friendly methods of controlling spending. That’s what single payer is all about – people getting the health care they need while making it affordable for everyone.

'Cadillac tax' threatening public union health benefits

Health Care Law Raises Pressure on Public Unions

By Kate Taylor
The New York Times, August 4, 2013

Cities and towns across the country are pushing municipal unions to accept cheaper health benefits in anticipation of a component of the Affordable Care Act that will tax expensive plans starting in 2018.

The so-called Cadillac tax was inserted into the Affordable Care Act at the advice of economists who argued that expensive health insurance with the employee bearing little cost made people insensitive to the cost of care. In public employment, though, where benefits are arrived at through bargaining with powerful unions, switching to cheaper plans will not be easy.

Steven Kreisberg, the director of collective bargaining and health care policy at the American Federation of State, County, and Municipal Employees, said the term Cadillac tax was misleading, because it “connotes a certain aspect of luxury in these health plans that is just factually incorrect.”

Cities including New York and Boston, and school districts from Westchester County, N.Y., to Orange County, Calif., are warning unions that if they cannot figure out how to rein in health care costs now, the price when the tax goes into effect will be steep, threatening raises and even jobs.

“I think it was misguided all along,” Robert B. Reich, the former labor secretary, said in an e-mail. When the law was being written, he said, he worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.”

“Apparently, that’s what it’s become,” Mr. Reich, who is a professor of public policy at the University of California, Berkeley, said.

Under the tax, plans that cost above a certain threshold in 2018 — $10,200 annually for individual plans and $27,500 for family plans, with slightly higher cutoffs for retirees and those in high-risk professions like law enforcement — will be taxed at 40 percent of their costs in excess of the limit. (The thresholds will rise with inflation after 2018.)

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax.

So the administration of Mayor Michael R. Bloomberg, in its final months in office, is asking municipal unions to agree to seek new bids for the city’s health insurance business, hoping to lower premiums. But lower-cost plans are likely to involve greater out-of-pocket costs and more limited networks of doctors, and so far, the response from labor has been cool.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.

http://www.nytimes.com/2013/08/05/nyregion/health-care-law-raises-pressure-on-public-employees-unions.html?nl=todaysheadlines&emc=edit_th_20130805&_r=0&pagewanted=all

Obama demands tax on Cadillac plans

Comment by Don McCanne
Quote of the Day, January 7, 2010

What is the deal on the excise tax on high-premium “Cadillac” health plans, and why is President Obama pushing this tax so vigorously in the final stages of enacting health care reform?

Well, he is pushing it because his advisers tell him that it would help to achieve his first and foremost goal of slowing the increase in health care spending. The rhetoric being used implies that taxing high-premium plans would reduce the waste of paying for extravagant, non-essential benefits that are of little practical value. We’ll first dismiss this misperception and then follow with an explanation of why this form of cost management results in detrimental health outcomes.

The so-called Cadillac plans are merely plans with high premiums. The Health Affairs article by Jon Gabel and his colleagues (at link below) demonstrates that only 3.7 percent in the variation in premiums can be explained by the actuarial value inherent in the benefit design. In most instances, the higher premiums are not due to “Cadillac” benefits, but they are due to other factors, such as the type of industry providing the employment and the medical costs in the region.

Employers will not want to pay the excise tax, so they will demand from the insurers premiums that are at or below the tax threshold. Insurers will not simply reduce the premiums and continue to offer the same benefit packages. They will lower their benefits, lowering the actuarial value of the plans. There is absolutely no doubt that high and ever-increasing deductibles will be the norm.

The philosophy of controlling health care spending by shifting the financial burden to individuals and families is the most serious defect in the legislation before Congress. The excise tax on high-premium plans is only an example of this shift. The most glaring example is that the national standard proposed for basic plans has an actuarial value set at the unacceptably low level of 70 percent or even less. Making insured individuals pay money they don’t have to access care that is unaffordable is the worst way to control health care spending.

https://pnhp.org/news/2010/january/obama-demands-tax-on-cadillac-plans

Comment:

By Don McCanne, M.D.

Many of the health policies in Obamacare are not only highly flawed, they were known to be so as the Act was being crafted. The tax on Cadillac plans – standard full benefit plans that are expensive only because health care is expensive – is one of these we-told-you-so, seriously flawed policies.

Unions representing public employees have been more successful in maintaining the actuarial value of their plans, that is, ensuring that the plans will prevent financial hardship for those who need health care. Now Obamacare has provided local governments with a tool – the Cadillac tax – to bring employees’ health plans into compliance with high-deductible, low actuarial value underinsurance plans that have become the norm in the individual insurance market and are becoming more prevalent in the workplace. It is well established that these plans cause worse health outcomes and greater financial hardship.

It is complete nonsense to take good plans and wreck them so that they’ll all be equally bad, when what we need to do is to provide everyone with protection against financial hardship when accessing essential health care services. This is precisely what the health policies of the single payer model are designed to do. Let’s get our policies right.

Health Care Law Raises Pressure on Public Unions

By Kate Taylor
The New York Times, Aug. 4, 2013

Cities and towns across the country are pushing municipal unions to accept cheaper health benefits in anticipation of a component of the Affordable Care Act that will tax expensive plans starting in 2018.

The so-called Cadillac tax was inserted into the Affordable Care Act at the advice of economists who argued that expensive health insurance with the employee bearing little cost made people insensitive to the cost of care. In public employment, though, where benefits are arrived at through bargaining with powerful unions, switching to cheaper plans will not be easy.

Cities including New York and Boston, and school districts from Westchester County, N.Y., to Orange County, Calif., are warning unions that if they cannot figure out how to rein in health care costs now, the price when the tax goes into effect will be steep, threatening raises and even jobs.

“Every municipality with a generous health care plan is doing the math on this,” said J. D. Piro, a health care lawyer at a human resources consultancy, Aon Hewitt.

But some prominent liberals express frustration at seeing the tax used against unions in negotiations.

“I think it was misguided all along,” Robert B. Reich, the former labor secretary, said in an e-mail. When the law was being written, he said, he worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.”

“Apparently, that’s what it’s become,” Mr. Reich, who is a professor of public policy at the University of California, Berkeley, said.

Under the tax, plans that cost above a certain threshold in 2018 — $10,200 annually for individual plans and $27,500 for family plans, with slightly higher cutoffs for retirees and those in high-risk professions like law enforcement — will be taxed at 40 percent of their costs in excess of the limit. (The thresholds will rise with inflation after 2018.)

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax.

New York City expects its two most popular employee health plans to reach taxable Cadillac levels by 2018 or shortly after. This year, the city projects that it will pay a total of $7,128 for individuals and $18,249 for families in its most popular plan, including the costs the city pays into union welfare funds to cover prescription drug benefits. That is above the national average for employer-sponsored health care coverage, which last year was $5,615 for single coverage and $15,745 for family coverage, according to a 2012 Kaiser Family Foundation survey.

The total health care cost for the city’s nearly 300,000 municipal employees, pre-Medicare-age retirees and their dependents is expected to approach $8 billion by 2018.

In a letter in April to the head of a labor coalition, Caswell F. Holloway IV, deputy mayor for operations, said the Cadillac tax would cost New York City $22 million in 2018, increasing to $549 million in 2022. (This year, the total city budget, excluding federal and state aid, is just over $50 billion.)

“We know that, on the current trajectory, we’re going to be hit with that tax and it would increase very steeply,” Mr. Holloway said.

So the administration of Mayor Michael R. Bloomberg, in its final months in office, is asking municipal unions to agree to seek new bids for the city’s health insurance business, hoping to lower premiums. It has already achieved one small victory, getting the city’s current primary insurer to freeze premiums for one year if it keeps the city’s business, the mayor said on Friday.

But lower-cost plans are likely to involve greater out-of-pocket costs and more limited networks of doctors, and so far, the response from labor has been cool.

Ninety-five percent of city employees and 93 percent of retirees are in the two largest plans, which require employees to pay nothing toward their premiums. According to the Kaiser Family Foundation survey, the average contribution by public employees throughout the country is 12 percent for individual plans and 23 percent for family plans.

Harry Nespoli, the chairman of the Municipal Labor Committee, the labor coalition that negotiates with the city on health care, said that he was concerned about the tax, but also that the burden of any cuts would fall largely on workers at the bottom of the pay scale.

Mr. Nespoli said his staff was looking over the request for proposals that the city had written, but he said he was skeptical that the process of seeking new health insurance could be completed before the next administration.

“We’re not going to turn around and do a $7 billion contract that affects our members for the next 10 years out without looking at it very carefully,” he said.

Most of Boston’s 20,000 employees are currently in plans that by 2018 would exceed the tax threshold. The city and its unions are preparing a request for proposals for new insurance coverage.

“The tax is going to be a hit, and, if you’re not expecting it, it’s going to be very shocking,” said Meredith Weenick, the chief financial officer for Boston.

Jim Finley, the executive director of the Connecticut Conference of Municipalities, said he thought it would be hard for Connecticut towns and cities to get their unions to agree to cheaper health care benefits to avoid the tax.

“In the end, it’s the taxpayer that’s going to bear that burden,” Mr. Finley said.

In Orange County, Calif., the Newport Mesa Unified School District warned employees during contract negotiations that if the district’s health care costs continued rising at the current rate, the district could face a $2.3 million burden from the tax in 2018.

The teachers’ union ultimately agreed to accept greater out-of-pocket costs to reduce the increase in its premium this year to 3 percent from 6 percent, but union leaders said they resented the district’s using the threat of the tax as a negotiating tactic.

Municipal unions opposed the inclusion of the tax in the health care law, and it was partly their efforts that succeeded in delaying its effective date until 2018.

Steven Kreisberg, the director of collective bargaining and health care policy at the American Federation of State, County, and Municipal Employees, said the term Cadillac tax was misleading, because it “connotes a certain aspect of luxury in these health plans that is just factually incorrect.”

The announcement last month that the Obama administration would delay by a year the mandate that larger employers offer coverage to their workers does not affect the timing of the excise tax, although it may provide encouragement to those who hope that the assessment will be delayed or scrapped altogether.

“Some skeptics, and I’m not one of them, say that that’s why the tax was put into effect in 2018 — that it’s far enough away that people can consider whether or not they really want it to go into effect,” Mr. Piro, the health care lawyer, said.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.

“This is intended to shift compensation away from excessively generous health insurance toward wages,” he said.

In New York, if the Bloomberg administration does not succeed in getting new health insurance before
the end of the year, the problem will fall in the lap of the next mayor.

Mr. Holloway said the Bloomberg administration, like many city governments, had long been concerned about the rising cost of health care and its impact on the budget.

But the 2018 tax “adds a sense of real urgency to getting a handle on this,” he said.

“We’ve got to start thinking about this now,” he continued. “Why is it that my plan is so expensive per person? What are the ways that we could get that under control?”

http://www.nytimes.com/2013/08/05/nyregion/health-care-law-raises-pressure-on-public-employees-unions.html?pagewanted=all&_r=0

Steve Auerbach on Stossel

A Healthy Debate

Stossel
Fox Business Channel, April 25, 2013

On John Stossel’s show, pediatrician Steve Auerbach debates orthopedist Lie Hieb.

7 minute video:

http://www.youtube.com/watch?v=ZDTWu9lxARI

Comment:

By Don McCanne, M.D.

Steve Auerbach is a member of the executive board of the N.Y. Metro chapter of Physicians for a National Health Program (PNHP) which supports a single payer system – an improved Medicare for all. John Stossel, the moderator, is a libertarian, and, as such, is not supportive of government programs such as single payer. Lee Hieb is a past president of the Association of American Physicians and Surgeons (AAPS) which supports a free market medical system and is opposed to government or corporate intervention.

The debate, such as it is, is no contest. Considering the limited time, Dr. Auerbach presents a convincing case for single payer reform, whereas Stossel gains no ground with his libertarian pitches, and Dr. Hieb is simply not credible as she presents the AAPS distortions and untruths.

In this video, Dr. Auerbach provides us with lessons on taking the higher moral ground.