By Caroline Mayer
Kaiser Health News, July 2, 2013

Even with Stage IV lung cancer, there are moments when 32-year-old Chip Kennett feels blessed. Over the course of two weeks in April, those moments were many, as 325 friends and family members contributed $56,800 over the Internet to help defray his out-of-pocket medical costs.

The Kennett family of Alexandria is one of thousands turning to the Internet to raise money for medical bills. The sites that host these campaigns operate much like online business fundraising sites such as Kickstarter. It takes only a few keystrokes for a family to set up a Web page, where they tell their story and state a fundraising goal; later, they can spread the word on social media sites such as Facebook. Donations can be made with credit cards or via PayPal.

The contributions, which can be given by name or anonymously, typically range from the very small (as little as $5) to the extremely generous ($1,000 and up). In the Kennetts’ case, donations ranged from $10 to $2,000. Most sites are for-profit and charge a fee, between 3 and 12 percent of the money donated, to cover the processing costs and the expenses of running the Web site.

The Kennetts acknowledge they are lucky to have good health insurance. (Sheila has a federal employee policy through her job at the Senate.) Even so, the Kennetts have paid thousands of dollars in out-of-pocket expenses, including the insurance plan’s co-pay requirements and its $5,000 annual deductible ($7,000 for out-of-network doctors) for both 2012 and 2013.

Medical fundraising sites are growing in number and profitability. In the first 12 months after it launched in 2008, GiveForward raised $225,000 for 359 campaigns; this year, it raised more than $20 million for more than 15,000. Company officials said GiveForward had more than $1.4 million in revenue in 2012 and has raised more than $47 million for families since it began.

When it launched, GiveForward also raised money for other causes — “scholarships, art projects, whatever,” says co-founder Ethan Austin. But the “hugbacks” — calls or messages from users — from medical fundraisers were so appreciative, “we decided, ‘Why do anything else?'”

Austin says he is not surprised at the rapid growth of crowd-funding for medical costs, citing a 2011 National Bureau of Economic Research study that found that half of American adults say they would not be able to come up with $2,000 in the event of a medical emergency. This, taken along with another recent study showing that the average cancer patient incurs as much as $8,500 a year in expenses not covered by insurance, further explains why so many ailing Americans are seeking outside help to pay their expenses, according to Austin.

http://www.kaiserhealthnews.org/Stories/2013/July/02/online-fundraising-to-help-pay-medical-bills-takes-hold.aspx

Comment:

By Don McCanne, M.D.

Crowdfunding: the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations (Wikipedia).

What a nice gesture – friends, acquaintances and caring strangers joining together to pay medical expenses not covered by a federal employee health policy available through the United States Senate (FEHBP), one of the highest quality private insurance plans available in the United States.

What? Cost sharing has become so prevalent – even amongst the best of our health plans – that people with significant health care needs insured by these plans have to turn to charity to pay their bills? Not even cake sales will do. They need real money. (Isn’t this what insurance is supposed to prevent?)

And who moves in? Entrepreneurs who set up for-profit organizations that provide administrative services for this crowdfunding. Just what we need in a health care system already tremendously overburdened with administrative waste – more administrators who profit from our highly dysfunctional, fragmented health care financing system.

PwC reports that next year 44 percent of employers are considering high-deductible plans as the only option for their employees. The benchmark plans in the Marketplaces (exchanges) are high-deductible plans. The new national standard in health care coverage will leave far too many individuals exposed to financial hardship in spite of having a health care plan.

The logical solution would be to reverse this trend and provide coverage that protects individuals from medical debt. But that’s not the American way. We bring in more administrators and pay them richly, further adding to our almost intolerable national health expenditures.

Hey! Is anybody reading these messages? Single payer. Single payer! SINGLE PAYER!

Centers for Medicare and Medicaid Services, June 26, 2013

The Department of Health and Human Services (HHS) finalized provisions concerning how Marketplaces (also known as “Exchanges”) will determine eligibility for and grant certificates of exemption from the individual shared responsibility payment described in section 5000A of the Internal Revenue Code.

This guidance is intended to describe the circumstances that Marketplaces may use in determining what constitutes a hardship if they prevent an individual from obtaining coverage under a QHP.

We clarify that Marketplaces may consider the following circumstances in determining what constitutes a hardship under 45 CFR 155.605(g)(1) if they prevent an individual from obtaining coverage under a QHP, which include an individual who–

* becomes homeless;

* has been evicted in the past six months, or is facing eviction or foreclosure;

* has received a shut-off notice from a utility company;

* recently experienced domestic violence;

* recently experienced the death of a close family member;

* recently experienced a fire, flood, or other natural or human-caused disaster that resulted in substantial damage to the individual’s property;

* filed for bankruptcy in the last 6 months;

* incurred unreimbursed medical expenses in the last 24 months that resulted in substantial debt;

* experienced unexpected increases in essential expenses due to caring for an ill, disabled, or aging family member;

* is a child who has been determined ineligible for Medicaid and CHIP, and for whom a party other than the party who expects to claim him or her as a tax dependent is required by court order to provide medical support. We note that this exemption should only be provided for the months during which the medical support order is in effect; or

* as a result of an eligibility appeals decision, is determined eligible for enrollment in a QHP through the Marketplace, advance payments of the premium tax credit, or cost-sharing reductions for a period of time during which he or she was not enrolled in a QHP through the Marketplace, noting that this exemption should only be provided for the period of time affected by the appeals decision.

http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/exemptions-guidance-6-26-2013.pdf

Comment:

By Don McCanne, M.D.

The Affordable Care Act (ACA) requires that individuals who fail to enroll in a qualified health plan (QHP) be required to make a shared responsibility payment (a financial penalty for being uninsured). There are several exemptions that allow the penalty to be waived, and one of these is “individuals who experience a hardship.” This guidance defines what constitutes a hardship.

Supposedly a goal of health care reform was to be sure that everyone had health care coverage, but especially those whose personal finances made purchase of insurance prohibitive. That is why the most important provisions of ACA included the expansion of Medicaid for individuals at or near poverty and the establishment of income adjusted subsidies for purchase of private plans within the insurance exchanges (Marketplace).

The shared responsibility payment penalty was established to encourage those who could afford insurance to buy it, with a goal of approaching truly universal coverage.

When it was realized that there were many legitimate situations in which individuals would not qualify for either Medicaid or the subsidies for the exchange plans and yet could not afford to purchase plans, it was thought that it would be unfair to penalize these individuals for being uninsured, as if that were not enough of a penalty. Thus the exemptions from the penalty were established.

Of the exemptions, hardship is perhaps the most compelling. But think about that. These are individuals who have the greatest need to have the security of health care coverage, yet, instead of establishing measures that would bring them under the insurance umbrella, they are being left bare – exposed to greater financial hardship and greater barriers to health care access.

Is this the best that we can do for these people – waive a financial penalty for the sin of being uninsured – a penalty that they couldn’t pay anyway?

Absolutely everyone should be covered – automatically. How many times do we have to say it? Single payer.

Co-author: Tom Buchmueller
Presenter: Alice Zawacki, Ph.D., Senior Economist, Center for Economic Studies, Bureau of the Census
AcademyHealth, 2013 Annual Research Meeting, June 23-25, 2013

Research Objective:

The Great Recession of 2007-2009, which took a major toll on the U.S. economy, was especially hard on state and local governments. The fiscal crises have led to increased scrutiny of public sector compensation practices and renewed debate about how the compensation of public sector employees compares to that of private sector workers. Employer-sponsored health insurance represents a substantial share of non-wage compensation and rising health care costs are a pressing concern for both public and private employers. According to data from the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC), average health insurance premiums in the late 1990s until 2000 were similar for public and private employers. In subsequent years, public sector premiums grew more than private sector premiums. In 2000, premiums for large public sector plans were $705 or 22% higher than premiums for large private sector plans. By 2009, this difference grew to $1580 or 35%. This paper examines changes in employee demographics, plan type and plan benefit design with the goal of explaining why premiums in the private and public sectors have diverged over the past decade.

Study Design:

To study the premium differences between sectors, we conduct regression analyses on plan-level data from the 1996-2009 MEPS-IC augmented with additional worker demographic characteristics we impute from the 2000 Decennial Census and the 2009 American Community Survey. Population Studied: Health insurance plans offered by state and local governments and private sector employers with at least 100 employees.

Principal Findings:

Early work shows that over 40 percent of the premium difference for all plans in 2009 is attributable to demographic factors: public workers are older, more likely to be female and are more educated than workers in the private sector. Some of the gap is also explained by the fact that cost sharing increased more in the private than the public sector.

Conclusions:

These findings are consistent with the idea that private employers were more aggressive in increasing cost sharing in the health plans offered to employees. Increases in cost sharing can lead to lower utilization of services for which benefit is low relative to the cost, implying an increase in economic welfare. Alternatively, if utilization is not significantly affected, increases in deductibles, co-payments and co-insurance will merely shift costs from low risk employees who use relatively little care (but pay premiums in the form of reduced wages) to higher risk employees who use more care.

Implications for Policy, Delivery or Practice:

While the growing gap in health benefits spending in the public and private sector does not necessarily imply that public sector benefits are excessive, it is natural for policy makers to look to health insurance costs as a potential area for reform and savings. It is important that efforts in this area be guided by a clear and detailed understanding of the health benefits that are provided to public sector employees and how those benefits compare to those in the private sector.

http://www.academyhealth.org/files/ARM/2013/All%20Podium%20Presentations.pdf

Comment:

By Don McCanne, M.D.

In the past decade, health insurance premiums for state and local government employers have grown more than premiums for employers in the private sector. Although some of this is due to demographic characteristics, a significant portion has been due to an increase in the use of cost sharing in the private sector. Plans for public employers have maintained the same level of benefits, whereas the coverage in plans for private sector employers has deteriorated.

The policy implications of this should have us concerned. As explained in a message earlier this week, the trend in the private sector has been to expand the use of cost sharing, especially high-deductible plans, with a detrimental impact on employees. It is highly unlikely that private employers would support a reversal of this trend.

State and local governments have faced difficult budget decisions, so it is logical that they would look at the high costs of their employee health benefit programs as a source for reducing budget deficits. Many have already tapped into their programs for retirees. Although unions for public employees have been more effective in protecting benefits, there will be considerable pressure to follow the lead of the private sector and expand the use of cost sharing.

There is a far better option other than simply trying to adjust the differences in plans for public and private employees. Instead of thinking about traditional private insurance design options, especially those that emphasize catastrophic coverage, we should consider changing everyone to a prepaid health care system in which financial barriers to care are removed – a single payer system.

Not only is single payer coverage much better, it also provides the greatest value in health care. If we adopted a single payer system, both public and private employers would no longer be placed in the role of trying to control their budgets by hacking away at employees’ well earned health benefit programs.

By Karen E. Joynt, MD, MPH; Atul A. Gawande, MD, MPH; E. John Orav, PhD; Ashish K. Jha, MD, MPH
JAMA, June 24, 2013

Objective

To quantify preventable acute care services among high-cost Medicare patients.

Discussion

We found that more than 70% of the roughly $91.7 billion in acute care costs in the Medicare population in 2010 were for the 10% of patients that comprise the high-cost cohort. Approximately 10% of these costs were for what were deemed potentially preventable causes as calculated using standard algorithms; the percentage was slightly higher for the persistently high-cost cohort. Hospital referral regions with a higher primary care or specialist physician supply had higher annual preventable costs per capita.

The biggest drivers of inpatient spending for high-cost patients were catastrophic events such as sepsis, stroke, and myocardial infarction, as well as cancer and expensive orthopedic procedures such as spine surgery and hip replacement. These findings suggest that strategies focused on enhanced outpatient management of chronic disease, while critically important, may not be focused on the biggest and most expensive problems plaguing Medicare’s high-cost patients. Indeed, while a proportion of these very expensive inpatient episodes may be potentially preventable (such as acute myocardial infarction or degenerative joint disease leading to orthopedic procedures), their prevention would likely require a long time horizon and substantial investments in population wellness. Such investments are critically important for ensuring the health of the population, but the time frame needed to see cost savings is likely years, not weeks or months.

These findings may shed light on why many recent efforts to control costs for these very medically complex, high-utilizing patients, including the Medicare Coordinated Care Demonstration programs, have failed to do so, even in cases in which there was a small decrease in hospital admissions. The majority of these programs have focused on providing enhanced outpatient services, such as frequent telephone and in-person contact, patient education, enhanced medication management services, and assistance with transitional care following a hospitalization. These types of services are targeted toward reducing ambulatory care–sensitive hospitalizations, and investing further in disease management programs may lead to reductions in avoidable ED visits and hospitalizations. Although these visits are still very expensive in aggregate, our findings suggest that they make up a small proportion of the total acute care spending among the costliest of patients. As a result, while disease management may yield cost savings, even a substantial reduction in these preventable hospitalizations is unlikely to have a large effect on overall spending levels within this cohort.

Conclusions and Relevance

Among a sample of patients in the top decile of Medicare spending in 2010, only a small percentage of costs appeared to be related to preventable ED visits and hospitalizations. The ability to lower costs for these patients through better outpatient care may be limited.

http://jama.jamanetwork.com/article.aspx?articleid=1699911

Comment:

By Don McCanne, M.D.

The experts keep talking about the 30 percent of spending that is wasted on clinical services, and they keep proposing and implementing solutions to squeeze that waste out of our system. Yet when we look closer at the waste and at the methods being used to reduce it, we find that most efforts are relatively ineffective, and, further, that much of that suspect care may not be wasteful after all. This study adds to the data showing how elusive the goal of eliminating clinical waste has been.

Yet the savings that they are looking for are potentially recoverable, but not in the clinical services. They are to be found primarily in the financing infrastructure. The non-clinical administrative waste is profound in our current financing system. It could be dramatically reduced by adopting a single payer system (eliminating the administrative excesses of the private insurers and the administrative burden they place on the delivery system, placing hospitals on global budgets, negotiating rates with health care professionals, bulk purchasing of pharmaceuticals, and separate planning and budgeting of capital improvements).

We should continue to make efforts to improve clinical services. But we should not look upon these improvements as a source of savings that would allow us to continue to unjustly enrich the superfluous vested interests who are diverting our finite funds from health care. Why would we want to continue to reward them anyway? Let’s fix what we do know is wrong with the system… especially since we know how to do that.

PwC Health Research Institute, June 2013

Each year, HRI issues its projection for the following year’s medical cost trend based on activity in the market that serves employer-based insurance.

Consumer-driven health plans – insurance coverage with a high-deductible – are set to go mainstream in 2014. According to the 2013 PwC Touchstone Survey of major US companies, 44% of employers are considering offering high-deductible health plans as the only benefit option to their employees in 2014. Already, 17% of employers offer high-deductible plans as their only option in 2013, a 31% increase over 2012.

High-deductible health plans, which place greater responsibility on consumers, are designed to promote cost-conscious decisions. A recent study reported families that switched from a traditional health plan to a high-deductible plan spent an average of 21% less on healthcare in the first year.

The ACA, with its new insurance marketplaces, accelerates the move to consumer-driven plans. Many of the newly insured say they are willing to accept plan features such as higher deductibles in return for lower monthly premiums – as found in the new bronze and silver plans.

2013 – Average deductibles

$1,230 – In-network
$2,110 – Out-of-network

http://www.pwc.com/en_US/us/health-industries/behind-the-numbers/assets/medical-cost-trend-behind-the-numbers-2014.pdf

Comment:

By Don McCanne, M.D.

The forces supporting consumer-driven health care (CDHC) have incessantly asserted emphatically that the answer to our health care spending problem is to place the consumer (i.e., patient) in charge of health care spending. Although some of us have been trying to explain the horrible consequences of this approach, the mainstream media disseminated the message of the CDHC advocates so effectively that it has now become a meme. The CDHC camp has won the policy battle.

How can we say this? CDHC has now become virtually synonymous with high-deductible health plans (HDHP). Whether or not the deductible passes through a health savings account or is paid directly really doesn’t make much difference since the designated cash account is simply a matter of tax policy rather than health policy. Let’s look at a very brief history of HDHPs to see if we can understand why we lost.

Large employer-sponsored group plans have been the mainstay of health coverage in the United States for decades. They have provided comprehensive coverage through high actuarial value plans which required only modest cost sharing by the patient. As health care costs increased, large employers depended more on controlling spending by creating networks of providers with contracted rates. In contrast, individuals, and to a certain extent smaller employers, were unable to afford the premiums for high actuarial value plans and so the insurers heavily marketed high-deductible plans that had much more competitive premiums; so that’s what people bought.

When the Affordable Care Act was written, it was recognized that high actuarial value plans would be unaffordable unless the government subsidies were much larger than members of Congress were willing to budget. Thus the decision was made to make the benchmark plan for the insurance exchanges a low actuarial value plan (silver), made possible only by using high deductibles.

Large employers have been looking for relief from the very high costs of their employee health benefit programs. It looks like they’ve found it, now that HDHPs are becoming the new standard set by our government for the plans in the exchanges. This report from PwC shows that 12 percent of employers used HDHPs as their only option in 2012, and that may increase to 44 percent next year! That is a phenomenal shift in such a short period, and is the basis for saying that the CDHC (HDHP) camp has won the policy battle.

Not only are patients assessed a significant financial penalty for seeking health care (an average $1,230 deductible), that penalty is almost doubled if the patient obtains care out of network ($2,110 deductible) – a greater likelihood as narrower networks become more prevalent.

HDHPs have become popular for one reason only, and that is not because they make patients better shoppers. It is only because the premium to purchase the health plans is more affordable (or for self-insured employers the amount paid out in benefits is less).

There are two important trade-offs for the lower premiums. One is that people will decline to obtain appropriate health care since they will have to pay full fees until the deductible is met. A properly designed financing system should make it easier for people to obtain the care they need, not more difficult. The other is that far too many people have little or no discretionary income, and high deductibles create a financial hardship for them. The health care financing system should reduce or eliminate financial hardship, not create it.

And the out-of-network penalties? A financing system should increase health care choices for patients, not reduce them.

This boat is not going to turn around. Within two or three years, HDHPs will be the standard for employer-sponsored coverage. More people will suffer. The media knew that this change had to come, but only because they didn’t listen to us. They simply dismissed single payer because of another meme – “it isn’t feasible.”

I’m not a violent person, but the next time I hear, “skin in the …,” watch out!

Swiss Broadcasting Corporation
swissinfo.ch, June 24, 2013

The proposal of creating a single fund for health insurance would be accepted by voters if the ballot for the initiative were held today, according to a poll commissioned by the pharmaceutical lobby group Interpharma.

About 65 per cent of the population would approve the proposal and 28 per cent would reject it, according to the first poll conducted on the issue. The result is still not very conclusive, as only about 31 per cent of people surveyed said they would actually participate in the vote.
 
In 2014 or 2015, the initiative for public health insurance will be put to a nationwide vote, which if accepted will see current providers of basic cover replaced by a single public fund. Under Swiss law, health insurance is compulsory, and residents currently may choose between offerings of about 60 companies which provide coverage.

The initiative – supported by the centre-left Social Democrats and by the Greens as well as by patient and consumer organisations – would leave only supplemental insurance in the hands of private companies.
 
The survey was conducted as part of the 2013 Health Monitor by GfS Bern research and polling institute.  The Health Monitor also showed that three out of four people in Switzerland view the health system in Switzerland positively, the highest share ever.

http://www.swissinfo.ch/eng/swiss_news/Swiss_voters_back_single-payer_health_insurance.html?cid=36250986

swissinfo.ch, April 19, 2013

According to the 2012 Health Monitor of the GfS Bern research and polling institute, 40 per cent of those questioned were in favour of a change, while 45 per cent preferred to stick with the current system.

http://www.swissinfo.ch/eng/swiss_news/Seeking_a_political_cure_for_rising_health_costs.html?cid=35544180

Comment:

By Don McCanne, M.D.

Whereas last year 40 percent of Swiss voters supported change in the health insurance system, the same poll this year shows that 65 percent support a single fund for health insurance – single payer. It is difficult to know if this support is malleable, and whether it would hold up under the political rhetoric of campaigns. A similar measure in 2007 was rejected by 70 percent of their voters.

Nevertheless, it should make us challenge those who keep telling us that we need a system just like the Swiss have – a mandate to purchase plans from a market in which about 60 insurers participate. Clearly, though they view their system positively, there is very strong support for a single public health insurance program.

CMS’s new website (https://www.healthcare.gov/) promotes the “Health Insurance Marketplace.” Sounds sort of like the Swiss system. If we’re going copy the Swiss, why don’t we skip their mistakes and go directly to single payer?